[House Document 104-48]
[From the U.S. Government Publishing Office]





                                     

        104th Congress, 1st Session - - - - - - - - - - - - - House 
Document 104-48


 
         EXPENDITURES INCURRED TO DEAL WITH A NATIONAL EMERGENCY

                               __________

                                MESSAGE

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

 A FINAL REPORT ON THE TOTAL EXPENDITURES DIRECTLY ATTRIBUTABLE TO THE 
 NATIONAL EMERGENCY DECLARATION RESULTING FROM THE LAPSE OF THE EXPORT 
 ADMINISTRATION ACT OF 1979, COVERING THE PERIOD FROM AUGUST 19, 1994, 
          TO FEBRUARY 19, 1995, PURSUANT TO 50 U.S.C. 1641(C)




  March 21, 1995.--Message referred to the Committee on International 
                  Relations and ordered to be printed
To the Congress of the United States:
    1. On August 19, 1994, in Executive Order No. 12924, I 
declared a national emergency under the International Emergency 
Economic Powers Act (IEEPA) (50 U.S.C. 1701 et seq.) to deal 
with the threat to the national security, foreign policy, and 
economy of the United States caused by the lapse of the Export 
Administration Act of 1979, as amended (50 U.S.C. App. 2401 et 
seq.) and the system of controls maintained under that Act. In 
that order, I continued in effect, to the extent permitted by 
law, the provisions of the Export Administration Act of 1979, 
as amended, the Export Administration Regulations (15 C.F.R. 
768 et seq.), and the delegations of authority set forth in 
Executive Order No. 12002 of July 7, 1977 (as amended by 
Executive Order 12755 of March 12, 1991), Executive Order No. 
12214 of May 2, 1980, Executive Order No. 12735 of November 16, 
1990 (subsequently revoked by Executive Order No. 12938 of 
November 14, 1994), and Executive Order No. 12851 of June 11, 
1993.
    2. I issued Executive Order No. 12924 pursuant to the 
authority vested in me as President by the Constitution and 
laws of the United States, including, but not limited to, 
IEEPA. At that time, I also submitted a report to the Congress 
pursuant to section 204(b) of IEEPA (50 U.S.C. 1703(b)). 
Section 204 of IEEPA requires follow-up reports, with respect 
to actions or changes, to be submitted every 6 months. 
Additionally, section 401(c) of the National Emergencies Act 
(NEA) (50 U.S.C. 1601 et seq.) requires that the President, 
within 90 days after the end of each 6-month period following a 
declaration of a national emergency, report to the Congress on 
the total expenditures directly attributable to that 
declaration. This report, covering the 6-month period from 
August 19, 1994, to February 19, 1995, is submitted in 
compliance with these requirements.
    3. Since the issuance of Executive Order No. 12924, the 
Department of Commerce has continued to administer and enforce 
the system of export controls, including antiboycott 
provisions, contained in the Export Administration Regulations. 
In administering these controls, the Department has acted under 
a policy of conforming actions under Executive Order No. 12924 
to those required under the Export Administration Act, insofar 
as appropriate.
    4. Since my last report to the Congress, there have been 
several significant developments in the area of export 
controls:

Bilateral cooperation/technical assistance

    As part of the Administration's continuing effort to 
encourage other countries to implement effective export 
controls to stem the proliferation of weapons of mass 
destruction, as well as certain sensitive technologies, the 
Department of Commerce and other agencies conducted a range of 
discussions with a number of foreign countries, including 
governments in the Baltics, Central and Eastern Europe, the 
Newly Independent States (NIS) of the former Soviet Union, the 
Pacific Rim, and China. Licensing requirements were liberalized 
for exports to Argentina, South Korea, and Taiwan, responding 
in part to their adoption of improved export control 
procedures.

Australia group

    The Department of Commerce issued regulations to remove 
controls on certain chemical weapon stabilizers that are not 
controlled by the Australia Group, a multilateral regime 
dedicated to stemming the proliferation of chemical and 
biological weapons. This change became effective October 19, 
1994. In that same regulatory action, the Department also 
published a regulatory revision that reflects an Australia 
Group decision to adopt a multi-tiered approach to control of 
certain mixtures containing chemical precursors. The new 
regulations extend General License G-DEST treatment to certain 
categories of such mixtures.
Nuclear suppliers group (NSG)

    NSG members are examining the present dual-use nuclear 
control list to both remove controls no longer warranted and to 
rewrite control language to better reflect nuclear 
proliferation concerns. A major item for revision involves 
machine tools, as the current language was accepted on an 
interim basis until agreement on more specific language could 
be reached.
    The Department of Commerce has implemented license denials 
for NSG-controlled items as part of the ``no-undercut'' 
provision. Under this provision, denial notifications received 
from NSG member countries obligate other member nations not to 
approve similar transactions until they have consulted with the 
notifying party, thus reducing the possibilities for 
undercutting such denials.

Missile technology control regime (MTCR)

    Effective September 30, 1994, the Department of Commerce 
revised the control language for MTCR items on the Commerce 
Control List, based on the results of the last MTCR plenary. 
The revisions reflect advances in technology and clarifications 
agreed to multilaterally.
    On October 4, 1994, negotiations to resolve the 1993 
sanctions imposed on China for MTCR violations involving 
missile-related trade with Pakistan were successfully 
concluded. The United States lifted the Category II sanctions 
effective November 1, in exchange for a Chinese commitment not 
to export ground-to-ground Category I missiles to any 
destination.
    At the October 1994 Stockholm plenary, the MTCR made public 
the fact of its ``no-undercut policy on license denials. Under 
this multilateral arrangement, denial notifications received 
from MTCR members are honored by other members for similar 
export license applications. Such a coordinated approach 
enhances U.S. missile nonproliferation goals and precludes 
other member nations from approving similar transactions 
without prior consultation.
Modifications in controls on embargoed destinations

    Effective August 30, 1994, the Department of Commerce 
restricted the types of commodities eligible for shipment to 
Cuba under the provisions of General License GIFT. Only food, 
medicine, clothing, and other human needs items are eligible 
for this general license.
    The embargo against Haiti was lifted on October 16, 1994. 
That embargo had been under the jurisdiction of the Department 
of the Treasury. Export license authority reverted to the 
Department of Commerce upon the termination of the embargo.

Regulatory reform

    In February 1994, the Department of Commerce issued a 
Federal Register notice that invited public comment on ways to 
improve the Export Administration Regulations. The project's 
objective is ``to make the rules and procedures for the control 
of exports simpler and easier to understand and apply.'' This 
project is not intended to be a vehicle to implement 
substantive change in the policies or procedures of export 
administration, but rather to make those policies and 
procedures simpler and clearer to the exporting community. 
Reformulating and simplifying the Export Administration 
Regulations is an important priority, and significant progress 
has been made over the last 6 months in working toward 
completion of this comprehensive undertaking.

Export enforcement

    Over the last 6 months, the Department of Commerce 
continued its vigorous enforcement of the Export Administration 
Act and the Export Administration Regulations through 
educational outreach, license application screening, spot 
checks, investigations, and enforcement actions. In the last 6 
months, these efforts resulted in civil penalties, denials of 
export privileges, criminal fines, and imprisonment. Total 
fines amounted to over $12,289,000 in export control and 
antiboycott compliance cases, including criminal fines of 
nearly $9,500,000 while 11 parties were denied export 
privileges.
    Teledyne Fined $12.9 Million and a Teledyne Division Denied 
Export Privileges for Export Control Violations: On January 26 
and January 27, Teledyne Industries, Inc. of Los Angeles, 
agreed to a settlement of criminal and administrative charges 
arising from illegal export activity in the mid-1980's by its 
Teledyne Wah Chang division, located in Albany, Oregon. The 
settlement levied criminal fines and civil penalties on the 
firm totaling $12.9 million and imposed a denial of export 
privileges on Teledyne Wah Chang.
    The settlement is the result of a 4-year investigation by 
the Office of Export Enforcement and the U.S. Customs Service. 
United States Attorneys office in Miami and Washington, D.C., 
coordinated the investigation. The investigation determined 
that during the mid-1980's, Teledyne illegally exported nearly 
270 tons of zirconium that was used to manufacture cluster 
bombs for Iraq.
    As part of the settlement, the Department restricted the 
export privileges of Teledyne Wah Chang division; the division 
will have all export privileges denied for 3 months, with the 
remaining portion of the 3-year denial period suspended.
    Storm Kheem Pleads Guilty to Nonproliferation and Sanctions 
Violations: On January 27, Storm Kheem pled guilty in Brooklyn, 
New York, to charges that he violated export control 
regulations barring U.S. persons from contributing to Iraq's 
missile program. Kheem arranged for the shipment of foreign-
source ammonium perchlorate, a highly explosive chemical used 
in manufacturing rocket fuel, from the People's Republic of 
China to Iraq via Amman, Jordan, without obtaining the required 
validated license from the Department of Commerce for arranging 
the shipment. Kheem's case represents the first conviction of a 
person for violating section 778.9 of the Export Administration 
Regulations, which restricts proliferation-related activities 
of ``U.S. persons.'' Kheem also pled guilty to charges of 
violating the Iraqi Sanctions Regulations.
    5. The expenses incurred by the Federal Government in the 
6-month period from August 19, 1994, to February 19, 1995, that 
are directly attributable to the exercise of authorities 
conferred by the declaration of a national emergency with 
respect to export controls were largely centered in the 
Department of Commerce, Bureau of Export Administration. 
Expenditures by the Department of Commerce are anticipated to 
be $19,681,000 most of which represents program operating 
costs, wage and salary costs for Federal personnel and overhead 
expenses.
                                              William J. Clinton.  
                                   The White House, March 21, 1995.