The Pacific Forum, with support from the US State Department’s Export Control and Related Border Security Program, held a virtual Seminar on Strategic Trade Controls in Southeast Asia on July 27-28, and August 5-6, 2020 via Zoom. Over 90 people from the Indo-Pacific region representing relevant government departments and ministries, private sector, industry associations, academia, and civil society organizations joined the seminar. Following the conference, several experts in attendance were invited to submit short analytical commentaries for compilation into this volume. Key themes from this conference, along with a summary of each paper contribution, are outlined below.
The seminar focused on four substantive topics: (1) the adoption of Strategic Trade Controls (STCs) for nonproliferation and internal security; (2) post-COVID-19 supply chains and trade facilitation; (3) ASEAN and STC; (4) the World Customs Organization, STC, and the exploration of maturity models. Following presentations and discussions on these topics, representatives from several Southeast Asian countries—Philippines, Malaysia, Singapore, Thailand, Vietnam, Cambodia, Laos, Myanmar, and Indonesia—offered updates on the adoption of STC in their respective jurisdictions.
Panelists discussed the uneven STC implementation within the Southeast Asian region as evidenced by Singapore, Malaysia, Philippines, and Thailand’s recent adoption or calibration of regulations while others, such as Vietnam, Cambodia, and Brunei have been slower to implement a more robust system. The region’s history of non-alignment, past experience with export controls as a coercive mechanism, prioritization of economic growth, and the view that STC can be used for technological denial fuels skepticism. ASEAN is a late entrant to the development of free trade zones and regional economic integration. Although it seeks to attract international investment, relaxed oversight, susceptibility to smuggling, and a lack of transparency inhibit growth. Some participants suggested connecting STC with the World Customs Organization Authorized Economic Operator scheme as it can exist without a national STC system already in place.
Previous studies have shown that there is no negative effect stemming from the implementation of STCs, yet it can be argued that these studies have data limitations and that some use less-than-ideal methodologies. In fact, participants argued that the biggest impact of STC for developing countries seems not to be on exports, but on high-tech imports, access to Western markets, and garnering the trust of suppliers. STCs function to compel a company’s compliance by imposing reputational risks and penalties and can also provide opportunities; logistics companies can charge for strategic goods declarations, manufacturers can use bulk licenses to expedite delivery, and cybersecurity companies can better guarantee safe and inclusive supply chains. Companies should be shown that implementing Internal Compliance Programs (ICPs) are an investment. Setting up an ICP is only a fraction of annual revenue but allows access to a wider pool of technology, trade, and consumers, while non-major suppliers that import from the EU or the US can access more advanced technologies if they have safeguards established by ICPs.
Experts also discussed the impact of various international STC regimes, implications of the significant delays in the full implementation of the ASEAN Economic Community, and potential costs for countries that do not have a comprehensive STC management system in place. They also touched on the difficulties of controlling emerging technologies and a related lack of uniform standards. Participants highlighted the increasing difficulty in distinguishing between strategic trade and dual-use technologies, and noted that the US is moving toward protecting its strategic interests in the multilateral regimes while pushing others to incorporate broader national security considerations into technology controls. ASEAN is increasingly concerned about a regression into Cold-War style of export controls.
Bryan Early’s contribution to this special report, “Compliance in Crisis: The Impact of Covid-19 on Strategic Trade Controls,” examines the critical role of STC implementation, especially in preventing the proliferation of weapons of mass destruction. In light of individual countries’ obligation to implement appropriate and effective STCs, Early examines the adverse impact of COVID-19 on STC compliance.
Scott Jones’ piece, “The Compelling Logic of Integrating Markets: The Case for Common Strategic Trade Controls,” highlights the fractious nature of ASEAN’s STC implementation and the resulting threat to both regional and international proliferation. Deepening regional economic ties require harmonization of both economic and security policies. Therefore, Jones concludes that ASEAN should establish and coordinate common STC standards.
Seema Gahlaut’s paper, “The Role of ASEAN in Regional STC Development,” contextualizes the function of regional organizations in promoting international nonproliferation obligations. Gahlaut highlights these organizations’ ability to transcribe international obligations into regional standards and provide institutional links between nonproliferation mandates and economic and security dialogues.
Through his paper, “Maturity Model-based Approaches to Strategic Trade Control System Development,” Todd Perry establishes the utility of maturity models within the STC matrix and their ability to emphasize STC-related capabilities that states should acquire if seeking to create interagency-based STC proliferation risk reduction systems. Perry concludes that maturity models are an important part of the development and strengthening of STCs and in the mitigation of WMD proliferation.
The second half of this report moves from global and regional trends to a focus on national STC systems. Lorenz Anthony T. Fernando, Janice Sacedon-Dimayacyac, and Domina Pia S. Salazar examine the STC management system in the Philippines in “ASEAN STC Implementation: Strategies in the Implementation of the Philippine Strategic Trade Management Act.” As the authors illustrate, the Philippines has taken major strides to establish a strategic trade management regime, embodied in the 2015 Philippine Strategic Trade Management Act. The authors detail the importance of the Act and the role of the Philippine Strategic Trade Management Office in its implementation.
Moving to Myanmar, Phone Myint Naing focuses on the successes and failures of Naypyidaw’s pursuit of STCs in his “Updates on Myanmar’s STC System.” Crucially, although the Myanmar government has been implementing an STC system since 2016, it has been unable to prioritize it. COVID-19 has further complicated this process and thus the nation has fallen behind in legislation, licensing processes, industry engagement and interagency cooperation.
Through her paper “General Overview on Implementation of Strategic Trade Controls in Viet Nam,” Thu Pham highlights Hanoi’s willingness to cooperate with international partners to counter WMD proliferation. Pham also illustrates the challenges that Vietnam faces as it moves from the production of commercial goods to high-tech products.
Finally, Alfian Chaniago provides insight into Jakarta’s STC management in his piece “How Indonesia Customs Control Strategic Items.” Chaniago illustrates that while Indonesia is not a member of international trade control regimes and does not have specific STC regulations, it has mechanisms in place to control strategic items. Chaniago then explores the role of the Directorate General of Customs and Excise in the implementation and enforcement of STC.
Taken as a whole, the region is moving toward improved STC implementation. Nonetheless, Southeast Asian countries face challenges ranging from global tensions over critical technologies and supply chains to domestic lack of resources or political will. The dialogue between relevant government departments and ministries, private sector, industry associations, academia, and civil society organizations within the United States and Southeast Asia must continue if we are to achieve our shared goals of economic growth and development while preventing the proliferation of WMD and related materials.
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About the Authors
Bryan R. Early is an Associate Professor of Political Science and Associate Dean for Research at the University at Albany, SUNY’s Rockefeller College of Public Affairs Policy. Early is also the founding director of the Project on International Security, Commerce, and Economic Statecraft and served as the Director of the Center for Policy Research from 2015-2019. He has published 30 peer-reviewed academic articles on the topics such as economic sanctions, weapons of mass destruction (WMD) security issues, shadow economies, and political violence. Early earned his PhD from The University of Georgia in 2009 and is a former research fellow at Harvard University’s Belfer Center for Science and International Affairs.
Scott A. Jones is a Nonresident Fellow at Stimson with the Trade, Technology, and Security program at the Stimson Center. His areas of expertise are WMD nonproliferation, export controls, sanctions, and economics. Jones is also a principal at TradeSecure, LLC. a global advisory firm focused on export control, FDI, sanctions, and trade compliance solutions. Previously, Jones served as Director at the University of Georgia’s Center for International Trade and Security and foreign affairs analyst at Oak Ridge National Laboratory. He received his Ph.D. in international political economy at the University of Georgia and an MA at Lancaster University in the UK.
Seema Gahlaut is the Director of Strategic Trade Management Initiative (STMI), and Senior Fellow with the Trade, Technology and Security Program at the Stimson Center. Her areas of expertise are legal and institutional design of Strategic Trade Control/Management (STC/M) systems, UNSCR 1540 and sanctions implementation/enforcement, and CBRN security. Gahlaut has over 15 years of experience in conducting and managing training programs on STC for governments and industry. Prior to Stimson, Gahlaut served as the Assistant Director, Center for International Trade & Security (CITS) at the University of Georgia. She received her Ph.D. from the University of Georgia, USA and her Masters’ and M. Phil., degrees from Jawaharlal Nehru University, New Delhi, India.
Todd E. Perry works in the US Department of State’s Bureau of International Security and Nonproliferation (ISN) as US Special Coordinator for United Nations Security Council Resolution (UNSCR) 1540. In this capacity, he guides US diplomacy in the 1540 Committee, promotes US and other 1540-related international outreach programs, and leverages ISN and US interagency expertise in support of the national reporting and assistance mandates of the 2004 resolution. Before joining State in 2019, Perry created and directed the US Department of Energy National Nuclear Security Administration’s (DOE/NNSA’s) International Nonproliferation Export Control Program (INECP). Perry received his Ph.D. in Government and Politics from the University of Maryland, College Park in 2001, and his B.A. from Grinnell College in 1985 with majors in French and Political Science.
Lorenz Anthony T. Fernando is the Chief of the Department of Trade and Industry Strategic Trade Management Office – Registration and Authorization Division (Philippines). Before joining the STMO, he handled research projects on green materials, biopolymers, and composites at the Department of Mining, Metallurgical, and Materials Engineering, University of the Philippines – Diliman. He is a registered chemical engineer with an MS in Materials Science and Engineering.
Janice Sacedon-Dimayacyac is the Assistant Director of the Philippine Strategic Trade Management Office. She has previously worked for the Supreme Court of the Philippines and an international law firm for 10 years.
Domina Pia S. Salazar is the Deputy Chief of the Strategic Trade Management Office Registration and Authorization Division. She previously worked as a Science Researcher and Forensic Chemist at the Department of Science and Technology – Philippine Textile Research Institute and the Philippine Drug Enforcement Agency. She is a registered chemist and is currently pursuing her master’s degree in chemistry.
Phone Myint Naing has served as a staff officer at the Department of Trade under the Ministry of Commerce, Myanmar since August 2016. Phone was a resident Nonproliferation Fellow of the Pacific Forum, a foreign policy research institute based in Honolulu, Hawaii from December 2017 to December 2018.
Pham Minh Thu is a Customs official with the International Cooperation Department at the General Department of Viet Nam Customs, where her duties focus on the implementation of international cooperation activities related to trade security including the US Department of State Export Control and Border Protection Program, the EU Dual-Use Items Control Program, and implementation of UNSC resolutions. Pham has participated in multiple bilateral and multilateral cooperation activities for the Viet Nam Customs office and has worked on Customs-related projects with Cambodia, Mexico, and the Netherlands. Additionally, Pham has headed projects including risk management and capacity training for Vietnamese Customs officials, funded by the Japanese government, and the Trade Facilitation Project funded by USAID.
Alfian Chaniago has served as Deputy Director of Multilateral at the Directorate of International and Public Affairs, Directorate General of Customs and Excise Indonesia, since April 2017.