TECHNOLOGY SANCTIONS True Face of Free Trade, the American War

WITH all the hoopla over Clinton’s visit, not a word has been said by India regarding the various technological sanctions that the US has imposed on India. The BJP government, busy as it is in trying to displace Pakistan as the junior strategic partner of the United States, obviously does not have time for raising that India has been the target of US technology sanctions from mid-seventies. The recent sanctions, that were imposed after Pokhran II, are over and above a whole range of sanctions that were imposed by the United States and its allies on India earlier. The few exceptions, such as Russia, have now fallen in line after the United States twisted its arm on the cryogenic engine deal with ISRO. India’s inability to rebuild advanced electronic manufacturing facility — the Semiconductor Complex at Mohali — is also due to the same reason.


 The world today is witnessing an unprecedented attack on the domestic economies of the developing countries in the name of free trade. If only trade barriers are lowered, advanced technology and capital will flow in, and this will lead to rapid development; this is the siren song of the Americans, other advanced countries and the Bretton Wood twins: the IMF and the World Bank. Apart from the obvious problems with such a view of the world — pauperisation of a majority of people and the debt trap that most countries face under this new global order — what is left unspoken is that advanced technology is anyway not available for a large number of countries including India. This is the global technology control regimes that have been put in place by the United States with help from other advanced countries.

 The technology control regimes have two origins. One is to deny advanced technology to those countries that had not signed the nuclear Non-Proliferation Treaty (NPT); the other is to deny any advanced technology flow to the socialist countries — the COCOM regime. It has been strengthened now to include missile development and chemical and biological weapons. It targets even those countries that have signed the NPT, but are considered anti-American, for example, Iraq, Libya and Iran.

 The main thrust of these technology control regimes is that they not only bar specific equipment that could be used in nuclear, missile or military programmes; they are also blanket bans and bar the technology that could produce or help develop equipment that can be used for such purposes. This is what makes the technology sanctions so pernicious. Thus import of all advanced chip manufacturing equipment and supercomputer are deemed dangerous and hence barred to countries such as India.


 The alleged purposes of the current technology control regimes, constructed by the United States and its allies are, as follows:

Nuclear Weapons — Nuclear Suppliers Group (NSG),

Missiles: Missile Technology Controls Regime (MTCR),

Chemical and Biological Weapons: Australia Group (AG), and

Dual Use Technology and Conventional Weapons: The Wassenaar Arrangement (WA).

 As the weapons control regimes seek to control the design, development, production and testing of the above weapon systems, not only are all systems and sub-systems controlled, but all materials, components, design tools such as high speed computers and software, production equipment such as advanced machine tools and various test equipment are also controlled for the target countries. However, all such technologies have very large civilian applications as well. For instance, electronic devices for triggering nuclear devices are used in oil exploration also. Chemicals used to make nerve gas are also used for making plastics. A modern pharmaceutical industry facility could be used to make biological weapons also. High-speed computers that are required for climate modelling or designing any modern equipment could also be used to design nuclear bombs. In effect, the above weapons control regimes thus impose a virtual autarchy for the target countries in high technology areas.

 Earlier, the NATO countries and their allies controlled flow of advanced technology to the socialist countries under COCOM guidelines, a private arrangement between the NATO countries and Japan. In the post-Cold War period, the COCOM has been broadened in terms of target countries and expanded by inducting countries such as Russia in an agreement known as the Wassenaar Arrangement. By this, a common list of dual-use technologies is sought to be banned from export to specific countries and specific entities within certain countries.

 Though the wording of the Wassenaar Arrangement is such that individual countries will control the export under its domestic laws and these items will only be exported under strict license conditions, there is a strong presumption of denial of license for dual-use items for countries identified by the US as “rogue states” or, for instance, to entities in India involved with space and nuclear applications.

 The number of entities in India currently under this embargo exceed 200 and include the Bhabha Atomic Research Centre, Nuclear Power Corporation, Atomic Energy Regulatory Board, Bharat Electronics Ltd (BEL), various units of Bharat Heavy Electricals Ltd (BHEL), Electronics Corporation of India Ltd (ECIL), Indian Space Research Organisation (ISRO), etc. Included are virtually all organisations connected with defence, nuclear activities, aerospace engineering, and ordnance and arms factories. Even the aerospace departments of academic institutions such as Indian Institute of Science and the IITs were put under embargo after Pokhran II. Though 51 such entities are being taken off the entities list, effectively they will still continue to be under various technology restrictions.


 The technology controls for nuclear weapons claims that it draws its legal standing from the NPT. It came into existence after India’s Pokhran I test to target countries such as India, which are not signatories to the NPT. After the Iraq war, it also targets countries that are signatories to the NPT but are considered by the US to be involved in the “clandestine” manufacture of nuclear weapons. However, it does not target Israel, and did not target South Africa earlier, which have been known to possess nuclear weapons. The operative organisation is the Nuclear Suppliers Group (NSG) with 35 members.

 The technology that cannot be exported to India under US sanctions is any technology for designing, building or maintaining nuclear reactors and processing of nuclear fuels. In addition, supply of nuclear fuels or spare parts for the existing nuclear power plants, supplied earlier, are also banned. In this, even the equipment required for safety of the nuclear plants supplied by US, such as Tarapur, are not permitted to be supplied to India. Further, the Tarapur type reactor has been modified in the US after discovery of certain problems with the reactor design. Even these modifications cannot be passed on to India, thus endangering the lives of lakhs of people living in the vicinity of the Tarapur plant. The US therefore holds the people in Bombay ransom for India not signing the NPT.


 The Missile Technology Control Regime (MTCR) does not have any international treaty as its basis. It is a voluntary agreement reached in 1987 between participating countries that space and missile technology will be denied to a number of countries. It started as denial of missiles and missile subsystems for missiles with over 500 kg payload and 300 km range as they can be used for delivering nuclear weapons. But its scope was enlarged in 1993 to cover virtually all missiles capable of carrying any weapon of mass destruction: biological and chemical as well as nuclear. As biological and chemical weapons are considerably lighter in weight and can also be used close to a country’s own borders, the MTCR thus virtually bans the sale of missiles if there is a suspicion that they could be used to carry such weapons by the target countries. The ban on missiles beyond 500 kg payload and 300 km range is irrespective of intent. The regime has an absolute ban on facilities for missile production.

 Though in theory, the MTCR is supposed not to impede space programmes as long as these do not contribute to development of missiles, this is inherently impossible, as any technology capable of developing space launch vehicles is also capable of being used for a missile programme.

 The MTCR started with seven advanced countries: Canada, France, Germany, Italy, Japan, United Kingdom and United States. It now has 32 participating countries including Russia.

 One of the crucial differences between other technology control regimes and the MTCR is that it is inherently inequitable. Advanced countries join the MTCR with the right to develop space launch technologies but no developing country can do so. Any developing country can join the MTCR only if it gives up its space launch programme. Thus Brazil and Argentina, each of which had a space programme capable of developing into a full-fledged space launch programme, had to give it up when they joined the MTCR.


The crucial issue here is that the future of telecommunications and broadcasting lies in space launch satellites. These satellites carry not only telephone calls and Internet traffic, they also provide the transponders for cable TV as well as the Direct Home Telecast (DTH) TV. The space launch capabilities and the ability to build satellites is crucial for the future development of the country in these areas. The NASA (a US agency) and Arianne Space Agency (a joint European effort with Germany, France and UK being the leaders) charge huge sums for space launch of satellites. Further, the satellites themselves are made by a few companies in the world such as Hughes (a US multinational) who again charge astronomical sums. In case the countries do not have their own satellites, they can be fleeced by companies or agencies that have put their satellites in orbit.

 Thus countries such as India decided on a space programme, not only for developing missiles but also for developing communications and meteorological satellites. India’s space programme, both in terms of developing space launch vehicles and satellites, is well advanced. It not only provides a much cheaper route for India to develop its communications and telecommunications services, but also an option for other countries who might like to use Indian capability in developing communications satellite and Indian space launch vehicles for their communications and telecommunications programmes. Thus, the MTCR embargo on the Indian space programme is directed not only against the Indian missile programme but also against India’s civilian space programme.

 This is the reason that US forced Glavkosmos of Russia not to provide India with cryogenic engine know-how required for launching geo-stationary satellites. Geo-stationary satellites are satellites that appear not to move with respect to the earth: their orbital velocities coincide with the earth’s revolution. These are the ones that are used for carrying all TV signals — cable and DTH.

 As in the nuclear embargo, the MTCR embargo also covers complete systems, subsystems and dual use technologies. The technology for developing production facilities for missiles is absolutely prohibited under the guidelines of MTCR. The enforcement of the export regime is under the national laws and export policies of the participating countries. The major lead in all this is taken by the US which draws up the list of countries, entities and items that are barred for export by the member countries.


 The Australia Group seeks to control chemical and biological weapons. It has 30 member states and seeks to embargo a large number of materials, production facilities and technology which can lead to the production of chemical and biological weapons.

 The problem of controlling technology for chemical and biological weapons is that the same technology is used for the chemical and pharmaceutical industry. Though India is not a target for embargo — the major targets being Iraq and Libya — the choice of countries as targets and the kind of technology for embargo, can be decided at any time in the future by the participating countries, particularly the US.


 The Wassenaar Agreement was instituted to replace the COCOM controls that existed during the Cold War period. In this period, a very large number of items relating to missile, aircraft, submarines, nuclear power and weapons, were subject to embargo to the socialist countries. As most of these technologies were dual-use, this meant an embargo of all advanced technology items to the eastern block countries. In the post-Cold War period, the COCOM controls have been broadened to cover a large number countries and has also expanded to include former eastern block countries. The Wassenaar Agreement was reached in 1996 and has 33 members.

 The Wassenaar arrangement is to impose export controls on all advanced technology items under the garb of dual-use technologies. Thus virtually all advanced materials, electronic equipment, high-speed computers, advanced machine tools, cryogenic equipment, communications equipment, a range of chemicals, biotechnology items are covered under the Wassenaar arrangement. The Wassenaar arrangement is not an international treaty but an arrangement by which participating countries inform each other of the export of goods under the dual-use category and also all the denial of items under this list. The actual denials are implemented under the export control regimes and acts of the respective countries.

 The Wassenaar arrangement has been used by the US to impose its export control list on all participating countries. Earlier, US companies had been complaining that they were being forced not to export certain items to countries such as India and China while other countries such France, Germany, Japan, etc, could do so. Under the Wassenaar Agreement, if one country denies such exports, all countries are expected to follow suit. Further, a common list has been agreed upon, which is virtually modelled on the US commerce department’s list.


 The situation after Pokhran II is that the number of items that could earlier be imported under a license can no longer be imported. Further, every item that is considered dual-use such as process control systems, electronic equipment, special materials, high-speed computers, etc, goes through a much longer time cycle for the US or another exporter to issue the requisite license for its export to any end-user in India. This greatly increases the cost to the Indian companies as well as makes it difficult to compete in the international market due to the much longer import time cycle imposed on the Indian companies. It is interesting, however, that under the WTO dispute settlement body’s judgement, the country thus affected cannot compensate the higher cost thus imposed on the domestic industry. Brazil, which tried to compensate its domestic industry to cover the higher country risk premium charged for international loans, was penalised and forced to remove this compensation as it was deemed to be a “subsidy” and unacceptable under the WTO’s rules.

 The lesson in all this is clear. Any developing country that accepts that it will give up nuclear and space technologies and will fall in line with American foreign policy, will be allowed access to high-tech items from the advanced countries. Otherwise, it will be forced to develop indigenously all the technology it needs for its high-tech industry. For any country, such a path of technological autarchy is costly and difficult. However, this is the only path that is available for countries such as India.

 Some may wonder if the WTO, that is supposed to safeguard free trade, cannot be invoked here. The answer is simple. The WTO accepts all such blanket bans on free trade in the name of national security. Thus, the rights and obligations of the WTO regime are completely skewed. It demands that all developing countries must open their markets to all foreign goods, but allows selective bans on export of high technology items that they desperately need.

 Those advocating free trade therefore suffer from selective amnesia: they forget that under today’s global order, free trade is a one-way street. India can make its markets free for American capital; what it will get is Coke and McDonalds and not advanced technology. Accept the export of technology for burgers and colas, but do not expect technology for development: this is the true face of free trade, the American way. And this is what is being hidden from the India people in all the euphoria of the Vision Statement signed by Clinton with Vajpayee.