[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3121 Reported in House (RH)]





                                                 Union Calendar No. 253

104th CONGRESS

  2d Session

                               H. R. 3121

                      [Report No. 104-519, Part I]

_______________________________________________________________________

                                 A BILL

To amend the Foreign Assistance Act of 1961 and the Arms Export Control 
  Act to make improvements to certain defense and security assistance 
provisions under those Acts, to authorize the transfer of naval vessels 
         to certain foreign countries, and for other purposes.

_______________________________________________________________________

                             April 16, 1996

  Referral to the Committee on Rules extended for a period ending not 
                       later than April 16, 1996

                             April 16, 1996

Committee on Rules discharged; committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed





                                                 Union Calendar No. 253
104th CONGRESS
  2d Session
                                H. R. 3121

                      [Report No. 104-519, Part I]

To amend the Foreign Assistance Act of 1961 and the Arms Export Control 
  Act to make improvements to certain defense and security assistance 
provisions under those Acts, to authorize the transfer of naval vessels 
         to certain foreign countries, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 20, 1996

  Mr. Gilman (for himself and Mr. Hamilton) introduced the following 
 bill; which was referred to the Committee on International Relations, 
     and in addition to the Committee on Rules, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

                             March 21, 1996

         Reported from the Committee on International Relations

                             April 16, 1996

  Referral to the Committee on Rules extended for a period ending not 
                       later than April 16, 1996

                             April 16, 1996

Committee on Rules discharged; committed to the Committee of the Whole 
       House on the State of the Union and ordered to be printed

_______________________________________________________________________

                                 A BILL


 
To amend the Foreign Assistance Act of 1961 and the Arms Export Control 
  Act to make improvements to certain defense and security assistance 
provisions under those Acts, to authorize the transfer of naval vessels 
         to certain foreign countries, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. TABLE OF CONTENTS.

    The table of contents of this Act is as follows:

Sec. 1. Table of contents.
                TITLE I--DEFENSE AND SECURITY ASSISTANCE

               Chapter 1--Military And Related Assistance

Sec. 101. Terms of loans under the Foreign Military Financing program.
Sec. 102. Additional requirements under the Foreign Military Financing 
                            program.
Sec. 103. Drawdown special authorities.
Sec. 104. Transfer of excess defense articles.
Sec. 105. Excess defense articles for certain European countries.
        Chapter 2--International Military Education and Training

Sec. 111. Assistance for Indonesia.
Sec. 112. Additional requirements.
                  Chapter 3--Antiterrorism Assistance

Sec. 121. Antiterrorism training assistance.
Sec. 122. Research and development expenses.
                Chapter 4--Narcotics Control Assistance

Sec. 131. Additional requirements.
Sec. 132. Notification requirement.
Sec. 133. Waiver of restrictions for narcotics-related economic 
                            assistance.
                      Chapter 5--Other Provisions

Sec. 141. Standardization of congressional review procedures for arms 
                            transfers.
Sec. 142. Standardization of third country transfers of defense 
                            articles.
Sec. 143. Increased standardization, rationalization, and 
                            interoperability of assistance and sales 
                            programs.
Sec. 144. Definition of significant military equipment.
Sec. 145. Elimination of annual reporting requirement relating to the 
                            Special Defense Acquisition Fund.
Sec. 146. Cost of leased defense articles that have been lost or 
                            destroyed.
Sec. 147. Designation of major non-NATO allies.
Sec. 148. Certification thresholds.
Sec. 149. Depleted uranium ammunition.
Sec. 150. End-use monitoring of defense articles and defense services.
Sec. 151. Brokering activities relating to commercial sales of defense 
                            articles and services.
Sec. 152. Return and exchanges of defense articles previously 
                            transferred pursuant to the arms export 
                            control act.
Sec. 153. National security interest determination to waive 
                            reimbursement of depreciation for leased 
                            defense articles.
    TITLE II--TRANSFER OF NAVAL VESSELS TO CERTAIN FOREIGN COUNTRIES

Sec. 201. Authority to transfer naval vessels.
Sec. 202. Costs of transfers.
Sec. 203. Expiration of authority.
Sec. 204. Repair and refurbishment of vessels in United States 
                            shipyards.

                TITLE I--DEFENSE AND SECURITY ASSISTANCE

               CHAPTER 1--MILITARY AND RELATED ASSISTANCE

SEC. 101. TERMS OF LOANS UNDER THE FOREIGN MILITARY FINANCING PROGRAM.

    Section 31(c) of the Arms Export Control Act (22 U.S.C. 2771(c)) is 
amended to read as follows:
    ``(c) Loans available under section 23 shall be provided at rates 
of interest that are not less than the current average market yield on 
outstanding marketable obligations of the United States of comparable 
maturities.''.

SEC. 102. ADDITIONAL REQUIREMENTS UNDER THE FOREIGN MILITARY FINANCING 
              PROGRAM.

    (a) Foreign Military Sales.--Section 21(h) of the Arms Export 
Control Act (22 U.S.C. 2761(h)) is amended--
            (1) in paragraph (1)(A), by inserting ``or the Government 
        of Israel'' after ``North Atlantic Treaty Organization''; and
            (2) in paragraph (2), by striking ``or to any member 
        government of that Organization if that Organization or member 
        government'' and inserting ``, any member government of that 
Organization, or the Government of Israel, if the Organization, member 
government, or Government of Israel, as the case may be,''.
    (b) Audit of Certain Private Firms.--Section 23 of such Act (22 
U.S.C. 2763) is amended by adding at the end the following new 
subsection:
    ``(f) For each fiscal year, the Secretary of Defense, as requested 
by the Director of the Defense Security Assistance Agency, shall 
conduct audits on a nonreimbursable basis of private firms that have 
entered into contracts with foreign governments under which defense 
articles, defense services, or design and construction services are to 
be procured by such firms for such governments from financing under 
this section.''.
    (c) Notification Requirement With Respect to Cash Flow Financing.--
Section 23 of such Act (22 U.S.C. 2763), as amended by this Act, is 
further amended by adding at the end the following new subsection:
    ``(g)(1) For each country and international organization that has 
been approved for cash flow financing under this section, any letter of 
offer and acceptance or other purchase agreement, or any amendment 
thereto, for a procurement of defense articles, defense services, or 
design and construction services in excess of $100,000,000 that is to 
be financed in whole or in part with funds made available under this 
Act or the Foreign Assistance Act of 1961 shall be submitted to the 
congressional committees specified in section 634A(a) of the Foreign 
Assistance Act of 1961 in accordance with the procedures applicable to 
reprogramming notifications under that section.
    ``(2) For purposes of this subsection, the term `cash flow 
financing' has the meaning given such term in the second subsection (d) 
of section 25.''.
    (d) Limitations on Use of Funds for Direct Commercial Contracts.--
Section 23 of such Act (22 U.S.C. 2763), as amended by this Act, is 
further amended by adding at the end the following new subsection:
    ``(h) Of the amounts made available for a fiscal year to carry out 
this section, not more than $100,000,000 for such fiscal year may be 
made available for countries other than Israel and Egypt for the 
purpose of financing the procurement of defense articles, defense 
services, and design and construction services that are not sold by the 
United States Government under this Act.''.
    (e) Annual Estimate and Justification for Sales Program.--Section 
25 of such Act (22 U.S.C. 2765) is amended--
            (1) by striking the ``and'' at the end of paragraph (11);
            (2) by redesignating paragraph (12) as paragraph (13); and
            (3) by inserting after paragraph (11) the following new 
        paragraph:
            ``(12)(A) a detailed accounting of all articles, services, 
        credits, guarantees, or any other form of assistance furnished 
        by the United States to each country and international 
        organization, including payments to the United Nations, during 
        the preceding fiscal year for the detection and clearance of 
        landmines, including activities relating to the furnishing of 
        education, training, and technical assistance for the detection 
        and clearance of landmines; and
            ``(B) for each provision of law making funds available or 
        authorizing appropriations for demining activities described in 
        subparagraph (A), an analysis and description of the objectives 
        and activities undertaken during the preceding fiscal year, 
        including the number of personnel involved in performing such 
        activities; and''.

SEC. 103. DRAWDOWN SPECIAL AUTHORITIES.

    (a) Unforeseen Emergency Drawdown.--Section 506(a)(1) of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2318(a)(1)) is amended by 
striking ``$75,000,000'' and inserting ``$100,000,000''.
    (b) Additional Drawdown.--Section 506 of such Act (22 U.S.C. 2318) 
is amended--
            (1) in subsection (a)(2)(A), by striking ``defense articles 
        from the stocks'' and all that follows and inserting the 
        following: ``articles and services from the inventory and 
        resources of any agency of the United States Government and 
        military education and training from the Department of Defense, 
        the President may direct the drawdown of such articles, 
        services, and military education and training--
                    ``(i) for the purposes and under the authorities 
                of--
                            ``(I) chapter 8 of part I (relating to 
                        international narcotics control assistance);
                            ``(II) chapter 9 of part I (relating to 
                        international disaster assistance); or
                            ``(III) the Migration and Refugee 
                        Assistance Act of 1962; or
                    ``(ii) for the purpose of providing such articles, 
                services, and military education and training to 
                Vietnam, Cambodia, and Laos as the President determines 
                are necessary--
                            ``(I) to support cooperative efforts to 
                        locate and repatriate members of the United 
                        States Armed Forces and civilians employed 
                        directly or indirectly by the United States 
                        Government who remain unaccounted for from the 
                        Vietnam War; and
                            ``(II) to ensure the safety of United 
                        States Government personnel engaged in such 
                        cooperative efforts and to support Department 
                        of Defense-sponsored humanitarian projects 
                        associated with such efforts.'';
            (2) in subsection (a)(2)(B), by striking ``$75,000,000'' 
        and all that follows and inserting ``$150,000,000 in any fiscal 
        year of such articles, services, and military education and 
        training may be provided pursuant to subparagraph (A) of this 
        paragraph--
                    ``(i) not more than $75,000,000 of which may be 
                provided from the drawdown from the inventory and 
                resources of the Department of Defense;
                    ``(ii) not more than $75,000,000 of which may be 
                provided pursuant to clause (i)(I) of such 
                subparagraph; and
                    ``(iii) not more than $15,000,000 of which may be 
                provided to Vietnam, Cambodia, and Laos pursuant to 
                clause (ii) of such subparagraph.''; and
            (3) in subsection (b)(1), by adding at the end the 
        following: ``In the case of drawdowns authorized by subclauses 
        (I) and (III) of subsection (a)(2)(A)(i), notifications shall 
        be provided to those committees at least 15 days in advance of 
        the drawdowns in accordance with the procedures applicable to 
        reprogramming notifications under section 634A.''.
    (c) Notice to Congress of Exercise of Special Authorities.--Section 
652 of such Act (22 U.S.C. 2411) is amended by striking ``prior to the 
date'' and inserting ``before''.

SEC. 104. TRANSFER OF EXCESS DEFENSE ARTICLES.

    (a) In General.--Section 516 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2321j) is amended to read as follows:

``SEC. 516. AUTHORITY TO TRANSFER EXCESS DEFENSE ARTICLES.

    ``(a) Authorization.--The President is authorized to transfer 
excess defense articles under this section to countries for which 
receipt of such articles was justified pursuant to the annual 
congressional presentation documents for military assistance programs, 
or for programs under chapter 8 of part I of this Act, submitted under 
section 634 of this Act, or for which receipt of such articles was 
separately justified to the Congress, for the fiscal year in which the 
transfer is authorized.
    ``(b) Limitations on Transfers.--The President may transfer excess 
defense articles under this section only if--
            ``(1) such articles are drawn from existing stocks of the 
        Department of Defense;
            ``(2) funds available to the Department of Defense for the 
        procurement of defense equipment are not expended in connection 
        with the transfer;
            ``(3) the transfer of such articles will not have an 
        adverse impact on the military readiness of the United States;
            ``(4) with respect to a proposed transfer of such articles 
        on a grant basis, such a transfer is preferable to a transfer 
        on a sales basis, after taking into account the potential 
        proceeds from, and likelihood of, such sales, and the 
        comparative foreign policy benefits that may accrue to the 
        United States as the result of a transfer on either a grant or 
        sales basis;
            ``(5) the President determines that the transfer of such 
        articles will not have an adverse impact on the national 
        technology and industrial base and, particularly, will not 
        reduce the opportunities of entities in the national technology 
        and industrial base to sell new or used equipment to the 
        countries to which such articles are transferred; and
            ``(6) the transfer of such articles is consistent with the 
        policy framework for the Eastern Mediterranean established 
        under section 620C of this Act.
    ``(c) Terms of Transfers.--
            ``(1) No cost to recipient country.--Excess defense 
        articles may be transferred under this section without cost to 
        the recipient country.
            ``(2) Priority.--Notwithstanding any other provision of 
        law, the delivery of excess defense articles under this section 
        to member countries of the North Atlantic Treaty Organization 
        (NATO) on the southern and southeastern flank of NATO and to 
        major non-NATO allies on such southern and southeastern flank 
        shall be given priority to the maximum extent feasible over the 
        delivery of such excess defense articles to other countries.
    ``(d) Waiver of Requirement for Reimbursement of Department of 
Defense Expenses.--Section 632(d) shall not apply with respect to 
transfers of excess defense articles (including transportation and 
related costs) under this section.
    ``(e) Transportation and Related Costs.--
            ``(1) In general.--Except as provided in paragraph (2), 
        funds available to the Department of Defense may not be 
        expended for crating, packing, handling, and transportation of 
        excess defense articles transferred under the authority of this 
        section.
            ``(2) Exception.--The President may provide for the 
        transportation of excess defense articles without charge to a 
        country for the costs of such transportation if--
                    ``(A) it is determined that it is in the national 
                interest of the United States to do so;
                    ``(B) the recipient is a developing country 
                receiving less than $10,000,000 of assistance under 
                chapter 5 of part II of this Act (relating to 
                international military education and training) or 
                section 23 of the Arms Export Control Act (22 U.S.C. 
                2763; relating to the Foreign Military Financing 
                program) in the fiscal year in which the transportation 
                is provided;
                    ``(C) the total weight of the transfer does not 
                exceed 25,000 pounds; and
                    ``(D) such transportation is accomplished on a 
                space available basis.
    ``(f) Advance Notification to Congress for Transfer of Certain 
Excess Defense Articles.--
            ``(1) In general.--The President may not transfer excess 
        defense articles that are significant military equipment (as 
        defined in section 47(9) of the Arms Export Control Act) or 
        excess defense articles valued (in terms of original 
        acquisition cost) at $7,000,000 or more, under this section or 
        under the Arms Export Control Act (22 U.S.C. 2751 et seq.) 
        until 15 days after the date on which the President has 
        provided notice of the proposed transfer to the congressional 
        committees specified in section 634A(a) in accordance with 
        procedures applicable to reprogramming notifications under that 
        section.
            ``(2) Contents.--Such notification shall include--
                    ``(A) a statement outlining the purposes for which 
                the article is being provided to the country, including 
                whether such article has been previously provided to 
                such country;
                    ``(B) an assessment of the impact of the transfer 
                on the military readiness of the United States;
                    ``(C) an assessment of the impact of the transfer 
                on the national technology and industrial base and, 
                particularly, the impact on opportunities of entities 
                in the national technology and industrial base to sell 
                new or used equipment to the countries to which such 
                articles are to be transferred; and
                    ``(D) a statement describing the current value of 
                such article and the value of such article at 
                acquisition.
    ``(g) Aggregate Annual Limitation.--
            ``(1) In general.--The aggregate value of excess defense 
        articles transferred to countries under this section in any 
        fiscal year may not exceed $350,000,000.
            ``(2) Effective date.--The limitation contained in 
        paragraph (1) shall apply only with respect to fiscal years 
        beginning after fiscal year 1996.
    ``(h) Congressional Presentation Documents.--Documents described in 
subsection (a) justifying the transfer of excess defense articles shall 
include an explanation of the general purposes of providing excess 
defense articles as well as a table which provides an aggregate annual 
total of transfers of excess defense articles in the preceding year by 
country in terms of offers and actual deliveries and in terms of 
acquisition cost and current value. Such table shall indicate whether 
such excess defense articles were provided on a grant or sale basis.
    ``(i) Excess Coast Guard Property.--For purposes of this section, 
the term `excess defense articles' shall be deemed to include excess 
property of the Coast Guard, and the term `Department of Defense' shall 
be deemed, with respect to such excess property, to include the Coast 
Guard.''.
    (b) Conforming Amendments.--
            (1) Arms export control act.--Section 21(k) of the Arms 
        Export Control Act (22 U.S.C. 2761(k)) is amended by striking 
        ``the President shall'' and all that follows and inserting the 
        following: ``the President shall determine that the sale of 
        such articles will not have an adverse impact on the national 
        technology and industrial base and, particularly, will not 
        reduce the opportunities of entities in the national technology 
        and industrial base to sell new or used equipment to the 
        countries to which such articles are transferred.''.
            (2) Repeals.--The following provisions of law are hereby 
        repealed:
                    (A) Section 502A of the Foreign Assistance Act of 
                1961 (22 U.S.C. 2303).
                    (B) Sections 517 through 520 of the Foreign 
                Assistance Act of 1961 (22 U.S.C. 2321k through 2321n).
                    (C) Section 31(d) of the Arms Export Control Act 
                (22 U.S.C. 2771(d)).

SEC. 105. EXCESS DEFENSE ARTICLES FOR CERTAIN EUROPEAN COUNTRIES.

    Notwithstanding section 516(e) of the Foreign Assistance Act of 
1961, during each of the fiscal years 1996 and 1997, funds available to 
the Department of Defense may be expended for crating, packing, 
handling, and transportation of excess defense articles transferred 
under the authority of section 516 of such Act to countries that are 
eligible to participate in the Partnership for Peace and that are 
eligible for assistance under the Support for East European Democracy 
(SEED) Act of 1989.

        CHAPTER 2--INTERNATIONAL MILITARY EDUCATION AND TRAINING

SEC. 111. ASSISTANCE FOR INDONESIA.

    Funds made available for fiscal years 1996 and 1997 to carry out 
chapter 5 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 
2347 et seq.) may be obligated for Indonesia only for expanded military 
and education training that meets the requirements of clauses (i) 
through (iv) of the second sentence of section 541 of such Act (22 
U.S.C. 2347).

SEC. 112. ADDITIONAL REQUIREMENTS.

    (a) General Authority.--Section 541 of the Foreign Assistance Act 
of 1961 (22 U.S.C. 2347) is amended in the second sentence in the 
matter preceding clause (i) by inserting ``and individuals who are not 
members of the government'' after ``legislators''.
    (b) Exchange Training.--Section 544 of such Act (22 U.S.C. 2347c) 
is amended--
            (1) by striking ``In carrying out this chapter'' and 
        inserting ``(a) In carrying out this chapter''; and
            (2) by adding at the end the following new subsection:
    ``(b) The President may provide for the attendance of foreign 
military and civilian defense personnel at flight training schools and 
programs (including test pilot schools) in the United States without 
charge, and without charge to funds available to carry out this chapter 
(notwithstanding section 632(d) of this Act), if such attendance is 
pursuant to an agreement providing for the exchange of students on a 
one-for-one basis each fiscal year between those United States flight 
training schools and programs (including test pilot schools) and 
comparable flight training schools and programs of foreign 
countries.''.
    (c) Assistance for Certain High-Income Foreign Countries.--
            (1) Amendment to the foreign assistance act of 1961.--
        Chapter 5 of part II of such Act (22 U.S.C. 2347 et seq.) is 
        amended by adding at the end the following new section:

``SEC. 546. PROHIBITION ON GRANT ASSISTANCE FOR CERTAIN HIGH INCOME 
              FOREIGN COUNTRIES.

    ``(a) In General.--None of the funds made available for a fiscal 
year for assistance under this chapter may be made available for 
assistance on a grant basis for any of the high-income foreign 
countries described in subsection (b) for military education and 
training of military and related civilian personnel of such country.
    ``(b) High-Income Foreign Countries Described.--The high-income 
foreign countries described in this subsection are Austria, Finland, 
the Republic of Korea, Singapore, and Spain.''.
            (2) Amendment to the arms export control act.--Section 
        21(a)(1)(C) of the Arms Export Control Act (22 U.S.C. 2761) is 
        amended by inserting ``or to any high-income foreign country 
        (as described in that chapter)'' after ``Foreign Assistance Act 
        of 1961''.

                  CHAPTER 3--ANTITERRORISM ASSISTANCE

SEC. 121. ANTITERRORISM TRAINING ASSISTANCE.

    (a) In General.--Section 571 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2349aa) is amended by striking ``Subject to the provisions 
of this chapter'' and inserting ``Notwithstanding any other provision 
of law that restricts assistance to foreign countries (other than 
sections 502B and 620A of this Act)''.
    (b) Limitations.--Section 573 of such Act (22 U.S.C. 2349aa-2) is 
amended--
            (1) in the heading, by striking ``Specific Authorities 
        and'';
            (2) by striking subsection (a);
            (3) by redesignating subsections (b) through (f) as 
        subsections (a) through (e), respectively; and
            (4) in subsection (c) (as redesignated)--
                    (A) by striking paragraphs (1) and (2);
                    (B) by redesignating paragraphs (3) through (5) as 
                paragraphs (1) through (3), respectively; and
                    (C) by amending paragraph (2) (as redesignated) to 
                read as follows:
    ``(2)(A) Except as provided in subparagraph (B), funds made 
available to carry out this chapter shall not be made available for the 
procurement of weapons and ammunition.
    ``(B) Subparagraph (A) shall not apply to small arms and ammunition 
in categories I and III of the United States Munitions List that are 
integrally and directly related to antiterrorism training provided 
under this chapter if, at least 15 days before obligating those funds, 
the President notifies the appropriate congressional committees 
specified in section 634A of this Act in accordance with the procedures 
applicable to reprogramming notifications under such section.
    ``(C) The value (in terms of original acquisition cost) of all 
equipment and commodities provided under this chapter in any fiscal 
year may not exceed 25 percent of the funds made available to carry out 
this chapter for that fiscal year.''.
    (c) Annual Report.--Section 574 of such Act (22 U.S.C. 2349aa-3) is 
hereby repealed.
    (d) Technical Corrections.--Section 575 (22 U.S.C. 2349aa-4) and 
section 576 (22 U.S.C. 2349aa-5) of such Act are redesignated as 
sections 574 and 575, respectively.

SEC. 122. RESEARCH AND DEVELOPMENT EXPENSES.

    Funds made available for fiscal years 1996 and 1997 to carry out 
chapter 8 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 
2349aa et seq.; relating to antiterrorism assistance) may be made 
available to the Technical Support Working Group of the Department of 
State for research and development expenses related to contraband 
detection technologies or for field demonstrations of such technologies 
(whether such field demonstrations take place in the United States or 
outside the United States).

                CHAPTER 4--NARCOTICS CONTROL ASSISTANCE

SEC. 131. ADDITIONAL REQUIREMENTS.

    (a) Policy and General Authorities.--Section 481(a) of the Foreign 
Assistance Act (22 U.S.C. 2291(a)) is amended--
            (1) in paragraph (1)--
                    (A) by redesignating subparagraphs (D) through (F) 
                as subparagraphs (E) through (G), respectively; and
                    (B) by inserting after subparagraph (C) the 
                following new subparagraph:
            ``(D) International criminal activities, particularly 
        international narcotics trafficking, money laundering, and 
        corruption, endanger political and economic stability and 
        democratic development, and assistance for the prevention and 
        suppression of international criminal activities should be a 
        priority for the United States.''; and
            (2) in paragraph (4), by adding before the period at the 
        end the following: ``, or for other anticrime purposes''.
    (b) Contributions and Reimbursement.--Section 482(c) of that Act 
(22 U.S.C. 2291a(c)) is amended--
            (1) by striking ``Contribution by Recipient Country.--To'' 
        and inserting ``Contributions and Reimbursement.--(1) To''; and
            (2) by adding at the end the following new paragraphs:
    ``(2)(A) The President is authorized to accept contributions from 
foreign governments to carry out the purposes of this chapter. Such 
contributions shall be deposited as an offsetting collection to the 
applicable appropriation account and may be used under the same terms 
and conditions as funds appropriated pursuant to this chapter.
    ``(B) At the time of submission of the annual congressional 
presentation documents required by section 634(a), the President shall 
provide a detailed report on any contributions received in the 
preceding fiscal year, the amount of such contributions, and the 
purposes for which such contributions were used.
    ``(3) The President is authorized to provide assistance under this 
chapter on a reimbursable basis. Such reimbursements shall be deposited 
as an offsetting collection to the applicable appropriation and may be 
used under the same terms and conditions as funds appropriated pursuant 
to this chapter.''.
    (c) Implementation of Law Enforcement Assistance.--Section 482 of 
such Act (22 U.S.C. 2291a) is amended by adding at the end the 
following new subsections:
    ``(f) Treatment of Funds.--Funds transferred to and consolidated 
with funds appropriated pursuant to this chapter may be made available 
on such terms and conditions as are applicable to funds appropriated 
pursuant to this chapter. Funds so transferred or consolidated shall be 
apportioned directly to the bureau within the Department of State 
responsible for administering this chapter.
    ``(g) Excess Property.--For purposes of this chapter, the Secretary 
of State may use the authority of section 608, without regard to the 
restrictions of such section, to receive nonlethal excess property from 
any agency of the United States Government for the purpose of providing 
such property to a foreign government under the same terms and 
conditions as funds authorized to be appropriated for the purposes of 
this chapter.''.

SEC. 132. NOTIFICATION REQUIREMENT.

    (a) In General.--The authority of section 1003(d) of the National 
Narcotics Control Leadership Act of 1988 (21 U.S.C. 1502(d)) may be 
exercised with respect to funds authorized to be appropriated pursuant 
to the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.) and with 
respect to the personnel of the Department of State only to the extent 
that the appropriate congressional committees have been notified 15 
days in advance in accordance with the reprogramming procedures 
applicable under section 634A of that Act (22 U.S.C. 2394).
    (b) Definition.--For purposes of this section, the term 
``appropriate congressional committees'' means the Committee on 
International Relations and the Committee on Appropriations of the 
House of Representatives and the Committee on Foreign Relations and the 
Committee on Appropriations of the Senate.

SEC. 133. WAIVER OF RESTRICTIONS FOR NARCOTICS-RELATED ECONOMIC 
              ASSISTANCE.

    For each of the fiscal years 1996 and 1997, narcotics-related 
assistance under part I of the Foreign Assistance Act of 1961 (22 
U.S.C. 2151 et seq.) may be provided notwithstanding any other 
provision of law that restricts assistance to foreign countries (other 
than section 490(e) or section 502B of that Act (22 U.S.C. 2291j(e) and 
2304)) if, at least 15 days before obligating funds for such 
assistance, the President notifies the appropriate congressional 
committees (as defined in section 481(e) of that Act (22 U.S.C. 
2291(e))) in accordance with the procedures applicable to reprogramming 
notifications under section 634A of that Act (22 U.S.C. 2394).

                      CHAPTER 5--OTHER PROVISIONS

SEC. 141. STANDARDIZATION OF CONGRESSIONAL REVIEW PROCEDURES FOR ARMS 
              TRANSFERS.

    (a) Third Country Transfers Under FMS Sales.--Section 3(d)(2) of 
the Arms Export Control Act (22 U.S.C. 2753(d)(2)) is amended--
            (1) in subparagraph (A), by striking ``, as provided for in 
        sections 36(b)(2) and 36(b)(3) of this Act'';
            (2) in subparagraph (B), by striking ``law'' and inserting 
        ``joint resolution''; and
            (3) by adding at the end the following:
    ``(C) If the President states in his certification under 
subparagraph (A) or (B) that an emergency exists which requires that 
consent to the proposed transfer become effective immediately in the 
national security interests of the United States, thus waiving the 
requirements of that subparagraph, the President shall set forth in the 
certification a detailed justification for his determination, including 
a description of the emergency circumstances which necessitate 
immediate consent to the transfer and a discussion of the national 
security interests involved.
    ``(D)(i) Any joint resolution under this paragraph shall be 
considered in the Senate in accordance with the provisions of section 
601(b) of the International Security Assistance and Arms Export Control 
Act of 1976.
    ``(ii) For the purpose of expediting the consideration and 
enactment of joint resolutions under this paragraph, a motion to 
proceed to the consideration of any such joint resolution after it has 
been reported by the appropriate committee shall be treated as highly 
privileged in the House of Representatives.''.
    (b) Third Country Transfers Under Commercial Sales.--Section 
3(d)(3) of such Act (22 U.S.C. 2753(d)(3)) is amended--
            (1) by inserting ``(A)'' after ``(3)'';
            (2) in the first sentence--
                    (A) by striking ``at least 30 calendar days''; and
                    (B) by striking ``report'' and inserting 
                ``certification''; and
            (3) by striking the last sentence and inserting the 
        following: ``Such certification shall be submitted--
            ``(i) at least 15 calendar days before such consent is 
        given in the case of a transfer to a country which is a member 
        of the North Atlantic Treaty Organization or Australia, Japan, 
        or New Zealand; and
            ``(ii) at least 30 calendar days before such consent is 
        given in the case of a transfer to any other country,
unless the President states in his certification that an emergency 
exists which requires that consent to the proposed transfer become 
effective immediately in the national security interests of the United 
States. If the President states in his certification that such an 
emergency exists (thus waiving the requirements of clause (i) or (ii), 
as the case may be, and of subparagraph (B)) the President shall set 
forth in the certification a detailed justification for his 
determination, including a description of the emergency circumstances 
which necessitate that consent to the proposed transfer become 
effective immediately and a discussion of the national security 
interests involved.
    ``(B) Consent to a transfer subject to subparagraph (A) shall 
become effective after the end of the 15-day or 30-day period specified 
in subparagraph (A)(i) or (ii), as the case may be, only if the 
Congress does not enact, within that period, a joint resolution 
prohibiting the proposed transfer.
    ``(C)(i) Any joint resolution under this paragraph shall be 
considered in the Senate in accordance with the provisions of section 
601(b) of the International Security Assistance and Arms Export Control 
Act of 1976.
    ``(ii) For the purpose of expediting the consideration and 
enactment of joint resolutions under this paragraph, a motion to 
proceed to the consideration of any such joint resolution after it has 
been reported by the appropriate committee shall be treated as highly 
privileged in the House of Representatives.''.
    (c) Commercial Sales.--Section 36(c)(2) of such Act (22 U.S.C. 
2776(c)(2)) is amended by amending subparagraphs (A) and (B) to read as 
follows:
            ``(A) in the case of a license for an export to the North 
        Atlantic Treaty Organization, any member country of that 
        Organization or Australia, Japan, or New Zealand, shall not be 
        issued until at least 15 calendar days after the Congress 
        receives such certification, and shall not be issued then if 
        the Congress, within that 15-day period, enacts a joint 
        resolution prohibiting the proposed export; and
            ``(B) in the case of any other license, shall not be issued 
        until at least 30 calendar days after the Congress receives 
        such certification, and shall not be issued then if the 
        Congress, within that 30-day period, enacts a joint resolution 
        prohibiting the proposed export.''.
    (d) Commercial Manufacturing Agreements.--Section 36(d) of such Act 
(22 U.S.C. 2776(d)) is amended--
            (1) by inserting ``(1)'' after ``(d)'';
            (2) by striking ``for or in a country not a member of the 
        North Atlantic Treaty Organization''; and
            (3) by adding at the end the following:
    ``(2) A certification under this subsection shall be submitted--
            ``(A) at least 15 days before approval is given in the case 
        of an agreement for or in a country which is a member of the 
        North Atlantic Treaty Organization or Australia, Japan, or New 
        Zealand; and
            ``(B) at least 30 days before approval is given in the case 
        of an agreement for or in any other country;
unless the President states in his certification that an emergency 
exists which requires the immediate approval of the agreement in the 
national security interests of the United States.
    ``(3) If the President states in his certification that an 
emergency exists which requires the immediate approval of the agreement 
in the national security interests of the United States, thus waiving 
the requirements of paragraph (4), he shall set forth in the 
certification a detailed justification for his determination, including 
a description of the emergency circumstances which necessitate the 
immediate approval of the agreement and a discussion of the national 
security interests involved.
    ``(4) Approval for an agreement subject to paragraph (1) may not be 
given under section 38 if the Congress, within the 15-day or 30-day 
period specified in paragraph (2)(A) or (B), as the case may be, enacts 
a joint resolution prohibiting such approval.
    ``(5)(A) Any joint resolution under paragraph (4) shall be 
considered in the Senate in accordance with the provisions of section 
601(b) of the International Security Assistance and Arms Export Control 
Act of 1976.
    ``(B) For the purpose of expediting the consideration and enactment 
of joint resolutions under paragraph (4), a motion to proceed to the 
consideration of any such joint resolution after it has been reported 
by the appropriate committee shall be treated as highly privileged in 
the House of Representatives.''.
    (e) Government-to-Government Leases.--
            (1) Congressional review period.--Section 62 of such Act 
        (22 U.S.C. 2796a) is amended--
                    (A) in subsection (a), by striking ``Not less than 
                30 days before'' and inserting ``Before'';
                    (B) in subsection (b)--
                            (i) by striking ``determines, and 
                        immediately reports to the Congress'' and 
                        inserting ``states in his certification''; and
                            (ii) by adding at the end of the subsection 
                        the following: ``If the President states in his 
                        certification that such an emergency exists, he 
                        shall set forth in the certification a detailed 
                        justification for his determination, including 
                        a description of the emergency circumstances 
                        which necessitate that the lease be entered 
                        into immediately and a discussion of the 
                        national security interests involved.''; and
                    (C) by adding at the end of the section the 
                following:
    ``(c) The certification required by subsection (a) shall be 
transmitted--
            ``(1) not less than 15 calendar days before the agreement 
        is entered into or renewed in the case of an agreement with the 
        North Atlantic Treaty Organization, any member country of that 
        Organization or Australia, Japan, or New Zealand; and
            ``(2) not less than 30 calendar days before the agreement 
        is entered into or renewed in the case of an agreement with any 
        other organization or country.''.
            (2) Congressional disapproval.--Section 63(a) of such Act 
        (22 U.S.C. 2796b(a)) is amended--
                    (A) by striking ``(a)(1)'' and inserting ``(a)'';
                    (B) by striking out the ``30 calendar days after 
                receiving the certification with respect to that 
                proposed agreement pursuant to section 62(a),'' and 
                inserting in lieu thereof ``the 15-day or 30-day period 
                specified in section 62(c) (1) or (2), as the case may 
                be,''; and
                    (C) by striking paragraph (2).
    (f) Effective Date.--The amendments made by this section apply with 
respect to certifications required to be submitted on or after the date 
of the enactment of this Act.

SEC. 142. STANDARDIZATION OF THIRD COUNTRY TRANSFERS OF DEFENSE 
              ARTICLES.

    Section 3 of the Arms Export Control Act (22 U.S.C. 2753) is 
amended by inserting after subsection (a) the following new subsection:
    ``(b) The consent of the President under paragraph (2) of 
subsection (a) or under paragraph (1) of section 505(a) of the Foreign 
Assistance Act of 1961 (as it relates to subparagraph (B) of such 
paragraph) shall not be required for the transfer by a foreign country 
or international organization of defense articles sold by the United 
States under this Act if--
            ``(1) such articles constitute components incorporated into 
        foreign defense articles;
            ``(2) the recipient is the government of a member country 
        of the North Atlantic Treaty Organization, the Government of 
        Australia, the Government of Japan, or the Government of New 
        Zealand;
            ``(3) the recipient is not a country designated under 
        section 620A of the Foreign Assistance Act of 1961;
            ``(4) the United States-origin components are not--
                    ``(A) significant military equipment (as defined in 
                section 47(9));
                    ``(B) defense articles for which notification to 
                Congress is required under section 36(b); and
                    ``(C) identified by regulation as Missile 
                Technology Control Regime items; and
            ``(5) the foreign country or international organization 
        provides notification of the transfer of the defense articles 
        to the United States Government not later than 30 days after 
        the date of such transfer.''.

SEC. 143. INCREASED STANDARDIZATION, RATIONALIZATION, AND 
              INTEROPERABILITY OF ASSISTANCE AND SALES PROGRAMS.

    Paragraph (6) of section 515(a) of the Foreign Assistance Act of 
1961 (22 U.S.C. 2321i(a)(6)) is amended by striking ``among members of 
the North Atlantic Treaty Organization and with the Armed Forces of 
Japan, Australia, and New Zealand''.

SEC. 144. DEFINITION OF SIGNIFICANT MILITARY EQUIPMENT.

    Section 47 of the Arms Export Control Act (22 U.S.C. 2794) is 
amended--
            (1) in paragraph (7), by striking ``and'' at the end;
            (2) in paragraph (8), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
    ``(9) `significant military equipment' means articles--
            ``(A) for which special export controls are warranted 
        because of the capacity of such articles for substantial 
        military utility or capability; and
            ``(B) identified on the United States Munitions List.''.

SEC. 145. ELIMINATION OF ANNUAL REPORTING REQUIREMENT RELATING TO THE 
              SPECIAL DEFENSE ACQUISITION FUND.

    (a) In General.--Section 53 of the Arms Export Control Act (22 
U.S.C. 2795b) is hereby repealed.
    (b) Conforming Amendment.--Section 51(a)(4) of such Act (22 U.S.C. 
2795(a)(4)) is amended--
            (1) by striking ``(a)''; and
            (2) by striking subparagraph (B).

SEC. 146. COST OF LEASED DEFENSE ARTICLES THAT HAVE BEEN LOST OR 
              DESTROYED.

    Section 61(a)(4) of the Arms Export Control Act (22 U.S.C. 
2796(a)(4)) is amended by striking ``and the replacement cost'' and all 
that follows and inserting the following: ``and, if the articles are 
lost or destroyed while leased--
                    ``(A) in the event the United States intends to 
                replace the articles lost or destroyed, the replacement 
                cost (less any depreciation in the value) of the 
                articles; or
                    ``(B) in the event the United States does not 
                intend to replace the articles lost or destroyed, an 
                amount not less than the actual value (less any 
                depreciation in the value) specified in the lease 
                agreement.''.

SEC. 147. DESIGNATION OF MAJOR NON-NATO ALLIES.

    (a) Designation.--
            (1) Notice to congress.--Chapter 2 of part II of the 
        Foreign Assistance Act of 1961 (22 U.S.C. 2311 et seq.), as 
        amended by this Act, is further amended by adding at the end 
        the following new section:

``SEC. 517. DESIGNATION OF MAJOR NON-NATO ALLIES.

    ``(a) Notice to Congress.--The President shall notify the Congress 
in writing at least 30 days before--
            ``(1) designating a country as a major non-NATO ally for 
        purposes of this Act and the Arms Export Control Act (22 U.S.C. 
        2751 et seq.); or
            ``(2) terminating such a designation.
    ``(b) Initial Designations.--Australia, Egypt, Israel, Japan, the 
Republic of Korea, and New Zealand shall be deemed to have been so 
designated by the President as of the effective date of this section, 
and the President is not required to notify the Congress of such 
designation of those countries.''.
            (2) Definition.--Section 644 of such Act (22 U.S.C. 2403) 
        is amended by adding at the end the following:
    ``(q) `Major non-NATO ally' means a country which is designated in 
accordance with section 517 as a major non-NATO ally for purposes of 
this Act and the Arms Export Control Act (22 U.S.C. 2751 et seq.).''.
            (3) Existing definitions.--(A) The last sentence of section 
        21(g) of the Arms Export Control Act (22 U.S.C. 2761(g)) is 
        repealed.
            (B) Section 65(d) of such Act (22 U.S.C. 2796d(d)) is 
        amended--
                    (i) by striking ``or major non-NATO''; and
                    (ii) by striking out ``or a'' and all that follows 
                through ``Code''.
    (b) Cooperative Training Agreements.--Section 21(g) of the Arms 
Export Control Act (22 U.S.C. 2761(g)) is amended in the first sentence 
by striking ``similar agreements'' and all that follows through ``other 
countries'' and inserting ``similar agreements with countries''.

SEC. 148. CERTIFICATION THRESHOLDS.

    (a) Increase in Dollar Thresholds.--The Arms Export Control Act (22 
U.S.C. 2751 et seq.) is amended--
            (1) in section 3(d) (22 U.S.C. 2753(d))--
                    (A) in paragraphs (1) and (3), by striking 
                ``$14,000,000'' each place it appears and inserting 
                ``$25,000,000''; and
                    (B) in paragraphs (1) and (3), by striking 
                ``$50,000,000'' each place it appears and inserting 
                ``$75,000,000'';
            (2) in section 36 (22 U.S.C. 2776)--
                    (A) in subsections (b)(1), (b)(5)(C), and (c)(1), 
                by striking ``$14,000,000'' each place it appears and 
                inserting ``$25,000,000'';
                    (B) in subsections (b)(1), (b)(5)(C), and (c)(1), 
                by striking ``$50,000,000'' each place it appears and 
                inserting ``$75,000,000''; and
                    (C) in subsections (b)(1) and (b)(5)(C), by 
                striking ``$200,000,000'' each place it appears and 
                inserting ``$300,000,000''; and
            (3) in section 63(a) (22 U.S.C. 2796b(a))--
                    (A) by striking ``$14,000,000'' and inserting 
                ``$25,000,000''; and
                    (B) by striking ``$50,000,000'' and inserting 
                ``$75,000,000''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to certifications submitted on or after the date of the 
enactment of this Act.

SEC. 149. DEPLETED URANIUM AMMUNITION.

    Chapter 1 of part III of the Foreign Assistance Act of 1961 (22 
U.S.C. 2370 et seq.), as amended by this Act, is further amended by 
adding at the end the following new section:

``SEC. 620H. DEPLETED URANIUM AMMUNITION.

    ``(a) Prohibition.--Except as provided in subsection (b), none of 
the funds made available to carry out this Act or any other Act may be 
made available to facilitate in any way the sale of M-833 antitank 
shells or any comparable antitank shells containing a depleted uranium 
penetrating component to any country other than--
            ``(1) a country that is a member of the North Atlantic 
        Treaty Organization;
            ``(2) a country that has been designated as a major non-
        NATO ally (as defined in section 644(q)); or
            ``(3) Taiwan.
    ``(b) Exception.--The prohibition contained in subsection (a) shall 
not apply with respect to the use of funds to facilitate the sale of 
antitank shells to a country if the President determines that to do so 
is in the national security interest of the United States.''.

SEC. 150. END-USE MONITORING OF DEFENSE ARTICLES AND DEFENSE SERVICES.

    (a) In General.--The Arms Export Control Act (22 U.S.C. 2751 et 
seq.) is amended by inserting after chapter 3 the following new 
chapter:

   ``CHAPTER 3A--END-USE MONITORING OF DEFENSE ARTICLES AND DEFENSE 
                                SERVICES

``SEC. 40A. END-USE MONITORING OF DEFENSE ARTICLES AND DEFENSE 
              SERVICES.

    ``(a) Establishment of Monitoring Program.--
            ``(1) In general.--In order to improve accountability with 
        respect to defense articles and defense services sold, leased, 
        or exported under this Act or the Foreign Assistance Act of 
        1961 (22 U.S.C. 2151 et seq.), the President shall establish a 
        program which provides for the end-use monitoring of such 
        articles and services.
            ``(2) Requirements of program.--To the extent practicable, 
        such program--
                    ``(A) shall provide for the end-use monitoring of 
                defense articles and defense services in accordance 
                with the standards that apply for identifying high-risk 
                exports for regular end-use verification developed 
                under section 38(g)(7) of this Act (commonly referred 
                to as the `Blue Lantern' program); and
                    ``(B) shall be designed to provide reasonable 
                assurance that--
                            ``(i) the recipient is complying with the 
                        requirements imposed by the United States 
                        Government with respect to use, transfers, and 
                        security of defense articles and defense 
                        services; and
                            ``(ii) such articles and services are being 
                        used for the purposes for which they are 
                        provided.
    ``(b) Conduct of Program.--In carrying out the program established 
under subsection (a), the President shall ensure that the program--
            ``(1) provides for the end-use verification of defense 
        articles and defense services that incorporate sensitive 
        technology, defense articles and defense services that are 
        particularly vulnerable to diversion or other misuse, or 
        defense articles or defense services whose diversion or other 
        misuse could have significant consequences; and
            ``(2) prevents the diversion (through reverse engineering 
        or other means) of technology incorporated in defense articles.
    ``(c) Report to Congress.--Not later than 6 months after the date 
of the enactment of this section, and annually thereafter as a part of 
the annual congressional presentation documents submitted under section 
634 of the Foreign Assistance Act of 1961, the President shall transmit 
to the Congress a report describing the actions taken to implement this 
section, including a detailed accounting of the costs and number of 
personnel associated with the monitoring program.
    ``(d) Third Country Transfers.--For purposes of this section, 
defense articles and defense services sold, leased, or exported under 
this Act or the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.) 
includes defense articles and defense services that are transferred to 
a third country or other third party.''.
    (b) Effective Date.--Section 40A of the Arms Export Control Act, as 
added by subsection (a), applies with respect to defense articles and 
defense services provided before or after the date of the enactment of 
this Act.

SEC. 151. BROKERING ACTIVITIES RELATING TO COMMERCIAL SALES OF DEFENSE 
              ARTICLES AND SERVICES.

    (a) In General.--Section 38(b)(1)(A) of the Arms Export Control Act 
(22 U.S.C. 2778(b)(1)(A)) is amended--
            (1) in the first sentence, by striking ``As prescribed in 
        regulations'' and inserting ``(i) As prescribed in 
        regulations''; and
            (2) by adding at the end the following new clause:
    ``(ii)(I) As prescribed in regulations issued under this section, 
every person (other than an officer or employee of the United States 
Government acting in official capacity) who engages in the business of 
brokering activities with respect to the manufacture, export, import, 
or transfer of any defense article or defense service designated by the 
President under subsection (a)(1), or in the business of brokering 
activities with respect to the manufacture, export, import, or transfer 
of any foreign defense article or defense service (as defined in 
subclause (IV)), shall register with the United States Government 
agency charged with the administration of this section, and shall pay a 
registration fee which shall be prescribed by such regulations.
    ``(II) Such brokering activities shall include the financing, 
transportation, freight forwarding, or taking of any other action that 
facilitates the manufacture, export, or import of a defense article or 
defense service.
    ``(III) No person may engage in the business of brokering 
activities described in subclause (I) without a license, issued in 
accordance with this Act, except that no license shall be required for 
such activities undertaken by or for an agency of the United States 
Government--
            ``(aa) for use by an agency of the United States 
        Government; or
            ``(bb) for carrying out any foreign assistance or sales 
        program authorized by law and subject to the control of the 
        President by other means.
    ``(IV) For purposes of this clause, the term `foreign defense 
article or defense service' includes any non-United States defense 
article or defense service of a nature described on the United States 
Munitions List regardless of whether such article or service is of 
United States origin or whether such article or service contains United 
States origin components.''.
    (b) Effective Date.--Section 38(b)(1)(A)(ii) of the Arms Export 
Control Act, as added by subsection (a), shall apply with respect to 
brokering activities engaged in beginning on or after 120 days after 
the enactment of this Act.

SEC. 152. RETURN AND EXCHANGES OF DEFENSE ARTICLES PREVIOUSLY 
              TRANSFERRED PURSUANT TO THE ARMS EXPORT CONTROL ACT.

    (a) Repair of Defense Articles.--Section 21 of the Arms Export 
Control Act (22 U.S.C. 2761) is amended by adding at the end the 
following new subsection:
    ``(l) Repair of defense articles.--
            ``(1) In general.--The President may acquire a repairable 
        defense article from a foreign country or international 
        organization if such defense article--
                    ``(A) previously was transferred to such country or 
                organization under this Act;
                    ``(B) is not an end item; and
                    ``(C) will be exchanged for a defense article of 
                the same type that is in the stocks of the Department 
                of Defense.
            ``(2) Limitation.--The President may exercise the authority 
        provided in paragraph (1) only to the extent that the 
        Department of Defense--
                    ``(A)(i) has a requirement for the defense article 
                being returned; and
                    ``(ii) has available sufficient funds authorized 
                and appropriated for such purpose; or
                    ``(B)(i) is accepting the return of the defense 
                article for subsequent transfer to another foreign 
                government or international organization pursuant to a 
                letter of offer and acceptance implemented in 
                accordance with this Act; and
                    ``(ii) has available sufficient funds provided by 
                or on behalf of such other foreign government or 
                international organization pursuant to a letter of 
                offer and acceptance implemented in accordance with 
                this Act.
            ``(3) Requirement.--(A) The foreign government or 
        international organization receiving a new or repaired defense 
        article in exchange for a repairable defense article pursuant 
        to paragraph (1) shall, upon the acceptance by the United 
        States Government of the repairable defense article being 
        returned, be charged the total cost associated with the repair 
        and replacement transaction.
            ``(B) The total cost charged pursuant to subparagraph (A) 
        shall be the same as that charged the United States Armed 
        Forces for a similar repair and replacement transaction, plus 
        an administrative surcharge in accordance with subsection 
        (e)(1)(A) of this section.
            ``(4) Relationship to certain other provisions of law.--The 
        authority of the President to accept the return of a repairable 
        defense article as provided in subsection (a) shall not be 
        subject to chapter 137 of title 10, United States Code, or any 
        other provision of law relating to the conclusion of 
        contracts.''.
    (b) Return of Defense Articles.--Section 21 of such Act (22 U.S.C. 
2761), as amended by this Act, is further amended by adding at the end 
the following new subsection:
    ``(m) Return of Defense Articles.--
            ``(1) In general.--The President may accept the return of a 
        defense article from a foreign country or international 
        organization if such defense article--
                    ``(A) previously was transferred to such country or 
                organization under this Act;
                    ``(B) is not significant military equipment (as 
                defined in section 47(9) of this Act); and
                    ``(C) is in fully functioning condition without 
                need of repair or rehabilitation.
            ``(2) Limitation.--The President may exercise the authority 
        provided in paragraph (1) only to the extent that the 
        Department of Defense--
                    ``(A)(i) has a requirement for the defense article 
                being returned; and
                    ``(ii) has available sufficient funds authorized 
                and appropriated for such purpose; or
                    ``(B)(i) is accepting the return of the defense 
                article for subsequent transfer to another foreign 
                government or international organization pursuant to a 
                letter of offer and acceptance implemented in 
                accordance with this Act; and
                    ``(ii) has available sufficient funds provided by 
                or on behalf of such other foreign government or 
                international organization pursuant to a letter of 
                offer and acceptance implemented in accordance with 
                this Act.
            ``(3) Credit for transaction.--Upon acquisition and 
        acceptance by the United States Government of a defense article 
        under paragraph (1), the appropriate Foreign Military Sales 
        account of the provider shall be credited to reflect the 
        transaction.
            ``(4) Relationship to certain other provisions of law.--The 
        authority of the President to accept the return of a defense 
        article as provided in paragraph (1) shall not be subject to 
        chapter 137 of title 10, United States Code, or any other 
        provision of law relating to the conclusion of contracts.''.
    (c) Regulations.--Under the direction of the President, the 
Secretary of Defense shall promulgate regulations to implement 
subsections (l) and (m) of section 21 of the Arms Export Control Act, 
as added by this section.

SEC. 153. NATIONAL SECURITY INTEREST DETERMINATION TO WAIVE 
              REIMBURSEMENT OF DEPRECIATION FOR LEASED DEFENSE 
              ARTICLES.

    (a) In General.--Section 61(a) of the Arms Export Control Act (22 
U.S.C. 2796(a)) is amended--
            (1) in the second sentence, by striking ``, or to any 
        defense article which has passed three-quarters of its normal 
        service life''; and
            (2) by inserting after the second sentence the following 
        new sentence: ``The President may waive the requirement of 
        paragraph (4) for reimbursement of depreciation for any defense 
        article which has passed three-quarters of its normal service 
        life if the President determines that to do so is important to 
        the national security interest of the United States.''.
    (b) Effective Date.--The third sentence of section 61(a) of the 
Arms Export Control Act, as added by subsection (a)(2), shall apply 
only with respect to a defense article leased on or after the date of 
the enactment of this Act.

    TITLE II--TRANSFER OF NAVAL VESSELS TO CERTAIN FOREIGN COUNTRIES

SEC. 201. AUTHORITY TO TRANSFER NAVAL VESSELS.

    (a) Egypt.--The Secretary of the Navy is authorized to transfer to 
the Government of Egypt the ``OLIVER HAZARD PERRY'' frigate GALLERY. 
Such transfer shall be on a sales basis under section 21 of the Arms 
Export Control Act (22 U.S.C. 2761; relating to the foreign military 
sales program).
    (b) Mexico.--The Secretary of the Navy is authorized to transfer to 
the Government of Mexico the ``KNOX'' class frigates STEIN (FF 1065) 
and MARVIN SHIELDS (FF 1066). Such transfers shall be on a sales basis 
under section 21 of the Arms Export Control Act (22 U.S.C. 2761; 
relating to the foreign military sales program).
    (c) New Zealand.--The Secretary of the Navy is authorized to 
transfer to the Government of New Zealand the ``STALWART'' class ocean 
surveillance ship TENACIOUS. Such transfer shall be on a sales basis 
under section 21 of the Arms Export Control Act (22 U.S.C. 2761; 
relating to the foreign military sales program).
    (d) Portugal.--The Secretary of the Navy is authorized to transfer 
to the Government of Portugal the ``STALWART'' class ocean surveillance 
ship AUDACIOUS. Such transfer shall be on a grant basis under section 
516 of the Foreign Assistance Act of 1961 (22 U.S.C. 2321j; relating to 
transfers of excess defense articles).
    (e) Taiwan.--The Secretary of the Navy is authorized to transfer to 
the Taipei Economic and Cultural Representative Office in the United 
States (which is the Taiwan instrumentality designated pursuant to 
section 10(a) of the Taiwan Relations Act) the following:
            (1) The ``KNOX'' class frigates AYLWIN (FF 1081), PHARRIS 
        (FF 1094), and VALDEZ (FF 1096). Such transfers shall be on a 
        sales basis under section 21 of the Arms Export Control Act (22 
        U.S.C. 2761; relating to the foreign military sales program).
            (2) The ``NEWPORT'' class tank landing ship NEWPORT (LST 
        1179). Such transfer shall be on a lease basis under section 61 
        of the Arms Export Control Act (22 U.S.C. 2796).
    (f) Thailand.--The Secretary of the Navy is authorized to transfer 
to the Government of Thailand the ``KNOX'' class frigate OUELLET (FF 
1077). Such transfer shall be on a sales basis under section 21 of the 
Arms Export Control Act (22 U.S.C. 2761; relating to the foreign 
military sales program).

SEC. 202. COSTS OF TRANSFERS.

    Any expense of the United States in connection with a transfer 
authorized by this title shall be charged to the recipient.

SEC. 203. EXPIRATION OF AUTHORITY.

    The authority granted by section 201 shall expire at the end of the 
2-year period beginning on the date of the enactment of this Act.

SEC. 204. REPAIR AND REFURBISHMENT OF VESSELS IN UNITED STATES 
              SHIPYARDS.

    The Secretary of the Navy shall require, to the maximum extent 
possible, as a condition of a transfer of a vessel under this title, 
that the country to which the vessel is transferred have such repair or 
refurbishment of the vessel as is needed, before the vessel joins the 
naval forces of that country, performed at a shipyard located in the 
United States, including a United States Navy shipyard.