India pushes for membership of export control regimes - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Wednesday 18 April 2012

India pushes for membership of export control regimes

Foreign Secretary Ranjan Mathai, in a major foreign policy speech in New Delhi, argued for membership of four strategic export control regimes

by Ajai Shukla
Business Standard, 19th Apr 12

Three weeks after the Prime Minister suggested to world leaders at a nuclear summit in Seoul that India should get membership in the worlds’ four major export control regimes, Foreign Secretary Ranjan Mathai today fleshed out that statement into a detailed case. Addressing a gathering of diplomats and proliferation experts in New Delhi today, Mathai described the export control safeguards that India had instituted in recent years, which qualified it for membership of the Nuclear Suppliers Group (NSG), Australia Group (AG), Wassenaar Arrangement (WA) and the Missile Technology Control Regime (MTCR).

Mathai said that India’s “law based export system, covering about nine different legislations,” was not just “in line with the highest international standards,” but also, in some cases, “extends beyond the controls of the multilateral regimes.”

The foreign secretary chose to make his case at the Institute for Defence Studies and Analyses (IDSA), a defence ministry-affiliated think tank, but his audience was clearly global. In his opening remarks he welcomed “members of the diplomatic corps, in particular representatives of countries currently chairing the various multilateral export control regimes.”

These regimes include the NSG (46 member-countries), which was created after India’s “peaceful nuclear experiment” in 1974 to strictly regulate the international transfer of nuclear technologies and materials. The MTCR (39 member-countries), collectively seeks to block the proliferation of missiles that could deliver weapons of mass destruction. The Wassenaar Arrangement (41 member-countries) promotes transparency in the trade in conventional arms and dual use goods and technologies. The Australia Group (40 countries and the European Commission) seeks to ensure that exports do not lead to the development of chemical or biological weapons.

India has been canvassing for membership of these four regimes to gain legitimacy as a mainstream decision-maker, overcoming its status as a nuclear pariah due to its non-signature of the Nuclear Non-Proliferation Agreement (NPA). This was partly achieved in 2008, when the NSG unanimously approved a US proposal to drop a ban on trade with India. Now, with the US heading the NSG, India sees an opportunity.

“While we wish to move forward in tandem on all the four regimes, our engagement with NSG is seen by observers as the most important,” said Mathai.

The foreign secretary highlighted four key legislations that backstop India’s export controls: the Foreign Trade Development and Regulation Act (or FTDR) of 1992; the Atomic Energy Act of 1962; the Customs Act of 1962; and the Weapons of Mass Destruction (WMD) Act of 2005. The WMD Act, said Mathai, “incorporated into national legislation key international standards in export controls.”

Besides these laws, India had notified, under the Foreign Trade Act in 1995, a detailed list of “dual use” items called SMET (Special Material, Equipment and Technology). This list was revised in 1999, 2005 and 2007 and is now called the SCOMET (Special Chemicals, Organisms, Material, Equipment and Technology) list. In 2008, India’s SCOMET controls were harmonized with the NSG and MTCR.

India’s desire for membership of the four multilateral export control regimes is also driven by commercial considerations. India’s high technology trade, said Mathai, could only be boosted if there were credible export controls. As India integrated into global supply chains and became “an important hub of manufacturing and export of high technology items” it would be essential to assure commercial partners that sensitive materials, products and technologies would not be diverted.

“High technology companies would invest in India confident that apart from favourable commercial returns, access to a huge market and skilled workforce and protection of IPR, there would be no risk of unauthorized diversion or re-exports,” said Mathai.

Unusually for a foreign secretary, Mathai detailed the specific measures that India had taken to secure the export of controlled items. The SCOMET regulations “outline the procedure, process and factors relating to the licensing of controlled items.” India has created strict mechanisms to prevent, detect and penalise unauthorised exports. Indian industry, including SMEs, were being approached to “enhance understanding about export controls among producers and exporters of controlled items (and) also share best practices in internal control systems for due diligence. Besides, CII is working on a voluntary “Code of Conduct” on export controls, which can guide companies in strengthening their internal compliance systems.

“Mathai has put together multiple developments in order to paint a big picture and to send out a message to the international community,” says a former MEA official with extensive experience in non-proliferation.

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