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Saturday, September 26, 2009

Extraterritoriality in Export Controls

For more than sixty years, U.S. export controls have been a key U.S. national security tool for preventing undesirable exports of goods and technology. Although the overall structure of these controls has changed relatively little since the enactment of the Export Administration Act of 1979 (“EAA of 1979”), the United States’ interpretation and application of its export control laws is in some ways radically different than upon the act’s passage. This is particularly true with respect to claims of extraterritorial U.S. jurisdiction, which have been difficult to justify under international law principles of prescriptive jurisdiction.

I have been thinking about this subject for some time (it is a bit of a pet project of mine); I think it is fascinating and important, even if a little arcane. I also think it is quite relevant to current events, namely the efforts by the United States to impede or prevent any Iranian nuclear program, and I believe it offers important insights into how states can and should (and cannot and should not) try to achieve foreign policy and national security goals through the regulation of trade.  Accordingly, in this post I want to (a) recap the history and evolution of the extraterritorial features of U.S. export control laws, (b) discuss the legally problematic nature of these features under international law, and (c) discuss their legal justifiability from a perspective that has not previously been actively explored. 

The post is quite long, but I have decided to err on the side of over-description, so as to provide a fuller context for my comments.


In the early 1980s, the United States radically expanded the extraterritorial application of its export control regime and set off an international furor over what many viewed as excessive U.S. reach. These claims were first made by the United States in an attempt to thwart the construction of a Soviet trans-Siberian pipeline to Europe, by prohibiting certain European firms from using certain U.S. technology in their possession in furtherance of the project.

Specifically, the type of extraterritoriality asserted by the United States in the Soviet pipeline dispute was based on the national origin of the technology involved--as opposed to the technology’s physical location or the nationality of the parties. Under this “item-based” approach, the United States claimed jurisdiction over some U.S. origin technology, regardless of the fact that it was already outside the United States and possessed by non-U.S. parties, and regardless of the fact that the restricted uses were not prohibited or restricted at the time the technology was first exported from the United States. In other words, national origin was the sole basis for U.S. prescriptive jurisdiction over this technology.

The United States backed down in that particular controversy when it rescinded the prohibitions on use of that technology--but it did not waive its claim of jurisdiction. The extraterritorial jurisdiction first asserted by the United States in that dispute remains a hallmark feature of U.S. export control laws: the United States continues to assert extraterritorial jurisdiction over U.S. goods and technology located outside the United States, based solely on the fact that these items are of U.S. origin or contain significant U.S. content.  (For those interested, Andreas Lowenfeld provided a very nice, concise summary of the 1981-1982 pipeline dispute in "Trade Controls for Political Ends:  Four Perspectives," 4 Chi. J. Int'l Law 355 (2003)).


The validity of item-based prescriptive extraterritorial jurisdiction was debated at length by scholars in the 1980s and early 1990s, and at the time a general scholarly consensus was reached that item-based extraterritorial jurisdiction was difficult to justify at best, and unjustifiable at worst. Yet even as this extraterritoriality remained in place attention to this subject waned, perhaps due to the lack of another galvanizing, headline-grabbing event such as the trans-Siberian pipeline controversy. Still, I think the subject of extraterritorial, item-based U.S. export controls remains an important one that is worth revisiting from a more contemporary perspective. The current dispute with Iran regarding Iranian nuclear activities suggests to me that the timing is right for a revisit of the issue. Even if no dispute arises now over U.S. extraterritoriality in U.S. efforts to restrict Iranian activities, it will be useful to consider why that is the case (i.e., is it because of consensus? More on this below.).

My thinking on the subject has led me to conclude that changes in global trade patterns and U.S. national security concerns since the early 1980s can and do provide stronger justifications in 2009 than in 1982 for item-based extraterritorial export jurisdiction. Briefly stated, export control concerns now are based far less on an item or technology’s destination and far more on how it will be used after export or reexport, and by whom. Perhaps, then, prescriptive jurisdiction based on end use concerns (such as nonproliferation or prevention of terrorism) are more justified.

In other words, while the Objective Territorial and Nationality Principles of international prescriptive jurisdiction remain insufficient legal grounds for an assertion of jurisdiction over such U.S. items/technology abroad (just as they were insufficient in 1982), the changed nature of global trade suggests that jurisdiction might be more justifiable under the Protective Principle, and perhaps even under Universal Jurisdiction. While there may be concerns about overly broad jurisdictional reach under these principles, perhaps this broad reach can be considered a logical and not undesirable outcome, provided of course that there is some international consensus concerning the purposes being achieved--i.e., the prevention of terrorism or chemical, biological, or nuclear proliferation activities.

A Different Perspective

This is all well and good, and interesting too--yet “justifiable” does not mean “sufficient,” or perhaps even close to it. That is, item-based extraterritorial export controls may be more legally justifiable now than previously, but they are also strategically imperfect and highly suboptimal. If that is the case, a different sort of analysis is needed.

While during the Cold War “origin” could serve as a useful proxy for “items that raised national security concerns and therefore needed regulating,” this proxy relationship has broken down as global trade has expanded and grown more multilateral. The use of item origin as a jurisdictional filter (to control some transactions but not others)--or more accurately, as a jurisdictional long-arm mechanism--is thus ultimately of little practical importance or meaning. National and multilateral security concerns thus suggest that broader, non-origin-based controls are needed.

How, then, might the export control laws and regulations of the United States, and of other countries too, be reformulated to be both doctrinally satisfactory and strategically sufficient? In my view, a reconsideration of the primary national security goals of these controls suggests that their current antiterrorism and nonproliferation goals could be better served by a departure from item-based jurisdiction. Such a change might lead to greater multilateral cooperation in the area of export controls, since it would resolve an unresolved dispute--which in turn could lead to greater consensus and cooperation via harmonization and enforcement networks than currently exists through multilateral export control regimes such as the Wassenaar Arrangement, Australia Group, and Nuclear Suppliers Group. In the absence of full harmonization, greater progress could at least be made toward mutual recognition by states of their respective different (yet justifiable) export control schemes (including jurisdictional considerations), somewhat along the lines of the mutual recognition regime work by Kalypso Nikolaïdis and Gregory Shaffer.

What is particularly interesting about such a re-imagined conception of export controls is, firstly, that extraterritoriality is not justified on the problematic basis of item origin; and secondly, that because these approaches are based on consensus, they can comport entirely with traditional international law jurisdictional principles. As such, they are both more justifiable and more strategically appropriate than the current item-based approach.  What is also interesting, and indeed ironic, is that after nearly thirty years of problematic extraterritoriality the United States might finally win the legal argument. Sarah Cleveland’s work regarding unilateral trade sanctions as a means to spark international dialogue and push the development of new norms translates well to the export control context.  (See Sarah H. Cleveland, "Norm Internationalization and U.S. Economic Sanctions," 26 Yale J. Int'l L.1 (2001) and Sarah H. Cleveland, "Human Rights Sanctions and International Trade:  A Theory of Compatibility," 5 J. Int'l Econ. L. 133 (2002)).

That is, in recent years at least, the United States’ extraterritorial jurisdiction assertions have been justified largely on antiterrorist and nonproliferation bases--justifications with which U.S. trading partners generally can agree, at least to an extent. The United States thus may have facilitated or fostered transnational export control dialogue on these subjects, and international consensus may be achieved that such broad extraterritorial reach, or at least transnational coordination and cooperation, is justified. And as already noted, efforts to broker a unified multilateral response to Iran’s nuclear activities may provide the factual scenario for this to occur.

Posted by gregory w bowman on September 26, 2009 at 01:29 AM in International Law | Permalink


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Bruce, your memory is not so foggy at all. A detailed discussion is beyond the scope of a blog comment, but under the U.S. "deemed export" rule such a provision of technology to the foreign scientist (or any other foreign national) might be considered an export at the time the technology is actually provided ("released") to that person, and before any travel abroad. That's actually a very interesting twist on what I was saying in my post: with deemed exports, the expansive interpretation does not concern jurisdiction, since the event takes place in the U.S.; rather, the expansiveness is in the aggressive interpretation of the term "export."

In other words, in various ways the U.S. (and some of its trading partners too) is trying to assert jurisdiction over as much trade as possible, both outbound from the U.S. and abroad, so as to constrain unwanted activity (trade with unfriendly countries or parties, trade in support of WMD activity, etc.). But tortured interpretations of jurisdictional reach (whether justified or not) or of what is or is not an export miss the larger point--which goes back to what I was saying in my post.

Posted by: gregory bowman | Sep 28, 2009 1:27:23 AM

Very interesting. It's been a while since I've dealt with this issue and my memory is pretty foggy, but my recollection is that technical knowledge gained from a U.S. person, such as an employer, can also fall within the export controls, such that a foreign scientist who then returns home can take the prohibited technology with them in their head -- making the basis for extraterritorial jurisdiction even more metaphysical.

Posted by: Bruce Boyden | Sep 27, 2009 4:34:02 PM

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