[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





     NONPROLIFERATION: ASSESSING MISSILE TECHNOLOGY EXPORT CONTROLS

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                   EMERGING THREATS AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 9, 2004

                               __________

                           Serial No. 108-165

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
NATHAN DEAL, Georgia                 C.A. ``DUTCH'' RUPPERSBERGER, 
CANDICE S. MILLER, Michigan              Maryland
TIM MURPHY, Pennsylvania             ELEANOR HOLMES NORTON, District of 
MICHAEL R. TURNER, Ohio                  Columbia
JOHN R. CARTER, Texas                JIM COOPER, Tennessee
MARSHA BLACKBURN, Tennessee          ------ ------
------ ------                                    ------
------ ------                        BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

 Subcommittee on National Security, Emerging Threats and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman

MICHAEL R. TURNER, Ohio
DAN BURTON, Indiana                  DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio           TOM LANTOS, California
RON LEWIS, Kentucky                  BERNARD SANDERS, Vermont
TODD RUSSELL PLATTS, Pennsylvania    STEPHEN F. LYNCH, Massachusetts
ADAM H. PUTNAM, Florida              CAROLYN B. MALONEY, New York
EDWARD L. SCHROCK, Virginia          LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. ``DUTCH'' RUPPERSBERGER, 
TIM MURPHY, Pennsylvania                 Maryland
------ ------                        JOHN F. TIERNEY, Massachusetts
                                     ------ ------

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
              J. Vincent Chase, Chief Investigator Member
                        Robert A. Briggs, Clerk
             Andrew Su, Minority Professional Staff Member



                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 9, 2004....................................     1
Statement of:
    Borman, Matthew S., Deputy Assistant Secretary of Commerce 
      for Export Administration, Department of Commerce; Robert 
      W. Maggi, Managing Director of Defense Trade Controls, 
      Department of State; Lieutenant General Tome H. Walters, 
      Jr., USAF, Defense Security Cooperation Agency, Department 
      of Defense, accompanied by Vann H. Van Diepen, Director, 
      Office of Chemical, Biological and Missile 
      Nonproliferation, Department of State; and Lisa Bronson, 
      Deputy Under Secretary of Defense for Technology Security 
      Policy and Counterproliferation, Department of Defense.....    97
    Feickert, Andrew, Specialist in National Defense, 
      Congressional Research Service; Joseph A. Christoff, 
      Director, International Affairs and Trade Team, U.S. 
      General Accounting Office; and Dennis M. Gormley, senior 
      fellow, Monterey Institute, Center for Nonproliferation 
      Studies....................................................     8
Letters, statements, etc., submitted for the record by:
    Borman, Matthew S., Deputy Assistant Secretary of Commerce 
      for Export Administration, Department of Commerce, prepared 
      statement of...............................................   100
    Bronson, Lisa, Deputy Under Secretary of Defense for 
      Technology Security Policy and Counterproliferation, 
      Department of Defense, prepared statement of...............   154
    Christoff, Joseph A., Director, International Affairs and 
      Trade Team, U.S. General Accounting Office, prepared 
      statement of...............................................    34
    Feickert, Andrew, Specialist in National Defense, 
      Congressional Research Service, prepared statement of......    11
    Gormley, Dennis M., senior fellow, Monterey Institute, Center 
      for Nonproliferation Studies, prepared statement of........    52
    Maggi, Robert W., Managing Director of Defense Trade 
      Controls, Department of State, prepared statement of.......   114
    Ruppersberger, Hon. C.A. Dutch, a Representative in Congress 
      from the State of Maryland, prepared statement of..........     6
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3
    Walters, Lieutenant General Tome H., Jr., USAF, Defense 
      Security Cooperation Agency, Department of Defense, 
      prepared statement of......................................   135

 
     NONPROLIFERATION: ASSESSING MISSILE TECHNOLOGY EXPORT CONTROLS

                              ----------                              


                         TUESDAY, MARCH 9, 2004

                  House of Representatives,
Subcommittee on National Security, Emerging Threats 
                       and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room 2154, Rayburn House Office Building, Hon. Michael Turner 
(vice chairman of the subcommittee) presiding.
    Present: Representatives Shays, Turner, Burton, Duncan, 
Ruppersberger, and Tierney.
    Staff present: Lawrence Halloran, staff director and 
counsel; J. Vincent Chase, chief investigator; Robert A. 
Briggs, clerk; Anna Laitin, minority communications and policy 
assistant; Earley Green, minority chief clerk; Jean Gosa, 
minority assistant clerk; and Andrew Su, minority professional 
staff member.
    Mr. Turner. A quorum being present, the Subcommittee on 
National Security, Emerging Threats and International 
Relations, entitled, ``Nonproliferation: Assessing Missile 
Technology Export Controls,'' is hereby called to order.
    Cruise missiles and unmanned aerial vehicles [UAVs], pose a 
growing threat to U.S. interests at home and abroad. Available, 
affordable and versatile, these technologies offer rogue 
nations and sub-state actors access to strategic capabilities 
previously beyond their reach. The burgeoning global 
marketplace of military and commercial systems means our 
battlefield and homeland defenses will face profound challenges 
from the thick catalog of pilotless machines some call the poor 
man's air force.
    According to the Congressional Research Service, as of last 
year, 161 UAV production programs operated in 50 nations. The 
arsenals of 75 nations currently contain 131 different types of 
cruise missiles. By one estimate, an enemy with $50 million to 
spend could buy just one or two advanced tactical fighters, 15 
ballistic missiles or 100 off-the-shelf, ready-to-fire cruise 
missiles, each carrying a substantial conventional payload. 
Slower and small UAV systems from model airplanes to GPS-
enabled rotary wing craft can be effective purveyors of 
chemical or biological weapons. A standard sized cargo 
container on the deck of a freighter approaching our coast 
could conceal a cruise missile and launcher.
    Numerous commercial UAV applications and the ready 
availability of dual-use components like guidance systems make 
controlling the spread of sensitive technologies extremely 
difficult. Many of the systems sought by proliferators 
literally and figuratively fly under the defensive radars 
arrayed against them. To prove the point, a New Zealander with 
only limited aerospace expertise was able to obtain all of the 
components needed to build a homemade cruise missile last year. 
He apparently broke no laws while procuring an airframe, 
propulsion plant and guidance and control systems for less than 
$5,000.
    The dimensions of this rapidly emerging threat compel us to 
ask, what is being done to keep these lethal technologies from 
falling into the wrong hands? Are cold war era 
counterproliferation strategies focused on system range and 
payload limits relevant against a post-September 11 threat 
characterized by rapid technology innovation, miniaturization 
and a highly adaptable enemy? Do national and international 
export control regimes effectively limit the flow of the most 
advanced components that define our current technological 
advantage in the cruise missile and UAV fields?
    To help us address these issues, we asked the General 
Accounting Office to assess international counterproliferation 
efforts and evaluate U.S. programs to verify that UAV and 
cruise missile technology exports are used as intended. The GAO 
findings released last week point to gaps in export license 
reviews and post-shipment monitoring. GAO recommends far more 
aggressive use of end-use verification and inspections by the 
Department of Commerce, Defense and State.
    We will hear testimony this afternoon from two panels of 
experts. The first will describe the scope of the problem. The 
second panel will discuss the complex international and 
interagency export control process used to limit the diversion 
of critical UAV and cruise missile technologies.
    We appreciate the experience and insight of all of our 
witnesses and what they bring to our oversight of these issues, 
and we look forward to their testimony.
    Now I would like to recognize my colleague, Mr. 
Ruppersberger.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Mr. Ruppersberger. Thank you, Mr. Chairman. At the center 
of today's discussion is the inherent tension between national 
security and commercial concerns. This conflict has always 
existed, but a world more complicated by global trade and 
terrorism only makes the divide more complicated. Export 
controls and the laws created to deal with them, both domestic 
and international laws, are based on states dealing with 
states. Much of this is based on knowing who our friends are 
and who our enemies are. This is the way the world once was, 
but it is not that way anymore.
    I understand the business concerns. They need to keep 
manufacturing lines running and retain highly skilled 
employees. International trade has allowed many in this 
industry, including the AAI Corp., the developer and 
manufacturer of the Shadow UAV located in my district, 
Maryland's Second Congressional District, to keep production 
going when U.S. purchases have been sporadic. When export 
controls are cumbersome or ineffective, U.S. businesses 
struggle to remain competitive. At a time when we need to grow 
the American economy and create more jobs, I understand the 
business perspective well.
    But I also understand the national security concerns. 
Technology improves every day, and the success found in recent 
conflicts make American products attractive to our enemies as 
well as our allies. With so many questions about who we are 
selling to, how what we sell will be used, and potential dual 
uses of this technology, we cannot ignore threats to our 
servicemen and women serving abroad or our homeland defense.
    My experience on the House Intelligence Committee gives me 
another perspective on the national security aspect. It leads 
me to question whether the Intelligence Community provides a 
satisfactory assessment of the cruise missile and UAV threat to 
support export control decisions. It makes me wonder if our 
current export control regimes are sufficiently adaptable to 
take into account any new threats from cruise missiles or UAVs.
    I don't believe GAO included these questions in the scope 
of their investigation. However, I believe these questions are 
critical to this discussion and hope they will be a part of 
today's or future discussions on this topic.
    I would like to thank all the witnesses today for their 
hard work in this area. I look forward to your testimony. 
Continuing these conversations is critical to strike the right 
balance between commerce and security. Thank you, Mr. Chairman.
    [The prepared statement of Hon. C.A. Dutch Ruppersberger 
follows:]

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    Mr. Turner. Thank you, Mr. Ruppersberger.
    I ask unanimous consent that all members of the 
subcommittee be permitted to place any opening statement in the 
record and that the record remain open for 3 days for that 
purpose. Without objection, so ordered.
    And I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record. 
Without objection, so ordered.
    I'd like to recognize our first panel, which includes Mr. 
Andrew Feickert, Specialist in National Defense, Congressional 
Research Service; Mr. Joseph A. Christoff, Director of the 
International Affairs and Trade Team, U.S. General Accounting 
Office; and Mr. Dennis M. Gormley, senior fellow, Monterey 
Institute, Center for Nonproliferation Studies.
    Gentlemen, we do swear in our witnesses in this committee. 
If you wouldn't mind standing, please. Please raise your right 
hands.
    [Witnesses sworn.]
    Mr. Turner. Note for the record that the witnesses 
responded in the affirmative.
    We're going to begin our testimony with Mr. Feickert. We're 
going to ask that your comments be somewhere in the range of 5 
to 10 minutes. We do have the light, so we'll show you when the 
5-minute period is concluded, and then you'll have additional 
time after that to wrap up your comments.

STATEMENTS OF ANDREW FEICKERT, SPECIALIST IN NATIONAL DEFENSE, 
CONGRESSIONAL RESEARCH SERVICE; JOSEPH A. CHRISTOFF, DIRECTOR, 
 INTERNATIONAL AFFAIRS AND TRADE TEAM, U.S. GENERAL ACCOUNTING 
    OFFICE; AND DENNIS M. GORMLEY, SENIOR FELLOW, MONTEREY 
         INSTITUTE, CENTER FOR NONPROLIFERATION STUDIES

    Mr. Feickert. Mr. Chairman, thank you for the opportunity 
to appear before you today to discuss the growing cruise 
missile threat as delivery systems for both conventional 
weapons and weapons of mass destruction. Cruise missiles and 
UAVs are no longer the exclusive domain of a few select 
countries. They are widely available throughout the world. At 
present there are reportedly about 130 cruise missile types----
    Mr. Turner. Mr. Feickert, I appreciate that you've turned 
on the microphone. Could you also move it just a little bit 
closer, please?
    Mr. Feickert. Yes, sir--in the hands of about 75 different 
countries. According to experts, there are 161 operational UAV 
programs in 50 different countries.
    Because pilots and aircraft are not put at risk, cruise 
missiles and UAVs are very attractive systems----
    Mr. Shays. I'm sorry, Mr. Chairman. Could you just please 
move the mic a little closer?
    Mr. Feickert. Is that better, sir?
    Mr. Shays. Yes.
    Mr. Turner. I think it's a little bit directional. Perhaps 
if you'd put it in front of you and point it directly out, it 
might allow us to all hear better. Thank you.
    Mr. Feickert. Because the pilots in aircraft are not put at 
risk, cruise missiles and UAVs are very attractive systems, 
particularly in countries with small or less than capable air 
forces. Some analysts believe that countries with cruise 
missiles and UAVs might be more inclined to conduct high-risk 
operations against better equipped countries such as the United 
States. These systems are easy to build or acquire. One report 
predicts that 6,000 to 7,000 land attack cruise missiles could 
be sold by the year 2015, excluding United States, Russian and 
Chinese sales.
    Despite MTCR restrictions, many countries produce cruise 
missiles which fall just under the regime's parameters or 
modify missiles proscribed by the MTCR to produce a less 
capable variant. If acquiring a land attack cruise missile 
proves to be too difficult or too expensive, it is possible to 
convert an antiship cruise missile such as the SS-N-2, Styx, 
which is found in the inventories of more than 20 different 
countries.
    UAVs, which are also covered under the MTCR, can be 
acquired on the international market as complete, ready-to-fly 
systems or can be built from scratch or by converting an 
existing manned aircraft.
    Most experts agree that any country or group with even a 
modest aerospace program can readily build UAVs with common 
dual-use aviation technologies.
    These systems are very affordable. As previously noted, a 
country with $50 million to spend by can buy 1 or 2 advanced 
tactical fighters, 15 ballistic missiles or 100 cruise 
missiles.
    The chart before you helps to further illustrate this 
point. In addition to being affordable, these systems are 
accurate. Cruise missiles with global positioning system or GPS 
guidance can strike their targets within a few meters of their 
intended aim point. Both cruise missiles and UAVs are 
versatile. Cruise missiles can be launched from an aircraft 
which can significantly extend the range or they can be 
launched from surface ships, submarines or also from ground 
positions.
    The UAV's versatility as a dual-use system is why many 
experts believe that it could be very difficult to regulate 
them under nonproliferation or export control regimes. But 
unlike the cruise missile, which has little utility outside the 
military arena, there are a host of nonmilitary uses for UAVs.
    Cruise missiles are very difficult to defend against 
because of their small size and their ability to fly 
unpredictable routes at low altitudes. Defending against cruise 
missiles is further complicated if the cruise missile employs 
stealth technologies which are available worldwide and are 
being incorporated into a number of new designs.
    Cruise missiles also challenge missile defense systems. 
According to defense officials, the Patriot system when 
currently employed in its ballistic missile defense mode, has 
limited ability to detect and engage incoming targets at 100 
meters or less.
    UAVs offer their own defensive challenges. Smaller 
propeller-driven UAVs flying slower and closer to the ground 
may escape detection by ground and air based radars. Higher 
flying larger UAVs can employ stealth technologies which can 
improve their chances of penetrating hostile airspace.
    Even though cruise missiles and UAVs offer a variety of 
challenges, it is important to note that the majority of these 
systems pose only a local or regional threat. Currently only a 
few cruise missiles and UAVs have a range of 1,000 kilometers 
or more.
    A wide variety of conventional munitions have been 
developed for cruise missiles. A less extensive array of 
warheads is currently available for UAVs. This is due to the 
payload capacity of most of today's UAVs, which were originally 
intended to serve as information gathering platforms.
    United States and foreign efforts to develop unmanned 
combat aerial vehicles [UCAVs], will likely expand the 
conventional weapons utility of UAVs.
    The United States has developed the majority of special 
payloads that are currently available for cruise missiles. In 
1991, the United States reportedly used Tomahawk cruise 
missiles filled with chemically treated carbon graphite 
filaments to short out Iraqi electrical transformers and 
switching stations. Special payloads under consideration for 
UAVs include microwave weapons as well as ballistic missile 
defense interceptors. Other nations could also develop special 
warheads for their own systems.
    Cruise missiles can deliver nuclear weapons. Currently only 
the United States and Russia have nuclear cruise missiles, 
although China is reportedly developing a new cruise missile 
with nuclear potential. Many analysts agree that nuclear cruise 
missiles are currently outside the technical range of most 
countries, as most Third World nuclear warhead designs are too 
large and too heavy for cruise missile use.
    UAVs could also be used to deliver a nuclear weapon, but in 
addition to size and weight constraints, the UAV's ability to 
penetrate air defenses might be somewhat limiting.
    Both cruise missiles and UAVs could be effective for 
delivering biological agents because of their ability to 
dispense payloads at subsonic speeds, thereby ensuring 
survivability of the biological agent.
    Cruise missiles that use advanced guidance systems and 
onboard sensors could alter their flight profiles to respond to 
local terrain and weather conditions to provide optimum target 
coverage. While this advanced capability may at present be 
within the grasp of only a few countries, less sophisticated 
attacks with biological agents using cruise missiles and UAVs 
are certainly within the capabilities of most countries or 
nonstate actors that could produce or gain access to such 
weapons.
    Cruise missiles and UAVs can also dispense chemical agents. 
Chemical agents are generally more survivable than biological 
agents, but larger chemical payloads may be required to achieve 
the same level of lethality or area of coverage. Most analysts 
believe that developing a simple chemical warhead for a cruise 
missile or UAV is well within the technical capabilities of 
most countries that have these programs and quite possibly 
within the capabilities of technically adept nonstate groups.
    Mr. Chairman, this concludes my remarks. Thank you for the 
opportunity to appear before you today, and I welcome any 
questions that you might have.
    [The prepared statement of Mr. Feickert follows:]

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    Mr. Turner. Thank you.
    Mr. Christoff.
    Mr. Christoff. Mr. Chairman, members of the committee, I am 
pleased to be here today to discuss GAO's recent report on U.S. 
efforts to limit the proliferation of cruise missiles and UAVs. 
Last year this committee asked us to assess United States and 
international efforts to limit the proliferation of cruise 
missiles and UAVs. In a report we released 2 weeks ago, we 
addressed three key areas: First, the nature and extent of the 
proliferation; second, the tools used to address proliferation 
risks; and third, U.S. efforts to verify the end use of these 
sensitive technologies.
    In summary, we found that nonproliferation tools and end-
use monitoring efforts are not keeping pace with the growing 
threat from cruise missiles and UAVs, and let me now summarize 
our findings and our recommendations.
    First, we found that cruise missiles and UAVs pose a 
growing threat to U.S. national security interests. They are 
accurate, inexpensive delivery systems for conventional, 
chemical and biological weapons. They are difficult to detect, 
difficult to defeat and are available worldwide.
    For example, at least 70 nations possess about 75,000 
cruise missiles, mostly antiship cruise missiles armed with 
high explosive warheads. China and Russia have sold cruise 
missiles to Iran, Iraq, Libya, North Korea and Syria. In 
addition, commercial items such as global positioning systems 
and lightweight engines are increasingly available worldwide. 
These items have allowed countries to expand the range and 
accuracy of their cruise missile systems.
    The Chinese Silkworm missile you see on your left was found 
in Iraq after the first Gulf war. In October 2003 the United 
States found 10 additional Silkworm missiles that the Iraqis 
had modified to become land attack cruise missiles. As a 
result, the range of the missiles increased from 100 to 180 
kilometers.
    The second picture you see on your left is the U.S.-built 
Predator UAV. UAVs are pilotless vehicles that operate like 
airplanes. They have primarily been used for reconnaissance. 
Countries worldwide are increasingly interested in acquiring 
and developing UAV technology; 32 nations are developing or 
manufacturing more than 250 models of UAVs.
    We also assessed tools the United States uses to reduce the 
proliferation of cruise missiles and UAVs. First, multilateral 
export control regimes are voluntary arrangements among 
supplier countries to restrict exports of sensitive 
technologies.
    Between 1997 and 2002, the Missile Technology Control 
Regime accepted six U.S. proposals to expand the list of cruise 
missile and UAV technologies subject to international controls. 
Regime members are expected to scrutinize the listed items 
before approving an export license.
    However, these lists do not preclude countries from 
exporting sensitive items. In addition, regime members have 
disagreed over the sales of cruise missiles to countries of 
concern. For example, the U.S. disagreed with France's 1997 
decision to sell its Black Shaheen cruise missile to the United 
Arab Emirates.
    In addition, nonmembers such as China and Israel continue 
to export cruise missiles and UAV technology to countries of 
concern. The United States also uses its national export 
control laws to address missile proliferation but finds it 
difficult to identify and track commercially available items 
not covered by control lists.
    In addition, a gap in U.S. regulations has allowed nonstate 
actors to acquire cruise missile or UAV technology without 
violating U.S. laws. This gap is illustrated by the 2003 case 
of a New Zealand citizen who illegally obtained U.S. dual-use 
items to develop a cruise missile.
    Current regulations prohibit the sale of unlisted dual-use 
items to 12 missile proliferation projects and 20 countries of 
concern. This regulation does not apply to individuals or 
nonstate actors.
    We recommended that the Secretary of Commerce determine 
whether the regulations should be modified to close this gap.
    Finally, we review the results of end-use monitoring checks 
completed between 1998 and 2002 by the Departments of State, 
Defense and Commerce. We found that the departments conducted 
few checks to confirm the recipient's cruise missiles and UAVs 
complied with U.S. license conditions.
    The State Department conducted checks on only 4 of the 786 
licenses it issued for cruise missile and UAV-related 
technology. The Department of Defense conducted no checks on 
the more than 500 cruise missiles and related items transferred 
to other countries. And the Department of Commerce conducted 
checks on only 29 of nearly 2,500 cruise missile or UAV-related 
licenses it approved.
    We recommended that the departments conduct a comprehensive 
assessment of the nature and extent of compliance with license 
conditions on these technologies. This assessment should 
include additional end-use checks.
    Mr. Chairman, members of the committee, that concludes my 
statement, and I will be happy to answer your questions.
    [The prepared statement of Mr. Christoff follows:]

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    Mr. Turner. Thank you, Mr. Christoff.
    Mr. Gormley.
    Mr. Gormley. Mr. Chairman, members of the committee, I'm 
honored to appear before you today to illuminate how cruise 
missiles and unmanned aerial vehicles pose a threat that could 
affect both U.S. interests and the American homeland. The 
timing of this hearing and the release of the GAO report on 
improvements needed to better control technology exports could 
not come at a more propitious time. We are at a crucial turning 
point, in my view, in the proliferation of cruise missiles and 
UAVs, one precipitated via events during Operation Iraqi 
Freedom as well as by growing evidence of terrorist plans for 
using UAVs.
    The GAO report interestingly mentioned at least five times 
that cruise missiles and UAVs pose an emerging threat to U.S. 
interests abroad as well as at home. Permit me in these brief 
remarks to illustrate how, and I would ask that my longer 
statement and accompanying journal article be placed in the 
record.
    First, in regard to threats to the U.S. homeland, cruise 
missiles or UAVs might be launched from concealed locations at 
modest distances from their targets or brought within range and 
launched from freighters or commercial container ships; in 
effect, two-stage forms of delivery. Al Qaeda is believed to 
possess at least 15 freighters. In the aftermath of the 
September 11, 2001 terrorist attacks on the U.S. homeland, key 
U.S. decisionmakers began to take such two-stage threats more 
seriously.
    The 2002 National Intelligence Estimate on the ballistic 
missile threat to the United States drew attention to the 
covert conversion of a commercial container ship as a launching 
pad for a cruise missile. Even a large bulky cruise missile 
like the ones Iraq used to fire at coalition forces last year 
could be equipped with a small internal erector for launching 
and still comfortably be fit within a standard 12-meter 
shipping container.
    Indeed, the 2002 National Intelligence Estimate argues that 
because such a delivery system, among several others, is less 
costly, easier to acquire and more reliable than an 
intercontinental ballistic missile, a cruise missile attack 
against the American homeland is more likely to occur than a 
ballistic missile attack.
    The notion that a terrorist group might entertain using 
UAVs is by no means far-fetched. One recent accounting of 
terrorist activity notes 43 recorded cases involving 14 
terrorist groups in which remote control delivery systems were 
either threatened, developed or actually utilized.
    Model airplanes were used or planned for use by al Qaeda to 
kill leaders at the 2002 G-8 summit in Genoa, Italy. Moreover, 
according to the London Independent newspaper, a British 
national held at Camp Delta, Guantanamo Bay, Cuba has confessed 
to being part of an al Qaeda plot to acquire a drone to attack 
the House of Commons with anthrax.
    Let me now turn to threats--conceivable threats that might 
affect our regional interests. Operation Iraqi Freedom 
demonstrates powerfully how cruise missiles and UAVs might 
threaten our overseas interests. Patriot missile batteries 
performed immensely better than they did during the first Gulf 
war. All nine of Iraq's most threatening ballistic missile 
launchers were successfully intercepted and destroyed, but the 
second Gulf war saw the first use of enemy land attack cruise 
missiles against Patriot in combat.
    American and Kuwaiti Patriot batteries failed to detect any 
of Iraq's low-flying cruise missiles, one of which came 
perilously close to striking a U.S. Marine encampment on the 
war's opening day. What's more, at least two Iraqi ultra light 
aircraft, which were feared capable of carrying chemical or 
biological agents, were detected only after flying over 
thousands of U.S. troops, equipment and command facilities 
prior to a U.S. Army's divisional advance on Baghdad.
    Iraq's use of cruise missiles and slowflying air vehicles, 
which were manned but needn't have been, also contributed to 
the Patriot's unfortunate series of friendly fire incidents, 
two of which led to the loss of two coalition aircraft and the 
deaths of three crew members.
    America's adversaries are bound to draw important lessons 
from the performance of U.S. missile defenses against Iraq. 
Referring to Iraq's use of cruise missiles, the Chief of Staff 
of the 32nd Army Air and Missile Defense Command told the New 
York Times, ``this was a glimpse of future threats. It is a 
poor man's air force; a thinking enemy will use uncommon means 
such as cruise missiles and UAVs on multiple fronts.''
    At least two reasons account for why we should anticipate 
an acceleration of interest in acquiring cruise missiles and 
UAVs. First, countries wishing to deter U.S. military 
interventions were unlikely to invest heavily in cruise 
missiles until American missile defenses performed decisively 
better against ballistic missiles than they did during the 1991 
Gulf war. Patriot's success against Iraqi ballistic missiles in 
2003 coupled with problems coping with cruise missile attacks 
increases the incentive to acquire difficult to defend against 
cruise missiles and UAVs.
    Second, American's adversaries are likely to appreciate the 
operational advantages of combining ballistic and cruise 
missile launches to maximize the probability of penetrating 
even the best American missile defenses. Converting small 
airplanes or UAVs into weapons-carrying missiles offers a 
particularly attractive poor man's option.
    When these in large numbers are combined with more 
expensive and sophisticated ballistic and cruise missiles, they 
raise the stakes enormously for American missile defenses.
    Consider, for example, the dire and unfavorable cost 
exchange arithmetic associated with current U.S. missile 
defenses and conceivable adversary missile threats. The 
guidance upgrade alone on the Patriot PAC-2 guidance enhanced 
missile costs $400,000 per missile, and each new PAC-3 
interceptor roughly costs $3.5 million dollars per interceptor. 
A flock of cruise missiles or converted airplanes, several 
orders of magnitude cheaper, could readily saturate most 
economically feasible missile defense architectures. Thus, 
controlling the quantitative spread of cruise missiles and UAVs 
through improved nonproliferation policies is an absolute 
necessity
to guarantee confidence in our missile defense expenditures.
    Beyond the excellent set of recommendations offered by the 
GAO in its report, I would be pleased to discuss additional 
proposals during our question and answer time. I thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Gormley follows:]

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    Mr. Turner. Thank you, Mr. Gormley. We'll move to a series 
of question periods of--we'll do 5 minutes and then a rollover 
of additional 5 minutes for additional questions, recognizing 
Mr. Ruppersberger.
    Mr. Ruppersberger. Sure. OK. Can you tell me how from your 
perspective, all three, whoever wants to answer, the authority 
agencies involved interact with the intelligence community to 
determine who and what the current threats are and how often 
are lists of who we sell to and who we will not sell to updated 
on this intel data?
    Mr. Christoff. The intelligence community and the data is 
used in the licensing process. In addition to doing what the 
departments refer to as prelicense checks, they look at the 
bona fides of the companies or the countries that are--we're 
selling our cruise missiles and UAVs to and they also 
incorporate intelligence information into the interagency 
process.
    Mr. Ruppersberger. Do you think it's effective and it's 
working, the relationship with getting the data?
    Mr. Christoff. We haven't looked in detail about that part 
of the licensing process. I don't think I'd want to comment on 
that.
    Mr. Ruppersberger. OK. The way I see that you've looked at 
your report, there are three stages. That's before we sell. 
That's the actual transfer. And I think the focus of your 
report was more of the end-use compliance. Is that correct?
    Mr. Christoff. Correct.
    Mr. Ruppersberger. Now, do any of you believe that the 
current authority provided to State and subsequently to 
Commerce and DOD is adequate and do you think the GAO findings 
are the result of--the GAO findings the result of inadequate 
authority or failure to exercise authority they already have?
    Mr. Christoff. I think it's a failure to exercise existing 
authority, because the one main point that we want to make in 
our recommendation to do this comprehensive assessment is that 
you need better information. If you only have conducted 33 
post-shipment verifications out of 4,000 licenses, it's 
difficult to really thoroughly assess the risks associated with 
not doing more, and therefore by doing more PSVs, you will be 
able to determine what the potential risk is and be able to 
determine what your priorities are, where you should be placing 
your resources and how best to use that information in 
prelicensing decisions as well.
    Mr. Ruppersberger. Well, then what would you recommend?
    Mr. Christoff. Well, the recommendations that we made are 
the ones that we made in the report. First is that the paucity 
of the number of post-shipment verifications that the three 
agencies have done is insufficient. It doesn't give them a 
basis for believing, as State does, that there is no problems 
that have occurred in the post-shipment verification process. 
So doing more, going back to the 4,000 and doing as DOD 
suggested to us, a statistically valid random sample, will give 
you good information about the problems in the past and then 
conducting more PSVs in the future as well and to commit to 
that.
    Mr. Ruppersberger. Do you think it needs more resources or 
money?
    Mr. Christoff. It needs more information, No. 1, to then 
make decisions about where the priorities and resources should 
be targeted.
    Mr. Ruppersberger. Where are you going to get the 
information?
    Mr. Christoff. Going to look at the prior PSVs that have 
not been----
    Mr. Ruppersberger. And that's the only area you recommend, 
looking at the prior from a random point of view?
    Mr. Christoff. Looking at that, and also we recommended for 
the Commerce Department to look into the existing catchall 
regulations to determine whether or not the scope of those 
regulations should be broadened.
    Mr. Ruppersberger. Sometimes you need one boss, one person 
in authority. Do you see any problems between DOD and Commerce 
working that through?
    Mr. Christoff. We've issued prior reports that have talked 
about the interagency process and the need for three 
departments to work more closely together to use the 
intelligence information that they have available, to make sure 
that they are transferring information from one department to 
the other. So, yes, the interagency process can always be 
improved considerably.
    Mr. Ruppersberger. Well, then, the purpose of this hearing 
is to find out how and why. How would you improve it? And I'd 
like to hear from the other two also on these questions that 
I'm asking.
    Mr. Gormley. Well, let me make one comment in regard to how 
one might improve it. It strikes me that all of the 
recommendations are necessary but not sufficient, particularly 
with respect to this growing concern about a poor man's air 
force. When you look at the necessary elements to put together 
a poor man's air force--there is the concern about effects on 
commercial enterprise--one can certainly not conceive of 
regulations that make it more difficult for people interested 
in, for example, recreational aircraft to require a case-by-
case review for that. That's inconceivable, and I couldn't 
imagine that occurring.
    But when one thinks about the challenges associated with 
turning that recreational aircraft requiring a man to fly it 
into a fully autonomous cruise missile, there are serious 
transformation requirements associated with it, the most 
notable being the creation of a fully autonomous flight control 
system to guide that system to the intended target without a 
man piloting it.
    And there are on the marketplace today--and it's a recent 
phenomenon over the past 5 years--I would imagine less than 10 
companies which are largely spin-offs of the large aerospace 
firms that are now producing what are called variable autonomy 
flight control systems. They provide the complete flight 
management solution for turning a manned aircraft into an 
unmanned air vehicle, and it seems to me that the impact on 
placing some case-by-case reviews on these UAV flight 
management systems would make immense sense in terms of making 
that transformation hurdle more difficult for an individual or 
a terrorist group who might be interested in turning that 
recreational aircraft into a weapon of terror.
    There was an attempt in 2003 by the U.S. Government to 
introduce an antiterrorism proposal that focused on this 
particular poor man's issue of turning airplanes into terror 
weapons, and because it was not sufficiently detailed with 
respect to precisely what kind of technology should be 
controlled, I understand that it was rejected within the 
Wassenaar Arrangement where it was introduced.
    Now, my recommendation would be to clean up that proposal, 
focus specifically on the technologies that ought to receive 
case-by-case review and consider it not only within the 
Wassenaar Arrangement but within the Missile Technology Control 
Regime as well, because they have better, you know, no denial, 
no undercut rules that I think would provide for a more 
effective basis for monitoring these transfers.
    Mr. Ruppersberger. OK. And what I'm trying to get to, and I 
think you're answering some of it, and what I'd like to hear 
from all three, though, why do you think that there are 
problems now? Lack of resources, direct funding or manpower, 
time, all of that, or do you believe it's a lack of just 
prioritizing? I mean, whenever we have funding issues and 
what's going on now, sometimes it's a matter of prioritizing. 
Would you expand on that, Mr. Feickert?
    Mr. Feickert. I'm really not privy to the interagency 
process or what goes on in terms of regulating exports, but one 
solution might be examining some of the more critical enabling 
technologies that----
    Mr. Ruppersberger. Like you referred to, Mr. Gormley? 
There's eight groups?
    Mr. Feickert. Well, there's present technologies. For 
example, your small fuel-efficient gas turbine engines that 
have commercial applicability for business jets, guidance 
systems, perhaps the seekers, which are the actual guidance 
system used in the terminal phases of cruise missile flight. 
Some analysts have suggested that looking out into the future, 
things like fuel cell technology which could be incorporated 
into cruise missiles and UAVs to increase their range might be 
something worth considering.
    Mr. Ruppersberger. Any other comments on that?
    Mr. Gormley. Let me add one additional comment. I haven't 
been in government service for over 20 years, so I don't have 
direct experience, but I have talked to many people involved--
--
    Mr. Ruppersberger. That might make you an expert.
    Mr. Gormley [continuing]. In this process.
    Mr. Ruppersberger. No offense.
    Mr. Gormley [continuing]. And I would say that what I hear 
consistently from people who have--or are charged with 
responsibility for dealing with this area in the interagency 
process is being overwhelmed by largely the issue of 
maintaining an awareness of rapid technological change and how 
that technological change affects current regimes, and they're 
simply understaffed in my view. So it is a matter of staffing 
priority from----
    Mr. Ruppersberger. That's the point I was trying to get out 
of you, that----
    Mr. Gormley. And I would also say a matter of priority as 
well.
    Mr. Ruppersberger. Mr. Christoff, anything further from 
your perspective?
    Mr. Christoff. I think also focusing on the multilateral 
export control regimes. Two years ago when we looked at these 
different regimes, specifically the Missile Technology Control 
Regime, the Wassenaar Arrangement, we had several 
recommendations about how to improve those regimes themselves. 
Keep in mind these are voluntary, nonbinding, consensus-based 
regimes, and so it's important to try to have some type of 
accountability mechanisms put into these different regimes. 
Just getting them to share information among countries using an 
automated information system so that you have timely reporting 
of denials is something that's lacking, for example, on the 
MTCR. So the regimes can be--an important focus on the regimes 
is trying to strengthen them as well. I think it's important.
    Mr. Ruppersberger. I'm sure the State Department--you don't 
have to answer the question, but do you see any possibility of 
strengthening the regime cooperation? I mean, that seems to be 
a huge letdown, and it's just voluntary. And I understand if 
one--there's one violation, then everyone should abide and not 
deal with that group, and that's not the case and that happens 
I'm sure on a regular basis. Do you see that? Do you see any 
way we could strengthen the regime issue?
    Mr. Christoff. Well, I think in some of the recommendations 
we made, just in terms of getting the regimes to be a little 
more efficient and effective in sharing information from one 
country to another. When it takes anywhere from 3 and 6 months 
for one country to send a denial notice to another country in 
the MTCR, that's not quick enough. That's important information 
that should be transmitted immediately, such as what the 
nuclear suppliers group does.
    Mr. Ruppersberger. What leverage do we as the United States 
have to effectuate that, or would working with other countries 
to effectuate that type of situation----
    Mr. Christoff. Well, I think the example of the six out of 
the eight proposals that the United States pushed through on 
the MTCR is an excellent example of how we got more items on 
the control list that just occurred in the past few months.
    Mr. Ruppersberger. But you don't have China a part of the 
group. Right?
    Mr. Christoff. No.
    Mr. Ruppersberger. Who else? What other major countries are 
not part of that, that we need to worry?
    Mr. Christoff. Well, China is obviously the most important 
nonmember of the MTCR. I mean, they've sold cruise missiles to 
Iran, Iraq, North Korea, Pakistan. That's a critical secondary 
proliferator. That's important. You have other--those 
countries, those secondary proliferators are also not members 
of the MTCR. So they're important countries that have the 
capability and currently manufacture cruise missiles. They're 
on the cusp of exporting cruise missiles, and they're not 
member of the MTCR.
    Mr. Ruppersberger. OK. Thank you.
    Mr. Turner. Thank you. Now to our chairman, Mr. Shays.
    Mr. Shays. Thank you, gentlemen. Thank you, Mr. Feickert 
and Mr. Christoff and Mr. Gormley, for being here.
    First, which is the greater threat to national security, 
the UAV or the cruise missiles?
    Mr. Gormley. Today I would say that just looking at 
Operation Iraqi Freedom, as I mentioned, where a crude first-
generation antiship cruise missile called a Seersucker from the 
Silkworm family of antiship cruise missiles was used quite 
effectively and undetected by our Patriot batteries and also 
created complications by virtue of changing the rules of 
engagement so that Patriot radars had to look both for high-
angle ballistic missile--incoming ballistic missiles and low-
flying cruise missiles, which complicates the whole issue of 
separating friendly returning aircraft from low-flying cruise 
missiles.
    So I think that event suggests to me that existing 
inventories of cruise missiles, however crude, represent a 
serious threat, particularly when they're combined with the use 
of ballistic missiles.
    Now, UAVs is an interesting and more recent phenomenon, I 
think, accelerated by virtue of the very effective use and 
prominent use and prominent public display of the effectiveness 
of the Predator in Afghanistan, initially after September 11th, 
and then its increasing use in other conflicts and the arming 
of Predator to demonstrate that what had heretofore been a 
seemingly innocent reconnaissance system now had the capacity 
to deliver a payload to a rather significant range.
    So I think I would argue that existing inventories of 
cruise missiles represent the near-term threat and the longer 
term threat comes from the UAV and particularly the opportunity 
that adversaries have to turn very small manned aircraft into 
so-called cruise missiles or UAVs armed with weapons of mass 
destruction.
    Mr. Shays. Would either of you gentlemen care to add 
something?
    Mr. Feickert. Yes, sir, I do. I'm going to look at it from 
two perspectives, a security threat posed by foreign militaries 
and a security threat posed by nonstate actors. I think if you 
look at it from the foreign military perspective, I believe 
that probably cruise missiles would pose a more immediate 
threat. Although they're available and they're relatively 
unsophisticated, it still requires an infrastructure, mission 
planning and your various mapping technologies. The fact that 
they can also penetrate most known air defenses also lends 
itself to military use.
    In terms of nonstate use, if you look at some of the cruise 
missiles--excuse me, UAVs that are available out there, 
nonstate groups tend to be a little more unsophisticated. 
Perhaps it might be a little easier for them to acquire the UAV 
which in some cases can be nothing more than an upscale model 
aircraft, radio-controlled aircraft, and perhaps employ either 
conventional or weapons of mass destruction with that 
particular vehicle.
    Mr. Shays. Mr. Christoff.
    Mr. Christoff. Just to cap what Dennis and Andy said was 
the order of priority would obviously be anticruise ship 
missiles. The predominant of the 75,000 cruise missiles out 
there, most of them are antiship cruise missiles. The emerging 
concern are land attack cruise missiles because of the 
capabilities of converting--as Iraq proved, taking an antiship 
cruise missile and turning it into a land attack capability.
    And then the emerging threat that I would agree is UAVs. 
You couple that with nonstate actors, chem/bio concerns, and 
you definitely have an emerging threat.
    Mr. Shays. You all pretty much agree, it seems to me. I've 
been kind of wondering how we respond--tell me the 
justification--I mean, I know why we want to do it, but tell me 
the justification of a country that has cruise missiles 
deciding that no one else can have them. How do we sort out the 
logic of that, and how are we able to convince others that 
makes sense?
    Let me back up and say are we basically saying to those who 
have them, you have them, so let's make sure more don't have 
them? Is that our logic so we're just arguing to those who 
have? Or are we trying to make an argument to the world as well 
that it won't be in your best interest to have them because 
your neighbor will have it too? Walk me through that kind of 
philosophical question.
    Mr. Christoff. Well, it's the philosophy of all other 
regimes, for example. You know, these regimes that I've been 
referring to, the missile technology control regime, Wassenaar, 
etc., these are regimes that are supplier based regimes. The 
belief that the existing possessors of these missiles, these 
dual-use items, these nuclear materials, etc., have an 
obligation and a commitment to try to reduce the supply and to 
educate those nonmembers about the reasons why it's not in 
their best breast to obtain these sensitive technologies.
    So it's a two-prong approach of reducing the supply, and 
that's the philosophy within all the regimes, and trying to 
educate other regime members about the bad effects of having 
those types of sensitive technologies.
    Mr. Shays. Do either of you care to add anything?
    Mr. Feickert. Yes, sir. In this particular case we may be a 
victim of our own success. Our research has indicated that a 
lot of countries now consider these an integral part of their 
national security framework, just as in past generations new 
systems like tanks and aircraft carriers developed along those 
lines.
    There's been some criticism by some countries of the MTCR, 
that it is sort of a have and have not situation, where certain 
countries are allowed to have missiles and UAVs and other 
countries are not.
    There's no really easy answer to that. I mean, we certainly 
have a vested interest in keeping these systems out of the 
hands of people that intend to do us harm, but at the same time 
it's very difficult to try to convince these countries, for 
example, like India and Pakistan, to become members of the 
MTCR. That's been one of the central arguments of those two 
countries for a long time as to why they don't want to join 
that particular agreement.
    Mr. Shays. Because I look at the UAVs and I wonder at the 
challenge that's going on in our own air force--and this is 
somewhat of an aside, but I'm thinking of Mitchell trying to 
convince our military that we should be able to use airplanes 
to bomb ships, and what he did was--at least I think I recall 
he basically brought his planes in lower and knocked them all 
out and was ultimately court-martialed, but there was this 
tremendous resistance on the part of the military to use 
airplanes in this way.
    Do you sense from any of your work that there's a 
reluctance on the part of the Air Force to acknowledge that 
this type of weapon may in fact make manned flight somewhat 
obsolete?
    Mr. Gormley. I think that is dissipating very rapidly as a 
byproduct of the lessons learned that come from both 
Afghanistan and Operation Iraqi Freedom, but your point is well 
taken. If one simply looks at the development of the Tomahawk 
cruise missile, I can recall as a--while I was in government 
service in the late 1970's, there was enormous resistance at 
first both within the U.S. Air Force and the U.S. Navy to 
promoting the Tomahawk for various missions, not least because 
the alternative was to deliver munitions by manned aircraft. 
The whole development program for the Tomahawk took an enormous 
amount of time before it was well accepted that the Tomahawk 
could play a dominant role, and indeed not until the 1991 
Persian Gulf war where the Tomahawk in the initial attack 
demonstrated that it could open up corridors and increase 
dramatically the effectiveness of follow-on manned aircraft 
attacks, where it truly demonstrated that unmanned cruise 
missiles had an enormously important role to play.
    Mr. Shays. Let me ask you, from all three of your 
testimonies, I am struck by the fact that you are saying to us 
that cruise missile and UAV technology is not all that cutting 
edge anymore. Is that correct for the most part? So the answer 
basically by nodding heads was yes.
    And therefore I begin to wonder what about the sharing of 
the technology, because basically they're going to be able to 
bypass this anyway. In other words, do you get the gist? So 
tell me how--so we do a great job. We don't share what we know, 
but so what? Respond to that.
    Mr. Feickert. In terms of our technology sharing from 
just----
    Mr. Shays. I'm going to ask you to speak a little louder.
    Mr. Feickert. Yes, sir. In terms of technology sharing, to 
use cruise missiles for example, there are a number of cruise 
missile systems out there that have been developed by more than 
one country. Certain countries bring certain expertise. For 
example, the Indian-Russian Brahmos, an antiship cruise 
missile, a supersonic cruise missile which is going to be 
entering service in the near future, capitalized on the 
strengths of the Russian propulsion system and India's guidance 
system. The French Apache has had various foreign involvement.
    Mr. Shays. So what you would be arguing to me would be that 
they can have much more sophisticated weapons if they are able 
to get the technology of others, but the bottom line is that 
they can get the basic concept. So are you saying, in essence, 
it would be kind of like a 1934 Ford as opposed to a 2004 Ford? 
It would just be that kind of difference? It would still be a 
car, but it wouldn't be as good, still be a cruise but not as 
good? Is that your point?
    Mr. Feickert. Sir, there are varying levels of technology 
in cruise missiles. For example, you've got your Silkworm or 
your STICs missiles, which are roughly equivalent to a Scud 
ballistic missile. I mean, they've been around for a long time. 
They were developed in the late 1950's, and they're very 
adaptable. They're found in the inventories of many, many Third 
World countries.
    And then you have some leading-edge cruise missiles like 
the French Apache, the South African Torgos cruise missile, 
which was supposed to make a debut either in 2004 or 2005, is 
very state-of-the-art. Some of these foreign cruise missiles 
are in a sense almost as capable as our current Tomahawk cruise 
missile.
    Mr. Shays. Mr. Chairman, I know I have a red light. Just 
let me ask this question if I could. Thank you.
    So what am I to infer? Let me ask you this to close. You're 
basically saying there are some very sophisticated technologies 
in cruise and Predator systems, but can I--and therefore the 
sharing of technology there would enable people to advance more 
quickly, but can I infer that a fairly simplistic cruise 
missile or Predator could still do a hell of a lot of damage?
    Mr. Christoff. Yes.
    Mr. Feickert. Yes, sir. Absolutely.
    Mr. Shays. OK. Thank you, Mr. Chairman. Did you want to say 
anything, Mr. Gormley?
    Mr. Gormley. I would simply add that the qualitative--what 
you're referring to is the qualitative spread of cruise missile 
and UAV technology, and the interesting way to look at it from 
my view is to suggest that the MTCR has been enormously 
effective in terms of qualitatively controlling the spread of 
ballistic missiles. If it could become as effective in terms of 
controlling the qualitative spread of cruise missiles and UAV 
technology, it will have done an immense job at achieving a 
slow, steady, more controllable environment within which we can 
improve our missile defenses to become more effective against 
emerging threats.
    Mr. Shays. But ultimately these folks are going to get 
these weapons?
    Mr. Gormley. Well, I would hope, for example, that the case 
of the French transfer of the Storm Shadow version of--called 
the Black Shaheen--to the United Arab Emirates was an isolated 
incident, and that a missile with a radar cross-section like 
that missile had would not occur again. Now, that happened 
within the existing regime, where France and the UK permitted 
that transfer to occur, notwithstanding objections from various 
members. If we can prohibit or control those kinds of high 
quality transfers, then we'll be doing an important job.
    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Turner. Thank you, Mr. Chairman. I want to recognize 
Representative Burton from Indiana, Representative Duncan from 
Tennessee and Mr. Tierney from Massachusetts, who have joined 
us.
    Mr. Burton. Do you want to go with Mr. Tierney first, or do 
you want me to go ahead?
    OK. I just have a couple of questions. You know, nuclear 
proliferation that has been taking place over the past couple 
of decades scares the pants off everybody. We're worrying about 
North Korea right now and others, and after I saw the Hellfire 
first missile that was fired from that Predator that took out 
some of Osama bin Laden's top people, I think I came to the 
realization like a lot of people that this is something--it's a 
weapon of the future that could be used for a whole host of 
things, and it was something that ought to be looked at with a 
jaundiced eye.
    And one of the things that concerns me, and you touched on 
it a minute ago, was the Chinese and others selling advanced 
missile technology, and I don't know about the kind of 
technology we have in the UAV, but to a lot of countries that 
we might be very concerned about like Iran and others in the 
somewhat hostile world.
    I don't know if there's anybody in the administration 
that's here or not that can give us an idea on what kind of 
pressures we could use to bring about some changes in the 
policies of these other countries and in particular countries 
like China that are selling this technology to our potential 
adversaries. What can be done or what is being done to stem the 
tide of this technology getting out of hand? I don't think 
we're going to see the end of wars in our lifetime, and I'd 
like for the United States to be a few jumps ahead of the 
potential enemies. And I'd like to know if anybody can answer 
what we're doing to try to make sure that the kind of 
proliferation we're talking about doesn't continue and what 
kind of pressure we can be bringing to bear on our friends like 
the Chinese, ``who are selling this technology.'' Any of you 
want to take a shot at that? Is there anybody in the State 
Department or the administration that might want to take a shot 
at that?
    Mr. Turner. Mr. Burton, we do have the second panel which 
perhaps they should----
    Mr. Burton. Should I reserve that question for them?
    Mr. Turner. They certainly could respond on behalf of the--
--
    Mr. Burton. Well, if you're out there and I have to leave, 
I hope you do answer that question. I'll try to stick around.
    Mr. Shays. I'll ask it.
    Mr. Burton. OK. Thank you. I think that was the only 
question I have. I was just listening and I said my gosh, how 
do we get a handle on this thing.
    Thank you, Mr. Chairman.
    Mr. Turner. Thank you.
    Mr. Tierney. No questions.
    Gentlemen, when we're talking about end-use verification 
and post-shipment verification, one of the things that strikes 
me obviously from your testimony is that we're not doing a good 
enough job in those areas and that we can improve it.
    Mr. Christoff, you talked about the recommendations that 
were made in your report, which included using the existing 
authority we have and expanding it on a very limited basis that 
we're conducting, what would be prudent or would be necessary. 
But in listening to the discussion about that, it strikes me as 
it almost seems as if the end use verification process would be 
a cradle to grave process, that even if we just look at the 
initial transaction that occurs, any verification that occurs 
there would not really give us assurances that in the future 
that technology is not going to be further transferred.
    I'd like each of you to talk about just the process of end 
user verification, the post-shipment verification process, how 
you can see it can be enhanced and really the issues and 
difficulties that we have of being able to have an effective 
process.
    Mr. Feickert.
    Mr. Feickert. Yes, sir. In terms of enhancements, because 
there's such a vulnerability in terms of diversion, it would be 
very easy the day after a team comes and inspects. Let's say, 
for example, gas turbine engines that were destined for 
commercial aircraft, it wouldn't be that hard the day after 
that team leaves to perhaps divert those or even copy those for 
use in cruise missiles, or even UAVs.
    Perhaps one approach might be on the intelligence side of 
the house is actual--the intent of the customer or the country 
or the group, what is the intent? I would imagine they would 
sort of have a feel as to whether or not these countries are 
even interested at all in cruise missiles or UAVs, or possibly 
they want these things for legitimate aerospace use.
    So I would suggest the possibility of going a step further 
and looking at intent. Is there a possibility that they're 
being diverted to a military program or are they going to be 
used for peaceful purposes?
    Mr. Christoff. I would just reiterate what we found in our 
report. We can talk about additional things to do in end-use 
monitoring, but I think the first thing is to do it. When you 
have done only 4 out of 786 by the State Department, 29 out of 
2,490, zero out of 500 for DOD, that suggests that there isn't 
much information to even base decisions on about, is this a 
problem? Is it a risk?
    PSVs are important. They are important because they're the 
primary vehicle that you have to check on whether or not an 
item is being used as intended after it leaves our shore. It's 
important because it's good feedback into the prelicensing 
decision. If you know that a country or you know that a company 
is not adhering to the license conditions, then that should 
feed back into any future decisions about that license or 
future exports that you would permit.
    Mr. Gormley. I would really defer to Mr. Christoff's 
reaction, but it seems to me--in reading the GAO report, I 
can't help but think that the issue of staffing and sufficient 
moneys to be consistent in end-use assurances is an important 
issue; and it seems to me, providing those resources to get 
involved in more than the number that have historically been 
the case would be a sensible approach. So the resource issue is 
something that ought to be looked at closely.
    Mr. Turner. Mr. Gormley, when you were talking about the 
petition and its limitations and the threat of the cruise 
missiles and UAV, I was struck by the fact that we've 
undertaken a huge investment in air defenses, antimissile 
technology. Can you give us additional thoughts as to what our 
current strategies are as we approach these issues and our 
design of our current defenses?
    Mr. Gormley. Yes, Mr. Chairman. We have a huge investment 
that the Department of Defense has made in U.S. air defenses 
since the early 1950's. But the advent of the cruise missile 
threat largely makes those investments, while necessary, not 
nearly sufficient to deal with the emerging cruise missile and 
UAV threat, and that is largely because these threats fly low 
under the radarscope, so to speak. And not only do they fly 
low, but once they reduce their radar cross-section or add 
countermeasures, they impose severe difficulties on existing 
U.S. missile defenses, as they did in Operation Iraqi Freedom.
    And then there's another perverse issue and that is, when 
systems fly slow, our modern legacy, airborne and some ground-
based radars actually eliminate slow-flying objects that are 
close to the ground in order to permit their signal processing 
and display systems to operate more effectively. So there are--
critically, it seems to me--some defense priorities that we 
need to turn to, and one is creating a single, integrated air 
picture to use and link together in a connected system all of 
the radars that are looking at these threats, including 
returning friendly aircraft, so that we have coverage, a 
common, single view of multiple aspect angles out to a large 
geographic region, so that we can be in a better position to 
discern friend from foe.
    The second area is simply to increase our battle space by 
producing better sensors on our airborne platforms and better 
missile seekers for our ground-based surface-to-air missile 
systems and air-to-air missile systems.
    And finally, we need to make cruise missile defenses 
cheaper. I referred to the unfortunate arithmetic associated 
with the cost of Patriot missiles and even the guidance upgrade 
for the PAC 2 system in comparison to the cost of an investment 
in a large number of cheap cruise missiles or UAVs; and until 
we get the costs of our seekers down, then we are going to have 
a difficult time as time passes, as the quantitative threat 
emerges, unless we can get the cost of our missile defenses 
down. And there are existing programs that are looking at 
trying to radically reduce the cost of seekers, which represent 
about 65 percent of the cost of an intercepter.
    Mr. Turner. Mr. Christoff, you've mentioned the number of 
end-use verification inspections that had been conducted, 
which, of course, is a quantification. Did you notice anything 
about the end-use verification process when an inspection had 
been undertaken that related to the quality of the threat? Did 
you notice any anticipation of an end user that might represent 
a greater threat for proliferation versus nonproliferation?
    Mr. Christoff. You mean in terms of whether or not they set 
priorities on the few that were done?
    Mr. Turner. Yes.
    Mr. Christoff. The Commerce Department, for example, does 
focus on certain choke-point technologies when it goes out and 
tries to determine where it's going to be doing its end use 
monitoring, and I think that's good process, good criteria that 
they're applying. So I think that's one good example of the 29 
that they did do, that does undergo the process of looking at 
what are the most important aspects of the technologies or the 
technologies that they want to focus on.
    Mr. Turner. Very good. Mr. Ruppersberger.
    Mr. Ruppersberger. One question. Regarding the end-use 
monitoring for compliance, I think, Mr. Christoff, you said 
that there were only 33 licenses out of 4,000 that were checked 
for compliance. Out of those 33, what did you find?
    Mr. Christoff. You mean, what did the departments find?
    Mr. Ruppersberger. What did the departments find? What did 
you find when you investigated the departments----
    Mr. Christoff. I'd like to submit for the record all the 
details. I can't recall all the details of the 33 licenses, but 
in some of them they did find that they were, ``unfavorable 
checks'' in a few of the cases. Some of them did result--I 
think in two instances it resulted in some criminal penalties 
being applied to individuals that had not dealt with the 
technology appropriately. There were also ones in which they 
had favorable checks in which there were no problems.
    Mr. Ruppersberger. What did you find? You're telling me 
what was bad or not. What did you actually find from a factual 
point of view----
    Mr. Christoff. We found that the process--when the process 
for end-use monitoring is conducted, the departments do go out 
and look thoroughly at the extent to which the end-use efforts 
that the departments are doing are accurate. They are looking 
at whether or not the item is where it's supposed to be, there 
is adequate security, and whether or not the item's being used 
as intended. So when the results are applied, they're important 
results and they do provide good information back to the 
licensing process.
    Mr. Ruppersberger. What happens when you find that there 
are bad results? What action is taken----
    Mr. Christoff. It depends on the actions. Congress can--for 
example, can undertake civil penalties against the company that 
may be violating some of the terms and conditions of the 
license. Others, such as the Customs Department, can engage in 
criminal penalties as well.
    Mr. Ruppersberger. Do you know if that was done?
    Mr. Christoff. Yes.
    Mr. Ruppersberger. It was done?
    Mr. Christoff. Uh-huh.
    Mr. Ruppersberger. Let me ask you this, too. It seems to me 
that 33 out of 4,000 is not much, and that is not really a good 
sampling of the entire program. Do you think there needs to be 
a change in the 33 out of 4,000 as far as the random checking 
that is done?
    Mr. Christoff. Absolutely. And when we broached our 
concerns with the departments, our original recommendation was 
go back and do a comprehensive assessment.
    Well, we realized that would be difficult to do, going back 
to all 4,000, so go back and do a sample, take a statistically 
valid sample of those 4,000 and conduct PSVs----
    Mr. Ruppersberger. What would that be? What number do you 
think that would be?
    Mr. Christoff. I don't know.
    Mr. Ruppersberger. I'm asking your opinion.
    Mr. Christoff. I don't know.
    Mr. Ruppersberger. You're not going to talk for Mr. 
Gormley. He's telling me he's nongovernment. What do you think?
    Mr. Christoff. I know. And here I'm from the accounting 
office.
    Mr. Ruppersberger. That even makes it worse. Give it a shot 
then. We won't hold it against you.
    Mr. Christoff. Right. Actually, statisticians will tell you 
precisely what is a statistically valid sample based on a 
sample size of 4,000, and I don't really know what it is, but 
certainly it has to be more than 29 from one department and 
four from another department.
    Mr. Ruppersberger. What do you feel the reason is that 
we're not doing more?
    Mr. Christoff. We're not doing more? What the department 
stated to us was that, No. 1, the resource constraints in terms 
of being able to go out there and do additional ones, and the 
priority, it's not as high a priority as let's say Stinger 
missiles and AMRAAMs, those kinds of checks as well.
    Mr. Ruppersberger. OK. So then it gets down to resources 
and priority?
    Mr. Christoff. Yes.
    Mr. Ruppersberger. Fine. Thank you.
    Mr. Turner. Mr. Chairman, additional questions?
    Mr. Shays. I don't have a lot of questions, but I'd like to 
know, why were licenses for cruise missiles and UAV-related 
technology issued to non-MTCR members?
    Mr. Christoff. That's a good question, I think, to direct 
to the next panel; but 15 to 30 percent of those licenses that 
we looked at out of 4,000 went to non-MTCR countries.
    Mr. Shays. But you don't know why?
    Mr. Christoff. No.
    Mr. Shays. And there were no arguments presented.
    What countries should the United States be most concerned 
about regarding cruise missile-UAV proliferation?
    Mr. Christoff. China is No. 1. Clearly, China, having sold 
cruise missiles to particular countries of concern: Pakistan, 
Iran, Iraq, North Korea. And also I think I referred to these 
emerging markets where you have certain countries that 
currently manufacture cruise missiles, but they're not 
exporters and they are also not members of the MTCR such as 
Egypt, Israel, Oman, Iran as well, Pakistan.
    Mr. Shays. So they're making their own----
    Mr. Christoff. Yes.
    Mr. Shays. But they're not exporting.
    Mr. Christoff. Not yet.
    Mr. Shays. But they've probably got technology to enable 
them to create their weapons?
    Mr. Christoff. Yes.
    Mr. Shays. Thank you, Mr. Chairman.
    Mr. Turner. Thank you.
    Do any members of the panel have anything else they wish to 
add before we move on to the next panel?
    We thank each of you for participating.
    Moving on to our second panel, which will include Mr. 
Matthew Borman, Deputy Assistant Secretary for Export 
Administration, the Department of Commerce; Mr. Robert Maggi, 
Managing Director of Defense Trade Controls, Department of 
State, who is accompanied by Mr. Van Diepen, Director, Office 
of Chemical, Biological and Missile Nonproliferation, 
Department of State; Lieutenant General Walters, U.S. Air 
Force, Defense Security Cooperation Agency, Department of 
Defense, and Ms. Lisa Bronson, Deputy Under Secretary of 
Defense for Technology Security Policy and 
Counterproliferation, Department of Defense.
    We appreciate your attendance today, and participation. 
Before you all get comfortable, perhaps you would all stand, 
please, so we can administer the oath.
    [Witnesses sworn.]
    Mr. Turner. Please note for the record that the witnesses 
have responded in the affirmative.
    We will begin this panel with the testimony of Mr. Borman.

STATEMENTS OF MATTHEW S. BORMAN, DEPUTY ASSISTANT SECRETARY OF 
  COMMERCE FOR EXPORT ADMINISTRATION, DEPARTMENT OF COMMERCE; 
 ROBERT W. MAGGI, MANAGING DIRECTOR OF DEFENSE TRADE CONTROLS, 
 DEPARTMENT OF STATE; LIEUTENANT GENERAL TOME H. WALTERS, JR., 
   USAF, DEFENSE SECURITY COOPERATION AGENCY, DEPARTMENT OF 
DEFENSE, ACCOMPANIED BY VANN H. VAN DIEPEN, DIRECTOR, OFFICE OF 
 CHEMICAL, BIOLOGICAL AND MISSILE NONPROLIFERATION, DEPARTMENT 
 OF STATE; AND LISA BRONSON, DEPUTY UNDER SECRETARY OF DEFENSE 
   FOR TECHNOLOGY SECURITY POLICY AND COUNTER-PROLIFERATION, 
                     DEPARTMENT OF DEFENSE

    Mr. Borman. Thank you, Mr. Chairman and members of the 
committee.
    Mr. Turner. Mr. Borman, would please move your microphone 
in front of you. As we said in the last panel, these do appear 
to be directional. So if you have it in front of you, it would 
be helpful.
    Mr. Borman. How does that sound? Thank you.
    Mr. Chairman, Mr. Vice Chairman, and members of the 
committee. It's a pleasure to be here to testify before you on 
this important topic. I have a short oral statement and ask 
that my full written testimony be entered into the record.
    The Department of Commerce's Bureau of Industry and 
Security is responsible for administering controls on U.S. 
Dual-use exports for reasons of national security, foreign 
policy, nonproliferation, and short supply. In this regard, the 
Bureau vigorously administers and enforces missile technology 
and anti-terrorist controls to stem the proliferation of 
systems that can be used to deliver weapons of mass 
destruction. We carry out our mission working closely with the 
Departments of Defense, State, Energy, Homeland Security, and 
Justice, as well as the Intelligence Community.
    National security is the primary focus of Commerce's Bureau 
of Industry and Security. We are keenly aware that our Nation 
faces significant threats both from terrorist groups and from 
countries seeking to acquire weapons of mass destruction and 
the means to deliver them. Although the export controls we 
administer cannot solve all of these problems, they do have a 
crucial role in denying terrorists and proliferators some of 
the tools they need for their hostile operations. As requested, 
I will address how the Department of Commerce mitigates the 
proliferation risks posed by cruise missile and UAV technology, 
paying particular note to the General Accounting Office's 
recent report.
    We appreciate GAO's work on this issue and note that the 
GAO did not conclude that U.S.-origin items are contributing to 
the proliferation of cruise missile and UAV technology. 
Although we do not believe GAO fully analyzed all of these 
issues, we are nonetheless in the process of addressing the two 
recommendations in the GAO report.
    Export controls are most effective when implemented on a 
multilateral basis. The Missile Technology Control Regime 
[MTCR], is the primary multilateral organization that addresses 
exports of items which can be used in cruise missiles and UAVs. 
The MTCR currently has 33 member countries, including many of 
the key manufacturers and exporters of cruise missiles and 
UAVs.
    The MTCR is highly focused on stemming the spread of 
missile systems capable of delivering weapons of mass 
destruction. Important steps the MTCR has recently taken 
include amending its guidelines to address concerns regarding 
terrorism, adopting new definitions for missile range and 
payload to sharpen the regime's focus on missile systems with 
WMD delivery capability, expanding controls to include short-
range unmanned aerial vehicles which could have applicability 
in spreading chemical and biological agents, and also adopting 
catch-all controls.
    I also note that two of the other multilateral export 
control regimes, the Wassenaar Arrangement, which deals with 
conventional arms and dual-use items related to conventional 
arms, and the Australia Group, which deals with chemical and 
biological weapons, agents and precursors, are undertaking 
efforts within their jurisdictions to enhance controls related 
to cruise missiles and UAVs.
    Continuing to work within the multilateral framework is 
essential to the success of our nonproliferation goals, 
including stemming the proliferation of cruise missiles and 
UAVs that could deliver weapons of mass destruction.
    Consistent with our MTCR commitments and nonproliferation 
objectives, the United States implements an extensive export 
control system intended to stem the proliferation of weapons of 
mass destruction and their delivery systems. The Department of 
Commerce has jurisdiction for the export of dual-use items, 
items that have civilian and military applications, including 
items both enumerated on the Commerce list, as well as 
uncontrolled items. Commerce's controls directed to preventing 
the proliferation of cruise missile and UAV technology include 
inclusion on the Commerce control list of all items on the MTCR 
annex that are not covered by the Department of State's 
munitions list, additional unilateral antiterrorism controls on 
lower-level items that have missile or other weapons 
applications, catch-all controls that require exporters to 
obtain a license for the export of any item, even an 
uncontrolled item, if they know or are informed that the item 
will be used in or by certain countries for prohibited weapons 
of mass destruction or missile delivery activities.
    I would note that these catch-all controls also extend to 
nonexport activities, such as contracting, servicing or 
financing of U.S. persons anywhere in the world, regardless of 
whether any U.S. origin items are involved. And under this 
provision, a U.S. person was criminally convicted of violating 
the Export Administration regulations by failing to apply for a 
Commerce license to broker the transmission of material to be 
used as a missile propellant in Iraq; and it is important to 
note that in that case the material was of foreign origin and 
did not even enter U.S. territory. So the catch-all controls 
really have quite an extensive territorial reach.
    We also publish the entity list, which is a list that 
identifies specific end users in countries throughout the world 
that pose a proliferation concern. A license is required for 
all exports for most entities on the entity list.
    We also prohibit exports and reexports of any U.S.-origin 
items to persons designated by the Department of the Treasury 
as specially designated global terrorists, specially designated 
terrorists or foreign terrorist organizations.
    In addition, a critical component of our export control 
success is our outreach program to U.S. industry. We have an 
extensive outreach program to inform U.S. industry of their 
export obligations.
    Thus, we have an extensive set of controls to prevent the 
proliferation of missile technology, including cruise missiles 
and UAVs; and this set of controls covers sensitive items, 
sensitive uses of uncontrolled items, weapons of mass 
destruction-related activities and terrorists.
    Let me now turn to what we are doing to enhance these 
already robust controls. We are in the process of reviewing our 
existing missile catch-all controls and have identified options 
for further enhancement of these controls. The options we have 
identified will be submitted for interagency review shortly by 
the Department of Commerce.
    I would also note in this regard that our engineers, who 
have extensive experience and expertise in both commercial and 
military aerospace applications, are skeptical that a 
functioning cruise missile could be constructed out of 
uncontrolled parts and components.
    We also will undertake an assessment of dual-use exports 
related to cruise missiles and UAVs to determine if U.S. 
exporters and foreign end users are complying with license 
conditions.
    In conclusion, while we have an extensive system of 
controls that I think minimizes the likelihood of proliferation 
of cruise missiles and UAVs based on U.S.-origin technology, 
dual-use technology, we are taking steps to reduce that 
likelihood even further.
    Thank you for your attention to this important issue, and I 
will be pleased to answer any questions you have after the 
other witnesses have testified. Thank you.
    Mr. Turner. Thank you.
    [The prepared statement of Mr. Borman follows:]

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    Mr. Turner. Mr. Maggi.
    Mr. Maggi. Mr. Chairman, Mr. Tierney, Mr. Shays, thank you 
very much for having us here today. It's a real pleasure to be 
here to talk about this very important issue and discuss the 
views from our colleagues at the General Accounting Office.
    As stewards of this Nation's defense trade controls and 
exports, we have no higher priority than ensuring that the 
recipients of defense articles and services comply with U.S. 
export control laws and regulations. As such, and there's so 
much at stake, I actually welcome views and practical 
suggestions on how we can be doing a better job. This is real 
important to us. I have a prepared statement, and with your 
permission, I'd like to have that submitted for the record, 
please, sir.
    To begin with, there's an awful lot we agree about with the 
GAO. They did a lot of hard work and we appreciate their views.
    First of all, we're welcoming the attention that they've 
put on the issue of post-shipment verifications. That's really 
important.
    We also share the concern of the report having to do with 
proliferation of cruise missiles as well as UAV technologies.
    We also agree that the capabilities and the use of cruise 
missiles and UAVs have expanded around the world and we need to 
be paying attention to it.
    Finally, we do agree that we need to be conducting more 
end-use checks, and we're on our way to doing that.
    But there are other areas where we're not in complete 
agreement. I'm not sure that we actually agree with the threat 
as presented in the report. I think that was quite a picture 
that we just heard from our colleagues on the prior panel, and 
that's a very worrisome issue, but I'm not sure that those are 
things that have occurred as a result of our system or our 
parts or our equipment. The picture was an accurate one, but 
I'm not sure it was driven be diversion of U.S. equipment.
    Additionally, I think that with regard to concern of the 
homeland danger, we'll have to be looking at that as well.
    Finally, we certainly don't agree with the views in the 
report having to do with the effectiveness of export controls. 
I believe that end-use verification is very important, but of 
singular impatience is the full range of activities that we 
take to make sure that defense goods and services are properly 
managed when they leave the United States; and I think it gives 
a misimpression of the full degree and the range and depth of 
the activities we take to make sure that the right stuff ends 
up in the right place.
    Mr. Ruppersberger started on a very good point about 
balance and tension between two priorities. For us, it's the 
tension between making sure that important weapons and 
technology stay out of the hands of people we don't want them 
to be in, while, at the same time, we help our friends and 
allies have in their possession the equipment and the 
technology available for them to help share the burden of world 
peace. That's real important for us.
    Strategic balance and regional stability are our major 
concerns. Last year, we adjudicated 55,000 cases worth over $90 
billion. We are headed for zero defect. We need to get every 
single one of those right the first time, and to do that, we 
rely on a full spectrum of tools that go beyond just post-
shipment verification. They include the actual licensing 
process, preshipment checks, compliance and enforcement 
activities, and very close work with other groups of folks and 
other agencies.
    The report, I think, could have given a little more credit 
to the full range of activities that we take, including how our 
registration process works, how our watch list works; how our 
flag system draws attention to suspicious activities; the 
vetting that we do within the Department of State and with the 
Department of Defense and the Department of Commerce; the work 
that's done by the Missile Tech Export Committee checking on 
whether or not these technologies should be going places. The 
idea of establishing and validating the bona fides of the end 
user and the confidence that we have in them is important for 
us to know to shape our views of who should be getting what 
sorts of things.
    I would make note that with the exception of six Predator 
UAVs for Italy, no complete systems were licensed by the 
Department of State, the vast majority of the cases that were 
reviewed of that 786 were spare parts for UAVs that were in the 
possession of known allies, and that the vast majority of the 
cases ended up in well-known programs that had very high levels 
of transparency.
    I would also make note that one of the things that allows 
us to track what the cases look like is a piece of our 
automated process called ``commodity codes,'' which we are 
updating. So sometimes what looks like the export of an actual 
piece of hardware turns out to be a license was for marketing 
or a spare part.
    To be clear, compliance and enforcement are critical. We've 
restructured. We took an organization and made a separate 
office just to focus on compliance. We've given them a lot of 
resources. We've upped our compliance staff from 3 to 30 people 
in the last 15 years. We added 5 in the past year; there will 
be 10 more this year. The growth of the people and keeping them 
on board will help us with the excellence of the quality of the 
cases that we're working on.
    We've now got a new automated system, so by doing this, 
augmented by computers and, particularly, attaching our 
computer work with that of the Customs folks now known as ICE, 
we will be able to see what actually leaves each day in a 
contemporaneous way and be able to see how we track that 
against the use of the end users.
    And our work with the other agencies continues to be 
important. Our end-use checks benefit from what goes on with, 
for example, Customs and Justice. Last year, we had 665 cases 
that we cooperated with the Justice Department and Customs on, 
for a total of over $100 million in seizures. We assessed over 
$63 million in fines to folks that violated the Arms Export 
Control Act and the international traffic in arms regulations.
    The report, in conclusion, addresses a very valid concern 
and we're concerned as well, but I don't think it gave a 
complete picture of how we do our business. Almost a third of 
my team is either active duty military or veterans. We're 
serious about weapons and we're serious about the technologies 
surrounding them. Every day we are mindful of our 
responsibility not only to the American taxpayer, but to the 
world community. We're not complacent.
    We also recognize the need to stay ahead of the emerging 
threat. While past performance is no guarantee of future 
success, it's worth noting that neither we nor the report are 
aware of any areas in which our technologies have left and have 
presented a threat back to us.
    Finally, three points: We pay special attention to cruise 
missile and UAV technology transactions. We are increasing the 
number and effectiveness of our end-use monitoring checks, and 
we are increasing the quality in the way we do our targeting on 
UAV and MTCR-related actions.
    Thank you for your attention.
    Mr. Turner. Thank you.
    [The prepared statement of Mr. Maggi follows:]

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    Mr. Turner. General.
    Lieutenant General Walters. Mr. Chairman, distinguished 
members of the committee, thank you for the opportunity to 
appear before you today to discuss the Department of Defense's 
controls on items that we sell to our friends and allies.
    Mr. Chairman, I have a longer written statement that I have 
submitted for the record.
    The Defense Security Cooperation Agency manages U.S. 
foreign military sales. Those are government-to-government 
sales, typically, $12 to $13 billion annual. We do that to 
achieve very specific goals: to strengthen America's alliances 
and partnerships, to help our friends and allies defend 
themselves, to build trust and influence with those friends and 
allies in peacetime so that we can gain access in times of 
crisis and then be interoperable when we fight together.
    In all of this, there's a dynamic tension, on the one hand 
providing highly capable U.S. equipment to friends and allies, 
but at the same time making sure we protect ourselves, our 
forces around the world, and America. We fully recognize our 
responsibility to make sure the equipment we transfer only goes 
to the right hands and is only used for its intended purpose.
    We agree with the thrust of the GAO report to make sure 
foreign end users are complying with the conditions of the 
transfer. We've got an extensive process in the Pentagon to 
establish a trustworthiness of the end user before the transfer 
decision is made. It's focused on two key questions: Does the 
prospective user have the capability to protect our equipment 
as we would; and second, does he have the will to do that? 
There is no more vigorous debate over arms transfers than the 
one that goes on inside the Department of Defense before the 
transfer, for one simple reason: If we get it wrong, we're 
first in line to deal with the consequences.
    The GAO has recommended that we beef up postshipment 
verification after transfer, and we will do that.
    Now, the drafters of the 1996 amendment to the Arms Export 
Control Act chose their words with care when they told us to 
establish end-use monitoring programs to the extent practicable 
and to provide reasonable assurance that end users are 
complying with our requirements to protect the equipment we 
transfer. Since the GAO investigator spoke with us a year ago, 
we have published specific guidance designating manned portable 
air defense system, MANPADS; Javelin attack missiles; advanced 
medium-range air-to-air missiles, AMRAAM; night vision devices; 
TOW-B antitank and antibunker land attack missiles; and now 
cruise missiles and UAVs for increased postshipment 
verification. We've gotten Secretary of Defense approval for 
four additional manpower billets for this purpose, and we're in 
the process of hiring those people now.
    We have begun work to create an end-use monitoring data 
base application on a Web-based system; and we have reached 
agreement with the Defense Threat Reduction Agency to support 
our efforts in inspection visits with their manpower.
    I'll close by noting that the GAO report did not find any 
evidence of misuse or diversions of military equipment 
transferred through the foreign military sales system. That's a 
good sign that our processes are working now. But I do agree 
that we can and should do more to raise the end-use monitoring 
bar higher to be clear in our own minds that we have that 
reasonable assurance that those who receive our equipment are 
protecting and using it properly.
    Thank you, Mr. Chairman, and I look forward to the 
questions.
    Mr. Turner. Thank you, General.
    [The prepared statement of Lietenant General Walters 
follows:]

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    Mr. Turner. Mr. Van Diepen.
    Mr. Van Diepen. Thank you, Mr. Chairman. I've got no 
statement, but I will be prepared to answer questions.
    Mr. Turner. Thank you.
    Ms. Bronson.
    Ms. Bronson. Good afternoon, Mr. Chairman. Thank you for 
the opportunity to appear before you today to discuss how the 
Defense Technology Security Administration [DTSA], formulates 
its recommendations to the Departments of State and Commerce in 
the development of export control lists to help prevent the 
spread of missile technology. I have submitted written 
testimony, which I ask be included in the record.
    The Defense Technology Security Administration is a defense 
field activity of the Office of the Under Secretary of Defense 
for Policy. In addition to my position as the Deputy Under 
Secretary of Defense for Technology, Security Policy and 
Counterproliferation, I serve as the Director of DTSA. DTSA 
provides technical assessments of license applications referred 
from the Department of State and the Department of Commerce. 
DTSA also works closely with these two organizations in the 
development of export control regulations and procedures.
    During the past 4 years, DOD has undertaken a comprehensive 
review of the U.S. munitions list. Two of the categories of the 
USML review are relevant to today's discussion. USML Category 
IV controls our missiles including cruise missiles. Category 
VIII, which controls military aircraft, also controls unmanned 
aerial vehicles or UAVs.
    The Category IV review began in June 2002, when the DOD 
working group for that category first met. Over the next 6 
months, a total of seven meetings were held and included 
technical experts from DTSA, OSD Acquisition, Army, Navy, Air 
Force, the Missile Defense Agency, and the Institute for 
Defense Analyses.
    This working group closely examined the Category IV 
controls for cruise missile systems, components, materials, 
test facilities, manufacturing equipment and tooling, and 
associated technologies. The working group ultimately 
determined that the existing Category IV control is appropriate 
and no new control or definition was proposed for cruise 
missile systems. However, new control language was proposed for 
test equipment and facilities for manufacturing equipment and 
tooling specific to cruise missile development and production. 
Existing control language on [inaudible] and composite 
materials for heat shields or nozzles was also revised to 
better describe the items meriting export control.
    DTSA submitted the working group draft language for 
interagency review in October 2003, and the interagency 
agreement was obtained in December 2003.
    The Category VIII review was conducted in a similar fashion 
beginning in 2000. My written testimony describes the Category 
VIII review in detail.
    The Defense Technology Security Administration has provided 
technical advice in support of the development and modification 
of the Missile Technology Control Regime Technical Annex since 
1991. As new threats evolve and technologies mature, our 
technical exports develop proposals to modify the Technical 
Annex and evaluate proposals submitted by other U.S. Government 
agencies, as well as by our MTCR partners.
    After the September 11 terrorist attacks, the threat from 
the use of crop-dusting aircraft or UAVs for spread of chemical 
and biological agents was highlighted. In response, DTSA 
recommended adding a new control in March 2002 at the U.S. 
Interagency Missile Annex Review Committee. A U.S. white paper, 
drafted by DTSA, was presented and discussed with our MTCR 
partners during the biannual MTCR Technical Experts Meeting in 
April 2002.
    Following the April Technical Experts Meeting, DTSA 
developed a formal USG proposal to control aerosol-dispensing 
UAVs and presented this proposal at the September 2002, 
multinational Technical Experts Meeting. New controls on UAVs 
equipped for aerosol spraying were ultimately adopted into the 
multinational Technical Annex in April 2003.
    Chairman Turner, in your opening statement, you asked 
whether in today's security environment, payload and range 
limits continue to make sense. The U.S. proposal to control 
aerosol-dispensing UAVs adopted by the multilateral MTCR does 
not have a range limitation. This was a significant shift in 
thinking for the Missile Technology Control Regime.
    The new controls on UAVs equipped for aerosol spraying is 
just one example of the improvements made to the Missile 
Technology Control Regime Technical Annex over the past 3 
years. Other examples are included in my written testimony.
    Besides controlling specific hardware, it is important to 
control the underlying technology and the know-how that enables 
production of UAVs and cruise missiles. To identify future 
technologies that may yield military capabilities beyond that 
envisioned during the review of the current export controls, 
DTSA created an interdisciplinary team to identify emerging 
technologies that are likely to result in fundamental 
warfighting paradigm shifts. They began their work 6 months 
ago.
    While I must stress that our review is at the most 
preliminary stages, our initial internal review identified 
certain enabling technologies related to UAVs for further 
examination. Specifically, technologies related to miniature 
sensors, advanced data links, and micro-miniature guidance and 
navigation components have been identified as key enabling 
technologies for UAVs. Although these are only initial results, 
I believe that our ongoing review will underscore the 
importance of controlling these emerging systems and 
capabilities.
    Mr. Chairman, I trust my comments have addressed the 
specific question raised by your staff, how does DTSA formulate 
its recommendations to the Departments of State and Commerce 
concerning export control lists? I would be happy to answer any 
questions you may have regarding this subject.
    Thank you.
    [The prepared statement of Ms. Bronson follows:]

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    Mr. Turner. Thank you.
    We will begin our questions with Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman. I thank the witnesses 
for their testimony today.
    Let me just start with a rather general question. The 
recommendations in the GAO report indicate that a gap in dual-
use export control regulations could enable individuals in most 
countries in the world to legally obtain, without any U.S. 
Government review, U.S. dual-use items not on the Commerce 
control list to help make a cruise missile or UAV.
    Mr. Borman, do you accept that statement as accurate or do 
you have some issue with that?
    Mr. Borman. No. We are working, actually, to draft the 
regulatory change to address that, but I would note that the 
example that I think gave rise to that recommendation, this 
individual in New Zealand who had a Web site who claimed that 
he could make a cruise missile based entirely on uncontrolled 
parts and components. As I said, our engineers, who have a lot 
of experience in both commercial and military applications, are 
very skeptical that someone could truly build, in effect, a 
cruise missile solely through that method. But, nonetheless, we 
are looking to revise our regulations to close out that 
potential loophole.
    Mr. Tierney. When do you think that revision will be done?
    Mr. Borman. I would say within the next 6 weeks.
    Mr. Tierney. Mr. Maggi.
    Mr. Maggi. Yes, sir.
    Mr. Tierney. Do you accept that statement as accurate or do 
you have contrary feelings and opinions about that?
    Mr. Maggi. I'm fine with Mr. Borman's position.
    Mr. Tierney. Now, the other statement here that concerns me 
is that because the departments have conducted so few PSV 
visits to monitor compliance with the U.S. Government export 
conditions on transfers of cruise missiles, UAVs and related 
dual-use technology, the extent of the compliance problem is 
unknown.
    If I could just ask each of you, do you think that we have 
our hands around what the extent of the problem is, or do you 
think that there are large potentials out there for types of 
violations that we may not be aware of because there have been 
so few PSVs?
    Mr. Borman. I guess I can start from the Commerce 
perspective; and the first point I'd make is that certainly 
I've seen no information that leads me to believe that U.S.-
origin items, at least dual-use items, are being diverted for 
cruise missile or UAV proliferation. So that's a starting 
point.
    Having said that, we are certainly again willing to go 
back----
    Mr. Tierney. Can I interrupt? I hope you don't mind. Just 
that, is it that you have seen no information because we just 
haven't done the inquiry or we haven't made the visits or----
    Mr. Borman. No. Well, there is information that is made 
available to us on a regular basis from the Intelligence 
Community that relates to these issues. So the actual checks 
are one part of the way we view compliance, but obviously there 
is other information that comes in to us that also helps us 
evaluate that. I can't say too much more in open session, but 
we don't rely solely on the end-use checks to determine whether 
particular licenses are being complied with.
    Mr. Tierney. With respect to the other means that you use 
to monitor the situations, how much after the delivery is made 
do they continue? Do they continue ad infinitum or do they stop 
for a period of time, so after that we would have a concern?
    Mr. Borman. Well, let me put it another way.
    Information comes to us on a regular basis not necessarily 
on specific transactions, but on actions of foreign parties 
that come to the attention of others in the U.S. Government.
    Mr. Tierney. So----
    Mr. Borman. But let me then come back to also the GAO 
point.
    I think one of the things that GAO could have explored 
further in their report is that, as Mr. Maggi mentioned, in 
reviewing a license application, there's a whole range of 
things we look at. And so, for example, if the transaction is 
going to a foreign party that we have previously done an end-
use check on, even though it otherwise meets the criteria for a 
check, we usually don't go ahead and do that again because we 
have a high degree of confidence that end user, particularly if 
it's a U.S. subsidiary, for example, will comply with the 
license conditions.
    In some cases, we get government-to-government assurances. 
And in some cases, there is technology transferred, and the 
technology transfer is obviously much more difficult to do an 
end-use check on. It's much easier to check on a thing than it 
is on technology.
    And so up front in the licensing process is where we really 
put a lot of emphasis in determining, is the foreign party 
reliable and likely to comply with the license conditions? So 
while we take GAO's point that we certainly should look at 
doing more of these, we take some issue with their view that so 
few of them are done we have no idea whether compliance is 
there or not.
    Mr. Tierney. Thank you.
    Mr. Turner. Thank you.
    One of the issues that was discussed was concerned the 
Missile Technology Control Regime and its restrictions. It 
seems as if a lot of the testimony we received indicated that 
there needed to be an effort to strengthen or curb 
proliferation through increasing the restrictions or at least 
the cooperation among the regime.
    Could each of you talk a little bit more about that issue, 
giving us some information from your perspective on the 
operation--the agreement among the regime and also ways in 
which you can see that it could be strengthened.
    Mr. Van Diepen. If I might start, Mr. Chairman, first of 
all, the critical function of the MTCR is to try and put in 
place coordinated export controls over the most threatening 
pieces of equipment and technology from a missile proliferation 
standpoint, and the regime members have put together the so-
called ``annex,'' which is the list of specific equipment and 
technologies that all of them have agreed to control according 
to the regime's guidelines. The fundamental purpose is to make 
sure that these transfers get adequate scrutiny and that they 
are looked at to make sure that they don't inadvertently 
contribute to proliferation.
    So most items are subject simply to a case-by-case check 
against agreed nonproliferation factors, the end result being 
to try and make sure that they don't contribute to the delivery 
of weapons of mass destruction or to the activities of 
international terrorists, a new aspect of MTCR controls that's 
been added within the past 2 years.
    Certain systems and certain technologies are subject to 
what's called a ``strong presumption of denial,'' meaning that 
they are so sensitive that normally they will not be exported 
except on so-called rare occasions that are especially well 
justified in terms of the guidelines. And certain cruise 
missiles have been controlled by the MTCR from its advent in 
1987.
    Additional cruise missiles and UAVs were added to control 
in 1993; and as Ms. Bronson noted in her testimony, still 
further UAVs were added to control within the last 2 years. In 
addition, this past year we got agreement that so-called 
``catch-all controls'' that control items, including missiles 
not on the MTCR Annex when they are destined for WMD delivery, 
have now been made an MTCR-wide requirement. So what started as 
a U.S. unilateral control is now a multilateralized MTCR 
control.
    In addition, the MTCR technical experts continue to look 
for areas, including in the UAV area and the CBW delivery area 
which is related, where we continue to improve the controls. 
We're looking at things like, are there additional propulsion 
systems, additional guidance systems that should be added to 
MTCR control?
    And then, finally, there's a great deal of intelligence and 
information exchange including on cutting-edge threats such as 
cruise missiles and UAVs, including on the progress of missile 
programs of proliferation concern, including in the UAV area to 
help sensitize all the members to the threat to the methods 
that proliferators use to try and get equipment and technology. 
Thank you.
    Mr. Turner. Ms. Bronson, Mr. Gormley testified that the 
United States had unsuccessfully attempted to introduce a 
measure of control over additional technology when it 
introduced an antiterrorism proposal to the Wassenaar Agreement 
in early 2003. He stated, ``expressing concern about the 
possible terrorist use of kit airplanes or other manned civil 
aircraft'' as a poor man's UAV, the U.S. proposal sought export 
control reviews and international notifications for all 
equipment systems and specifically designed components that 
would enable these planes to be converted into UAVs.'' he goes 
on to recommend that the executive branch authority should 
redirect their efforts toward accomplishing this and redefining 
their proposal. Do you have any comments on his testimony?
    Ms. Bronson. He raises an area where we don't have 
controls, and the way in which we go ahead and work our process 
in the U.S. Government is to attend to get multilateral before 
we go ahead and add something to the CCL.
    From our perspective, adding the conversion kits for civil 
aircraft to the CCL is a desirable thing to do. The specifics 
on how we would go about modifying our proposal in the 
Wassenaar Arrangement are still under study, but it continues 
to be an area of concern, and we will take into account what we 
have heard today as we refine that process.
    Mr. Turner. Do you think it might be accomplished soon or 
are we pretty far away from a resolution of that?
    Ms. Bronson. It is very difficult to predict how soon one 
can get multinational agreement on a proposal in the Wassenaar 
Arrangement, so I wouldn't even attempt to predict whether or 
not that agreement could be achieved in a short period of time.
    Lieutenant General Walters. Mr. Chairman, if I could add 
one more point to that question and answer, it's my 
understanding that the components for these so-called 
``conversion systems'' are already under control, principally 
MTCR-controlled items, and I think the issue we're talking 
about here is sort of an additional explicit control that 
controls them as conversion kits themselves in addition to the 
individual components that go into a conversion kit.
    Mr. Turner. Thank you.
    Mr. Maggi, you testified that end-user control and end-user 
verification, postshipment verification, is a process that you 
did agree with in the testimony that you had heard. It was 
something that needed to be enhanced, increased, and was 
desirable. Would each of you comment about your various 
agencies and what you're doing to increase what we might expect 
after this hearing in accomplishing both increased end-use 
verification and postshipment verification.
    Mr. Maggi. Yes, sir. Whether there had been a hearing or 
not, we had already been headed for about a 20 to 25 percent 
increase in the postshipment verification checks. We've already 
discussed that it is just one part of the full range of all of 
the activities we do to make sure that we understand how items 
are being used after they are transferred.
    Earlier, I believe it was mentioned that there was a 
thought about a cradle-to-grave requirement to be watching what 
was going on. That's a very good point; and part of how that 
happens in many areas is because our active duty folks from the 
Department of Defense are actually out there engaged with the 
folks that are using some of this equipment. So our goal from 
the direct licensing perspective is, in fact, looking to go 
from about 400 to about 500 postverification checks this year 
with actually a desire to go higher than that in the not too 
distant future.
    You had asked earlier, sir, about the requirement for more 
resources. From our perspective, I think we're in pretty good 
shape for what we have, but the folks that are actually doing 
our end-use postmonitoring checks or postshipment verifications 
are the country team people out at the embassies. So this will 
make them work a little harder.
    Mr. Turner. Mr. Borman.
    Mr. Borman. Again, we are in the process of reviewing both 
our protocol and--for doing end-use checks particularly on 
these types of items; and our records so far--and as I 
mentioned, it is important to take into account the other 
factors that come into play in doing the postshipment 
verifications, the up-front work--who the parties are, what the 
transactions that have been previously checked are to the same 
end users.
    Mr. Turner. Does anyone else want to comment on that?
    General, one of the points that our chairman had made is, 
regardless of what efforts the United States may undertake in 
controls or efforts to limit proliferation, this technology is 
technology that is going to at some point become dated and of 
age where it would be widely available and less subject to just 
our control or the control of those countries who are party 
with us currently to agreements.
    We heard in testimony from the previous panel about our 
efforts for our air defenses, the limitations of the Patriot 
missile, and anticipation that our efforts alone might not be 
successful in stopping the proliferation of these types of 
missiles or UAVs.
    What are some of the things that you would recommend that 
we look at in increasing--or anticipating a need to increase 
our air defenses in this area.
    Lieutenant General Walters. That's a very large question 
and I don't presume to be the expert in that area. I was at 
Asian Aerospace 2 weeks ago, at the Singapore air show. The 
first day, they had a UAV conference that was attended by many 
countries and hundreds of people. The numbers that we walked 
away with, GAO said, 32 countries, 250 UAVs. By our quick math, 
I think at that conference we calculated it to be 39 countries 
and 425 UAV systems. So UAVs right now are at about the Orville 
and Wilbur stage. Every mom-and-pop bicycle shop operated out 
there is basically trying to figure out how to put together a 
small engine and a set of wings and go fly those things. So 
horses are out of the corral when it comes to UAVs.
    Now, building one and operationalizing it is an entirely 
different matter and something meaningful, particularly 
something that's a threat to the U.S. homeland.
    The air defenses, to get back to your question specifically 
about the air defenses, trying to build--a previous witness 
testified to a single integrated air picture. We have spent a 
lot of long time doing that in this country, focused originally 
at a Soviet threat. I'm not sure that some of that system 
hasn't degraded since the fall of the Berlin Wall.
    The importance of having an integrated air picture that's 
capable of seeing very small cross-section vehicles is 
important to the United States. It's important for the 
homeland. It's equally or more important for forward deployed 
forces in theaters. So that's a body of work that the Pentagon 
is very hard at work on. The combined air component commander 
has that as a very high, high priority to do that. To give you 
a more expert opinion on the whole thrust of air defenses, I 
would have to turn to other experts in the Pentagon and ask 
them to give you more specific details.
    Mr. Turner [presiding]. Thank you, General.
    Mr. Ruppersberger.
    Mr. Ruppersberger. Yes. Mr. Maggi, I interpreted from your 
testimony that you felt that the GAO focused too heavily on the 
compliance process. Could you walk through the compliance 
process and tell how it works and also what you would do to 
change it?
    Mr. Maggi. I certainly am of the opinion that the report 
focused on the postshipment verification part of the compliance 
process too much. The entire activity that we do with regard to 
licensing from my perspective is in fact compliance. Making 
sure that in the first step the individual, the entity trying 
to export is registered with the Department of State, that's 
the first step toward compliance. Do we know who they are, do 
we know where they are, do we know the people that run the 
company, do we know their background?
    The second thing is, have they provided us--with regard to 
compliance, have they given us all the data that we need to 
know: What is it, where it's going to go, and why is it going 
there?
    The third part of this is as we're checking into the actual 
application, we have a watch list that we run names against. 
There's about 50,000 entities in that watch list, and that's 
the very first thing that happens before we go any further into 
the application process.
    Once we get through those parts of making sure that the 
application is compliant with law and regulation, we then look 
into the actual substance of what is it that they're trying to 
transfer, and through about a third of our cases we send them 
out to our colleagues in the Department of Defense and other 
places inside the State Department to get their views and 
recommendations on how that works.
    Let me back up. You were asking me about the blue lantern 
process and the postshipment verification. Well, as we go 
through the beginning and the front end of the checks on this 
and we look to see are there any extraordinary things that are 
going on, our teams are put together with regard to the 
commodities that they manage, so they're generally pretty 
familiar with who the people are that are in the industry. They 
also try to be pretty familiar with who are the shippers, 
because those are people that we're very concerned about: Who 
are the people that are actually moving these defense goods or 
services? So if a flag comes up or if this is an unknown 
entity, then we're very mindful of who those people are.
    The GAO folks did a great job in looking at the 786 cases, 
and made a good point about they're a very small number at the 
State Department that were actually looked at, but in 
conjunction to those, there had been in that same timeframe 
almost 100 checks that had been done against the same parties 
that were in those cases that came under scrutiny.
    Mr. Ruppersberger. Well, why wasn't that stated? So you're 
saying it's not 33 but it's 100 now?
    Mr. Maggi. No. What I'm saying is the words in the GAO 
report were absolutely correct. Of the 786 cases that they 
looked at, we did 3 special blue lantern, end-use monitoring, 
post-verification checks. But in conjunction with those, of the 
entities that were associated with those cases, there had 
already been another actually 97 checks done on the same 
parties in those cases in a timeframe--in that same timeframe. 
So we had--Mr. Borman was saying, we had already looked at some 
number of those folks in those cases having to do with another 
license for another commodity or another product going to the 
same end user.
    Mr. Ruppersberger. OK.
    Mr. Maggi. So you asked me what would I be doing. No. 1, 
compliance is life. Trust, yet verify. So we really believe in 
this stuff. We're automating. We're coming up with a new system 
called T-REX in which we'll be able to keep track of all of the 
compliance activities that are going on. It's going to be 
connected with our main licensing system called D-Trade which 
came online this year in full operation, and we're also 
interoperable with the AES, the Automated Export System that 
you can get from the Customs folks at Homeland Security. By 
seeing what goes out every day through this automated process, 
we think we will greatly improve our efficiencies and our 
knowledge of what we're doing.
    The next thing we'd do is continue to add more folks.
    Mr. Ruppersberger. OK. Thank you.
    General Walters, in your testimony page 11, you state that 
you rely on military departments to determine your priorities. 
How does that work with the State Department and the 
Intelligence Community?
    Lieutenant General Walters. We rely on the military 
departments to determine what's really--what are their crown 
jewels, what's important to them; what, if it was coming back 
in the other direction, would really bother them. We go through 
a very complex release process. First, we only sell to our 
friends. Kind of an important point to make to begin with. We 
look very hard at their capability and their track record and 
their will. And it's important to note that the service that's 
making the determination to sell something to a country is--
let's take antiship cruise missiles and let's take harpoon 
missiles that the United States makes and sells. U.S. Navy are 
the people that are deciding whether or not to sell the harpoon 
to another country, and they've got a track record with the 
countries. They're talking to the intelligence services. The 
intelligence agencies get a vote.
    If it's a higher-end process system and we go through an 
exceptions to national disclosure policy review, joint staff 
gets a vote. The U.S. Navy gets a vote. The intelligence 
agencies get a vote. State Department gets a vote. So all the 
players get a vote, and the most important player is, in the 
case of the harpoon missile, the U.S. Navy, which is the 
organization that's most concerned with what's going to happen 
if it comes back at me. And I can look you in the eye and tell 
you with absolute certainty that the U.S. Navy, in dealing with 
the cruise missiles, that it has worked with--and those are the 
majority of the ones that we're talking about here--is 
absolutely certain that it's maintained an edge and is not 
threatened by what it sold.
    Mr. Ruppersberger. OK. Now, bearing in mind this is an 
unclassified session, does the Intelligence Community provide a 
satisfactory assessment of the cruise missile and UAV threat to 
support export control decisions?
    Lieutenant General Walters. To my mind they do. For our 
purposes and to my mind, particularly when we're talking about 
a military threat back to us, I believe that they do. In terms 
of pieces and parts and technology transfer, I'll defer to the 
other witnesses.
    Mr. Ruppersberger. Well, Mr. Maggi, could you respond to 
that? Does the Intelligence Community provide a satisfactory 
assessment of the cruise missile and UAV threat to support 
export control decisions?
    Mr. Maggi. Yes, sir.
    Mr. Ruppersberger. Could you elaborate?
    Mr. Maggi. Well, you may have noticed I was smiling, 
because you can never have too much intelligence, and 
understanding what all the----
    Mr. Ruppersberger. Are you talking about personal 
intelligence or--no, I'm kidding.
    Mr. Maggi. Well, that was my staff. Having that 
intelligence and understanding what it means is often very 
difficult, and knowing how to use it, particularly in the 
compliance area, is very complicated for us, because it then 
gets complicated with regard do what we know, what we can share 
with others, how we can go to other governments. We spoke 
earlier about how we induce others to do the right thing, and 
frequently we aren't able to share that data.
    Yes, we get the data we need.
    Mr. Ruppersberger. One of the reasons I ask the question, 
because there's an ongoing debate within the Intelligence 
Community of the volume that we're getting in intelligence that 
because of security clearances and issues like that, there's a 
lot of information that probably should be maybe unclassified, 
it needs to go to different agencies that is not in order for 
you to do your job.
    Mr. Maggi. Well, I think we get plenty of support at the 
classified level. Of course, I don't know what I don't know, 
but I think we get a pretty steady stream of data. My larger 
concern is not being able to share it with other governments, 
to be able to point out to them the shortcomings of people in 
their countries.
    Mr. Ruppersberger. OK. Thank you.
    Mr. Turner. Mr. Chairman.
    Mr. Shays. Thank you. I thank the gentlemen and the lady 
for being with us.
    I would like to first know from each of you the point you 
agreed with the most in the first panel and the point you 
disagreed the most. And by the way, I appreciate you all being 
here for the first panel. That's helpful to us.
    Mr. Maggi. May I start, sir?
    Mr. Shays. Yes.
    Mr. Maggi. The thing I agree with the most is that there's 
a threat out there, and we really need to pay attention to it. 
The thing I disagree with the most is that we're contributing 
to it.
    Mr. Shays. ``We'' being?
    Mr. Maggi. We, my organization, is contributing to that 
threat, the licensing process.
    Mr. Shays. Well, weren't they basically saying you're 
contributing, but you can take steps to do a better job? You 
don't disagree you can do a better job?
    Mr. Maggi. Sir, we can definitely do a better job, but I 
don't think we're contributing to the threat that we heard 
presented by the first panel.
    Mr. Shays. Mr. Borman.
    Mr. Borman. I have a similar reaction, and that is I 
think----
    Mr. Shays. Is your mic on?
    Mr. Borman. The GAO report perhaps gives the impression 
that there are U.S. origin items, either dual use or munitions, 
going into this proliferation threat, and I just don't think 
there's any evidence for that. But certainly we agree that 
there are steps that we can take, both on the regulatory side 
and on the compliance side, to look to improve both our 
performance in both of those areas.
    Mr. Shays. General.
    Lieutenant General Walters. GAO does us a great service 
when they say they're--when they highlight the threat for both 
UAVs and cruise missiles. That's unarguable. And to the extent 
that they say you can do better--a better job in postshipment 
verification, yeah, we can. And so we'll work on that. But let 
me put that in context----
    Mr. Shays. That's really not in dispute, is it?
    Lieutenant General Walters. No. Let me put it in context. 
I'm only focused on government-to-government foreign military 
sales. Well, we haven't sold any UAVs through the foreign 
military sale system, No. 1, for us, so I don't have anything 
to go count in the UAVs that we participated with.
    In the cruise missiles, GAO says 500 cruise missiles. Our 
best records show between 1998 and 2002, 317, of which 207 have 
been delivered. The countries that they've been delivered to 
are the United Kingdom, Canada, Denmark and Taiwan. I've got 
high trust and confidence in those countries and in our allies.
    The countries that we've sold but not delivered to include 
Imam and South Korea and the United Arab Emirates. So there's 
nothing for me to go count at this point.
    What the report doesn't say is that we sold over 3,000 
earlier-model cruise missiles, primarily harpoon--simple 
model--simpler-model harpoons from many years ago. We did our 
first tiger team--we've done three tiger teams. We've done one 
to Egypt, and I was quite pleased with what happened. Mr. Leon 
Yates here, who was our end-use monitor when he went there, 
asked to go take a look at their harpoon missiles that we had 
sold. They're not part of this--the GAO's report. And the 
Egyptians were quite forthcoming, and they were quite happy 
that we were there to visit. They took him to their central 
storage facility. He went through all of their records. They 
willingly, happily, led him into the facility, and he was so 
impressed at the point, that he didn't feel the need to count 
serial number by serial number every single weapon that was in 
there, you know.
    So on the basis of a sample of one, with one country having 
gone out there, I've got pretty reasonable assurance that at 
least for that customer, that things are not seriously off 
track.
    We'll do more counting. There's a problem with accounting, 
and that is national sovereignty. Some of the--we have a right, 
and we make it very clear that we have a right to go in and 
count. We ask them to verify to us, and so they do when we sell 
some of these cruise missiles, for example, and other systems. 
But we tell them very clearly that we reserve the right to come 
in. But even so, if I go down to Australia or the U.K. or some 
of our friends, they say, come on guys; you know we're fighting 
side by side with you, is this really necessary?
    So there are some sensitivities out there, and we're going 
to have to bruise a few sensitivities and step on a few toes as 
we increase our sample size.
    UAVs and cruise missiles aren't the biggest problem that I 
have, and I don't think that what we, the United States, are 
selling in the UAV and cruise missiles are the problem. It's 
all those others.
    Mr. Shays. The others?
    Lieutenant General Walters. It's all the others. It's China 
and North Korea, and everybody else who is building other--both 
missiles and UAVs. So, yes, we can focus on ours, but it's kind 
of like we're looking through a soda straw at a small piece of 
the problem, and there's this carrier looming over my shoulder. 
And that's everybody else that's selling things out there, in 
my view.
    The biggest challenge I have in postshipment verification 
isn't the UAV and the cruise missile. It's actually my 
colleague, Ms. Bronson, who from the Defense Technology 
Security Agency, has asked me to go count all night vision 
devices. Now, that is a much bigger problem.
    Mr. Shays. I was a little confused when you said your 
biggest challenge was Ms. Bronson. Maybe we're onto something 
here.
    Lieutenant General Walters. She's asking me to go count 
night vision devices. Now, that's a problem on an order of 
magnitude harder.
    Mr. Shays. Mr. Van Diepen, do you have any point that you 
would strongly disagree or agree with that you wanted to 
highlight from the previous panel?
    Mr. Van Diepen. I would strongly agree with the first 
panel's emphasis on the novel and future aspects of the UAV and 
cruise missile threat, the possibility of combined ballistic 
missile and cruise missile attacks, the risk of nonstate actors 
acquiring.
    In terms of disagreement, I think there may be an 
overemphasis on export control as a way of dealing with this 
problem, particularly the nonstate actor problem, where, 
frankly, someone within the United States without exporting 
anything or importing anything could acquire the wherewithal to 
put together the kinds of rudimentary UAVs the panel was 
talking about here and use them to attack us here at home. And 
so export controls is only one of a whole series of tools that 
one has to use to try to impede the proliferation threat.
    Mr. Shays. Thank you. Makes you wonder, though, if we need 
to be keeping a better track on what's happening here, I mean, 
from the point you make.
    Ms. Bronson.
    Ms. Bronson. I would agree with two things in particular 
that I heard. First, I wholeheartedly agree we need to look to 
the enabling technologies as we think about what are the newer 
controls of the future.
    Second, I agree we need to do more postshipment 
verifications and end-user checks. I think that there's a bit 
of an overstatement of the effectiveness of the Iraqi cruise 
missile, and I want to look a little more closely at the data 
that informed that judgment.
    I'd also point out that the cruise missiles that are most 
capable are very, very difficult to build, and we have to be 
careful not to lump the ability to build the UAVs and the 
ability to lump effective cruise missiles together in the same 
category.
    Mr. Shays. Thank you.
    The first panel, as I heard them, said on the short-run 
cruise missile, their biggest concern. In the long run it's 
UAVs. And I think they said in the long run it's the UAVs for 
nongovernment organizations, terrorist organizations. Would you 
disagree with that basic position?
    How do we measure the success if people are able to get 
this stuff outside even the agreements we have?
    Mr. Maggi. I think, sir, the people that you're looking at 
in front of you, at least myself, we're fighting a holding 
action. Over time, technology is going to change. Over time, 
technologies will proceed in a way, and our goal is to maximize 
it being in the hands of our friends and allies and minimize it 
being in the hands of the enemies. And it's a job we work on 
every day, and over time it's just going to all change.
    Mr. Shays. You have this kind of--giving me this impression 
it's kind of like the finger in the dike. Is it that bad?
    Mr. Maggi. Well, it's not a finger in the dike. There's a 
whole load of people working on this; but over time, 
technology--earlier today you mentioned is this a 1938 Ford or 
a 2004 Ford. Well, colloquially, if I get hit by either one of 
them and get run over, I'm in trouble. So----
    Mr. Shays. I hear you. I said I would ask a question--Mr. 
Burton's question, but it was really--I just want the record to 
note he asked what is being done to limit the proliferation of 
cruise. And you were asked, given that we have the multilateral 
agreements and we have the export controls and what else, and I 
think that question was pretty much answered. So I just want 
the record to show that it was answered.
    Is there anything that any of you would like to put on the 
record before we adjourn this hearing?
    Mr. Turner. If not, thank you, Mr. Chairman. We'll be 
adjourned.
    [Whereupon, at 4:19 p.m., the subcommittee was adjourned.]

                                 
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