[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5916 Reported in House (RH)]






                                                 Union Calendar No. 391
110th CONGRESS
  2d Session
                                H. R. 5916

                          [Report No. 110-626]

 To reform the administration of the Arms Export Control Act, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 29, 2008

    Mr. Berman (for himself, Ms. Ros-Lehtinen, Mr. Sherman, and Mr. 
  Manzullo) introduced the following bill; which was referred to the 
                      Committee on Foreign Affairs

                              May 12, 2008

                    Additional sponsor: Mr. Crowley

                              May 12, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                               29, 2008]

_______________________________________________________________________

                                 A BILL


 
 To reform the administration of the Arms Export Control Act, 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. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Security 
Assistance and Arms Export Control Reform Act of 2008''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

           TITLE I--REFORM OF ARMS EXPORT CONTROL PROCEDURES

 Subtitle A--Defense Trade Controls Performance Improvement Act of 2008

Sec. 101.  Short title.
Sec. 102.  Findings.
Sec. 103. Strategic review and assessment of the United States export 
                            controls system.
Sec. 104. Performance goals for processing of applications for licenses 
                            to export items on USML.
Sec. 105. Requirement to ensure adequate staff and resources for DDTC 
                            of the Department of State.
Sec. 106. Audit by Inspector General of the Department of State.
Sec. 107. Increased flexibility for use of defense trade controls 
                            registration fees.
Sec. 108. Review of ITAR and USML.
Sec. 109. Special licensing authorization for certain exports to NATO 
                            member states, Australia, Japan, and New 
                            Zealand.
Sec. 110. Availability of information on the status of license 
                            applications under chapter 3 of the Arms 
                            Export Control Act.
Sec. 111. Sense of Congress.
Sec. 112. Definitions.
Sec. 113. Authorization of appropriations.

                  Subtitle B--Miscellaneous Provisions

Sec. 121. Report on self-financing options for export licensing 
                            functions of DDTC of the Department of 
                            State.
Sec. 122. Expediting congressional defense export review period for 
                            South Korea and Israel.
Sec. 123. Availability to Congress of Presidential directives regarding 
                            United States arms export policies, 
                            practices, and regulations.
Sec. 124. Increase in congressional notification thresholds and 
                            expediting congressional review for South 
                            Korea and Israel.
Sec. 125. Diplomatic efforts to strengthen national and international 
                            arms export controls.
Sec. 126. Reporting requirement for unlicensed exports.
Sec. 127. Report on value of major defense equipment and defense 
                            articles exported under section 38 of the 
                            Arms Export Control Act.
Sec. 128. Report on satellite export controls.
Sec. 129. Definition.

      TITLE II--SECURITY ASSISTANCE AND RELATED SUPPORT FOR ISRAEL

Sec. 201. Assessment of Israel's qualitative military edge over 
                            military threats.
Sec. 202. Report on United States' commitments to the security of 
                            Israel.
Sec. 203. War Reserves Stockpile.
Sec. 204. Implementation of Memorandum of Understanding with Israel.
Sec. 205. Definitions.

 TITLE III--WAIVER OF CERTAIN SANCTIONS TO FACILITATE DENUCLEARIZATION 
                       ACTIVITIES IN NORTH KOREA

Sec. 301. Waiver authority and exceptions.
Sec. 302. Certification regarding waiver of certain sanctions.
Sec. 303. Congressional notification and report.
Sec. 304. Termination of waiver authority.
Sec. 305. Expiration of waiver authority.
Sec. 306. Continuation of restrictions against the Government of North 
                            Korea.
Sec. 307. Report on verification measures relating to North Korea's 
                            nuclear programs.
Sec. 308. Definitions.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Authority to build the capacity of foreign military forces.
Sec. 402. Maintenance of European Union arms embargo against China.
Sec. 403. Reimbursement of salaries of members of the reserve 
                            components in support of security 
                            cooperation missions.
Sec. 404. Foreign Military Sales Stockpile Fund.
Sec. 405. Congressional notification requirements under the Arms Export 
                            Control Act.
Sec. 406. Sense of Congress.

              TITLE V--AUTHORITY TO TRANSFER NAVAL VESSELS

Sec. 501. Authority to transfer naval vessels to certain foreign 
                            recipients.

           TITLE I--REFORM OF ARMS EXPORT CONTROL PROCEDURES

 Subtitle A--Defense Trade Controls Performance Improvement Act of 2008

SEC. 101. SHORT TITLE.

    This subtitle may be cited as the ``Defense Trade Controls 
Performance Improvement Act of 2008''.

SEC. 102. FINDINGS.

    Congress finds the following:
            (1) In a time of international terrorist threats and a 
        dynamic global economic and security environment, United States 
        policy with regard to export controls is in urgent need of a 
        comprehensive review in order to ensure such controls are 
        protecting the national security and foreign policy interests 
        of the United States.
            (2) In January 2007, the Government Accountability Office 
        designated the effective identification and protection of 
        critical technologies as a government-wide, high-risk area, 
        warranting a strategic reexamination of existing programs, 
        including programs relating to arms export controls.
            (3) Federal Government agencies must review licenses for 
        export of munitions in a thorough and timely manner to ensure 
        that the United States is able to assist United States allies 
        and to prevent nuclear and conventional weapons from getting 
        into the hands of enemies of the United States.
            (4) Both staffing and funding that relate to the Department 
        of State's arms export control responsibilities have not kept 
        pace with the increased workload relating to such 
        responsibilities, especially over the last five years.
            (5) Outsourcing and off-shoring of defense production and 
        the policy of many United States trading partners to require 
        offsets for major sales of defense and aerospace articles 
        present a potential threat to United States national security 
        and economic well-being and serve to weaken the defense 
        industrial base.
            (6) Export control policies can have a negative impact on 
        United States employment, nonproliferation goals, and the 
        health of the defense industrial base, particularly when 
        facilitating the overseas transfer of technology or production 
        and other forms of outsourcing, such as offsets (direct and 
        indirect), co-production, subcontracts, overseas investment and 
        joint ventures in defense and commercial industries. Federal 
        Government agencies must develop new and effective procedures 
        for ensuring that export control systems address these problems 
        and the threat they pose to national security.
            (7) In the report to Congress required by the Conference 
        Report (Report 109-272) accompanying the bill, H.R. 2862 (the 
        Science, State, Justice, Commerce and Related Agencies 
        Appropriations Act, 2006; Public Law 109-108), the Department 
        of State concluded that--
                    (A) defense trade licensing has become much more 
                complex in recent years as a consequence of the 
                increasing globalization of the defense industry;
                    (B) the most important challenge to the Department 
                of State's licensing process has been the sheer growth 
                in volume of applicants for licenses and agreements, 
                without the corresponding increase in licensing 
                officers;
                    (C) fiscal year 2005 marked the third straight year 
                of roughly 8 percent annual increases in licensing 
                volume;
                    (D) although an 8 percent increase in workload 
                equates to a requirement for three additional licensing 
                officers per year, there has been no increase in 
                licensing officers during this period; and
                    (E) the increase in licensing volume without a 
                corresponding increase in trained and experienced 
                personnel has resulted in delays and increased 
                processing times.
            (8) In 2006, the Department of State processed over three 
        times as many licensing applications as the Department of 
        Commerce with about a fifth of the staff of the Department of 
        Commerce.
            (9) On July 27, 2007, in testimony delivered to the 
        Subcommittee on Terrorism, Nonproliferation and Trade of the 
        House Committee on Foreign Affairs to examine the effectiveness 
        of the United States export control regime, the Government 
        Accountability Office found that--
                    (A) the United States Government needs to conduct 
                assessments to determine its overall effectiveness in 
                the area of arms export control; and
                    (B) the processing times of the Department of State 
                doubled over the period from 2002 to 2006.
            (10) Although the current number of unprocessed 
        applications for licenses to export defense items is less than 
        3,800 applications, due to the extraordinary efforts of the 
        personnel and management of the Department of State's 
        Directorate of Defense Trade Controls, at the end of 2006, the 
        Department of State's backlog of such unprocessed applications 
        reached its highest level at more than 10,000 unprocessed 
        applications. This resulted in major management and personnel 
        challenges for the Directorate of Defense Trade Controls.
            (11)(A) Allowing a continuation of the status quo in 
        resources for defense trade licensing could ultimately harm the 
        United States defense industrial base. The 2007 Institute for 
        Defense Analysis report entitled ``Export Controls and the U.S. 
        Defense Industrial Base'' found that the large backlog and long 
        processing times by the Department of State for applications 
        for licenses to export defense items led to an impairment of 
        United States firms in some sectors to conduct global business 
        relative to foreign competitors.
            (B) Additionally, the report found that United States 
        commercial firms have been reluctant to engage in research and 
        development activities for the Department of Defense because 
        this raises the future prospects that the products based on 
        this research and development, even if intrinsically 
        commercial, will be saddled by Department of State munitions 
        controls due to the link to that research.
            (12) According to the Department of State's fiscal year 
        2008 budget justification to Congress, commercial exports 
        licensed or approved under the Arms Export Control Act exceeded 
        $30,000,000,000, with nearly eighty percent of these items 
        exported to United States NATO allies and other major non-NATO 
        allies.
            (13) A Government Accountability Office report of October 
        9, 2001 (GAO-02-120), documented ambiguous export control 
        jurisdiction affecting 25 percent of the items that the United 
        States Government agreed to control as part of its commitments 
        to the Missile Technology Control Regime. The United States 
        Government has not clearly determined which department has 
        jurisdiction over these items, which increases the risk that 
        these items will fall into the wrong hands. During both the 
        108th and 109th Congresses, the House of Representatives passed 
        legislation mandating that the Administration clarify this 
        issue.

SEC. 103. STRATEGIC REVIEW AND ASSESSMENT OF THE UNITED STATES EXPORT 
              CONTROLS SYSTEM.

    (a) Review and Assessment.--
            (1) In general.--Not later than March 31, 2009, the 
        President shall conduct a comprehensive and systematic review 
        and assessment of the United States arms export controls system 
        in the context of the national security interests and strategic 
        foreign policy objectives of the United States.
            (2) Elements.--The review and assessment required under 
        paragraph (1) shall--
                    (A) determine the overall effectiveness of the 
                United States arms export controls system in order to, 
                where appropriate, strengthen controls, improve 
                efficiency, and reduce unnecessary redundancies across 
                Federal Government agencies, through administrative 
                actions, including regulations, and to formulate 
                legislative proposals for new authorities that are 
                needed;
                    (B) develop processes to ensure better coordination 
                of arms export control activities of the Department of 
                State with activities of other departments and agencies 
                of the United States that are responsible for enforcing 
                United States arms export control laws;
                    (C) ensure that all items on the Missile Technology 
                Control Regime Annex are subject to stringent control 
                by the United States Government;
                    (D) determine the overall effect of arms export 
                controls on counterterrorism, law enforcement, and 
                infrastructure protection missions of the Department of 
                Homeland Security;
                    (E) contain a detailed summary of known attempts by 
                unauthorized end-users (such as international arms 
                traffickers, foreign intelligence agencies, and foreign 
                terrorist organizations) to acquire items on the United 
                States Munitions List, including--
                            (i) data on--
                                    (I) commodities sought, such as M-4 
                                rifles, night vision devices, F-14 
                                spare parts;
                                    (II) parties involved, such as the 
                                intended end-users, brokers, 
                                consignees, and shippers;
                                    (III) destination countries and 
                                transit countries;
                                    (IV) modes of transport;
                                    (V) trafficking methods, such as 
                                use of false documentation and front 
                                companies registered under flags of 
                                convenience;
                                    (VI) whether the attempted illicit 
                                transfer was successful; and
                                    (VII) any administrative or 
                                criminal enforcement actions taken by 
                                the United States and any other 
                                government in relation to the attempted 
                                illicit transfer;
                            (ii) a thorough evaluation of the Blue 
                        Lantern Program, including the adequacy of 
                        current staffing and funding levels;
                            (iii) a detailed analysis of licensing 
                        exemptions and their successful exploitation by 
                        unauthorized end-users; and
                            (iv) an examination of the extent to which 
                        the increased tendency toward outsourcing and 
                        off-shoring of defense production harm United 
                        States national security and weaken the defense 
                        industrial base, including direct and indirect 
                        impact on employment, and formulate policies to 
                        address these trends as well as the policy of 
                        some United States trading partners to require 
                        offsets for major sales of defense articles; 
                        and
                    (F) assess the extent to which export control 
                policies and practices under the Arms Export Control 
                Act promote the protection of basic human rights.
    (b) Congressional Briefings.--The President shall provide periodic 
briefings to the appropriate congressional committees on the progress 
of the review and assessment conducted under subsection (a). The 
requirement to provide congressional briefings under this subsection 
shall terminate on the date on which the President transmits to the 
appropriate congressional committees the report required under 
subsection (c).
    (c) Report.--Not later than 18 months after the date of the 
enactment of this Act, the President shall transmit to the appropriate 
congressional committees a report that contains the results of the 
review and assessment conducted under subsection (a). The report 
required by this subsection shall contain a certification that the 
requirement of subsection (a)(2)(C) has been met, or if the requirement 
has not been met, the reasons therefor. The report required by this 
subsection shall be submitted in unclassified form, but may contain a 
classified annex, if necessary.

SEC. 104. PERFORMANCE GOALS FOR PROCESSING OF APPLICATIONS FOR LICENSES 
              TO EXPORT ITEMS ON USML.

    (a) In General.--The Secretary of State, acting through the head of 
the Directorate of Defense Trade Controls of the Department of State, 
shall establish the following goals:
            (1) The processing time for review of each application for 
        a license to export items on the United States Munitions List 
        (other than applications for approval of agreements under part 
        124 of title 22, Code of Federal Regulations (or successor 
        regulations)) shall be not more than 60 days from the date of 
        receipt of the application.
            (2) The processing time for review of each application for 
        a commodity jurisdiction determination shall be not more than 
        60 days from the date of receipt of the application.
            (3) The total number of applications described in paragraph 
        (1) that are unprocessed shall be not more than 7 percent of 
        the total number of such applications submitted in the 
        preceding calendar year.
    (b) Additional Review.--(1) If an application described in 
paragraph (1) or (2) of subsection (a) is not processed within the time 
period described in the respective paragraph of such subsection, then 
the Managing Director of the Directorate of Defense Trade Controls or 
the Deputy Assistant Secretary for Defense Trade and Regional Security 
of the Department of State, as appropriate, shall review the status of 
the application to determine if further action is required to process 
the application.
    (2) If an application described in paragraph (1) or (2) of 
subsection (a) is not processed within 90 days from the date of receipt 
of the application, then the Assistant Secretary for Political-Military 
Affairs of the Department of State shall--
            (A) review the status of the application to determine if 
        further action is required to process the application; and
            (B) submit to the appropriate congressional committees a 
        notification of the review conducted under subparagraph (A), 
        including a description of the application, the reason for 
        delay in processing the application, and a proposal for further 
        action to process the application.
    (3) For each calendar year, the Managing Director of the 
Directorate of Defense Trade Controls shall review not less than 2 
percent of the total number of applications described in paragraphs (1) 
and (2) of subsection (a) to ensure that the processing of such 
applications, including decisions to approve, deny, or return without 
action, is consistent with both policy and regulatory requirements of 
the Department of State.
    (c) United States Allies.--Congress states that--
            (1) it shall be the policy of the Directorate of Defense 
        Trade Controls of the Department of State to ensure that, to 
        the maximum extent practicable, the processing time for review 
        of applications described in subsection (a)(1) to export items 
        that are not subject to the requirements of section 36(b) or 
        (c) of the Arms Export Control Act (22 U.S.C. 2776(b) or (c)) 
        to United States allies in direct support of combat operations 
        or peacekeeping or humanitarian operations with United States 
        Armed Forces is not more than 7 days from the date of receipt 
        of the application; and
            (2) it shall be the goal, as appropriate, of the 
        Directorate of Defense Trade Controls to ensure that, to the 
        maximum extent practicable, the processing time for review of 
        applications described in subsection (a)(1) to export items 
        that are not subject to the requirements of section 36(b) or 
        (c) of the Arms Export Control Act to government security 
        agencies of United States NATO allies, Australia, New Zealand, 
        Japan, South Korea, Israel, and, as appropriate, other major 
        non-NATO allies for any purpose other than the purpose 
        described in paragraph (1) is not more than 30 days from the 
        date of receipt of the application.
    (d) Report.--Not later than December 31, 2010, and December 31, 
2011, the Secretary of State shall submit to the appropriate 
congressional committees a report that contains a detailed description 
of--
            (1)(A) the average processing time for and number of 
        applications described in subsection (a)(1) to--
                    (i) United States NATO allies, Australia, New 
                Zealand, Japan, South Korea, and Israel;
                    (ii) other major non-NATO allies; and
                    (iii) all other countries; and
            (B) to the extent practicable, the average processing time 
        for and number of applications described in subsection (b)(1) 
        by item category;
            (2) the average processing time for and number of 
        applications described in subsection (a)(2);
            (3) the average processing time for and number of 
        applications for agreements described in part 124 of title 22, 
        Code of Federal Regulations (relating to the International 
        Traffic in Arms Regulations);
            (4) any management decisions of the Directorate of Defense 
        Trade Controls of the Department of State that have been made 
        in response to data contained in paragraphs (1) through (3); 
        and
            (5) any advances in technology that will allow the time-
        frames described in subsection (a)(1) to be substantially 
        reduced.
    (e) Congressional Briefings.--If, at the end of any month beginning 
after the date of the enactment of this Act, the total number of 
applications described in subsection (a)(1) that are unprocessed is 
more than 7 percent of the total number of such applications submitted 
in the preceding calendar year, then the Secretary of State, acting 
through the Under Secretary for Arms Control and International 
Security, the Assistant Secretary for Political-Military Affairs, or 
the Deputy Assistant Secretary for Defense Trade and Regional Security 
of the Department of State, as appropriate, shall brief the appropriate 
congressional committees on such matters and the corrective measures 
that the Directorate of Defense Trade Controls will take to comply with 
the requirements of subsection (a).
    (f) Transparency of Commodity Jurisdiction Determinations.--
            (1) Declaration of policy.--Congress declares that the 
        complete confidentiality surrounding several hundred commodity 
        jurisdiction determinations made each year by the Department of 
        State pursuant to the International Traffic in Arms Regulations 
        is not necessary to protect legitimate proprietary interests of 
        persons or their prices and customers, is not in the best 
        security and foreign policy interests of the United States, is 
        inconsistent with the need to ensure a level playing field for 
        United States exporters, and detracts from United States 
        efforts to promote greater transparency and responsibility by 
        other countries in their export control systems.
            (2) Publication on internet website.--The Secretary of 
        State shall--
                    (A) upon making a commodity jurisdiction 
                determination referred to in paragraph (1) publish on 
                the Internet website of the Department of State not 
                later than 30 days after the date of the 
                determination--
                            (i) the name of the manufacturer of the 
                        item;
                            (ii) a brief general description of the 
                        item;
                            (iii) the model or part number of the item; 
                        and
                            (iv) the United States Munitions List 
                        designation under which the item has been 
                        designated, except that--
                                    (I) the name of the person or 
                                business organization that sought the 
                                commodity jurisdiction determination 
                                shall not be published if the person or 
                                business organization is not the 
                                manufacturer of the item; and
                                    (II) the names of the customers, 
                                the price of the item, and any 
                                proprietary information relating to the 
                                item indicated by the person or 
                                business organization that sought the 
                                commodity jurisdiction determination 
                                shall not be published; and
                    (B) maintain on the Internet website of the 
                Department of State an archive, that is accessible to 
                the general public and other departments and agencies 
                of the United States, of the information published 
                under subparagraph (A).
    (g) Rule of Construction.--Nothing in this section shall be 
construed to prohibit the President or Congress from undertaking a 
thorough review of the national security and foreign policy 
implications of a proposed export of items on the United States 
Munitions List.

SEC. 105. REQUIREMENT TO ENSURE ADEQUATE STAFF AND RESOURCES FOR DDTC 
              OF THE DEPARTMENT OF STATE.

    (a) Requirement.--The Secretary of State shall ensure that the 
Directorate of Defense Trade Controls of the Department of State has 
the necessary staff and resources to carry out this subtitle and the 
amendments made by this subtitle.
    (b) Minimum Number of Licensing Officers.--For fiscal year 2010 and 
each subsequent fiscal year, the Secretary of State shall ensure that 
the Directorate of Defense Trade Controls has at least 1 licensing 
officer for every 1,250 applications for licenses and other 
authorizations to export items on the United States Munitions List by 
not later than the third quarter of such fiscal year, based on the 
number of licenses and other authorizations expected to be received 
during such fiscal year. The Secretary shall ensure that in meeting the 
requirement of this subsection, the performance of other functions of 
the Directorate of Defense Trade Controls is maintained and adequate 
staff is provided for those functions.
    (c) Minimum Number of Staff for Commodity Jurisdiction 
Determinations.--For each of the fiscal years 2009 through 2011, the 
Secretary of State shall ensure that the Directorate of Defense Trade 
Controls has, to the extent practicable, not less than three 
individuals assigned to review applications for commodity jurisdiction 
determinations.
    (d) Enforcement Resources.--In accordance with section 127.4 of 
title 22, Code of Federal Regulations, U.S. Immigration and Customs 
Enforcement is authorized to investigate violations of the 
International Traffic in Arms Regulations on behalf of the Directorate 
of Defense Trade Controls of the Department of State. The Secretary of 
State shall ensure that the Directorate of Defense Trade Controls has 
adequate staffing for enforcement of the International Traffic in Arms 
Regulations.

SEC. 106. AUDIT BY INSPECTOR GENERAL OF THE DEPARTMENT OF STATE.

    (a) Audit.--Not later than the end of each of the fiscal years 2010 
and 2011, the Inspector General of the Department of State shall 
conduct an independent audit to determine the extent to which the 
Department of State is meeting the requirements of sections 104 and 105 
of this Act.
    (b) Report.--The Inspector General shall submit to the appropriate 
congressional committees a report that contains the result of each 
audit conducted under subsection (a).

SEC. 107. INCREASED FLEXIBILITY FOR USE OF DEFENSE TRADE CONTROLS 
              REGISTRATION FEES.

    (a) In General.--Section 45 of the State Department Basic 
Authorities Act of 1956 (22 U.S.C. 2717) is amended--
            (1) in the first sentence--
                    (A) by striking ``For'' and inserting ``(a) In 
                General.--For''; and
                    (B) by striking ``Office'' and inserting 
                ``Directorate'';
            (2) by amending the second sentence to read as follows:
    ``(b) Availability of Fees.--Fees credited to the account referred 
to in subsection (a) shall be available only for payment of expenses 
incurred for--
            ``(1) management,
            ``(2) licensing (in order to meet the requirements of 
        section 105 of the Defense Trade Controls Performance 
        Improvement Act of 2008 (relating to adequate staff and 
        resources of the Directorate of Defense Trade Controls)),
            ``(3) compliance,
            ``(4) policy activities, and
            ``(5) facilities,
of defense trade controls functions.''; and
            (3) by adding at the end the following:
    ``(c) Allocation of Fees.--In allocating fees for payment of 
expenses described in subsection (b), the Secretary of State shall 
accord the highest priority to payment of expenses incurred for 
personnel and equipment of the Directorate of Defense Trade Controls, 
including payment of expenses incurred to meet the requirements of 
section 105 of the Defense Trade Controls Performance Improvement Act 
of 2008.''.
    (b) Conforming Amendment.--Section 38(b)(3)(A) of the Arms Export 
Control Act (22 U.S.C. 2778(b)(3)(A)) is amended to read as follows:
    ``(3)(A) For each fiscal year, 100 percent of registration fees 
collected pursuant to paragraph (1) shall be credited to a Department 
of State account, to be available without fiscal year limitation. Fees 
credited to that account shall be available only for the payment of 
expenses incurred for--
            ``(i) management,
            ``(ii) licensing (in order to meet the requirements of 
        section 105 of the Defense Trade Controls Performance 
        Improvement Act of 2008 (relating to adequate staff and 
        resources of the Directorate of Defense Trade Controls)),
            ``(iii) compliance,
            ``(iv) policy activities, and
            ``(v) facilities,
of defense trade controls functions.''.
    (c) Use of Civil Penalties.--Not more than $10,000,000 of the 
amount of civil penalties collected in each of fiscal years 2008, 2009, 
2010, 2011 and 2012 pursuant to section 38(e) of the Arms Export 
Control Act (22 U.S.C. 2778(e)) shall be made available for the 
expenses of the Directorate of Defense Trade Controls of the Department 
of State.

SEC. 108. REVIEW OF ITAR AND USML.

    (a) In General.--The Secretary of State shall review, with the 
assistance of United States manufacturers and other interested parties 
described in section 111(2) of this Act, the International Traffic in 
Arms Regulations and the United States Munitions List to determine 
those technologies and goods that warrant different or additional 
controls.
    (b) Conduct of Review.--In carrying out the review required under 
subsection (a), the Secretary of State shall review not less than 20 
percent of the technologies and goods on the International Traffic in 
Arms Regulations and the United States Munitions List in each calendar 
year so that for the 5-year period beginning with calendar year 2009, 
and for each subsequent 5-year period, the International Traffic in 
Arms Regulations and the United States Munitions List will be reviewed 
in their entirety.
    (c) Report.--The Secretary of State shall submit to the appropriate 
congressional committees an annual report on the results of the review 
carried out under this section.

SEC. 109. SPECIAL LICENSING AUTHORIZATION FOR CERTAIN EXPORTS TO NATO 
              MEMBER STATES, AUSTRALIA, JAPAN, AND NEW ZEALAND.

    (a) In General.--Section 38 of the Arms Export Control Act (22 
U.S.C. 2778) is amended by adding at the end the following:
    ``(k) Special Licensing Authorization for Certain Exports to NATO 
Member States, Australia, Japan, New Zealand, Israel, and South 
Korea.--
            ``(1) Authorization.--(A) The President may provide for 
        special licensing authorization for exports of United States-
        manufactured spare and replacement parts or components listed 
        in an application for such special licensing authorization in 
        connection with defense items previously exported to NATO 
        member states, Australia, Japan, New Zealand, Israel, and South 
        Korea. A special licensing authorization issued pursuant to 
        this clause shall be effective for a period not to exceed 5 
        years.
            ``(B) An authorization may be issued under subparagraph (A) 
        only if the applicable government of the country described in 
        subparagraph (A), acting through the applicant for the 
        authorization, certifies that--
                    ``(i) the export of spare and replacement parts or 
                components supports a defense item previously lawfully 
                exported;
                    ``(ii) the spare and replacement parts or 
                components will be transferred to a defense agency of a 
                country described in subparagraph (A) that is a 
                previously approved end-user of the defense items and 
                not to a distributor or a foreign consignee of such 
                defense items;
                    ``(iii) the spare and replacement parts or 
                components will not to be used to materially enhance, 
                optimize, or otherwise modify or upgrade the capability 
                of the defense items;
                    ``(iv) the spare and replacement parts or 
                components relate to a defense item that is owned, 
                operated, and in the inventory of the armed forces a 
                country described in subparagraph (A);
                    ``(v) the export of spare and replacement parts or 
                components will be effected using the freight forwarder 
                designated by the purchasing country's diplomatic 
                mission as responsible for handling transfers under 
                chapter 2 of this Act as required under regulations; 
                and
                    ``(vi) the spare and replacement parts or 
                components to be exported under the special licensing 
                authorization are specifically identified in the 
                application.
            ``(C) An authorization may not be issued under subparagraph 
        (A) for purposes of establishing offshore procurement 
        arrangements or producing defense articles offshore.
            ``(D)(i) For purposes of this subsection, the term `United 
        States-manufactured spare and replacement parts or components' 
        means   spare and replacement parts or components--
                    ``(I) with respect to which--
                            ``(aa) United States-origin content costs 
                        constitute at least 85 percent of the total 
                        content costs;
                            ``(bb) United States manufacturing costs 
                        constitute at least 85 percent of the total 
                        manufacturing costs; and
                            ``(cc) foreign content, if any, is limited 
                        to content from countries eligible to receive 
                        exports of items on the United States Munitions 
                        List under the International Traffic in Arms 
                        Regulations (other than de minimis foreign 
                        content); and
                    ``(II) that were last substantially transformed in 
                the United States.
            ``(ii) For purposes of clause (i)(I)(aa) and (bb), the 
        costs of non-United States-origin content shall be determined 
        using the final price or final cost associated with the non-
        United States-origin content.
            ``(2) Inapplicability provisions.--(A) The provisions of 
        this subsection shall not apply with respect to re-exports or 
        re-transfers of spare and replacement parts or components and 
        related services of defense items described in paragraph (1).
            ``(B) The congressional notification requirements contained 
        in section 36(c) of this Act shall not apply with respect to an 
        authorization issued under paragraph (1).''.
    (b) Effective Date.--The President shall issue regulations to 
implement amendments made by subsection (a) not later than 180 days 
after the date of the enactment of this Act.

SEC. 110. AVAILABILITY OF INFORMATION ON THE STATUS OF LICENSE 
              APPLICATIONS UNDER CHAPTER 3 OF THE ARMS EXPORT CONTROL 
              ACT.

    Chapter 3 of the Arms Export Control Act (22 U.S.C. 2771 et seq.) 
is amended by inserting after section 38 the following new section:

``SEC. 38A. AVAILABILITY OF INFORMATION ON THE STATUS OF LICENSE 
              APPLICATIONS UNDER THIS CHAPTER.

    ``(a) Availability of Information.--Not later than one year after 
the date of the enactment of the Defense Trade Controls Performance 
Improvement Act of 2008, the President shall make available to persons 
who have pending license applications under this chapter and the 
committees of jurisdiction the ability to access electronically current 
information on the status of each license application required to be 
submitted under this chapter.
    ``(b) Matters To Be Included.--The information referred to in 
subsection (a) shall be limited to the following:
            ``(1) The case number of the license application.
            ``(2) The date on which the license application is received 
        by the Department of State and becomes an `open application'.
            ``(3) The date on which the Directorate of Defense Trade 
        Controls makes a determination with respect to the license 
        application or transmits it for interagency review, if 
        required.
            ``(4) The date on which the interagency review process for 
        the license application is completed, if such a review process 
        is required.
            ``(5) The date on which the Department of State begins 
        consultations with the congressional committees of jurisdiction 
        with respect to the license application.
            ``(6) The date on which the license application is sent to 
        the congressional committees of jurisdiction.''.

SEC. 111. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1)(A) the advice provided to the Secretary of State by the 
        Defense Trade Advisory Group (DTAG) supports the regulation of 
        defense trade and helps ensure that United States national 
        security and foreign policy interests continue to be protected 
        and advanced while helping to reduce unnecessary impediments to 
        legitimate exports in order to support the defense requirements 
        of United States friends and allies; and
            (B) therefore, the Secretary of State should share 
        significant planned rules and policy shifts with DTAG for 
        comment; and
            (2) recognizing the constraints imposed on the Department 
        of State by the nature of a voluntary organization such as 
        DTAG, the Secretary of State is encouraged to ensure that 
        members of DTAG are drawn from a representative cross-section 
        of subject matter experts from the United States defense 
        industry, relevant trade and labor associations, academic, and 
        foundation personnel.

SEC. 112. DEFINITIONS.

    In this subtitle:
            (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committee on 
        Foreign Affairs of the House of Representatives and the 
        Committee on Foreign Relations of the Senate.
            (2) International traffic in arms regulations; itar.--The 
        term ``International Traffic in Arms Regulations'' or ``ITAR'' 
        means those regulations contained in parts 120 through 130 of 
        title 22, Code of Federal Regulations (or successor 
        regulations).
            (3) Major non-nato ally.--The term ``major non-NATO ally'' 
        means a country that is designated in accordance with section 
        517 of the Foreign Assistance Act of 1961 (22 U.S.C. 2321k) as 
        a major non-NATO ally for purposes of the Foreign Assistance 
        Act of 1961 (22 U.S.C. 2151 et seq.) and the Arms Export 
        Control Act (22 U.S.C. 2751 et seq.).
            (4) Missile technology control regime; mtcr.--The term 
        ``Missile Technology Control Regime'' or ``MTCR'' has the 
        meaning given the term in section 11B(c)(2) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2401b(c)(2)).
            (5) Missile technology control regime annex; mtcr annex.--
        The term ``Missile Technology Control Regime Annex'' or ``MTCR 
        Annex'' has the meaning given the term in section 11B(c)(4) of 
        the Export Administration Act of 1979 (50 U.S.C. App. 
        2401b(c)(4)).
            (6) Offsets.--The term ``offsets'' includes compensation 
        practices required of purchase in either government-to-
        government or commercial sales of defense articles or defense 
        services under the Arms Export Control Act (22 U.S.C. 2751 et 
        seq.) and the International Traffic in Arms Regulations.
            (7) United states munitions list; usml.--The term ``United 
        States Munitions List'' or ``USML'' means the list referred to 
        in section 38(a)(1) of the Arms Export Control Act (22 U.S.C. 
        2778(a)(1)).

SEC. 113. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as may be 
necessary for fiscal year 2009 and each subsequent fiscal year to carry 
out this subtitle and the amendments made by this subtitle.

                  Subtitle B--Miscellaneous Provisions

SEC. 121. REPORT ON SELF-FINANCING OPTIONS FOR EXPORT LICENSING 
              FUNCTIONS OF DDTC OF THE DEPARTMENT OF STATE.

    Not later than 90 days after the date of the enactment of this Act, 
the Secretary of State shall submit to the appropriate congressional 
committees a report on possible mechanisms to place the export 
licensing functions of the Directorate of Defense Trade Controls of the 
Department of State on a 100 percent self-financing basis.

SEC. 122. EXPEDITING CONGRESSIONAL DEFENSE EXPORT REVIEW PERIOD FOR 
              SOUTH KOREA AND ISRAEL.

    The Arms Export Control Act (22 U.S.C. 2751 et seq.) is amended--
            (1) in sections 3(d)(2)(B), 3(d)(3)(A)(i), 3(d)(5), 
        21(e)(2)(A), 36(b)(2), 36(c)(2)(A), 36(d)(2)(A), 62(c)(1), and 
        63(a)(2) by inserting ``the Republic of Korea, Israel,'' before 
        ``or New Zealand'';
            (2) in section 3(b)(2) by inserting ``the Government of the 
        Republic of Korea,'' before ``or the Government of New 
        Zealand''; and
            (3) in section 21(h)(1)(A), by inserting ``the Republic of 
        Korea,'' before ``or Israel''.

SEC. 123. AVAILABILITY TO CONGRESS OF PRESIDENTIAL DIRECTIVES REGARDING 
              UNITED STATES ARMS EXPORT POLICIES, PRACTICES, AND 
              REGULATIONS.

    (a) In General.--The President shall make available to the 
appropriate congressional committees the text of each Presidential 
directive regarding United States export policies, practices, and 
regulations relating to the implementation of the Arms Export Control 
Act (22 U.S.C. 2751 et seq.) not later than 15 days after the date on 
which the directive has been signed or authorized by the President.
    (b) Transition Provision.--Any Presidential directive described in 
subsection (a) that is signed or authorized by the President on or 
after January 1, 2008, and before the date of the enactment of this Act 
shall be made available to the appropriate congressional committees not 
later than 90 days after the date of the enactment of this Act.
    (c) Form.--To the maximum extent practicable, the Presidential 
directives required to be made available to the appropriate 
congressional committees under this section shall be made available on 
an unclassified basis.

SEC. 124. INCREASE IN CONGRESSIONAL NOTIFICATION THRESHOLDS AND 
              EXPEDITING CONGRESSIONAL REVIEW FOR SOUTH KOREA AND 
              ISRAEL.

    (a) Foreign Military Sales.--
            (1) In general.--Subsection (b) of section 36 of the Arms 
        Export Control Act (22 U.S.C. 2776) is amended--
                    (A) by redesignating paragraphs (2) through (6) as 
                paragraphs (3) through (7), respectively; and
                    (B) by striking ``The letter of offer shall not be 
                issued'' and all that follows through ``enacts a joint 
                resolution'' and inserting the following:
            ``(2) The letter of offer shall not be issued--
                    ``(A) with respect to a proposed sale of any 
                defense articles or defense services under this Act for 
                $200,000,000 or more, any design and construction 
                services for $300,000,000 or more, or any major defense 
                equipment for $75,000,000 or more, to the North 
                Atlantic Treaty Organization (NATO), any member country 
                of NATO, Japan, Australia, the Republic of Korea, 
                Israel, or New Zealand, if Congress, within 15 calendar 
                days after receiving such certification, or
                    ``(B) with respect to a proposed sale of any 
                defense articles or services under this Act for 
                $100,000,000 or more, any design and construction 
                services for $200,000,000 or more, or any major defense 
                equipment for $50,000,000 or more, to any other country 
                or organization, if Congress, within 30 calendar days 
                after receiving such certification,
        enacts a joint resolution''.
            (2) Technical and conforming amendments.--Such section is 
        further amended--
                    (A) in subsection (b)--
                            (i) in paragraph (6)(C), as redesignated, 
                        by striking ``Subject to paragraph (6), if'' 
                        and inserting ``If''; and
                            (ii) by striking paragraph (7), as 
                        redesignated; and
                    (B) in subsection (c)(4), by striking ``subsection 
                (b)(5)'' each place it appears and inserting 
                ``subsection (b)(6)''.
    (b) Commercial Sales.--Subsection (c) of such section is amended--
            (1) in paragraph (2)--
                    (A) in subparagraph (A)--
                            (i) by inserting after ``for an export'' 
                        the following: ``of any major defense equipment 
                        sold under a contract in the amount of 
                        $75,000,000 or more or of defense articles or 
                        defense services sold under a contract in the 
                        amount of $200,000,000 or more, (or, in the 
                        case of a defense article that is a firearm 
                        controlled under category I of the United 
                        States Munitions List, $1,000,000 or more)''; 
                        and
                            (ii) by striking ``Organization,'' and 
                        inserting ``Organization (NATO),'' and by 
                        further striking ``that Organization'' and 
                        inserting ``NATO''; and
                    (B) in subparagraph (C), by inserting after 
                ``license'' the following: ``for an export of any major 
                defense equipment sold under a contract in the amount 
                of $50,000,000 or more or of defense articles or 
                defense services sold under a contract in the amount of 
                $100,000,000 or more, (or, in the case of a defense 
                article that is a firearm controlled under category I 
                of the United States Munitions List, $1,000,000 or 
                more)''; and
            (2) by striking paragraph (5).

SEC. 125. DIPLOMATIC EFFORTS TO STRENGTHEN NATIONAL AND INTERNATIONAL 
              ARMS EXPORT CONTROLS.

    (a) Sense of Congress.--It is the sense of Congress that the 
President should redouble United States diplomatic efforts to 
strengthen national and international arms export controls by 
establishing a senior-level initiative to ensure that such arms export 
controls are comparable to and supportive of United States arms export 
controls, particularly with respect to countries of concern to the 
United States.
    (b) Report.--No later than one year after the date of the enactment 
of this Act, and annually thereafter for four years, the President 
shall transmit to the appropriate committees of Congress a report on 
United States diplomatic efforts described in subsection (a).

SEC. 126. REPORTING REQUIREMENT FOR UNLICENSED EXPORTS.

    Section 655(b) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2415(b)) is amended--
            (1) in paragraph (2), by striking ``or'' at the end;
            (2) in paragraph (3), by striking the period at the end and 
        inserting ``; or''; and
            (3) by adding at the end the following:
            ``(4) were exported without a license under section 38 of 
        the Arms Export Control Act (22 U.S.C. 2778) pursuant to an 
        exemption established under the International Traffic in Arms 
        Regulations, other than defense articles exported in 
        furtherance of a letter of offer and acceptance under the 
        Foreign Military Sales program or a technical assistance or 
        manufacturing license agreement, including the specific 
        exemption provision in the regulation under which the export 
        was made.''.

SEC. 127. REPORT ON VALUE OF MAJOR DEFENSE EQUIPMENT AND DEFENSE 
              ARTICLES EXPORTED UNDER SECTION 38 OF THE ARMS EXPORT 
              CONTROL ACT.

    Section 38 of the Arms Export Control Act (22 U.S.C. 2778) is 
amended by adding at the end the following:
    ``(l) Report.--
            ``(1) In general.--The President shall transmit to the 
        appropriate congressional committees a report that contains a 
        detailed listing, by country and by international organization, 
        of the total dollar value of major defense equipment and 
        defense articles exported pursuant to licenses authorized under 
        this section for the previous fiscal year.
            ``(2) Inclusion in annual budget.--The report required by 
        this subsection shall be included in the supporting information 
        of the annual budget of the United States Government required 
        to be submitted to Congress under section 1105 of title 31, 
        United States Code.
            ``(3) Appropriate congressional committees defined.--In 
        this subsection, the term `appropriate congressional 
        committees' means the Committee on Foreign Affairs of the House 
        of Representatives and the Committee on Foreign Relations of 
        the Senate.''.

SEC. 128. REPORT ON SATELLITE EXPORT CONTROLS.

    (a) Report.--The President shall report to the appropriate 
committees of the Congress, not later than 180 days after the date of 
the enactment of this Act regarding--
            (1) the extent to which current United States export 
        controls on satellites and related items under the Arms Export 
        Control Act are successfully preventing the transfer of 
        militarily-sensitive technologies to countries of concern, 
        especially the People's Republic of China;
            (2) the extent to which comparable satellites and related 
        items are available from foreign sources without comparable 
        export controls; and
            (3) whether the current export controls on satellites and 
        related items should be altered and in what manner, including 
        whether other incentives or disincentives should also be 
        employed to discourage exports of satellites and related items 
        to the People's Republic of China by any country.
    (b) Definitions.--In this section, the terms ``satellite'' and 
``related items'' mean satellites and all specifically designed or 
modified systems or subsystems, components, parts, accessories, 
attachments, and associated equipment for satellites as covered under 
category XV of the International Traffic in Arms Regulations (as in 
effect on the date of the enactment of this Act).

SEC. 129. DEFINITION.

    In this subtitle, the term ``appropriate congressional committees'' 
means the Committee on Foreign Affairs of the House of Representatives 
and the Committee on Foreign Relations of the Senate.

      TITLE II--SECURITY ASSISTANCE AND RELATED SUPPORT FOR ISRAEL

SEC. 201. ASSESSMENT OF ISRAEL'S QUALITATIVE MILITARY EDGE OVER 
              MILITARY THREATS.

    (a) Assessment Required.--The President shall carry out an 
empirical and qualitative assessment on an ongoing basis of the extent 
to which Israel possesses a qualitative military edge over military 
threats to Israel. The assessment required under this subsection shall 
be sufficiently robust so as to facilitate comparability of data over 
concurrent years.
    (b) Use of Assessment.--The President shall ensure that the 
assessment required under subsection (a) is used to inform the review 
by the United States of applications to sell defense articles and 
defense services under the Arms Export Control Act (22 U.S.C. 2751 et 
seq.) to countries in the Middle East.
    (c) Reports.--
            (1) Initial report.--Not later than 180 days after the date 
        of the enactment of this Act, the President shall transmit to 
        the appropriate congressional committees a report on the 
        initial assessment required under subsection (a).
            (2) Quadrennial report.--Not later than four years after 
        the date on which the President transmits the initial report 
        under paragraph (1), and every four years thereafter, the 
        President shall transmit to the appropriate congressional 
        committees a report on the most recent assessment required 
        under subsection (a).
    (d) Certification.--Section 36 of the Arms Export Control Act (22 
U.S.C. 2776) is amended by adding at the end the following:
    ``(h) Certification Requirement Relating Israel's Qualitative 
Military Edge.--
            ``(1) In general.--Any certification relating to a proposed 
        sale or export of defense articles or defense services under 
        this section to any country in the Middle East other than 
        Israel shall include a determination that the sale or export of 
        the defense articles or defense services will not adversely 
        affect Israel's qualitative military edge over military threats 
        to Israel.
            ``(2) Definition.--In this subsection, the term 
        `qualitative military edge' has the meaning given the term in 
        section 205 of the Security Assistance and Arms Export Control 
        Reform Act of 2008.''.

SEC. 202. REPORT ON UNITED STATES' COMMITMENTS TO THE SECURITY OF 
              ISRAEL.

    (a) Initial Report.--Not later than 30 days after the date of the 
enactment of this Act, the President shall transmit to the appropriate 
congressional committees a report that contains--
            (1) a complete, unedited, and unredacted copy of each 
        assurance made by United States Government officials to 
        officials of the Government of Israel regarding Israel's 
        security and maintenance of Israel's qualitative military edge, 
        as well as any other assurance regarding Israel's security and 
        maintenance of Israel's qualitative military edge provided in 
        conjunction with exports under the Arms Export Control Act (22 
        U.S.C. 2751 et seq.), for the period beginning on January 1, 
        1975, and ending on the date of the enactment of this Act; and
            (2) an analysis of the extent to which, and by what means, 
        each such assurance has been and is continuing to be fulfilled.
    (b) Subsequent Reports.--
            (1) New assurances and revisions.--The President shall 
        transmit to the appropriate congressional committees a report 
        that contains the information required under subsection (a) 
        with respect to--
                    (A) each assurance described in subsection (a) made 
                on or after the date of the enactment of this Act, or
                    (B) revisions to any assurance described in 
                subsection (a) or subparagraph (A) of this paragraph,
        within 15 days of the new assurance or revision being conveyed.
            (2) 5-year reports.--Not later than 5 years after the date 
        of the enactment of this Act, and every 5 years thereafter, the 
        President shall transmit to the appropriate congressional 
        committees a report that contains the information required 
        under subsection (a) with respect to each assurance described 
        in subsection (a) or paragraph (1)(A) of this subsection and 
        revisions to any assurance described in subsection (a) or 
        paragraph (1)(A) of this subsection during the preceding 5-year 
        period.
    (c) Form.--Each report required by this section shall be 
transmitted in unclassified form, but may contain a classified annex, 
if necessary.

SEC. 203. WAR RESERVES STOCKPILE.

    (a) Department of Defense Appropriations Act, 2005.--Section 
12001(d) of the Department of Defense Appropriations Act, 2005 (Public 
Law 108-287; 118 Stat. 1011), is amended by striking ``4'' and 
inserting ``6''.
    (b) Foreign Assistance Act of 1961.--Section 514(b)(2)(A) of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321h(b)(2)(A)) is amended by 
striking ``fiscal years 2007 and 2008'' and inserting ``fiscal years 
2009 and 2010''.
    (c) Effective Date.--The amendment made by subsection (a) takes 
effect on August 5, 2008.

SEC. 204. IMPLEMENTATION OF MEMORANDUM OF UNDERSTANDING WITH ISRAEL.

    (a) In General.--Of the amount made available for fiscal year 2009 
for assistance under the program authorized by section 23 of the Arms 
Export Control Act (22 U.S.C. 2763) (commonly referred to as the 
``Foreign Military Financing Program''), the amount specified in 
subsection (b) is authorized to be made available on a grant basis for 
Israel.
    (b) Computation of Amount.--The amount referred to in subsection 
(a) is the amount equal to--
            (1) the amount specified under the heading ``Foreign 
        Military Financing Program'' for Israel for fiscal year 2008; 
        plus
            (2) $150,000,000.

SEC. 205. DEFINITIONS.

    In this subtitle--
            (1) the term ``appropriate congressional committees'' means 
        the Committee on Foreign Affairs of the House of 
        Representatives and the Committee on Foreign Relations of the 
        Senate; and
            (2) the term ``qualitative military edge'' means the 
        ability to counter and defeat any credible conventional 
        military threat from any individual state or possible coalition 
        of states or from non-state actors, while sustaining minimal 
        damages and casualties, through the use of superior military 
        means, possessed in sufficient quantity, including weapons, 
        command, control, communication, intelligence, surveillance, 
        and reconnaissance capabilities that in their technical 
        characteristics are superior in capability to those of such 
        other individual or possible coalition of states or non-state 
        actors.

 TITLE III--WAIVER OF CERTAIN SANCTIONS TO FACILITATE DENUCLEARIZATION 
                       ACTIVITIES IN NORTH KOREA

SEC. 301. WAIVER AUTHORITY AND EXCEPTIONS.

    (a) Waiver Authority.--Except as provided in subsection (b), the 
President may waive, in whole or in part, the application of any 
sanction contained in subparagraph (A), (B), (D), or (G) of section 
102(b)(2) of the Arms Export Control Act (22 U.S.C. 2799aa-1(b)(2)) 
with respect to North Korea in order to provide material, direct, and 
necessary assistance for disablement, dismantlement, verification, and 
physical removal activities in the implementation of the commitment of 
North Korea, undertaken in the Joint Statement of September 19, 2005, 
``to abandoning all nuclear weapons and existing nuclear programs'' as 
part of the verifiable denuclearization of the Korean Peninsula.
    (b) Exceptions.--The waiver authority under subsection (a) may not 
be exercised with respect to the following:
            (1) Any export of lethal defense articles that would be 
        prevented by the application of section 102(b)(2)(B) of the 
        Arms Export Control Act.
            (2) Any sanction relating to credit or credit guarantees 
        contained in section 102(b)(2)(D) of the Arms Export Control 
        Act.

SEC. 302. CERTIFICATION REGARDING WAIVER OF CERTAIN SANCTIONS.

    Assistance described in subparagraph (B) or (G) of section 
102(b)(2) of the Arms Export Control Act (22 U.S.C. 2799aa-1(b)(2)) may 
be provided with respect to North Korea by reason of the exercise of 
the waiver authority under section 301 only if the President first 
determines and certifies to the appropriate congressional committees 
that--
            (1) all necessary steps will be taken to ensure that the 
        assistance will not be used to improve the military 
        capabilities of the armed forces of North Korea; and
            (2) the exercise of the waiver authority is in the national 
        security interests of the United States.

SEC. 303. CONGRESSIONAL NOTIFICATION AND REPORT.

    (a) Notification.--The President shall notify the appropriate 
congressional committees in writing not later than 15 days before 
exercising the waiver authority under section 301.
    (b) Report.--Not later than 60 days after the date of the enactment 
of this Act, and annually thereafter for such time during which the 
exercise of the waiver authority under section 301 remains in effect, 
the President shall transmit to the appropriate congressional 
committees a report that--
            (1) describes in detail the progress that is being made in 
        the implementation of the commitment of North Korea described 
        in section 301;
            (2) describes in detail any failures, shortcomings, or 
        obstruction by North Korea with respect to the implementation 
        of the commitment of North Korea described in section 301;
            (3) describes in detail the progress or lack thereof in the 
        preceding 12-month period of all other programs promoting the 
        elimination of North Korea's capability to develop, deploy, 
        transfer, or maintain weapons of mass destruction or their 
        delivery systems; and
            (4) beginning with the second report required by this 
        subsection, a justification for the continuation of the waiver 
        exercised under section 301 and, if applicable, section 302, 
        for the fiscal year in which the report is submitted.

SEC. 304. TERMINATION OF WAIVER AUTHORITY.

    Any waiver in effect by reason of the exercise of the waiver 
authority under section 301 shall terminate if the President determines 
that North Korea--
            (1)(A) on or after September 19, 2005, transferred to a 
        non-nuclear-weapon state, or received, a nuclear explosive 
        device; or
            (B) on or after October 10, 2006, detonated a nuclear 
        explosive device; or
            (2) on or after September 19, 2005--
                    (A) transferred to a non-nuclear-weapon state any 
                design information or component which is determined by 
                the President to be important to, and known by North 
                Korea to be intended by the recipient state for use in, 
                the development or manufacture of any nuclear explosive 
                device, or
                    (B) sought and received any design information or 
                component which is determined by the President to be 
                important to, and intended by North Korea for use in, 
                the development or manufacture of any nuclear explosive 
                device,
        unless the President determines and certifies to the 
        appropriate congressional committees that such waiver is vital 
        to the national security interests of the United States.

SEC. 305. EXPIRATION OF WAIVER AUTHORITY.

    Any waiver in effect by reason of the exercise of the waiver 
authority under section 301 shall terminate on the date that is 4 years 
after the date of the enactment of this Act. The waiver authority under 
section 301 may not be exercised beginning on the date that is 3 years 
after the date of the enactment of this Act.

SEC. 306. CONTINUATION OF RESTRICTIONS AGAINST THE GOVERNMENT OF NORTH 
              KOREA.

    (a) In General.--Except as provided in section 301(a), restrictions 
against the Government of North Korea that were imposed by reason of a 
determination of the Secretary of State that North Korea is a state 
sponsor of terrorism shall remain in effect, and shall not be lifted 
pursuant to the provisions of law under which the determination was 
made, unless the President certifies to the appropriate congressional 
committees that--
            (1) the Government of North Korea is no longer engaged in 
        the transfer of technology related to the acquisition or 
        development of nuclear weapons, particularly to the Governments 
        of Iran, Syria, or any other country that is a state sponsor of 
        terrorism;
            (2) in accordance with the Six-Party Talks Agreement of 
        February 13, 2007, the Government of North Korea has ``provided 
        a complete and correct declaration of all its nuclear 
        programs,'' and there are measures to effectively verify this 
        declaration by the United States which, ``[a]t the request of 
        the other Parties,'' is leading ``disablement activities'' and 
        ``provid[ing] the funding for those activities''; and
            (3) the Government of North Korea has agreed to the 
        participation of the International Atomic Energy Agency in the 
        monitoring and verification of the shutdown and sealing of the 
        Yongbyon nuclear facility.
    (b) State Sponsor of Terrorism Defined.--In this section, the term 
``state sponsor of terrorism'' means a country the government of which 
the Secretary of State has determined, for purposes of section 6(j) of 
the Export Administration Act of 1979 (as continued in effect pursuant 
to the International Emergency Economic Powers Act), section 40 of the 
Arms Export Control Act, section 620A of the Foreign Assistance Act of 
1961, or any other provision of law, is a government that has 
repeatedly provided support for acts of international terrorism.

SEC. 307. REPORT ON VERIFICATION MEASURES RELATING TO NORTH KOREA'S 
              NUCLEAR PROGRAMS.

    (a) In General.--Not later than 15 days after the date of enactment 
of this Act, the Secretary of State shall submit to the appropriate 
congressional committees a report on verification measures relating to 
North Korea's nuclear programs under the Six-Party Talks Agreement of 
February 13, 2007, with specific focus on how such verification 
measures are defined under the Six-Party Talks Agreement and understood 
by the United States Government.
    (b) Matters To Be Included.--The report required under subsection 
(a) shall include, among other elements, a detailed description of--
            (1) the methods to be utilized to confirm that North Korea 
        has ``provided a complete and correct declaration of all of its 
        nuclear programs'';
            (2) the specific actions to be taken in North Korea and 
        elsewhere to ensure a high and ongoing level of confidence that 
        North Korea has fully met the terms of the Six-Party Talks 
        Agreement relating to its nuclear programs;
            (3) any formal or informal agreement with North Korea 
        regarding verification measures relating to North Korea's 
        nuclear programs under the Six-Party Talks Agreement; and
            (4) any disagreement expressed by North Korea regarding 
        verification measures relating to North Korea's nuclear 
        programs under the Six-Party Talks Agreement.
    (c) Form.--The report required under subsection (a) shall be 
submitted in unclassified form, but may include a classified annex.

SEC. 308. DEFINITIONS.

    In this title--
            (1) the term ``appropriate congressional committees'' 
        means--
                    (A) the Committee on Foreign Affairs and the 
                Committee on Appropriations of the House of 
                Representatives; and
                    (B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate;
            (2) the terms ``non-nuclear-weapon state'', ``design 
        information'', and ``component'' have the meanings given such 
        terms in section 102 of the Arms Export Control Act (22 U.S.C. 
        2799aa-1); and
            (3) the term ``Six-Party Talks Agreement of February 13, 
        2007'' or ``Six-Party Talks Agreement'' means the action plan 
        released on February 13, 2007, of the Third Session of the 
        Fifth Round of the Six-Party Talks held in Beijing among the 
        People's Republic of China, the Democratic People's Republic of 
        Korea (North Korea), Japan, the Republic of Korea (South 
        Korea), the Russian Federation, and the United States relating 
        to the denuclearization of the Korean Peninsula, normalization 
        of relations between the North Korea and the United States, 
        normalization of relations between North Korea and Japan, 
        economy and energy cooperation, and matters relating to the 
        Northeast Asia Peace and Security Mechanism.

                   TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. AUTHORITY TO BUILD THE CAPACITY OF FOREIGN MILITARY FORCES.

    (a) Authority.--The Secretary of State is authorized to conduct a 
program to respond to contingencies in foreign countries or regions by 
providing training, procurement, and capacity-building of a foreign 
country's national military forces and dedicated counter-terrorism 
forces in order for that country to--
            (1) conduct counterterrorist operations; or
            (2) participate in or support military and stability 
        operations in which the United States is a participant.
    (b) Types of Capacity-Building.--The program authorized under 
subsection (a) may include the provision of equipment, supplies, and 
training.
    (c) Limitations.--
            (1) Annual funding limitation.--The Secretary of State may 
        use up to $25,000,000 of funds available under the Foreign 
        Military Financing program for each of the fiscal years 2009 
        and 2010 to conduct the program authorized under subsection 
        (a).
            (2) Assistance otherwise prohibited by law.--The Secretary 
        of State may not use the authority in subsection (a) to provide 
        any type of assistance described in subsection (b) that is 
        otherwise prohibited by any provision of law.
            (3) Limitation on eligible countries.--The Secretary of 
        State may not use the authority in subsection (a) to provide 
        assistance described in subsection (b) to any foreign country 
        that is otherwise prohibited from receiving such type of 
        assistance under any other provision of law.
    (d) Formulation and Execution of Activities.--The Secretary of 
State is authorized to coordinate with the head of any other 
appropriate department or agency in the formulation and execution of 
the program authorized under subsection (a).
    (e) Congressional Notification.--
            (1) Activities in a country.--Not less than 15 days before 
        obligating funds for activities in any country under the 
        program authorized under subsection (a), the Secretary of State 
        shall submit to the congressional committees specified in 
        paragraph (3) a notice of the following:
                    (A) The country whose capacity to engage in 
                activities in subsection (a) will be assisted.
                    (B) The budget, implementation timeline with 
                milestones, and completion date for completing the 
                activities.
            (2) Specified congressional committees.--The congressional 
        committees specified in this paragraph are the following:
                    (A) The Committee on Foreign Affairs and the 
                Committee on Appropriations of the House of 
                Representatives.
                    (B) The Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.

SEC. 402. MAINTENANCE OF EUROPEAN UNION ARMS EMBARGO AGAINST CHINA.

    (a) Findings.--Congress makes the following findings:
            (1) Congress has previously expressed its strong concerns 
        in House Resolution 57 of February 2, 2005, and Senate 
        Resolution 91 of March 17, 2005, with the transfer of armaments 
        and related technology to the People's Republic of China by 
        member states of the European Union, which increased eightfold 
        from 2001 to 2003, and with plans to terminate in the near 
        future the arms embargo they imposed in 1989 following the 
        Tiananmen Square massacre.
            (2) The deferral of a decision by the European Council to 
        terminate its arms embargo following adoption of the 
        resolutions specified in paragraph (1), the visit by the 
        President of the United States to Europe, and growing concern 
        among countries in the regions and the general public on both 
        sides of the Atlantic, was welcomed by the Congress.
            (3) The decision by the European Parliament on April 14, 
        2005, by a vote of 421 to 85, to oppose the lifting of the 
        European Union's arms embargo on the People's Republic of 
        China, and resolutions issued by a number of elected 
        parliamentary bodies in Europe also opposing the lifting of the 
        arms embargo, was also welcomed by the Congress as a 
        reassurance that its European friends and allies understood the 
        gravity of prematurely lifting the embargo.
            (4) The onset of a strategic dialogue between the European 
        Commission and the Government of the United States on the 
        security situation in East Asia holds out the hope that a 
        greater understanding will emerge of the consequences of 
        European assistance to the military buildup of the People's 
        Republic of China for peace and stability in that region, to 
        the security interests of the United States and its friends and 
        allies in the region, and, in particular, to the safety of 
        United States Armed Forces whose presence in the region has 
        been a decisive factor in ensuring peace and prosperity since 
        the end of World War II.
            (5) A more intensive dialogue with Europe on this matter 
        will clarify for United States' friends and allies in Europe 
        how their ``non-lethal'' arms transfers improve the force 
        projection of the People's Republic of China, are far from 
        benign, and enhance the prospects for the threat or use of 
        force in resolving the status of Taiwan.
            (6) This dialogue may result in an important new consensus 
        between the United States and its European partners on the need 
        for coordinated policies that encourage the development of 
        democracy in the People's Republic of China and which 
        discourage, not assist, China's unjustified military buildup 
        and pursuit of weapons that threaten its neighbors.
            (7) However, the statement by the President of France in 
        Beijing in November 2007 that the European Union arms embargo 
        should be lifted is troubling, especially since France will 
        assume the six-month presidency of the European Union in July 
        2008.
            (8) There continues to be wide-spread concerns regarding 
        the lack of any significant progress by the Government of the 
        People's Republic of China in respecting the civil and 
        political rights of the Chinese people.
    (b) Statement of Policy.--It shall be the policy of the United 
States Government to oppose any diminution or termination of the arms 
embargo that was established by the Declaration of the European Council 
of June 26, 1989, and to take whatever diplomatic and other measures 
that are appropriate to convince the Member States of the European 
Union, individually and collectively, to continue to observe this 
embargo in principle and in practice. Appropriate measures should 
include prohibitions on entering into defense procurement contracts or 
defense-related research and development arrangements with European 
Union Member States that do not observe such an embargo in practice.
    (c) Report.--Not later than 180 days after the date of the 
enactment of this Act, and every six months thereafter until December 
31, 2010, the President shall transmit to the Committee on Foreign 
Affairs and Committee on Armed Services of the House of Representatives 
and the Committee on Foreign Relations and the Committee on Armed 
Services of the Senate a report on all efforts and activities of the 
United States Government to ensure the success of the policy declared 
in subsection (b).

SEC. 403. REIMBURSEMENT OF SALARIES OF MEMBERS OF THE RESERVE 
              COMPONENTS IN SUPPORT OF SECURITY COOPERATION MISSIONS.

    Section 632(d) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2392(d)) is amended--
            (1) by striking ``(d) Except as otherwise provided'' and 
        inserting ``(d)(1) Except as otherwise provided''; and
            (2) by adding at the end the following:
    ``(2) Notwithstanding provisions concerning the exclusion of the 
costs of salaries of members of the Armed Forces in section 503(a) of 
this Act and paragraph (1) of this subsection, the full cost of 
salaries of members of the reserve components of the Armed Forces 
(specified in section 10101 of title 10, United States Code) may, 
during each of fiscal years 2009 and 2010, be included in calculating 
pricing or value for reimbursement charged under section 503(a) of this 
Act and paragraph (1) of this subsection, respectively.''.

SEC. 404. FOREIGN MILITARY SALES STOCKPILE FUND.

    (a) In General.--Subsection (a) of section 51 of the Arms Export 
Control Act (22 U.S.C. 2795) is amended--
            (1) in paragraph (1), by striking ``Special Defense 
        Acquisition Fund'' and inserting ``Foreign Military Sales 
        Stockpile Fund''; and
            (2) in paragraph (4), by inserting ``building the capacity 
        of recipient countries and'' before ``narcotics control 
        purposes''.
    (b) Contents of Fund.--Subsection (b) of such section is amended--
            (1) in paragraph (2), by striking ``and'' at the end;
            (2) in paragraph (3), by inserting ``and'' at the end; and
            (3) by inserting after paragraph (3) the following:
            ``(4) collections from leases made pursuant to section 61 
        of this Act,''.
    (c) Availability.--Subsection (c)(2) of such section is amended to 
read as follows:
    ``(2) Amounts credited to the Fund under subsection (b) shall 
remain available until expended.''.
    (d) Conforming Amendments.--(1) The heading of such section is 
amended by striking ``Special Defense Acquisition Fund'' and inserting 
``Foreign Military Sales Stockpile Fund''.
    (2) The heading of chapter 5 of the Arms Export Control Act is 
amended by striking ``SPECIAL DEFENSE ACQUISITION FUND'' and inserting 
``FOREIGN MILITARY SALES STOCKPILE FUND''.

SEC. 405. CONGRESSIONAL NOTIFICATION REQUIREMENTS UNDER THE ARMS EXPORT 
              CONTROL ACT.

    The Arms Export Control Act (22 U.S.C. 2751 et seq.) is amended--
            (1) by striking ``Speaker of the House of Representatives 
        and the Committee on Foreign Relations of the Senate'' each 
        place it appears and inserting ``Committee on Foreign Affairs 
        of the House of Representatives and the Committee on Foreign 
        Relations of the Senate'';
            (2) by striking ``Speaker of the House of Representatives 
        and the Chairman of the Committee on Foreign Relations of the 
        Senate'' and ``Speaker of the House of Representatives and the 
        chairman of the Committee on Foreign Relations of the Senate'' 
        each place they appear and inserting ``Chairman of the 
        Committee on Foreign Affairs of the House of Representatives 
        and the Chairman of the Committee on Foreign Relations of the 
        Senate'';
            (3) by striking ``Speaker of the House of Representatives 
        and to the chairman of the Committee on Foreign Relations'' 
        each place it appears and inserting ``Chairman of the Committee 
        on Foreign Affairs of the House of Representatives and to the 
        Chairman of the Committee on Foreign Relations'';
            (4) by striking ``Speaker of the House of Representatives 
        and the Committees on Armed Services and Foreign Relations of 
        the Senate'' each place it appears and inserting ``Committees 
        on Foreign Affairs and Armed Services of the House of 
        Representatives and the Committees on Foreign Relations and 
        Armed Services of the Senate'';
            (5) by striking ``Speaker of the House of Representatives, 
        the chairman of the Committee on Foreign Relations of the 
        Senate, and the chairman of the Committee on Armed Services of 
        the Senate'' each place it appears and inserting ``Chairmen of 
        the Committees on Foreign Affairs and Armed Services of the 
        House of Representatives and the Chairmen of the Committees on 
        Foreign Relations and Armed Services of the Senate''; and
            (6) by striking ``Speaker of the House of Representatives, 
        and to the chairman of the Committee on Foreign Relations'' 
        each place it appears and inserting ``Chairman of the Committee 
        on Foreign Affairs of the House of Representatives and to the 
        Chairman of the Committee on Foreign Relations'' each place it 
        appears.

SEC. 406. SENSE OF CONGRESS.

    It is the sense of Congress that the United States should not 
provide security assistance or arms exports to nations contributing to 
massive, widespread, and systematic violations of human rights or acts 
of genocide, particularly with respect to Darfur, Sudan.

              TITLE V--AUTHORITY TO TRANSFER NAVAL VESSELS

SEC. 501. AUTHORITY TO TRANSFER NAVAL VESSELS TO CERTAIN FOREIGN 
              RECIPIENTS.

    (a) Transfers by Grant.--The President is authorized to transfer 
vessels to foreign countries on a grant basis under section 516 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321j), as follows:
            (1) Pakistan.--To the Government of Pakistan, the OLIVER 
        HAZARD PERRY class guided missile frigate MCINERNEY (FFG-8).
            (2) Greece.--To the Government of Greece, the OSPREY class 
        minehunter coastal ships OSPREY (MHC-51) and ROBIN (MHC-54).
            (3) Chile.--To the Government of Chile, the KAISER class 
        oiler ANDREW J. HIGGINS (AO-190).
            (4) Peru.--To the Government of Peru, the NEWPORT class 
        amphibious tank landing ships FRESNO (LST-1182) and RACINE 
        (LST-1191).
    (b) Grants Not Counted in Annual Total of Transferred Excess 
Defense Articles.--The value of a vessel transferred to a recipient on 
a grant basis pursuant to authority provided by subsection (a) shall 
not be counted against the aggregate value of excess defense articles 
transferred in any fiscal year under section 516(g) of the Foreign 
Assistance Act of 1961.
    (c) Costs of Transfers.--Any expense incurred by the United States 
in connection with a transfer authorized by this section shall be 
charged to the recipient.
    (d) Repair and Refurbishment in United States Shipyards.--To the 
maximum extent practicable, the President shall require, as a condition 
of the transfer of a vessel under this section, that the recipient 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 the 
recipient performed at a shipyard located in the United States, 
including a United States Navy shipyard.
    (e) Expiration of Authority.--The authority to transfer a vessel 
under this section shall expire at the end of the 2-year period 
beginning on the date of the enactment of this Act.
                                                 Union Calendar No. 391

110th CONGRESS

  2d Session

                               H. R. 5916

                          [Report No. 110-626]

_______________________________________________________________________

                                 A BILL

 To reform the administration of the Arms Export Control Act, and for 
                            other purposes.

_______________________________________________________________________

                              May 12, 2008

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed