[Senate Hearing 110-651]
[From the U.S. Government Publishing Office]
S. Hrg. 110-651
TREATIES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FOREIGN RELATIONS
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MAY 21, 2008
__________
Printed for the use of the Committee on Foreign Relations
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COMMITTEE ON FOREIGN RELATIONS
JOSEPH R. BIDEN, Jr., Delaware, Chairman
CHRISTOPHER J. DODD, Connecticut RICHARD G. LUGAR, Indiana
JOHN F. KERRY, Massachusetts CHUCK HAGEL, Nebraska
RUSSELL D. FEINGOLD, Wisconsin NORM COLEMAN, Minnesota
BARBARA BOXER, California BOB CORKER, Tennessee
BILL NELSON, Florida GEORGE V. VOINOVICH, Ohio
BARACK OBAMA, Illinois LISA MURKOWSKI, Alaska
ROBERT MENENDEZ, New Jersey JIM DeMINT, South Carolina
BENJAMIN L. CARDIN, Maryland JOHNNY ISAKSON, Georgia
ROBERT P. CASEY, Jr., Pennsylvania DAVID VITTER, Louisiana
JIM WEBB, Virginia JOHN BARRASSO, Wyoming
Antony J. Blinken, Staff Director
Kenneth A. Myers, Jr., Republican Staff Director
(ii)
C O N T E N T S
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Page
Biden, Hon. Joseph R., U.S. Senator from Delaware, opening
statement...................................................... 2
Prepared statement........................................... 4
Lugar, Hon. Richard G., U.S. Senator from Indiana, opening
statement...................................................... 1
Rood, Hon. John C., Acting Under Secretary for Arms Control and
International Security, Department of State, Washington, DC.... 5
Prepared statement........................................... 8
Responses to questions submitted by Senator Norm Coleman..... 29
Responses and attachments to questions submitted by Senators
Joseph Biden and Richard Lugar............................. 37
Additional Material Submitted for the Record
Hagel, Hon. Chuck, U.S. Senator from Nebraska, prepared statement 23
Chertoff, Michael, Secretary of Homeland Security, Department of
Homeland Security:
Letter from Senate Committee on Foreign Relations............ 27
Responses to questions submitted by Senators Joseph Biden and
Richard Lugar.............................................. 27
Mukasey, Hon. Michael B., Attorney General, Department of
Justice:
Letter from Senate Committee on Foreign Relations............ 24
Responses to questions submitted by Senators Joseph Biden and
Richard Lugar.............................................. 25
Additional letters received from:
Aerospace Industries Association of America, Inc............. 32
Arms Control Association, Federation of American Scientists,
and Wisconsin Project on Nuclear Arms Control.............. 34
Brown, Right Hon. Gordon, Prime Minister of the United
Kingdom of Great Britain and Northern Ireland.............. 30
Bush, Hon. George W., President of the United States, The
White House, Washington, DC................................ 29
Richardson, Hon. Dennis, Ambassador of Australia............. 30
Rittenmeyer, Ron, chairman, president and CEO, EDS, Plano, TX 32
Rudd, Hon. Kevin, Prime Minister of Australia................ 31
Stevens, Robert J., chairman, president and CEO, Lockheed
Martin Corporation, Bethesda, MD........................... 33
Taylor, Right Hon. Baroness Ann, of Bolton, Minister of State
for Defence Equipment and Support, United Kingdom of Great
Britain and Northern Ireland............................... 31
(iii)
TREATIES
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WEDNESDAY, MAY 21, 2008
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 9:39 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. Joseph R.
Biden, Jr. (chairman of the committee) presiding.
Present: Senators Biden, Feingold, Lugar, and Hagel.
OPENING STATEMENT OF HON. RICHARD G. LUGAR, U.S. SENATOR FROM
INDIANA
Senator Lugar [presiding]. I have been asked to commence
the hearing. The chairman will be with us in just a few
minutes, but I will give an opening statement and then the
chairman will arrive and take over our hearing, and we will
proceed in the regular order.
I simply want to say I welcome the opportunity to consider,
with the witnesses and with our colleagues, these two defense
cooperation treaties with the United Kingdom and Australia. I
support the goal of these treaties, and I believe that if
carefully implemented, they will enhance United States national
security.
The subject of streamlining defense cooperation with our
two close allies first came before this committee as bilateral
agreements creating exemptions from arms licenses for defense
trade. As chairman, I initiated the first legislative action on
these agreements in 2003 by including language in S. 925, the
Foreign Relations Authorization Act for Fiscal Year 2004, which
was necessary to bring the agreements into force.
In 2004, language was eventually included in the defense
authorization bill regarding the agreements. Unfortunately,
that language did not include the exemptions that I had
authored, and it merely established expedited review of
licenses for the United Kingdom and Australia.
Last summer, in the final days of Prime Minister Blair's
term, the United States announced it had signed a treaty with
the United Kingdom in defense trade. On September 20 of last
year, President Bush submitted that treaty to the Senate. On
December 3, 2007, a nearly identical treaty with Australia
arrived.
The fundamental purpose of these treaties, like the
original 2003 bilateral agreements, is to eliminate the
requirements for export licenses to certain firms and
individuals in the United Kingdom and Australia. The treaties
before us, however, are more expansive. The bilateral
agreements from 2003 were limited in scope to what Secretary
Colin Powell called ``low-sensitivity, unclassified, defense
items.'' The treaties would go further to include license-free
treatment for classified defense exports and sensitive defense
technologies.
The treaties set up groups of individuals and firms in the
United Kingdom and Australia who may receive unlicensed defense
articles if they are part of an approved community. The
treaties also create a list of cooperative endeavors and joint
military operations for which unlicensed exports may be made.
Many aspects of these treaties require careful explanation
by the administration. Of particular concern is the treaties'
use of what the President's message of transmittal refers to as
``implementing agreements.'' These implementing agreements
would govern some of the most critical aspects of the treaties,
including enforcement and the scope of the treaties'
application. Yet the transmittal message states--and I quote--
``The administration does not intend to submit any of the
implementing arrangements to the Senate for advice and
consent.''
The administration must illuminate provisions of the
treaties and implementing arrangements that lack specificity.
The Foreign Relations Committee may want the fullest possible
understanding of how these treaties will work. For example,
article 3 of the treaty with the United Kingdom states that the
licensing exemptions created by the treaty will apply to
certain counterterrorism operations; research, development,
production and support programs; and other specific projects
which are to be specified in an implementing agreement.
However, the relevant implementing agreement refers only to
various criteria that will be used to develop specifics related
to article 3. It does not list the actual projects, programs,
and operations to which the treaty applies. Thus, the treaty's
scope is expressed in an implementing arrangement that says the
application of the treaty will be determined at a later time
and under relatively vague criteria.
I am confident we can enable a clearer understanding of
article 3 and other provisions that will allow for Senate
passage this year. This will require effort on the part of both
the administration and the Senate. The administration must
expedite answers to questions for the record or other committee
inquiries within 2 or 3 weeks of this hearing.
I am glad we are moving forward today. I remain committed
to the proposition that we can achieve ratification of these
treaties in this Congress.
I thank the chairman again for calling the hearing and look
forward to our discussion this morning.
And I now welcome the chairman.
OPENING STATEMENT OF HON. JOSEPH R. BIDEN, JR.,
U.S. SENATOR FROM DELAWARE
The Chairman [presiding]. Thank you. I apologize for being
late and thank you, Mr. Chairman, for beginning this hearing.
I have a longer statement, but as usual, I would like to
associate myself with the remarks that you made and focus on
just two points.
The Arms Export Control Act has never been a very popular
piece of legislation. Our allies and friends have found it
difficult, and there have been many attempts over the years, a
40-year history of the existence of this to amend it to
accommodate changes. This treaty comes up with a novel way to
deal with what was attempted earlier under the tenure of
Secretary of State Powell to deal with particularly Australia
and the United Kingdom, two good friends.
But, as an old saying goes, the devil is in the details,
and there are surely a lot of details in this treaty that at
least I do not know enough about. The issues left unresolved in
the treaties include some very significant ones, procedures to
determine what qualifies as an activity in support of which
defense articles and services may be exported under the treaty;
defense articles and services to be excluded from the treaties;
criteria that United Kingdom and Australian facilities and
personnel must meet in order to be eligible to receive exports
under the treaties; procedures for obtaining United States
approval of re-exports; procedures for the United States to
gain access to facility records of the handling of U.S. goods
and technology, especially--especially--if something is
diverted and the United States wants to find out how and why it
happened; and procedures for coordinating enforcement efforts.
The committee and the Senate will also need assurances
regarding the ability to enforce the provisions of these
treaties and to deal with cases in which entities are removed
from an ``Approved Community'' or previously exported items are
added to the list of items excluded from a treaty.
Finally, the committee and the Senate will want to look
very closely at the impact of these treaties on congressional
prerogatives. If export licenses are no longer required for
some exports, will there be no prior notice and review of those
exports?
If a British or Australian entity wants to re-export an
item obtained without an export license, it will need U.S.
Government approval, but will that approval be under section
3(d) of the Arms Export Control Act and thus subject to the
congressional review procedures of that part of the law? Or
does section 3(d) apply only to items previously exported
pursuant to the law?
What are the implications for Congress, as well as for
domestic implementation, of having a treaty state ``that the
provisions of this treaty are self-executing in the United
States''?
The duty of this committee is to proceed with care and
precision so that the Senate's action will help to ensure
proper implementation and enforcement. And today's hearing is
one part of that process.
Our witness today for the hearing is the Honorable John
Rood, Acting Under Secretary of State for Arms Control and
International Security. We would like to welcome you, Mr.
Secretary.
And I understand that other officials from the State
Department's Office of the Legal Adviser and from the relevant
Departments will also be available to answer questions
concerning these treaties. Is that correct?
So I welcome you all and I expect we will make use of all
your expertise today. So I thank you and welcome you and since
we have such a small gathering today, Senator Hagel, would you
like to make any comment?
Senator Hagel. I will wait.
The Chairman. All right. Thank you.
[The prepared statement of Senator Biden follows:]
Prepared Statement of Hon. Joseph R. Biden, Jr., U.S. Senator From
Delaware
Forty years ago, the Arms Export Control Act was enacted to fashion
an orderly process for promoting U.S. arms sales while preventing the
spread of advanced military technology and equipment to our enemies or
to countries that might misuse those exports.
Over the years, this legislation has been amended to deal with such
concerns as restraints on sales to developing countries, end-use
monitoring, bans on incentive payments, bans on sales to state sponsors
of terrorism or sales that would help countries build weapons of mass
destruction, and sanctions on persons improperly selling systems or
components that breach the Missile Technology Control Regime.
The U.S. export control regime has never been popular. It's time-
consuming. It results in some businesses being denied the right to sell
their products and services. Sometimes this means that foreign
competitors get the business. Sometimes our allies chafe at
restrictions, especially the requirement that they secure U.S.
Government approval before re-exporting arms or components with U.S.
content.
But the law has served a national purpose--of closely regulating
the flow of arms to ensure that they do not disrupt regional security,
and preventing the proliferation of dangerous technologies. Close
congressional oversight has been essential to guarding against an
executive branch instinct to preserve alliances abroad and the defense
base at home, which sometimes can conflict with other, equally
significant national interests.
Since the 1990's, changes in the structure of the arms industry
have also affected export control. More companies are multinational
now, and more weapons systems are built with components and technology
from multiple countries. Projects like the Joint Strike Fighter are
designed to meet the needs of multiple buyers and to promote
interoperability between the United States and its allies.
The Arms Export Control Act has long had a provision for joint
projects with NATO countries--section 27--but not all projects come
within its purview. So, from time to time, our closest allies have
sought broader relief from export license requirements. Canada has such
broader relief, because its export control regime is patterned on ours
and because U.S. and Canadian industry are closely integrated.
Five years ago, the administration tried unsuccessfully to grant
export license relief to the United Kingdom and Australia under the
provisions of section 38 of the Arms Export Control Act. Our two close
allies were unable, for different reasons, to meet the standards of
section 38, and the House of Representatives would not relax those
standards (although the Senate was willing to do so).
Last year, the administration tried another approach. After speedy
and secret negotiations, it signed treaties with the U.K. and Australia
to grant them export control relief.
The treaties before us today are based on an innovative approach to
export control that may solve the problems that hampered earlier
efforts to provide export license exemptions. Rather than relying
solely upon the U.K. and Australian export control regimes, those
countries will treat U.S. arms exports under the treaties as classified
information--thus bringing the exports under their information security
laws, such as the U.K.'s Official Secrets Act.
In the U.K., the intent is that by treating imported U.S. arms and
technology as classified information, the British Government can
require U.S. Government approval for any re-export--even for a re-
export to a fellow member of the European Union. The EU bars countries
from controlling the flow between its members of ``dual use'' items
that have both military and nonmilitary uses; but it has no bar on
controlling the flow of classified information.
Similarly, in Australia, the government has no right to restrict
the flow of defense items from one Australian entity to another. But it
can restrict the flow of classified information.
The old saying that ``the devil is in the details'' surely applies
to these treaties. Many details of implementation are left to the
implementing arrangements, which were negotiated early this year and
provided to the committee. And much of what the treaties left to the
implementing arrangements has been kicked further down the road, to
procedures to be worked out by the management board that will implement
each treaty.
The issues left unresolved by the treaties include some significant
ones:
Procedures to determine what qualifies as an activity in
support of which defense articles and services may be exported
under the treaty;
Defense articles and services to be excluded from the
treaties;
Criteria that U.K. and Australian facilities and personnel
must meet in order to be eligible to receive exports under the
treaties;
Procedures for obtaining U.S. approval of re-exports;
Procedures for the United States to gain access to facility
records of the handling of U.S. goods and technology
(especially if something is diverted, and the United States
wants to find out how and why it happened); and
Procedures for coordinating enforcement efforts.
The committee and the Senate will also need assurances regarding
the ability to enforce the provisions of these treaties and to deal
with cases in which entities are removed from an ``Approved Community''
or previously exported items are added to the list of items excluded
from a treaty.
Finally, the committee and the Senate will want to look closely at
the impact of these treaties on congressional prerogatives:
If export licenses are no longer required for some exports,
will there be no prior notice and review of those exports?
If a British or Australian entity wants to re-export an item
obtained without an export license, it will need U.S.
Government approval.
But will that approval be under section 3(d) of the Arms Export
Control Act, and thus subject to the congressional review
procedures of that part of the law? Or does section 3(d) apply
only to items previously exported pursuant to that law?
What are the implications, for Congress as well as for
domestic implementation, of having a treaty state ``that the
provisions of this Treaty are self-executing in the United
States''?
The duty of this committee is to proceed with care and precision,
so that the Senate's action will help to ensure proper implementation
and enforcement. Today's hearing is one part of that process.
The witness for today's hearing is the Honorable John Rood, Acting
Under Secretary of State for Arms Control and International Security.
Welcome.
I understand that other officials--from the State Department's
Office of the Legal Adviser and from other relevant Departments will
also be available to answer questions concerning these treaties. I
welcome them as well, and I expect that we will make use of their
expertise today.
The Chairman. The floor is yours, Mr. Secretary.
STATEMENT OF HON. JOHN C. ROOD, ACTING UNDER SECRETARY FOR ARMS
CONTROL AND INTERNATIONAL SECURITY, U.S. DEPARTMENT OF STATE,
WASHINGTON, DC
Mr. Rood. Mr. Chairman, Senator Lugar, Senator Hagel, thank
you for holding this hearing and for the opportunity to testify
before the committee on the two bilateral defense cooperation
and trade treaties between the United States and the United
Kingdom and Australia. Before proceeding with my oral
statement, Mr. Chairman, I would like your permission to place
my full written statement in the record.
The Chairman. Yes. Your entire statement will be placed in
the record.
And I also would ask unanimous consent that my entire
opening statement be placed in the record as well.
Mr. Rood. Thank you.
Mr. Chairman, these treaties represent a paradigm shift in
the way the United States conducts defense trade with its
closest allies. Rather than reviewing individual export
licenses, the treaties will establish an environment where
trade in defense articles, technology, and services can take
place freely and securely between approved communities in the
United States, United Kingdom, and Australia when such trade is
in support of combined military and counterterrorism
operations; joint research development, production and support
programs; mutually agreed projects where the end-user is the
United Kingdom or Australian Government; or United States
Government end-users.
The United States Government will determine which end-users
may have access to United States Munitions List items under the
treaties by maintaining a mutually agreed-upon approved
community list of private sector entities in the United Kingdom
and Australia. Not all controlled items will be eligible for
export under the treaties, and we have identified such items in
a proposed exemption list which was developed by the Department
of Defense.
Both the United Kingdom and Australia have agreed to
protect United States origin defense items exported under the
treaty by using their national laws and regulations which
govern the safeguarding of classified information and materiel,
and also to require prior U.S. approval for the re-export and
re-transfer of such items outside the approved community. We
have agreed on detailed compliance and enforcement measures
which were negotiated by the Departments of State, Defense,
Justice, and Homeland Security.
The details of how the treaties will work are contained in
the implementing arrangements called for in both treaties. If
ratified, the treaties will be self-executing in that no
additional implementing legislation will be required to bring
them into force, although we will need to publish Federal
regulations implementing their effect on existing law.
Mr. Chairman, there is a strong strategic rationale for the
treaties. First, from an investment and trade perspective, the
United States, the United Kingdom, and Australia are already
closely connected. The United States is the largest foreign
investor in the United Kingdom with over $360 billion in
investments, and also in Australia with $120 billion invested
in that country. The United Kingdom's $300 billion of
investments in the United States makes it our largest foreign
investor, and Australia is the eighth largest foreign investor
in the United States.
The economic interdependence of our countries is one aspect
of a much deeper bond. Our shared historical experience,
culture, values, and above all, commitment to human liberty
form the deep and solid basis for our alliance, and the
treaties will further cement these relationships.
Second, our three nations have an enduring strategic
interdependence. Going back to our alliance with Great Britain
and the Commonwealth States during World War I, defense
relations have strengthened United States-United Kingdom-
Australia alliance ties throughout recent history. United
States military hardware helped Britain stand against fascist
aggression in World War II. United States and United Kingdom
scientific and technological cooperation led to tremendous
advances in military technology such as the invention of radar
and advances in code-breaking technology. In addition to close
cooperation during World War II, the United States-Australia
alliance continued to mature as symbolized most recently by the
ANZUS Treaty of 1951. And of course, throughout the cold war,
our defense industries worked closely together, which was
critical in defeating communism.
Today the United States, the United Kingdom, and Australia
are once again engaged in an overarching struggle, this time
against terrorism. The attacks in New York City, Washington,
DC, London, and Bali are grim reminders of the transnational
threat we face. The United States must work with its allies to
create new institutional paradigms that facilitate the
effective strategic cooperation we need to deal with the
threats of the 21st century.
Mr. Chairman, let me suggest three benefits that will flow
from these treaties.
First, the treaties will further strengthen our alliance in
the war on terror. A streamlined export control environment
will allow greater opportunities for joint research,
development, production, and support of defense equipment, and
will expedite the delivery of critical capabilities to our
forces. Greater economies of scale in production and support
will reduce costs. Having the forces of all three nations
outfitted with interoperable and supportable warfighting
capabilities will yield increased battlefield effectiveness.
Second, the treaties will create an even more competitive
defense industry marketplace. The institutionalized reforms in
these treaties will foster more efficient exchanges between our
countries' defense firms and will also improve the competitive
environment. Our forces will have greater and lower cost access
to cutting-edge technologies, much to the taxpayers' benefit.
Finally, it is worth considering the projected trends in
export licenses. The State Department expects to receive 85,000
export licenses in fiscal year 2008, and we project an annual
growth rate of about 8 percent. Industry officials and
representatives from our closest allies often raise concerns
that export license delays inhibit multilateral cooperation for
military and counterterrorism operations. Over the past 2
years, the State Department has processed over 15,000 such
export licenses for the U.K., and over 99.9 percent of those
export licenses were approved--those requests were approved. We
expect the treaties will remove the requirement for about two-
thirds of the licenses needed today for the United Kingdom and
Australia.
I emphasize that these benefits are not gained at the
expense of our fundamental duty to protect critical U.S.
defense technologies. As I mentioned, we have excluded the most
sensitive defense articles from treaty eligibility. In both
countries, only security-cleared entities and staff with a need
to know may have access to items exported under the treaty. In
the U.K., articles exported under the treaty will be subject to
the Official Secrets Act, as well as other relevant U.K. laws.
In Australia, treaty-exported articles will be subject to the
Crimes Act and the Criminal Code and Customs Acts. Approved
community entities will have detailed recordkeeping
requirements and can be subject to auditing, end-use
monitoring, and verification measures to ensure compliance and
to investigate potential violations.
Mr. Chairman, on behalf of the administration, I
respectfully urge the Senate to act on the treaties in a timely
manner, and I would be pleased to answer any questions you have
now.
[The prepared statement of Hon. Rood follows:]
Prepared Statement of Hon. John C. Rood, Acting Under Secretary for
Arms Control and International Security, Department of State,
Washington, DC
Mr. Chairman, thank you for holding this hearing and for the
opportunity to testify before the committee on the two bilateral
defense trade cooperation treaties between the United States and the
United Kingdom (Treaty Document 110-7), and Australia (Treaty Document
110-10). On behalf of the administration, I urge you and your
colleagues in the Senate to promptly provide advice and consent to the
ratification of these treaties.
The U.K. and Australia Defense Trade Cooperation Treaties represent
a paradigm shift in the way the United States conducts defense trade
with its closest allies. Rather than reviewing and approving individual
export licenses, once ratified and fully implemented, the treaties will
establish an environment where trade in defense articles, technology,
and services can take place freely and securely between approved
communities in the United States, United Kingdom, and Australia. These
treaties are designed to enable each nation's government and industry
to work together in a flexible, agile manner to provide the best
possible defense technology and equipment to our military forces and
counterterrorism organizations.
The treaties will permit, without prior written authorization, the
export of defense articles, technical information, and services
controlled pursuant to the International Traffic in Arms Regulations,
or ITAR, between the United States and the United Kingdom and
Australia, when in support of:
Combined military and counterterrorism operations;
Joint research, development, production, and support
programs;
Mutually agreed projects where the end-user is Her Majesty's
Government or the Government of Australia; or the U.S.
Government.
The U.S. Government will maintain its authority over which end-
users may have access to U.S. Munitions List items under the treaties
by mutually agreeing with Her Majesty's Government, and with the
Government of Australia, on an approved community of private sector
defense and counterterrorism related entities in these countries. The
U.S. Government will not approve the British and Australian Government
entities that will be eligible to use the treaties, but we will clearly
identify those entities for compliance and enforcement purposes. Not
all ITAR-controlled items will be eligible for export under the
treaties. We have identified such items in a proposed ``Exemption
List,'' which was carefully developed by the Department of Defense, and
provided this to the committee staff.
Both the U.K. and Australia have agreed to protect U.S.-origin
defense items exported under the treaty using their national laws and
regulations which govern the safeguarding of classified information and
materiel, and to require prior U.S. approval for the re-export and re-
transfer of such items outside the approved community. We have agreed
with the United Kingdom and Australia on detailed compliance and
enforcement measures, to be required of members of each approved
community, which were negotiated by the Departments of State, Justice,
Homeland Security (specifically, Customs and Border Protection, and
U.S. Immigration and Customs Enforcement), and the Department of
Defense. Violations of the treaties will be prosecuted under the laws
of the responsible participant.
These details, and others related to how the treaties will actually
work, are contained in the ``Implementing Arrangements'' called for in
both treaties. These arrangements will become effective on the date of
entry into force of the treaties. If ratified, the treaties will be
self-executing; that is, no additional implementing legislation will be
required to bring them into force, although we will need to publish
Federal regulations implementing their effect on existing law. The
administration believes that these treaties will play a key role in our
ability to manage risk while fulfilling our dual obligations of
building partnership capacity with key allies and protecting U.S.
defense technology through export controls.
I will now highlight the strategic rationale for the treaties and
explain why swift Senate action to provide its advice and consent would
significantly advance U.S. national security objectives with our two
closest allies.
First, from an investment and trade perspective, the United States,
the United Kingdom, and Australia are already connected to a remarkable
degree. The United States is the largest foreign investor in the United
Kingdom with over $360 billion in investments. Indeed, close to a third
of U.S. direct investment to all EU countries reaches the U.K., while
about 40 percent of U.S. investment in G-8 countries is in the U.K.
Likewise, the United States has invested over $120 billion in
Australia, making it that nation's largest foreign investor. To put
these numbers in perspective, it is worth considering U.S. economic
relations with rising global powers, China and India. While increasing
rapidly, U.S. investments in those countries are approximately $22
billion and $9 billion, respectively--still significantly less than in
the U.K. and Australia.
These relationships are, of course, reciprocal. The U.K.'s 300
billion dollars' worth of investments in the United States makes it our
largest foreign investor. These investments account for over one-fourth
of all EU investments in the United States. Australia is the eighth-
largest investor in the United States.
The economic interdependence between the United States, the United
Kingdom, and Australia is only one aspect of a much deeper bond that
connects our nations--a bond that Winston Churchill called ``the
fraternal association of the English-speaking peoples.'' Our shared
historical experience, culture, and--above all--commitment to the
ideals of human liberty, form the deep and solid basis for our alliance
over many years, and the implementation of these treaties will further
cement these relationships.
This leads me to my next reason for swift Senate action on these
treaties--our enduring strategic interdependence. Going back over 90
years to our alliance with Great Britain and its Commonwealth States
against the Central Powers during World War I, defense relations in
particular have served to strengthen United States-United Kingdom-
Australia alliance ties throughout recent history. In the early years
of World War II, President Franklin Roosevelt provided the U.K. with
military hardware under the lend-lease program, helping Britain stand
as a bulwark in Europe against fascist aggression. U.S.-U.K. scientific
and technological cooperation throughout the war led to tremendous
advances in military technology, such as the invention of radar in the
U.K. and advances in code breaking, and the Manhattan Project in the
United States. Ultimately, the efficient, integrated nature of the
allied defense industry proved decisive in dealing the final deathblow
to the Axis powers. While spending less than 40 percent of our GDP on
military spending during World War II, the introduction of U.S. troops
in Europe and the Pacific helped secure an allied victory in WWII. In
addition to close cooperation during World War II, the United States-
Australia alliance continued to mature as symbolized most clearly by
the ANZUS Treaty of 1951. Interestingly, the ANZUS Treaty and NATO
Article 5 were both invoked after the September 11 attacks on the
United States.
This military cooperation continued throughout the cold war as
allied defense industries worked together on a wide range of advanced
technologies and knowledge, producing key strategic weapons systems
like ballistic missile submarines and Tomahawk cruise missiles, which
are invaluable to our combined arsenals today. The collaborative nature
of our defense industries was critical in defeating communism.
The United States, United Kingdom, and Australia are once again
engaged in an overarching struggle, this time against terrorists and
insurgents operating outside conventional boundaries of warfare. The
September 11 attacks in the United States, the July 7 attacks in
London, and the October 2002 Bali bombing are grim reminders of the
transnational threat we face.
However, effective cooperation in the war on terrorism is not
inevitable; the United States must work with its allies to create new
institutional paradigms that facilitate strategic collaboration. It is
in this context that I hope you will consider the treaties.
Specifically, I will suggest three benefits we expect to see if the
Senate provides advice and consent to the treaties.
First, the treaties will further strengthen the United States-
United Kingdom-Australia alliance. Both the U.K. and Australia are
critical allies in the war on terrorism, supporting coalition missions
in Afghanistan and Iraq with operational, tactical, and intelligence
support. In the event of future military engagements, the United States
would naturally look to the U.K. and Australia for support as key
coalition partners. A streamlined export control environment under the
treaties with these key allies will allow greater opportunities for
joint research, development, production, and support of defense
equipment by government and industry, and would expedite the delivery
of critical warfighting technologies to our military forces and
counterterrorism organizations fighting the war on terrorism every day.
Greater agility in development, and economies of scale in production
and support, will result in more timely delivery of capability to our
operational forces while reducing costs. This in turn will yield
increased battlefield effectiveness because all three nations' forces
will be outfitted with common, interoperable, and supportable force
protection, weapons, intelligence, surveillance, and reconnaissance,
logistics, and command, control, and communications systems.
Second, the treaties will create an even more competitive defense
marketplace with these allies. The institutionalized reforms in these
treaties will create opportunities for more efficient exchanges between
our defense firms and those of the U.K. and Australia, many of which
specialize in development, production, and support of critical
equipment needed to fight and win current and future conflicts. Treaty
implementation will improve the competitive environment, thereby
attracting more firms into the defense marketplace by lowering the
costs of entry into an international market. This is particularly
important given our continuing trend toward greater private-sector
investment in defense research and development. The operational forces
of the U.S. and its key allies will have greater--and lower cost--
access to world class, cutting-edge technologies in the United States,
United Kingdom, and Australia, much to taxpayers' benefit.
The promise of innovation is not simply a long-term prospect; a
number of ongoing programs and projects would progress with greater
ease immediately after the treaties' entry into force. For example, the
United States, United Kingdom, and Australia are already working
jointly on technologies to defeat Improvised Explosive Devices (IEDs),
which our forces face on a daily basis in Iraq and Afghanistan.
Finally, it is worth considering projected trends in export
licenses. In FY 2008, the State Department's Bureau of Political-
Military Affairs expects to license up to $96 billion in authorized
exports for direct commercial sales. The number of applications
received has increased at about 8 percent annually. We anticipate that
total licenses received will rise from 69,000 in FY 2006 to 85,000 in
FY 2008. Industry officials and government representatives from our
closest allies often raise concerns that export license processing
delays are inhibiting efforts toward multilateral cooperation in
support of military and counterterrorism operations. Over the past 2
years, the State Department has processed over 15,000 such export
licenses for defense trade with the U.K. alone. Over 99.9 percent of
these requests were approved. We judge that, when implemented, the
treaties will remove the requirement for approximately two-thirds of
the licenses required today for both the U.K. and Australia.
All of the benefits flowing from increased research and development
cooperation, freer trade, and a more competitive market are in no way
gained at the expense of our fundamental duty to protect critical U.S.
defense technologies. In both countries consignment and end-use of
treaty exported articles will be limited to security-cleared facilities
and entities, as well as security-cleared staff with a bona fide need-
to-know. In the U.K., Defense articles exported under the treaty will
be subject to the Official Secrets Act, as well as other relevant U.K.
laws. In Australia, the ``official secrets'' section of the Crimes Act,
as well as the Criminal Code Act and Customs Act will similarly apply
to exports under the treaty. Approved community companies are required
to maintain all records of treaty-related transactions for a minimum of
5 years and can be subject to audit. The treaties also provide for end-
use monitoring and verification to ensure compliance and investigate
potential violations.
In considering the two treaties before you, I hope that the
distinguished members of this committee will reflect on not only the
immediate defense implications of ratification, but also the larger
strategic importance of the treaties. Confronting emerging security
challenges will require strong alliances inspired by shared ideals and
facilitated by effective institutions. Enduring friendships with the
U.K. and Australia are paramount. These treaties will establish a
framework for greater cooperation in support of our efforts with these
key allies in the decades to come.
With this in mind, I respectfully urge the Senate to act on the
treaties in a prompt and timely manner. I would be pleased to answer
any questions you might have.
The Chairman. Thank you. Let me ask you to expand a little
bit on what on the surface sounds like it makes a lot of sense,
but I am not sure it does, about this helping us fight the war
on terror and what happened in New York City. Most of what is
written about that says what we need is intelligence, not new
weapons systems. Are you telling me that this is really a major
element, or is this just the same old malarkey about the war on
terror justifies everything? I mean, seriously. I am being
deadly earnest about it. I mean, everybody uses the terminology
to justify everything. We are going to fight the war on terror.
I am empathetic to the treaties. I need a lot more detail,
but explain to me your comment when you referenced what
happened in New York City. How would any export control act
have any impact on what happened in New York City? I mean, any
treaty relating to exports.
Mr. Rood. Senator, there are technologies and programs that
will be developed more rapidly and easily and we think more
effectively under the treaty than they are today. There are a
number of areas where those kinds of new development activities
can be, we think, applied to the counterterrorism area. And
today, as I think was evident in your question, the so-called
front line is a little bit hard to distinguish at times,
whether that is Kandahar, Afghanistan, or that is New York or
Sydney, Australia. That front line changes. But what does not
change is the necessary ability for the United States, United
Kingdom, and Australian defense industries to be able to
rapidly develop new technologies, whether they be for
intelligence, as you mentioned, or for means to interdict
terrorist threats in whatever form they come. We think there
will be efficiencies developed and new ways of doing business
that will lower the cost, make these technologies more
interoperable, and indeed, more effective.
The Chairman. Are you confident that the U.K. can meet the
terms of the treaty while at the same time living up to their
EU obligations? Because that is what caused this dilemma in the
first place.
Mr. Rood. Yes. We think that the U.K. can implement its
obligations consistent with its EU obligations. First, in the
crafting of the treaty, this was a consideration that we took
into consideration from the outset. We worked closely with the
U.K. in that regard. One of the key tools that will allow that
to occur is that the U.K. will control the re-export or re-
transfer of goods from the United Kingdom using, in part, their
Official Secrets Act. The EU regulations do not apply to the
U.K.'s Official Secrets Act. This is their means of
maintaining----
The Chairman. How successful have the Brits been in
prosecuting violations of their Official Secrets Act?
Mr. Rood. The British have a good record of implementing
their export control regime, as well as protection of
classified information. We think that they will be able to use
the various legal tools they have, whether that is the Official
Secrets Act or their other domestic legislation related to
export controls, which will also apply. It is a bit of a belt
and suspenders approach in order to effectively enforce the
treaty.
The Chairman. Article 5 of the treaty states that the
United States community--and that is a term of art in the
treaty--will include nongovernmental United States entities
registered with the United States Government and eligible to
export defense articles under the United States law and
regulations.
What will a U.S. entity have to do other than register in
order to gain membership in the United States community?
Mr. Rood. Under the present system that we have today--the
statutory authority, of course, is the Arms Export Control
Act--
defense exporters need to register with the State Department,
and there is an established procedure by which they will do
that. The implementing arrangements for this treaty add
additional requirements for U.K. and Australian entities to be
in respective approved communities.
But the short answer is that we in the administration will
use those existing authorities that we have to review defense
exporters for eligibility to export under the treaty. For the
United Kingdom and Australian approved communities we will
follow the procedures under the implementing arrangements, and
we will take into account a wide range of factors before we
would place a company in the so-called approved community. That
could be their compliance record, whether there are any pending
indictments or other law enforcement matters against them. And
we would, of course, have the ability over time to continually
evaluate that. Once a firm is placed in the approved community,
they can be removed from that community as well by the
administration.
The Chairman. Well, under the present Arms Export Control
Act, specifically section 38(g), it prohibits someone who has
been convicted of certain crimes from being a party to a
licensed export as either an exporter or a recipient unless the
President finds that mitigating steps have been taken.
Now, from my staff's review of these treaties, it does not
seem to bar that same person from joining the approved
community and sending or receiving unlicensed defense items.
Why?
First of all, am I correct, and if I am correct, why has it
been deleted?
Mr. Rood. Senator, it is our understanding that the same
standard would apply as it currently does under the Arms Export
Control Act as under the treaty.
The Chairman. I am looking back at my staff. I will follow
up with you on that. That is not my impression.
The question I had was how was the President going to treat
convictions for violating laws that are listed in 38(g) but not
in the treaty implementation agreement. In other words--you
understand the question.
Mr. Rood. My understanding, Senator, is that if a person is
convicted today under the Arms Export Control Act, they are not
eligible to export today, and that that same standard would
apply under the treaty, which is that if you are a convicted
individual, you would also not be eligible for participation in
the approved community under the operation of the treaty.
The Chairman. Let me say it another way because I may be
wrong about this, to state the obvious. That is why I am asking
the question.
Mr. Rood. Yes, sir.
The Chairman. These issues now come up under the review for
an export license. Someone comes seeking a license and you all
review whether or not they have been convicted of a crime.
Under the treaty, there is no such review. So what is the
mechanism? We do not know and you do not lay it out, to the
best of my knowledge, what the mechanism will be. If someone
comes now and says, I want to become part of the approved--what
is the term of art?
Mr. Rood. Approved community.
The Chairman. The approved community. And I do not see any
written, specific criteria like in the Arms Export Control Act
that you look at to determine whether or not they can be part
of the approved community--not that I do not trust
administrations, but I do not trust administrations. I have
been here for seven, Democrat as well as Republican.
So all kidding aside, I mean, I may be missing something
here, but what is the mechanism? What assurance do we have that
you are being as fastidious and that is still the rule? Now the
President has to notify us that, look, I am providing--yes,
someone applied for a license. They have a conviction, but
there is a reason why we should grant the license anyway. There
is an exemption. The way the treaty is written, as I read it,
it could be that--and by the way, sometimes there are middlemen
here. We are not necessarily talking about--I am not
questioning the integrity of our British and Australian allies.
But there are middlemen involved here. So why is there not--are
you going to provide for us the criteria you are going to look
at? If you are not, you may have trouble getting the treaty
again--doing this again. That is what I am trying to get at
here. How do we know?
Mr. Rood. Yes, sir. As I understand it, if you are a
convicted individual, felony or something of that nature, you
are not eligible under today's Arms Export Control Act standard
for export. That will not change under the treaty. Today we
have a transactional approach, each transaction by each
transaction being reviewed by the administration. Under the
treaty, we changed that paradigm to review the participants in
a different process, and so the review process will be to vet
the individuals and the companies and entities that----
The Chairman. Are there written criteria, implementing
language for the treaty, as to what criteria you will use to
vet those individuals? And will they be available to us to see
before we approve this treaty?
Mr. Rood. Yes to both questions.
The Chairman. Good.
Mr. Rood. The implementing arrangements spell out a set of
criteria that are used to evaluate whether a firm will be
included or individuals in the so-called approved community. So
in our review of whether an individual would be part of that
community, we would look at things such as their criminal
record or whether there were any pending indictments, things of
that nature to determine whether or not they should be in the
approved community. And as I mentioned, once you are in the
approved community, that is not a status that you enjoy
permanently.
The Chairman. No; I understand that.
Mr. Rood. If someone were convicted at a later date of a
crime----
The Chairman. No----
Mr. Rood [continuing]. Then they could be removed.
The Chairman. I got that. As I said, the devil is in the
details.
My time is running out, but let me ask one last question.
Will U.S. law enforcement agencies and personnel be
committed to investigate alleged overseas violations of treaty
undertakings, or will such action be restricted to the treaty
partner's law enforcement agencies and personnel?
Mr. Rood. The principal role for, of course, enforcing the
treaty in the United Kingdom and Australia will fall to the
governments of Australia and the United Kingdom. They have
domestic legal authorities under which we think they can
enforce the treaty. The treaties do call for and require
cooperation in law enforcement matters in order to investigate
potential violations. For example, there is a discussion in the
treaty about--in the implementing arrangements, rather, about
determining the proper venue for prosecution. You may have a
case where it is more favorable to do that in one country or
another--to talk about the procedures by which the two
countries would do that. So we think we are going to enjoy the
kind of cooperation that will be necessary in order to
implement this treaty and to enforce it.
The Chairman. Well, you know, there are things that occur.
What brought this to mind was if illegal diversion occurs
during the transfer while on transit from the United States to
the United Kingdom, for example, the question is who is the
investigative agency. Does our FBI--do our agencies have the
authority and jurisdiction to investigate and prosecute it and
go forward, or is that--since the destination was Great Britain
and it was in their control or in an intermediate Party's
control that was associated with the destination country--who
has that jurisdiction? Because it seems to me what is going to
happen here is that this is going to get more and more
distant--the place where diversion is likely to occur. You
know, there are a lot of freight forwarders and intermediate
consignees to deal with in this process. It is not like you
take it from such and such a defense firm and that firm
personally delivers it. I assume we will get more detail on how
these particular items will be handled.
What I am asking my staff to do is to go back and take a
look at the enforcement mechanisms in the existing Export
Control Act and how those enforcement mechanisms will be
different under the treaty implementation language you are
going to come up with. That is what I want to see.
But my time is up, and I thank you.
Senator Lugar. Thanks very much, Mr. Chairman.
Secretary Rood, during my opening statement, I enumerated
sort of a multiyear project of moving these treaties along. You
have asked that we ratify these expeditiously, and I think the
chairman and members of the committee are eager to do that. But
it could become a mission impossible if we are not really able
to get from you or the administration things we need.
Now, specifically there are three parts in the defense
trade treaties. First are the treaties with the United Kingdom
and Australia signed in June and September and sent to the
Senate in September and December of last year. Second, there
are the implementing arrangements which were signed in February
and March and recently sent to the committee. And third, there
are regulations that will implement the treaties.
Now, at this point, Mr. Secretary, we do not have these
regulations despite President Bush's letter of transmittal
which states that in addition to the implementing arrangements,
his administration is prepared to provide the Senate the
``proposed amendments to the International Traffic in Arms
Regulations'' that would implement the treaty. To act on these
treaties in a prompt and timely manner, which you have
requested, we need this information.
Therefore, for the record, I have these three questions
specifically.
When will you provide the regulations to us that will
implement these treaties? That is the first question.
Second, do the United Kingdom and Australia view the
implementing arrangements they have concluded with you as
legally binding?
And third, why did you provide the implementing
arrangements to the Senate only for its information and not for
advice and consent?
Mr. Rood. Sir, we have, of course, engaged with the
committee staff on a number of occasions to brief on how the
treaties would operate, and to answer questions about
enforcement and other matters. And we have provided a number of
written answers to questions. Just for illustration, I believe
the last Senate staff briefing took 9 hours, but our folks were
there. The first one I believe was 6 hours, and there are
dozens of written questions that we have provided answers to.
I say that only to illustrate the point that we think we
are being cooperative, and we, of course, want to be, to
explain how the treaty will operate. It is a significant change
to today's operation. So we recognize the oversight role of the
committee and, indeed, we plan to continue to cooperate closely
with your staff.
With respect to the specific question you raised with
regard to regulations that would make changes to today's ITAR
regulations, we are still working on those. You were correct.
The treaties and the implementing arrangements have been
completed and provided to the Senate, as well as some
accompanying documentation on things like the exclusion list,
or the technologies that would not be covered by the treaty.
The regulations will probably be finished a little bit
later in the summertime. Once we have completed those, we
would, of course, provide them to the committee. As stated in
the President's transmittal letter--what we were trying to make
clear in the President's transmittal letter--is that those
would be provided in due course to the committee. The President
did not make a commitment in there to provide them prior to
ratification, but we are, of course, working on them as fast as
we can.
Senator Lugar. Would it not be appropriate to have those
prior to ratification? Is this not an integral part of the
process, the three parts we are talking about?
Mr. Rood. The implementing arrangements provide a fair
amount; we think a significant explanation of how the treaty
will operate.
The regulations are very similar to the kind of regulations
that exist today to implement the Arms Export Control Act. So
this is very common that agencies develop regulations to
implement the statutes that are passed by Congress. We see this
as an analogous situation where the Congress is being asked to
provide--or the Senate in this case--its advice and consent to
ratification of the treaties. We have provided the implementing
arrangements, and we in the administration, as we would
customarily do, are preparing regulations to implement the
legal statutes.
Senator Lugar. You continue to take the position then that
the implementing arrangements are only for our information and
not for advice and consent. Is that correct?
Mr. Rood. The treaty is self-executing and in the areas
where the treaty refers to the specific implementing
arrangements, that specific provision will also be legally
enforceable. We have provided the implementing arrangements in
full to the committee prior to the consideration of advice and
consent to ratification. So I think as a practical matter, we
feel as though we have provided the relevant documentation to
the Senate. As a technical legal matter, the implementing
arrangements are not a separate international agreement
requiring advice and consent by the Senate. Rather, the treaty,
we think, as a legal matter is the item that does require that
action by the Senate.
Senator Lugar. Well, then my third question, Do the United
Kingdom and Australia view the implementing arrangements they
have concluded with you as legally binding?
Mr. Rood. The treaty itself specifies areas where the
implementing arrangement will apply to issue A, B, or C. So by
the construction of the treaty, those provisions in the
implementing arrangements are also legally binding, and they
are viewed in that manner by the United Kingdom and Australia,
as well as ourselves.
Senator Lugar. But, nevertheless, your contention still is
that they are for our information and do not require advice and
consent. Only the treaty requires advice and consent.
Mr. Rood. Yes; that is correct.
Senator Lugar. Well, I think there is some disagreement on
this, and I do not want to belabor it. But I think probably we
need to have some more conversation and likewise the staffs. I
am inclined to see this all as one package with three parts,
and I am not certain I understand. But as I said, I will not
belabor it indefinitely. I think I have raised the points for
the record. You understand at least my general consternation
about the process.
Mr. Rood. Senator, the only thing I would say briefly in
response is that we see it as an analogous situation to that of
today where Congress, as an example, does not approve the ITAR
regulations that exist now. We regularly consult with the
committee about those and any particular changes, for instance,
before we put something in the Federal Register. So we see the
regulations that would implement this treaty as being similar
and the same type as the regulations we use today to implement
the law.
Senator Lugar. Well, I hear your position. As I say, maybe
we need to discuss this further.
Now, there are a couple of other areas, while you are
before us, that I want just to make a note of. Recently I
learned that an austere budget environment required the
Department of Commerce to make cuts to the treaty
implementation and compliance functions. We understand that the
State Department did not disagree with those decisions.
Specifically, the cuts may result in termination of Commerce
Department representation to our mission to the Organization
for the Prohibition of Chemical Weapons and has slowed an
already glacial pace of implementation for the U.S. additional
protocol to our safeguards agreement with the IAEA.
Now, first, what did you do when you learned of these cuts,
and second, what are you doing now to remedy the situation?
Mr. Rood. Senator, first, with regard to the Department of
Commerce's budget, that is something that the Commerce
Department is the principal authority on. We at State are not
always consulted about various revisions to the Commerce
Department's budget. The OMB process exists for that, but we
typically are the arbiter mainly for the State Department's
budget.
As to the specific questions you mentioned about the exact
levels of the cuts and the potential effect on some things such
as the OPCW, sir, I would like to take that for the record and
get you a precise answer.
Senator Lugar. All right. I would appreciate that because I
think you are cognizant of the cuts. We certainly are. I think
there is a serious matter with regard to arms control. So your
response for the record we would appreciate.
[The written response from Under Secretary Rood follows:]
The Department of Commerce and the Office of Management and Budget
are responsible for allocating limited resources in order to meet
Commerce responsibilities. The Department of State's ability to
influence the internal funding decisions of other Cabinet agencies is
limited. When the Department learned of funding cuts in the Treaty
Compliance Division of Commerce's Bureau of Industry and Security
(BIS), we expressed our concern to Commerce that this not be allowed to
adversely affect treaty implementation, particularly with respect to
Commerce's obligation to host CWC inspections of U.S. chemical
industry. Commerce told us that congressional cuts in the BIS
appropriation for fiscal year (FY) 2008 had forced the imposition of
significant fiscal constraints across the Bureau. We have been assured
that Commerce has sufficient funds available to carry out this
important function in FY08, and will also continue to work toward
implementation of the Additional Protocol.
Subsequently, the State Department's Ambassador Javits, who heads
the U.S. Delegation to the Organization for the Prohibition of Chemical
Weapons (OPCW), raised the issue of maintaining Commerce Department
representation on the delegation with Under Secretary Mario Mancuso and
Secretary Carlos Gutierrez. In response, we have been assured that the
Department of Commerce intends to resume permanent representation on
the U.S. Delegation to the OPCW when possible. In the meantime, we will
do our best to ensure that CWC issues affecting U.S. industry are
closely coordinated with the Department of Commerce.
Senator Lugar. Now, second, a consistent item on the United
States Russian agenda has been the negotiation of a legally
binding successor agreement to the START treaty which is set to
expire in 2009. When the Senate ratified the Moscow Treaty, it
did so on the understanding that a successor agreement to START
would be negotiated to provide verification of the arms control
progress of Russia and the United States.
My questions specifically--and you may want to take these
for the record. Is the administration supporting including new
limits on strategic forces as part of a follow-on agreement?
And second, do you intend to submit the outcome of your
negotiations to the Senate for advice and consent to
ratification?
Mr. Rood. Sir, a follow-on agreement for nuclear reductions
to the START treaty is something that is very important to us
in the administration. On Monday of this week, I met with my
Russian counterpart, Deputy Foreign Minister Kislyak, and his
team, including others from the Ministry of Defense and the
Russian Intelligence Services to talk about a follow-on
agreement to the START treaty. I have had numerous discussions
in that regard with my Russian counterpart.
The President and President Putin, as you saw in the recent
agreement at Sochi, called this a significant area that their
countries would pursue. Our policy is to seek the lowest
possible level of nuclear weapons, consistent with our
obligations to allies and our national security requirements.
And we hope that that will be embodied in a legally binding
follow-on to the START treaty. In all likelihood, that would be
another treaty that would require Senate advice and consent.
At present, we have a difference of opinion with our
Russian colleagues. Our view in the administration is that we
want a treaty that will set limits on strategic nuclear
warheads. We think that that is the appropriate focus of the
follow-on treaty. Our Russian colleagues have sought a treaty
with a broader scope, something which would also cover
conventional armaments and conventional delivery systems and
things of that nature. We are in the process of transitioning
to a greater reliance on conventional weapons and a reduced
reliance on nuclear forces. We, therefore, do not wish to
expand the scope of the treaty or other legally binding
agreement in the manner that our Russian colleagues have
identified.
Both sides, the Russians and the United States, do not wish
to simply continue the existing START treaty. It is a
phonebook-sized document of 750 pages. The negotiations began
under Brezhnev, when he was leader of the Soviet Union, and
were concluded under Gorbachev. And so we both recognize they
need to be updated as a minimum. We in the United States would
like another approach, as I said, that focuses on strategic
nuclear warheads and sets limitations upon them.
Senator Lugar. Well, I appreciate your response. I raise
the question because, really, throughout the recent years,
there has been an attitude I think on the part of the
administration that a follow-on to this was not really
required, even though the Moscow Treaty was sold to us on the
basis that something would occur in 2009. Now, this is not the
forum really to pursue all of that, but I just wanted to
register a serious concern about our negotiating posture and
our activities because I think we do need a follow-on.
I am not persuaded that because START I is a phonebook,
that somehow or other it is not pertinent. I think it is very
pertinent, and I suspect that the need to continue the
observations that we now have with the Russians mutually and
the joint enforcement is of the essence, as opposed to what I
think was a looser interpretation of the Moscow Treaty.
But maybe further hearings will eliminate that, and I
appreciate, Mr. Chairman, your indulgence in raising these
additional points.
The Chairman. I thank you, Senator. We have had a brief
discussion about this. I think it is appropriate that you and I
sit down and lay out a set of hearings on this soon, on the
larger issue of arms control.
As I said, I remember our meeting with the President and
how the Moscow Treaty was sold to us. I remember I was sitting
in the Oval Office and the things we both said to the President
and the representations that were made. So I think it is
important that we proceed.
And by the way, I am much less politic than my friend is,
but until we work out the matter that the Senator raised, there
is going to be no treaty. It is not going to come out of this
committee. So we will have to have a little meeting here about
how we are going to deal with these other issues. It is not
hard. We can come to an agreement, but if we do not come to
agreement, we are not going to have a treaty.
Senator.
Senator Feingold. Thank you so much, Mr. Chairman.
Thank you, Mr. Rood, for being here. I just want to follow
up on what Senator Lugar was asking you, basically reiterate
what he was getting at. It is my understanding that the
regulations that will govern exports under the treaty will not
be issued prior to ratification of the treaties. Is that
correct?
Mr. Rood. The regulations would not be issued prior to
ratification of the treaties? Sir, was that your question?
Senator Feingold. That is right.
Mr. Rood. No. We plan to complete the regulations later
this summer. The Senate has been asked to provide its advice
and consent to ratification before we deposit--the
administration, that is, deposits the instrument of
ratification and, therefore, allows the treaty to enter into
force. We will have to have in place regulations. Sir, what we
have asked is that--the treaty and the implementing
arrangements, of course, have been provided to the committee.
We would like the Senate to provide its advice and consent. We
will continue our work on regulations as we customarily would
do to implement statutes, and prior to the entry into force of
the treaty, which will occur when the President deposits the
instrument of ratification, we would, of course, have to have
those regulations be complete.
Senator Feingold. Will it then be within the discretion of
the President to determine whether to notify the Congress about
transfers and re-transfers conducted pursuant to the treaties?
Mr. Rood. We plan to continue to notify the committees of
oversight in the manner spelled out in the Arms Export Control
Act statute. So Congress, this committee, would continue to
receive advance notifications under the thresholds and of the
type of equipment under the standards that exist today in the
current statute.
Senator Feingold. But you see it as within the President's
discretion whether to do that or not?
Mr. Rood. Let me just consult our legal adviser as to
whether technically--legally what the status is, but I will
tell you as a matter of practice, I know that that is our
intention, to continue to notify the committee as the current
statute requires.
[Pause.]
Mr. Rood. I am advised by the State Department's Office of
the Legal Adviser that while we do intend and we are making the
commitment by the administration to continue to inform the
committee in the same manner as called for under the present
statute, that the treaty would change the legal reporting
requirements under the Arms Export Control Act. And so that
would be discretionary.
Senator Feingold. I understand that not all provisions of
the implementing agreement are binding. Can you list those
provisions that are binding?
Mr. Rood. The treaty in its terms specifically refers to
the implementing arrangements. For example, as you go through
the treaty text, it will say this will be identified in the
implementing arrangements concerning issue A or issue B or
issue C. In each and every case where the treaty refers to the
implementing arrangements, those elements of the implementing
arrangements will be legally binding.
Senator Feingold. Section 10(3)(f) of the implementing
agreement provides that any materiel violation of the treaty
must be reported immediately to Her Majesty's Government
``which will notify the United States Government as
appropriate.'' In short, is it correct to say that Her
Majesty's Government has the discretion to determine when to
notify the United States of violations or to handle them
itself? Is that correct?
Mr. Rood. You said that was section 10(3)(f), sir?
Senator Feingold. 10, sub 3, sub f.
Mr. Rood. Sir, perhaps I could respond to your next
question while our legal staff refers to that specific
provision in the implementing arrangement.
Senator Feingold. Let us move on and we will come back to
that.
How many prosecutions have been successfully carried out in
the United Kingdom and Australia pursuant to their secrecy
laws? How many of these prosecutions actually pertain to
illegal arms transfers?
Mr. Rood. This is a new arrangement that would exist in the
U.K. whereby the Official Secrets Act will begin to be applied
to defense articles and services sent to the U.K. from the
United States. The type of arrangement envisioned under the
treaty does not presently exist. We have had good cooperation
with the U.K. in the area of protection of classified
information under the Official Secrets Act. And we have a
General Security Agreement with the U.K. that the Ministry of
Defense in the U.K. and the Defense Department in the United
States are the primary interface. And we have had a good
experience there as well. So----
Senator Feingold. But how many of these prosecutions were
successful pertaining to illegal arms transfers?
Mr. Rood. What I was trying to say is this is a new
arrangement that is envisioned under the treaty. At present, we
are not exporting articles to the U.K. under the treaty system.
As to the specific number of prosecutions in the U.K. under the
Official Secrets Act, sir, I do not know the number, but I
could take that for the record.
Senator Feingold. Let me ask about their current laws and
whether they have been successful prosecuting under their
current laws.
Mr. Rood. We think the U.K. has had a good record in
running their export control system and in enforcing the
protection of classified information. As to the specific number
of prosecutions that the U.K. has conducted, sir, I would have
to get that for you for the record.
Senator Feingold. If you could get that back to me. We are
just trying to get information here, and I would appreciate
that.
[The written response from Under Secretary Rood follows:]
The Government of the United Kingdom has informed the State
Department that in the period from 2000 to 2008, Her Majesty's Revenue
& Customs (HMRC) successfully prosecuted 10 cases of export control
violations. In addition, there were 378 seizures of goods and HMRC
issued 64 warning letters to exporters. Currently, HMRC investigators
have seven active cases, and are considering launching investigations
into a further six. With regard to the Official Secrets Act, the U.K.
Crown Prosecution Service decided to prosecute seven cases in the same
time period. Of those, six were prosecuted successfully with a variety
of custodial sentences awarded, dependent on the seriousness of the
offense, ranging from 3 months to 11 years imprisonment. In a number of
cases significant fines were also imposed.
While noting the relatively small size, and niche nature, of
Australia's defense-related exports, the Government of Australia (GOA)
has informed the State Department that there have been a number of
investigations into breaches and alleged breaches of the Customs Act
and WMD Act, with some prosecutions resulting. Since 2004, there have
been 3 prosecutions for export control violations, and there are
currently 26 cases being investigated for breaches of export controls.
The GOA's Customs Cargo System profiling system, which identifies
potentially at-risk exports, has resulted in over 500 matches against
the profiles, resulting in 26 disruptions where the goods were held
pending resolution of concerns about the export. The GOA also noted
that there have been 56 disruptions of potential exports as a result of
other ongoing law enforcement activity, and that over 70 warning
letters have been issued to exporters since 2004.
Senator Feingold. How frequently will inspections be made
of companies that are involved in programs or projects
undertaken pursuant to the treaty and will those be unannounced
inspections?
Mr. Rood. The treaty envisions end-use monitoring and
verification, including inspections of the type that you
referred to. We have a program today called Blue Lantern that
we implement at the State Department. That will be continued
under the treaty. And so we expect that we will continue to
have the kinds of insight that we do today.
Senator Feingold. My question was how frequent will they be
and will they be unannounced.
Mr. Rood. Senator, there can be unannounced inspections.
The frequency and modality of how we do those will be as the
system is today, which is discretionary on our part. It is not
something where we have like a quarterly schedule. We try to
apply our limited resources for these kind of end-use
verifications in the particular areas where we have some
suspicion or some concern. There is not a uniform schedule
where each and every person is treated the same.
Senator Feingold. Mr. Rood, do you have an answer for me on
section 10(3)(f) after consulting with your lawyers?
Mr. Rood. Sir, the answer to your question with respect to
section 10(3)(f) of the implementing agreement is that
notification of materiel violations would be required by virtue
of article 13, subparagraph 3 of the treaty.
Senator Feingold. So that Her Majesty's Government would
not have the discretion to determine when to notify the United
States of violations?
Mr. Rood. Yes; that is correct.
Senator Feingold. Would not have the discretion. Would be
required to do so. Right, Mr. Rood?
Mr. Rood. Yes, sir.
Senator Feingold. OK.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
I have several additional questions, but it seems to me,
Mr. Secretary, the real potential--I want to emphasize
``potential''--sticking point here will be how we treat the
issue that was raised very briefly by me, in more detail by
Senator Lugar. I want to make it clear that the impetus for
this treaty--he and I voted for the proposals that were made in
the change of the Export Control Act to accommodate the British
and the Australians--What is it now, how many years ago now--in
2003, 5 years ago. So we are on the same page.
But it really does matter as an institutional matter. We
are clear on what precedent we are setting in approving a
treaty that may or may not--your argument, and I am not
suggesting it is illegitimate, is that these details of
implementation that come later in the summer are not
necessarily required to be subject to advice and consent. It
seems to me--and obviously, I do not speak for Senator Lugar--
that they may very well be. That is an issue we are going to
have to resolve. Until we resolve that, moving this treaty is
not likely.
Now, you may be able to convince the two of us and others
on the committee that you are correct. I think not. But until
that gets resolved, I can tell you as chairman of the committee
we are not going to move this treaty until we resolve that. It
does not mean we cannot resolve that tomorrow or in 3 days or 2
weeks. There is no time impediment here. It is a matter of,
from my perspective, the institutional prerogative of the
Senate in terms of advice and consent to a treaty and what we
are bound to and what we are not bound to.
So at any rate, I do not want to belabor the point.
Mr. Rood. Well, perhaps I could just try an initial
response.
The Chairman. Please.
Mr. Rood. With the treaty, we have provided the treaty
document itself. The implementing arrangements go into some
level of detail about how this treaty would, in fact, be
implemented. We have also provided other written documentation
to the committee which identifies how the treaty would work.
In normal practice, when the Senate passes a bill which is
then signed into law, the Congress acts first to establish the
legal basis, the statutory basis. It is very common that then
the agencies promulgate regulations to implement the statutes
at a later date than passed by Congress.
The Chairman. That is true.
Mr. Rood. This is an analogous situation where the
Congress, the Senate in this case, is being asked to provide
advice and consent to establish the statutory basis and in
terms of regulation, the administration----
The Chairman. I chaired the Judiciary Committee for 17
years.
Mr. Rood. I should not engage----
The Chairman. No, no. I do not mean to suggest you should
not. I stand to be educated. I can learn something new every
day.
There is one fundamental difference. As chairman of the
Foreign Relations Committee, I cannot go back and amend the
treaty. I can amend the law. If the Food and Drug
Administration, which you give regulatory capability to after
we set out the broad constraints, comes up with something we do
not like, guess what? I introduce a piece of legislation, and
bang, it changes. I take away their authority. Guess what? I
cannot do that as chairman of the Foreign Relations Committee
or as a sitting Senator. A Senator cannot do that. The Senate
cannot do that. So there is a fundamental difference--a
fundamental difference. Presidents negotiate treaties and we
give consent, and once we get consent, we are basically out of
the business. It is a question as to what we are consenting to.
It reminds me of--well, it does not matter. I do not want
to waste your time. But that is the fundamental difference.
Once we sign off, we are out of the game. If I sign off on the
analogous situations you pointed out to, we can change it in a
heartbeat, assuming we have enough votes to override a
Presidential veto, if they veto it. So we can change it. We
cannot do that to a treaty. The Senate cannot amend a treaty on
its own.
Mr. Rood. The Senate could not amend the treaty on its own.
However, you could in the Senate choose to pass legislation,
along with, of course, the Congress, that would establish new
statutory requirements. And as long as those statutory
requirements were consistent with the treaty, we would not be
in violation of the treaty. So if there is an element of a
Federal regulation that for some reason you disagreed with the
regulation, the Congress could in theory legislate upon that
regulation, and so long as it was not inconsistent with the
treaty, there would not be an issue raised there.
The Chairman. That is the key.
Mr. Rood. What the Senate will provide is its advice and
consent to the treaty and how it operates; that will be common
before and after ratification.
The Chairman. We trust you, but let us verify. [Laughter.]
Thank you very much. I appreciate it very much. I am sure
we can work this all out. At least I am confident we can.
I am sorry. Staff is pointing out that the committee has
received several letters and statements regarding the treaty.
So I would ask unanimous consent that they be placed in the
record.
As well, I am sure that the Department will be prepared to
permit that we leave the record open for additional questions
that may come from our colleagues here.
As I said, I am confident we ought to be able to work this
out, but we do have to talk. And so I thank you very, very
much, and we are adjourned.
[Whereupon, at 10:25 a.m., the hearing was adjourned.]
----------
Additional Material Submitted for the Record
Prepared Statement of Hon. Chuck Hagel, U.S. Senator From Nebraska
Mr. Chairman, I want to thank you for holding this hearing today on
two treaties of vital consequence to the stability and security of the
United States and our allies at a critical time in the world.
The world is facing one of the most transformational times in our
history. We are witnessing a diffusion of power unlike any we have ever
seen--one driven in part by emerging powers, energy, and massive
demographic trends.
How we manage our relations with the rest of the world over the
next several years will have a significant effect on how secure and
prosperous a 21st century America will be. The Defense Trade
Cooperation Treaties with the United Kingdom and Australia--two of
America's most critical allies--are key steps in reaffirming the value
of these important bonds.
Signed in the summer and fall of 2007, the treaties before us today
would strengthen the defense and security relationship between the
United States, the United Kingdom, and Australia by reducing barriers
to the increased trade of military goods, equipment, and technology
between our three countries. These agreements benefit the United States
in meaningful and significant ways.
First, these agreements will increase interoperability and
efficiency between our forces and those of our allies deployed
overseas. As our military men and women fight shoulder to shoulder with
our allies, they will need to be able to communicate easily and operate
seamlessly with each other.
Second, these agreements will increase America's national security
efforts by helping the U.S. Government focus on preventing sensitive
exports to potential adversaries and enemies. According to the State
Department, in 2005 and 2006, U.K. companies submitted nearly 13,000
license applications for U.S. defense articles to be shipped to the
United Kingdom; 99.9 percent of these time-consuming licenses were
eventually approved.
Third, these treaties are good for American business. Estimates
suggest that the United Kingdom buys more than 50 billion dollars'
worth of defense articles from U.S. companies every year. That's enough
to maintain nearly 100,000 American workers. To better protect these
jobs and our defense industries, we need to break down trade barriers
with our allies, not build new ones.
Finally, these agreements will help strengthen and expand two of
the most critical alliances for global peace and stability in the world
today. The U.S. needs to once again reinvest in our most important
relationships. This is not the time to bend to protectionist attitudes
or isolationist feelings.
I support the two treaties before us today and hope that the Senate
will move expeditiously to ratify these agreements.
______
Letter From the Senate Committee on Foreign Relations to Hon. Michael
B. Mukasey, Attorney General, U.S. Department of Justice
U.S. Senate,
Committee on Foreign Relations,
Washington, DC, July 3, 2008.
Hon. Michael B. Mukasey,
Attorney General, U.S. Department of Justice,
Washington, DC.
Dear Mr. Attorney General: On September 20 and December 3, 2007,
the President submitted to the Senate the Defense Trade Cooperation
Treaties between the United States and the United Kingdom (Treaty Doc.
110-7) and Australia (Treaty Doc. 110-10). The Senate Foreign Relations
Committee held a hearing on these treaties on May 21, 2008. We had
requested that the Department of State arrange to have a Department of
Justice witness or official present to answer questions at that
hearing, and we regret that none attended.
The Department of Justice, especially its Criminal Division, plays
a vital role in enforcing U.S. arms export laws and regulations. For
that reason, the Committee will benefit greatly from your insights and
expertise regarding the defense trade cooperation treaties and their
likely impact on export law investigations and prosecutions.
The Committee would appreciate your responding to the attached set
of questions for the record, to assist it in evaluating the
implications of U.S. ratification of the treaties. We would appreciate
receiving your answers by July 18. You may also be contacted by the
Department of State, as one question for the record sent to that
department asked for an estimate of the U.S. Government-wide costs of
implementing the treaties, specifically including costs that will be
borne by your department. If you or your department have any questions
regarding this request, please contact Staff Director Antony Blinken or
Mr. Edward Levine, or Minority Staff director Kenneth Myers, Jr., or
Mr. Thomas Moore.
Sincerely,
Joseph R. Biden, Jr., Chairman.
Richard G. Lugar, Ranking Member.
Responses of Attorney General Mukasey to Questions Submitted for the
Record by Senators Biden and Lugar
Question. What role did the U.S. Department of Justice or the
Federal Bureau of Investigation play in the negotiation of these
treaties?
Answer. The U.S. Department of Justice was not involved in the
negotiation of the treaties, but the Department of State consulted with
the Department of Justice regarding legal issues during the period of
negotiations.
Question. What is the view of the Criminal Division regarding the
construction and enforceability of paragraphs (1) and (2) of Article 13
of the treaties?
Answer. Within the Department of Justice, criminal export control
enforcement is now handled by the National Security Division.
Paragraphs (1) and (2) of Article 13 of the treaties will be
enforceable if implemented through regulations issued pursuant to the
Arms Export Control Act (AECA), 22 U.S.C. Sec. 2778(c), and included
within the International Traffic in Arms Regulations (ITAR), 22 CFR
Sec. 120-130.
Question. What are the advantages and impediments, for enforcement
of chapter 3 of the Arms Export Control Act (22 U.S.C. 2771, et seq.),
of a system in which certain exports and re-exports are exempt from
AECA controls, but a violation of the rules governing exempt
transactions brings one back under the requirements and penalties
prescribed in AECA?
Answer. There are greater challenges in investigating and
prosecuting violations of the AECA when export control documentation is
less available. Closer coordination with Treaty Partners will be
necessary to obtain evidence located overseas. In addition, amendments
to the ITAR will be required to ensure that unlicensed or unapproved
re-exports and re-transfers of U.S. defense articles are prohibited.
Question. What legal recourse will the United States have if a
member of the U.S. Community, without prior U.S. Government approval,
re-transfers an unclassified defense article to a U.S. firm that is not
in the U.S. Community?
Answer. The AECA and ITAR only prohibit the unlicensed export of a
defense article. See 22 U.S.C. Sec. 2778(b)(2); 22 CFR Sec. 120.17. A
re-transfer of a U.S. defense article from a U.S. company to another
U.S. firm is unlikely to require a license unless foreign persons are
also involved in the transaction or the defense article is sent out of
the United States.
Question. What legal authority will the State Department have to
enforce AECA controls over a previously exported defense article in the
event that an entity is expelled from the Agreed Community or a Party
to a treaty adds that defense article to the list of items exempted
from the treaty? Will it be able to cancel or constrain the
authorization for an export that did not need U.S. Government approval
in the first place?
Answer. Such controls may be imposed through regulations
promulgated pursuant to the AECA, 22 U.S.C. Sec. 2778(c), and included
within the ITAR. The ITAR currently includes re-transfer and re-export
controls upon U.S. defense articles resold or transferred to an
unauthorized foreign end-user after an initial authorized export. See
22 CFR Sec. Sec. 123.9(a) and 123.9(c). Such controls raise a variety
of factual and investigative challenges to enforcement.
Question. Would an intermediate consignee be subject to criminal
penalties under AECA for diverting a license-free export?
Answer. Assuming that a person acts to export or re-export a U.S.
defense article with the requisite knowledge and criminal intent, that
sufficient admissible evidence is available, and that such conduct is
prohibited by the ITAR, then such a person may be subject to criminal
penalties.
Question. Will the written acknowledgments that members of the
Treaty Partner Communities will be required to provide pursuant to
section 11(4)(b) of the implementing arrangement with the United
Kingdom and section 11(b) of the implementing arrangement with
Australia be useful for enforcement purposes in U.S. courts?
Answer. Such provisions and acknowledgements of U.S. law and
prohibitions may be useful for enforcement purposes.
Question. Does the Attorney General believe that the treaties
require the compilation and maintenance of sufficient documentation
relating to the export of United States defense articles, defense
services, and related technical data to facilitate law enforcement
efforts to detect, prevent, and prosecute criminal violations of any
provision of chapter 3 of the Arms Export Control Act, including the
efforts on the part of countries and factions engaged in international
terrorism to illicitly acquire sophisticated United States defense
items?
If not, what are the shortfalls and how might they be remedied?
Answer. The elimination of the licensing procedures reduces the
layers of scrutiny that aid in deterring and preventing the diversion
of munitions to criminal entities, terrorist organizations, or state
sponsors of terrorism. Currently, U.S. exporters and the U.S.
Government perform background checks on an export-by-export basis. U.S.
exporters typically check the bona fides of overseas companies and
their officials to satisfy themselves that the end-use and end-user
supplied by the foreign purchaser will ultimately be approved for an
export license. The U.S. Government then conducts a thorough review of
the transaction. These steps provide additional layers of security and
an evidentiary trail for future investigations and prosecutions in the
event that an unlawful diversion occurs.
Under the current system, companies seeking to circumvent the law
must take affirmative steps to evade the ITAR's requirements and
proscriptions--typically by falsifying information included within the
license application or shipping documents required to be filed with
Customs and Border Protection at the time of the export. Such
affirmative conduct creates a domestic evidentiary trail upon which any
ensuing investigation can be initiated and based. The license
exemption, in effect, moves our first line of defense against illegal
diversions to the U.K. and Australia.
The following actions or efforts may remedy some of the likely
shortfalls: Close coordination in the detection and investigation of
export control and embargo violations between the Treaty Partners; a
substantial increase in the resources devoted to outbound customs
review in the U.S.; a substantial increase in the resources committed
to investigative agencies charged with the detection, prevention, and
investigation of export control and embargo violations in the U.S., the
U.K., and Australia; and a significant expansion in the ability and
numbers of U.S. law enforcement officials to conduct post-shipment
verification reviews and searches in the U.K. and Australia.
Question. What is the view of the Department regarding the records
of each Treaty Partner in prosecuting violations of security and export
control laws?
Answer. The U.K. has prosecuted a handful of export control cases
in recent years. Australia prosecutes export enforcement cases under
its export control laws and other criminal laws. We expect that the
treaties will result in an increased number of investigations and
prosecutions by our Treaty Partners in the future.
Question. What prosecutorial options will be open to the United
Kingdom against companies in the U.K. Community that engage in
unapproved re-transfers or re-exports, and how will British law affect
the ability of U.S. prosecutors to pursue those cases?
Answer. It is understood that the U.K. does not have a statutory
regime or legal basis to prosecute corporations violating the terms of
the treaty or its Official Secrets Act. It is understood that the U.K.
may prosecute corporate executives under the Official Secrets Act or
other related criminal statutes in relation to unauthorized re-
transfers or re-exports of U.S. defense articles. It is hoped that the
U.K. would cooperate in a U.S. investigation and prosecution of a
corporation which allegedly had violated willfully the terms of the
AECA and ITAR.
Question. What is the view of the Department regarding the records
of each Treaty Partner in cooperating with U.S. authorities in
investigations and prosecutions relating to violations of security and
export control laws, or of other laws listed in section 38(g)(1) of the
Arms Export Control Act (22 U.S.C. 2778(g)(1))?
Answer. The Treaty Partners have a long history of cooperation in a
variety of criminal investigations and prosecutions. With respect to
export control investigations, both countries are willing to assist to
the extent permitted by their domestic laws.
______
Letter From the Senate Committee on Foreign Relations to Hon. Michael
Chertoff, Secretary of Homeland Security, Department of Homeland
Security
U.S. Senate,
Committee on Foreign Relations,
Washington, DC, July 3, 2008.
Hon. Michael Chertoff,
Secretary of the Department of Homeland Security,
Washington, DC.
Dear Mr. Secretary: On September 20 and December 3, 2007, the
President submitted to the Senate the Defense Trade Cooperation
Treaties between the United States and the United Kingdom (Treaty Doc.
110-7) and Australia (Treaty Doc. 110-10). The Committee on Foreign
Relations held a hearing on these treaties on May 21, 2008.
Although the Department of Homeland Security did not testify at
that hearing, it plays an important role in enforcing U.S. arms export
laws and regulations. U.S. Customs and Border Protection and U.S.
Immigration and Customs Enforcement are on the front line in guarding
against illegal arms exports and imports. When the rules for arms
transfers are changed, your department has to adjust its procedures and
resources to maintain our national security.
The Committee would appreciate your responding to the attached set
of questions for the record, to assist it in evaluating the
implications of U.S. ratification of the treaties. We would appreciate
receiving your answers by July 18. You may also be contacted by the
Department of State, as one question for the record sent to that
department asked for an estimate of the U.S. Government-wide costs of
implementing the treaties, specifically including costs that will be
borne by your department. If you or your department have any questions
regarding this request, please contact Staff Director Antony Blinken or
Mr. Edward Levine, or Minority Staff Director Kenneth Myers, Jr., or
Mr. Thomas Moore.
Sincerely,
Joseph R. Biden, Jr., Chairman.
Richard G. Lugar, Ranking Member.
Responses of Secretary Michael Chertoff to Questions for the Record
Submitted by Senators Joseph Biden and Richard Lugar
Question. What role did the Department of Homeland Security play in
negotiating these treaties? To what extent was U.S. Customs and Border
Protection (CBP) consulted, and what input did it provide, regarding
the likely impact of treaty provisions on its operations?
Answer. Although the Department (DHS), CBP, and Immigration and
Customs Enforcement (ICE) were not involved with the negotiations of
the treaties themselves, both were involved in the negotiations of the
implementing arrangements (``IAs'') required by the treaties. Over a
period of several months, representatives from CBP and ICE participated
in several rounds of in-person and video-conference negotiations with
delegations from the United Kingdom and Australia regarding the IAs.
CBP provided input on the IAs' export procedures, specifically
involving the mechanism to identify the shipments. It is our
understanding this will be accomplished through the promulgation of new
regulations so that shipments under the treaties will fall under a new
licensing exemption. CBP will use its established processes should
questions arise about the legitimacy of a particular export, or if
violations are discovered. Outreach to the exporting community,
referrals to the ICE EXODUS Command Center, and appropriate enforcement
action will all play a role.
ICE also played a lead role in negotiation of enforcement-related
provisions of the IAs required by the treaties. Attache offices in
London and Singapore provided information and guidance to the U.S.
negotiating team regarding ICE enforcement of U.S. export controls,
provided specifics regarding the cooperation between ICE and U.K. and
Australian authorities in export enforcement activity.
ICE helped to negotiate favorable terms for provisions to obtain
bills of lading, invoices, shipping documents, photographs, personal
information, business information, and other evidence in order to
investigate and prosecute violators of U.S. export laws. ICE also
requested that the IAs contain provisions to employ investigative
techniques such as conducting interviews, collecting evidence, and
participating in joint investigations with U.K. and Australian
authorities.
Question. What impact would the treaties have on CBP's ability to
carry out effective controls and inspections over items exported under
the authority of the treaties?
Answer. CBP expects the impact on inspections for this exemption to
be minimal because the new regulatory exemption may be handled similar
to existing exemptions. ICE expects that the Defense Trade Cooperation
Treaty will have little effect on current United States-Australia
processes or activities associated with investigating the illegal
export of U.S. defense articles. The treaty may facilitate leveraging
of new authorities to address violations in the United Kingdom. The
United States-United Kingdom IAs delineate that violations of the
treaty shall be considered violations of the Official Secrets Act, a
new avenue for cooperation in investigation.
Question. What information will Department of Homeland Security
personnel need in order to ensure that an asserted export or transfer
and the freight forwarders and any intermediate consignees involved in
it are legitimate?
Answer. In addition to the current requirements for all exports
reported in AES, all approved exporters, freight forwarders, and
consignees for articles exported under the treaty are to be shared with
CBP for incorporation into our targeting system. CBP receives regular
updates from the State Department on its list of approved freight
forwarders, and the list of exporters and consignees will also need to
be provided. In general, CBP looks for anomalies in export
transactions, and this would include a review of the parties involved,
including any intermediate consignees.
Question. Which elements of that information will be provided by
other U.S. Government entities, and what provisions have been made to
ensure that such information will be available, in usable form, when
needed?
Answer. It is CBP's understanding that the State Department will
provide the list of approved exporters and consignees (in addition to
the approved freight forwarders). This data will be provided
electronically with updated lists to be provided whenever there is a
change.
Question. What impact will overseeing unlicensed exports pursuant
to the treaties have on CBP's implementation of the Automated Export
System (AES) used at U.S. ports of exit and border crossings? Does the
AES incorporate an up-to-date version of the complete Directorate of
Defense Trade Controls watch list?
Answer. All exports that are exempt from licensing under the ITAR
need be reported in AES, and the appropriate exemption must be cited to
support the regulatory basis for the export. The new exemptions under
the treaties will be handled in the same manner.
AES does not incorporate the Defense Trade Controls (DDTC) Watch
List directly. This information is checked by CBP's Automated Targeting
System (ATS) using AES data. ATS checks the watch list, and also runs
license checks and determines whether freight forwarders are registered
with DDTC.
Question. The U.S. Government Accountability Office found in its
February 2005 report ``Arms Export Control System in the Post-9/11
Environment'' (GAO-05-234) that only 256 CBP officers were available to
cover outbound enforcement at 317 U.S. ports of exit and border
crossings. Under the treaties, Department of State export license data
for shipments to the United Kingdom and Australia would no longer exist
for predeparture transfer to CBP. How many CBP officers are available
today to cover outbound enforcement?
Answer. 265 CBP officers are assigned to outbound enforcement,
supported by 32 nonuniformed personnel.
Question. Will CBP need to increase the number of officers assigned
to U.S. ports of exit to screen unlicensed arms shipments to the U.K.
and Australia under the treaties?
Answer. No; CBP does not anticipate requiring additional officers
since exports of defense articles between the U.K. and Australia will
either qualify for the treaty, and therefore a license exemption, or
still require a license. Either way, all exports will be reported in
AES and can be screened by CBP prior to export.
Question. If so, how many additional officers will be needed and
what will be the expected costs?
Answer. Please see above.
______
Responses of Under Secretary John Rood to Questions Submitted for the
Record by Senator Norm Coleman
Background from Senator Coleman
We have heard that the U.S.-U.K. treaty is expected to reduce the
number of export licenses needed to ship products to the U.K. by 70
percent. While prime contactors may be able to identify the final
recipient of their product and take advantage of the treaty,
subcontractors have a much more difficult time. If I understand it
correctly, a subcontractor with facilities in England may still be
required to obtain export licenses for products that go back and forth
between the company's U.S. and U.K. facilities. Further, a
subcontractor to a prime may not know the final destination of the
product and therefore would need to continue obtaining export licenses
from the Department of State for their products. For example, a company
that manufactures parts that are used in an aircraft may not know
whether that aircraft is destined for the U.S., the U.K., or some other
allied partner. Therefore I would like clarification with respect to
the following questions:
Question. How does the treaty benefit companies in this situation?
Answer. Subcontractors involved in exports covered by the treaty
would enjoy the same benefits as the prime contractors. Assuming that
all entities are members of the United States or United Kingdom
Approved Community, that the technologies are not exempted under the
treaty, and that the operation, project, program or government end-use
is legitimate as described in Article 3 of the treaty and sections 2
and 3 of the implementing arrangement, there should be no license
requirements for either the prime or subcontractors. Assuming that the
operation, project, program or government end-use remains within the
scope of the treaty in all respects described above, partners in the
U.S. and U.K. can continue to export to and from the U.S. without a
license. With respect to information provided to subcontractors, the
information required of an exporter under traditional licensing is
identical to the treaty requirements. Were an applicant to submit a
license that did not identify the end-user, that license would be
subject to a return without action until the information is obtained--
which rarely happens. As such, it is our assumption that all exporters
will have access to the information required to conduct treaty exports.
Question. How does the Department of State calculate the 70-percent
reduction in the number of export licenses when subcontractors will
have to continue obtaining licenses in this situation?
Answer. The 70-percent reduction in the number of export licenses
was based on an analysis of previous licenses to the U.K., and
excluding those that would have been precluded based upon the exempted
technologies. This figure of an estimated 70-percent reduction is an
estimate only. As stated in response to the first question,
subcontractors--assuming that they are in an Approved Community,
exporting nonexempt technologies, for a treaty-defined end-use--should
not require a license. The Department of State is of the opinion that
the circumstances portrayed above, in which information would not be
available to all parties involved in a transaction, would be relatively
rare and should diminish over time as companies on both sides of the
Atlantic gain experience with the treaty and its requirements.
______
Letter From Hon. George W. Bush, President of the United States, The
White House, Washington, DC
April 7, 2008.
Hon. Joseph R. Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: On September 20 and December 3, 2007,
respectively, I forwarded to the Senate for its advice and consent the
``Treaty between the Government of the United States of America and the
Government of the United Kingdom of Great Britain and Northern Ireland
Concerning Defense Trade Cooperation,'' done at Washington and London
on June 21 and 26, 2007, and the ``Treaty between the Government of the
United States of America and the Government of Australia Concerning
Defense Trade Cooperation,'' done at Sydney on September 5, 2007.
My Administration has completed the implementing arrangements
called for in both treaties, and these documents have been provided to
the Committee on Foreign Relations, as requested.
The treaties will help advance our national security interests by
ensuring that the United States and our two closest allies have
streamlined access to relevant defense technologies available within
the Approved Community established by these treaties, while
safeguarding those technologies using robust, mutually agreed security
and export control standards. Such access will expand the breadth and
depth of collective efforts to develop, produce, and support leading-
edge military technologies, improve interoperability, and ultimately
enhance our future joint military and counterterrorism operations with
the United Kingdom and Australia.
The Government of the United Kingdom and the Government of
Australia are moving forward with their respective domestic processes
leading to ratification. I strongly support these treaties, and I urge
the Senate to give its advice and consent in an expedited fashion so
that I may ratify both treaties promptly.
Sincerely,
George W. Bush.
______
Letter From Right Hon. Gordon Brown, Prime Minister of the United
Kingdom of Great Britain and Northern Ireland to Senator Joseph R.
Biden, Jr.
10 Downing Street,
London, England, 11 April 2008.
Dear Senator Biden: The US-UK Defence Trade Co-operation Treaty
signed in June 2007 represented a significant step in achieving even
closer military and security relationships between our nations. Since
that time the respective Administrations have jointly completed
negotiations on the implementation arrangements for the Treaty and, in
February 2008, signed a Memorandum of Understanding to detail those
arrangements. Separately, the British Parliament has completed its
Treaty ratification processes and the British Government is now ready
to finalise the administrative details that should allow us to put the
new arrangements into effect.
This is a well negotiated and effective package of measures that
will deliver real benefits to both countries, such as enhanced
collaboration on addressing the immediate security challenges of IED
defeat and counter-terrorism. Its development has involved sustained
and detailed collaborative work between our two countries over a
considerable period of time.
The Government fully understands the commitments required to ensure
that the new arrangements can be implemented and subsequently operated
in accordance with the terms that have been agreed. We are determined
to make the new arrangements successful for both countries.
I would like to emphasise the importance which I and the British
Government attach to bringing this Treaty and its implementing
arrangements into effect as soon as possible. Accordingly, I look
forward to early Senate ratification of the Treaty to enable the new
arrangements to take rapid effect. Timely ratification, in the coming
weeks, would represent a strong and valuable signal of our continued
intent to enhance the closeness and effectiveness of our military and
security relationships. I hope that an early date can be set for a
Senate hearing, and look forward to being able to discuss this when I
visit Washington next week.
Yours sincerely,
Gordon Brown.
______
Letter From Hon. Dennis Richardson, Ambassador of Australia to the
United States
Embassy of Australia,
Washington, DC, 19 May 2008.
Hon. Joseph Biden,
Chairman, Senate Committee on Foreign Relations,
Dirksen Senate Office Building, Washington, DC.
Dear Mr. Chairman: Please find enclosed a letter from Prime
Minister Rudd concerning the Australia-United States Defense Trade
Cooperation Treaty.
We are grateful for the work your staff has undertaken on the
Treaty to date, and very much appreciate your decision to schedule a
committee hearing on May 21.
I am available to discuss the matter further at any stage, should
you so wish.
Yours sincerely,
Dennis Richardson.
Enclosure.
Letter From Hon. Kevin Rudd, Prime Minister of Australia
5 May 2008.
Hon. Harry Reid,
Senate Majority Leader,
Capitol Building, Washington DC.
Dear Senator Harry Reid: Thank you once again for our very positive
discussion during my recent visit to Washington DC. During our meeting
I expressed my, and the Australian Government's, support for the
Australia-United States Defense Trade Cooperation Treaty signed in
September 2007. I would like to further emphasise the strategic
significance of this Treaty to both our countries.
The Implementing Arrangements which underpin the Treaty were signed
on 14 March 2008. Those Arrangements articulate the comprehensive and
robust support and control mechanisms needed to give effect to a Treaty
of such importance.
The Treaty provides an unparalleled opportunity for our two nations
to further enhance our interoperability in defence and counter
terrorism activities; rapidly establish and grow collaborative research
and development programs that will maintain the technological edge our
nations seek in the defence and counter terrorism arenas; and provide
significant opportunities for the industries of our two countries to
work more effectively together delivering the defence capabilities we
need.
I want to assure you and the United States Senate that the
Australian Government is both fully committed to the intent of the
Treaty and acknowledges the commitments and responsibilities inherent
in giving it effect.
We would welcome early ratification by the United States Senate.
Ratification of the Treaty would constitute a powerful statement of our
shared commitment to the protection of our valuable defence
technologies and the significance our two countries place on the
interoperability of our Defence forces. Australia is also engaged in
the process of formal ratification of the Treaty.
I look forward to hearing of the Senate's deliberations.
I have copied this letter to Senators Mitch McConnell, Joseph Biden
and Richard Lugar.
Yours sincerely,
Kevin Rudd.
______
Letter From the Right Honorable Baroness Ann Taylor of Bolton, Minister
of State for Defence Equipment and Support, United Kingdom of Great
Britain and Northern Ireland
Ministry of Defence,
Whitehall, London, 14 November 2007.
Senator Joe Biden,
Chairman, Senate Committee on Foreign Relations,
Washington, DC, USA.
Dear Senator Biden: I have recently been appointed in succession to
Paul Drayson as Minister for Defence Equipment and Support at the
Ministry of Defence. I wanted to let you know that Her Majesty's
Government has formally presented the US-UK Defense Trade Co-operation
Treaty to both Houses of Parliament. This complements the submittal by
the President to the Senate on 20 September 2007. The House of Commons
Defence Committee will be scrutinising the Treaty and will take
evidence on 21 November 2007 before recommending ratification.
In calendar year 2006 over 8,500 licenses were granted by the U.S.
Department of State in support of US-UK defence related transactions at
a value in excess of $14 billion. Of these transactions the vast
majority were for the movement of UNCLASSIFIED information, goods and
services for the Ministry of Defence or the Department of Defense as
the end-user. In this context, I would like to take the opportunity to
stress the great importance that Her Majesty's Government places on
this Treaty as it will greatly improve our ability to support our
forces that are operating side by side around the world. The Treaty
will more easily allow our joint expertise to be brought to bear on the
challenges our forces currently face on the ground and ensure we are
well prepared for the challenges of the future. In addition, the Treaty
will bring benefits to both our defence industries, enabling them to
work more closely and efficiently together to deliver greater value for
money, at a time when our respective defence budgets are coming under
great stress. All this is backed by a system of firm security controls,
to which Her Majesty's Government is fully committed.
Early ratification of the Treaty would be a strong indicator of the
continued strength of the US-UK partnership and I very much hope that
we can work together to ensure timely implementation. I will keep you
apprised of developments in the UK, and look forward to discussing this
with you on a future visit to Washington which I hope to undertake
later in the year.
Thank you for your continued support and commitment.
Yours sincerely,
Baroness Ann Taylor.
______
Letter From the Aerospace Industries Association of America, Inc.
Arlington, Va, May 21, 2008.
Hon. Joseph Biden,
Senate Foreign Relations Committee,
Dirksen Senate Office Building, Washington, DC.
Dear Senator Biden: On behalf of the 275 member companies we
represent across the United States, the Aerospace Industries
Association (AIA) urges the United States Senate to consider and vote
in support of the Defense Trade Cooperation Treaties with the United
Kingdom and Australia.
The United Kingdom and Australia are the United States' closest
partners in the world today. Warfighters from these stalwart allies
stand shoulder to shoulder with our forces in Iraq, Afghanistan, and in
countless other operations. These experiences have demonstrated the
vital need for coalition forces to operate together seamlessly. The
United States and its closest allies must have the capability to share
key defense technologies quickly and efficiently to meet common
objectives on the battlefield.
AIA has long supported a rigorous export control system that keeps
our most advanced technologies out of the hands of our adversaries. At
the same time, it is imperative that this system also operate in a
predictable, efficient and transparent manner to facilitate technology
sharing and cooperation with our closest allies. The Defense Trade
Cooperation Treaties with the United Kingdom and Australia will help
reduce the defense licensing caseload at the State Department, enabling
our government to focus its efforts on preventing those that would
threaten our national security from obtaining our most sensitive
technologies. AIA stands ready to support the U.S., United Kingdom, and
Australian Goverrnnents as they develop the necessary regulations and
guidelines to ensure effective implementation of the treaties.
AlA looks forward to working with you as you consider the Defense
Trade Cooperation Treaties with the United Kingdom and Australia. We
respectfully urge the Senate to move expeditiously in the coming weeks
toward consideration and approval of these treaties by the Senate
Foreign Relations Committee and then the full Senate.
Thank you for your time and consideration.
Best regards,
Marion C. Blakey, President and CEO, Aerospace Industries Association
Dr. Ronald D. Sugar, Chairman, CEO and President, Northrop Grumman
Corporation
William H. Swanson, Chairman and CEO, Raytheon Company
James Albaugh, President and CEO, Boeing Integrated Defense Systems
Kenneth C. Dahlberg, Chairman, President and CEO, Science Applications
International Corporation
Robert J. Stevens, President, Chairman and CEO, Lockheed Martin
Corporation
Stephen Finger, President, Pratt and Whitney, United Technologies
Corporation
Walter P. Havenstein, President and CEO, BAE Systems, Inc.
Clayton M. Jones, Chairman, Aerospace Industries Association, Chairman,
President and CEO, Rockwell Collins.
______
Letter From Ron Rittenmeyer, Chairman, President and CEO, EDS, Plano,
TX
May 22, 2008.
Hon. Joseph R Biden, Jr.,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Chairman Biden: EDS provides communication and information
services to the U.S. Department of Defense, the United Kingdom's
Ministry of Defense and Australia's Defense Agency. We recognize the
values of efficiency, interoperability and information sharing in
providing service to the military, particularly armed forces on
deployment in theaters like Iraq and Afghanistan.
The United Kingdom and Australia are the closest allies of the
United States. Our armed forces often deploy together and have to be
able to work together seamlessly in information sharing and
communications in battle theaters as well as in cyber warfare.
EDS supports a robust export control regime to maintain the
security of our leading technologies. We believe the purpose of export
controls is to keep technology away from adversaries. The U.S.
Department of State and the U.S. Department of Defense should focus
their scarce resources on the threats from those trying to steal our
technology not on routine business with trusted allies. Allies--like
the U.K. and Australia--should be able to engage in commerce and
partnership with the U.S. The Defense Trade Cooperation Treaty with the
U.K. and Australia will accomplish such a goal.
EDS is always available to work with you as you consider the
Defense Trade Cooperation treaties with the United Kingdom and
Australia. We respectfully urge a review by the Senate Foreign
Relations Committee and ratification by the Senate in this session of
Congress.
Thank you for your consideration of our perspective.
Sincerely,
Ron Rittenmeyer,
Chairman, President and CEO.
______
Letter From Robert J. Stevens, Chairman, President and CEO, Lockheed
Martin Corporation, Bethesda, MD
May 13, 2008
Hon. Joseph R. Biden, Jr.,
Chairman, Senate Committee on Foreign Relations,
Dirksen Senate Office Building, Washington, DC.
Hon. Richard G. Lugar,
Ranking Member, Senate Committee on Foreign Relations,
Dirksen Senate Office Building, Washington, DC.
Dear Senators: It is my understanding that you and your colleagues
on the Senate Foreign Relations Committee will soon take up the U.S.
defense trade cooperation treaties that have been negotiated with the
United Kingdom and Australia. Lockheed Martin strongly supports the
treaties and respectfully urges that they be ratified--and
implemented--as quickly as possible.
The treaties were negotiated against the backdrop of an export
licensing caseload at the State Department that is growing
dramatically, now reaching nearly 85,000 cases annually. A significant
portion of that caseload involves licensing in support of our
government's own defense and security initiatives. It is, therefore, in
our country's best interest to ensure that such licensing be conducted
as efficiently as possible. This is particularly true of the defense
cooperation between the U.S and the United Kingdom and Australia. The
treaties are specifically intended to address that important objective
by significantly improving management of licensing and technology
sharing, with appropriate limitations, involving two of our closest
allies.
I appreciate your longstanding commitment to preventing the most
sensitive of U.S. defense technologies from falling into the hands of
our nation's adversaries, while ensuring engagement with our closest
allies and partners in countering today's global security threats. I
believe that ratification and prompt implementation of the treaties
will advance those goals, and I urge your strong support for Senate
approval of the treaties as soon as practicable.
Sincerely,
Robert J. Stevens.
______
Letter and Statement From the Arms Control Association, Federation of
American Scientists, and Wisconsin Project on Nuclear Arms Control
May 21, 2008.
Hon. Joseph R. Biden, Chairman,
Hon. Richard G. Lugar, Ranking Member,
Senate Foreign Relations Committee,
Washington, DC.
Dear Senators Biden and Lugar: As the Committee holds a hearing
today on the Defense Trade Cooperation Treaties with Australia and the
United Kingdom, we urge you to consider the questions and concerns we
have identified after reviewing the treaties, their implementing
arrangements and other public documents. Attached is a statement
conveying these questions and concerns, along with several
recommendations. We ask that this statement be placed in the hearing
record.
Sincerely,
Daryl G. Kimball,
Executive Director, Arms
Control Association.
Arthur Shulman,
General Counsel, Wisconsin
Project on Nuclear Arms
Control.
Dr. Ivan Oelrich,
Vice President of Strategic
Security, Federation of
American Scientists.
Enclosure.
Statement for the Record by Matt Schroeder, Federation of American
Scientists, Arthur Shulman and Matthew Godsey, Wisconsin Project on
Nuclear Arms Control, and Jeff Abramson, Arms Control Association
The U.S. arms export control system is widely and rightfully
regarded as one of the best in the world. This regime of prelicense
checks, retransfer and end-use restrictions and notification
requirements, and post-shipment end-use monitoring is effective at
preventing the unauthorized acquisition and use of U.S. weapons and
military technology. By keeping these items out of the hands of
terrorists, criminals, and rogue regimes such as Iran; preserving our
military technological edge; and serving as a model for other
governments, arms export controls contribute directly and profoundly to
U.S. national security and the advancement of key U.S. foreign policy
objectives. For this reason, it is vitally important that the rigor and
integrity of this system be preserved, and that Congress systematically
and thoroughly scrutinize any significant changes before they are
implemented. Of the recent proposals to change the arms export control
system, none are potentially more significant than the Defense Trade
Cooperation Treaties with the U.K. and Australia, which have been
described by State Department officials as a ``paradigm shift in how
the U.S. government does export controls.\1\
---------------------------------------------------------------------------
\1\ ``Interview with Frank Ruggiero,'' Defense News, 21 April 2008,
http://www.state.gov/t/pm/rls/rm/104012.htm.
---------------------------------------------------------------------------
It is important to note that many (but not all) of the concerns
identified below stem in part from a lack of detailed information about
the administration's plans for implementing the treaties. Without this
information, it is impossible to assess the adequacy of the treaty as a
substitute for the licensing process and other requirements under the
Arms Export Control Act. With that caveat in mind, below are questions
and concerns about the treaty that require immediate attention from the
Senate.
transfer controls and enforcement
Assessing the Treaty's likely impact on U.S. export controls and
law enforcement is not possible without additional information about
how the treaties will be implemented. Nonetheless, the following
section identifies several concerns that are based upon problems with
previous licensing exemptions and existing (limited) information about
the treaties and plans for implementing them.
Arms transfers to allied countries, even close allies who share
many of our interests and foreign policy goals, are not immune to
diversion. There are several examples of arms traffickers setting up
shop in the territory of close allies for the express purpose of
acquiring and illicitly retransferring U.S. weapons and technology to
embargoed regimes and other bad actors. In 2003, for example, agents
searched the premises of 18 U.S. companies suspected of shipping
thousands of components for missile systems and military aircraft to
the London-based facility of Multicore, LTD, a front company for the
Iranian military that ``conduct[ed] no legitimate business'' and
received ``military purchasing instructions from the Iranian
government,'' according to the Department of Homeland Security.\2\
---------------------------------------------------------------------------
\2\ ``ICE Agents Search 18 Firms in 10 States Suspected of
Illegally Exporting Military Components to Iranian Arms Network,''
Press Release, Department of Homeland Security, 10 July 2003.
---------------------------------------------------------------------------
Similar activity in Canada reportedly prompted the State Department
to scale back the longstanding licensing exemption for arms exports to
that country in 1999. In 2002, the Government Accountability Office
(GAO) published a list of these incidents, which included attempts to
acquire and illicitly retransfer missile components, communication
systems, fighter jet components, and other controlled items to several
proscribed destinations, including Pakistan, Iraq, Iran, China, Libya,
and the Sudan. One noteworthy case involved a Chinese entity shopping
for controlled U.S. infrared technology. After a U.S. company informed
the Chinese buyer that U.S. law prohibited the transfer of the
technology to China, the buyer ``suggested that the export could take
place through a Canadian company under the Canadian exemption and then
be re-exported to China,'' according to the GAO.\3\
---------------------------------------------------------------------------
\3\ ``Lessons To Be Learned From the Country Export Exemption,''
Government Accountability Office, GAO-02-63, March 2002, pp. 21-23.
---------------------------------------------------------------------------
While not perfect, the State Department's system of robust, case-
by-case licensing is among the best in the world at detecting and
preventing diversion attempts and other problematic arms transfers.
Trained licensing officers check all parties to each proposed transfer
(e.g. freight forwarders, intermediate consignees, etc.) against a
watchlist of over 130,000 foreign and domestic entities, review
documentation for telltale signs of diversion, and conduct end-use
checks through the Blue Lantern End-Use Monitoring Program.\4\
---------------------------------------------------------------------------
\4\ Directorate of Defense Trade Controls, ``Defense Trade Controls
Overview,'' 2006, http://www.fas.org/asmp/resources/110th/
defense_trade_overview_2006.pdf.
---------------------------------------------------------------------------
Generally speaking, licensing exemptions abridge this system in
ways that have the potential to increase the risk of unauthorized
exports. By eliminating the prelicense checks performed by licensing
officers, the responsibility for spotting diversion attempts and
ensuring that the proposed transfer complies with U.S. laws and
regulations shifts to the exporter--who may lack the training and
resources to do so effectively--and to customs officials, who may lack
the time and resources to adequately screen license-free exports before
they leave U.S. ports.\5\ These risks have been highlighted in reports
and statements by the GAO, the House International Relations Committee,
and the Criminal Division of the Justice Department, among others. In
2004, the House International Relations Committee warned of ``. . .
inherently greater risks of diversion associated with unlicensed
commercial exports of U.S. weapons and other defense commodities . .
.'' \6\ A year later, the GAO conveyed similar concerns from
enforcement officials, reporting that ``Homeland Security and Justice
officials . . . generally do not favor export licensing exemptions
because exemptions increase the risk of diversion and complicate
enforcement efforts.'' They noted, for example, that ``individuals
seeking to obtain U.S. arms illicitly can establish ``front companies''
overseas that obtain arms under an exemption and then divert those
items to other countries.'' \7\
---------------------------------------------------------------------------
\5\ See ``Lessons to Be Learned From the Country Export
Exemption,'' Government Accountability Office, March 2002, p. 8-11 and
``U.S. Weapons Technology at Risk: The State Department's Proposal to
Relax Arms Export Controls to Other Countries,'' House International
Relations Committee, 1 May 2004, p. 18--20.
\6\ U.S. Weapons Technology at Risk . . ., p. 3.
\7\ ``Arms Export Control System in the Post-9/11 Environment,''
Government Accountability Office, GAO-05-234, February 2005, p. 44.
---------------------------------------------------------------------------
The treaties attempt to address these risks by, inter alia,
limiting license-free arms exports to prescreened members of an
approved community and only for an as-yet undisclosed list of
``operations, programs and projects'' that meet the needs of the U.K.
or Australian governments. The implementing arrangements also lay out
specific eligibility criteria against which prospective nongovernmental
British and Australian members of the approved community will be
assessed, and limit access to items exported under the treaty to U.K.
and Australian individuals with appropriate security clearances. Each
government has assembled a short list of sensitive items that are
exempt from the scope of treaty, and the retransfer of U.S. defense
articles outside of the approved community requires U.S. Government
approval. The treaties and implementing arrangements also refer to
various (often vague) requirements for marking, identifying,
transmitting, storing and handling defense articles; self-audit
regimes; ``verifications, site visits and inspections'' and
``mechanisms to conduct post-shipment verifications and end-use or end-
user monitoring.''
If rigorously implemented, these types of safeguards could
significantly reduce the risk of unauthorized arms transfers. But the
devil is in the details of implementation, and many of these details
are not included in the treaties and implementing arrangements. If the
Senate has not already done so, it should:
Request detailed summaries of each of these safeguards,
particularly the self-audit regimes, site visits and
inspections, and post-shipment verification and end-use
monitoring mechanisms. These summaries should describe
precisely how these safeguards will work and when they will be
fully operational, and include detailed information about the
staffing, funding, and regulatory and procedural changes
necessary for relevant U.S. Government agencies to implement
them.
Confirm that all parties to transfers under the treaty,
including freight forwarders and intermediate consignees, will
be thoroughly vetted ahead of time. This confirmation should
include details about the vetting process.
Confirm that Customs and Border Protection has the capacity,
i.e., the staffing, expertise and infrastructure, to
effectively screen treaty-related shipments and spot potential
violations--including arms traffickers masquerading as members
of the approved community--before the shipments leave U.S.
ports.
Monitoring and preventing the unauthorized retransfer of exported
items after they are shipped can be more difficult in regard to items
shipped under exemptions. Under the International Traffic in Arms
Regulations (ITAR), retransfer and changes in end-use require the
submission of a written request to the State Department.\8\ The request
must describe the defense article(s) in question and indicate the
quantity and value of these articles, identify the new end-user, and
describe the new end-use. Under the treaties, members of the approved
community would not have to seek permission from the State Department
before retransferring exempt items to each other. The Senate should:
---------------------------------------------------------------------------
\8\ The ITAR does not require prior written approval for the
retransfer of some U.S. components incorporated into foreign weapon
systems to NATO countries, Australia and Japan. The entity that is re-
exporting the item must send DDTC a written notification, however.
Raise the question of how the administration intends to
systematically monitor and track these items as they move
around the approved community.
Inquire about specific plans for post-shipment end-use
monitoring--including regular audits and routine site
inspections--in the U.S., U.K. and Australia.
Another concern about licensing exemptions generally is their
effect on law enforcement and specifically the absence of an export
license and related paperwork, which has the potential to hinder
prosecutions of suspected arms export violations. In 2000, the
Department of Justice noted the importance of the ``domestic
evidentiary trail'' created by the licensing process and warned that
country licensing exemptions could ``greatly impede the ability of the
law enforcement community to detect, prevent and prosecute criminal
violations.'' \9\ Similar concerns about licensing exemptions have been
expressed by the House International Relations Committee and the
Government Accountability Office.\10\
---------------------------------------------------------------------------
\9\ ``Letter From Deputy Assistant Attorney General Swartz to
Senior Adviser Holum,'' April 27, 2000.
\10\ U.S. Weapons Technology at Risk . . ., p. 21. See also ``Arms
Export Control System in the Post-9/11 Environment,'' U.S. Government
Accountability Office, 7 April 2005 and ``Challenges Exist in
Enforcement of an Inherently Complex System,'' Government
Accountability Office, GAO-07-265, December 2006, p. 17.
---------------------------------------------------------------------------
Beyond the missing paperwork, the House International Relations
Committee also noted the inclination of the courts to ``view the
licensing requirement as highly relevant to the establishment of a
person's legal duty under U.S. law'' and the tendency of federal
prosecutors to ``regard the absence of a license requirement as
signifying an activity of lesser importance to the U.S. government . .
.'' \11\
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\11\ U.S. Weapons Technology at Risk . . ., p. 21.
---------------------------------------------------------------------------
The treaties and implementing arrangements contain several
recordkeeping, compliance, cooperation and enforcement measures. It is
unclear, however, if these measures and requirements are an adequate
substitute for the ``domestic evidentiary trail'' generated during the
licensing process. If the Senate has not already done so, it should:
Request a detailed analysis of the treaties' likely impact
on the investigation and prosecution of criminal violations of
the Arms Export Control Act, including the loss of
documentation associated with the licensing process, from the
Justice Department.
Request a detailed briefing on the British and Australian
governments' track record in regard to cooperating with U.S.
law enforcement officials on overseas export control
investigations.
statutory requirements and congressional oversight
Pursuit of the exemption agreement as a self-executing treaty
appears to bypass congressionally mandated requirements for country
licensing exemptions, setting a precedent that could weaken U.S. arms
export controls and congressional oversight. In 2000, Congress
established a specific set of requirements that must be met before the
President can exempt a foreign country from arms export licensing
requirements. Section 38(j) of the Arms Export Control Act (AECA)
allows country exemptions only for countries meeting specific end-use,
retransfer, handling and law enforcement requirements. The purpose of
these requirements is to allow license-free arms exports only to
countries whose export control regimes are as robust as ours in key
ways. The AECA also requires a determination by the Attorney General
that the exemption agreement requires sufficient documentation for law
enforcement (Sec. 38(f)(2)), an important requirement given the Justice
Department's aforementioned concerns about licensing exemptions.
Statements reportedly made by administration officials last year
suggest that the arrangements made with the U.K. as part of that treaty
do not fully satisfy these requirements.\12\ But even if the U.K.
treaty meets these requirements ``in spirit'' as the administration has
claimed, it still sets a precedent that could be used in the future to
circumvent both the letter and the spirit of the AECA.
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\12\ See ``U.S.-U.K. Defense Export Control Treaty Faces Hurdles in
Congress,'' Inside U.S. Trade, 13 July 2007.
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Similarly, the treaties set a precedent that could undermine the
role of country licensing exemptions as an inducement for other
governments to strengthen their export control systems. As mentioned
above, the Arms Export Control Act requires that governments seeking a
country exemption to agree--via a binding bilateral agreement--to
strengthen their export controls so that they are at least comparable
to those of the United States in several key ways. Negotiating country
licensing exemption agreements via a self-executing treaty appears to
render inapplicable the requirements identified in section 38(j) of the
Arms Export Control Act.
Pursuit of the exemption agreements in the form of a treaty also
effectively bypasses the House of Representatives. In recent years, the
House has been a source of thoughtful, probing, and rigorous analysis
of U.S. arms export controls and proposed changes to these controls.
Through public hearings and the release of GAO and committee reports,
House members have increased transparency and stimulated public debate
over critically important export control issues. Cutting the House out
of the loop reduces oversight and, consequently, accountability.
Finally, the treaties are, for the most part, mere frameworks. The
scope and function of each treaty is meaningfully (but not entirely)
described in its implementing arrangements, which apparently can be
changed at any time without input from Congress. It appears that the
Senate is being asked to approve something that is not complete and
will never be final.
The Senate should:
Request a detailed list of requirements in the Arms Export
Control Act that would apply to the treaty and those that would
not apply.
______
Responses of Acting Under Secretary John Rood to Questions From
Senators Joseph Biden and Richard Lugar
Question No. 1. Under Secretary Rood testified that these treaties
``represent a paradigm shift in the way the United States conducts
defense trade with its closest allies.'' Public reports indicate that
there is strong interest among other allies, particularly in NATO, in
negotiating similar treaties.
a. What has the administration stated in reply to requests from
other countries for similar treaties?
b. Is the administration prepared to consider similar treaties for
other countries?
Answer.
a. Our consistent reply has been that this administration has no
plans for additional Defense Trade Cooperation Treaties with any other
country.
b. This administration will not seek additional defense trade
treaties.
Question No. 2. One reason cited in the hearing testimony for
seeking license-free exports was to establish more interoperability
with the United Kingdom and Australia. Please explain how current
licensing of defense articles, defense services, and technical data
inhibits achieving interoperability (despite the expedited review
mandated in section 1225(b) of Public Law 108-375, the Ronald W. Reagan
National Defense Authorization Act for Fiscal Year 2005) with regard to
specific major defense programs or joint military operations in which
Australia and the United Kingdom currently participate.
Answer. In general, export license development and subsequent
government processing allows for a level of interoperability. The
expedited review mandated in section 1225(b) of Public Law 108-375
further enhances cooperation and interoperability with our two closest
allies, the U.K. and Australia. Expedited review, however, has no
affect on the time required by U.S. contractors to assess an
international program, create an export license application, and submit
the application for USG review and approval. Through initiatives such
as the Approved Communities, Approved Programs and Projects, etc., the
treaties will encourage the broadening and intensification of bilateral
cooperation between industries and governments at the earliest stages
of development. This will further enhance the breadth and depth of
U.S.-U.K. and U.S.-Australian interoperability. The treaties also
reduce time to deliver interoperable equipment to coalition forces,
including U.S. forces, beyond that of expedited license reviews.
Question No. 3. How much will it cost the U.S. Government, on a per
annum basis, to implement the defense trade treaties, taking into
account costs in the Departments of State, Defense, and Homeland
Security, in particular? Please include any additional information
security costs that will result from license-free trade in classified
defense articles.
a. Will Customs and Border Protection have to engage in additional
inspections?
b. Will CBP have to increase the number of officers assigned to
U.S. ports?
Answer. We anticipate the additional costs, such as initial
training costs, to the interagency to be less than $1 million. Any
additional requirements in this area will likely be met by resources
freed up from the decline in licensing workload created by the
treaties. We also do not anticipate any additional costs associated
with information security as the majority of treaty exports will be
treated as unclassified in the United States and there will be no
additional security costs associated with classified treaty exports.
Under the terms of the ``Security Implementing Arrangement for
Operations Between the Ministry of Defense of the United Kingdom and
the Department of Defense of the United States,'' known familiarly as
the ``Industrial Security Agreement,'' paragraph 4.c stipulates that
``[c]osts incurred by either of the parties through implementation of
other security measures, including costs incurred through the use of
the diplomatic courier service or any other authorized official courier
service, will not be reimbursed. There shall be provisions in
classified contracts for security costs to be incurred under the
contract, such as special costs for packing, transport and the like,
which shall be borne by the Party for whom the service is required
under the contract. If, subsequent to the date of contract, the
security classification or security requirements under the contract are
changed, and the security costs are thereby increased or decreased, the
provisions of the contract that may be affected shall be subject to an
equitable adjustment by reason of such increased or decreased costs.
Such equitable adjustments shall be accomplished under the appropriate
provisions in the contract governing changes.'' The United States-
Australia ``Industrial Security Agreement'' has similar provisions.
a. CBP does not plan on adding additional officers at the ports.
b. Existing procedures should be able to address treaty exports
without increased resources to fund additional inspections. New
approaches to such inspections might be undertaken but these should be
able to be managed with existing resources.
Question No. 4. What is your best estimate of how much it will cost
U.S. industry to comply with the regulations or processes developed to
implement the defense trade treaties?
a. Will the regulatory changes required to implement the treaties
in the United States constitute a ``major rule'' as defined by section
804(2) of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 804(2))?
Answer. We believe the overall costs of compliance to U.S. industry
should decrease as a result of the treaties. The requirements for
recordkeeping should be virtually identical to those required for
licensed exports, and any additional costs incurred in determining if
an export meets the treaty limitations should be offset by savings
derived from the absence of need for an infrastructure to process
licenses.
a. We believe that the changes do not meet the criteria for being a
``Major'' rule under Public Law 104-121 as (1) the annual effect on the
economy will not be $100,000,000 or more; (2) there will be no major
increase in costs or prices for consumers, industry, Federal, State, or
local government agencies or geographic regions and; (3) there will be
no significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of U.S.-based enterprises
to compete with foreign-based enterprises in domestic and export
markets.
Question No. 5. Each treaty states in the preamble that ``the
provisions of this treaty are self-executing in the United States.''
a. Was this language included at the request of the United States?
b. Why was it necessary to include this language?
c. What is the legal effect of including this language in the
preamble?
d. Does the inclusion of this language limit in any way the manner
in which these treaties can be implemented in the United States?
Answer. a. Yes.
With respect to b, c, and d, below, I am advised by the State
Department's Legal Adviser that:
b. It was not legally necessary to include this language in order
to make the treaties self-executing in the United States; however, it
was considered desirable to leave no doubt as to the intended effect.
c. It reflects a clear intent with respect to the domestic legal
effect of the treaties in the United States.
d. The Senate and executive branch can address questions left open
by the language, such as whether the treaties provide for judicially
enforceable rights.
Question No. 6. Your testimony says that ``[i]f ratified, the
treaties will be self-executing; that is, no additional implementing
legislation will be required to bring them into force.'' What existing
legislation, if any, would be utilized to enforce and implement the
treaty? Please be specific.
Answer. The implementing arrangements and the regulations issued in
accordance with the treaties would be utilized to implement the
treaties. Conduct falling outside of the procedures established
pursuant to the treaties, including their implementing arrangements, or
the regulations issued in accordance with the treaties, would be
subject to the requirements of the Arms Export Control Act (AECA) and
the International Traffic in Arms Regulations (ITAR). Such conduct
could constitute violations of the AECA, the ITAR, and information
security-related U.S. laws and regulations. All of these laws and
regulations may be utilized for enforcement purposes.
Question No. 7. Under what legal authority will the Department of
State promulgate regulations for these treaties, given that the current
International Traffic in Arms Regulations (ITAR, 22 CFR 120-130) are
promulgated under the authority of section 38 of the Arms Export
Control Act, which presumably will be superseded by the treaties?
a. If no provision of law can be cited, what implications will that
have for enforcement actions against a company that fails to abide by
the new regulations?
Answer. The Department of State will promulgate regulations based
on the authority of the treaties themselves.
a. Article 13 of each treaty recognizes that regulations will be
promulgated to implement that treaty's effect on existing law. As
provided in Article 13 (1) and (2) of each treaty:
Article 13(1): Compliance with the procedures established
pursuant to the Treaty, the Treaty's Implementing Arrangements,
and any regulations promulgated to implement the Treaty's
effect on existing law, by persons or entities exporting and
transferring defense articles, constitutes an exemption to the
applicable licensing requirements and implementing regulations
of the AECA.
Article 13(2): Conduct falling outside the terms of the
Treaty, the Treaty's Implementing Arrangements, and any
regulations promulgated to implement the Treaty's effect on
existing law, remains subject to applicable licensing
requirements and implementing regulations, including any
criminal, civil, and administrative penalties or sanctions
contained therein.
Question No. 8. If these treaties are ratified and a provision of
either of these treaties conflicts with existing treaty or statutory
law, it would override that treaty or statute where there is such a
conflict. Please set forth, with specificity, which provisions in the
two pending treaties conflict with treaty or statutory provisions now
in force, and therefore would override them. Please provide an
exhaustive list of the existing treaty or statutory law that will be
affected, not a list of examples.
Answer. I am advised by the office of the State Department's Legal
Adviser of the following:
The treaties, pursuant to their terms, allow for exports and
transfers without the requirement for separate U.S. Government licenses
or approvals. Statutory provision(s) that will be affected include:
22 U.S.C. 2778(b)(2)--as it applies to exports and transfers
that fall within the scope of the treaties.
22 U.S.C. 2753(a)--as it applies to transfers of defense
articles or defense services originally provided to the other
government pursuant to the Foreign Military Sales program where
such subsequent transfer is pursuant to either treaty.
Other statutory provisions, though not explicitly overridden by the
treaties, are rendered irrelevant as a matter of law for exports and
transfers that fall within the scope of the treaties because there will
be no license application or other approval pursuant to 22 U.S.C. 2778
to trigger the provisions of the statute, such as 22 U.S.C. 2753(d), 22
U.S.C. 2765(a), 22 U.S.C. 2776 (c) and (d), and 22 U.S.C. 2779(a)(2).
Question No. 9. Will the treaties be self-executing for each of the
Treaty Partners?
a. Please list, in detail, the changes that will be required to
existing law in the United Kingdom and Australia in the event that both
treaties are ratified.
b. Please describe the major regulatory changes that each Treaty
Partner will have to promulgate.
Answer.
Australia:
The State Department has been advised by the Australian Government
of the following:
a. Australia would need to enact new legislation to give effect to
Australia's rights and obligations under the Australia-U.S. Treaty
concerning Defense Trade Cooperation (the Treaty). New legislation to
enact the terms of the Treaty will include provisions addressing:
(1) The criteria for entry into the ``Australian Community''
and the conditions Australian Community members must abide by
to maintain membership, including personnel, information, and
facilities security requirements;
(2) The recordkeeping and notification and reporting
requirements under the Treaty;
(3) The handling, marking, and classification requirements
for U.S. and Australian defense articles exported or
transferred under the Treaty;
(4) The requirements for exports and transfers of U.S.
defense articles outside the approved community or to a third
country;
(5) The rules for transitioning U.S. defense articles into
and out of the terms of the Treaty;
(6) The rules for transitioning into and out of the
Australian Community;
(7) Auditing, monitoring, and investigative powers for
Commonwealth officials and powers to allow Commonwealth
officials to perform post-shipment verifications and end-use/
end-user monitoring; and
(8) Offenses and penalties, and administrative requirements,
necessary for the enforcement of the Treaty and its
implementing arrangement.
It is proposed that these changes be brought into force through
amendments to the current Weapons of Mass Destruction (Prevention of
Proliferation) Act 1995 (WMD Act). The name of this act will be amended
to better reflect the objective of the act. In conjunction with
legislation to implement the Treaty, Australia is also bringing forward
legislation to strengthen generally its controls over defense and dual-
use goods including controls over intangible transfers of controlled
technology and brokering of controlled goods, technology and services.
These provisions will also be included in the amended WMD Act.
b. The major regulatory changes that Australia will have to
promulgate are:
(1) The criteria for entry into the Australian Community, and
terms for maintaining Australian Community membership;
(2) The criteria for individuals to become authorized to
access U.S. defense articles received pursuant to the Treaty;
(3) Benefits stemming from Australian Community membership,
including a framework for license-free trade with the U.S. in
classified or controlled items falling within the scope of the
Treaty;
(4) The conditions Australian Community members must abide by
to maintain membership, including but not limited to:
i. Recordkeeping and notification requirements;
ii. Marking and classification requirements for
defense articles exported or transferred under the
Treaty;
iii. Requirements for the re-transfer to non-approved
community members and re-export to a third country of
defense articles; and
iv. Maintaining security standards and measures
articulated in defense protective security policy to
protect defense articles pursuant to the Treaty;
(5) Provisions to enforce the procedures established pursuant
to the Treaty, including auditing and monitoring powers for
Australian Department of Defense officials and powers to allow
Department of Defense officials to perform post-shipment
verifications and end-use/end-user monitoring;
(6) Offenses and penalties, including administrative and
criminal penalties and suspension and termination from the
Australian Community, to enforce the provisions of the Treaty;
and
(7) Requirements and standards for transition into or out of
the Australian Community and Treaty framework.
United Kingdom:
The State Department has been advised by the U.K. Government of the
following:
a. No changes will be required to existing law to give effect to
the U.K.'s rights and obligations under the Treaty, as the U.K. will
rely on existing legislation such as the Official Secrets Act.
b. There will be several regulatory changes made to support the
Treaty. These are:
Changes to U.K. export control regulations, including
development of a treaty-specific Open General Export License
(OGEL).
Changes to the U.K. Manual of Protective Security and
related security regulations for Government and U.K. Industry.
Changes to the MOD Classified Material Release Procedure
(F680) to take account of treaty re-exports and re-transfers.
Question No. 10. The treaty with Australia defines the term
``Scope'' as the ``Treaty's coverage as identified in Article 3''
(Article 1(j)). Article 13(2) of the treaty states that ``Conduct
falling outside the terms of this Treaty,'' and its implementing
arrangements and regulations remain subject to applicable law. The
``Overview'' accompanying the Secretary's letter of submittal, in
describing Article 13, states that conduct ``outside the scope of the
Treaty'' remains subject to applicable law (Treaty Doc. 110-10, at xi)
(emphasis added). Is the term ``scope,'' as used in the submittal
letter, equivalent to the treaty term, as defined in Article 1?
Answer. No. The cited reference to ``scope'' in the ``Overview'' is
equivalent to ``the terms of.''
Question No. 11. Article 1(1) of the treaty with the United Kingdom
and Article 1(1)(c) of the treaty with Australia define ``Defense
Services'' by reference to the United States Munitions List. Why are
the British and Australian munitions lists not also referenced?
a. This definition appears to permit the export to the United
Kingdom under the treaty of items that the United Kingdom controls only
as dual-use items, the re-transfer of which to other European Union
countries would not be subject to arms export controls.
b. What are the implications of relying on the Official Secrets Act
as a major predicate for enforcement in the United Kingdom? What sorts
of enforcement actions are taken under that act against individuals and
entities, and what new challenges will the treaty raise for enforcement
under that act?
Answer. The U.S. Munitions List is the basis for the treaties.
a. The list of items exempt from the U.K. Treaty includes ``Defense
Articles not controlled by the U.K. Munitions List (UKML) or Annex 4 to
the U.K. Dual Use List that the U.S. controls under the USML.''
Therefore, USML items that the United Kingdom may treat as dual-use
items are excluded from the treaty. The United States Munitions List
(USML) and United Kingdom Military List (UKML) cover broadly similar
items and the exceptions are few in number. The list for the Australia
Treaty includes similar language: ``Defense Articles not controlled by
the Australian Munitions List (Australian ML) or the Australian Dual
Use List that the U.S. controls under the USML.''
b. The use of the Official Secrets Act (OSA) to protect treaty
material within the U.K. provides a level of protection in U.K. law
that has not previously existed for the majority of U.S. defense
articles. With the OSA as the basis for enforcement, all material
transferred under the treaty will be given the same level of protection
that is currently given to RESTRICTED material, and in some respects to
CONFIDENTIAL material (the requirement for ``List X'' status and an SC
Clearance). Enforcement of the OSA under the treaty will be no
different from the enforcement activities that are currently carried
out for other U.K. classified material.
Question No. 12. Article 1(8) of the treaty with the United Kingdom
gives Her Majesty's Government the option of giving notice that it
includes in the definition of the Territory of the United Kingdom, in
addition to England and Wales, Scotland and Northern Ireland, ``any
territory for whose international relations the United Kingdom is
responsible.''
a. Which such territories might be included? Has Her Majesty's
Government consulted with the United States Government about including
such territories in the definition of the Territory of the United
Kingdom?
b. Will the United States object if Her Majesty's Government
proposes to include territories that are known to be offshore business
havens? Will U.S. Government concurrence be required to include such
territories?
c. In what manner will the executive branch inform Congress if Her
Majesty's Government initiates such consultations, and/or gives such
notice?
d. Will the United States be able to require removal of any
nongovernmental United Kingdom entity or facility from the approved
community regardless of its location within the Territory of the United
Kingdom?
Answer. a. Other such territories could include Bermuda, Anguilla,
the Falklands Islands and Gibraltar. To date, the U.K. Government has
not consulted with the United States Government about including such
territories.
b. Whether the United States would object to the inclusion of any
particular territory would depend on the relevant facts at the time.
U.S. Government concurrence is not required to include such territories
within the definition of ``Territory of the United Kingdom'' for treaty
purposes. As provided in Article 1(8), Her Majesty's Government is
required to consult with, and give notice through diplomatic channels,
regarding the inclusion of any such territories. The United States
would, however, need to concur on the inclusion of all members of the
approved community.
c. The administration is prepared to discuss with the Senate any
procedure by which the executive branch might notify Congress in the
event of such a change.
d. The U.S. can remove a nongovernmental entity or facility from
the U.K. Community and U.S. concurrence is required to add a
nongovernmental entity or facility.
Question No. 13. What would the implications be for enforcement of
the treaty if the United Kingdom were to include a ``territory for
whose international relations the United Kingdom is responsible''
pursuant to Article 1(8)?
a. Are the personnel of all ``List X'' facilities subject to the
Official Secrets Act and to all of that act's penalties for violations?
b. Do all personnel at ``List X'' facilities retain U.K. security
clearances?
c. Would the Official Secrets Act be enforceable in a ``territory
for whose international relations the United Kingdom is responsible?''
Alternatively, would the United Kingdom have jurisdiction in England if
the offense concerned acts in such a territory by persons who were
citizens of such a territory?
d. Will the U.S. Government be able to take into account any
limitations in Her Majesty's Government's ability to enforce compliance
with this treaty, its implementing arrangement and regulations, when
evaluating a proposed member of the U.K. Community, even though that
criterion is not specifically listed in section 7(4) of the
implementing arrangement?
Answer. There are no implications for enforcement arising from the
inclusion of such territories.
a. Not all ``List X'' facilities will be members of the United
Kingdom Community. As provided by Article 4 of the treaty, only those
facilities that meet mutually agreed eligibility requirements, are
accredited by Her Majesty's Government in accordance with the
implementing arrangements, and are mutually agreed to by the parties
will be members of the United Kingdom Community. All personnel of
facilities in the United Kingdom Community who require access to
defense articles exported under the treaty will have an appropriate
security clearance at least at the United Kingdom ``security check''
level, as provided in section 7(11) of the implementing arrangement
and, thus, will be subject to the Official Secrets Act and to all of
that act's penalties for violations.
b. As noted in subparagraph ``a'' above, not all ``List X''
facilities will be members of the United Kingdom Community. All
personnel of facilities on ``List X'' who are part of the United
Kingdom Community and who require access to defense articles exported
under the treaty will have an appropriate security clearance at least
at the United Kingdom ``security check'' level, as provided in section
7(11) of the implementing arrangement.
c. Yes. The Official Secrets Act extends to any act done by any
person in these territories as if it were done in the U.K.
d. Yes; section 7(4)(f) of the implementing arrangement includes
``national security risks'' as one of the criteria against which
nongovernmental United Kingdom entities and facilities will be assessed
for inclusion on ``the List.'' Limitations in Her Majesty's
Government's ability to enforce compliance with the treaty would be
considered under these criteria.
Question No. 14. The 2003 legislative initiative to permit a
licensing exemption agreement under section 38(j) of the Arms Export
Control Act would have applied to all unclassified exports of defense
articles and services. The treaties apply, by contrast, to classified
as well as unclassified exports of defense articles, but are limited by
the provisions of Article 3. They would appear, thus, to be both more
far-reaching and more complicated than the legislative proposal. What
are the advantages and disadvantages, in the administration's view, of
the approach adopted in the treaties?
a. Which of the requirements listed in section 38(j)(2) of the Arms
Export Control Act would each Treaty Partner not be able to satisfy
with respect to the treaties?
Answer. The advantage of the approach adopted in the treaties,
which permits the export and transfer of both classified and
unclassified defense articles and services, is that it applies to the
broadest possible range of defense articles and services while
tailoring the exclusions to those defense articles and services which
contain sensitive technologies, whether classified or unclassified.
Another advantage of the treaties is that they apply to both hardware
and intangibles, while some previous initiatives under 38(j)(2) covered
only hardware. An additional advantage of the treaties is that
unclassified USML items will now be subject to controls under the
Official Secrets Act, which is a level of enhanced control not
envisioned in the 2003 legislation.
a. Because the President chose to negotiate these agreements as
treaties, rather than as bilateral agreements under 38(j), a
comprehensive review to determine which requirements of 38(j)(2) would
or would not be satisfied by the treaties was deemed unnecessary and
was not conducted. Some of the provisions of 38(j)(2) are not addressed
in the treaties and, thus, presumably the treaties do not satisfy those
provisions, such as 38(j)(2)(B)(iii)--controls on international arms
trafficking and brokering--and 38(j)(2)(B)(iv)--cooperation with United
States Government agencies, including intelligence agencies to combat
efforts by third countries to acquire defense items, although nothing
in the treaties precludes such cooperation. Other provisions of
38(j)(2) are specifically addressed in the treaties, such as
38(j)(2)(A)(i)--conditions on the handling of all United States-origin
defense items exported to the foreign country, including prior written
United States Government approval for any re-exports to third
countries; 38(j)(2)(B)(i)--controls on the export of tangible and
intangible technology; including via fax, phone, and electronic media;
and 38(j)(2)(B)(ii)--appropriate controls on unclassified information
relating to defense items exported to foreign nationals.
Question No. 15. Article 3(2) of each treaty provides that the
``Treaty shall not apply to those Defense Articles that are identified
in the Implementing Arrangements as exempt from the Scope of this
Treaty.'' This language contrasts with Article 3(1)(b), which describes
certain programs ``identified pursuant to the Implementing
Arrangements'' (emphasis added) (see also Article 4(1)(a) (similar)).
The implementing arrangements do not contain an identification of such
defense articles, but rather leave the task of such identification to a
subsequent procedure. How does section 4 of the implementing
arrangement with each Treaty Partner comply with Article 3(2) of the
respective treaty?
Answer. The administration and its U.K. and Australian counterparts
view the phrases ``identified in'' and ``identified pursuant to'' to be
synonymous. For example, several treaty articles (Articles 1(3), 1(4)
and 1(11) of the United Kingdom Treaty and Articles 1(1)(b), 1(1)(e),
and 1(1)(f) of the Australia Treaty) indicate that specific individuals
or facilities will be ``identified in'' subsequent articles, yet the
subsequent articles do not identify each person or facility by name,
but rather refer to the process by which the individuals and facilities
will be identified. Likewise, Article 9(1) of each treaty provides that
exceptions to the re-transfer and re-export authorizations will be
``identified in'' the Implementing Arrangements, yet section 9(12) of
the United Kingdom implementing arrangement and section 9(7) of the
Australia implementing arrangement leave the task of identifying the
specifics of the exceptions to a subsequent procedure.
Question No. 16. What criteria will be used as the basis for U.S.
decisions on what defense articles to exempt from the scope of the
treaties?
Answer. If a specific technology meets any one of the following
criteria, it is included on the List of Technologies Exempt from the
Treaties, pursuant to Article 3(2) of each treaty. The technologies are
those that:
1. Are controlled according to U.S. Presidential Directive;
2. Are controlled subject to applicable international
agreements or arrangements (e.g., the MTCR, or Chemical or
Biological Warfare regimes);
3. Are not controlled for export as defense articles by the
U.K. or Australian Government; and/or,
4. Are targeted, sensitive technologies that should not be
freely transferred within an ``Approved Community,'' but only
to specifically identified recipients pursuant to an export
license.
Question No. 17. Please confirm that no defense articles controlled
in order to comply with the guidelines and control lists of the Nuclear
Suppliers Group (NSG), the Australia Group (AG) or the Missile
Technology Control Regime (MTCR) will be exported pursuant to the
treaties. If any such items may be exported under the treaties, please
explain what they are and why they will not be exempted pursuant to
Article 3(2).
Answer. No defense articles controlled for compliance with the NSG,
the AG, or the MTCR may be exported under the treaties per the List of
Defense Articles Exempted from Treaty Coverage which includes ``Defense
Articles listed in the Missile Technology Control Regime (MTCR) Annex,
the Chemical Weapons Convention (CWC) Annex on Chemicals, the
Convention on Biological and Toxin Weapons, and the Australia Group
(AG) Common Control Lists (CCL).''
Question No. 18. How long will it take to establish the ``policies
and procedures'' pursuant to section 4(7) of the implementing
arrangements that will govern those defense articles that were
previously exported or transferred but are later added to the list of
exempt defense articles, and how will the executive branch inform
Congress of such ``policies and procedures''?
Answer. The administration will establish the policies and
procedures as quickly as possible prior to the addition of any item to
the list of exempt defense articles. The administration is prepared to
discuss with the Senate procedures by which the executive branch might
notify Congress of the policies and procedures noted in section 4(7).
Question No. 19. The word ``scope'' is used in the treaty with the
United Kingdom in several instances. It is the title of Article 3.
Article 3(2) refers to items ``exempt from the Scope of this Treaty.''
Article 6(1) applies to ``Defense Articles within the Scope of this
Treaty.'' The term is capitalized. Article 1 states that ``Terms
capitalized in this Treaty, and their variants, shall have the meaning
established in this Article.'' The word ``Scope'' is not, however,
defined in Article 1. What does the term mean, and how is that meaning
established in this treaty?
Answer. The ``scope'' of the United Kingdom Treaty is the treaty's
coverage as identified in Article 3, entitled ``Scope.'' For the
purposes of the United Kingdom Treaty, it was not deemed necessary to
include a separate definition of ``Scope'' since it appeared to be
self-explanatory by the terms of Article 3. When the Australian Treaty
was negotiated, the Australian negotiators asked that a definition of
``Scope'' be added to Article 1. The word ``Scope'' has an identical
meaning in both treaties.
Question No. 20. What are the criteria, referenced in section 2(1)
of the implementing arrangements, that are used by the U.S. Department
of Defense and its counterparts in each Treaty Partner Government to
establish and document combined military operations and combined
counterterrorism operations?
Answer. Section 2(1) of the implementing arrangement calls for
developing and maintaining a list of combined Operations. The U.S. DOD
will use the criteria found in Joint Publication 3-16 (Joint Doctrine
for Multinational Operations) to develop and update the combined
Operations list. After consulting with the U.K. MOD and Australian DOD,
DOD will provide the Department of State with a validated combined
Operations list, and revisions thereto.
Question No. 21. With regard to the implementing arrangements with
each Party, what are the ``cooperative program legislative
authorities'' referenced in section 2(2)(a)?
a. If there is a finite list of such authorities, please name all
of them; if there are specific criteria for determining additional
cooperative program legislative authorities, please list them.
b. What is the ``valid cooperative program international agreement
or arrangement'' referenced in section 2(2) (b) and (c)?
Answer. a. I am advised by the Department of Defense that the
``corporate program legislative authorities'' referenced in section
2(2)a are the following: 10 U.S.C. 2350a, 10 U.S.C. 2350b, 10 U.S.C.
2350f, 10 U.S.C. 2350i, 10 U.S.C. 2350l, 10 U.S.C. 2358, 22 U.S.C. 2767
(section 27 of the AECA), and 22 U.S.C. 2796d (section 65 of the AECA).
b. I am advised by the Department of Defense that a ``valid
cooperative program international agreement or arrangement'' is: An
agreement or arrangement which is based on the legal authorities cited
in the answer to the question above, where the agreement or arrangement
(1) has entered into force or effect; and (2) has not expired or been
terminated.
Question No. 22. Section 2(2)(e) of each implementing arrangement
states that programs involving defense articles ``exempt from the scope
of the Treaty'' will be excluded from the list called for under that
paragraph, ``unless otherwise mutually determined for any program that
also involves ``Defense Articles not exempt from the scope of the
Treaty.''
a. Will license-free exports or transfers be permitted in such
programs for defense articles otherwise ``exempt from the scope of the
Treaty,'' or only for defense articles that have not been exempted?
b. If the former is true, how is this exception to the exclusion
justified, in view of the unqualified prohibition on inclusion of such
exempt items in Article 3(2) and section 4 of the implementing
arrangements?
Answer. a. Items exempt from the scope of the treaty will not be
exported or transferred under this provision. This is intended to allow
for exports or transfers in support of a subset of a larger program.
b. Items exempt from the scope of the treaty will not be exported
or transferred under this provision.
Question No. 23. Does section 3(1)(b) of the implementing
arrangements have any implications under the Competition in Contracting
Act and the Federal Acquisition Regulations? Will the solicitations
that are described in that section be considered to permit other than
full and open competition under 10 U.S.C. 2304(c)(4) or 41 U.S.C.
253(c)(4)?
Answer. I am advised by the Department of Defense that the treaties
have no implications on the Competition in Contracting Act. Changes to
the Defense Federal Acquisition Regulations Supplement (DFARS) and
Federal Acquisition Regulation (FAR) will be required for solicitations
and contracts that will be treaty-eligible. No such changes to the
DFARS or FAR will affect current requirements for full and open
competition.
Question No. 24. When do you expect to complete and publish the
initial lists of eligible: ``combined military and counterterrorism
operations'' (Article 3(1)(a), implementing arrangement section 2(1));
``cooperative security and defense research, development, production,
and support programs'' (Article 3(1)(b), implementing arrangement
section 2(2)); and, ``mutually agreed specific security and defense
projects where Her Majesty's Government is the end-user'' (Article
3(1)(c), implementing arrangement section 2(3))?
a. Will Congress be notified of changes to such lists in the same
way that the public is notified, or will there be a separate mechanism?
Answer. The lists will be completed and published prior to bringing
the treaties into force in accordance with Article 20 of both treaties.
The SFRC was provided an illustrative version Article 3(1)(b)
cooperative program list in furtherance of the April 7, 2008, staff
briefing.
a. The administration is prepared to discuss with the Senate
procedures by which the executive branch might notify Congress in the
event of such changes.
Question No. 25. Section 3(a)(2) of the Arms Export Control Act
states that no agreement shall be entered into for a cooperative
project (as defined in section 27 of the act) unless the country with
which such agreement has been made ``shall have agreed not to transfer
title to, or possession of, any defense article or related training or
other defense service so furnished to it, or produced in a cooperative
project . . . to anyone not an officer, employee, or agent of that
country . . . and not to use or permit the use of such article or
related training or other defense service for purposes other than those
for which furnished unless the consent of the President has first been
obtained.'' When the President provides such consent, notification to
this committee is required pursuant to section 3(d). If the treaties
are ratified, will the requirements of sections 3(a)(2) and 3(d) of the
act continue to apply to all cooperative projects under section 27 of
the act?
Answer. It is possible that defense articles or defense services
may be exported for the purposes of cooperative projects pursuant to
the treaties. With respect to the transfer of such items by HMG or the
Government of Australia within their respective approved community, the
provisions of section 3(a) and 3(d) will not apply. The provisions of
section 3(a)(2) will continue to apply to re-exports for section 27
cooperative programs with the U.K. and Australia.
Question No. 26. Article 3(1)(c) in each treaty limits the scope of
the treaty to, in part, ``specific security and defense projects where
the . . . [treaty partner] is the end-user.'' Section 2(3) of the
implementing arrangements states: ``In furtherance of Article 3(1)(c),
the Participants will develop, establish and maintain information
concerning mutually determined specific security and defense Projects,
including the publication of lists of such Projects where the . . .
[treaty partner] is the end-user'' [emphasis added]. This suggests that
there may also be projects under section 2(3) where the Treaty Partner
is not the end-user. In addition, the first criterion for such
projects, in section 2(3)(a), is that ``[t]he purpose of the Project
must be focused on meeting the needs of'' the Treaty Partner, but a
subsidiary objective may be ``security and defense exports to third
parties.''
a. Does section 2(3) of the implementing arrangements allow for
``mutually determined specific security and defense Projects'' other
than ones in which the Treaty Partner ``is the end-user?'' If so, then
under what authority in the treaty is its scope thus being broadened?
Or is section 2(3) an amendment to the treaty?
b. What balance between end-use by the Treaty Partner and
prospective exports to third parties will be required for a project to
be considered to be ``focused on'' end-use by that government?
c. How will defense articles previously exported for such a project
be treated if the balance between end-use by the relevant government
and transfer to a third Party changes at some later date and the
project is no longer within the scope of the treaty?
Answer. a. No. The formulation follows that in section 2(1) and
2(2), where the participants agree to ``develop, establish, maintain
and publish information . . . including lists'' and allows for the
publication of information other than lists. The scope of the treaty is
clear; this language does not broaden the scope of Article 3(1)(c).
b. This is not an issue of balance. To meet the requirements of
Article 3(1)(c) the end-use must be, first and foremost, for the
government of the Treaty Partner. Section 2(3)(a) of the implementing
arrangements confirms that the primary purpose of the project must be
to meet a legitimate security or defense requirement of the Treaty
Partner. If, at some time in the future, the Treaty Partner desires to
export to a third country a defense article developed through one of
these projects, they will have to obtain USG authorization to do so in
accordance with the AECA and the ITAR.
c. If a project is no longer within the scope of the treaty,
licensing requirements apply to all exports.
Question No. 27. Will the executive branch consult with Congress in
advance of any changes to the list of defense articles exempt from each
treaty pursuant to Article 3(2)?
a. If so, what form might such consultations take?
b. Will the public be informed of planned changes to the list of
exempt defense articles in advance?
Answer. The administration plans to continue to consult with
Congress on the operation of the treaty and on substantial changes
affecting its operation.
a. The administration expects to consult with members and staff of
oversight committees as appropriate.
b. In general, no; though it is possible that in particular cases
the Defense Trade Advisory Group may be advised of planned changes.
Question No. 28. The Foreign Military Sales (FMS) Program was
created to provide for sales of U.S. weapon systems to the armed forces
of other countries. Why will defense articles exported under the FMS
Program be eligible for license-free transfers to approved community
members, pursuant to Article 3(3)?
a. What use will likely be made of this option? What weapon systems
will likely be transferred, in what numbers, and for what purposes?
b. Does section 5 of the implementing arrangements give the United
States any role in determining whether defense articles exported under
the FMS Program are within the scope of Article 3(1) of the treaty? If
not, why not?
c. Section 5(1) of the implementing arrangements requires that
defense articles ``exempt from the scope of the Treaty'' that are
exported under the FMS Program be listed separately in an FMS Letter of
Offer and Acceptance (LOA). Does this requirement apply only to defense
articles exempted from the scope of the treaty pursuant to Article 3(2)
and section 4 of the implementing arrangements, or also to defense
articles that are outside the scope of the treaty because they do not
meet the standards of Article 3(1)?
d. Why will each Treaty Partner merely maintain a register of FMS
items that are subsequently transferred under the treaty, pursuant to
section 5(4) of the implementing arrangements, rather than notifying
either the United States or the producer that a weapon system will be,
or is being, transferred?
e. Section 5(5) of the implementing arrangements states: ``Terms of
the FMS LOA unrelated to the provisions implemented under the Treaty
will govern.'' Please explain which provisions of an LOA will be
considered ``unrelated to the provisions implemented under the Treaty''
and indicate, in particular, whether end-use restrictions and security
provisos will be among them.
f. How long will it take to develop the procedures required by
section 5(5) of the implementing arrangements governing transition of
those defense articles acquired and delivered through the FMS Program
to their being treated as defense articles exported pursuant to the
treaty? How will the executive branch inform Congress of such
procedures?
g. Please list those technologies that were approved for release
through an Exception to National Disclosure Policy (ENDP) as a part of
any FMS sale to either the United Kingdom or Australia since the year
2000. Please indicate whether such ENDP is still in force and, if so:
(i) Whether the technology in question will be exempted from the scope
of the treaty pursuant to Article 3(2); and (ii) if it will not be
exempted, then whether provisos attached to the ENDP will be maintained
in any transfer pursuant to the treaty.
Answer. Under the Arms Export Control Act, sales of defense
articles and defense services to foreign countries under the Foreign
Military Sales (FMS) program are made by the U.S. Government and
executed by the DOD. All FMS sales require the approval of the
Secretary of State but do not otherwise require licenses that the AECA
requires for exports for direct commercial sales where U.S. companies
export defense articles or defense services to foreign countries.
The procedures applicable to the export of defense articles and
defense services pursuant to an FMS case from the United States to
either Her Majesty's Government or the Government of Australia will
remain unchanged under the treaties. The intent is to allow for the
transfer of defense articles and defense services, without the need for
individual approvals from the Department of State, from the armed
forces of either the United Kingdom or Australia to approved community
members of that country to achieve the broader purposes of the treaty,
such as for maintenance, overhaul or repair.
a. For example, we anticipate that aircraft, engines, vehicles and
other items may be transferred to approved community members for
purposes such as maintenance, overhaul, and repair.
b. Section 5 of the implementing arrangements gives each partner
country the discretion to determine whether a transfer meets the treaty
criteria. However, the U.S. Government must agree (1) to inclusion of
the Operation, Program, or Project on the list, (2) that the technology
is not exempt from the scope of the treaty, and (3) to inclusion of
nongovernmental members in the relevant approved community.
c. The LOA should identify items that are ineligible for transfer
under Article 3(2) of the treaty at the time that the LOA is executed.
Prior to any transfer of an item sold pursuant to the FMS program, the
partner government must determine that the transfer is for a purpose
identified in accordance with Article 3(1) of the treaty. This
determination requirement is the same as for items sold commercially
and exported pursuant to either treaty.
d. Maintaining a register is not a small requirement on the partner
country. It creates a documented record that is available to the U.S.
Government for review or tracking of any transfer within the approved
community. This is in accordance with procedures for other items
transferred within the approved community pursuant to the treaty. The
United States does not need or want a notification of each movement,
and can meet its responsibilities and address particular concerns by
requiring these records to be kept and to be made available for review.
e. All the standard terms and conditions of the LOA will continue
to apply, except that the requirement for prior approval of the
Department of State for re-transfers of defense articles or defense
services will not apply to transfers of defense articles or defense
services under the treaty.
f. We are working closely with Her Majesty's Government and the
Government of Australia on the various elements of the Management Plan.
The administration is prepared to discuss with the Senate procedures by
which the executive branch might notify Congress of the processes and
procedures noted in section 5(5).
g. Normally exceptions to the National Disclosure Policy for
Australia and the U.K. are not required. Under the National Disclosure
Policy, authority to disclose classified military information to both
countries has been delegated to the Military Services. However, for
certain very sensitive programs involving production (Joint Strike
Fighter, the U.K. submarine program, the Australian COLLINS Class
submarine program, and advanced infrared countermeasures flares for
aircraft) approved exceptions were required. Provisos in the ENDPs will
remain in effect regardless of the treaty provisions and apart from the
treaty due to the classified nature of the information.
Question No. 29. Section 4 of the implementing arrangements
provides that the Treaty Partner's Defense Ministry will develop and
maintain a list of defense articles to be exempted from the scope of
the treaty; the United States will similarly develop and maintain a
list of defense articles to be exempted from the scope of the treaty;
and these two lists will be ``combined to constitute the list of
defense articles exempt from the scope of the Treaty.''
a. Is there to be, under each treaty, only one combined exclusion
list applying both to exports of defense articles to the Treaty Partner
Community and to exports to the United States Community pursuant to
Article 8 of each treaty?
b. What is the process for combining these two lists? Please
provide details.
c. Will each participant retain the right to exempt certain defense
articles from the scope of the treaty despite any objections from the
other Party? Or if a Treaty Partner puts an item on its list, will it
be possible for the United States to veto adding that item to the
combined list?
d. What is the process for removing items from the combined list?
If the United States wishes to remove an item from the list that the
United States originally added to the list, can it do so without the
Treaty Partner's approval?
Answer. a. Each country is obligated to create its own list of
items exempt from coverage under the treaty that will be combined in
accordance with the implementing arrangements.
b. The process for combining the two lists will be determined by
the Management Board.
c. The treaty does not require lists to be mutually agreed.
d. The United States may remove an item from its list without
approval of the Treaty Partner; it may not remove an item from the
Treaty Partner's list.
Question No. 30. Article 4(1) and Article 4(3) of the treaty with
Australia require that entities within the Australian Community be
located in the Territory of Australia. Articles 4(1) and 4(3) of the
treaty with the United Kingdom do not contain the same requirement. The
definitions of ``Export'' and ``Transfer'' in the treaty with the
United Kingdom make no reference to the Territory of the United Kingdom
(only re-exports and re-transfers make mention of the Territory of the
United Kingdom). The treaty itself would appear to permit the export or
transfer of defense articles to a nongovernmental United Kingdom entity
or facility located outside of the Territory of the United Kingdom. Is
this correct?
a. Section 7(4)(a) states that nongovernmental United Kingdom
entities and facilities ``must be on Her Majesty's Government's `List
X' of approved facilities'' to be included in the United Kingdom
Community pursuant to Article 4(1)(c). Are there any ``List X''
facilities outside of the Territory of the United Kingdom?
b. Is there any legal bar to a facility outside of the Territory of
the United Kingdom being included on ``List X?''
Answer. Exports and transfers can only take place between entities
within the approved community, within the territory of the United
Kingdom or the United States. The only exception to this is the re-
export of defense articles to operational theaters in support of U.K.
Armed Forces, as described in the Implementing Arrangement Section 9
paragraph 12.
a. No--``List X'' sites only exist in U.K. territory.
b. ``List X'' relies on the protections provided by the Official
Secrets Act, therefore a ``List X'' site could not exist outside of
U.K. territory.
Question No. 31. As a matter of policy, under what circumstances
will the U.S. Government agree to accepting in the U.K. Community an
entity that is located--
a. In a territory of the United Kingdom outside of England and
Wales, Scotland and Northern Ireland, pursuant to Article 1(8); or
b. Outside of the territory of the United Kingdom?
Answer. a. The Department of State will evaluate each
nongovernmental entity proposed for the approved community on an
individual basis, and will consider the Directorate of Defense Trade
Controls Watchlist and any law enforcement information on the entity,
as well as any input from the Intelligence Community and the Department
of Defense.
b. The Department of State will evaluate each nongovernmental
entity proposed for the approved community on an individual basis, and
will consider the Directorate of Defense Trade Controls Watchlist and
any law enforcement information on the entity, as well as any input
from the Intelligence Community and the Department of Defense. We do
not anticipate admitting to the approved community entities outside of
the territory of the United Kingdom.
Question No. 32. Section 7(4)(a) of the implementing arrangement
with the United Kingdom and section 6(4)(a) of the implementing
arrangement with Australia seem to make it impossible for a Treaty
Partner's nongovernmental entity or facility not on ``List X'' (or on
``the Government of Australia's list of approved facilities for the
handling of classified information and material'') to be part of the
approved community. Is this a correct interpretation?
Answer. To be in the United Kingdom Community, a nongovernmental
entity must first be on ``List X.'' Facilities approved by the
Australian Government to handle classified information and materials
are members of the Australian Defence Industry Security Program (DISP).
It is anticipated that the assessment criteria for Australian Community
membership application would be similar to those for the DISP
membership application. While DISP is designed to provide members with
information and guidance to assist in protecting classified
information, equipment, assets and material, it is not a prerequisite
for entities wanting to join the Australian Community to be DISP
members. Current DISP members wanting to join the Australian Community
will have to make application to the Australian Department of Defence
so that they may be screened against the other assessment criteria
pursuant to the treaty and the implementing arrangement.
Question No. 33. What is the process and what are the criteria by
which the United Kingdom determines what entities and facilities
qualify to be on Her Majesty's Government's ``List X'' (in light of
section 7(4)(a) of the U.S.-U.K. implementing arrangement) and
Australia determines what entities and facilities qualify to be on that
Government's list of approved facilities for the handling of classified
information and material (in light of section 6(4)(a) of the U.S.-
Australia implementing arrangement)?
a. In particular, what standards apply for foreign-owned companies
in those countries? How do those standards compare to those that are
applied by the United States (in light of Article 5(2) of the
treaties)?
Answer.
Australia:
The State Department has been advised by the Australian Government
of the following:
As stated in the answer to Question No. 32, joining the DISP will
not be a prerequisite for membership of the Australian Community per
se. Rather DISP membership processes and criteria will be incorporated
into the treaty application procedure.
The processes and criteria for DISP membership requires compliance
with the Australian Government's protective security standards and
obligations, covering physical, personnel, and information and
communications technology (ICT) security. There is also a system of
regular validations and reviews to ensure that these standards and
obligations continue to be met once membership is granted.
Any requirement to obtain membership of the DISP is determined
through an evaluation of the merits of each individual case. This
requirement is determined by Defence Security Authority (DSA), with due
consideration of Australia's international agreements and arrangements,
and in consultation with the Defence elements.
The following description covers the current process for membership
of the DISP and does not include any potential modification for
specific treaty requirements.
Australian defense industry entities who wish to join DISP must
provide written sponsorship to DSA including the following information
(which will also be necessary for entities applying to join the
Australian Community):
Details of the sponsor. Sponsorship may be from a Defence
element, an existing DISP member, or another Australian
Government entity.
The entity's corporate information and structure (see
response to Question No. 33a for more detail about how this
relates to foreign ownership, control, and influence).
Accreditation type. Facilities Accreditation, Personnel
Accreditation and/or Consultant Accreditation. For Facilities
Accreditation the entity must further nominate whether they
need accreditation for:
Document storage;
ICT systems;
Equipment storage; or
Communications security (COMSEC).
Accreditation level: RESTRICTED (minimum under the treaty),
CONFIDENTIAL, SECRET or TOP SECRET.
Reason for requiring membership of DISP including:
Details of proposed access, including time frames;
Project or contract details; and
Any likely future considerations.
On receipt of this information DSA assesses the claims for
membership including:
The foreign intelligence threat;
The risk of unauthorized access to classified material;
The nature of any foreign ownership, control or influence;
and
The existence of a relevant bilateral government-to-
government security instrument for the protection of classified
information.
The next stage is the Facilities Accreditation process:
Facilities Accreditation is an assessment of the physical
security of the entity's premises where the entity will be
handling, storing, and processing classified information. There
are up to four components assessed depending on the entity's
particular circumstances (see above).
Entities receive a management brief outlining what areas of
their physical security need to be approved. It is then the
responsibility of the entity to make the improvements within a
reasonable period of time.
Once an entity has received the Facilities Accreditation it will be
assessed against the other Australian Community criteria as outlined in
the Implementing Arrangements Section 6(4).
Personnel Accreditation comprises a security clearance process for
individuals. Treaty requirements are specified in section 6 (subheading
``Access'') of the Implementing Arrangement. Defence will fully
implement those requirements as well.
a. DISP accreditation requires that, in order to adequately assess
the suitability of an entity, the entity must provide DSA with
information on the following:
(1) Ownership details through all intermediary companies up
to, and including, the ultimate holding company (if
applicable);
(2) Ownership details for companies or individuals with:
i. 5 percent or more of the company's voting stock,
and
ii. 25 percent or more of the company's nonvoting
stock.
(3) Names, addresses, and nationalities of management
positions within the sponsored entity, such as Board members,
executives and senior managers;
(4) Contracts held with foreign persons and/or entities;
(5) Ownership in whole or in part by any foreign interest;
and
(6) Any other factors that indicate a capability of foreign
control and/or influence over the management or operations of
the entity.
United Kingdom:
The State Department has been advised by the U.K. Government of the
following:
The criteria and process for any U.K. facility to be placed on the
MOD's ``List X'' is as follows:
For the purposes of the treaty, a company that wishes to use
the treaty will apply to the MOD in the first instance
requesting permission to become part of the approved community.
The first stage of this application will be clearance of that
company's relevant facilities onto ``List X.''
A company as a whole does not join ``List X,'' only the
particular facility on which the classified material will be
stored processed or held is considered and vetted for ``List
X'' status.
The sponsored site is required to complete a detailed form
stating: Company history, Nationality, Parentage, Board makeup
and to give such other information as to enable a formal
checking process to begin which will cover both the company and
the site(s) defined.
A specialist MOD team conducts initial due diligence checks
with various Government Departments/Agencies to seek
information with regard to the: Security record, conduct,
ownership and general probity of the company and its defined
potential ``List X'' site(s).
Issues arising from Foreign Ownership Control or Influence
are also assessed. Ownership must be defined and it is required
that at least 50 percent of the Board will be British Nationals
resident in the U.K. A Board-level contact is identified and
this person is named as the responsible Board member and focus
for security-related matters.
One of the major responsibilities of the Board Level Contact
and Company Security Controller is to put in place clear
procedures for and guarantee the segregation and protection of
relevant protectively marked material (such as treaty
material).
The Board member chosen as the security focus and the
potential Company Security Controller are identified and each
is security cleared to at least SC level through the Defense
Vetting Agency.
When all company/site due-diligence checks are completed
these are considered by the Directorate of Defense Security
within the MOD.
If all is in order, a specialist Field Security Assurance
Officer visits the site to consider and advise on physical
security measures and give a brief to both the Board-level
contact and the Company Security Controller. Training is made
available for both.
Once the site can demonstrate compliance with the required
security standards it is placed on ``List X.''
A ``List X'' site is governed by Cabinet Office security
regulations (the Manual of Protective Security) and subject to
regular Directorate of Defense Security inspection/audit and
guidance.
a. Both governments have Foreign Ownership, Control, or Influence
(FOCI) policies similar to U.S. policies. Industrial Security
Agreements with the U.K. and Australia have requirements for FOCI.
Companies that are determined by security authorities in both countries
to be under financial, administrative, policy, or management control of
individuals or other entities of a third Party country may participate
in a contract or subcontract requiring access to classified information
provided by the U.S. only when enforceable legal measures are in effect
to ensure that individuals or other entities of a third Party country
will not have access to classified information that is provided or
generated under the contract or subcontract. If enforceable legal
measures are not in effect to preclude access by individuals or other
entities of third-Party countries, the written consent from the U.S.
must be obtained prior to permitting such access.
Question No. 34. The committee understands that if a foreign-owned
entity or facility is to be on ``List X,'' one Board member must act as
the security focus and take responsibility for security matters within
the company, and that such Board member ``is answerable under the
law.''
a. Please explain what this means.
b. Does this person have special responsibilities under the
Official Secrets Act?
Answer. The State Department has been advised by the U.K.
Government of the following:
a. All persons within the U.K. are subject to the Official Secrets
Act (OSA) irrespective of their employment, status or nationality and
are individually responsible for protecting classified material.
However, the Board Level Contact is specifically tasked within the
company to have Board-level responsibility for security at the relevant
``List X'' site or sites. This makes them specifically accountable for
ensuring the company's security arrangements are fit for purpose.
Therefore, in the event of an infringement that occurred due to a
failure in security process, it would be that individual who would be
seen to be both responsible and to have failed in his/her duty under
the OSA. The Company Security Controller could also share liability
where processes had been blatantly broken or negligently ignored.
b. Neither the Board Level Contact nor the Company Security
Controller have named and defined functions under U.K. legislation.
However, as individuals they have liability under the Official Secrets
Act, as does any other person while in the U.K. They both also have
defined and agreed roles within the company or ``List X'' facility,
meaning a failure by the company as a whole could make these
individuals the subject of a criminal prosecution under U.K. law.
Question No. 35. May section 7(4)(a) of the implementing
arrangement with the United Kingdom, and section 6(4)(a) of the
implementing arrangement with Australia, be amended or deleted without
the advice and consent of the United States Senate?
Answer. Yes. However, the administration is prepared to discuss
with the Senate procedures by which the executive branch might notify
Congress in the event of such an intended change.
Question No. 36. Section 7(4)(c) of the implementing arrangement
with the United Kingdom and section 6(4)(c) of the implementing
arrangement with Australia note that one criterion against which
potential members of the United Kingdom or Australian Community will be
judged is ``previous convictions or current indictments'' for violating
United States export laws or regulations. Why were the other conditions
required by section 38(g)(4) of the Arms Export Control Act for issuing
a license without a Presidential determination--that is, those
conditions unrelated to export control laws or regulations--not also
included as criteria for assessing inclusion in the United Kingdom or
Australian approved community?
Answer. The referenced sections of the implementing arrangements
provide sufficient discretion to the executive branch for it to refuse
inclusion of a nongovernmental entity into the respective approved
community based on the criteria identified in section 38(g)(4).
Question No. 37. Will the United States Government be able under
the treaties to request removal from the approved community of a
nongovernmental United Kingdom/Australia entity or facility for any
reason it deems to be in its ``national interest'' (pursuant to section
7(9) and section 6(9) of the implementing arrangements, respectively),
independent of the criteria in section 7(4) and 6(4)?
Answer. The referenced sections of the implementing arrangements
provide sufficient discretion to the executive branch for it to remove
a nongovernmental entity from the respective approved community based
on national interest of the U.S.
Question No. 38. Article 4(1)(d) of the treaties requires that
nongovernmental Treaty Partner employees who are in the approved
community be employees of an entity or facility that is also in the
approved community, and that they have security accreditation and a
need-to-know. Section 7(11) of the U.S.-U.K. implementing arrangement
addresses the latter requirement, but does not address the former one
or cite Article 4(1)(d). Is it the intent of the drafters that the
section 7(11) requirement be an elaboration on the Article 4(1)(d)
requirement, rather than a substitute for it?
a. Is it similarly the intent of the drafters that Treaty
Partner government personnel in the approved community,
pursuant to Article 4(1)(b), will have to be associated with a
Treaty Partner government facility that is related to the scope
of the treaty, pursuant to Article 4(1)(a)?
Answer. The requirement in section 7(11) is an elaboration of the
requirement found in Article 4(1)(d). In regard to Treaty Partner
government personnel, while it is expected that such personnel would be
assigned to organizations related to the scope of the treaty, it is
possible that an appropriately cleared government person with a
particular expertise from another agency might be brought in to work on
an operation, program or project under the scope of the treaty.
Question No. 39. Articles 4 and 5 of the treaties use the phrase
``security accreditation and a need-to-know.'' Does ``security
accreditation'' mean the same thing as ``security clearance''? If not,
please explain how the two terms differ.
Answer. For the purposes of the treaties, the two terms are
interchangeable.
Question No. 40. Article 4(1)(d) and section 7(11) of the U.S.-U.K.
implementing arrangement (section 6(11) of the U.S.-Australia
implementing arrangement) state that access to defense articles will be
granted only to those individuals with, in addition to the appropriate
security clearance, a ``need to know.''
a. Who will determine the ``need to know'' of an individual working
for a nongovernmental Treaty Partner entity or facility, given that the
Treaty Partner government will not know that such defense article has
been exported or transferred to that individual's employer?
b. Will the ``need to know'' for particular entities, facilities,
and personnel be limited to particular projects? Or will it be
permissible to transfer defense articles between projects?
Answer. a. As with current security practices, the ``need to know''
requirement will generally be met and handled by approved community
members rather than centrally managed or controlled by the Treaty
Partner.
b. In the context of the treaties, the ``need to know'' requirement
will be governed by the scope and limitations of the treaty and not a
particular operation, program, or project. Consequently, entities in
the approved community may utilize defense articles for different
operations, programs, or projects without government review or approval
as long as the operations, programs, or projects fall within the scope
of the treaties and meet treaty requirements.
Question No. 41. How will the U.S. Government vet all eligible
foreign end-users for inclusion in the U.K. and Australian Communities?
Which U.S. agencies will participate in such vetting?
Answer. The vetting of approved community members is detailed in
the implementing arrangements for each country. In the case of the
United Kingdom, entities must first be on ``List X.'' In the case of
Australia, procedures will follow those for the Australian Defence
Industrial Security Program (DISP) and additional criteria determined
by the Australia Department of Defence (see response to Question No.
32). The United Kingdom and Australia will review and vet requests by
entities seeking membership in their respective community, and the
United States and the Treaty Partner will mutually determine which
entities are allowed to join the approved community. In making its
determination, the Department of State will evaluate each
nongovernmental entity proposed for the approved community on an
individual basis, and will consider the Directorate of Defense Trade
Controls Watchlist and any law enforcement information on the entity,
as well as any input from the Intelligence Community and the Department
of Defense.
Question No. 42. Would access to defense articles exported pursuant
to the treaties be limited to nationals of the United States and the
relevant Treaty Partner? Or is it reasonable to expect that some third-
country nationals will also have such access, by virtue of having
Treaty Partner security clearances and a need to know?
Answer. A limited number of third country nationals may have access
to defense articles exported pursuant to the treaties. Section 6(14) of
the implementing arrangement with Australia provides that no nationals
of third countries who are not also Australian citizens will be
permitted access to defense articles without the prior authorization of
both the Government of Australia and the United States Government,
unless both governments agree to a different procedure and that
procedure is detailed in the Management Plan. Section 7(11) of the
implementing arrangement with the United Kingdom provides that serving
members of Her Majesty's Armed Forces may have access to defense
articles exported under the treaty, and some of those individuals may
be third country nationals, such as the Nepalese Gurkhas. Section 7(12)
of the implementing arrangement with the United Kingdom provides that
access may not be granted to individuals with close ties to countries
or entities of concern to either the U.S. or the United Kingdom unless
both governments agree.
Question No. 43. Will the U.K. and Australian Communities include
any distributors of parts and components, or only end-users of parts
and components?
Answer. Neither the treaties nor the implementing arrangements
preclude distributors from being members of the approved community.
However, it is highly unlikely that this would happen as such
distributors would have to be cleared to handle classified information
or material by the Treaty Partner.
Question No. 44. Article 5(2) of each treaty states the United
States approved community shall consist of nongovernmental entities
``registered with the United States Government and eligible to export
defense articles under United States law and regulation.''
a. On what basis is initial registration ever denied?
b. The International Traffic in Arms Regulations, at 22 CFR
122.1(c), notes that ``Registration does not confer any export rights
or privileges.'' Under current regulation and practice, is eligibility
to export established at the time of registration, or only when the
entity applies for its first license to export? If the latter, what
measures will be taken to establish a registered nongovernmental
entity's eligibility to export defense articles and, as a result, its
membership in the United States approved community, if that entity has
not yet applied for a license to export?
Answer. a. Neither initial nor renewal applications to register are
denied by the Department. The Arms Export Control Act requires that
companies in the defense arena (as defined by specific criteria) must
register with the Department and maintain this registration and does
not include a provision to deny a registration even for serious
criminal offenses. Even companies that have been debarred are still
required to maintain their registration as long as their defense
related activities meet the requirements for registration. In rare
cases, the Department will return a registration application based on
its analysis that the entity is not required to register under the
regulations or its activities are more appropriately and directly
regulated through another company that is or should be registered with
the Department.
b. Eligibility is a key element of the Arms Export Control Act
(AECA) and the International Traffic in Arms Regulations (ITAR).
Registration is the first step but an exporter must also be eligible as
defined in the ITAR. As provided in Article 5(2) of each treaty,
exporters under the treaties must meet the same requirements currently
followed for existing ITAR exemptions--they must be registered and
eligible.
Question No. 45. Will a United States nongovernmental firm,
individual or entity wishing to join the United States Community under
the treaties have to meet the eligibility requirements set forth in 22
CFR 120.1(c) regarding eligibility to export? If not, how and why would
the requirements differ?
a. What information will the firm, individual, or entity have to
provide to the Department of State?
b. What documentation would the firm, individual, or entity need to
provide the State Department's Directorate of Defense Trade Controls in
the Bureau of Political-Military Affairs (PM/DDTC) prior to making
exports under the treaties?
c. What procedure will be adopted to identify the applicant, the
freight forwarder, any intermediate consignees and the end-users with
respect to a proposed export, to verify the accuracy of information
provided by the exporter or freight forwarder, and to confirm the
legitimacy of the transaction under the treaties?
d. What information will be shared with, or sought from, U.S. law
enforcement agencies?
Answer. To be in the U.S. approved community, a United States
nongovernmental firm, individual, or entity must be both registered
with the Department of State and satisfy the eligibility requirements
in 22 CFR 120.1(c).
a. Firms, individuals, and entities would have to provide all
information currently required under the registration requirements of
the ITAR.
b. No additional requirements are envisioned for exports other than
for those exports which the administration intends to provide advance
notification to Congress.
c. The procedures used will be the same as those used under the
ITAR for exports under an exemption.
d. As is current practice and in accordance with the requirements
of the AECA, all registration applications will be vetted with law
enforcement and run against the Directorate of Defense Trade Controls
Watchlist.
Question No. 46. Section 38(g)(4) of the Arms Export Control Act
requires a case-by-case Presidential determination, predicated on a
Presidential finding, before issuing an export license if any Party to
the export meets certain conditions. Article 5(2) of the treaties
requires that nongovernmental entities be ``eligible to export defense
articles under United States law and regulation'' to be a member of the
United States approved community.
a. Can a nongovernmental United States entity that meets the
condition of section 38(g)(4) of the Arms Export Control Act be
considered ``eligible to export defense articles'' without the
Presidential determination and finding required by the Arms Export
Control Act?
b. Will case-by-case reviews occur before such an entity is
included in the United States approved community?
c. How will entities that employ individuals who meet the
conditions of section 38(g)(4) be dealt with?
d. How will nongovernmental U.S. entities (and their previous
exports) be dealt with if, after having been members of the United
States Community, such entities (or employees thereof) meet the
conditions of section 38(g)(4)?
Answer. Article 5(2) of each treaty provides that, to be in the
approved community in the United States (``U.S. Community''), a United
States nongovernmental firm, individual, or entity must be both
registered with the Department of State and satisfy the eligibility
requirements in 22 CFR 120.1(c).
a. Nongovernmental U.S. entities that are registered and eligible
(and therefore in the U.S. Community) will be removed from the approved
community if the Department of State is prohibited from issuing them
licenses pursuant to section 38(g)(4).
b. Yes; the case-by-case review procedures and regulatory practices
currently followed by the Department of State in regard to questions of
eligibility, granting exceptions for specific transactions and
reinstating an entity's eligibility in accordance with 38(g)(4) will
continue to apply. Nongovernmental U.S. entities that are registered
and eligible (and therefore in the U.S. Community) will be removed from
the approved community if they become ineligible.
c. Individuals that meet the conditions of section 38(g)(4) are
generally ineligible and would therefore not be permitted to
participate in an export under the treaty. The eligibility of entities
that employ such individuals will be reviewed on a case-by-case basis.
d. U.S. entities that become ineligible (and their previous
exports) will be subject to case-by-case review procedures and
regulatory practices currently followed by the Department of State in
regard to questions of eligibility, granting exceptions for specific
transactions, and the treatment of prior exports.
Question No. 47. Why do the treaties and implementing arrangements
make any U.S. registered company that is otherwise eligible to export
defense articles also eligible to make unlicensed exports to the United
Kingdom and Australia, instead of limiting eligibility to companies
with a track record of trustworthiness in previously monitored
transactions or in handling sensitive information?
a. How will the U.S. Government prevent front companies from
procuring defense articles, declaring them as license-free exports to
the United Kingdom or Australia, and diverting them to a third country
or other unauthorized end-user?
Answer. In drafting the treaties and implementing arrangements, the
administration sought to have a significant impact on how defense trade
is conducted with these two key allies. To do this, it was decided to
include all U.S. registered exporters to provide the benefits to all
and to establish a foundation for a new paradigm for defense
cooperation. This decision not to winnow this list down to a subgroup
of registrants also was based in recognition that U.S. registrants
already undergo review and vetting against the Department's Watchlist
and with law enforcement.
a. It is the vetting process which we believe minimizes the risk of
front companies registering with the Department of State for the
purposes of acquiring defense articles and exporting them as treaty-
related exports and then diverting them to unauthorized destinations.
Unauthorized exporters will remain subject to the criminal and civil
penalties of the AECA.
Question No. 48. Article 5 of each treaty requires, ``as
appropriate, security accreditation and a need-to-know'' of employees
of both governmental and nongovernmental entities in the United States
Community.
a. Will a person's past conduct, under the treaty or otherwise,
affect security accreditation determinations for the employees of
nongovernmental entities even if the nongovernmental entities are
eligible to export defense articles under United States law and
regulation?
b. Will security accreditation be required of employees in the
United States Community who do not handle classified exports or
transfers? Will any U.S. persons be required to obtain ``security
accreditation and a need to know'' that they do not already have?
c. If so, who will determine the criteria on the basis of which
accreditation and need-to-know decisions will be made, who will make
those decisions, and what process will there be to appeal a negative
decision?
Answer. a. Yes; an employee's past conduct, under the treaties or
otherwise, may affect the individual's eligibility for security
accreditation but it will not have an effect on the nongovernmental
entities' security accreditation unless the employee is also identified
as key management personnel. If the employee is identified as key
personnel, the nongovernmental entity may elect to remove the employee
from the key position pending the result of an investigation or final
disposition of the security issue.
b. No; security accreditation will not be required of employees in
the United States Community who do not handle classified exports or
transfers. For the U.K. Treaty, only those U.S. persons having access
to exports or transfers classified at the CONFIDENTIAL level or higher
will be required to obtain ``security accreditation and a need-to-
know.'' Under the Australian Treaty security accreditations for U.S.
persons and nongovernmental entities will be required only when access
to Australian RESTRICTED and higher information is involved.
c. The basis on which accreditation and need-to-know decisions are
made are based on E.O. 12958, ``Classified National Security
Information;'' E.O. 12968, ``Access to Classified Information;'' and
E.O. 12829, ``National Industrial Security Program.'' Department or
agency heads are responsible for determining access based on a
favorable adjudication of an appropriate investigation of the employee
and a determination of a need-to-know based on a lawful government
purpose. Within the Department of Defense, the Defense Office of
Hearings and Appeals handles hearings and appeals on negative security
accreditation decisions. E.O. 12968 sets forth similar hearings and
appeals proceedings for all other departments and agencies in the
executive branch.
Question No. 49. How will an entity know that it is a member of the
United States Community? Will there be a publicly available list of
members of the United States Community?
Answer. To be in the U.S. Community an entity must be registered
with the Department and eligible to export as defined in the
regulations promulgated pursuant to the treaties. Such registrants will
know they are in the approved community by virtue of this registration
and the regulations. At this time, there is no plan to publish a list
of entities registered with Department and in the approved community.
Such information is considered proprietary and there are practical
reasons (e.g., registration is at a corporate not the business unit
level) why publishing such a list would not be workable.
Question No. 50. How will the U.S. Government ensure that the
freight forwarders and intermediate consignees involved in license-free
exports or transfers under the treaties are legitimate and reliable
entities?
a. Will freight forwarders and intermediate consignees have to be
members of the approved community? If so, what is the legal authority
under which the executive branch will establish this or any other
requirement relating to such persons, if section 38(g) of the Arms
Export Control Act is not applicable to exports or transfers under the
treaties and given that neither the treaties nor the implementing
arrangements mention freight forwarders or intermediate consignees?
b. Will it suffice to require that freight forwarders and
consignees be members of the approved community? Article 5(2) requires
that United States Community members be ``registered with the United
States Government and eligible to export defense articles under United
States law and regulation,'' but it is not clear to the committee
whether an entity engaged only in license-free exports or transfers
would be investigated in the manner that a registered exporter is
investigated when it first obtains an export license.
c. What are the possible advantages and disadvantages of requiring
that freight forwarders and consignees for exports and transfers be
certified customs brokers?
d. What are the possible advantages and disadvantages of requiring
that freight forwarders and consignees for exports and transfers
register with the Department of State? Does the Directorate of Defense
Trade Controls (DDTC) have sufficient resources to run a registration
and investigation program of this sort?
Answer. In the U.S., some freight forwarders are also registered as
exporters, subjecting them to the registration and eligibility
requirements established for inclusion in the approved community. For
those who are not, we are exploring an option to allow the use of other
freight forwarders/intermediate consignees under the treaty to those
who are in good standing with the Department of Homeland Security's
Bureau of Customs and Border Protection (CBP) as licensed customs
brokers. The advantage of this approach is that licensed customs
brokers are subject to background investigation and must pass a
comprehensive examination of U.S. customs regulations administered by
CBP. Another possible option would be to require that freight
forwarders/intermediate consignees handling exports under the treaty
register with DDTC. A registry of freight forwarders/intermediate
consignees would be different from current ITAR registration
requirements for manufacturers, exporters, and brokers, but would be
subject to the same vetting procedures used for registration. The
advantage of this approach is that it includes screening against the
Department's Watchlist and vetting by law enforcement. While this would
represent additional workload, we believe it could be managed with
existing resources or resources made available by the decline in
licensing workload associated with the treaties. The State Department,
in conjunction with CBP, is exploring the options and will implement in
the regulations promulgated pursuant to the treaties.
The legal basis for placing requirements on the freight forwarders
and intermediate consignees comes from the treaties and implementing
arrangements.
Question No. 51. Please summarize the reporting and approval
requirements that will pertain for nongovernmental entities in the
United States Community regarding activities under the treaties, and
compare them to the reporting and approval requirements that pertain
under existing law and regulation.
Answer. The reporting and approval requirements are the same as
those now required of exporters who currently claim an exemption. Under
the treaty, there would be no case-by-case approval of exports. The
treaties replace the transactional approach to export licensing to one
driven by approved communities, limited purposes, and delineated
technologies. Recordkeeping requirements under the treaties will be
robust and largely mirror existing recordkeeping requirements
applicable to defense trade that are specified in the ITAR. Such
records would include purchase orders, shipping documents and
electronic shippers export documents filed in the Automated Export
System. Similar to existing requirements, these records must be made
available to the U.S. Government upon request.
Question No. 52. Executive branch officials have stated that in the
last 2 years, the State Department has processed over 13,000 export
licenses for the United Kingdom, with only 16 denials.
a. For how many of those 13,000 license applications was the
President required to notify Congress pursuant to section 36 of the
Arms Export Control Act (22 U.S.C. 2776(c))?
b. How many licenses did the United States approve for Australia in
the same timeframe, and how many of those were denied?
c. Would any of the proposed exports to the United Kingdom or
Australia that were denied licenses have been permitted if the treaties
had been in effect? If so, please indicate the defense articles and
end-users in question. If not, please cite the specific safeguards in
the treaties that would have prevented such exports from occurring.
d. How many of the license applications for the United Kingdom and
Australia were returned without action (RWA) by the State Department's
Directorate of Defense Trade Controls in the past 5 years (2003-2007)?
Please provide separate data with regard to each country.
e. How many of the license applications for the United Kingdom and
Australia were approved with provisos? Please estimate the proportion
of the applications approved with provisos that would have been
eligible for license-free export if the treaties had been in effect,
and indicate what sorts of provisos are thus likely not to be imposed
under the treaties.
f. What is the current median processing time for license
applications for the United Kingdom and Australia?
Answer. a. There were 24 Congressional Notifications during that
period, none were subject to a joint resolution recommending denial.
b. Over the past 2 years, 4,087 licenses were approved for exports
to Australia, 12 cases were denied.
c. Exports pursuant to the treaties will be in accordance with
procedures that clearly exclude technologies of concern, limit the
potential end-users to those that have been vetted, and limit the
potential end-uses. In the absence of the specific lists that will
encompass the approved communities, the approved operations, programs,
and projects, or the excluded technologies, it is not possible to
determine the effect in this limited number of cases.
d. For the period in question, 5,527 cases destined to the United
Kingdom were returned without action, 1,976 destined to Australia were
similarly treated.
e. During the last year, 1,678 licenses were approved with provisos
for Australia, 3,861 licenses were approved with provisos for the
United Kingdom. As addressed in response to Question ``c'' above,
exports pursuant to the treaties will be in accordance with procedures
that clearly exclude technologies of concern, limit the potential end-
users to those that have been vetted, and limit the potential end-uses.
In the absence of the specific lists that will encompass the approved
communities, the approved operations, programs, and projects, or the
excluded technologies it is not possible to determine the effect in
these cases.
f. Seven days and eight days respectively.
Question No. 53. Under the terms of the treaties, what legal
authority is there for any Party to use freight forwarders or
intermediate consignees that are not members of the approved community
to handle exports or transfers?
a. May the initial export of a defense article be handled by an
entity not in the approved community, because it has not yet been
provided to a Treaty Partner? If so, will the U.S. Government still
have the legal authority to restrict the choice of freight forwarders
or intermediate consignees?
b. Once a defense item has been exported, must subsequent transfers
be handled only by approved community members, because any transfer
``from the approved community'' must be treated as a re-transfer or a
re-export pursuant to Article 1?
Answer. The requirements applicable to freight forwarders and
intermediate consignees will be specified in the regulations
promulgated pursuant to the treaties. These regulations will detail the
ability of freight forwarders and intermediate consignees to
participate in treaty exports. The legal basis for placing requirements
on the freight forwarders and intermediate consignees comes from the
treaties and implementing arrangements.
Question No. 54. Article 6 and section 10 of the implementing
arrangements set standards for the marking of defense articles. How
will these standards apply in the United States and in each Treaty
Partner regarding oral communications (whether face-to-face or
electronic) and electronic communications of text other than attached
documents?
Answer. The requirements for marking are discussed in the
implementing arrangements and will be detailed as well in the
regulations to be published in accordance with the treaties. These
requirements are designed to ensure that all treaty exports regardless
of their form--tangible, intangible, oral, electronic, physical, etc.--
will be clearly marked or identified and properly controlled. The U.S.
and its Treaty Partners will employ current security policies and
procedures to implement Treaty Implementing Arrangement Section 10,
paragraph 10(c)(ii) requirements regarding marking and identification
of such communications. Such marking and identification practices are
already well understood and practiced by those with clearances to
handle classified information. Specifically, technical data (including
data packages, technical papers, manuals, presentations,
specifications, guides and reports), regardless of media or means of
transmission (physical, oral or electronic) will be required to be
individually labeled or, where such labeling is impracticable, be
accompanied by documentation (such as contracts, invoices, shipping
bills, or bills of lading) or a verbal notification clearly associating
the technical data with the appropriate markings.
The Department of Defense is drafting guidelines and procedures to
cover when and how exports and transfers are to be marked in a change
to the National Industrial Security Operating Manual (NISPOM) and DOD
5200.1-R, ``Information Security Program.'' In addition, special
guidance will be issued to cleared U.S. defense industry entities on
marking and other treaty compliance provisions. Under current security
and disclosure regimes for oral and electronic communications, the
identification of the classification and controls will be made at the
beginning and end of such communications.
Question No. 55. Given that the term ``Transfer'' is defined as
``the movement of previously exported defense articles within the
approved community'' (Article 1(9) of the U.K. treaty and Article 1(1)
of the Australia treaty), can a transfer be effected under the treaty
if it uses a freight forwarder or an intermediate consignee that is not
in the approved community?
Answer. The requirements applicable to freight forwarders and
intermediate consignees will be specified in the regulations issued in
accordance with the treaties. These regulations will detail the ability
of freight forwarders and intermediate consignees to participate in
treaty exports. Initial exports and subsequent transfers under the
treaties will have to comply with these requirements once established.
Question No. 56. Section 5(2)(a) of the implementing arrangements
requires the Treaty Partner to determine that an initial transfer of
defense articles acquired under the FMS Program ``falls within the
scope of Article 3(1) and that, at the time of the transfer, such
defense articles are not exempt from the scope of the Treaty.'' Given
that the Treaty Partner must make this determination, why is it not
required to inform either the U.S. Government or the producer of the
defense articles in question of the transfer?
Answer. This is in accordance with procedures for other items
transferred within the approved community pursuant to the treaty. The
U.S. does not need a notification of each movement, but requires
records to be kept and made available for review.
Question No. 57. Article 2 states that each treaty ``provides a
comprehensive framework for Exports and Transfers, without a license or
other written authorization, of Defense Articles . . . to the extent
that such Exports and Transfers are in support of the activities
identified in Article 3(1)'' [emphasis added]. Article 7 permits the
transfer within each Treaty Partner Community of defense articles
exported pursuant to the treaty, but makes no reference to a
requirement that transfers be in support of activities identified in
Article 3(1). Do all Parties to the treaties agree that transfers must
be in support of the activities identified in Article 3(1)?
Answer. Yes.
Question No. 58. What controls will apply to defense articles
exported pursuant to the treaty that are then transferred to the United
States by members of the U.K. and Australian Communities who come to
the United States to continue work on projects or programs for which
the exports were made under the treaties?
Answer. Transfers and exports under the treaty may occur within the
United States. In the situation described, involving members of the
approved community, the treaty would apply provided the operations,
programs, or projects remain within the scope of the treaty and the
defense articles involved are not exempt from the scope of the treaty.
Question No. 59. What will happen to items that are exported under
the treaties (or exported under the FMS program and then treated as an
exported item), but subsequently are removed from the United States
Munitions List and become subject to the controls of the Export
Administration Regulations and the Commerce Control List (CCL)? Will
there be any requirement for U.S. exporters to notify the Department of
Commerce or seek approval for past license-free exports and transfers?
a. How will any such changes in statutory and regulatory controls
be implemented in the United Kingdom and Australia to ensure that such
items receive adequate scrutiny and appropriate control, if such
control is required under the EAR and the CCL?
b. How will the executive branch ensure that foreign nationals who
may not be aware of the change in U.S. regulations regarding such items
will understand the controls applied to such items when they change
jurisdiction from the ITAR to the EAR?
Answer. The Export Administration Regulations and the Commerce
Control List (CCL) do not require notification of transfers once an
export reaches its destination country. The designation of the item
under the treaty will serve to ensure that USG approval will be
required when re-transfer outside of the approved community or re-
export from the Treaty Partner country is required, stricter
requirements than required by the Department of Commerce. The
Department of State can notify the recipient of the change of
jurisdiction at that time.
Question No. 60. What legal or regulatory authorities and what
programs already exist, under which license-free exports to the United
Kingdom and Australia (including project authorizations) have occurred
since 2003? Will such defense articles be eligible to be treated as
though exported under the treaty? If so, under what authority in the
treaty will this be permitted?
a. What procedures will apply if defense articles exported under
other cooperative programs are to be transitioned to treaty status? In
particular, who will decide these questions and what consultation or
notification will be required?
b. Will there be any reporting requirements or limits on the number
or size of shipments, similar to those in parts 123.16, 125.4, and
126.14 of the ITAR?
Answer. License-free exports have occurred under various exemptions
provided for in the ITAR, such as exemptions of general applicability
ITAR 125.4. (Project authorizations are licenses; exports under their
terms are not license free). Such exemptions will continue to be
available to exporters if they chose to use them. Articles transferred
pursuant to such exemptions are eligible to be treated as though
exported under the treaties provided the members of the approved
communities follow the procedures established in section 7 of the
implementing arrangement with Australia or section 8 of the
implementing arrangement with the U.K.
a. For defense articles previously exported in support of
cooperative programs, the Transition provisions in section 7 of
the implementing arrangement with Australia and section 8 of
the implementing arrangement with the U.K. will apply. The
draft Defense Trade Cooperation Treaty Regulations contain
information on the Transition notification process.
b. There are no limits on the number or size of shipments.
The administration intends to provide advance notification of
exports that would meet or exceed the Congressional
Notification thresholds of the AECA Sec. 36 (c) and (d).
Question No. 61. Article 8(1) of the treaty with Australia provides
that all exports ``to the United States Community under this treaty
shall not require export licenses or authorizations'' except under
blanket authorizations. Article 8 of the treaty with the United Kingdom
provides only that such exports ``shall not require additional export
licenses or other authorizations'' [emphasis added], and the committee
understands that some British arms exports to the United States do
currently require case-by-case licenses. Why did the United States
agree not to change current British procedures in this regard? Will
Australia have to change any of its current procedures?
a. Given that the United Kingdom, like the United States, will have
the right under Article 3(2) to designate certain defense articles as
outside the scope of the treaty, why will it need also to maintain its
current case-by-case license requirements?
Answer. Under the United Kingdom's export licensing system, open
general licenses (OGELs) are considered export licenses, though they
are not ``case-by-case licenses.'' As the U.K. intends to utilize OGELs
to implement the treaty, the term ``additional'' in this context means
licenses other than OGELs (or equivalent successor authorizations
should the U.K. revise its system) that do not require case-by-case
review and approval by the British Government. The Government of
Australia is revising it laws and procedures to update its export
controls and to implement the treaty. The treaty does not require
exporters to use its provisions; in accordance with Article 3(4)
exporters may opt to use traditional export licenses. Australia plans
to amend legislation in order to implement a system of ``license-free''
movement for defense articles pursuant to the treaty. This will involve
amending the Customs (Prohibited Export) Regulations 1958 and Customs
(Prohibited Import) Regulations 1956 to allow members of the approved
community to import and export goods pursuant to the treaty without
having to seek the individual licenses that would normally be required
under these regulations. Members of the Australian Community will be
issued with an approval or authorization that will officially identify
them as members and will allow them to move defense articles pursuant
to the treaty within the approved community without having to seek
individual licenses.
Question No. 62. Article 9 generally requires Treaty Partner
approval of all re-transfers and re-exports, with ``supporting
documentation that includes United States Government approval of the
proposed re-transfer or re-export.'' What procedures will be adopted to
assure that U.S. Government approval has been obtained?
a. Must these approvals be on a case-by-case basis, or do the
treaties permit the use of blanket authorizations by the Treaty
Partners? If the latter is the case, how will the United Kingdom modify
its blanket authorization system to require the documentation of U.S.
Government approval?
b. What form(s) will the ``supporting documentation'' take?
c. Can the ``supporting documentation'' be oral, or must it be
written?
d. Will an e-mail suffice, or will there have to be a written
document supporting that e-mail (e.g., in an attachment)?
Answer. The U.K. will make changes to its existing procedures for
controlling the release of classified material (the F680 process). For
transfers under the treaty, a check will be made to ensure that USG
approval for re-exports or re-transfers has been granted. As all treaty
material will be classified, those wishing to re-export or re-transfer
must seek approval from the U.K. MOD. If they do not they will have
breached the Official Secrets Act by releasing classified material
without authorization. The MOD will require evidence that the USG has
approved such a release before granting its own approval. The U.K.'s
export control processes will be changed to make it a requirement of
treaty-related export licenses that an MOD security release
authorization has been granted.
a. The re-export and re-transfer processes are there to deal with
exceptional instances when treaty material needs to be moved outside of
the approved community--companies should not use the treaty if they
intend to re-export or re-transfer at a later date. Approval of re-
exports and re-transfers will be on a case-by-case basis, to allow the
appropriate checks to be made that the proposed recipient is suitable
to receive the treaty material. The U.K.'s Open General Export License
(OGEL) will only permit exports to companies within the approved
community. Re-exports and re-transfers will therefore not be covered by
the OGEL.
b-d. The administration has determined that the supporting
documentation will be written, most likely in the form of a license or
other existing authorization issued from the Department of State. Once
finalized, the U.K. MOD will only accept authorization evidence in this
form. E-mail and oral documentation will not suffice.
Question No. 63. Under Secretary Rood, in his testimony before the
committee on May 21, 2008, told the committee that it was the opinion
of the State Department's Office of the Legal Adviser that ``the Treaty
will change the legal reporting requirements under the Arms Export
Control Act,'' making it discretionary for the executive branch to
provide notification to Congress prior to providing United States
Government approval for a re-transfer or re-export pursuant to Article
9(1) of both treaties.
a. Other than the treaties themselves, what provision of United
States law authorizes the President to consent (or withhold such
consent) to the re-transfer or the re-export of defense articles
exported pursuant to the treaties?
b. If notification to Congress of proposed re-transfers and re-
exports will be discretionary, does the executive branch believe that
the provisions of section 3(d) of the Arms Export Control Act regarding
procedures for consideration of a resolution of disapproval will still
apply to these cases? Or will Congress have to change the law if it
wants to preserve its role in the review of arms transfers to third
parties?
c. What other provisions of U.S. law on the export or transfer of
defense articles would no longer apply if such defense articles are not
exported pursuant to section 38 of the Arms Export Control Act, such as
under an agreement meeting the conditions of section 38(j)? For
example, would sections 3(a), 3(c)(2), 3(f), 3(g), 4, 5, 6, 23, 24, 39,
39A, 40, 73 and 81 of the Arms Export Control Act still apply to
exports or transfers or, as appropriate, to the approval of re-exports
or re-transfers?
d. What is the effect of the treaties on the application of laws
governing the transfer of nuclear, chemical or biological materials,
equipment or technology? If such exports were not to be exempted from
the scope of the treaties pursuant to Article 3(2) and section 4 of the
implementing arrangements, or were later to be removed from the list of
defense articles exempt from the scope of the treaty, could items under
Categories XIV and XVI of the United States Munitions List be exported
under the treaties without an export license or other case-by-case
authorization?
e. What is the effect in United States law of the statement in
Article 3(3) of both treaties that, ``Once delivered pursuant to a
[Foreign Military Sales program] Letter of Offer and Acceptance, such
Defense Articles may be treated as if they were exported under this
treaty in accordance with procedures mutually determined in the
Implementing Arrangements''? Does that statement affect in any way the
requirements of section 3(d) of the Arms Export Control Act?
Answer. I am advised by the office of the State Department's Legal
Adviser of the following:
a. As a re-transfer or re-export pursuant to the treaties is
outside of the scope of the treaties, re-transfer or re-export
authorization would be provided in accordance with section 38 of the
Arms Export Control Act (AECA).
b. Section 3(d) of the AECA does not apply as a matter of law
because the original export was not pursuant to section 38 of the AECA.
c. As stated in the answer to Question No. 8, certain statutory
provisions, though not explicitly overridden by the treaties, are
rendered irrelevant for exports and transfers that fall within the
scope of the treaties because there will be no license application or
other approval pursuant to section 38 of the AECA to trigger the
provisions of the statute. With respect to the particular provisions
referenced in the question:
The requirement in section 3(a) to obtain authorization
prior to any re-transfer to a person not an officer, employee,
or agent of the particular government or to change the end-use
of a defense article or defense service would not apply to a
defense article or defense service where the transfer or the
change in end-use is pursuant to the treaty;
The requirement in section 3(a)(2) to report to Congress
where a substantial violation of any agreement entered into
pursuant to the Arms Export Control Act, or any predecessor
act, may have occurred will continue to apply with respect to
defense articles and defense services provided pursuant to a
letter of offer and acceptance pursuant to the Foreign Military
Sales program;
The restriction in section 3(f) on the making of sales and
leases will continue to apply;
The requirement in section 3(g) relating to agreements
applicable to sales or leases would continue to apply to
letters of offer and acceptance pursuant to the Foreign
Military Sales program;
Defense articles and defense services will still only be
sold or leased for the purposes identified in section 4;
The requirements of section 5 will continue to require a
standard clause in U.S. Government contracts entered into for
the performance of any function under the Arms Export Control
Act. With respect to the reporting requirement contained in
section 5(c), while such requirement will continue to apply to
Foreign Military Sales, it will not apply to exports pursuant
to either treaty as such exports apply, although an export
pursuant to the treaties will not be a ``licensed transaction
under this Act'';
The requirements of section 6 will continue to apply to the
issuance of letters of offer and the extension of credits or
guarantees. Such requirements will not apply to exports under
either treaty as such exports may occur without the issuance of
an export license;
Section 23 will remain a potential authority for the
provision of defense articles and defense services to Australia
and the United Kingdom;
Guaranties may be provided pursuant to section 24;
Section 39 will continue to apply to sales made pursuant to
the Foreign Military Sales program. However, it will not apply
to exports under either treaty as such exports will not be
``licensed or approved under Section 38'';
Section 39A will continue to apply to sales made pursuant to
the Foreign Military Sales program. However, it will not apply
to exports under either treaty as such exports will not be
``licensed under this Act'';
Section 40 will continue to apply;
Section 73 will continue to apply; and
Section 81 will continue to apply.
d. The list of defense articles exempted from treaty coverage
includes ``Defense Articles listed in the Missile Technology Control
Regime (MTCR) Annex, the Chemical Weapons Convention (CWC) Annex on
Chemicals, the Convention on Biological and Toxin Weapons, and the
Australia Group (AG) Common Control Lists (CCL).'' The list of exempted
defense articles also includes ``USML Category XVI Defense Articles
specific to design and testing of nuclear weapons'' and defense
articles specific to naval nuclear propulsion. DOD is unlikely to
recommend, or agree to, a removal of either of these exemptions. Items
in Categories XIV and XVI of the United States Munitions List could
only be exported under the treaties without a license if they did not
include one of the listed exempted technologies and if they met all
other requirements of the treaties (e.g. approved community, approved
program or project, etc.).
e. If the Treaty Partner government transfers in accordance with
the treaties a defense article or defense service originally sold
pursuant to the FMS program, it is not required to request or obtain
USG authorization. Therefore, the notification requirements contained
in section 3(d) of the AECA would not apply.
Question No. 64. Please provide an authoritative list of the
circumstances in which notice to Congress that is currently required by
law will no longer be legally required under the treaties.
a. Under which of these circumstances does the executive branch
intend to notify Congress as a matter of policy, even though it will no
longer be required by law to do so? In those cases, how will
notification differ, in character or in timing, from that which is
currently provided?
b. The committee has been informed that the executive branch
intends to exempt from treaty coverage defense articles, regardless of
classification (including those modified or improved), when used for
marketing purposes, that have not previously been licensed for export
by the U.S. Department of State, Directorate of Defense Trade Controls.
Will this exemption result in continued notice to Congress of the first
export of a given defense article even if such export is a direct
commercial sale, or will it not result in any continued notice to
Congress because the exemption pertains only to marketing licenses (as
opposed to permanent exports of equipment)?
Answer. I am advised by the office of the State Department's Legal
Adviser that:
Exports from the United States pursuant to either treaty will not
require, as a matter of law, notification pursuant to section 36 (c) or
(d) of the Arms Export Control Act (AECA). Transfers within the
approved community will not require notification pursuant to section
3(d) of the AECA.
a. The administration plans a notification process to provide
Congress information on exports that meet or exceed the notification
thresholds of AECA section 36 (c) and (d). The administration intends
to provide such information 15 days prior to export and this
notification will contain the same information as required under the
statute. The administration intends to notify Congress of any request
to re-transfer or re-export to a person or entity outside of the
particular approved community a defense article or defense service
where the value of such transaction meets or exceeds the thresholds
identified in section 3(d) of the AECA.
b. Exports of such defense articles will be governed by section 38
of the AECA and therefore the requirements of section 36 would apply.
Question No. 65. Article 9(2) states that ``Defense Articles that
have approval to be Re-transferred or Re-exported shall be governed by
the terms and conditions of such approvals of the United States
Government.'' As a matter of law, will those terms and conditions have
to comply with requirements set forth in the Arms Export Control Act
(e.g., in section 3(a))?
a. As a matter of policy, will the executive branch ensure that
those terms and conditions comply with all requirements in the Arms
Export Control Act regarding third-Party transfers?
Answer. Re-transfers and re-exports will as a matter of policy and
law include obligations required by the AECA and the International
Traffic in Arms Regulations.
Question No. 66. Why is Article 10 (contained in each treaty)
necessary?
a. If a member of the approved community wants to transfer a
defense article to a firm other than the original producer of the
defense article, is either Party to the treaty under an obligation to
determine whether the original producer has approved or will be
compensated for the transfer?
b. If a Party to the treaty knows that a member of the approved
community intends to transfer a defense article to a firm other than
the original producer of the defense article without permission from
the original producer, is the Party under any obligation to stop the
transfer?
c. If a transfer that infringes upon asserted intellectual property
rights of a U.S. firm is authorized by a Treaty Partner (e.g., because
it is a transfer of a defense article originally exported under the
Foreign Military Sales program), what legal recourse will that firm
have?
d. If defense articles exported under the treaty have been
incorporated into other end items or have been modified or changed by a
member of the approved community, would the United States or the
original producer still have an ability to assert controls over such
items pursuant to the treaties or their implementing arrangements?
e. What does ``pursuant to this Treaty'' mean at the end of Article
10(1)?
f. Could a situation arise in which the intellectual property
rights of persons or entities within the approved community would
require a loosening of the security standards otherwise applicable
under the treaties? If so, please explain why that might occur and how
it would be handled.
Answer. The treaty only addresses export licensing; intellectual
property issues are outside of the scope of the treaty.
a. That issue is outside of the scope of the treaty.
b. This issue is outside of the scope of the treaty.
c. The treaty only deals with export licensing; the firm will have
the same legal recourse currently available.
d. The United States continues to have export licensing
jurisdiction over such items. With regard to intellectual property or
other rights, they are outside of the scope of the treaty.
e. It modifies the phrase ``Approved Community,'' and makes clear
that inclusion in the approved community does not grant or diminish
intellectual property rights.
f. The treaty removes the requirement for an export license. It
does not deal with intellectual property rights. If, because of
intellectual property restrictions, an item does not qualify for export
under the treaty, existing export licensing procedures will be used.
Question No. 67. Article 11(3) of each treaty uses the term
``safeguarded,'' a term not found in Article 11(1). What is the reason
for the difference?
Answer. Although the term ``safeguarded'' is not found in Article
11(1), both sections 11(1) and 11(3) of both treaties refer to the GSAs
which provide for the safeguarding and protection of classified
information. The term ``safeguarded'' was added to Article 11(3) to
place additional emphasis on the need to protect defense articles at
higher levels of classification.
Question No. 68. The Department has stated to the committee that
items exported under the treaty with the United Kingdom would be
subject to the Official Secrets Act and that U.K. Crown Servants and
Government Contractors within the approved community will be
responsible for ensuring that defense articles are suitably protected.
The terms ``Crown Servants'' and ``Government Contractors'' are defined
under section 12 of the Official Secrets Act 1989.
a. Will all nongovernmental members of the United Kingdom Community
and their employees meet the definition of ``Government Contractors?''
Or could there be nongovernmental members of the U.K. Community that
were not ``Government Contractors,'' perhaps because all their work
involved the United States Government as the end-user?
b. What offense under the Official Secrets Act 1989 would be
committed by an employee of a nongovernmental approved community entity
who inappropriately re-transferred defense articles, or provided them
to an individual without the need to access defense articles (although
they were appropriately marked pursuant to the treaty and its
implementing arrangements)?
c. What offense would be committed by such a person if the activity
occurred outside the United Kingdom, either before the defense articles
were appropriately marked (e.g., at an intermediate stop in their
initial export) or, with regard to technical data, during an overseas
visit, or if Her Majesty's Government could not show that any damage
had resulted from the improper activity?
d. Would there be some other offense(s) committed under United
Kingdom law in the cases described in Questions ``b'' and ``c''?
Answer. a. The U.K. Government has informed us that, yes, as
approved community members using the treaty to support USG-only
projects they would be covered under section 12(2) b of the Official
Secrets Act, which defines a ``Government Contractor'' as one which
provides goods or services under an agreement with another nation,
namely the treaty.
b. Subject to having sufficient evidence to prove all elements of
the offense, and depending on the circumstances, an offense could be
committed under section 2 (Defence), section 3 (International
Relations), section 5 (Information resulting from unauthorized
disclosures or entrusted in confidence) or section 8 (Safeguarding of
Information).
c. The Official Secrets Act applies overseas only if the activity
concerned is carried out by a British citizen, Crown Servant or by any
person in any of the Channel Islands or colony, and if the activity
would amount to an offense if done in the U.K. However, should any
other individual move treaty material outside of the approved community
without authorization while overseas, they will have breached U.K.
Export Control laws, as they would not have a valid export license for
such a transfer. It is a requirement of the OSA that any disclosure
must be damaging (as defined by the act). No offense will have been
committed under the OSA where damage cannot be shown.
d. If treaty material was exported from the U.K. without
authorization, an individual could be prosecuted for a breach of the
Export Control Act. If however the goods did not touch U.K. soil but
the act leading to the export from one third country to another was
conducted either by an individual based in the U.K. or by a U.K.
citizen based anywhere else in the world, such an individual could be
prosecuted under the Trade in Goods (Control) Order 2003.
Question No. 69. What protections does each Treaty Partner accord
to ``Restricted'' information, and how do they compare to the
protection that the United States gives to ``Confidential'' information
or to ``Sensitive but Unclassified'' or ``For Official Use Only''
information?
a. The U.K.'s Manual of Protective Security reportedly permits
``Restricted'' information to be stored and processed on unclassified
corporate networks and e-mail systems. Under this circumstance, how
will one limit access within a firm to those individual employees
having a U.K. clearance at the ``Security Check'' level and a ``need-
to-know,'' as provided in section 7(11)(b) of the implementing
arrangement with the United Kingdom?
Answer. The Australian Government has advised the State Department
of the following:
Defense security policy as it relates to information security is
based upon the Australian Government Protective Security Manual (PSM).
The PSM dictates mandatory requirements for all Australian Government
departments and agencies in the management of protective security.
Australia's Department of Defence applies the principles of the PSM
to its own operations through the Defence Security Manual (DSM). The
DSM also applies to industry through the Defence Industry Security
Program. DSM policy will apply to members of the Australian Community.
Protection of RESTRICTED information is based upon the following
standards:
Need to know.
Holding an appropriate security clearance (minimum of
RESTRICTED in this instance).
Classified information must be stored in a container (for
example a secure filing cabinet) appropriate to its
classification.
Protective markings must be correctly applied to classified
information.
Classified information must be transferred or transmitted
using methods that reduce the risk of interception.
Department of Defence employees and contractors must receive
appropriate training to ensure that they are aware of their
security responsibilities for classified information.
Specific physical security protections are applied according to the
underlying security of the location in which the information is stored
or handled.
The U.S. does not have an equivalent classification to RESTRICTED.
Under the Security Agreement between the Government of Australia and
the Government of the United States of America concerning Security
Measures for the Protection of Classified Information, dated 25 June
2002, the U.S. must treat Australian Restricted material as
Confidential. Australia does not use a ``Sensitive but Unclassified''
caveat; such material would be classified at least RESTRICTED and
cannot be passed over an unprotected network, such as the Internet, or
to persons unauthorized to receive it. All Department of Defense
information is considered to be official, even if not classified, and
may not be publicly released without specific authorization.
The U.K. Government has advised the State Department of the
following:
In the United Kingdom, the level of protection afforded to
classified material is decided by assessing the risk of release and the
impact this would have on U.K. interests. A proportionate set of
protective measures are then put in place for each classification. For
RESTRICTED material, measures must be in place that will stop an
inadvertent release or an opportunistic attempt to gain unauthorized
access. HMG's Manual of Protective Security (MPS) defines the measures
that must be taken to prevent such a release. These include details of
the storage requirements, handling and transfer requirements and how
classified material should be disposed of. In addition, the MPS defines
how access to material by individuals should be controlled, following
these basic principles:
An individual must have a proven need to know.
An individual must have an appropriate Security Clearance
(for the treaty, the more demanding SC level check, rather than
the baseline check normally required for access to RESTRICTED
sites).
An individual must have received briefing on the protective
security controls required to handle material classified at
that level.
The Board-level contact and Company Security Controller are
responsible for ensuring systems are in place to ensure only those with
a need to know can gain access to classified material, both physically
and electronically, and that staff have appropriate clearances and
security training. This includes access controls to storage areas and
computer systems.
For the treaty, the requirement that all Approved Community
Facilities must have ``List X'' clearance means that treaty material
will also benefit from a higher degree of protection than such material
normally would (equal to CONFIDENTIAL level and above, depending on the
site). It should also be noted that for material transferred under the
treaty with a U.S. classification of CONFIDENTIAL or above will be
protected at the equivalent U.K. classification. Only U.S. UNCLASSIFIED
material will receive a U.K. RESTRICTED classification under the
treaty.
Under the U.S. Industrial Security Agreement with the U.K., ``U.K.
RESTRICTED'' information is handled in the United States as U.S.
UNCLASSIFIED information that is exempt from public release (i.e.,
``For Official Use Only''). Documents or material so marked are stored
in locked containers affording appropriate protection or closed spaces
or areas that will prevent access by unauthorized personnel. Australian
RESTRICTED information must be protected as U.S. CONFIDENTIAL.
a. The U.K. Manual of Protective Security (MPS) requires that
RESTRICTED information can only be handled stored or processed on
accredited machines, systems or networks, operating to HMG approved
Security Operating Procedures and standards for that level of
Protective Marking. The unauthorized use of any machine is not
permitted under MPS. All MOD and ``List X'' laptops require approved
full disk encryption before they can be removed from a ``List X'' or
MOD Site.
Under the U.S.-U.K. Industrial Security Agreement, before any
Communications and Information System within the United States is
allowed to store, process or forward U.K. RESTRICTED information, it
must first be given security approval, known as Accreditation. Under
the Industrial Security Agreement, Accreditation is defined as a formal
statement by appropriate authority confirming that the use of a system
meets the appropriate security requirement and does not present an
unacceptable risk of compromise. For standalone desktop PCs and laptop
systems utilized in DOD establishments, the system registration
document together with the Security Operating Procedures serves as the
required Accreditation. For contractors, guidance on the use of
Communications and Information Systems will be incorporated within the
RESTRICTED Conditions Requirements Clause in the contract.
Question No. 70. Will the General Security Agreement between the
Government of the United Kingdom of Great Britain and Northern Ireland
and the Government of the United States of America of 14 April 1961
(GSA) need to be amended to reflect that items provided not only under
the GSA but also under the treaty are now to be marked/controlled by
the terms of the GSA in the United Kingdom? If so, will any legislative
amendment be necessary, either in the United States or in the United
Kingdom, to authorize such a change?
Answer. The referenced GSAs will not require amendment as a result
of the treaties, as both GSAs apply to the use, handling, storing,
safeguarding and protection of all classified information or material
exchanged between the Governments.
Question No. 71. Will the United States receive the notification
required of U.K. Community members under section 11(4)(b)(v) of the
implementing arrangement with the U.K. and of Australian Community
members under section 11(6)(e) of the implementing arrangement with
Australia?
Answer. Yes.
Question No. 72. Article 12 states that ``Each Party shall require
that entities within its Community . . . maintain detailed records . .
. [and] shall ensure that such records . . . are made available upon
request to the other Party.'' Is it the view of the executive branch
that the treaties themselves, upon Senate advice and consent and
ratification by the President, give the executive branch legal
authority to require by regulation that United States persons maintain
detailed records and make such records available to foreign governments
in connection with the treaties? If so, please explain.
a. To what officials, in each Treaty Partner, would such records be
available on request?
b. Would such requests require the concurrence of the Treaty
Partner?
c. Section (3)(a) of the implementing arrangements states that the
sharing of records between Participants shall be ``subject to their
respective laws.'' What are the relevant provisions of law in the
United States and in each Treaty Partner, and how are they likely to
affect the maintenance and sharing of detailed records required by
Article 12?
Answer. Yes; the requirement for approved community members to
collect and retain these records as well as the authority to share
these records with the Treaty Partners will be done pursuant to the
authority of the treaties. The sharing of such records will be done in
accordance with the procedures outlined in the implementing
arrangements, section 11(2), to support treaty operations and
enforcement efforts. In the United States, the government's ability to
obtain records and documents would be subject to our domestic laws,
most importantly the fourth amendment to the U.S. Constitution.
a. In Australia, such records would be available to government
officials in organizations including the Department of Defence (Defence
Export Control Office, Defence Legal and the Defence Security
Authority), Australian Customs Service and the Australia Federal
Police. In the United Kingdom, records would be available to government
officials in organizations including Department of Business,
Enterprise, and Regulatory Reform and Her Majesty's Revenue and Customs
as enforcing agencies and to the Ministry of Defence who will monitor
compliance with the treaty.
b. Concurrence of the Treaty Partner would be required where a
request was made from one Treaty Partner of an entity in the
jurisdiction of the other, i.e., a U.S. request relating to a British
company and vice versa. Neither the U.K., Australia, nor the U.S. would
be expected to seek concurrence where it is checking records of
entities in its own territory.
c. Australia's legislation to give effect to the provisions of the
treaty will require that Australian Community members make and maintain
records in relation to each activity done pursuant to the treaty. It is
proposed that if a member fails to make and maintain such records it
should constitute an offense. Various U.K. legislation must be
considered when dealing with a request of this kind, including the Data
Protection Act, Freedom of Information Act, and the Official Secrets
Act, as well as common law duties of confidentiality. Given the type of
records to be transferred, it is not expected that there would be a
problem in allowing the transfer, especially as companies will have
agreed to provide such information as part of joining the approved
community.
Question No. 73. Article 12(1) of each treaty states that entities
within either approved community will be required to maintain
``detailed records'' related to all movements under the treaty.
Pursuant to section 11(4)(b)(iv) of the implementing arrangement with
the United Kingdom and section 11(6)(d) of the implementing arrangement
with Australia, approved community members will be required to maintain
for at least 5 years records relating to any export, transfer, re-
export, or re-transfer of a defense article. How long would
corresponding records need to be maintained for defense articles
exported pursuant to licenses or approvals outside of the mechanisms of
the treaty, as permitted under Article 3(4)?
Answer. Records related to the export of defense articles exported
under authority other than the treaties will be subject to existing
recordkeeping and retention requirements detailed in the ITAR.
Question No. 74. Article 12(3) allows for ``appropriate legislative
notifications.'' How will U.S. ratification of these treaties affect
the reports required pursuant to section 25 and section 36(a) of the
Arms Export Control Act?
a. Will reporting of possible or actual sales under the treaties
still be required?
b. If not, will the executive branch continue to include those
sales in the reports?
c. Will some such reporting become impossible, because the U.S.
Government will not have the information on which to base such
reporting?
Answer. The reporting requirements contained in sections 25 and
36(a) applicable to government-to-government sales will continue to
apply. There are no legal requirements arising from either section
applicable to exports pursuant to the treaties.
Question No. 75. Article 13(1) of each treaty provides a legal and
regulatory exemption for ``Compliance with the procedures established
pursuant to this Treaty . . .'' Article 13(2) states that ``Conduct
falling outside the terms of this Treaty remains subject to''
applicable requirements and sanctions.
a. Why are these articles needed in addition to the other
provisions in the treaties that exempt covered items from the
requirement to obtain export licenses?
b. What is ``conduct falling outside the terms of this Treaty,''
and how does it differ from conduct ``in violation of'' the treaty or
its implementing arrangements? Why does Article 13(2) refer to
``conduct,'' rather than to compliance or noncompliance?
c. Is conduct that violates the implementing arrangements
enforceable in the same manner as conduct that violates the treaties,
and are the written acknowledgements that will be required from members
of the Treaty Partner communities, pursuant to section 11(4)(b) of the
implementing arrangement with the United Kingdom and section 11(b) of
the implementing arrangement with Australia, necessary to make that
clear?
d. Will ``conduct falling outside the terms of this Treaty'' remain
subject to applicable requirements and sanctions even if a member of
the approved community makes every effort to comply with the procedures
established pursuant to this treaty? Will U.S. producers or exporters
incur any civil or criminal liability if an illegitimate buyer fools
them into thinking that the defense articles are within the scope of
the treaty and are being shipped to a member of the approved community?
e. If a member of the approved community departs from the
procedures established pursuant to this treaty in one respect (e.g.,
through a violation of a security requirement), will it then be
``outside the terms of this Treaty'' in subsequent actions as well
(e.g., if it engages in a transfer before the earlier infraction is
corrected)?
f. Will ``conduct falling outside the terms of this Treaty'' by one
member of the approved community (e.g., failure to meet the scope
requirements pursuant to Article 3(1) or the security and recordkeeping
requirements pursuant to Articles 11 and 12) subject the subsequent
actions of other approved community members that receive the defense
article in question to the requirements and sanctions in existing law?
Thus, will there be an affirmative duty upon all parties to an export
or transfer to assure full compliance with all the procedures
established pursuant to this treaty?
Answer. a. Article 13(1) explicitly establishes that standard
export control requirements do not apply to exports that are in
accordance with the treaties, the implementing arrangements, and the
regulations issued in accordance with the treaties. Article 13(2)
limits Article 13(1) in that conduct falling outside of the terms of
the treaties, the implementing arrangements, and the regulations issued
in accordance with the treaties are subject to the standard export
control requirements.
b. The treaties and the implementing arrangements establish
obligations and commitments between the relevant governments.
Therefore, only the governments may comply with or violate such
obligations and commitments. Use of ``conduct falling outside the terms
of'' is intended to capture activity by private parties.
c. As stated above, private parties are not expected to violate the
treaties or their implementing arrangements. Article 13 of both
treaties contemplates regulations that will identify the specific
requirements for private parties. The referenced acknowledgments are
expected to be helpful in reminding members of Treaty Partner
communities of their obligations and in enforcing such obligations.
d. Enforcement actions pursuant to the Arms Export Control Act and
the International Traffic in Arms Regulations take into account the
specific facts associated with any action. It is not appropriate to
respond to the limited hypothetical questions provided here.
e. A violation of a security requirement would be considered to be
activity outside of the terms of the treaties. Any subsequent actions
with respect to the relevant defense article or defense service would
need to be considered in the context of the nature of such violation.
f. In accordance with section 11 of the implementing arrangements
foreign members of the approved communities are required to acknowledge
their obligations as members of the approved communities. Any prior or
subsequent violation by a Party would need to be considered in the
context of the nature of such violation.
Question No. 76. Why is there no provision in Article 13 for joint
investigations?
Answer. Article 13 does not preclude joint investigations; a
specific provision was not deemed necessary.
Question No. 77. For each Treaty Partner, is there any ``conduct
falling outside the terms of this Treaty'' that would constitute an
extraditable offense under its extradition treaty with the United
States?
Answer. The export of a U.S. defense article or defense service
from the United States caused by a foreign person who is not within the
approved community would constitute conduct falling outside the terms
of the treaty and would constitute a violation of the Arms Export
Control Act and International Traffic in Arms Regulations. With regard
to a willful violation, the United States would continue to maintain
that such a violation of the Arms Export Control Act is an extraditable
offense.
The Australian Government has stated that the Treaty on Extradition
between Australia and the United States of America would apply in
circumstances wider than just offenses under the treaty. Article II of
the Australia-U.S. Treaty on Extradition provides that ``an offence
shall be an extraditable offence if it is punishable under the laws in
both [Australia and the United States of America] by deprivation of
liberty of more than 1 year, or by a more severe penalty.''
Accordingly, any conduct that falls outside the terms of the Australia-
U.S. Defense Trade Cooperation Treaty that is punishable under the laws
in both Australia and the United States of America by deprivation of
liberty of more than 1 year, or by a more severe penalty would
generally be an ``extraditable offence'' under the terms of the
Australia-U.S. Treaty on Extradition.
U.K. Government has stated that Article 2 of the United Kingdom-
United States Extradition Treaty of 2003 states that only that conduct
that is punishable in both the U.K. and the USA with at least 12
months' imprisonment constitutes an extradition offense. However,
Article 4 allows for the possible extradition of an individual for an
offense committed outside of the territory of the Requesting State.
Action can be taken on such a request and extradition ordered where,
either the Requested State has a similar jurisdiction over such conduct
or, if it does not, the Requested State is given the discretion to
grant extradition. A state can claim jurisdiction, and potentially
request extradition, under any of the following grounds:
1. Objective territoriality: Where a state asserts
jurisdiction over acts committed outside of its territory, but
which have or are intended to have substantial effects within
the State;
2. Active personality: Where the State of the nationality of
a victim is entitled to assert jurisdiction over the conduct of
its nationals abroad;
3. Passive personality: Where the State exercises its
jurisdiction on the basis of the nationality of the victim of a
crime committed abroad;
4. Protective principle: Where jurisdiction is asserted on
the basis of the impact of the conduct on a State's key
interests, e.g., national security;
5. Universal jurisdiction: Where a State can claim
jurisdiction over crimes committed outside of the boundaries of
the State (regardless of nationality, country of residence or
any other nexus with the Requesting State), e.g., war crimes,
etc.
Question No. 78. Which of the documents referenced in section 11(2)
of the implementing arrangements are international agreements, binding
under international law? Please submit separately a copy of each of the
documents referenced in section 11(2) of the implementing arrangements,
other than the treaties referenced therein, that is an international
agreement, binding under international law.
Answer. I am advised by the office of the State Department's Legal
Adviser that the instruments identified in subparagraphs (a) and (f) of
section 11(2) of the implementing arrangement with the United Kingdom
and subparagraph (e) of the implementing arrangement with Australia are
international agreements, binding under international law. While the
executive branch has already complied with applicable Case-Zablocki
requirements with respect to these agreements, copies are being
provided as a part of this package.
Question No. 79. If an export under the treaties is diverted to a
third Party while on route to a Treaty Partner, what offenses will have
been committed under U.S. or Treaty Partner law? (Assume, for the
purposes of this question, that both the shipper and the putative end-
user were involved in the diversion and that wrongful acts were
committed in both countries.) Which Party to the treaty will have the
primary role regarding investigation and prosecution?
Answer. It will depend on the facts. An export from the U.S. that
is diverted to a third Party might constitute conduct falling outside
the terms of the treaties, implementing arrangements, and associated
regulations; and therefore remain subject to the Arms Export Control
Act and the International Traffic in Arms Regulations. Such conduct may
also violate new Australian legislation that is planned to be enacted
to implement the provisions of the treaty. Such conduct may also
violate the U.K. Trade in Goods Control Order 2005 which has effect
when there has been an export control offense but the goods have never
touched U.K. soil, provided the act that led to them being ``diverted''
was done either by a U.K. citizen anywhere in the world or by a foreign
national based in the U.K. This U.K. legislation has been widely
drafted such that ``any act calculated to promote'' would mean that
what may appear a minor role in the act could be caught under this
order. The Treaty Partners would work together to investigate the
matter in a coordinated fashion. The Treaty Partners would consult each
other on possible prosecutions related to the conduct and determine the
most effective and efficient means of criminal investigation and
prosecution. The independent prosecuting authorities in each nation
would maintain discretion in any individual case.
Question No. 80. What is the U.S. enforcement experience regarding
export control offenses in which no export license was required by the
International Traffic in Arms Regulations? How many indictments and
convictions under the Arms Export Control Act were there in 2003-2007
for such cases?
Answer. As commonly charged, a criminal prosecution for a violation
of the Arms Export Control Act requires a showing beyond a reasonable
doubt that a person exported (or caused the export of) a defense
article or defense service without a license from the Department of
State and that the person did so willfully. See 22 U.S.C. 2778(b)(2)
and 2778(c); 22 CFR 127.1. Accordingly, with regard to the export of
defense articles and defense services in violation of the Arms Export
Control Act and the International Traffic in Arms Regulations, all
criminal prosecutions require a showing that an export license from the
State Department was required and was not obtained. Likewise, if an
exporter claims an exemption under the ITAR that did not provide the
authority for the export, the exporter would meet the precondition that
``an export license from the State Department was required and was not
obtained.''
Additionally, the State Department has conducted civil
investigations which have involved the misuse of exemptions. The civil
settlements with Raytheon involving illegal exports through Canada to
Pakistan and the settlement with General Dynamics involving illegal
exports to Canada are two examples. The proposed charging letters in
these cases did not include specific charges for violations of an ITAR
exemption but rather addressed the failure to obtain an export license.
Question No. 81. What impact, if any, will the treaties have on the
operations and actions of various companies that are operating under
consent agreements from past arms export cases?
Answer. Companies under Consent Agreements that have not been
statutorily or administratively debarred by the Department may remain
in the approved community. In future Consent Agreements the Department
will likely explicitly address whether or not to suspend the Company's
authority to use the treaty. Such an approach would be consistent with
the Department's practice of suspending a registrant's ability to use
certain ITAR exemptions in response to specific concerns with the
registrant's reliability as an exporter.
Question No. 82. Pursuant to section 11(4)(b)(iii) of the
implementing arrangement with the United Kingdom and 11(6)(c) of the
implementing arrangement with Australia, nongovernmental United
Kingdom/Australia Community entities must acknowledge in writing that
any re-transfer or re-export of defense articles without prior approval
will be a violation of the United States International Traffic in Arms
Regulations, Arms Export Control Act, and related laws and regulations.
Will this acknowledgement form a predicate for both criminal and civil
action against violators in each country? Will courts in each country
accept it as evidence that a violator knew, or should have known, the
obligations of Treaty Partner Community members under the treaties?
a. Under what laws can such action be taken by each Treaty Partner?
In particular, what actions can the United Kingdom take against an
entity under the Official Secrets Act, and what criminal penalties can
be assessed? If civil actions are pursued, what penalties can be
assessed and what is the record of each Treaty Partner regarding such
prosecutions and convictions?
b. Please cite exactly which provisions of the Arms Export Control
Act and the International Traffic in Arms Regulations would be violated
if a U.S. defense article exported pursuant to the treaty (that is,
without a license) were then re-transferred or re-exported by a foreign
person without consent of the United States Government.
c. Please also cite the ``related [U.S.] laws.''
d. Why does section 11(4)(b)(iii) of the implementing arrangement
with the United Kingdom state only that ``the United States Government
considers'' these acts to be violations of U.S. law and regulations,
while section 11(6)(c) of the implementing arrangement with Australia
states affirmatively that such activity ``constitutes a violation of
Australian law as well as'' U.S. law and regulations?
e. Would re-transfers or re-exports without approval not
necessarily violate British law?
f. Does the United Kingdom question whether such acts would violate
U.S. law and regulations? Does it contest the right of the United
States to prosecute violators if the acts are committed by non-
Americans in the United Kingdom?
g. Why does section 11(4)(b)(viii) of the implementing arrangement
with the United Kingdom state that ``No objection will be made by the
United Kingdom Community member to any reasonable request by either
Participant to . . . inspect any premises in accordance with the
established mechanisms of cooperation,'' while section 11(6)(h) of the
implementing arrangement with Australia requires that all inspections
be ``by the government of Australia in accordance with Australian laws
and regulations?'' How will U.S.-requested audits and inspections in
the United Kingdom differ from those in Australia in practice?
Answer. This provision was included to both educate approved
community members on their obligations under the treaty and the
enforcement provisions of the AECA, as well as to provide documentation
to help establish and demonstrate knowledge of the law and regulations
usable in a criminal investigation.
Such an acknowledgement may be relevant to a prosecution under the
treaty but such an acknowledgement is not a requirement for a
prosecution under Australian law.
For the United Kingdom, the acknowledgement in section
11(4)(b)(iii) means that nongovernmental U.K. Community entities are
put on notice that the U.S. Government will consider such breaches to
be violations of the U.S. ITAR, the AECA and related laws. This would
not form a predicate for criminal action in the U.K. where no U.K. law
has been breached. It may entitle an aggrieved Party to take civil
action provided it could establish a quantifiable loss emanating from
the action in question. Were a matter to reach courts in the U.K. it
would be difficult to see the courts being persuaded by an argument, in
light of the acknowledgement, that the offending Party did not realize
that the U.S. would consider that its laws had been breached.
a. Treaties to which Australia is Party are implemented through the
enactment of domestic legislation, unless legislation that satisfies
the requirements of a treaty is already in place. Australia does not
currently have legislation to satisfy all of the requirements of the
Australia-U.S. Treaty concerning Defence Trade Cooperation (the
Treaty). New legislation to enact the terms of the treaty will include
provisions addressing:
(a) The criteria for entry into the ``Australian Community''
and the conditions Australian Community members must abide by
to maintain membership, including personnel, information, and
facilities security requirements;
(b) The recordkeeping and notification and reporting
requirements under the treaty;
(c) The handling, marking and classification requirements for
U.S. and Australian defense articles exported or transferred
under the treaty;
(d) The requirements for exports and transfers of U.S.
defense articles outside the approved community or to a third
country;
(e) The rules for transitioning U.S. defense articles into
and out of the terms of the treaty;
(f) The rules for transitioning into and out of the
Australian Community;
(g) Auditing, monitoring and investigative powers for
Commonwealth officials and powers to allow Commonwealth
officials to perform post-shipment verifications and end-use/
end-user monitoring; and
(h) Offenses and penalties, and administrative requirements,
necessary for the enforcement of the treaty and its
implementing arrangement.
It is proposed that these changes be brought into force through
amendments to the current Weapons of Mass Destruction (Prevention of
Proliferation) Act 1995 (WMD Act). The name of this act will be amended
to better reflect the objective of the act. In conjunction with
legislation to implement the treaty, Australians also bringing forward
legislation to strengthen generally its controls over defense and dual-
use goods including controls over intangible transfers of controlled
technology and brokering of controlled goods, technology and services.
These provisions will also be included in the amended WMD Act. As
legislation is being specifically enacted for the treaty there is no
existing record for prosecutions under the treaty. However, Australia
does have a strong and long established history of working with the
United States in security matters and of bringing prosecutions for
violations of its laws.
For the United Kingdom, HMG can take action against an entity where
U.K. laws have been breached.
b. Sections 38(c) and 38(e) of the Arms Export Control Act contains
the applicable criminal and civil penalty provisions. Parts 120.19,
127.1(a)(1), 127.1(a)(3), and 127.1(a)(6) of the ITAR address
violations of the regulations including unauthorized exports, re-
transfers, and brokering.
c. Related U.S. laws would include Federal laws prohibiting
conspiracy, false statements, and other generally applicable Federal
criminal laws.
d. The phrasing in this section reflects the concerns of HMG
regarding the extraterritorial application of U.S. law in the United
Kingdom. The HMG defers to the U.S. on its interpretation of its laws
and accepts that the U.S. considers such acts to be violations of U.S.
law. HMG also agrees that acts that are contrary to the terms of the
treaty or its implementing arrangements will also likely be violations
of the Official Secrets Act and considered a criminal offense by the
United Kingdom.
e. British law would be violated, under the OSA, the Export Control
Act or other legislation such as those concerned with firearms.
f. The United Kingdom does not contest that such acts would be
contrary to the terms of the treaties and a violation of the AECA.
While the United Kingdom, like most countries, has concerns about the
extraterritorial application of laws on its own citizens, it has made
it clear that since such violations will also likely be violations of
the Official Secrets Act they would investigate such cases as well as a
breach of their security laws. See the answer to Question No. 77 for
extradition purposes. The prosecution of alleged offenders by the U.S.,
in the U.S., is a matter for the U.S. authorities.
g. The security requirements stipulated in the General Security
Agreements with the U.K. and Australia provide for reciprocal visits by
security personnel. U.S. security representatives, after prior
consultation, are permitted to visit each government, to discuss and
view firsthand their laws, policies, regulations, practices and
procedures related to personnel security, information/document
security, physical security, industrial security, export controls and
automated information system security. Each visit also entails visits
to both government (military) and defense industry facilities to
observe security implementation to determine whether classified
information provided by the U.S. is being adequately protected.
Question No. 83. Article 13(3) of each treaty states that each
Party ``shall promptly investigate all [emphasis added] suspected
violations and reports of alleged violations of the procedures
established pursuant to this treaty, and shall promptly inform the
other Party of the results of such investigations.'' But section
10(3)(f) of both implementing arrangements states that the other
government may inform the United States Government ``as appropriate''
of violations of the treaty, material or otherwise, reported by an
approved community member.
a. Would the United States Government ever consider it to be
appropriate for the United Kingdom/Australia Government not to inform
the United States Government of at least a material violation of the
treaty?
b. Will the United States Government ultimately be informed of all
violations of the treaty reported to the other government, perhaps as
part of discussions between the Principals or the Management Board?
Answer. a. The USG would never consider it appropriate to not be
informed of material violations.
b. All violations are expected to be reported to the USG.
Question No. 84. Article 13(4) states that, ``The Parties shall
cooperate, as appropriate, with respect to . . . prosecutions or
actions'' related to alleged violations of procedures established
pursuant to this treaty. What concerns led to the inclusion of the
words ``as appropriate'' in this provision?
Answer. The language chosen was intended to reflect the inherent
complexity involved in such investigations and prosecutions involving
two countries with different legal structures.
Question No. 85. Article 13(5) states that the Parties ``may
conduct post-shipment verifications and end-use or end-user monitoring
of exports and transfers.'' Will this provision result in more post-
shipment verifications and end-use monitoring than is currently the
case, or less?
a. What U.S. programs and resources will be utilized to effect such
verifications and monitoring?
b. What legal authority is there to use the State Department's Blue
Lantern program with regard to defense articles that are exported or
transferred pursuant to these treaties, rather than pursuant to the
Arms Export Control Act or under an exemption that complies with
section 38(j) of that act?
c. What legal authority is there to use the Defense Department's
Golden Sentry program with regard to defense articles exported under
the Foreign Military Sales Program after they have transitioned to the
treaty processes pursuant to Article 3(3)?
d. Investigations under the Blue Lantern program often stem from
information obtained in the export licensing process, such as unusual
routing of an arms shipment. Since exports and transfers will not
require any export licenses, what triggers will prompt post-shipment
verifications and end-use or end-user monitoring under the treaties?
Answer. a. The provision establishing an end-use verification
program for treaty exports was drafted to create controls comparable to
those found in the Department's Blue Lantern program for licensed
exports. While no formal goal has been established for the number of
checks to be performed, it is anticipated that the program will likely
encompass more exports than are currently done for the United Kingdom
and Australia where relatively few checks are done per year.
b-c. The executive branch will use the authority of the treaty and
its implementing arrangements for this program.
d. The methodology developed for the Blue Lantern program will be
adapted to accommodate exports under the treaty. While no specific
export licenses will be required, exports and transfers under the
treaty will be limited to approved community members. The new
verification program will track that approach in its design--focusing
on the exports and transfers of particular members of the approved
community, verifying recordkeeping and marking requirements are being
met and that such exports and transfers conform to terms of the treaty.
Initially, targeting of such checks may be driven by a number of
factors, including the sensitivity of the technologies involved, the
volume of export activity, and the Parties involved in the transaction.
While approved community members must keep records of their exports, it
is important to remember that data on many shipments under the treaty
will be available through the Automated Export System (AES). The
methodology and the targeting of such checks will no doubt evolve over
time as the Department and the Treaty Partners gain experience with the
program.
Question No. 86. For each of the years 2003-2007, please provide
the number of persons charged and those found guilty under each Treaty
Partner's export control laws and indicate how many convictions
resulted in jail sentences and how many merely in monetary fines.
Please also provide the number of administrative actions that Treaty
Partner agencies have taken against firms involving export control
violations (i.e., comparable to the actions of the Departments of State
and Commerce in programs for civil violations) and the penalties and
remedial compliance measures that resulted from such cases.
Australia:
The Australian Government has advised the State Department of the
following:
The Australian Department of Defence, in conjunction with the
Australian Customs Service, has dual responsibility for the
administration of Australia's export controls for defense and dual-use
technology. The export controls are administered through the Customs
Act 1901 and associated legislation. Both Defence and Customs operate
in an environment of improving the level of voluntary compliance by the
exporting community. As noncompliance manifests itself in a variety of
ways, ranging from simple error, to indifference, to intentional
disregard both agencies have in place strategies that reduce the
likelihood and/or consequence of an unlawful export.
There have been 65 denials for export approval of defense and dual-
use goods under the Customs Act, and 3 notices prohibiting supply of
goods or provision of service under the Weapons of Mass Destruction
Act.
Over 1,524 flags have been created on the Customs cargo system used
by exporters to report their goods to Customs. These flags are
indicators to exporters that the goods do, or may, require a permit for
the shipment to occur lawfully. Since 2004, at least 53 profiles have
been created on the Customs cargo system to identify at-risk exports.
There have been over 500 matches against the profiles resulting in 26
disruptions where the goods were held pending resolution of concerns
about the export. Seventy warning letters have been issued where a
breach of an export control was identified but prosecution or seizure
action was not undertaken. There are currently 26 cases being
investigated for breaches of export controls. There have been three
prosecutions for export control violations--outcomes were fines and no
imprisonment.
A significant focus for the Department of Defence (Defence Export
Control Office--DECO) is the provision of marketing material, workshops
and seminars that aim to educate industry on export controls. Almost
1,000 individuals, representing over 174 companies and various agencies
within the Department of Defence have attended DECO Practitioners
Workshops. Since 2004, at least 115 companies have been outreached by
DECO Officers to discuss the export control environment while
information kits, which provide further information, have been
forwarded to a further 50 companies. Mail-outs to industry have been
undertaken with over 1,400 letters sent to universities and industry;
651 employees, representing 151 companies have been provided ITAR
training. DECO also produces a biannual newsletter which is sent out to
approximately 1,600 recipients and is available for download from the
DECO Web site.
United Kingdom:
The U.K. Government has advised the State Department of the
following:
Between 2003 and 2007, the following prosecutions under the Customs
and Excise Management Act (CEMA) 1979, for the breach of a prohibition
enacted under the Export Control Act 2002 took place:
------------------------------------------------------------------------
Prosecutions--jail
Year sentence Prosecutions--Fines
------------------------------------------------------------------------
2003-2004...................... .................. 1
2004-2005...................... 1 ...................
2005-2006...................... .................. 2
2006-2007...................... .................. 4
2007-2008...................... 2 1
------------------------------------------------------------------------
In addition, Her Majesty's Revenue and Customs conducted the following
seizures of goods controlled on the U.K. Strategic Export Control list:
Year No. of seizures
2003-2004......................................................... 63
2004-2005......................................................... 37
2005-2006......................................................... 34
2006-2007......................................................... 44
The Export Control Organisation (ECO), part of the Department for
Business, Enterprise and Regulatory Reform, carry out compliance checks
on companies using Open General and Open Individual Export Licences.
Below are details of the number of compliance checks carried out in
each year 2003-2007.
No. of
Year compliance visits
2004.............................................................. 567
2005.............................................................. 522
2006.............................................................. 578
2007.............................................................. 664
2008 to date...................................................... 294
In the vast majority of cases where compliance problems are
identified, these are due to technical errors (e.g. form filling).
Followup compliance checks are carried out wherever problems are
identified to ensure they have been rectified. ECO also have a system
of warning letters for noncompliant companies and can remove a
company's right to use open licenses for exports.
Evasion of export controls or unlicensed shipments are extremely
rare and are always referred to Her Majesty's Revenue and Customs for
investigation.
Question No. 87. Under what laws of each Treaty Partner, in
addition to those laws already applicable to export control violations,
will it be possible to prosecute companies, as opposed to individuals,
that engage in illegal re-exports or re-transfers of defense articles?
a. In 2003-2007, how many prosecutions (and how many convictions)
of companies were there by each Treaty Partner?
Answer.
Australia:
The Australian Government has advised the State Department of the
following:
Under Australia's Customs Act (Regulation 13E), which controls the
export of goods on the Defence and Strategic Goods List, both companies
and individuals can be prosecuted. Also, Australia's WMD Act, when it
is amended to implement the treaty, also will allow for the prosecution
of companies as well as individuals.
a. In Australia, all three prosecutions during the 2003-2007
timeframe were of individuals.
United Kingdom:
The U.K. Government has advised the State Department of the
following:
a. It is possible to prosecute companies other than under the
export control provisions. The offense committed would depend on the
circumstances but most commonly would include breaches of the Export
Control Act (i.e. where treaty material has been exported from the U.K.
without meeting the requirements of the Treaty Open General Export
Licence (which will be based on the terms of use of the treaty)), theft
offenses or firearms offenses under the U.K. Firearms Control
legislation. The most likely prosecution route would be under the
export control provisions. A company could also find itself losing
``List X'' status, which would mean not being able to conduct future
business in the Defense and Security field in the U.K. In addition,
where a British citizen or person based in the U.K. arranges an illegal
transfer that doesn't actually pass through the U.K., that individual
would have committed an offense under the Trade in Goods (Control)
Order 2003.
a. HMG does not hold centrally figures for all prosecutions/
convictions of companies during the period referred to, are aware of
three convictions of companies for export control violations.
Question No. 88. In 2003-2007, how many prosecutions (and how many
convictions) were there by each Treaty Partner for violations relating
to ``Restricted'' information?
Answer.
Australia:
The Australian Government has advised the State Department of the
following:
There were no prosecutions or convictions during this period. All
breaches identified and investigated were dealt with administratively.
United Kingdom:
The U.K. Government has advised the State Department of the
following:
There were six convictions under the Official Secrets Act in the
past 10 years. None of these related solely to releases of RESTRICTED
material.
Question No. 89. What are the British and Australian regulations
regarding transmission of ``Restricted'' information over the Internet
or on open phones? Will the U.S. Government impose a similar
prohibition on the U.S. Community regarding defense articles? Will the
British and Australian rules be loosened for communications within each
approved community?
a. Could the absence of such controls for U.S. persons impair
prosecutions of U.K. or Australian individuals who fail to
appropriately protect ``Restricted'' items?
b. Would the imposition of such controls, in either direction, pose
a serious burden for companies in the approved community working on
unclassified projects?
Answer. In the U.K., the transmission of RESTRICTED information
over the Internet is prohibited under both the U.K. Manual of
Protective Security and the Ministry of Defence Security Manual as is
the discussion of RESTRICTED material over unprotected telephone lines.
Under the treaty, the Official Secrets Act (OSA) is used to protect
treaty material within the U.K. or in the possession of U.K. Forces in
operational theatres or on training. The OSA applies to all persons in
the U.K., regardless of nationality. A U.S. person who fails to
appropriately protect RESTRICTED material would therefore be in breach
of the OSA. Outside the U.K. (under the treaty this means in the U.S.
or in the possession of U.S. Forces in operational theatres or on
training), treaty material is protected under the International Traffic
in Arms Regulations (ITAR), if it is handled contrary to the procedures
established pursuant to the treaty as promulgated in the regulations.
Under the terms of the U.S.-U.K. Industrial Security Agreement, the
U.K. MOD and U.S. DOD agreed in 2003 that U.K. RESTRICTED material need
not be protected in the U.S. at the U.S. CONFIDENTIAL level (as had
previously been the case) unless specifically requested. The guidance
and rules relating to this agreement (which define the protections U.S.
contractors and personnel are expected to provide to U.K. RESTRICTED
material) will apply to treaty material, limiting the burden that
approved community companies would have otherwise faced. In addition,
U.K. RESTRICTED material being exported from the U.K. under the treaty
must receive MOD F680 clearance first--this will check that the
recipient of the export is suitable to receive the treaty material.
Material classified at higher levels will continue to be protected in
the U.S. under the terms of the General Security Agreement.
The U.S.-Australian Industrial Security Agreement imposes similar
controls as the U.K. Industrial Agreement. However, the Australian GSA
and Industrial Security Agreement require that Australian RESTRICTED
information in the United States be protected as if it is U.S.
CONFIDENTIAL. This is a more stringent requirement than for protection
of U.K. RESTRICTED in the United States. Facility clearances are
required for each U.S. industrial facility that maintains Australian
RESTRICTED information and security clearances are required for the
personnel that access the Australian RESTRICTED information in the
facility.
a. There is no potential for impairment of prosecutions of U.K. or
Australian individuals since a common standard of protection already
exists.
b. The Department of Defense has concluded that these controls will
not pose a serious burden.
Question No. 90. Both treaties speak of ``implementing
arrangements,'' suggesting there would be more than one such
arrangement. But only one such arrangement, per treaty, has been
submitted. Do you expect to negotiate more than one implementing
arrangement with these Treaty Partners? If so, when do you expect those
to be concluded?
Answer. We do not anticipate additional implementing arrangements
for these treaties.
Question No. 91. The letter of submittal by the Secretary of State
to the President on the treaty with the United Kingdom indicates that
the implementing arrangements ``may be entered into as Executive
Agreements.''
a. Does the executive branch intend to submit the implementing
arrangement to Congress under the Case-Zablocki Act? If not, please
explain why.
b. Does the executive branch regard the implementing arrangements
as executive agreements, binding under international law?
c. Does either the United Kingdom or Australia regard its
implementing arrangement with the United States to be an international
agreement, binding under international law?
d. If only portions of the implementing arrangements are intended
to be binding, please explain the criteria for determining whether a
provision is binding, state whether the Treaty Partners agree with
those criteria, and provide an exhaustive list, for each implementing
arrangement, of the provisions that are intended by the Parties to be
binding.
Answer. The office of the State Department's Legal Adviser has
advised me of the following:
a. The implementing arrangement was not concluded as a separate
international agreement, but rather as an arrangement under the treaty.
This implementing arrangement is explicitly called for by the terms of
the treaty. For the foregoing reasons, the arrangement is not
considered an ``international agreement'' within the meaning of the
Case-Zablocki Act. The administration has provided the arrangement to
the Senate in the context of seeking Senate approval of the treaty and
does not intend to submit it to Congress under the Case-Zablocki Act.
b. The provisions of the implementing arrangements that the
treaties explicitly require the Parties to follow will be binding under
international law. Those provisions of the arrangements that address
administrative or procedural matters that are not explicitly required
by the treaties would not have legally binding status under
international law.
c. The United Kingdom and Australia regard the implementing
arrangements the same way we do, as described in our answer to Question
``b'' above.
d. The answers to Questions ``b'' and ``c'' above identify the
criteria and the position of the United Kingdom and Australia. As
discussed in the negotiation of the implementing arrangements, each
government expects that its Treaty Partner will comply with all of the
provisions of the applicable treaty and implementing arrangement. To
avoid the suggestion that compliance with certain provisions of the
implementing arrangements is not essential, an exhaustive list of
provisions that are binding under international law was not developed
by the Parties. Should any Treaty Partner fail to comply with a
particular provision of an implementing arrangement, both Treaty
Partners will work to remedy the situation. The administration remains
prepared to answer any questions that the committee may have regarding
particular provisions of the implementing arrangements. For example,
the administration, in response to a question during the May 21
hearing, stated that section 10(3)(f) of the implementing arrangement
with the United Kingdom regarding notification of material violations
would be a binding obligation by virtue of article 13(3) of the treaty.
Question No. 92. What are the precedents for the Senate including
other documents in the definition of a treaty when it gives its advice
and consent to ratification?
Answer. As stated in the President's Letter of Transmittal,
including its enclosures, the administration is seeking advice and
consent to ratification to the treaty only. The implementing
arrangement was provided for the Senate's information. Therefore, the
administration is not seeking that the Senate include ``other documents
in the definition of a treaty when it gives its advice and consent to
ratification'' in this case. In terms of precedents, the Senate has
given its advice and consent to related instruments in a single
resolution where the President has requested such advice and consent.
Question No. 93. What is the purpose of Article 14(2)? Does it
envisage that most, if not all, of the previously exported items in the
United Kingdom and Australia that have licenses could move to an exempt
status, if they now would qualify for export pursuant to the treaties?
Answer. Article 14(2) is intended to provide a mechanism for items
already exported to move to the processes established under the
treaties. We envisage that some items will be moved to the processes
established under the treaties, but do not expect that all will be
eligible, or that all recipients of these items will want to move them
to the processes established under the treaties.
Question No. 94. Does the executive branch believe that an
amendment to either treaty requires the advice and consent of the
Senate?
Answer. Generally, the administration anticipates that amendments
to either of these treaties would be submitted to the Senate for its
advice and consent.
Question No. 95. Article 20 states that the treaties shall enter
into force ``upon an exchange of notes confirming that each Party has
completed the necessary domestic requirements to bring this treaty into
force.'' Please list the ``necessary domestic requirements'' that will
pertain for the United States and for each Treaty Partner, and provide
your best estimate of how long it will take to satisfy those
requirements in each case.
a. Will exports of defense articles under each treaty be permitted
before all relevant U.K. and Australian laws are amended and
regulations are promulgated in each country? If so, why?
Answer. The United States must obtain the advice and consent of the
Senate, and prepare instruments of ratification. We must also finalize
lists of approved community members, projects and programs that qualify
for exports under the treaty, and finalize the list of items exempt
from the treaties. We must finalize regulations issues in accordance
with the treaties. The National Industrial Security Program Operating
Manual must be updated. Customs and Border Protection and the U.S.
Census Bureau must update their procedures and guidelines to reflect
the new export authority.
For the United Kingdom, the following will need to be in place
before the treaty can come into force are:
Agreement on treaty lists--authorized Operations, Programs,
U.K. Projects and Treaty exemptions, and these lists published.
Approved community in place, including application process,
company vetting procedures, ongoing assurance program and
relevant changes to the U.K. Manual of Protective Security and
associated rules and guidance.
Changes to the U.K. export control regulations to be
complete, including associated guidance, processes and
training.
Changes to the MOD ``release of classified material''
process (F680) to be complete, including associated guidance,
processes and training.
Necessary staff within the approved community to hold the
correct security clearances.
Clear Government-Government and Government-Industry
communication channels for the treaty established.
Personnel, in both Government and Industry to have received
appropriate training on the treaty.
Guidance on the treaty provided to relevant U.K. Government
departments and U.K. Industry.
Successful validation of all new processes and procedures to
show they are fit for purpose.
Australia's domestic treaty approval process requires that:
The treaty be tabled in the both Houses of Parliament for 20
joint sitting days together with a National Interest Analysis
which notes the reasons why Australia should become a Party;
The treaty be scrutinized by the Joint Standing Committee on
Treaty (JSCOT) while it is tabled in Parliament. JSCOT is
responsible for making recommendations to the Parliament on
whether binding treaty action should be taken. However, JSCOT
recommendations do not have legal force and are not binding on
the Australian Government;
Any new legislation to give effect to Australia's rights and
obligation under the treaty be enacted.
The above requirements apply to the Australia-U.S. Defense Trade
Cooperation Treaty (Treaty). The treaty was tabled in Parliament on 14
May 2008 and JSCOT held a public hearing on the treaty 16 June 2008. It
takes approximately 4 months from the date of the hearing of a treaty
for JSCOT to make its recommendation for that treaty. New legislation
is required to give effect to Australia's rights and obligations under
the treaty. It is envisaged that the proposed new legislation will be
tabled in Australian Parliament in the spring 2008 session (i.e.,
August to December 2008) and it is expected that this new legislation
will be proclaimed by mid-2009. Following a decision by JSCOT and the
enactment of the necessary new legislation, the Australian Government
could then take binding treaty action to bring the treaty into force.
a. No.
[Editor's note.--Attachments submitted by Acting Under
Secretary Rood to accompany the responses of several of the
above questions follow:]
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