[Senate Hearing 105-850]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 105-850

 
  BENEFITS OF COMMERCIAL SPACE LAUNCH FOR FOREIGN ICBM AND SATELLITE 
                                PROGRAMS

=======================================================================

                                HEARING

                               before the

  SUBCOMMITTEE ON INTERNATIONAL SECURITY, PROLIFERATION, AND FEDERAL 
                                SERVICES

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION


                               __________

                              MAY 21, 1998

                               __________

      Printed for the use of the Committee on Governmental Affairs


                      U.S. GOVERNMENT PRINTING OFFICE
49-589 CC                     WASHINGTON : 1999

_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402




                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOHN GLENN, Ohio
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              JOSEPH I. LIEBERMAN, Connecticut
SAM BROWNBACK, Kansas                DANIEL K. AKAKA, Hawaii
PETE V. DOMENICI, New Mexico         RICHARD J. DURBIN, Illinois
THAD COCHRAN, Mississippi            ROBERT G. TORRICELLI, New Jersey
DON NICKLES, Oklahoma                MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania
             Hannah S. Sistare, Staff Director and Counsel
                 Leonard Weiss, Minority Staff Director
                       Lynn L. Baker, Chief Clerk

                                 ------                                

   SUBCOMMITTEE ON INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL 
                                SERVICES

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
PETE V. DOMENICI, New Mexico         RICHARD J. DURBIN, Illinois
DON NICKLES, Oklahoma                ROBERT G. TORRICELLI, New Jersey
ARLEN SPECTER, Pennsylvania          MAX CLELAND, Georgia
                   Mitchel B. Kugler, Staff Director
               Linda J. Gustitus, Minority Staff Director
                      Julie A. Sander, Chief Clerk




                            C O N T E N T S

                                 ------                                
                                                                   Page

Opening statement:

    Senator Cochran..............................................     1
    Senator Levin................................................     2
    Senator Thompson [ex officio]................................     4
    Senator Collins..............................................     7

                               WITNESSES
                         Thursday, May 21, 1998

William Graham, President, National Security Research, Inc., 
  former Deputy Administrator, NASA, Science Advisor to 
  Presidents Reagan and Bush.....................................     8
John Pike, Director, Space Policy Project, Federation of American 
  Scientists.....................................................    12
William Schneider, Jr., Adjunct Fellow, Hudson Institute.........    15

                     Alphabetical List of Witnesses

Graham, William:
    Testimony....................................................     8
    Prepared statement...........................................    43
Pike, John:
    Testimony....................................................    12
    Prepared statement...........................................    48
Schneider, William Jr.:
    Testimony....................................................    15
    Prepared statement...........................................    55

                                APPENDIX

Chart entitled ``Waivers for Exports of Satellites Launched By 
  China,'' prepared by the Subcommittee staff....................    59
Chart entitled ``Applicability of Space Launch Vehicle Technology 
  to Ballistic Missiles,'' provided by the Central Intelligence 
  Agency.........................................................    60
Article submitted by Senator Levin from the Washington Post, 
  dated September 10, 1988, entitled ``Reagan Backs Plan to 
  Launch Satellites From China Rockets''.........................    61
Letter dated September 20, 1996, sent to Chairman of the Senate 
  Foreign Relations Committee from the Department of State, 
  signed by Barbara Larkin, who was Assistant Secretary for 
  Legislative Affairs............................................    63
Letter dated October 8, 1997, sent to Commerce Department from 
  Hughes Space and Communications Company, signed by the manager 
  for export compliance..........................................    65


  BENEFITS OF COMMERCIAL SPACE LAUNCH FOR FOREIGN ICBM AND SATELLITE 
                                PROGRAMS

                              ----------                              


                         THURSDAY, MAY 21, 1998


                                       U.S. Senate,
                  Subcommittee on International Security,  
                       Proliferation, and Federal Services,
                        of the Committee on Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m. in 
room SD-342, Senate Dirksen Building, Hon. Thad Cochran, 
Chairman of the Subcommittee, presiding.
    Present: Senators Cochran, Collins, Levin, and Thompson [ex 
officio].

              OPENING STATEMENT OF SENATOR COCHRAN

    Senator Cochran. The Subcommittee will please come to 
order.
    I would like to welcome everyone to today's hearing of the 
Governmental Affairs Subcommittee on International Security, 
Proliferation, and Federal Services.
    This morning we will examine the question of how a foreign 
country's satellite and intercontinental ballistic missile 
programs could benefit from launching commercial satellites 
that are built in the United States, and whether the 
administration's export control policy for satellites is 
adequate to prevent technology transfers that could endanger 
our country.
    We will hear from witnesses who will explain the evolution 
of our commercial satellite export policies and discuss 
specifically whether military benefits are derived by China 
when it launches U.S.-built satellites.
    In 1996, President Clinton ordered export-licensing 
jurisdiction for all commercial satellites on the U.S. 
Munitions List moved from the State Department to the 
Department of Commerce. This policy change was accompanied by 
an announcement that the Commerce Department would conduct 
``enhanced'' reviews of satellite export license requests in 
order to safeguard American technology and national security; 
that export licensing decisions for commercial satellites would 
still be based primarily on the national security implications 
of the transfer; and that an individual validated license would 
continue to be required throughout the export process.
    The end of the Cold War, of course, did not signal the end 
of threats to America's security. In numerous hearings last 
year, this Subcommittee took testimony from experts who 
provided many facts on one of the most substantial post-Cold 
War threats to the United States, the proliferation of weapons 
of mass destruction and missile delivery systems. And while 
Russia and China were identified as the world's major 
proliferators, we learned last year that the United States 
itself is implicated in proliferation through increasingly lax 
controls on the export of so-called ``dual-use products,'' such 
as supercomputers, that have both civilian and military uses.
    This morning we will explore the effect on American 
national security of the relaxation of U.S. export controls on 
missile and satellite technology. Although there is a lot of 
interest in the reasons for the administration's commercial 
satellite export policy changes, and particularly in the 
questions that have been raised about the license issued to 
Loral Space and Communications, those issues will be examined 
later, after a thorough review of the facts.
    A senior official of one of America's major aerospace firms 
recently told my staff that, ``whenever you connect a launch 
vehicle to a satellite, there has to be some technology 
transferred.'' The question is whether the United States faces 
enhanced national security risks as a result of this kind of 
technology transfer, and if so, what should be done about it.
    The witnesses who will testify this morning are: Dr. 
William Graham, former Deputy Administrator of NASA and Science 
Advisor to Presidents Reagan and Bush, and currently President 
of National Security Research, Incorporated; John Pike, 
Director of the Space Policy Project at the Federation of 
American Scientists; and Dr. William Schneider, Under Secretary 
of State for Security Assistance, Science, and Technology from 
1982 through 1986, and now a fellow at the Hudson Institute.
    It is the intention of the Chair to ask each witness to 
make a statement. We have written statements which have been 
supplied to the Subcommittee which will be printed in the 
record, and then we will have an opportunity, after all the 
statements have been made, to question the witnesses.
    Senator Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Thank you, Mr. Chairman.
    The question that we're asking today is whether using other 
countries' rockets to launch U.S. commercial satellites could 
jeopardize our national security. Specifically, the focus will 
no doubt be on whether the United States should permit U.S.-
built civilian satellites to be sent to China or other 
similarly situated countries for launching.
    Apparently our country does not have enough capacity to 
accommodate the needs of our own commercial companies, and 
launches in the United States are considerably more expensive 
than launches in China. These factors drove U.S. businesses to 
seek approval for their satellites to be launched in China, 
starting in the late 1980's, when President Reagan first 
approved the use of Chinese rockets in China to launch U.S.-
made commercial satellites.
    In order to send a sensitive item like a satellite to a 
foreign country like China, the owner must obtain an export 
license. As of March 1996, the owner is required to submit an 
application to the Commerce Department which convenes an 
interagency process to review it. The Department of Defense, 
Department of State, Energy Department, and Arms Control and 
Disarmament Agency all participate in reviewing the license 
application.
    For countries other than China, that's the end of the 
process. The Commerce Department can either approve or reject 
the application. Prior to March 1996 and depending upon the 
type of satellite or satellite equipment, the licensing agency 
was the Department of State, which maintains the so-called 
``munitions list,'' which included many commercial satellites 
and satellite equipment. The Department of State limits 
licensing considerations to those of national security and 
foreign policy, without consideration of economic or trade 
concerns.
    When the licensing authority was transferred to the 
Commerce Department, consideration of national security and 
foreign policy concerns continued, but consideration of U.S. 
economic interests was added.
    Relative to China, however, the licensing process doesn't 
reach a conclusion until the President agrees to a waiver, 
unless, of course, there is a decision not to proceed. Since 
the 1989 Tiananmen Square incident, the law prohibits any 
commercial satellite shipment to China unless the President, on 
a case-by-case basis, determines that the shipment would be in 
the national interest. This waiver, like the export license, 
involves an interagency process in determining whether a waiver 
would be appropriate.
    The State Department is a major player in this decision. If 
the agencies agree, they send a recommendation to the National 
Security Council which then conducts its own review and makes a 
recommendation to the President. No license to ship a satellite 
to China may be issued by the Commerce Department--nor could it 
have been issued by the State Department when it had the 
jurisdiction--without that Presidential waiver.
    So in the case of China, the licensing process is really 
determined by the requirement of a Presidential waiver, since 
no license can be issued without it and obviously once a waiver 
is granted, the license would follow.
    Recent news stories have focused on the procedures that our 
government follows in granting licenses to send satellites to 
China, namely the issue of which Department should be in charge 
of approving the licensing and whether the grant of waivers by 
President Clinton has been appropriate. But in looking at the 
last 9 years in which American-made satellites have been sent 
to China for launching, we can see that both the choice of 
which Department will be doing the licensing and the identity 
of the President granting the waivers has been immaterial to 
the outcome.
    As you can see from the list which has been prepared by my 
Subcommittee staff,\1\ using data provided by the Congressional 
Research Service, of the 20 waivers granted for satellites sent 
to China for launching in the last 9 years, 9 were approved by 
President Bush over 3 years, and 11 were approved by President 
Clinton over 4\1/2\ years. And, in all but the last 3 waivers--
so in 17 of the 20 waivers--the licensing agency was the State 
Department, which is the licensing agency if the exported item 
is on the munitions list.
---------------------------------------------------------------------------
    \1\ The chart entitled ``Waivers for Exports of Satellites Launched 
By China,'' provided by the Subcommittee staff, appears in the Appendix 
on page 59.
---------------------------------------------------------------------------
    These facts strongly suggest that it has made no difference 
relative to China whether satellites were on the munitions list 
and therefore licensed by the State Department, or whether the 
satellites are not on the munitions list and therefore licensed 
by the Commerce Department. Either way, the use of Chinese 
launch rockets require a Presidential waiver, and it made no 
difference whether the President was named Bush or Clinton. 
Those waivers have been approved.
    In answering the question of whether we should simply 
eliminate the opportunity for a waiver and bar the shipment of 
civilian satellites or their parts to China, period, we need to 
look at the risks involved in continuing the current practice 
initiated by President Reagan. First, does the act of using 
China's rockets to launch U.S. satellites involve the transfer 
of technology that will enhance China's ability to launch 
missiles? At least one witness today thinks there is such a 
possibility.
    Second, there is the possibility that the failure of a 
launch--the explosion of a rocket--will allow pieces of U.S.-
made satellites to fall into the hands of the Chinese. I would 
like to explore that question and the question of other 
possible risks with today's witnesses, as I know each of us 
will.
    Mr. Chairman, the United States is a technological giant in 
the world of commerce. This hearing raises important questions 
about how we carry out that role. I am glad we are holding this 
hearing, and I thank you for bringing us together.
    Senator Cochran. Thank you, Senator Levin.
    Senator Thompson.

             OPENING STATEMENT OF SENATOR THOMPSON

    Senator Thompson. Thank you very much, Mr. Chairman.
    I appreciate the fact that you are holding these hearings 
to examine our process of export approval of commercial 
communications satellites, and whether or not we are risking 
the transfer of technology that might assist the Chinese with 
their ICBM missiles.
    I think that we will have to conclude at the outset that no 
one--no one here, anyway--can possibly know whether or not 
technology has been transferred in any particular instance that 
might compromise our interests. I think it's clear that with 
regard to the way these things work, the extensive 
communications between our commercial vendors here and the 
Chinese concerning the operations of the missiles, no one knows 
exactly what conversations take place or what information might 
be passed on.
    We do know that it's very much in the interest of our 
commercial enterprises for these missiles carrying their 
satellites to work. It's very much in the commercial interest 
of our domestic companies to have the Chinese, for example, 
carry these satellites. It's the difference between hundreds of 
millions of dollars per launch and somewhere between $25 
million and $85 million.
    So going in, we know that our commercial interests--while 
totally patriotic--have a commercial interest in not only 
having the Chinese do this, and others, but that they work and 
that they not explode, as happens on occasion. And if there are 
problems with regard to the missiles carrying these satellites, 
I am sure there is a tendency to want to transfer enough 
information--to the Chinese, in this instance--to make sure 
those missiles don't explode again, that they don't shake so 
much that they damage sensitive technology, and that they have 
the capability of getting the job done.
    We can't know about all of what transpires. We can guess; 
we can think in terms of probabilities, or we can think in 
terms of possibilities. We can think in terms of the risks that 
are there, and we certainly need to think in terms of 
safeguards and what kind of process and procedure we need to 
have in place to minimize those risks.
    Of course, the underlying problem is that these commercial 
communications satellites contain militarily-sensitive 
characteristics cross-link capabilities where satellites talk 
to one another without having to go through the ground, 
integration technology that could improve ballistic missile 
capabilities to make sure that the missiles are stable.
    Many think the intangible know-how that might be derived 
from learning more and more about how to make their missiles 
operable and accurate is more important to the Chinese than the 
actual hardware. Satellite dispensing technology--the same 
technology that allows multiple satellites to be launched on 
one launcher--is the same kind of technology that is needed for 
multiple warhead missiles.
    There is no question that the standards have been relaxed 
with regard to the transfer of this technology and export 
licensing. The State and Commerce Departments simply approach 
things differently, as they are supposed to do. The Commerce 
Department has more than one interest; the Commerce Department 
has the commercial interest in addition to the national 
security interest.
    I'm not sure how much we can determine by the fact that 
there have been sanctions waivers in various administrations 
and that some licenses are granted by the State Department and 
some by the Commerce Department. I'm not sure without examining 
each one, how much we can determine about that, or what the 
result might have been had decisions been with another agency. 
But we do know that the shift that this administration made in 
1996 of the responsibility in this area from the State 
Department to the Commerce Department was contrary to the 
determinations that had previously been made by interagency 
groups, both in the Bush and the Clinton Administrations.
    I think it's important to point out that in the Bush 
Administration, the interagency group established criteria with 
regard to militarily-sensitive characteristics pertaining to 
these satellites and they determined that satellites that did 
not contain these militarily-sensitive characteristics could be 
transferred to the jurisdiction of the Commerce Department. 
About two dozen items were so transferred, and about half of 
the satellites which had no such characterizations. That was 
following the recommendation of a 2-year study by this 
interagency group.
    What happened in 1996 was that the interagency group at 
that time determined that that situation should stay the way it 
was; that is, if these satellites did not contain militarily-
sensitive information, it was OK for them to be under the 
Commerce Department jurisdiction, but if they did, they should 
remain at the State Department.
    Secretary of State Christopher agreed with that. However, 
the President overruled his own interagency group and the 
Secretary of State--his own Secretary of State at the time--and 
transferred licensing authority to the Commerce Department. So 
the difference between administrations is, first, in the nature 
of the technology or the nature of the satellites that were 
being transferred, and second, the fact that one President 
followed the recommendations of his interagency group while 
another President overruled it. It was overruled when Secretary 
of Commerce Ron Brown appealed the decision of Secretary of 
State Warren Christopher to President Clinton. And that's the 
way that that came about.
    The GAO looked at all of this, and they say that the 
implications of transferring to the Commerce Department 
authority over satellites with militarily-sensitive 
characteristics are uncertain.
    I not think that we can consider this matter without the 
underlying consideration of who we're dealing with. We know the 
Chinese have sent missiles to Pakistan; they've sent technology 
to Iran; they've sent nuclear equipment to both; they've 
conducted missile tests off the coast of Taiwan; and 
apparently, according to reports, the CIA has determined that 
13 of their 18 long-range ballistic missiles have nuclear 
warheads aimed at American cities. They have been caught in 
violation of their solemn agreements with regard to these 
matters. They are apparently aggressively trying to improve 
their missile program as a part of a military buildup.
    This is what we're dealing with here. So I appreciate the 
fact that you're having this hearing, Mr. Chairman. I look 
forward to exploring this, and saving other matters for other 
times. Later we will have a chance to look into several of what 
have been called ``coincidences,'' such as the fact that the 
Chinese arms dealer, Wang Jun, visited Mr. Brown at the 
Commerce Department and attended a White House coffee on the 
very day that President Clinton approved the launch of four 
satellites by the Chinese on February 6, 1996. Of course, Wang 
Jun had millions of dollars at stake in a Hong Kong satellite 
company.
    Another coincidence that we will inquire into later is the 
fact that between November 1995 and June 1996, the Loral folks 
contributed $275,000 to the Clinton reelection.
    The last coincidence we will look into later on is one 
concerning Ms. Liu. Apparently after the President announced 
this shift to the Commerce Department, she facilitate the 
transfer of a little under $100,000 to the Democratic National 
Committee. Ms. Liu, of course, is reported to be a Lieutenant 
Colonel in the Chinese military; her father was the highest-
ranking member in the military and in the leadership of the 
Communist Party.
    Incidentally, the parent company of Ms. Liu's company tests 
and provides equipment for the Chinese nuclear arsenal, and the 
Great Wall Industries Company. That company also launches 
private satellites; and that company, incidentally, is the one 
that was sanctioned by this country back in 1993 for 
transferring satellites to Pakistan.
    So those are all matters that we will save for another 
time. But I look forward to that also. Thank you very much.
    Senator Cochran. Thank you, Senator Thompson.
    Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you very much, Mr. Chairman.
    I want to start by commending you, Mr. Chairman, for your 
long leadership in the area of technology transfer. I know this 
is an issue that has been of great concern to you for many 
years, and you've been a real leader in Congress in this area.
    Certainly, recent events have conspired to give the subject 
of our hearing this morning even more relevance than usual. On 
February 15, 1996, a so-called Long March booster rocket lifted 
off its launch pad in the People's Republic of China, only to 
explode spectacularly some moments later. Because this 
explosion destroyed a $200 million satellite owned by Loral 
Space and Communications, and Hughes Electronics, February 15 
was a grim day for these American companies.
    This launch failure, however, was perhaps not entirely 
unwelcome from the perspective of United States national 
security interests. It has recently been reported that at least 
13 of China's 18 intercontinental ballistic missiles are 
targeted on American cities. Significantly, if ever launched, 
the nuclear warheads on these missiles would be carried to 
their American targets by rocket boosters similar to the Long 
March system that exploded on that day in February 1996.
    Significantly, the faults that the two American companies 
subsequently found in the exploding Long March booster were 
reportedly symptomatic of more general engineering or design 
flaws in Chinese rockets. If the Long March blew up upon 
launching, in other words, we could hope that if Chinese 
missiles were ever released against Washington, Chicago, New 
York, Denver, Dallas, or San Francisco, they, too, might well 
blow up.
    Ordinarily, one might think that a previously undiscovered 
defect in Chinese ballistic missiles would be good news for all 
Americans. Loral and Hughes, however--and with them it appears, 
the White House itself--did not think so. The details of how 
these companies and the administration cooperated to facilitate 
improvements in Chinese missile reliability now seems likely to 
be the subject of considerable investigation by Congress.
    The reports of this missile episode, however, highlight the 
importance of the export control matters that we are 
considering today. They suggest that there are some very real 
problems in the way that U.S. policy attempts simultaneously to 
promote American business interests and to protect American 
national security.
    Security policy making in a democracy often requires 
enormously difficult trade-offs. Among these many balancing 
acts is the tension between free trade and export controls. No 
matter what the economic benefits from free trade, however, 
arming potential adversaries with weapons they cannot otherwise 
obtain is surely foolhardy.
    It is on the strength of this insight that we have built 
our system of national security export controls. Today they 
revolve around such things as ICBM launch control systems, 
supercomputers, and multiple warhead delivery systems.
    With regard to ICBMs, we should make no mistake. The 
technologies used in military and civilian space launch systems 
have always been inextricably intertwined. The space programs 
and the ICBM programs of both the United States and the Soviet 
Union, for example, shared a common origin in Hitler's V-2 
rocket program. The V-2 mastermind, Werner von Braun, in fact, 
went on to help us build our earliest ICBMs and to develop our 
civilian satellite program.
    Space launch technologies have, therefore, always been 
dual-use technologies.
    Now, I do not mean to suggest that we can never insulate 
civilian technology transfers from military ones. My point 
simply is that it takes great care and diligence to do this 
correctly. It requires constant attention from real security 
professionals. And it requires that the White House not 
interfere with the decisions of those professionals.
    There is considerable reason to believe that our government 
has failed to follow these requirements.
    I look forward to hearing the expert witnesses that we have 
before us today. And again, I commend the Chairman for his 
longstanding leadership in this area.
    Senator Cochran. Thank you very much, Senator.
    If we now can move to the statements of our witnesses, 
we'll call on Dr. Graham first, then Mr. Pike and Dr. Schneider 
will follow in that order.
    Dr. Graham, welcome.

 TESTIMONY OF WILLIAM GRAHAM,\1\ PRESIDENT, NATIONAL SECURITY 
  RESEARCH, INC., FORMER DEPUTY ADMINISTRATOR, NASA, SCIENCE 
             ADVISOR TO PRESIDENTS REAGAN AND BUSH

    Mr. Graham. Thank you, Mr. Chairman, and Senators.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Graham appears in the Appendix on 
page 43.
---------------------------------------------------------------------------
    I'd like to briefly address the benefits of commercial 
space launch assistance and use for foreign intercontinental 
ballistic missile programs this morning.
    The design, engineering, testing and operation of ballistic 
missiles and space launch vehicles, sometimes called SLVs, have 
a great deal in common. This is particularly true for 
intercontinental ballistic missiles. The maximum velocities of 
ICBMs can be slightly less than that of SLVs, but from an 
orbital mechanics point of view, ICBM's can be considered space 
launch vehicles whose orbits intersect the Earth at the target.
    There's a misperception in some circles that ICBMs are more 
sophisticated and complex than space launch vehicles. In 
reality, the opposite is true. The preponderance of SLVs are 
ICBMs with additional elements. Put another way, if you have a 
space launch vehicle, you also can have an ICBM by removing 
those additional elements--the satellite in particular--and 
adding a re-entry vehicle containing a nuclear or other type of 
warhead.
    Most of the current U.S. unmanned space launch vehicles are 
derived from ICBM systems and are closely related to them. This 
is true for foreign countries as well.
    In the case of China, the Long March-3 was derived from DF-
5 ballistic missile technology, and India's Agni Medium Range 
Ballistic Missile is based on the design of its first space 
launch vehicle, the SLV-3, which in turn is a copy of a U.S. 
space launch vehicle.
    Space launch vehicles produced in non-market economies have 
been offered to the United States and other satellite 
manufacturers at attractive prices for launching high altitude 
geosynchronous communications satellites, which support the 
demand for long distance telephony, data transmission, pagers, 
radio feeds, and television feeds, as we've seen this week with 
the Galaxy IV satellite failure. And in the coming years, lower 
altitude satellites will provide infrastructure for commercial 
remote sensing, cell phones, and pagers.
    Because these commercial satellites are expensive and time-
consuming to build, and are instrumental in generating profits 
for the communications industry, American satellite 
manufacturers have strong incentives to enlist in ensuring that 
foreign SLVs transport their satellites to the intended orbits 
reliably and deploy the satellites in good working order. This 
assistance, however, can equally aid in the development and the 
reliability of foreign ICBMs.
    Essential elements of a space launch vehicle are its 
propulsion, structure, staging, guidance and control, ground 
support and launch equipment and procedures, overall systems 
integration, pay-load, the satellite or re-entry vehicle with 
warhead, the payload deployment, and the development testing, 
engineering, and facilities of the space launch vehicle.
    These essential elements of an ICBM are the same, with the 
exception of the payload, which for an ICBM, as I mentioned, is 
a re-entry vehicle containing some type of warhead rather than 
a satellite. I will briefly discuss each of these elements.
    Propulsion. There are basically two types of propulsion 
systems used in rockets: liquid fuel propulsion systems and 
solid fuel propulsion systems. The liquid fuel systems are all 
derivatives and extensions of the V-2 technology developed 
during World War II. That applies all the way from the V-2 
itself to the space shuttle main engines that are used today.
    These liquid propulsion systems are very efficient. At the 
same time, they require some care in handling and preparation 
for launching. The propellants themselves are very, very 
energetic chemicals and have to be managed and handled by 
experts.
    Solid propellants, on the other hand, are much more inert 
materials until they're ignited. And they are much more 
appropriate for a ballistic missile force that has to stay on a 
high state of alert for long times--years--and still launch on 
very short notice--minutes. This is an advanced ballistic 
missile force, and in fact similar to the technology the United 
States and, by and large, Russia uses today.
    Both of these technologies can be used for space launch 
vehicles, and both have been used for space launch vehicles. In 
general, developing countries tend to prefer the greater 
efficiency of the liquid systems for their first space launch 
vehicles.
    The structure of ICBMs and space launch vehicles must both 
be very light, since they're being accelerated against the 
force of gravity to velocities in the range of 24,000 feet per 
second--about 10 times the speed of a typical rifle bullet--but 
still must be very strong.
    The acceleration of launch produces several Gs of load on 
the structure during the ascent phase, and the aerodynamic 
loads are large during portions of the trajectory when the 
vehicle is high in the atmosphere.
    The structural requirements place a premium on materials 
design and fabrication for both ICBM and SLVs. These structures 
are very highly integrated in order to save weight. That 
integration goes through the payload itself, either the warhead 
for an ICBM or the satellite for an SLV.
    Staging is a common procedure designed to throw away part 
of the mass of the space launch vehicle, or the ICBM, before it 
reaches orbit or its target. You've heard of one, two, and 
three stage rocket systems, in which stages are sequentially 
discarded after the fuel has been expended.
    Stage separation, which is commanded by the vehicle's 
control system immediately after the propulsion of the stage is 
terminated, is used to minimize the amount of structure carried 
along after it is no longer needed. Staging is a very delicate 
process that has to be done quite precisely so that it doesn't 
disorient or otherwise damage the stages remaining to go to 
orbit, or for that matter, disrupt the satellite or the 
warhead.
    Guidance and control subsystems of both space launch 
vehicles and ICBMs keep track of where the vehicle is and where 
it's supposed to go. Where it's supposed to go is a combination 
of velocity and location in orbit for a space launch vehicle, 
or a point on the surface of the Earth for an ICBM.
    The guidance and control system calculates the direction 
and duration of the rocket thrust that must be commanded for 
the rocket to reach the target, and then controls the direction 
of thrust, so that it satisfies that calculation. This process 
occurs several times each second during powered flight.
    In the past, the location of the vehicle during ascent was 
determined by inertial measuring units, comprised of gyroscopes 
and accelerometers. But the opportunity exists today to use 
U.S. global positioning satellite systems and the Russian 
GLONAST system to establish the rocket's location with high 
accuracy by reference to precision satellite beacons.
    While high precision inertial measuring units are expensive 
and difficult to produce, GPS and GLONAST--assisted navigation 
units are potentially more accurate and less expensive, and the 
basic elements are widely available today.
    ICBMs designed to destroy targets specifically hardened to 
nuclear attack require more accurate guidance than space launch 
vehicles. However, for attacking all other targets, including 
cities, space launch vehicle guidance systems have sufficient 
accuracy for ICBM use as well.
    Ground support and launch equipment and procedures are also 
an important part of both ICBMs and space launch vehicles. In 
fact, they're the same for the propulsion and guidance elements 
of both of these types of systems. From a personnel standpoint, 
space launch vehicle crews are automatically capable of being 
ICBM launch crews.
    The ground support for preparation, monitoring and checkout 
of the specific payloads for space launch vehicles and ICBMs is 
different, since the payloads are different. Satellite payloads 
for SLVs tend to be more complex and require more advanced 
ground support than do ICBM warheads.
    A very important area that's sometimes overlooked is the 
overall system integration, which in general is a field in 
which the United States has world leadership. Even after the 
individual components and subsystems of a space launch vehicle 
or ICBM are functioning properly, they must still be integrated 
into a complete system that can work together.
    Instabilities in propulsion, control, or other subsystems 
often depend on the coupling of two or more subsystems in 
unanticipated ways. Incipient instabilities can lead to a rough 
ride to orbit, placing additional mechanical stresses on the 
payload. An extreme manifestation of these instabilities can, 
and unfortunately has, caused the breakup and destruction of 
the entire vehicle in powered flight.
    The integration of the propulsion, guidance, control, 
structure and aerodynamics is the same for space launch 
vehicles and ICBMs, while the integration of the payload is 
unique to the specific design. However, the analytical tools, 
such as the structural dynamics analysis software, are the same 
for both and are used widely.
    The integration of the payload, like other aspects of 
system integration, require an intimate knowledge of both the 
payload and the launch vehicle. In the case of a space launch 
vehicle, a great deal of detailed technical information must be 
exchanged between the satellite designers, the satellite 
attachment and aerodynamic shroud designers, and the vehicle 
designers, to integrate the payload into the system.
    And there must be a close working relationship between the 
space launch vehicle engineers and satellite engineers and 
technicians to assure a successful launch mission.
    Mr. Chairman, integrating a satellite with an SLV is not 
like putting a load in the back of a pickup truck. This is a 
very highly integrated system.
    The more that can be done to improve the ride to orbit by 
reducing the mechanical stresses on the satellite, and the more 
that can be done throughout the SLV system to increase its 
overall reliability, the more likely that a successful launch 
and orbital insertion will be achieved. Measures taken to 
increase the performance and reliability of space launch 
vehicles translate directly into performance and reliability 
improvements in ICBMs.
    United States and Russian ICBM development programs have 
used more test flights than have their space launch vehicle 
counterparts. This is a result of United States and Russian 
efforts to achieve both high reliability and high accuracy--
goals that may not be as important to other countries.
    Payloads for space launch vehicles and ICBMs are different. 
That has been noted in the opening statements, and is certainly 
worth repeating.
    On the other hand, the integration problems, as I 
mentioned, are the same. And all the ascent problems are very 
similar.
    Payload deployment is another area of common technology. 
The release of a single satellite payload and a single warhead 
payload are similar operations. Both require the proper 
deployment, positioning, and orientation of the payload. The 
deployment of multiple satellites from a space launch vehicle 
and multiple warheads from an ICBM are also similar operations.
    The Iridium program, for example, which has used Chinese 
space launch vehicles, among others, deploys several satellites 
during one launch mission, and requires a deployment platform 
to do that. This, of course, is very, similar to the technology 
for multiple re-entry vehicles such as we have on our Minuteman 
III system, and for that matter, on Peacekeeper. Information 
and experience gained from one of these payload deployment 
activities can be applied directly to the other.
    Development, testing, engineering and facilities is another 
area of common technology. The requirements for space launch 
vehicle and for ICBM vehicle development are very similar. 
These include engine test stands and testing, guidance and 
navigation test laboratories and facilities, test flight 
ranges, and vehicle diagnostics and telemetry systems.
    Perhaps the most critical technology that can be 
transferred is the engineering skill and experience required 
for interpreting and rectifying design problems that occur 
during system development and are reflected in the telemetry of 
system performance during testing.
    In addition to advancing the ICBM capabilities of other 
countries, U.S. assistance in supporting and developing space 
launch vehicle capabilities assists these countries in being 
able to use space more effectively for military purposes. These 
purposes include reconnaissance, communications, and 
meteorology, and others.
    Such capabilities can then be provided in turn to other 
countries in exchange for military, political, or financial 
support. Transferring space launch technology to the developing 
world provides space access to many potential adversaries of 
the United States, and is a serious matter that carries 
substantial risk to the United States and its allies around the 
world.
    Thank you, Mr. Chairman.
    Senator Cochran. Thank you very much, Dr. Graham, for your 
statement.
    Mr. Pike, we will now hear from you.

  TESTIMONY OF JOHN PIKE,\1\ DIRECTOR, SPACE POLICY PROJECT, 
               FEDERATION OF AMERICAN SCIENTISTS

    Mr. Pike. Mr. Chairman, Members of the Subcommittee, I 
appreciate the opportunity to testify before you this morning, 
a morning in which the world is a more dangerous place than it 
was a month ago or a year ago. And a morning on which I think 
it's going to be a more dangerous place a month and a year from 
now.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pike appears in the Appendix on 
page 48.
---------------------------------------------------------------------------
    We're witnessing the birth pangs of an arms race on the 
Indian subcontinent, rumors of war in Kashmir, ratification of 
the comprehensive test ban in the United States, or the START -
2 agreement in Russia seem less likely than even a few weeks 
ago.
    This Subcommittee in particular has been instrumental in 
alerting the Nation to these and other dangers, many of which 
transcend the traditional Cold War litany. Fortunately, 
however, the subject of today's hearing does not rank very high 
on this list. And I welcome this opportunity to inject some 
much-needed balance to the increasingly controversial questions 
of the relationship between missile and space launch 
technology, and the adequacy of existing export control 
mechanisms to maintain this distinction.
    You may recall that Werner von Braun ``aimed for the Moon 
and hit London.'' Since the dawn of the space age and the 
missile era, the primary distinction between space launch 
vehicles and missiles has been attitude, and only secondarily, 
altitude. The first American and Soviet satellites were 
launched on converted military missiles and derivatives of 
these missiles continue to be used by both countries.
    It remains trivially true that many of the major technical 
arts applicable to the challenges of missilery are equally 
applicable to space launch operation. A more challenging 
question is to unravel the actual military significance of 
specific technologies.
    Concerns have been raised as to whether the interactions 
with American commercial satellite operators have led to the 
transfer of technical information that would be useful to the 
Chinese in improving the liability or capability of their 
missiles. Given the ongoing investigations of these matters, 
and the consequent limited public availability of detailed 
technical information, it's difficult to form a definitive view 
on this matter, and several general observations are possible 
and necessary at this juncture.
    For nearly three decades, the Chinese have maintained a 
small arsenal of ICBMs capable of targeting American cities. It 
is the fact of the existence of this force, rather than the 
fine grained details of their technical characteristics, that 
has defined their existential deterrent posture relative to the 
United States.
    The space launch industry is extremely sensitive to 
questions of launcher reliability, with launchers exhibiting 
reliability lower than the prevailing 90 to 95 percent 
liability rates, facing potentially prohibitive insurance 
premiums. Unlike space launch vehicles, the difference between 
75 percent and 90 percent reliability of the Chinese missile 
force would have no material bearing on the quality of the 
existential deterrents in terms of American or Chinese 
calculation.
    High confidence and high reliability of missiles has been 
an abiding concern of the United States. But we face a very 
different operational requirement of achieving target kill 
against a large number of Russian ICBM silos.
    I am concerned that in the absence of rampant and 
significant reductions in American and Russian nuclear 
arsenals, China may, over the coming decades, build up to 
current American force levels if we choose not to build down to 
theirs, and develop an appetite for high confidence and 
reliability.
    Hopefully we can forestall this development, but should we 
fail, we will not confront the Chinese arsenal of liquid fueled 
DF-5s, such as they have today, but rather a more numerous 
arsenal of their new solid fuel DF-31 and DF-41 missiles.
    And any insight, however marginal, into the reliability of 
the DF-5 gained in the 1990's would surely be of vanishing or 
little relevance to the reliability of the utterly unrelated 
DR-31s and DF-41s deployed decades hence.
    While accuracy is also of interest in the missile and 
launch fields, divergent considerations apply. Satellite 
operators generally set standards for launch vehicles, placing 
their satellites into some proximity of the destination orbit.
    But the margin for error in the real world is normally many 
miles. And since satellites always carry their own maneuvering 
propellant it's left to the satellite rather than the launcher 
to reach the ultimate destination. And in the case of deploying 
multiple satellites, this deployment can take place over a 
period of hours or days, rather than the minutes found in the 
case of a multiple warhead missile.
    The warheads carried on missiles have no such supplementary 
guidance or propulsion capability, and rely entirely on the 
missile and the quality of the re-entry vehicle body to reach 
their terrestrial destination. The accuracy of existing Chinese 
missiles is not well characterized in -the open literature, but 
is surely denominated in miles rather than the hundreds of 
yards characteristic of American missiles. Such accuracy is 
consistent with the deterrent role of the existing Chinese 
missile force.
    Close does count in horseshoes, hand grenades and global 
thermonuclear war. It matters little to China or America 
precisely which part of Los Angeles is the actual ground zero. 
It should be recalled that the atomic bomb dropped on Nagasaki 
actually missed by a wide margin, a fact lost on the citizens 
of that unfortunate city.
    Again, over time, this may change, and we may a few decades 
hence confront the Chinese nuclear arsenal that is both as 
numerous and as accurate as that deployed by the United States 
today. While this would represent a profound policy failure on 
the part of the United States to the extent that it was within 
our control, the potential transfer of technical data related 
to current Chinese launch vehicles would not materially 
contribute to this failure.
    And given the ongoing investigation of allegations, it's 
also difficult at this point and in this forum to provide a 
definitive answer to the adequacy of current export control 
regulations. But the course taken over this decade with respect 
to the Chinese launch vehicles has had diverse benefits and on 
balance, manageable risks.
    This set of policies has strengthened the American 
satellite industry, enhancing our global dominance of this 
strategic sector, and in the process, increasing the diversity 
and capability of communications available to our military 
forces worldwide.
    It's engaged the energies of the Chinese aerospace industry 
and perhaps moved them towards seeing space development rather 
than missiles as a central focus of their emerging role in the 
world. It's given us leverage in discouraging their transfer of 
special weapons technologies to other countries, notably 
Pakistan. While these efforts have clearly not been as 
successful as we would have wished, armed proliferation sticks 
would have been even less effective in the absence of the 
carrots of space proliferation.
    We should not allow current controversies to obscure the 
fundamental soundness of this approach. But even more 
critically, we should not allow the current controversy to 
distract us from the more pressing and significant challenges 
American security faces today.
    Senator Cochran. Thank you, Mr. Pike.
    Dr. Schneider, we will hear from you now.

TESTIMONY OF WILLIAM SCHNEIDER, JR.,\1\ ADJUNCT FELLOW, HUDSON 
                           INSTITUTE

    Mr. Schneider. Thank you very much, Mr. Chairman, and I 
appreciate the privilege of testifying before this 
Subcommittee, and also appreciate your leadership on this 
particularly important subject.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schneider appears in the Appendix 
on page 55.
---------------------------------------------------------------------------
    I'll just summarize a few remarks concerning the regulatory 
aspects of this problem. The U.S. Government has historically 
regulated communications satellites, even when they were having 
strictly commercial applications, because of the close 
association of space launch and space satellites with national 
defense purposes.
    Over time, the enabling technologies for the civil and 
military applications began to converge, and there were 
relatively few differences between them for either civil or 
military applications for communications satellites.
    The primary differences between the commercial 
communications satellites and military communications 
satellites focused on measures to assure the survivability of 
those satellites. Those measures were generally developed 
through the Department of Defense, and hence justified the 
regulation of the communications satellites, even for 
commercial purposes, under munitions list auspices.
    Due to the growth in space and launch services reliability, 
as Dr. Graham and Mr. Pike referred, especially in Russia and 
China, it created the possibility of establishing a worldwide 
commercial launch industry. This coincided with the U.S. 
Government's policy change seeking to de-nationalize the space 
launch industry and convert it into a commercial industry.
    However, for national security as well as commercial 
considerations, the U.S. Government chose in the 1980's to 
limit the use of Russian and Chinese space launch services. 
This was done through continuing munitions list licensing of 
communications satellites and a system of launch quotas because 
of the fact that China and Russia at the time were non-market 
countries.
    A policy change undertaken referred to in 1996 is an 
important philosophical change, and I think it should be noted, 
because of the difference between the concept of munitions 
license regulation and commercial or Department of Commerce 
regulation. The philosophy under munitions licensing is that 
the matter to be exported is approved to achieve the national 
security purposes of the United States. Nothing is permitted to 
be exported that addresses those purposes, unless specifically 
authorized.
    As a consequence, when a communications satellite or space 
launch services or anything else that is identified on the 
munitions list is proposed for export, the technology is very 
thoroughly disaggregated to the point where perhaps two dozen 
offices in the national security community, the Department of 
Defense, Department of State, intelligence community and other 
agencies depending on the details of the technology, will 
review it very carefully, based upon very detailed 
documentation required to be submitted by the applicant.
    This differs from the philosophy of products that are 
licensed under the Department of Commerce licensing, which is 
mainly done to promote the economic interests of the United 
States. And the aim is to facilitate the passage of this 
technology or services or hardware into international commerce 
for the benefit of U.S. industry.
    Typically, the technology associated with it is focused 
primarily on the functionality of the system, that is, what 
purpose would it be used for, rather than the disaggregated 
review of the technology, as is the case in munitions 
licensing. These philosophical differences are important, 
because to the degree to which technology is transferred under 
a commodity jurisdiction change, from the munitions list to the 
Department of Commerce list, the technology is more likely to 
go into the public domain and indeed, to be done in a way that 
is generally not subject to U.S. monitoring.
    I think the trends in this can be underscored by the degree 
to which liberalization has taken place. When I served in the 
Department of State in the mid-1980's, the Department of 
Commerce issued nearly 150,000 validated export licenses for 
dual-use equipment. In fiscal year 1997, that figure dropped to 
about 11,000, underscoring the dramatic degree to which the 
advanced technology has been liberalized.
    Indeed, the most common items licensed on the Department of 
Commerce list are shotguns. So the degree of liberalization is 
indeed very substantial.
    If added to that, there is a Commodity Jurisdiction change, 
based on the philosophical differences between the two 
licensing systems, it reflects a change in underlying public 
policy. The circumstances that we face with communications 
satellites is that it is at the nexus of the problem of 
balancing between these commercial aspirations of the United 
States which are extremely important, as our society and 
economy are information-driven, and our national security 
concerns.
    I appreciate the work of this Subcommittee in trying to 
understand the issue and achieve appropriate balance in them.
    Thank you Mr. Chairman.
    Senator Cochran. Thank you, Dr. Schneider, for your 
assistance to the Subcommittee and for your statement.
    Dr. Graham, you have pointed out how there are a lot of 
similarities between space launch activities and 
intercontinental ballistic missile activities in terms of the 
testing, building, and launching of these types of vehicles.
    We happen to have a chart here that was prepared for the 
Subcommittee by the Central Intelligence Agency, although it is 
unclassified. It's available there, and it compares different 
parts of the missile system with a space launch vehicle.\1\
---------------------------------------------------------------------------
    \1\ The chart provided by the Central Intelligence Agency appears 
in the Appendix on page 60.
---------------------------------------------------------------------------
    Does this in your view, based on your experience and 
knowledge of these systems, describe in a helpful way or an 
accurate way how interchangeable so many of the parts of these 
systems are?
    Mr. Graham. Yes, Mr. Chairman, I think this is a good 
representation of it. I would only add that for third world 
countries that are developing longer range rockets, they can 
also take the strap-on boosters you see on the space launch 
vehicle and apply them to the ballistic missile as well. So 
there is in fact a little more commonality than that chart 
shows.
    But it's basically correct.
    Senator Cochran. In 1993, on the question of whether the 
State Department would continue to license technical data 
sharing for the commercial satellites already moved to the 
Commerce Department's licensing jurisdiction, a Defense 
Department memorandum to the Department of State said, ``While 
all of the USML,'' meaning U.S. Munitions List, ``controlled 
technical data is of concern, that technical data which covers 
launch vehicle integration services is of the utmost importance 
to DOD and the missile tech community. Because any technical 
data on the launch vehicle, other than electrical and 
mechanical integration data, directly relates to ballistic 
missile proliferation concerns.''
    Do you think the Department of Defense memorandum in 1993 
is still a valid expression of concern?
    Mr. Graham. Yes, Mr. Chairman. If anything, I think it was 
a understatement of the concern. It excludes the mechanical 
integration information, but in fact, the mechanical 
integration of the payload with the booster is very important.
    For example, both ballistic missiles and space launch 
vehicles tend to bend while they're flying upwards, sort of 
like this. The control system has to be able to take that out 
by dynamic control.
    The weight of the satellite or the payload on top is also 
moving back and forth. You can't let that body, in an 
oscillation called a body mode, either damage the satellite or 
its mount, or somehow have that mass at the top of the missile 
adversely affect the dynamical response of the rest of the 
vehicle.
    So I think if anything, the concerns are a little more 
extensive than they are voiced there. But they're basically 
correct.
    Senator Cochran. In the next year, January 1994, there was 
a Washington Times article which reported that licenses had 
been approved for the launch of two Martin Marietta satellites, 
Echo Star and AsiaSat II in China. The Commerce Department 
export licenses reportedly permitted Martin Marietta to assist 
the Chinese with integration analysis of the satellites to the 
space launch vehicle.
    According to the article, ``A Martin Marietta spokesman 
confirmed that his company's sale would include an integration 
analysis package,'' my question to you is, what is this 
integration analysis that is being discussed there, and how 
could it be helpful to Chinese missile programs?
    Mr. Graham. The integration analysis is the analysis of the 
overall performance of the space launch vehicle with the 
satellite on board. It's a very important part of space launch 
activities, because if in fact the missile or the booster is 
not well suited to the satellite launch, if it provides a rough 
ride or high acceleration to the satellite, one of two things 
will happen. Either you will have to put more structure in the 
satellite, which means you have less useful payload, or you 
will experience a failure in the satellite, either from the 
mechanical stresses on it or on the attachment it has to the 
space launch vehicle.
    Similarly, if the satellite isn't the right mass and 
balance, it can affect adversely the rocket launcher itself. So 
there is not a way to separate the integration of the satellite 
with the integration of the space booster. They have to be done 
as one single unit. And you have to understand the performance 
of that whole system to have a successful launch to orbit.
    There's technically not a divide between what the booster 
design people need to know and what the satellite people need 
to know. They both need to know almost everything about the 
mechanical and electrical characteristics of the system.
    Senator Cochran. Your statement is in essence a conclusion 
based on your experience and knowledge of these systems that by 
allowing China to launch U.S. commercial satellites, we're 
actually helping improve China's missile and satellite launch 
capabilities and their infrastructure.
    Does this also relate to providing a higher state of 
readiness for those involved in China in these programs? We 
hear a lot about China being unable to immediately respond in 
cases of emergencies. Does launching U.S. satellites also help 
keep China's launch time in a higher state of readiness than it 
otherwise would be?
    Mr. Graham. It certainly provides strong economic support 
to the cadres of rocket scientists and engineers that China 
has. We essentially pay for part of their training and their 
infrastructure. That gives China an overall more capable 
ballistic missile as well as satellite launch capability.
    It also keeps those cadres active in preparing and 
launching rockets. That, again, helps their readiness to launch 
whatever China dictates that they launch.
    Finally, in the longer run, the next step in guidance 
systems, for example, is going to be to global positioning 
satellite assisted guidance, both for space launch vehicles and 
for ICBMs. And that will make both of these much more accurate 
in their performance and improve their ICBMs' ability to hit 
targets.
    Senator Cochran. Dr. Schneider, in your discussion of the 
regulatory regime and its evolution and the changes that have 
taken place over the last several years, you mentioned the 
impact of the change of philosophy as well as regulation that 
occurred in 1996. I have a copy of a letter that was written to 
the Chairman of the Senate Foreign Relations Committee from the 
Department of State, signed by Barbara Larkin, who was 
Assistant Secretary for Legislative Affairs.
    It's dated September 20, 1996. And it's notifying the U.S. 
Senate, specifically the Chairman of the Foreign Relations 
Committee, of these changes that had taken place under the 
Export Administration Act. I'm going to give you a copy of 
this, so you can have it available to you.\1\
---------------------------------------------------------------------------
    \1\ The letter, dated September 20, 1996, appears in the Appendix 
on page 63.
---------------------------------------------------------------------------
    One thing that is mentioned in this letter is that, not 
only is there a removal from State Department to the Commerce 
Department, from the munitions list to the so-called Commerce 
Department control list, of militarily sensitive components of 
commercial satellites. But it noted that additional controls 
would be placed on these items by the Commerce Department to 
bolster its export control regime.
    The letter says this: ``These satellites would not be 
eligible for a Commerce Department general license.''
    My question is, what is meant by the term ``general 
license''? Is this some kind of jargon for saying a formal 
export license from the government is not necessary to export 
the item? And how is this different from an individual 
validated license?
    Mr. Schneider. Thank you, Mr. Chairman.
    A general destination license is essentially equivalent to 
not requiring an export license. The technology that is so 
identified, or the product that's so identified, can be 
exported by the exporter without need for additional authority 
from the U.S. Government.
    The individual validated license, which is, that is the 
category I mentioned that has been a beneficiary of substantial 
liberalization from about 150,000 now down to about 11,000 in 
fiscal year 1997. Individual validated license means that the 
applicant has to provide information on what he wishes to 
export and who the end user is, and other bits of information 
relating to it.
    That is assessed by the Department of Commerce and in some 
cases referred to other agencies. If the agencies agree, then 
the Department of Commerce will issue a license of the intended 
purpose. And that is an individual validated license.
    Senator Cochran. Thank you. For the purpose of our record, 
I'm going to ask that a copy of the letter dated September 20, 
1996, be included in the record.
    Senator Cochran. Senator Levin.
    Senator Levin. Thank you, Mr. Chairman.
    First I'd like to go back to 1988, when President Reagan 
decided to allow for the transfer of satellites for Chinese 
launch. It was apparently a highly controversial decision, 
opposed by many members of Congress. This is what a Washington 
Post article says on September 10, 1988, which I would ask be 
made part of the record, Mr. Chairman.\2\
---------------------------------------------------------------------------
    \2\ The Washington Post article referred to appears in the Appendix 
on page 61.
---------------------------------------------------------------------------
    It said that, ``President Reagan, in a move designed to 
expand trade between the United States and China, has given 
conditional approval to plans to launch three American-made 
communications satellites on China's Long March rocket 
boosters, the State Department announced yesterday. If the 
decision is not blocked by Congress, or by a special Western 
Bloc commission that monitors technology transfers to communist 
nations, it will mark the first time U.S. satellites have been 
launched from a non-western or communist country.''
    ``The administration's approval of export licenses,'' and 
I'm shortening this, that's why I want the whole article in the 
record, ``the administration's approval of export licenses for 
the satellites was condemned by several members of Congress as 
threatening national security by giving the Chinese an 
opportunity to see American satellite technology.''
    ``China's promised it will not examine the satellites, 
which will be shipped for launch in sealed containers. But some 
U.S. officials have said there is no way to ensure the security 
of the satellites once they're in China awaiting launch.''
    So apparently this decision, it says here by the way, 
``this is a victory,'' says the Washington Post, ``for the 
Chinese government.''
    Apparently it was a highly controversial decision at the 
time, because of some of the concerns, Dr. Graham, which I 
heard from you this morning, the very launch of an American 
satellite from a Chinese rocket contributes to the advance of 
rocket science in China. Is that fair?
    Mr. Graham. Yes, Senator, that's fair.
    Senator Levin. Since that time, since Tiananmen Square, 
there's been a requirement for a Presidential waiver for a 
transfer of a satellite for Chinese launch. Those waivers have 
been forthcoming under both President Bush and President 
Clinton.
    There must be a national security review, as I understand 
it, before those waivers, so that the waiver in effect 
supersedes the licensing requirement. Because the agency, 
whether it's the State Department or the Commerce Department, 
is going to license something where there's been a Presidential 
waiver. Once it's gone through that waiver process, I doubt 
there's very much left for the agency to decide.
    The waiver process kind of supersedes the licensing 
process. If a President waives a transfer, it's kind of hard to 
imagine the Commerce Department or the State Department is not 
going to issue the license following that.
    Do you know, Dr. Schneider, whether or not the number of 
agencies involved in that presidential review are fewer than 
they are for a munitions list review, when there's a State 
Department licensing? Do you know if the number of agencies is 
fewer?
    Mr. Schneider. I'm not intimately acquainted with the 
process that's being used. But my expectation would be that the 
same agencies at the cabinet level would be involved. The issue 
that is not known to me is the degree to which the technology 
is in fact disaggregated and sent to the special offices that 
have the particular knowledge of the technology. That might 
make a difference in how the review would come out.
    Senator Levin. So you're not sure whether or not, inside 
each agency, it goes to the same sub-agency groups for review, 
but it might.
    Mr. Schneider. It might, yes. I hope it would.
    Senator Levin. Now, yesterday, the House passed an 
amendment which reverses this policy and says, no more 
satellites can be transferred to China-basically reverses the 
decision--there's also a couple of other amendments, too, which 
change the munitions list issue.
    But the fundamental amendment adopted yesterday by the 
House said, no more satellites can go to China for launch, 
regardless of what President Reagan's done, what President Bush 
has done, what President Clinton has done, in terms of 
permitting this with waivers or with scrutiny. The fundamental 
issue here seems to me is the one that Dr. Graham has raised, 
and you others have commented on: Should the satellites be 
permitted to go to China for launch?
    By a vote yesterday of 417 to 4, following I believe a 10-
minute debate on the amendment but a much longer debate on the 
whole issue, the House of Representatives said that there will 
be a prohibition, here it is: ``No satellite of the United 
States in origin, including commercial satellites and satellite 
components, may be exported or re-exported to the People's 
Republic of China.''
    Do you agree with that decision, Dr. Graham?
    Mr. Graham. Senator Levin. I would like to preface my 
response with a brief word of background. I first worked on 
ballistic missiles in 1964, when I was an officer in the Air 
Force. I have worked on several ballistic missiles since then, 
and also helped, when I was at NASA, resurrect the U.S. 
unmanned space launch vehicle program. So I have considerable 
familiarity with both ballistic missiles and space launch 
vehicles.
    I was the director of the Office of Science and Technology 
Policy, as well as science advisor to the President, when the 
issue of the use of Chinese SLVs came forward in 1988. Based on 
my experience, at that time I opposed sending those first three 
satellites to China for launch. I still think that was an 
unsound policy, and therefore think the measures the House has 
taken yesterday are in fact correct.
    Senator Levin. In 1988, you opposed President Reagan's 
action?
    Mr. Graham. No, Senator, there was an interagency review of 
the prospect of allowing those satellites to be transferred to 
China for launch. During that interagency review process, I 
opposed their being transferred.
    Senator Levin. That's what I mean. During that process, it 
was your opinion that those satellites should not have been 
transferred, we should not have started down that road?
    Mr. Graham. That's correct, Senator.
    Senator Levin. That's still your opinion?
    Mr. Graham. Yes, Senator.
    Senator Levin. Mr. Pike, yesterday's vote, do you think it 
is wise or unwise? It's the fundamental issue.
    Mr. Pike. I think it was certainly very poorly premised, 
and that's one of the reasons I'm hoping that this hearing 
today is going to be able to put this matter in a slightly 
better perspective. If one examines the statements that have 
been made on the Floor of the House, Floor of the Senate over 
the last several weeks regrading the situation with respect to 
the Chinese strategic forces, it seems to me that the House was 
making a decision that was at best extremely poorly informed.
    We've heard charges that there are now hundreds of Chinese 
nuclear missiles aimed at the United States, although I think 
we've had probably a more realistic assessment of that here 
this morning. The suggestion that there were no Chinese 
missiles capable of reaching the United States until last year 
and that this change and all kinds of other horrific changes 
have been solely due to the events that I take it are going to 
be subject to further investigation here and elsewhere, I think 
is obviously and fundamentally at variance with the facts.
    So if the House is basing its decision with respect to 
launching Chinese satellites, American satellites on Chinese 
rockets, under the notion that this policy has somehow resulted 
in some profound, immediate, obvious, irrefutable degradation 
in American security due to the ability of the Chinese to fire 
hundreds of nuclear missiles at the United States today, 
whereas they were utterly incapable of doing so a year ago, I 
think that it's astonishing that the House could be making a 
decision on the basis of such erroneous information.
    Senator Levin. I take it, then, you don't agree with the 
House's decision?
    Mr. Pike. I think it was very poorly premised, and I'm 
hopeful that the Senate will be able to set matters straight, 
hopefully on the basis of the record we're making in this 
hearing today.
    Senator Levin. Dr. Schneider, was the House doing the right 
thing yesterday in prohibiting the transfer or export of 
satellites or components to China?
    Mr. Schneider. I know any President wishes to have 
discretion in the ability to manage foreign policy. 
Restrictions imposed by the Congress are often resisted for 
that reason. But because of the risks of proliferation, I think 
it was the right choice.
    Senator Levin. Simply, no more commercial satellites for 
launch in China?
    Mr. Schneider. Unless we can come up with a technique that 
isolates China's access to the technology transfer that we've 
been discussing here.
    Senator Levin. Doesn't the very launch of those satellites 
contribute somewhat to their knowledge, for the reasons that 
Dr. Graham went into and you went into somewhat?
    Mr. Schneider. Yes. Hypothetically, the only way I can 
imagine doing it is if they export the satellites to an 
offshore user acceptable to the United States, where all the 
launch integration services would be performed by people 
outside of China.
    Senator Levin. My understanding of the waiver provision 
following Tiananmen Square, which has been used by President 
Bush and by President Clinton, is that Congress has an 
opportunity to overturn the waivers. We're on that chart that I 
put up, those 20 waivers. Is that your understanding? Does 
anyone know if that is correct?
    Excuse me, the license, technically, which follows the 
waiver. Do you know if that's technically correct, anybody, 
that Congress has, I think, 30 days after the license is issued 
following the waiver to China, to overturn that license?
    Mr. Schneider. That's not my understanding. That process, 
to the best of my knowledge, applies only to exports under the 
Arms Export Control Act where there's a Congressional----
    Senator Levin. All right, but 17 of those 20 were munitions 
list items.
    Mr. Schneider. Munitions List items, yes.
    Senator Levin. So in those 17 cases, when the State 
Department had the licensing responsibility following the 
waiver, in those cases Congress had 30 days to object. Is that 
correct?
    Mr. Schneider. Yes, under the Section 36 notification 
process, that's correct.
    Senator Levin. All right. Now, do you know whether in any 
of those 20 cases, where those launches occurred in China, that 
Congress even attempted to file an objection? Does anybody know 
that?
    Mr. Schneider. It's not known to me, Senator.
    Senator Levin. Do you know? Anybody know?
    Mr. Pime. There has certainly been, at least early in the 
process, a fair amount of specifying. But I don't think there 
was any concerted effort.
    Senator Levin. So as far as you know, Congress has never 
exercised the power it has to stop a satellite from going to 
China in order to be launched in China, is that correct? Never 
attempted to exercise that power?
    Mr. Schneider. Yes, that's correct, Senator.
    Senator Levin. Is there also a power that Congress has when 
something is removed from the munitions list to object, do you 
know?
    Mr. Schneider. I don't recall, sir.
    Senator Levin. I think the letter that was read earlier is 
a notice to Congress under Section 38(f) that the President 
report to the Congress at least 30 days before any item is 
removed from the U.S. Munitions List. So there is a notice 
requirement, is that correct?
    Mr. Schneider. Notification, right.
    Senator Levin. And as far as you know, did Congress, when 
it received notice of the shift of these items from the 
munitions list to the Commerce Department list, was there an 
effort to override that shift? Do any of you know?
    Mr. Schneider. I don't believe there is a statutory process 
where they have a resolution of disapproval, as in the case of 
AECA transfers.
    Senator Levin. But a bill could be introduced?
    Mr. Schneider. Yes, of course.
    Senator Levin. Do you know whether or not a bill was 
introduced?
    Mr. Schneider. Not me, Senator.
    Senator Levin. Any of you know?
    Mr. Graham. No.
    Mr. Pime. No.
    Senator Levin. Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator Levin.
    Senator Thompson.
    Senator Thompson. On the license issue, is my understanding 
correct that if something's on the munitions list at the State 
Department, then the administration's got to give Congress 30 
days notice?
    Mr. Schneider. Correct.
    Senator Thompson. That does not mean that Congress has 
special power over these sales. Congressmen can object or make 
a speech, but the only power that we have is the power we have 
anyway, and that is to pass a law prohibiting it. There's no 
special override on the part of Congress, is that right?
    Mr. Schneider. On these transactions, Senator, the Congress 
can submit a resolution of disapproval. And if that is passed 
by the Congress, then the sale cannot be consummated.
    Senator Thompson. That's legislation.
    Mr. Schneider. Yes, its a specific form described in the 
law.
    Senator Thompson. Is one of the consequences now of 
transferring this authority from the State Department to the 
Commerce Department that there no longer is that 30-day notice 
requirement?
    Mr. Schneider. That's correct. There are two different 
statutes involved.
    Senator Thompson. When it was under the State Department, 
you had to give Congress 30 days notice, so they could at least 
voice an objection.
    Mr. Schneider. That's correct.
    Senator Thompson. Now, that it's been changed to the 
Commerce Department, Congress does not even get that 30 day 
notice, is that correct?
    Mr. Schneider. That's correct.
    Senator Thompson. All right. Also with regard to the waiver 
issue, I don't think the fact that there have been waivers 
under various administrations, is an issue. I mean, it's not a 
waiver is a waiver is a waiver, or a transfer is a transfer is 
a transfer. I think that the issue is what is being waived, 
what is being transferred. There is a difference between a 
transfer that contains militarily sensitive material and a 
transfer that does not.
    Also, I would assume that whether or not there was a viable 
USSR might have something to do with decisions as to what one 
would transfer in these circumstances. Also, the process by 
which these decisions were made would be relevant.
    I think when we acknowledge that there are several waivers 
at several different times, we have to go a little further than 
that and determine exactly what was waived and under what 
circumstances and what were the processes.
    Now, you've mentioned some of the different standards 
between the Commerce Department and the State Department. As I 
understand it, there's one license required at the Commerce 
Department, two licenses at the State Department.
    Mr. Schneider. Yes, there are different types of licenses. 
For example, to market products that are licensed by the State 
Department, you need one type of license. And to transfer 
technical data, you need another type of license. To actually 
transfer the hardware, you need yet a different type of 
license.
    So the aim is to protect as best as can be done through the 
regulatory process, access to defense-related technology.
    Senator Thompson. Well, for a matter under the State 
Department on the munitions list, don't you have to have a 
license even to begin to enter into discussions with the 
Chinese, for example?
    Mr. Schneider. Yes.
    Senator Thompson. That's not true with the Commerce 
Department, is it?
    Mr. Schneider. That's correct.
    Senator Thompson. As I understand it, according to this GAO 
report, the Bush interagency group and subsequently the Clinton 
interagency group all agreed that if these satellites contain 
militarily sensitive characteristics integrated in them, they 
should remain at the State Department, right?
    Mr. Schneider. Correct.
    Senator Thompson. Are you familiar with these nine 
sensitive characteristics, anti-jam capability, antenna cross-
links, encryption devices, pointing accuracy, and all of that? 
Are you generally familiar with those?
    Mr. Schneider. Yes, I am.
    Senator Thompson. Do you agree with the interagency 
determinations that if those sensitive military matters are 
present within these satellites, they should remain under the 
stricter standards of the State Department? Do you agree with 
that?
    Mr. Schneider. Yes, I do, sir.
    Senator Thompson. Is it not also true that now, since 1996, 
when the shift was taken, that even if a satellite contains any 
or all of these characteristics, pointing accuracy, propulsion 
system, the others that I mentioned, that that still rests with 
the Commerce Department now?
    Mr. Schneider. That's correct.
    Senator Thompson. All right. There's been some writing in 
the professional journals concerning intangible know-how. Dr. 
Graham, you might respond to this, or all of you. Hardware is 
one thing, but one of the matters we need to be most concerned 
about is the transfer of intangible know-how. We should take 
special care regarding conversations that might go on, the 
information that might be transferred pursuant to U.S. 
companies trying to make sure that these rockets work.
    Do you share that concern?
    Mr. Graham. Yes, Senator. I'm an engineer speaking with 
this criticism, but we engineers are trained our whole lives to 
look at equipment capabilities, analyze them, look for flaws, 
errors, and anything else that would cause failure or trouble, 
and try to solve the problem.
    That's what engineers do. It's almost impossible to stop 
them from doing that, and almost no matter where you put them, 
that's what they're going to do. Experienced U.S. engineers 
have intangible knowledge that can very easily be transferred 
to foreign engineers, if you put them together.
    Senator Thompson. Well, I understand that the statement is 
made sometimes in response that monitoring does occur. But my 
information is that there's no absolute requirement that the 
Department of Defense monitor and be present at all times with 
regard to discussions, the mating of rocket to satellite, the 
launching and all of that. That in fact, with regard to the May 
19 Lockheed Martin Marietta launch, that they went to the 
Department of Commerce and asked them to provide monitors. Are 
you familiar with that point?
    Mr. Graham. I'm generally familiar with the fact that 
Martin initiated the request for monitoring, not the U.S. 
Government, Senator.
    Senator Thompson. Do you know whether or not in practice 
there's an absolute requirement that Department of Defense 
monitor and be present at all stages?
    Mr. Graham. I would defer to Dr. Schneider.
    Mr. Schneider. My understanding is that no, that is not the 
case. This illustrates the difference between a commercial 
license and a State Department license. The State Department 
license limits what technology can be transferred. And there 
are procedures that a vendor is required to follow that 
restrict even the amount of informal knowledge he is allowed to 
transmit. He is told exactly what he can transmit, the vendor 
is required to submit a technology transfer control plan, in 
most cases, so that they know exactly how the information will 
be transferred, under what procedures and so forth.
    But with a Commerce Department license, the idea is to 
transfer the asset and its functionality. And there is not a 
procedure in ordinary Commerce Department licenses for the 
control of this informal transmission of information. And the 
idea of a monitor would probably be of some help, but it would 
still be difficult to control the transfer of information if 
there was not otherwise a requirement in the license to do so.
    Senator Thompson. All right. Let me ask you one more 
question. Are any of you gentlemen familiar with the 
Coordinating Committee for Multilateral Export Controls, which 
the United States was a member of?
    Mr. Schneider. Yes, I'm familiar with it.
    Senator Thompson. Dr. Schneider, what was the function of 
that entity? And why did we get out of it?
    Mr. Schneider. It was established in 19149 among the United 
States and our European allies, to restrict the flow of 
initially arms to the Warsaw Pact, but later, to control the 
flow of technology that would enhance the military performance 
of the Warsaw Pact. It was a non-treaty based organization, 
headquartered in Paris, that coordinated the export control 
activities of the member states.
    At the end of the Cold War, the U.S. Government was unable 
to persuade allied governments to continue the existence of the 
COCOM organization. So a new entity was established in 1994 
called the WASSANAAR arrangement, after the river in the 
Netherlands where the meeting was held. This arrangement does 
not control the transfer of technology, but only limits the 
flow of, let's say, it requires notification after sale of 
military equipment to essentially pariah states.
    Senator Thompson. Did the United States remove itself from 
the original organization?
    Mr. Schneider. No, the United States agreed not to continue 
COCOM and to seek a new----
    Senator Thompson. When did that happen?
    Mr. Schneider. In 1993.
    Senator Thompson. Did the COCOM, as you've referred to it, 
would that have placed stricter requirements on the exports of 
these commercial satellites than what we have today?
    Mr. Schneider. Yes.
    Senator Thompson. That's all.
    Senator Cochran. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    I want to follow up on some questions that Senator Thompson 
posed to you about the differences between the procedures used 
by the Department of State and the Department of Commerce. It 
seems to me one basic difference also lies in the mission of 
the two departments. And indeed, when you look at the people 
who are appointed to be the Commerce Department Secretary, they 
often have highly political backgrounds. But I can't think of 
any in recent history who had national security expertise.
    And this area, of course, is very technical and does 
obviously involve complex aspects of national security.
    I'd like to ask each of you which department or agency you 
believe should have primarily responsibility in the area of 
export control of space technology. Dr. Graham, let's start 
with you.
    Mr. Graham. It's my personal view that the greatest 
expertise in that area resides in the Department of Defense, 
since they are the agency that develops, or at least used to 
develop, ballistic missiles for the United States, and also is 
an extensive user of space launch technology.
    So from a national security and generally national benefit 
point of view, I would feel most comfortable if the primary 
responsibility in the area of export control of space 
technology resided ultimately with the Department of Defense.
    Senator Collins. Mr. Pike.
    Mr. Pike. I think that the current arrangement where the 
Bureau of Export Administration at the Department of Commerce 
has primary responsibility for dual-use technologies is the 
correct arrangement. The challenge, of course, that we have is, 
unlike the situation in the Cold War where we were mainly 
concerned with primarily military exports, the concern today is 
primarily with dual-use technologies like supercomputers, like 
space launch components.
    I think that the Bureau of Export Administration, their 
proper place is trying to strike the balance with American 
competitiveness and other interests.
    Senator Collins. Dr. Schneider.
    Mr. Schneider. The two export control regimes--the 
Department of Commerce regime and the Arms Export Control 
regime--have their origin in different statutes with different 
purposes. The State Department export controls over the U.S. 
Munitions List is derived from the Arms Export Control Act. The 
purposes of that act are to assure the congruence of exports 
with the foreign policy and national security interests of the 
United States.
    The export control regime managed by the Department of 
Commerce is derived from the Export Administration Act. And the 
purpose of that is to promote the commerce of the United 
States, and for that reason, I believe that the licensing 
apparatus should be managed by the national security apparatus, 
because of the coupling of this technology to U.S. national 
security interests.
    I think the arrangement that the Department of State 
manages with interagency consultation, where the office with 
the most expertise, whether it's the Department of Defense or 
the Department of Energy, whatever, is the one that dominates 
licensing decision. I think that is an acceptable way of 
managing and should be continued.
    Senator Collins. So Dr. Schneider, you would disagree with 
the decision that the Clinton Administration made to transfer 
the primary responsibility from the State Department to the 
Commerce Department?
    Mr. Schneider. Correct.
    Senator Collins. Thank you.
    Dr. Graham, I'm interested in the issue of the technology 
transfers that can happen in the event of a launch failure. 
It's been reported that a so-called black box containing 
decryption hardware is missing from one of the satellites 
launched unsuccessfully by China, one of the ones that 
presumably blew up.
    The New York Times has reported that similar devices are 
used to communicate with American spy satellites, and that the 
Pentagon and intelligence agencies were concerned that anyone 
who could crack the code could take control of the satellites 
themselves.
    Now, the National Security Advisor, Sandy Berger, has 
dismissed technology transfer concerns on the grounds that 
China had no access to the technology in U.S. satellites, 
because such devices are sealed into a container that's not 
opened until the satellite actually leaves the booster in 
space. But isn't there a danger in the event of a failure that 
there will be unexpected access to technology, to very 
sensitive technology?
    Mr. Graham. Yes, there is, Senator Collins. I am not 
familiar with the details of this particular satellite and its 
encoding devices. But it's common to provide some degree of 
encryption in what is called the telemetry command and control, 
or housekeeping system for the satellite, so that unauthorized 
users can't come in by radio link and disorient or otherwise 
cause the satellite to malfunction once it's on orbit. You 
basically protect yourself against rogue data streams coming 
into the satellite with encryption.
    That is in part embedded in the hardware in the satellite, 
and in part in the software. That hardware will be placed 
inside black boxes in the satellite, and should the satellite 
and booster fail on the way to orbit, those black boxes will be 
scattered over the landscape, or the seascape, depending where 
it comes down, and are available for whoever finds them first.
    While they will tend to be rather damaged-looking from the 
outside, my experience with such failures is that you can learn 
a great deal by taking them apart.
    Senator Collins. Mr. Pike, do you share the concerns 
expressed by the Pentagon and intelligence agencies and Dr. 
Graham about the access that could occur in the event a 
satellite blows up?
    Mr. Pike. This is obviously dependent on technical details 
that can't be discussed in an unclassified forum. I think that 
it's certainly safe to say that, for instance, in the immediate 
aftermath of the Challenger accident, one of the very highest 
priorities the U.S. Government had was not recovering the 
bodies of the astronauts, but rather recovering the 
cryptographic support materials that were on the communications 
satellite carried by the shuttle.
    The cryptologic systems used by American military 
satellites are obviously of a different type and a different 
standard than those used on commercial satellites. However, 
obviously, commercial satellite operators have an interest in 
making sure that backyard enthusiasts can't commandeer the 
satellite to have their own pirate television station, as was 
done before these cryptographic systems were implemented in the 
early 1980's.
    But at the same time, normally these systems are embedded 
in chips that have been hardened to make it extremely difficult 
to open the packaging of the chip without completely destroying 
the underlying chip. And even having access to the 
cryptosystems electronics hardware might enable you to 
replicate that type of hardware, but it is not going to give 
you the keys to getting access to enable you to commandeer a 
commercial satellite. And certainly not a military satellite.
    And of course, the United States has been trying to get 
other countries to implement these type chip-based cryptologic 
systems, to make it easier for the National Security Agency to 
read their communications. So the notion that the Chinese are 
going to be trying to replicate a cryptographic system whose 
chief virtue is that it's certified to be readable by the 
National Security Agency is not something I'm terribly worried 
about.
    Senator Collins. Dr. Schneider, do you have a concern in 
this area?
    Mr. Schneider. Yes, I think it logically follows, if the 
public policy was to protect the access to the content of the 
satellite before it went on then it follows that if the 
satellite should be destroyed, and the contents inaccessible to 
unauthorized parties, that it would be a concern of the United 
States.
    Senator Collins. It seems that it would be a concern to me, 
also.
    Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator Collins.
    Dr. Schneider, in your capacity as Under Secretary of 
State, you had a responsibility for supervising this munitions 
list that we've talked about. You served in that capacity for 
how long?
    Mr. Schneider. Four years, sir.
    Senator Cochran. And now I understand you are chairman of 
the State Department's Defense Trade Advisory Group, is that 
correct?
    Mr. Schneider. That's correct, Mr. Chairman.
    Senator Cochran. Can you tell us, based on your experience 
in these positions, if there is a substantial difference 
between a technical assistance agreement that was required when 
a munitions list item was to be sold or transferred, and the 
current policy in this administration? And if there is a 
difference, what is that difference, and what was the reason 
for the technical assistance agreement?
    Mr. Schneider. Do you mean the difference between a TAA in 
the State Department and the Commerce Department?
    Senator Cochran. Yes, the current license or----
    Mr. Schneider. OK. A technical assistance agreement is 
required under a munitions license any time you transfer 
technical data that is not in the public domain. This can be 
classified or unclassified. It requires this review.
    The review is extremely thorough, and very few licenses are 
issued without what are called provisos, which are further 
restrictions on how the technical data can be transferred. It 
has a high order of rigor, because the technical data is often 
the key to understanding the performance of the system.
    Because of the differing philosophies between the two 
export control regimes, the Commerce Department normally 
doesn't license technical data. In some cases they do, but it's 
not a primary feature of Commerce Department licenses, because 
of the philosophy of the export control. They are mainly 
transferring the functionality of the system, and don't seek, 
in most cases, to control the transfers of the technical data, 
per se.
    Senator Cochran. There is a list that I have been given of 
14 categories of technical data. I'm advised that these relate 
to missile launch activities or characteristics or components. 
I'm giving a copy, asking the staff to give a copy to each 
witness and each Senator. I will also ask that a copy be made a 
part of the record.
    [The information supplied follows:]

         1. Form, fit, and function
         2. Mass
         3. Electrical
         4. Mechanical
         5. Dynamic/environmental
         6. Telemetry
         7. Safety
         8. Facility
         9. Launch pad access
        10. Launch pad parameters
        11. Telemetry, tracking and control maintenance data
        12. Satellite system data such as power, weight, and fuel 
        budgets
        13. Observance of satellite test
        14. Operational training for customer personnel

    Senator Cochran. I'm wondering if you can tell us if these 
technical data categories would have been included in a 
required technical assistance agreement as part of the license, 
if the transfer of commercial satellites were still a munitions 
list item?
    Mr. Schneider. Yes, they would, and there would be 
additional ones to that.
    Senator Cochran. Can you tell us what the significance of 
these technical data items would be in terms of technology 
transfers that could be harmful to the United States, in the 
hands of the wrong country?
    Mr. Schneider. Each of the items on this list pertains to 
matters relating to the integration of the payload to the 
booster. That's why they would be considered categories that 
the applicant would have to provide, if it was a Department of 
State munitions license. They would have to, in addition to 
providing the information, the license would specify exactly 
what form, fit and function data could be transferred. 
Frequently they will say in addition what cannot be 
transferred.
    The applicants are required to do a substantial amount of 
record keeping and reporting and so forth relating to the 
implementation of that license.
    Senator Cochran. And as I understand it, the Commerce 
Department's control list and its licensing requirements and 
rules don't include any such technical data categories or 
specific authority to discuss technical data, is that correct?
    Mr. Schneider. In the case of the arrangements that were 
made during the transfer of the commodity jurisdiction, the 
Department of Commerce has undertaken a higher order of review, 
then it is the case normally in Department of Commerce licenses 
with respect to the transfer of satellite systems.
    As Senator Levin mentioned, the Commerce Department leads 
an interagency process that undertakes reviews that can cover 
this particular material. As I mentioned, I'm not intimate with 
the details of how the interagency process is being conducted. 
So I can't really comment as to whether they take each of these 
items in detail. But the fact that they have an expanded review 
would certainly give the agencies the authority to comment on 
these issues if they chose to do so.
    Senator Cochran. I understand that some companies, despite 
the absence of a requirement to do so, are continuing to go to 
the State Department to obtain what amounts to a technical 
assistance agreement, or TAA license. Is that your 
understanding?
    Mr. Schneider. Yes, I have heard that. That may be for 
applicants who have previously had export licenses issued by 
the Department of State, and are following up on that. I don't 
have any specific knowledge of why they've chosen to do that.
    Senator Cochran. Based on all of these facts that you have 
given us, is it fair to conclude that export control 
requirements on commercial satellites have become less 
stringent since being moved from the munitions list to the 
Commerce control list?
    Mr. Schneider. I believe that's the case.
    Senator Cochran. On October 8 last year, the manager for 
export compliance at the Hughes Space and Communications 
Company wrote a letter to the Commerce Department, seeking 
guidance on whether the technical data I mentioned, these 14 
categories of technical data, requires an export license.
    And I understand the Commerce Department has not replied to 
that letter of 7\1/2\ months ago, even though for the first 10 
categories, the official with Hughes wrote, ``We believe that 
this data is classified as EAR99, exportable under the Commerce 
Department license exception NLR.''
    And I'll ask that this letter be made part of the record, 
and a copy provided.\1\
---------------------------------------------------------------------------
    \1\ The letter, dated October 8, 1997, appears in the Appendix on 
page 65.
---------------------------------------------------------------------------
    I'll also note that the Commerce Department license 
exception NLR stands for, I think, ``no license required.''
    Mr. Schneider. Correct.
    Senator Cochran. For the last four categories, the Hughes 
official wrote, ``Since there is some difference of opinion as 
to what event triggers the ability to utilize a Commerce 
Department license exception, please clarify conditions under 
which the exception is applicable.''
    What is your reaction to that in terms of the Defense 
Department memorandum that we earlier talked about that 
mentioned transferring jurisdiction of this data, these 14 
categories to the Commerce Department, and the Commerce 
Department handling it? How important do you consider the 
licensing oversight of technical information transfer under 
these circumstances to be?
    Mr. Schneider. I think it's very important if the 
technology is pertinent to matters relating to national 
defense. I think for items that are not so required, that it 
would constitute a burden on the Commerce Department.
    Senator Cochran. Dr. Graham, you have in front of you that 
list that I refer to that was included in the Hughes letter. 
What is your opinion about whether we should be concerned that 
one of the major aerospace companies is operating on the 
impression that 10 of these 14 categories requires no technical 
assistance license? Or for that matter, any license? And for 
the last four categories, clarification of administration's 
policy is necessary?
    Mr. Graham. Well, Mr. Chairman, these are just categories, 
of course. But in looking at them, I would be very concerned 
that if there were an unconstrained dialogue or cooperative 
engineering work that was performed, even seemingly simple ones 
like mass involve far more than just how heavy the satellite 
is.
    The distribution of the mass, the concentricity of the 
mass, the moments of inertia that it provides to the missile 
are all very important in not just the weight, but also how it 
affects the dynamic response of the missile, or rather the 
space launch vehicle satellite system. That is picked up in 
item five again, dynamic environmental, when you get into a 
dynamic analysis of the space launch vehicle, and its 
satellite.
    Here again, I believe it would be virtually impossible for 
an American engineer to look at a space launch vehicle 
satellite combination, observe some kind of a serious problem, 
or perhaps even critical flaw in the space launch vehicle, and 
go ahead and let the satellite be launched with a high degree 
of knowledge that it might not reach orbit, without saying 
something about it.
    Of course correcting flaws in either the structural, 
electrical or other elements of the system are also directly 
applicable to both liquid and solid ICBM systems. Telemetry is 
another category; it tells you how well the SLV system is 
working on its way to orbit and tells you what problems it's 
having, if any.
    So I think each of the categories on this list warrant 
further exploration. But some of them are clear areas of 
potential technology transfer that would be adverse to the 
United States.
    Senator Cochran. And it seems, if I'm concluding correctly 
from the Hughes letter, that they believe this data is 
exportable under the Commerce Department license rules. And 
according to what I understand from you and Dr. Schneider, 
these are items, technical data items, that could very well be 
employed by the recipient country in a militarily useful way 
that could endanger our national security, is that correct?
    Mr. Schneider. Yes, if these items transferred are applied 
for military purposes, yes, they could be.
    Senator Cochran. And how does that compare with the State 
Department notice about the transfer of these munitions list 
items to a Commerce Department licensing regime and then the 
statement that enhanced regulations have been developed and 
agreed upon, an individual validation license will be required 
for all destinations, etc. Obviously, Hughes and others had 
copies of these regulations.
    And then for them to be able to conclude that no license 
was required for 10 of these items. Doesn't seem to me that 
these are enhanced regulations, these are much more relaxed 
regulations. Is that the conclusion that you come to as well?
    Mr. Schneider. The process that was set up under the 
Department of State notification so that it could produce the 
same results. And I haven't audited this process to see how 
it's actually working.
    But if the situation spins out as you describe it, it could 
produce unintended transfers of technology that's pertinent for 
military purposes.
    Mr. Pike. That's not self evident from this list, though.
    Senator Cochran. Mr. Pike, I didn't ask you. I'll ask you a 
question later.
    Mr. Pike. All right.
    Senator Cochran. Senator Levin.
    Senator Levin. Thank you.
    Relative to the shift from the State Department to the 
Commerce Department, this occurred after 17 licenses were 
issued for a launch in China, is that correct?
    Mr. Schneider. That's correct.
    Senator Levin. So the vast majority, including the one that 
blew up, was on the munitions list?
    Mr. Schneider. Correct.
    Senator Levin. Then when the transfer was made, at the last 
three, Congress had an opportunity for 30 days for someone to 
file a bill or someone to object. I don't know of any effort on 
the part of Congress or anyone in Congress to object to that 
transfer. None of our witnesses seem to know of any effort at 
that point, either.
    But there's another point. And that is that when we come to 
China, it is the same process in terms of a Presidential 
waiver, whether or not you had a State Department or a Commerce 
Department issuing the license. Now, again, with the vast 
majority since 1988, since President Reagan started down this 
road, the vast majority, 17 out of 20, it was a State 
Department license, that means a munitions list issue. And they 
all got approved.
    But in all 20 of the 20, there was a Presidential waiver, 
which involved a National Security Council recommendation to 
the President.
    Now, do any of you know, relative to that National Security 
Council recommendation that occurred with all 20 of these--
which gets us a little closer to your point, Dr. Graham, about 
getting the Department of Defense involved in this, because I 
think that is a critical issue--relative to that National 
Security Council recommendation to a president, be it President 
Bush or President Clinton, was that process in those 20 
instances any different whether or not the State Department 
started down the licensing road in 17 of the 20, or the 
Commerce Department started down the road? Do you know of any 
differences in that waiver review, which involved the National 
Security Council, do you know of any differences, Dr. 
Schneider, in that review process?
    Mr. Schneider. No, the waiver is a separate process from 
the analysis of the transfer itself.
    Senator Levin. And do you know, are you familiar with that 
process?
    Mr. Schneider. Not in detail. Only in the structure you 
describe, I have heard of before.
    Senator Levin. Do you know of any difference in the 
National Security Council involvement in this waiver process, 
be it under the first 17, whether it was the State Department, 
or the last three under the Commerce Department?
    Mr. Pike. There were certainly important differences in 
terms of the policy objectives that were sought and granting 
the waivers. Because we had not been granting these waivers 
simply because American satellite companies wanted to fly on 
Chinese launch vehicles. This has been part of our non-
proliferation policy with respect to China.
    On several occasions, we have withheld these pending 
resolution of non-proliferation concerns with the Chinese. And 
they were only brought forward once the Chinese had made 
representations that were satisfactory to the concerns we then 
raised.
    But apart from that very important policy difference, which 
I think highlights a lot of why we had been doing this, 
procedurally, I think they were approximately the same.
    Senator Levin. As far as the procedures used with a 
Presidential wavier?
    Mr. Pike. Essentially.
    Senator Levin. The same whether it was the State Department 
or the Commerce Department? Do you know, Dr. Graham?
    Mr. Graham. Senator, I haven't followed this process since 
I left government, so I don't know.
    Senator Levin. There are some differences between State 
Department and Commerce Department licenses. There's no doubt 
about it. And items are shifted, by the way, from one list to 
another, with notice to Congress. There are differences.
    But in the case of China, when we're talking about 
satellites, you have a totally different track, whether it 
starts up here at the State Department, which it did 17 out of 
20, or up here, the last 3, with the Commerce Department. It 
then gets into a single track which goes through an interagency 
process, and then a recommendation from the National Security 
Council to the President.
    DOD is deeply involved, as it should be, in that track, by 
the way. But I think it's important that we know the difference 
between the Commerce Department and the State Department. I 
think that's a very relevant issue. But it's not nearly as 
relevant, and indeed may be totally irrelevant relative to 
those particular transfers.
    Because in the case of China, with the satellites, they all 
go through this Presidential review process involving the 
National Security Council. And I think, Mr. Chairman, it would 
be very useful for us to have somebody either answer for the 
record or somehow or another tell us whether or not there was 
any difference in that National Security Council process, 
depending on whether or not it started off on the State 
Department track or on the Commerce Department track.
    I don't believe there is. And if there isn't, it seems to 
me relative at least to the satellite issue that this 
distinction between the State Department and the Commerce 
Departments is not relevant. It is a relevant distinction for a 
whole lot of other issues. But when it comes to the issue of 
export or transfer to China of satellites, it's not relevant, 
if the key issue is a Presidential waiver, made on the 
recommendation of the National Security Council, no matter 
whether or not the initial review started in the State 
Department with that munitions list, or started in the Commerce 
Department with its own list.
    So Mr. Chairman, I would like to ask for the record, from 
the National Security Council, whether or not their process of 
review for Presidential wavier purposes is any different, 
dependent on whether the licensing process began with the State 
Department or with the Commerce Department. If we could do that 
for the record.
    Senator Cochran. I suggest we draft a letter, you and I 
sign it, send it to them, and ask for a response for our 
record.
    Senator Levin. One last question. A number of other 
countries apparently, allegedly do not treat civilian 
satellites as munitions. Is that correct, Dr. Schneider?
    Mr. Schneider. Yes, that's correct, Mr. Chairman, and I 
think that's been one of the frustrations that has led to the 
change in commodity jurisdiction. The United States, I believe, 
is the only producer of satellites that had maintained 
satellites on a munitions list.
    Senator Levin. We were the only producer of commercial 
satellites which at one point had them on a munitions list?
    Mr. Schneider. That's correct.
    Senator Levin. And the other countries that produce 
satellites did not?
    Mr. Schneider. Did not. Yes. And as I said, that's one of 
the things that stimulated the effort to move it from the 
munitions list to the Commerce Department list.
    Senator Levin. Thank you so much.
    Senator Cochran. Thank you.
    Senator Thompson.
    Senator Thompson. Thank you very much.
    I think we still have a bit to understand about the 
distinctions between the waiver process and the license 
process. By the time a wavier gets down to the Department, I 
would assume they would know what their boss, the President of 
the United States, would want. I think that some might assume 
that the review process would be just as rigorous under those 
circumstances as if they were on the munitions list, for 
example. I question that.
    But let me ask you about the explosion that happened in 
February 1996 which destroyed a $200 million Loral satellite. 
There was an investigation conducted in the cause of that 
accident which has since caused some controversy as to whether 
or not sensitive information was given to the Chinese pursuant 
to that investigation.
    Gentlemen, are you generally familiar with that situation, 
and what can you do to enlighten us with regard to what 
happened and what the potential problems are there? Let me tell 
you what my understanding is, then you can correct me or fill 
in, to the extent that you can.
    I understand that after that explosion, Hughes-Loral did an 
investigation and prepared a report. They determined that it 
was the guidance system that was essentially the problem. There 
was a question raised as to whether or not that information 
should have been given to the Chinese. I think even the Hughes-
Loral people voluntarily--I think the phrase was used--turned 
themselves in. Whether that's a correct phrase or not, I don't 
know.
    I've also read where the Department of Defense has 
determined that national security was harmed by releasing this 
report to the Chinese. What do you know about the instance, and 
what is the significance? Dr. Graham.
    Mr. Graham. Senator Thompson, let me address what I've seen 
in the press about it. I've seen statements that the Defense 
Department, as you said, has judged that as a part of the 
review of the launch failure, information was transferred by 
Loral to the Chinese that would benefit Chinese construction 
and operation of both space launch vehicles and ballistic 
missiles. I have not seen any statements in the press by the 
Defense Department or any other government agency, that 
contradicts that conclusion. I'm afraid I have to leave it 
there in this particular forum.
    Senator Thompson. As far as the facts, Dr. Schneider, can 
you elaborate on that in any way?
    Mr. Schneider. I read the same material, and that's my 
understanding of what took place. From a regulatory 
perspective, my presumption is that transferring information 
about the guidance section would require a separate license. If 
that is indeed what happened, then that activity would of 
course need to be licensed for authorization.
    Senator Thompson. Is this one of the kinds of problems that 
just arise in these sorts of things? I mean, it stands to 
reason that if you put up a $200 million satellite and it's 
destroyed, you want to tell the people who are going to put the 
next one up, maybe, what went wrong. And therein lies the 
inherent problem, I suppose.
    What about the May launch of the Motorola satellites? My 
understanding is they were using dispensing technology. Can you 
describe dispensing technology and how that is used 
commercially? What purpose is serves?
    Mr. Graham. Yes. The Motorola launch, I believe, was for 
one of the sets of Iridium satellites that will form a low 
orbit constellation of cellular telephone base stations. Each 
of these satellites is relatively small, smaller than the 
payload of the Long March or most other space launch vehicles. 
Therefore, it's economical to put several of these satellites 
on the same space launch vehicle and take them to orbit 
simultaneously.
    But of course, you don't want to put them in exactly the 
same orbit. You want to at least disperse them enough so they 
won't interfere with each other while they finish the maneuvers 
necessary to get them to final desired orbits. Therefore, you 
have to be able to release them carefully to allow them to 
reach their pre-planned orbits.
    Senator Thompson. It's been written that this is the same 
thing as MIRV technology. Is that essentially correct, in your 
opinion?
    Mr. Graham. This is very similar to MIRV technology.
    Senator Thompson. Mr. Pike can speak for himself, but I 
understand, Mr. Pike, your point was that with regard to 
commercial satellites, they dispense the satellites more slowly 
than in a military situation?
    Mr. Pike. That's correct.
    Senator Thompson. A military application would be more 
rapidly dispensed?
    Mr. Pike. An ICBM basically has about half an hour from 
launch to impact. The MIRV busing phase, typically you're only 
looking at about 10 minutes or so.
    I'm not familiar with the precise deployment sequence in 
the case of Motorola Iridium, but in the case of U.S. 
intelligence community satellites, where you have multiple 
deployments, those typically take place over a period of 
several days.
    I think if the Motorola people were able to go to the 
Chinese with some confidence that they would succeed in this 
regard, because the Chinese had demonstrated a multiple launch 
capability off a single launch vehicle, the ability to deploy 
several satellites on a single launch vehicle, about two 
decades ago. So there was nothing particularly novel or in my 
view, immediately militarily significant in the Iridium launch.
    Senator Thompson. Well, doing something and knowing how you 
do it are two different things. Perfecting it, I think, would 
be also.
    But I assume that leads you to the conclusion that it's not 
a big problem if we can enhance the Chinese capability to use 
this dispensing technology. Because that transfer from the 
commercial to the military is, I assume in your opinion, not as 
significant as a lot of other people think it might be.
    Dr. Graham, what's your response to that?
    Mr. Graham. I think it can be quite significant. In the 
first place, we need to look at the time lines on the Iridium 
deployment. In fact, with ICBMs, we do some final maneuvering, 
much as we do with satellites, when we insert independently 
targeted re-entry vehicles.
    The device on an ICBM that deploys multiple independently 
targeted warheads is called a bus. It moves the satellites 
around in space and velocity until it has each on the right 
line to the target, and then releases it. A similar process 
conducted is done with multiple satellites. The time lines for 
the space launch can be longer, or can be the same as for the 
ICBM without damage to the space launch. It just depends on how 
you want to go about it.
    Senator Thompson. So you don't think that difference in 
timing is that significant?
    Mr. Graham. No, Senator.
    Senator Thompson. That's all I have, Mr. Chairman. Thank 
you very much.
    Senator Cochran. One other characteristic of the policy 
that you administer, Dr. Schneider, at the Department of State, 
was that a Department of Defense monitor, a person who would 
observe discussions and transfer of data, was required as a 
part of the process and procedure. What is, in your view, the 
importance of having that monitor involved in the process and 
does the absence of such a monitor now under current policy 
present any particular problems for our national security?
    Mr. Schneider. The incorporation of provisions for a 
Department of Defense monitor occurred subsequent to my 
departure from the government. But during my own service on 
China exports, there were several cases where there was a 
requirement for a U.S. monitor. The general purpose of this is 
to assure compliance with the terms of the license, that the 
license was implemented by the specific end user identified in 
the license, and for the purposes identified in the license.
    The procedure was designed to monitor efforts to divert the 
product transferred to an end use that was not specified in the 
license. The absence of a monitor then creates a compliance 
issue as to whether or not compliance can be monitored by other 
means.
    Senator Cochran. Do you think the lack of a requirement 
under current regulations for the presence of Department of 
Defense monitors to be a weakness in the current policy?
    Mr. Schneider. If they don't have any other means of 
monitoring compliance, then there could be some difficulty. I 
haven't seen the details of the license as to whether they have 
perhaps other U.S. Government officials, other than the 
Department of Defense, doing the monitoring, or some other 
means to sustain compliance. But if they have no one 
monitoring, then there presumably is no other way to assure 
compliance.
    Senator Cochran. Dr. Graham, when we were preparing for the 
hearing, we learned that there was an impending Chinese launch 
scheduled of a Lockheed Martin ChinaStar-1 satellite. The 
ChinaStar-1 license was granted in 1996. And according to 
Lockheed Martin officials, the license required no Department 
of Defense monitor for any phase of the export.
    We were told that Lockheed Martin requested the monitors, 
despite the absence of a licensing requirement. My question is, 
by not having Department of Defense monitors present at these 
meetings between the satellite builder or vendor and the 
Chinese launch team officials, does this increase the risk, in 
your opinion, of technology transfer and intangible know-how 
transfer that could be militarily useful to the Chinese?
    Mr. Graham. I believe it does, Senator Cochran. As you 
know, I'm not in favor of this process in any of its forms. 
This would be an effort to mitigate the damage done to the 
United States by adverse technical transfer to the Chinese. It 
could have some of that effect if there were a set of clear 
terms of reference, guidelines, and constraints imposed on the 
contractor before the discussions began, and if the government 
monitors, or chaperons, were competent to know when those terms 
were being observed and when they were being violated. It would 
also provide the opportunity for the contractor to hold 
discussions on issues before material was presented to the 
Chinese. Once you have said something or given some material, 
it doesn't come back, so it's a very irrevocable act.
    While I would not encourage any of this type of 
technological interchange or transfer, if it's going to be 
done, I think having the strongest possible chaperons present 
would be in the U.S. interest.
    Senator Cochran. Dr. Graham, would it surprise you if an 
engineer or scientist were to identify a problem and suggest 
how it could be fixed, in the case of a launch vehicle, given 
the financial situation and the risk of a loss of an expensive 
satellite? Is it your view that these kinds of temptations 
under the current situation are too great to overcome and stand 
and remain silent while a launch is about to take place that 
might very well be risky or destined to fail, and not point out 
some deficiency?
    Mr. Graham. Well, the economic issues certainly drive the 
process towards tech transfer. But even beyond that, engineers 
are trained and practice all their lives to find problems, 
point them out, and fix them. So it would surprise me only if 
the engineer did not do something to try to rectify the problem 
once he saw it.
    Senator Cochran. There are many low-Earth orbit 
communication satellite constellations deployed or planned for 
the future, and they are driving the demand by U.S. satellite 
manufacturers for foreign launch services.
    What needs to be done, in your opinion, to keep these 
launches, or at least more of them, within the United States? 
Do we not have the launch capability here to handle the volume 
of launches that are in demand now by the communication 
companies? And if we don't, what should we consider doing about 
it?
    Mr. Graham. Senator Cochran, in the early 1960's, we built 
a thousand Minuteman missiles in something on the order of 6 
years. It is inconceivable that the industrial bases of the 
United States couldn't provide adequate launch systems for all 
the satellites that the United States builds.
    I believe this is basically an economic issue, where 
satellite owners and builders are attempting to take advantage 
of the prices that these non-market economies, such as China, 
are willing to provide and receive in turn the recognition of 
their ballistic missile and satellite capabilities, the 
technologies they will get from it, and the western hard 
currency to sustain their rocket infrastructure.
    But the United States could certainly build the needed 
SLVs.
    Senator Cochran. Dr. Schneider, one aerospace executive 
told us as we were preparing the hearing, that he views the DOD 
monitors that you and I were talking about as important because 
companies tend to view their foreign launch service providers 
as customers. Hence when the customer wants something, you want 
to try to help him out. And U.S. companies try to respond in a 
way that establishes a good relationship for future business 
dealings.
    Do you think this attitude is prevalent, or a problem among 
American satellite manufacturers? And what if anything can be 
done to prevent it from making technology transfer commonplace?
    Mr. Schneider. Well, I don't think this is necessarily a 
conflict. Because in the case of munitions list transfers of, 
say, conventional munitions to convention arms to allies 
abroad, the ally abroad is, of course, a customer as well.
    But the terms of the license restrict the U.S. vendor from 
transferring information. My own experience in the Department 
of State is that the vendor community was very familiar with 
these restrictions and would inform the customer that they 
cannot give them information of a specific type, because it was 
proscribed by the terms of the license.
    So I think because this practice generally works pretty 
well, there is not a normal requirement for a Department of 
Defense monitor to be associated with all munitions list 
transfers. The licensees enforce the transfers themselves, 
because there are indeed draconian penalties for failure to do 
so.
    Senator Cochran. Thank you very much, Dr. Schneider.
    Senator Levin.
    Senator Levin. I'll withhold any additional questions for 
the record. Thank you very much, and thanks to these witnesses.
    Senator Cochran. Senator Thompson.
    Senator Thompson. Just one more observation. The question 
still remains, and I certainly want to understand more about 
this process myself, in a situation where a waiver must first 
be obtained for these satellites, does that waiver create a 
national security review process that's the same, regardless of 
which control list the export item is on?
    We saw the administration's national security process at 
work. Secretary Christopher convened an interagency group 
consisting of the Department of Defense, the State Department, 
Arms Control and Disarmament Agency, the Commerce Department, 
CIA, NSA and the entire intelligence community. It's decision 
about licensing authority was overridden on the recommendation 
of Ron Brown.
    So that's the process that we saw work in one instance. And 
I wonder, too, if the waiver process for an item that is not on 
the munitions list is as stringent as it would be if the item 
were on the munitions list. If it is, why take it off the 
munitions list to start with?
    Mr. Schneider. I think it applies less to China than 
perhaps other markets. The munitions list treatment of any item 
imposes a greater burden on the exporter than does the Commerce 
Department license. And I think that has been what has driven 
people to seek the commodity jurisdiction transfer to the 
Department of Commerce.
    But because of the special circumstances of China, there 
has been this process of approving a waiver after the licensing 
activity has been undertaken by the interagency process. That 
is the device that's intended to assure compliance with the 
U.S. national security objectives. If the administration has 
set up a system where the President gets to make the final 
call, that's all that can be done, I believe.
    Senator Thompson. Thank you. That's all I have.
    Senator Levin. Mr. Chairman, can I just briefly comment on 
that?
    Senator Cochran. Certainly, Senator Levin.
    Senator Levin. My understanding is that the Ron Brown 
reference was not to a waiver situation, but the transfer from 
the munitions list issue. And that the State Department 
approved every single one of the waivers.
    But that's the kind of factual determination we can make 
when that answer comes for the record. But I don't believe that 
the Ron Brown position related to a waiver at all. It related 
to a transfer from the munitions list to the Commerce 
Department list, which he, of course, was fighting for. I'll 
repeat that I believe that every single one of those waivers 
was approved by the State Department.
    Senator Cochran. I should have done this at the beginning 
of the hearing, I hope you will forgive me for omitting this. 
But for the record, could you state your professional training 
and education and qualifications--Dr. Graham, and Mr. Pike and 
Dr. Schneider?
    Mr. Graham. Mr. Chairman, I have a bachelor's degree in 
physics and a Ph.D. in electrical engineering. I've served as 
an Air Force project officer, working at the Air Force Weapons 
Lab, and working on, among other things, the Minuteman II and 
III missile systems, and in subsequent work after I left the 
Air Force, the Polaris and the Poseidon sea launch ballistic 
missile systems.
    I have generally been involved with ballistic missile 
programs for about 35 years. I have also served as the Deputy 
Administrator of NASA, was involved in resurrecting the 
unmanned space launch vehicle capability of the United States. 
Those are my primary activities in this area.
    Senator Cochran. Thank you. Mr. Pike.
    Mr. Pike. Mr. Chairman, my involvement is slightly less 
illustrious than my colleague here. I've been Director of the 
Space Policy Project at the Federation of American Scientists 
for the last 15 years. I've done consulting work with NASA, the 
United Nations and I'm a fellow of the British Interplanetary 
Society.
    Senator Cochran. What is your educational experience?
    Mr. Pike. I attended Vanderbilt in Nashville, Tennessee, as 
an undergraduate.
    Senator Cochran. Dr. Schneider.
    Mr. Schneider. Mr. Chairman, I'm an economist, Ph.D. from 
New York University. I have worked for 16 years in the Federal 
Government, including 4 years in the Department of State, 
dealing with matters pertaining to export control. Subsequent 
to my departure from the Department of State, I served as 
Chairman of the General Advisory Committee on Arms Control and 
Disarmament, and have monitored the export control system 
throughout my career.
    Senator Thompson. Mr. Chairman, if I may comment just very 
briefly.
    Senator Cochran. Senator Thompson.
    Senator Thompson. While it is true the instance I mentioned 
was not a waiver, it had to do with something much more 
significant than a waiver. It had to do with the entire 
transfer of the entire process. And it had to do with a 
national security process, which I think is instructive when we 
consider the process they may be going through with regard to 
any individual waiver.
    Thank you very much.
    Senator Cochran. This has been a very interesting, and I 
think productive, hearing for our Subcommittee. I appreciate 
very much the attendance of the witnesses and the Senators for 
participating.
    I think we've learned first, that there can't be any 
question about the potential military utility of commercial 
satellite launches for ballistic missile and satellite 
programs. And second, when commercial satellites received 
export licenses from the State Department Munitions List, a 
license was necessary for technical data that was shared with 
China and others. And DOD monitors were required to be present 
in all meetings and launch activities.
    Third, since commercial satellites were moved to the 
Commerce control list, the requirement for a license to share 
technical information is at best ambiguous, with some companies 
proceeding with them, and some without them. Furthermore, the 
requirements for a DOD technical monitor is also ambiguous, 
with some companies requesting monitors on their own volition 
and other companies proceeding without them.
    This sounds to me like a situation where militarily 
significant technology transfer can occur and probably has 
occurred. It's a situation at odds with the administration's 
September 1996 representation to the Congress that enhanced 
regulations have been developed and agreed upon by the 
interested departments that will provide for both national 
security and foreign policy controls under the Export 
Administration Act for commercial satellites.
    It's hard to understand why the administration has failed 
to respond to a request 7\1/2\ months ago from the Hughes 
Corporation for clarification of the current regulations. I 
think it's clear the administration's export control policy for 
commercial satellites isn't doing a good enough job of reducing 
risks to American security.
    We will continue to explore this issue. Our Subcommittee 
will have another hearing on this subject in June, at a date 
that we will announce later. We will invite the Commerce 
Department to testify and explain why it worked so hard to gain 
control of export licensing for commercial satellites, but has 
done little to control their exports since gaining the 
authority to do so.
    We will likely invite some of the aerospace companies as 
well to send representatives to discuss the licensing process. 
Until then, the Subcommittee will stand in recess.
    [Whereupon, at 12:34 p.m., the Subcommittee was recessed, 
to reconvene at the call of the Chair.]



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