The United States has recently revised its former stringent controls over high-technology dual-use exports to India. This significant change in policy has resulted from India being promoted to the Strategic Trade Authorization – 1 (STA-1) list, permitting more relaxed licensing regulations.
A Background of the US Export Licensing Regime
The US has traditionally been recognized for its restrictive export licensing regime concerning defense and dual-use technology. These limitations were based on two primary determinants namely, US national security, and the recipient’s regional stability. However, this changed in 2011 when the US government introduced the concept of Strategic Trade Authorization (STA) as part of their export control reforms initiative. This new approach aimed at adopting a license-free or license exemption regime. To facilitate this, two lists were formed – STA-1 and STA-2. Countries that were not included in these lists were obliged to apply for a license for every item on the control list.
The creation of STA-1 and STA-2 lists enabled the US to establish a ranking system amongst countries they deemed reliable and unlikely to contribute towards global “proliferation”.
Key Features of STA Lists
Countries under the STA-1 category are granted nearly unrestricted access to almost 90% of dual-use technology. They are also allowed to import items which may pose threats to national security or could potentially be used in chemical or biological warfare. This applies even if the technology or item influences regional stability or American national security.
On the other hand, STA-2 listed countries enjoy some degree of licensing exemption. However, they cannot access dual-use items/technology that may threaten regional stability or contribute to nuclear non-proliferation.
The Implication of India’s STA-1 Status
India’s recent inclusion in the STA-1 list, despite not being a member of all four multilateral export control regimes, is a significant endorsement of its flawless track record as a responsible member of these regimes. The four multilateral export control regimes include the Wassenaar Arrangement (WA), Missile Technology Control Regime (MTCR), Australia Group (AG), and Nuclear Suppliers Group (NSG). India’s entry to NSG has been repeatedly blocked by China.
India’s STA-1 status could potentially open up new avenues for sales and manufacturing in the country, leading to increased high-technology trade and commerce. The US estimates that India’s previous exclusion from the STA-1 list had led to a “lost opportunity” worth $10 billion over seven years, dating back to 2011.
The Impact of the National Defence Authorization Act (NDAA), 2019
Following the passage of the National Defence Authorization Act (NDAA), 2019, by the US Senate, this upgrade could be viewed as another stage in enhancing India-US relations. STA-1 status provides India with increased supply chain efficiency for both defense and other high-tech products, which will boost activity with US systems, improve system interoperability, and save time and resources for obtaining licensing approval.
The NDAA 2019 seeks to amend a law threatening secondary sanctions against strategic partners of the US, like India, who significantly trade with Russia. This move is seen as a major relief for India, as it makes way for further purchases of the Russian S400 Triumf.