    [House Hearing, 111 Congress]
    [From the U.S. Government Publishing Office]

                         IMPACTS OF U.S. EXPORT CONTROL
                       POLICIES ON SCIENCE AND TECHNOLOGY
                         ACTIVITIES AND COMPETITIVENESS

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

                                    HEARING

                                   BEFORE THE

                      COMMITTEE ON SCIENCE AND TECHNOLOGY
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 FIRST SESSION

                                   __________

                               FEBRUARY 25, 2009

                                   __________

                               Serial No. 111- 4

                                   __________

         Printed for the use of the Committee on Science and Technology

         Available via the World Wide Web: http://www.science.house.gov

                                   ----------
                             U.S. GOVERNMENT PRINTING OFFICE

    47-610 PDF                       WASHINGTON : 2009

    For sale by the Superintendent of Documents, U.S. Government Printing
    Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
    DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
    Washington, DC 20402-0001

                      COMMITTEE ON SCIENCE AND TECHNOLOGY

                       HON. BART GORDON, Tennessee, Chair
    JERRY F. COSTELLO, Illinois          RALPH M. HALL, Texas
    EDDIE BERNICE JOHNSON, Texas         F. JAMES SENSENBRENNER JR.,
    LYNN C. WOOLSEY, California              Wisconsin
    DAVID WU, Oregon                     LAMAR S. SMITH, Texas
    BRIAN BAIRD, Washington              DANA ROHRABACHER, California
    BRAD MILLER, North Carolina          ROSCOE G. BARTLETT, Maryland
    DANIEL LIPINSKI, Illinois            VERNON J. EHLERS, Michigan
    GABRIELLE GIFFORDS, Arizona          FRANK D. LUCAS, Oklahoma
    DONNA F. EDWARDS, Maryland           JUDY BIGGERT, Illinois
    MARCIA L. FUDGE, Ohio                W. TODD AKIN, Missouri
    BEN R. LUJAN, New Mexico             RANDY NEUGEBAUER, Texas
    PAUL D. TONKO, New York              BOB INGLIS, South Carolina
    PARKER GRIFFITH, Alabama             MICHAEL T. MCCAUL, Texas
    STEVEN R. ROTHMAN, New Jersey        MARIO DIAZ-BALART, Florida
    JIM MATHESON, Utah                   BRIAN P. BILBRAY, California
    LINCOLN DAVIS, Tennessee             ADRIAN SMITH, Nebraska
    BEN CHANDLER, Kentucky               PAUL C. BROUN, Georgia
    RUSS CARNAHAN, Missouri              PETE OLSON, Texas
    BARON P. HILL, Indiana
    HARRY E. MITCHELL, Arizona
    CHARLES A. WILSON, Ohio
    KATHLEEN DAHLKEMPER, Pennsylvania
    ALAN GRAYSON, Florida
    SUZANNE M. KOSMAS, Florida
    GARY C. PETERS, Michigan
    VACANCY

                                C O N T E N T S

                               February 25, 2009

                                                                       Page
    Witness List.....................................................     2

    Hearing Charter..................................................     3

                               Opening Statements

    Statement by Representative Bart Gordon, Chairman, Committee on
      Science and Technology, U.S. House of Representatives..........    22
        Written Statement............................................    23

    Statement by Representative Ralph M. Hall, Minority Ranking
      Member, Committee on Science and Technology, U.S. House of
      Representatives................................................    24
        Written Statement............................................    25

    Prepared Statement by Representative Jerry F. Costello, Member,
      Committee on Science and Technology, U.S. House of
      Representatives................................................    28

    Prepared Statement by Representative Eddie Bernice Johnson,
      Member, Committee on Science and Technology, U.S. House of
      Representatives................................................    28

    Prepared Statement by Representative Gabrielle Giffords, Member,
      Committee on Science and Technology, U.S. House of
      Representatives................................................    29

    Prepared Statement by Representative Harry E. Mitchell, Member,
      Committee on Science and Technology, U.S. House of
      Representatives................................................    29

    Statement by Representative Dana Rohrabacher, Member, Committee
      on Science and Technology, U.S. House of Representatives.......    26
        Written Statement............................................    27

                                   Witnesses:

    Lieutenant General Brent Scowcroft (USAF, Ret.), President and
      Founder, The Scowcroft Group
        Oral Statement...............................................    30
        Written Statement............................................    32
        Biography....................................................    34

    Mr. A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-
      Chair, Center for Strategic and International Studies (CSIS),
      Working Group on the Health of the U.S. Space Industrial Base
      and the Impact of Export Controls
        Oral Statement...............................................    34
        Written Statement............................................    35
        Biography....................................................    38

    Dr. Claude R. Canizares, Vice President for Research and
      Associate Provost, Bruno Rossi Professor of Physics,
      Massachusetts Institute of Technology
        Oral Statement...............................................    39
        Written Statement............................................    40
        Biography....................................................    42

    Major General Robert S. Dickman, Executive Director, American
      Institute of Aeronautics and Astronautics
        Oral Statement...............................................    43
        Written Statement............................................    44
        Biography....................................................    49

    Discussion
      Executive Order Relating to Relief for Universities............    50
      International Dual-use Technology Balance......................    51
      Differentiating Military Weapons and Dual-use Technology.......    52
      Dual-track Export Control Systems..............................    53
      Export Control Dangers With the Chinese........................    54
      Conclusion of Hearing..........................................    55

                 Appendix 1: Answers to Post-Hearing Questions

    Lieutenant General Brent Scowcroft (USAF, Ret.), President and
      Founder, The Scowcroft Group...................................    58

    Mr. A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-
      Chair, Center for Strategic and International Studies (CSIS),
      Working Group on the Health of the U.S. Space Industrial Base
      and the Impact of Export Controls..............................    62

    Dr. Claude R. Canizares, Vice President for Research and
      Associate Provost, Bruno Rossi Professor of Physics,
      Massachusetts Institute of Technology..........................    65

    Major General Robert S. Dickman, Executive Director, American
      Institute of Aeronautics and Astronautics......................    69

                 Appendix 2: Additional Material for the Record

    Briefing of the Working Group on the Health of the U.S. Space
      Industrial Base and the Impact of Export Controls, Center for
      Strategic & International Studies, February 2008...............    76

       IMPACTS OF U.S. EXPORT CONTROL POLICIES ON SCIENCE AND TECHNOLOGY
                         ACTIVITIES AND COMPETITIVENESS

                                  ----------

                          WEDNESDAY, FEBRUARY 25, 2009

                      House of Representatives,
                           Committee on Science and Technology,
                                                        Washington, DC.

        The Committee met, pursuant to call, at 10:09 a.m., in Room
    2318 of the Rayburn House Office Building, Hon. Bart Gordon
    [Chair of the Committee] presiding.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                hearing charter

                      COMMITTEE ON SCIENCE AND TECHNOLOGY

                         U.S. HOUSE OF REPRESENTATIVES

                         Impacts of U.S. Export Control

                       Policies on Science and Technology

                         Activities and Competitiveness

                          wednesday, february 25, 2009
                             10:00 a.m.-12:00 p.m.
                       2318 rayburn house office building

    Purpose

        On Wednesday, February 25, 2009 at 10:00 a.m. in Room 2318, Rayburn
    House Office Building, the Committee on Science and Technology will
    hold a hearing to review the impacts of current export control policies
    on U.S. science and technology activities and competitiveness and to
    examine the findings and recommendations of the National Academies
    study, Beyond ``Fortress America'': National Security Controls on
    Science and Technology in a Globalized World.

    Witnesses

    Lt. General Brent Scowcroft (Ret.), Co-Chair, National Academies
    Committee on Science, Security and Prosperity, and President and
    Founder, The Scowcroft Group

    Mr. A. Thomas Young, Co-Chair, Center for Strategic and International
    Studies Working Group on the Health of the U.S. Space Industrial Base
    and the Impact of Export Controls, and Lockheed Martin Corporation
    (Ret.)

    Dr. Claude R. Canizares, Vice President for Research and Associate
    Provost, Massachusetts Institute of Technology

    Maj. General Robert Dickman (Ret.), Executive Director, American
    Institute of Aeronautics and Astronautics

    Issues

        Some of the issues the hearing will explore include:

              What are the implications and unintended consequences
            of current export control policies for the conduct of United
            States Government and commercial science and technology
            activities and national security?

              How does U.S. export control policy affect U.S.
            scientific and technological competitiveness?

              What are the principal findings and recommendations
            of the National Academies report, Beyond ``Fortress America'':
            National Security Controls on Science and Technology in a
            Globalized World, as they relate to the conduct of U.S.
            Government and commercial science and technology activities and
            U.S. global science and technology competitiveness?

              What is required to implement the National Academies'
            report recommendations and what are the most significant
            challenges in doing so?

              U.S. export control policies have an impact on the
            conduct of the U.S. commercial space industry and government
            civil space activities. What particular issues and unintended
            consequences do the current export control policies present for
            U.S. civil and commercial space activities, including space-
            based research and human space flight activities? How serious
            are those issues and what must be done to address the
            unintended consequences?

              What are the most critical issues relevant to U.S.
            civil government and commercial space activities that should be
            considered in any potential review of U.S. export control
            policies?

              What effect, if any, do the unintended consequences
            of U.S. export control policies have on U.S. leadership in
            space in the near-term and long-term?

    INTRODUCTION

        The Cold War sparked the United States to make historic investments
    in scientific research and development that could serve our national
    security needs, including the support of university, government, and
    industrial research institutions. Those Cold War investments created a
    robust science and engineering workforce, drove innovation, fueled
    economic growth, and established the United States' preeminence in
    science and technology.
        The Soviets, however, sought access to U.S. technologies for
    potential military applications. In response, the U.S. instituted
    mechanisms aimed at preventing the transfer of certain U.S.-developed
    components, systems, and information to the Soviet Union and other
    adversaries. These national security controls include the
    classification system, export controls, limitations on the transfer of
    knowledge about technologies, visa controls, and measures to restrict
    the dissemination of certain government-funded research that could
    threaten national security.
        Export controls, which are the focus of this hearing, are directed
    by the Arms Export Control Act of 1968 and the Export Administration
    Act of 1979. The Arms Export Control Act governs the export of
    components and systems that are listed as defense articles; the
    Department of State administers the International Traffic in Arms
    Regulations (ITAR), which are the regulations to implement the Act. The
    U.S. Munitions List (USML) comprises the list of defense articles
    regulated under the ITAR; and that list includes such categories of
    items as tanks and military vehicles, aircraft and associated
    equipment, military electronics, optical and guidance and control
    equipment, toxicological agents, and spacecraft systems and associated
    equipment. ITAR also controls technical data, including data for the
    design and development of defense articles, and defense services, which
    are ``The furnishing of assistance (including training) to foreign
    persons, whether in the United States or abroad in the design,
    development, engineering, manufacture, production, assembly, testing,
    repair, maintenance, modification, operation, demilitarization,
    destruction, processing or use of defense articles'' [International
    Traffic in Arms Regulations, Section 120.9(a)(1)].
        The Export Administration Act governs the export of dual-use
    items--those that have military and as well commercial applications--
    including software and technology. The Act is implemented through the
    Export Administration Regulations (EAR), which are administered by the
    Department of Commerce. The EAR controls the export of dual-use items
    on the Commerce Control List, including software, hardware, and other
    systems subject to the EAR. The EAR also controls ``Any release of
    technology or source code subject to the EAR to a foreign nation. Such
    release is deemed to be an export to the home country or countries of
    the foreign national.'' [EAR Part 734] These ``deemed exports'' include
    technology or software released through

             ``(i) visual inspection by foreign nationals of U.S.-origin
            equipment and facilities;

             (ii) oral exchanges of information in the United States and
            abroad; or

             (iii) the application to situations abroad of personal
            knowledge or technical experience acquired in the United
            States.'' [EAR Part 734]

        The Export Administration Act has ``lapsed several times,''
    according to the National Academies report, Beyond ``Fortress
    America,'' and presidential authorities have sustained EAR requirements
    by using the International Economic Emergency Powers Act of 1977, ``on
    the grounds that the expiration of the act poses an `unusual and
    extraordinary threat to the national security, foreign policy and
    economy of the United States','' according to the report.
        What these controls mean in practice is that an institution such as
    a company or university may need to apply for an export control license
    to export controlled hardware or software (for example as part of an
    international space research mission or sale of a product or components
    abroad). The institution may also need to obtain a license to share
    designs, conduct training related to the controlled item, or discuss
    information about the item with a non-U.S. citizen who is abroad or
    working in the U.S. Export control licenses, especially ITAR licenses,
    require a significant review and interagency approval process that may
    take months.
        During the late 1990s, the implementation of export control
    policies tightened in response to findings about the unintentional
    transfer of controlled defense technologies and information to China.
    Since those changes, the time required to approve ITAR licenses, in
    particular, has put stress on the federal agency systems for processing
    licenses and on the applicants for those licenses. In 2007, the
    Government Accountability Office (GAO) commented that the time required
    for processing export licenses ``increased from a median of 13 days in
    2002 to 26 days in 2006.'' And by late 2006, ``State's backlog of
    applications reached its highest level of more than 10,000 open
    cases.'' The time involved in obtaining Technical Assistance Agreements
    (TAAs), which are required to discuss ITAR-controlled technologies, has
    also increased.
        These delays mean that commercial companies may lose the
    opportunity to respond to a bid while waiting for a license, and that
    government projects may be delayed and incur cost increases. Other
    impacts of export controls pertain to researchers who may not be able
    to discuss ideas or research equipment with foreign colleagues at an
    international conference for fear of inadvertently transmitting
    controlled information. Failure to comply with the ITAR and EAR can
    carry fines and criminal penalties. The later sections of this charter
    provide additional examples of the unintended consequences of the
    policies and the challenges in implementing them.
        A large number of organizations have made statements, released
    positions, led studies, and issued recommendations for improvements to
    the export control system. Some of those institutions include The
    Aerospace Industries Association, the Space Enterprise Council of the
    U.S. Chamber of Commerce, the Universities Space Research Association
    [an association of 102 universities], the Space Foundation, the
    Association of American Universities, the Council on Governmental
    Relations, the Center for Strategic and International Studies, and the
    Coalition for Security and Competitiveness [which includes the
    Aerospace Industries Association, American Association of Exporters and
    Importers, American Electronics Association, The Association for
    Manufacturing Technology, Business Roundtable, Chamber of Commerce
    Space Enterprise Council, Coalition for Employment Through Exports,
    Electronic Industries Alliance, General Aviation Manufacturing
    Association, Government Electronics and Information Technology
    Association, Industrial Fasteners Institute, Information Technology
    Industry Council, National Association of Manufacturers, National
    Defense Industrial Association, National Foreign Trade Council,
    Satellite Industries Association, Space Foundation and U.S. Chamber of
    Commerce.]
        The Department of State has taken some steps to increase the
    efficiency of processing export control licenses. However, a 2007 GAO
    report commented that ``Despite efforts to improve efficiency, State's
    median processing times of license applications have been increasing
    since 2003.'' In January 2008, the Bush Administration issued U.S.
    Export Control Reform Directives to ``ensure the United States' export
    control policies and practices support the National Security Strategy
    of 2006, while facilitating the United States' continued international
    economic and technological leadership,'' according to a release issued
    by the White House Office of the Press Secretary. A fact sheet released
    by the State Department's Bureau of Political-Military Affairs noted
    that the directives included making additional resources available to
    handle defense trade licenses, upgrading an electronic licensing
    system, and improving dispute resolution and enforcement.
        During the 110th Congress, the House passed H.R. 5916, the Security
    Assistance and Arms Export Control Reform Act, which directed the
    President ``to conduct a comprehensive and systematic review and
    assessment of the United States arms export controls system in the
    context of the national security interests and strategic foreign policy
    objectives of the United States,'' among other provisions. However, the
    bill never became law. During the 110th Congress, the House also passed
    H.R. 6063, the NASA Authorization Act of 2008, which was introduced by
    Rep. Mark Udall, chairman of the Subcommittee on Space and Aeronautics,
    Committee on Science and Technology. H.R. 6063 directed the Office of
    Science and Technology Policy to carry out a study of export control
    policies related to civil and commercial space activities. The House-
    passed provision did not make it into law. Other legislation on export
    controls was introduced during the 110th Congress but was not acted
    upon.
        In addition, during his campaign, then-candidate Barack Obama
    issued a white paper, ``Advancing the Frontiers of Space Exploration,''
    in which he stated that he would ``direct a review of the ITAR to
    reevaluate restrictions imposed on American companies, with a special
    focus on space hardware that is currently restricted from commercial
    export.'' His paper also stated that he would revise the licensing
    process, without impact to American national security, to ensure that
    American aerospace supplier companies are competitive in the global
    market.

    THE CHANGING ENVIRONMENT

        The geopolitical landscape has changed dramatically since national
    security controls were put into place. Advances in communications
    technologies have facilitated the growth of a global marketplace of
    goods and ideas. In addition, science and technology, which is
    increasingly international, has become a primary agent of the Nation's
    national and economic security. Recently, studies sponsored by both
    government and non-government institutions have called for reexamining
    national security controls in light of their impacts on our global
    scientific, technological, and economic competitiveness.
        In its January 2007 report, the GAO identified the export control
    system as a new high risk area. In July 2007 the GAO released a report
    in which it found that ``Given the importance of the system in
    protecting U.S. national security, foreign policy, and economic
    interests, it is necessary to assess and rethink what type of system is
    needed to best protect these interests in a changing environment.'' And
    in January 2009 the GAO reported on the status of the government's
    progress in implementing GAO recommendations. Their report, Ensuring
    the Effective Protection of Technologies Critical to U.S. National
    Security Interests, found that

             ``Over the years, GAO has identified weaknesses in the
            effectiveness and efficiency of government programs designed to
            protect critical technologies while advancing U.S. interests.
            Since this area was designated high risk in 2007, the agencies
            responsible for administering these programs, including the
            Departments of Commerce, Defense, Justice, State and the
            Treasury, have made improvements in several areas. However,
            vulnerabilities continue to exist, and agencies have yet to
            take action to address GAO's major underlying concern, which is
            the need for a fundamental re-examination of current government
            programs to determine how they can collectively achieve their
            mission and to evaluate the need for alternative approaches.''

        The need for new approaches to the export control system was the
    thrust of the recently released National Academies report, Beyond
    ``Fortress America'': National Security Controls on Science and
    Technology in a Globalized World. The report considered the multiple
    dimensions of national security controls including ``the changing
    requirements of national security from the Cold War era, the impact of
    economic globalization on the U.S. economy, the impact of the
    globalization of science and technology on the U.S. economy and on its
    S&T leadership . . ..''
        The National Academies report took a broad look at dual-use export
    controls--those technologies that may have both commercial and military
    applications--and science and technology competitiveness. The National
    Academies committee also considered visa policies given the importance,
    as discussed in the report, of the U.S. being engaged in science and
    technology internationally and learning from the best and brightest
    outside the U.S. The report did not address the classification system,
    existing statutes, or policies that may prohibit technology transfers
    to a particular nation. In addition, the committee did not make
    recommendations on multilateral export control regimes or consider how
    individual agencies manage and administer export control regulations.
    The report specifically focused on issues that could be addressed
    through Executive authority.
        In general, the report recommends significant changes to foster
    ``openness and engagement'' and that would require the government to
    provide a ``rational basis'' for restrictions on dual-use items planned
    to be exported. The report recommends that the President make some
    structural and policy changes by issuing an Executive Order under the
    authority of the International Economic Emergency Powers Act of 1977.
    According to the report, the Act allows the President to ``structure
    the regulatory framework of the dual-use export controls system.''
        The National Academies committee, co-chaired by John L. Hennessy,
    President, Stanford University and Lt. General Brent Scowcroft
    (ret.),former National Security Advisor, concluded:

             ``As a nation, we cannot, and should not abandon well-
            conceived efforts to keep dangerous technology and scientific
            know-how out of the hands of those who would use this knowledge
            to create weapons of mass destruction and other, equally
            dangerous military systems. However, these represent a very
            narrow and limited set of goods, technology, and knowledge. Our
            former unilateral strategy of containment and isolation of our
            adversaries is, under current conditions, a self-destructive
            strategy for obsolescence and declining economic
            competitiveness. A strategy of international engagement is a
            path to prosperity that can be coupled with a smarter approach
            to security using an adaptive system of government regulation
            and incentives. The committee recommends the issuance of an
            Executive Order that implements the recommendations it has
            outlined as one of the first orders of business in January
            2009.''

        Some of the elements of the Order would include:

              Establishing a process for removing every item on a
            control list after 12 months unless there is a strong case for
            keeping it;

              An economic competitiveness exemption that
            ``eliminates export controls on dual-use technologies where
            they, or their functional equivalents, are available without
            restriction in open markets outside the United States'';

              Establishing a coordinating center for export
            controls that would receive license applications, determine the
            appropriate jurisdiction for those licenses (i.e., Commerce or
            State), ensure the efficient processing of licenses, and manage
            an appeals process;

              Creating an independent export license appeals panel;
            and

              Ensuring support for excluding fundamental research
            from export controls.

        The complete list of report recommendations is included in
    Attachment A and a list of the members of the study committee is
    provided in Attachment B.
        While the National Academies report addressed the broad and
    interrelated issues of national security controls, economic security,
    and science and technology competitiveness, certain sectors of
    scientific research and commercial activity are particularly affected
    by the export control system. All satellites are export-controlled by
    the ITAR, and the implications of the regulations has been a matter of
    concern for the industries, universities, and other institutions that
    are involved in commercial and civil space activities. A number of
    studies have examined the unintended consequences of export controls on
    the U.S. civil and commercial space sectors, and the results of those
    studies and the issues they raise are detailed in later sections of
    this charter.
        Questions related to the National Academies report include such
    things as what, in specific terms, would be involved in implementing
    the National Academies' recommendations? At what point after an
    Executive Order is in place should we expect to see improvements in the
    export control system? What, specifically, does the recommended
    Executive Order address? What, if anything, is missing from the Order?
    What areas does Congress need to address? How would implementing the
    recommendations mitigate the impacts raised in specific sectors such as
    civil and commercial space? What is the outlook if the National
    Academies' recommendations are not implemented?

    NATIONAL SECURITY

        The National Academies report, ``Beyond ``Fortress America'':
    National Security Controls on Science and Technology in a Globalized
    World,'' stated in the first finding of the report:

             ``Designed for the Cold War when the U.S. had global dominance
            in most areas of science and technology, the current system of
            export controls now harms our national and homeland security,
            as well as our ability to compete economically.''

        The report also states:

             ``. . . the export control system enforced in the U.S. today
            has failed to evolve with changing global conditions, and now
            produces significant harm to U.S. military capability, to
            homeland security, and to the Nation's economic
            competitiveness.''

        The Department of Defense (DOD) examined the impact of export
    control policies on the health of the U.S. space industrial base and
    issued a report in 2007. The report, Defense Industrial Base
    Assessment: U.S. Space Industry Final Report, which will be discussed
    in later sections of this charter, states that ``The National Security
    Space Industrial Base (NSSIB) is critical to U.S. success in developing
    and deploying national security space assets.'' As part of the
    conclusions, the report states that: ``To maintain and enhance the U.S.
    competitive position in the global market, ITAR processes need to be
    frequently reviewed and adjusted, as appropriate.''
        In response to direction in P.L. 109-364, the John Warner National
    Defense Authorization Act for Fiscal Year 2007, the Institute for
    Defense Analyses produced a report, Leadership, Management, and
    Organization for National Security Space. The report, which was
    prepared by an Independent Assessment Panel chaired by Mr. A. Thomas
    Young, was accompanied by a letter to the Honorable Carl Levin,
    Chairman, Senate Committee on Armed Services that in part stated:

             ``Today, U.S. leadership in space provides a vital national
            advantage across the scientific, commercial, and national
            security realms. In particular, space is of critical importance
            to our national intelligence and war-fighting capabilities. The
            panel members nevertheless are unanimous in our conviction
            that, without significant improvements in the leadership and
            management of NSS [national security space] programs, U.S.
            space preeminence will erode to the extent that space ceases to
            provide a competitive national security advantage.''

        The Independent Assessment Panel (IAP) referenced a study by the
    Center for Strategic and International Studies (CSIS) on the health of
    the U.S. space industrial base, and noted that ``The IAP supports the
    recommendations of the CSIS panel to revisit the ITAR and relax those
    aspects that are counterproductive to U.S. competitiveness.'' The
    findings of the CSIS study are discussed in later sections of this
    charter.

    CONTROVERSIES ABOUT EXPORT CONTROL REFORM

        According to the Congressional Research Service report, The Export
    Administration Act: Evolution, Provisions, and Debate, as updated on
    January 15, 2009, debate on export administration legislation tends to
    involve a conflict between national security and commercial concerns:

             ``These concerns are not mutually exclusive . . .. For
            example, nearly everyone favors reform of the current system,
            yet no one considers themselves opposed to national security.
            Generally, however, many who favor reform of the current export
            control accept the business perspective that such reform would
            assist U.S. business to compete in the global marketplace.
            Others view the issue more from a national security
            perspective. To this group, reform should be concerned less
            with the abilities of U.S. industry to export and more with the
            effective controls placed on potential exports to countries
            that threaten the security of the United States, terrorists,
            violators of human rights, and proliferators of weapons of mass
            destruction. From these different perspectives, controversies
            arise regarding the controllability of technology, the
            effectiveness of multinational regimes, the bureaucratic
            structure of the licensing process and the impact of export
            controls on the U.S. economy.''

    ISSUES AND UNINTENDED CONSEQUENCES RELATED TO SCIENCE AND TECHNOLOGY
                        COMPETITIVENESS

    Overarching Findings of National Academies Report
        The National Academies report identifies a number of specific
    findings that argue for revamping the current export control systems:

              ``U.S. national security, including the protection of
            the homeland, is not well served by the current controls.

              The single technology base that today supports both
            U.S. commercial and military capabilities is constrained from
            expanding into new fields and from applying new scientific
            developments.

              Entire international markets are denied to U.S.
            companies because they are forbidden to ship their
            technologically sophisticated products to foreign countries.

              Obsolete lists of controlled components prevent U.S.
            companies from exporting products built from prior generation
            technologies not likely to harm national security.

              U.S. scientists are hobbled by rules that prevent
            them from working with world-class foreign scientists and with
            advanced laboratories located overseas, making it less likely
            that valuable discoveries and inventions will occur in the U.S.

              The government's rules are driving jobs abroad--
            knowledge-intensive jobs critical to the future of the U.S.
            economy.

              The government's rules are accelerating the
            development of technologies in capable research centers outside
            the U.S.''

    Impeding the Exchange of People and Ideas
        The health of the U.S. science and technology depends on the free
    exchange and transport of ``people, ideas, materials, and equipment,''
    as described in the National Academies report. Increasingly, science
    and technology competitiveness is dependent on having the ability to
    draw on the talent and capabilities of non-U.S. persons.
        According to the report,

              ``. . . with increasing frequency, important
            discoveries are made by scientists who work in teams and who
            have access to the best work going on in scientific centers
            around the world and state-of-the-art instrumentation.''

              ``Similarly, in a world in which breakthroughs can
            happen anywhere, being competitive requires being aware of--and
            capitalizing on--developments in other places . . .''

              ``A new scientific breakthrough, or a newly developed
            technological capability, can stimulate additional research in
            laboratories around the world. Although science does depend on
            the ability of researchers to validate previously published
            results, the scientific reward system--and the allocation of
            competitively awarded resources--strongly favors the first to
            publish. Speed is equally critical in bringing high-technology
            products to market.''

        U.S. visa policy governs our ability to benefit from non-U.S.
    scientific talent. The policy uses lists that identify certain areas of
    academic research, particular countries of concern, and specific
    research activities that require applicants to undergo special review.
    Visa policies were tightened after 9-11. Although ``the most draconian
    rules affecting graduate students were ameliorated'' the report notes,
    ``significant barriers still remain for scholars and researchers
    seeking visas to attend conferences or for other short-term
    professional trips in the United States.''
        In light of the challenges and implications of export control and
    visa policies for carrying out fundamental research, the National
    Academies report finds that:

             ``The best practices that underpin successful competition in
            research and technology advancement [freedom of inquiry,
            freedom to pursue knowledge at the scientist's own discretion,
            freedom to collaborate without limitation, pluralistic and
            meritocratic support of science, and freedom to publish] are
            undermined by government regulation that restricts the flow of
            information and people participating in fundamental research.''

        These impediments can have negative effects on the competitiveness
    of the U.S. scientific infrastructure within the global environment.
    For instance, the report notes that:

              ``Breakthrough discoveries in science often come when
            supporting advancements in related fields have occurred in
            sufficient numbers or new types of instrumentation have become
            available. If one researcher or laboratory `misses' a new
            advance, it is likely that a competitive researcher elsewhere
            will make the discovery soon thereafter.''

              ``. . . export controls and `deemed export' rules
            make U.S. universities less able to attract the most capable
            foreign researchers or to retain some of the most creative
            faculty members. Important discoveries may be hindered, or may
            simply occur elsewhere.''

              ``Licensing requirements inevitably lead to delays,
            and they may deter or even eliminate the spontaneous
            discoveries that arise from serendipitous interactions and
            spur-of-the moment collaborations, most of which are impossible
            under `deemed export' rules.''

              ``The best foreign universities now have the research
            equipment and infrastructure to compete with the best U.S.
            research universities for students and researchers. Where
            limitations exist on foreigners studying or working in the U.S.
            system, foreign universities are well positioned to extend
            competing offers.''

    Implications for America COMPETES Act
        The issues noted above have implications for the Nation's
    innovation and competitiveness and the types of actions directed in the
    America COMPETES Act [P.L. 110-69], which has as its three primary
    goals: 1) increasing research investment, 2) strengthening educational
    opportunities in science, technology, engineering, and mathematics; and
    3) developing an innovation infrastructure. The National Academies
    report, Rising Above the Gathering Storm, which provided the basis for
    the Act, recognized the impacts of export controls and recommended that
    the current system of ``deemed exports'' be reformed:

             ``The new system should provide international students and
            researchers engaged in fundamental research in the United
            States with access to information and research equipment in
            U.S. industrial, academic, and national laboratories comparable
            with the access provided to U.S. citizens and permanent
            residents in a similar status . . . In addition, the effect of
            deemed export regulations on the education and fundamental
            research work of international students and scholars should be
            limited . . ..''

    Using Lists to Control Exports
        Using lists such as the Commerce Control List and the U.S.
    Munitions Control List, according to the National Academies report, are
    ineffective ways to control technology transfer because the
    technologies and information on the lists are, in many cases, available
    for sale on the open market from non-U.S. sources. The lists can also
    have the effect of advancing indigenous science and technology
    capabilities and competitiveness elsewhere. For example, the report
    notes that foreign nations may use the lists to prioritize research and
    development investments, because they anticipate that U.S. companies
    and institutions may face challenges in exporting those controlled
    technologies abroad. The case of U.S. commercial communications
    satellite development exemplifies this point. As a result of ITAR
    hurdles, Europe began to develop satellite components itself and to
    produce satellites that do not use U.S.-developed technologies rather
    than purchase the components, which are ITAR-controlled, from the U.S.
        The lists also affect how U.S. researchers make decisions on the
    type of research they pursue. The National Academies report notes that
    ``Some avoid research in areas that are affected by federal controls
    out of an apprehension that significant work may not be published or
    that students or researchers needed for first-rate laboratories will
    not be available. Breakthroughs will thereby be thwarted.''
        The recommendation from the National Academies is to: ``Apply
    `sunset' requirements to all items on export control lists that are
    controlled unilaterally by the U.S., and require findings to be made
    every 12 months that removing controls on an item would present a
    substantial risk to national security.''

    Fundamental Research Exemptions
        In 1985, President Reagan issued National Security Decision
    Directive (NSDD) 189, which recognizes that ``our leadership position
    in science and technology is an essential element in our economic and
    physical security'' and ``The strength of American science requires a
    research environment conducive to creativity, an environment in which
    the free exchange of ideas is a vital component.'' To that end, NSDD
    189 states:

             ``It is the policy of this Administration that, to the maximum
            extent possible, the products of fundamental research remain
            unrestricted. It is also the policy of this Administration
            that, where the national security requires control, the
            mechanism for control of information generated during
            federally-funded fundamental research in science, technology
            and engineering at colleges, universities and laboratories is
            classification.''

        During the late 1990s, however, the implementation of export
    control policies tightened in response to findings about the
    unintentional transfer of controlled defense technologies and
    information to China, and those changes raised questions about the
    fundamental research protections under NSDD 189.
        In 2001, former National Security Advisor Condoleezza Rice
    reaffirmed the Directive, and in 2002 the State Department modified the
    ITAR as it applies to defense articles developed at U.S. universities
    for use in fundamental research. Section 123.16(10) of the ITAR states
    that:

             ``Port Directors of U.S. Customs and Border Protection shall
            permit, without a license, the permanent export, and temporary
            export and return to the United States, by accredited U.S.
            institutions of higher learning of articles fabricated only for
            fundamental research purposes.''

        The exemption includes several conditions, including:

              ``The export is to an accredited institution of
            higher learning, a governmental research center or an
            established government funded private research center located
            within countries of the North Atlantic Treaty Organization'' or
            that have been designated as a non-NATO ally.

              ``All of the information about the article(s),
            including its design, and all of the resulting information
            obtained through fundamental research involving the article
            will be published and shared broadly within the scientific
            community, and is not restricted for proprietary reasons or
            specific U.S. Government access and dissemination controls or
            other restrictions accepted by the institutions or its
            researchers on publication of scientific and technical
            information resulting from the project or activity . . ..''

        Despite the attempts to address the matter, the fundamental
    research exclusion ``has not had the effect of precluding all such
    restrictions'' according to the National Academies report. The Council
    on Governmental Relations and the Association of American Universities
    has conducted surveys of U.S. research universities to gauge the
    problem of restrictive clauses on research. According to their report,
    Restrictions on Research Awards: Troublesome Clauses 2007/2008, issued
    in July 2008,

             ``. . . federal agencies are expanding the type of controls
            they impose in award terms and conditions and are using more
            sophisticated (and varying) technical language and approaches
            for implementing restrictions that affect university research
            projects. Particularly alarming is the spread of restrictive
            award terms by federal agencies beyond contracts to federal
            assistance mechanisms, such as grants.''

        Universities maintain that the export control regulations are
    confusing with respect to fundamental research, especially given that
    research usually involves participation by non-U.S. persons in American
    universities or abroad, and interactions with them may be considered
    exports.
        The National Academies committee ``recommends that the Fundamental
    Research Exemption be maintained, adhered to, and properly implemented.
    Universities and other research institutions have worked under this
    regime successfully and have in place the necessary mechanisms to
    comply with the exemption.''

    ISSUES AND UNINTENDED CONSEQUENCES FOR U.S. GOVERNMENT CIVIL AND
                        COMMERCIAL SPACE ACTIVITIES

        Commercial and civil space activities make significant
    contributions to the economy and the Nation's science and technology
    capabilities. In 2008, global sales for U.S. aerospace companies
    totaled $204 billion of which $33 billion was for the U.S. sales of
    space systems, according to the Aerospace Industries Association.
    Universities, federal laboratories, research institutions, along with
    private industry, conduct the Nation's space-based research activities.
    These commercial and research activities help engage and train the next
    generation of scientists and engineers and develop innovative
    technologies that contribute to our economic competitiveness.
        The aerospace industry, especially the satellite manufacturing
    industry, has long maintained that export controls have led to
    decreasing competitiveness and loss of market share in the global
    market. In addition, space science researchers have identified
    unintended consequences of the ITAR on fundamental space research.
    Government officials have also questioned whether export controls are
    affecting the health of the space and defense industry. Recent studies
    have examined the impacts of export controls on these space sectors.
        In 2007, the DOD completed a study, Defense Industrial Base
    Assessment: U.S. Space Industry Final Report, which involved gathering
    quantitative data on the U.S. space industrial base and reviewing
    whether export controls were affecting the industry. The study involved
    a survey of companies and business units that included prime
    contractors that sell products to commercial and/or government
    institutions (Tier 1), subcontractors that provide major components and
    systems to prime contractors (Tier 2), and lower tier companies that
    sell subassemblies, structures, materials and less complex components
    as well as engineering and other services (Tier 3). The DOD Industrial
    Base Assessment found that ITAR is having an impact on industry sales
    and competitiveness; examples of these impacts are provided in the
    sections below.
        In 2008, the CSIS issued a Briefing of the Working Group on the
    Health of the U.S. Space Industrial Base and the Impact of Export
    Controls, which reviewed the results of the 2007 DOD Defense Industrial
    Base Assessment, interviewed and collected data from across the
    government, industry, and other experts, and examined the findings of
    other reports on export controls. The findings of the CSIS study echo
    many of the issues affecting the broader areas of science and
    technology that were raised in the National Academies report. The CSIS
    report concludes, for example, that:

              U.S. policies are not controlling the rapid
            proliferation of non-U.S. space capabilities and in some cases
            the policies are encouraging them;

              U.S. preeminence in space is being challenged;

              Current export control policies are restricting U.S.
            international space activities and partnerships; they have led
            to separation between U.S. and emerging non-U.S. space actors;

              Certain elements of export controls are in variance
            with U.S. National Space Policy; and

              U.S. market share in foreign space markets is
            declining and it is harder for U.S. companies to compete in
            non-U.S. markets, particularly for the lower tier companies.

        The implications of these conclusions are described further in the
    sections below.
        The National Academies held a workshop on the implications of the
    ITAR and space science. In 2008, the Academies released, Space Science
    and the International Traffic in Arms Regulations: Summary of a
    Workshop. The workshop summary pointed to the disconnect between the
    ITAR regulations, the fundamental research exemption, and the way in
    which space-based research is conducted. The ambiguities and
    uncertainties in the interpretation of and application of the ITAR
    requirements are leading academic institutions to be overly
    conservative in their actions. This results in concerns over loss of
    competitiveness in scientific research and education at U.S.
    institutions of higher learning, according to the report.

    Increasing Foreign Capability and Diminished U.S. Leadership in Space
        The CSIS report found that ``United States preeminence in space in
    under challenge in many areas.'' Export controls have not thwarted the
    increasing capabilities of foreign space programs.

              According to the CSIS report, Chinese and Indian
            space programs have continued to make considerable progress
            including the launching of indigenous high resolution imaging
            satellites, lunar probes, and China's successful launch of a
            human into outer space and the successful execution of its
            first human space-walk activity.

              The report also notes that the number of nations with
            their own space-based positioning and navigation systems has
            tripled since 1999; the number of countries possessing earth
            observation and reconnaissance satellites has doubled since
            1999; at least twelve nations are capable of launching their
            own satellites; and 38 countries can control the operations of
            their own communication satellites.

              According to CSIS, the capabilities of non-U.S. space
            countries participating in the commercial market has also
            grown. Non-U.S. companies are now capable of producing
            commercial communications satellites that are on par with those
            of the U.S.

                      As noted in the CSIS report, ``Since 1998, European
                    and Asian manufacturers of satellites have gone from
                    delivering satellites that were smaller, had fewer
                    transponders, lesser payload power and shorter lives to
                    manufacturing satellites of equal weight, number of
                    transponders, payload power and lifespan.''

                      Europe has developed ITAR-free components and
                    systems.

                      According to a news item of the European Space
                    Agency, the European Commission, the European Space
                    Agency, and the European Defense Agency ``have agreed
                    to join forces in order to develop critical space
                    technologies in Europe. The aim is to ensure that
                    Europe can rely on a technical and industrial capacity
                    for accessing space, in particular in the area of the
                    manufacturing of satellites and launchers.''

              Foreign innovation and human capital are important to
            U.S. leadership in space but are increasingly harder to access.
            The U.S. has benefited from foreign innovation and talent.
            Foreign students obtain more than half of the Ph.D.s in
            science, technology, and engineering and workers born outside
            of the U.S. account for more than a quarter of the science and
            technology workforce in the U.S., according to the CSIS report.
            Export controls make it more difficult to take advantage of
            this talent pool, as noted in the CSIS report.

    Conflicts with Objectives of U.S. National Space Policy
        In 1996, the Clinton Administration issued a National Space Policy
    in which the policy's commercial space guidelines stated:

             ``The fundamental goal of U.S. commercial space policy is to
            support and enhance U.S. economic competitiveness in space
            activities while protecting U.S. national security and foreign
            policy interests. Expanding U.S. commercial space activities
            will generate economic benefits for the Nation and provide the
            U.S. Government with an increasing range of space goods and
            services.''

        In 2006, the Bush Administration issued a U.S. National Space
    Policy, which superseded the 1996 policy, and states that:

             ``The United States Government will pursue, as appropriate,
            and consistent with U.S. national security interests,
            international cooperation with foreign nations and/or consortia
            on space activities that are of mutual benefit and that further
            the peaceful exploration and use of space.''

        The 2006 Policy also supports the use of effective export policies
    and states that ``space-related exports that are currently available or
    are planned to be available in the global marketplace shall be
    considered favorably.''
        The goals of the space policy include:

              ``Strengthen the Nation's space leadership and ensure
            that space capabilities are available in time to further U.S.
            national security, homeland security, and foreign policy
            objectives;''

              ``Enable a dynamic, globally competitive domestic
            commercial space sector in order to promote innovation,
            strengthen U.S. leadership, and protect national, homeland, and
            economic security;''

              ``Encourage international cooperation with foreign
            nations and/or consortia on space activities that are of mutual
            benefit and that further the peaceful exploration and use of
            space, as well as to advance national security, homeland
            security, and foreign policy objectives.''

        The CSIS report found that aspects of current export control
    policies and regulations are at variance with the national space
    policy. For instance, the export control system does not enable
    cooperation while also denying capabilities to adversaries. Placing
    satellites on the USML has encouraged the development of non-U.S. space
    capabilities, and ITAR regulations have had negative impacts for U.S.
    industry. CSIS also notes that export controls have interfered with a
    legacy of beneficial collaboration with foreigners and have made it
    difficult for international partners to resolve anomalies in
    collaborative space activities.

    Issues for Fundamental Research Using Space-Based Hardware
        In response to concerns about the transfer of export controlled
    hardware and information to China during the 1990s, the Strom Thurmond
    National Defense Authorization Act for Fiscal Year 1999 [P.L. 105-261]
    transferred ``all satellites and related items that are on the Commerce
    Control List of dual-use items . . . to the United States Munitions
    List and controlled under section 38 of the Arms Export Control Act . .
    ..''
        In 2002, the Department of State revised the ITAR language
    concerning scientific satellites for fundamental research. ITAR
    licenses are not required for scientific research satellites when
    specific conditions are met. Space researchers, however, report
    confusion about the application of that exemption to space research
    projects.
        The summary report of the National Academies workshop on space
    science and ITAR noted that regulations are applied differently to
    institutions involved in a single space project--national labs,
    universities, industry, and government. In addition, researchers are
    unclear about the type of information that can be placed in the public
    domain, including in the classroom. Moreover, the fundamental research
    exclusion in the ITAR applies only to ``accredited U.S. institutions of
    higher learning.'' There is also a lack of clarity about involving
    foreign students and researchers in space research projects that may
    use ITAR-controlled technology. Researchers are also unclear about what
    information regarding a satellite project they can share with non-U.S.
    individuals or students in an academic environment.
        In the absence of clarity, universities and researchers interpret
    regulations conservatively and may add burdens that are not necessary
    and lead to decisions that affect university engagement in space
    research. For example, according to the National Academies' workshop
    summary, universities and researchers may make decisions not to pursue
    projects requiring ITAR licenses or to allow non-U.S. researchers and
    students to participate in space research projects. In addition, the
    report says that ``uncertainties are leading some professors to `dumb
    down' course content rather than risk ITAR violations by discussing
    their research in the classroom setting.''
        The workshop summary on space science and ITAR also notes that
    compliance ``creates a significant unfunded mandate for universities,
    because they operate with capped overhead costs . . ..'' In addition,
    universities bear the costs of educating faculty and contracting and
    grants officers, maintaining documentation, handling negotiations with
    the State Department, and ``the substantial costs of delays in securing
    approvals for activities that fall under ITAR,'' according to the
    report.

    Reduced Competitiveness of Space Industry
        Both the CSIS study and the Defense Industrial Base Assessment make
    findings about the increasing challenges that U.S. space companies face
    in being competitive in foreign markets. According to the results of
    the DOD-initiated space industrial survey, ``Defense Industrial Base
    Assessment: U.S. Space Industry Final Report,'' several companies
    voluntarily commented that ITAR was an issue in being competitive in
    foreign space markets. For example, the Assessment notes that:

             ``Over two-thirds of the survey respondents felt strongly
            enough to add narrative comments with over a quarter of those
            encountering difficulties in export markets. Some companies
            have self-eliminated from foreign markets to focus on the
            domestic only market.''

             ``There have been a number of firms in all tiers that have not
            applied for export licenses (half of the companies surveyed)
            due to real or perceived problems with navigating the licensing
            process.''

        One company commented that it chose to forgo space business because
    that business has not been profitable and some foreign customers will
    not procure items that require ITAR licenses.

              Of the companies that participated in the survey for the DOD
            Assessment, 58 percent listed export controls as the number one
            barrier to entry when attempting to market products abroad.

              According to the DOD Assessment, ``Companies reported $2.35B
            of ITAR-related potential sales lost due to the licensing
            process from 2003-2006, an average of $588M annually. This loss
            represents about one percent of total U.S. space revenues.''
            [Note that the $588M figure is a best estimate and does not
            include opportunities that were not pursued or that were lost
            due to ITAR. It may also involve some double-counting among
            competitors.]

              The cost of managing compliance with export controls is
            another challenge. ``Space industry-wide compliance costs
            averaged $49M per year in 2003-2006,'' according to the DOD
            Assessment, and created a significant financial burden,
            especially for smaller companies.

        The CSIS recommendation is to ``Remove from the Munitions List
    commercial communications satellite systems, dedicated subsystems, and
    components specifically designed for commercial use; provide safeguards
    by having Defense Department identify critical space components and
    technologies that should always require licensing and referral. Have
    the appropriate executive departments conduct a study to see if other
    space technologies should be removed from the list.''

    Pronounced Impacts on Competitiveness of Smaller and New Commercial
            Space Companies
        The Assessment and the CSIS report found, in particular, that the
    burden of ITAR is ``more pronounced'' for smaller companies (the lower
    tiers) in terms of compliance costs and exports to foreign systems for
    example. It is the lower tier companies that are often the sources of
    innovation. The CSIS study found that ``Export controls are adversely
    affecting U.S. companies' ability to compete for foreign space
    business, particularly the second and third tier. And it is the 2nd/3rd
    tier of the industry that is the source of much innovation, and is
    normally the most engaged in the global market place in the aerospace/
    defense sector.'' In addition, the President and CEO of the General
    Aviation Manufacturers Association (GAMA) stated at a March 2008 forum
    on export controls that ``small companies where much of the innovation
    takes place [are] leary of participating in a program that could put
    them in a position of inadvertently violating export control rules.''
        One space company that is aiming to sell access to a commercial
    space habitat found that the modular inflatable technology that forms
    the basis of its space habitat is export controlled. The company also
    ran into ITAR problems with a basic technical stand. As the company
    President, Robert Bigelow, reported in a February 2008 article in Space
    News, ``A wonderful example of the irrationality of the current regime
    is the 'technical stand' from our Genesis campaigns. This simple
    aluminum stand is composed of a circular base with several legs
    sticking out. If you were to turn the stand upside down it would
    literally be indistinguishable from a common coffee table. However,
    under the current export control regime, the stand was considered `ITAR
    hardware' and we were required to have two security officers guarding
    the stand on a 24/7 basis while at our launch base in Russia.''

    Lost Revenue in Satellite Manufacturing Market
        The CSIS report notes that ``Study after study shows the same
    results, an erosion of U.S. share of the global commercial satellite
    market since the late 1990s.''
        In addition, the DOD Assessment, shows that, based on Satellite
    Industry Association reports in 2004 and 2006,

              ``The U.S. share of global satellite manufacturing has
            decreased since the ITAR changes were implemented in 1999.''

              ``U.S. market share dropped from 63 percent in 1996-1998 to
            52 percent in 1999-2001 and 42 percent in 2002-2006.''

              ``Revenues dropped in real terms as well from an average of
            $6.6B in the first period, to $5.5B in the transition period,
            and $4.2B in the most recent period of the data.''

              ``U.S. share of GEO [geostationary] commercial
            communications satellites manufactured has decreased 10 percent
            since 1998.''

        Challenges for Government-Sponsored International Space Activities
        Much of the Nation's civil space activities are international given
    the global nature of the marketplace, the benefits of commercial
    strategic partnerships, and the legacy of cooperation in NASA's space-
    based scientific research and human exploration mission programs.
    Export controls hinder these activities and may introduce safety
    concerns. The NASA director for export control noted at a March 2008
    Aerospace States Association forum on Export Controls that:

             ``Unfortunately, certain provisos requiring separate and
            specific government review and approval for any collaborative
            anomaly resolution activity may impede the ability of NASA's
            contractors to expeditiously take action to assure operations
            safety and mission success, including during real-time
            operations, where an anomaly could be encountered.'' He said
            ``Rendezvous and docking of the European Automated Transfer
            Vehicle (ATV) and Japanese H-II Transfer Vehicle (HTV) with the
            International Space Station are time-critical operations that
            require timely exchange of information for effective
            operations. In the event of an on-orbit problem, for the safety
            of the Space Station and its crew, ATV and HTV engineers must
            be able to quickly and easily share technical data--in real-
            time--with U.S. engineers . . ..''

        Along those same lines, a 2007 report of the International Space
    Station Independent Safety Task Force (IISTF) explained that
    ``Currently the ITAR restrictions and the IP's objections to signing
    technical assistance agreements are a threat to the safe and successful
    integration and operations of the Station.'' The study recommended that
    the State Department grant relief to NASA contractors working directly
    with the International Space Station (ISS) international partners and
    their contractors to enable engineering and safety reviews, program
    management interactions, and to handle anomaly resolution among other
    specific activities and that the ``Executive and Legislative Branches
    of the government should conduct a comprehensive and thorough review of
    government policies and procedures related to ITAR and related export
    controls as soon as practical.''
        The CSIS recommendation on anomaly resolution is that: ``The
    Secretary of Defense and NASA Administrator, in addition to the
    Secretary of State, should have the authority to grant real-time, case-
    by-case, specific time period exemptions for anomaly resolutions deemed
    to be in the national interest based on criteria from the National
    Space Policy.''
        The NASA export control director also commented that the State
    Department has ``advised NASA to seek legislative authority as a
    prerequisite to the Department's promulgation of an exemption to
    facilitate the implementation of NASA's programs, including the U.S.
    Space Exploration Policy.'' The Bush Administration did not send any
    proposed legislation to Congress regarding this export control matter.
        A significant portion of NASA's science missions involve
    international cooperation in which export controls apply. At a hearing
    of the House Committee on Science and Technology, Subcommittee on Space
    and Aeronautics, held in March 2008 to examine NASA's science programs,
    Dr. Jack Burns, a professor from the University of Colorado noted: ``.
    . . we need to be looking at more international cooperation because
    sharing the costs and the risks associated with these large projects in
    astrophysics . . . The ITAR restrictions are making it more difficult
    than they need to be.'' Another witness at the hearing, Dr. Steven
    Squyres of Cornell University, the Principal Investigator for the Mars
    Exploration Rovers (Spirit and Opportunity), testified that ``many
    talented students come and want to work on the mission. These are
    students and post-docs from Denmark and Canada, and we have had to turn
    away people because of the restrictions on ITAR. And these are people
    who can materially advance a U.S. space mission and make it a better
    mission.''
        In addition, the National Academies workshop summary on space
    science and ITAR raised concern over the ability to continue
    international collaborations, especially as projects become
    increasingly more complicated. The workshop summary notes that:

             ``The costs and delays imposed by ITAR processing requirements
            coupled with other nations' reluctance to be made subject to
            restrictions derived from U.S. law and regulations, are making
            the United States less and less desirable as a partner to its
            foreign collaborations. The implications for continued
            international collaboration are grave.'' The workshop summary
            also said that ``International participants in the workshop
            went so far as to speculate that without high-level U.S.
            Government relief on ITAR, the development of highly integrated
            infrastructure programs, such as those envisioned for human
            space exploration, will be impossible.''

    ATTACHMENT A

      National Academies, Beyond ``Fortress America'': National Security
         Controls on Science and Technology in a Globalized World, 2009

                       Excerpt from the Executive Summary

    ``Recommendations
        The committee structured its recommendations into three areas:
    reforming the export control process, ensuring scientific and
    technological competitiveness, and improving the non-immigrant visa
    system that regulates the entry into the United States of foreign
    science and engineering students, scholars, and professionals.
        In the committee's view, it is important to act immediately, within
    the boundaries of the President's authority to ameliorate the policy
    logjam that is the unintended consequence of Congress's inaction over
    dual-use export controls. The new President needs to make the changes
    that will stem a serious decline affecting broad areas of the Nation's
    security and economy.

    Recommendation 1. The President should restructure the export control
    process within the federal government so that the balancing of
    interests can be achieved more efficiently and harm can be prevented to
    the Nation's security and technology base; in addition to promoting
    U.S. economic competitiveness.
        Restructuring the export control process does not involve
    abandoning all export controls. Rather, the committee recommends that
    two policy changes and two structural changes be made to retain needed
    export controls while shedding the largest obstacles to an efficient
    system. With these changes implemented in an expedient manner, the
    United States will stem the loss of technological and economic
    competitiveness and begin to benefit from carefully targeted and
    calibrated controls that reflect and meet current challenges that the
    country faces in protecting both our national security and our economic
    well-being.

    Action Items

    A. Recognize the interdependence of national security and economic
    competitiveness factors in making export control decisions with respect
    to individual requests for licenses through a principle-based system.
        When the licensing agency applies principles to decisions about
    export controls, the focus will stay on why items should or should not
    continue to be controlled, rather than on adding to otherwise static
    lists of controlled items. This kind of governance system can assess
    each decision in terms of whether an item should be controlled against
    the governing principles that have been established within the system.
    Doing so can ensure that the remaining controlled items are relevant to
    rapidly changing global conditions. It can also help ensure that
    decisions are made in a timely manner. The following are the principles
    that the committee recommends:

            1.  Maintain the value of protecting traditional U.S. national
            security in export control policy.

            2.  Recognize that today this value must be balanced against
            the equally important value of maintaining and enhancing the
            scientific and technological competitiveness of the United
            States.

            3.  Allow openness and engagement to prevail unless a
            compelling case can be made for restrictions.

            4.  Articulate a rational basis for each restriction.
            Restrictions on unclassified technology should be implemented
            only when:

                    a.  The U.S. alone, or the U.S. and cooperating allies,
                    possess technology that leads not only to identifiable
                    military advantage, but to an advantage that is likely
                    to persist for a significant period of time (i.e., the
                    time needed to field a system based on that
                    technology);

                    b.  The U.S., or the U.S. acting together with allies,
                    control the technology such that they can prevent it
                    from moving into the hands of possible adversaries;

                    c.  The restrictions do not impose costs and
                    inefficiencies that are disproportionate to the
                    restrictions' security benefits; and

                    d.  Restrictions are re-examined and re-adjusted
                    periodically to ensure they remain appropriate.

            5.  Protect the capability to ``run faster.''

            6.  Treat weapons separately--but define them narrowly and
            precisely.

            7.  Recognize the ``global public good'' nature of health-
            related technologies.

    B. Apply ``sunset'' requirements to all items on export control lists
    that are controlled unilaterally by the U.S., and require findings to
    be made every 12 months that removing controls on an item would present
    a substantial risk to national security. No version of the current
    control system should survive without an effective method for pruning
    items from the control lists when they no longer serve a significant
    definable national security interest.

    C. Establish as a new administrative entity a coordinating center for
    export controls, with responsibilities for coordinating all interfaces
    with persons or entities seeking export licenses and expediting agency
    processes with respect to the granting or denial of export licenses.
        This small coordinating entity would be responsible for:

              Receiving all applications for export licenses;

              Determining whether the Department of Commerce or the
            Department of State should handle the license application and
            dispatch the application to the appropriate agency for a
            decision;

              Maintaining timetables for decision-making on license
            applications so that applications do not languish;

              Receiving decisions on applications from the
            designated agencies and distributing these decisions to
            applicants;

              Receiving appeals of licensing decisions and
            petitions for review of sunset decisions, and delivering these
            to the appellate panel (see description below);

              Maintaining timetables for decisions on appeal;

              Receiving decisions on appeals and distributing these
            decisions to applicants;

              Providing administrative support to the appellate
            panel (see description below); and

              Monitoring and oversight of the sunset process.

    D. Establish an independent export license appeals panel to hear and
    decide disputes about whether export licenses are required, whether
    particular decisions to grant or deny licenses were made properly, and
    whether sunset requirements have been carried out properly. An
    independent, neutral decision-making authority is required to break the
    logjams in the system caused by philosophical differences and varying
    interpretations of statutory, regulatory, and executive order language.
    Two kinds of issues can be resolved quickly and effectively using an
    appellate decision-making panel:

              First, if the agency makes a decision (either
            requiring or not requiring a license), and a party or a
            government agency believes the matter was wrongly decided,
            there is an avenue to resolve these differences.

              Second, if the agency fails to remove an item or
            category of items from the control list under the sunset
            requirement, or does not act at all within the one-year time
            period for review of each item on the list, an affected party
            could appeal either to reverse the agency's determination, or
            to require the agency to act in a timely way to make the
            necessary determination.

        The committee recommends that an independent export license appeals
    panel be constituted, appointed by the President or the National
    Security Advisor Panel members would serve a five-year term. [NB: It is
    at times difficult to get presidential action on appointments in a
    timely way, particularly at the beginning of an administration when
    there are many competing concerns. For that reason, the President's
    Executive Order would allow 90 days from the date of issuance of the
    Order for the appointments to be made through the presidential
    processes, and after that, the appointments would be made by the Chief
    Judge of the Federal Court of Appeals for the District of Columbia
    Circuit within 30 days. Replacement judges would be selected in the
    same way. No Senate confirmation would be required because this is not
    a ``court''; it is an administrative panel assembled by the President
    to assist agencies in carrying out their responsibilities. This panel
    makes decisions among competing interests of agencies the same way the
    National Security Council's staff makes decisions about the competing
    interests of the Departments of State and Defense.] The panel would be
    co-located with the coordinating center and would be housed, for
    administrative purposes, under the same organizational umbrella.
    Appeals panels such as this one are not ``directed'' by an
    administrative authority. This kind of panel acts independently and
    neutrally to resolve disputes. It has no operational responsibility
    other than to hear disputes and issue opinions.
        The best organizational home for the proposed coordinating center
    and the export license appeals panel would be within the National
    Security Council structure, with the coordinating center's director
    reporting directly to the National Security Adviser. This placement in
    the White House structure will ensure the coordinating center's
    independence and will establish its relationship to the President. The
    coordinating center and the export license appeals panel would not
    necessarily be co-located with the NSC. This would not be required for
    an effective exercise of its powers under the Executive Order.
        The committee weighed several options before making the
    recommendation for a new coordinating center and an export license
    appeals panel and locating them within the NSC. The option to create an
    interagency group was rejected because experience supports the
    conclusion that this would devolve into just another debating society
    and would not constitute a practical means to improve the present
    export control system. The option to use a group made up of private
    sector members was rejected because that alternative would not be
    acceptable to the government agencies involved. The option to place
    this responsibility with the Department of Defense was rejected,
    because the department, through its management of the Militarily
    Critical Technologies List, is an important player in the export
    control regime. Similarly, any placement within any other cabinet-level
    department involved in licensing would also compromise the independence
    of the proposed center. The option to place these administrative
    functions in the Office of Management and Budget was also considered.
    Although neither the National Security Council nor the Office of
    Management and Budget is an operational agency, the committee thinks
    that the NSC provides the better fit, because of its focus on national
    security and economic policy. In addition, the chain of command would
    have the coordinating center's director reporting directly to the
    National Security Advisor. This would not only signify the importance
    of these issues, in terms of both national security and economic
    policy, it would also serves as a brake on the director in terms of
    choosing his or her battles carefully.

    Recommendation 2. The President should direct that executive
    authorities under the Arms Export Control Act and the Export
    Administration Act be administered to assure the scientific and
    technological competitiveness of the United States, which is a
    prerequisite for both national security and economic prosperity.

    Action Items

    A. Maintain the Fundamental Research Exemption that protects
    unclassified research, as provided by National Security Decision
    Directive 189, and ensure that it is properly implemented.

    B. Create an economic competitiveness exemption that eliminates export
    controls on dual-use technologies where they, or their functional
    equivalents, are available without restriction in open markets outside
    the United States.

    Recommendation 3. The President should maintain and enhance access to
    the reservoir of human talent from foreign sources to strengthen the
    U.S. science and technology base. Traditionally, the United States had
    to worry about science and technology flowing out of the country. In
    today's conditions, the U.S. must make sure that advanced science and
    technology will continue to flow into the country. For this reason, the
    U.S. visa regulations as applied to credentialed foreign scientists
    should ensure that the U.S. has access to the best talent. Science and
    engineering degree holders who prefer, after graduation, to work in the
    U.S. should have ready access to permission for long-term stays.
    Granting this access for highly trained technical and scientific
    personnel is an important way of augmenting a critical segment of the
    workforce. The U.S. cannot protect U.S. jobs by denying entry to
    foreign professionals; jobs will simply go abroad. It is important for
    both the national security and economic prosperity to maintain the flow
    of human talent into the United States.

    Action Items

    A. Streamline the visa process for credentialed short-term visitors in
    science and technology fields.
        The committee recommends the President's Executive Order require
    that a non-immigrant visa applicant who is a graduate student,
    researcher, or professional in any field of science or technology and
    whose application is supported by a qualified university, scientific
    body, or corporation should receive a determination on his or her visa
    application within 30 days. This will allow access for credentialed
    academic researchers to work with U.S.-based colleagues and in U.S.-
    based programs, and will facilitate work done in U.S. science
    laboratories.

    B. Extend the duration of stay for science and engineering graduates
    with advanced degrees.
        The committee recommends the President's Executive Order provide a
    one-year automatic visa extension to international students to remain
    in the United States to seek employment or acceptance into further
    advanced study on receipt of advanced degrees in science, technology,
    engineering, mathematics, or other fields of national need at qualified
    U.S. institutions. If these students are offered jobs by U.S.-based
    employers and pass security screening measures, they should be provided
    automatic work permits and expedited residence status. If students are
    unable to obtain employment within one year, their visas would expire.

    C. Include expert vouching by qualified U.S. scientists in the non-
    immigrant visa process for well known scholars and researchers.
        The committee recommends that the President's Executive Order allow
    qualified U.S. scientists, as part of the visa application process, to
    vouch for the technical credibility and legitimacy of visa applicants
    who are in the same or in a similar field. A more interactive
    application review procedure would permit those with expertise in
    relevant scientific and technology fields (and personal knowledge of
    the expertise of the individual whose application is being reviewed) to
    aid consular officials in accurately and efficiently determining the
    existence of a real security threat.

    D. Institute skills-based preferential processing with respect to visa
    applications.
        The committee recommends that the President's Executive Order
    institute a new skills-based, preferential processing with respect to
    visa applications. The visa applications of scientists and engineers
    should be given priority. Graduate-level education and science and
    engineering skills should substantially raise an applicant's chances
    and confer priority in obtaining residence permits and U.S.
    citizenship.

    In Conclusion

        As a nation, we cannot, and should not abandon well-conceived
    efforts to keep dangerous technology and scientific know-how out of the
    hands of those who would use this knowledge to create weapons of mass
    destruction and other, equally dangerous military systems. However,
    these represent a very narrow and limited set of goods, technology, and
    knowledge. Our former unilateral strategy of containment and isolation
    of our adversaries is, under current conditions, a self-destructive
    strategy for obsolescence and declining economic competitiveness. A
    strategy of international engagement is a path to prosperity that can
    be coupled with a smarter approach to security using an adaptive system
    of government regulation and incentives. The committee recommends the
    issuance of an Executive Order that implements the recommendations it
    has outlined as one of the first orders of business in January 2009.''

    ATTACHMENT B

                         Members of National Academies

                 Committee on Science, Security and Prosperity

    John L. Hennessy (Co-Chair), President, Stanford University, Palo Alto,
            CA

    Brent Scowcroft (Co-Chair), President and founder, The Scowcroft Group,
            Washington, DC

    Ronald Atlas, Professor of Biology and Public Health, and Co-Director
            of the Center for Health Hazards Preparedness, University of
            Louisville, Louisville, KY

    William F. Ballhaus, Jr., Retired, President and CEO, The Aerospace
            Corporation, El Segundo, CA

    Alfred R. Berkeley, III, Chairman, Pipeline Trading, New York, NY

    Claude R. Canizares, Vice President for Research and Associate Provost,
            Massachusetts Institute of Technology, Cambridge, MA

    Gail H. Cassell, Vice President, Scientific Affairs and Distinguished
            Lilly Research Scholar for Infectious Diseases, Eli Lilly and
            Company, Indianapolis, IN

    France A. Cordova, President, Purdue University, West Lafayette, IN

    Ruth A. David, President and Chief Executive Officer, Analytic Services
            Inc., Arlington, VA

    Gerald L. Epstein, Senior Fellow for Science and Security, Homeland
            Security Program, Center for Strategic and International
            Studies, Washington, DC

    John Gage, Partner, Kleiner, Perkins, Caufield & Byers, Menlo Park, CA

    B.R. Inman, LBJ Centennial Chair in National Policy, University of
            Texas, Austin, TX

    Anita Jones, Lawrence R. Quarles Professor of Engineering and Applied
            Science, School of Engineering and Applied Science, University
            of Virginia, Charlottesville, VA

    Judith A. Miller, Sr. Vice President & General Counsel, Bechtel Group,
            Inc., San Francisco, CA

    Norman P. Neureiter, Director, Center for Science, Technology and
            Security Policy, American Association for the Advancement of
            Science, Washington, DC

    Elizabeth Rindskopf Parker, Dean, McGeorge School of Law, University of
            the Pacific, Sacramento, CA

    John S. Parker, Senior Vice President, Science Applications
            International Corp., Alexandria, VA

    Suzanne D. Patrick, Independent Consultant, Washington, DC

    Deanne Siemer, Managing Director, Wilsie Co. LLC, Washington, DC

    Mitchel B. Wallerstein, Dean, The Maxwell School, Syracuse University,
            Syracuse, NY
        Chair Gordon. This hearing will come to order, and good
    morning. Welcome to today's hearing entitled the Impacts of
    U.S. Export Control Policies on Science Technology Activity and
    Competitiveness. I would like to begin by welcoming our panel
    of distinguished witnesses and look forward to your testimony.
    And let me just put everyone on notice that General Scowcroft,
    who is an important part of this panel, is immortal and he got
    stuck in the long lines. And we tried to in respect to those
    folks who are here on time, get started on time, and as he
    comes in, he will join us welcomely and discreetly. And so we
    will just let everyone know that.
        The Nation's export controls system and the related
    International Traffic in Arms Regulations, also known as ITAR,
    were put into place to help protect America's sensitive
    technologies from falling into the hands of those who might do
    harm to this nation.
        In short, the export controls were supposed to strengthen
    our national security.
        However, in recent years there has been a growing chorus of
    concern about some of the unintended consequences of the
    current system of export controls for both the Nation's
    competitiveness in the global economy and for the Nation's
    science and technology enterprise.
        Equally troubling, there are also increasing expressions of
    concern from experts in the national security industry and
    academic communities to the effect that the current system of
    export controls is actually weakening our national security,
    not strengthening it, while undermining the health of our
    science and technology enterprise.
        In that regard, let me quote from the recent National
    Academies report authored by a distinguished panel under the
    co-chairmanship of Gen. Scowcroft, one of witnesses at today's
    hearing, and I quote: ``The national security controls that
    regulate access to and export of science and technology are
    broken. As currently structured, many of these controls
    undermine our national and homeland security and stifle
    American engagement in the global economy, and in science and
    technology. Fixing these controls does not mean putting an end
    to them, but implementing reforms based on the realities of the
    risks and opportunities of today's threats to our nation.''
        The panel then goes on to make an equally sobering
    statement, and once again I quote: ``The export controls and
    visa regulations that were crafted to meet conditions the
    United States faced over five decades ago now quietly undermine
    our national security and our national economic well-being.''
        Those are very serious statements from a group of very
    knowledgeable individuals, and I think that they warrant our
    close consideration.
        In addition, there have been a growing number of reports
    that have focused on the impact of the current export controls
    regime on America's civil and commercial space programs and
    space research activities.
        Those reports have also reached some of the same troubling
    conclusions.
        For example, the Center for Strategic and International
    Studies Working Group on the Health of the U.S. Space
    Industrial Base and the Impact of Export Controls, which was
    co-chaired by another one of our witnesses today, Thomas Young,
    quoted, and again I will quote: ``The current export control
    policy is constricting U.S. engagement and partnerships with
    the rest of the global space community, and is feeding a
    growing separation between the U.S. space community and an
    emerging non-U.S. space community.''
        And they go further to say, ``Export controls are adversely
    affecting U.S. companies' ability to compete for foreign space
    business, particularly the second and third tier. And it is the
    second and third tier of the industry that is the source of
    much innovation, and is normally the most engaged in the global
    market place in the aerospace/defense sector.''
        Findings such as those led this committee last year to
    include a provision in the House-passed NASA Authorization Act
    of 2008 directing the Director of the Office of Science and
    Technology Policy to carry out a comprehensive study of the
    impact of current export control policies on our civil and
    commercial aerospace enterprise.
        While that provision did not make it into the final public
    law, I am encouraged that President Obama called for a similar
    review during his Presidential campaign, and I am optimistic
    that such a study will be initiated and I will be in written
    contact with the Administration making that request.
        In closing, I think that it is time for Congress to take
    another look at the Nation's export controls regime to ensure
    that it is working effectively and without unintended adverse
    impacts.
        As part of that look, we want to understand any negative
    effects that the current export controls regime may be having
    on our efforts to stimulate the economy and promote long-term
    growth through the investment of science and technology.
        This committee is starting the process with today's
    hearing, and I hope and anticipate that other committees will
    be following up in the coming weeks and months with further
    oversight of other aspects of the export controls issue.
        With that, I again welcome our witnesses, and I will now
    turn to my friend, Mr. Hall, for any opening remarks that he
    cares to make.
        [The prepared statement of Chair Gordon follows:]
                    Prepared Statement of Chair Bart Gordon
        I would like to begin by welcoming our panel of witnesses to this
    morning's hearing. We look forward to your testimony.
        The Nation's export controls system and the related International
    Traffic in Arms Regulations--also known as ITAR--were put into place to
    help protect America's sensitive technologies from falling into the
    hands of those who might do harm to this nation.
        In short, export controls were supposed to help strengthen our
    national security.
        However, in recent years there has been a growing chorus of concern
    about some of the unintended consequences of the current system of
    export controls for both the Nation's competitiveness in the global
    economy and for the Nation's science and technology enterprise.
        Equally troubling, there are also increasing expressions of concern
    from experts in the national security, industrial, and academic
    communities to the effect that the current system of export controls is
    actually weakening our national security--not strengthening it--while
    undermining the health of our science and technology enterprise.
        In that regard, let me quote from the recent National Academies
    report authored by a distinguished panel under the co-chairmanship of
    Gen. Scowcroft, one of witnesses at today's hearing:

             ``The national security controls that regulate access to and
            export of science and technology are broken. As currently
            structured, many of these controls undermine our national and
            homeland security and stifle American engagement in the global
            economy, and in science and technology.

             Fixing these controls does not mean putting an end to them,
            but implementing reforms based on the realities of the risks
            and opportunities of today's threats to the Nation.''

        The panel then goes on to make an equally sobering statement:

             ``The export controls and visa regulations that were crafted
            to meet conditions the United States faced over five decades
            ago now quietly undermine our national security and our
            national economic well-being.''

        Those are serious statements from a group of very knowledgeable
    individuals, and I thus think that they warrant our close attention.
        In addition, there have been a growing number of reports that have
    focused on the impact of the current export controls regime on
    America's civil and commercial space programs and space research
    activities.
        Those reports have also reached some troubling conclusions.
        For example, the Center for Strategic and International Studies
    Working Group on the Health of the U.S. Space Industrial Base and the
    Impact of Export Controls, which was co-chaired by another of today's
    witnesses, Thomas Young, found that:

             ``The current export control policy is constricting U.S.
            engagement and partnership with the rest of the global space
            community, and is feeding a growing separation between the U.S.
            space community and an emerging non-U.S. space community.''

        And

             ``Export controls are adversely affecting U.S. companies'
            ability to compete for foreign space business, particularly the
            second and third tier. And it is the second/third tier of the
            industry that is the source of much innovation, and is normally
            the most engaged in the global market place in the aerospace/
            defense sector.''

        Findings such as those led this committee last year to include a
    provision in the House-passed NASA Authorization Act of 2008 directing
    the Director of the Office of Science and Technology Policy to carry
    out a comprehensive study of the impact of current export control
    policies on our civil and commercial aerospace activities.
        While that provision did not make it into the final public law, I
    am encouraged that President Obama called for a similar review during
    his Presidential campaign and I am thus optimistic that such a study
    will be initiated.
        In closing, I think that it is time for Congress to take another
    look at the Nation's export controls regime to ensure that it is
    working effectively and without unintended adverse impacts.
        As part of that look, we want to understand any negative effects
    that the current export controls regime may be having on our efforts to
    stimulate the economy and promote long-term growth through investments
    in science and technology.
        This committee is starting the process with today's hearing on the
    current export controls' impacts on science and technology, and I hope
    and anticipate that other committees will be following up in the coming
    weeks and months with further oversight of other aspects of the export
    controls issue.
        With that, I again want to welcome our witnesses, and I will now
    turn to Mr. Hall for any opening remarks he would care to make.

        Mr. Hall. Mr. Chair, thank you. I will skip over the
    paragraph where I brag on you for a couple of three minutes,
    and also I won't need to thank the distinguished panel. You
    have done a good job of that, but I just want to say that
    export controls are crucial and necessary to prevent the
    proliferation of militarily-useful technologies from falling
    into the wrong hands, and it is critically important that we
    continue, to the best of our abilities, to deny the transfer of
    these technologies to our adversaries.
        In today's global marketplace, as our witnesses will soon
    point out, it is equally important that export control
    regulations recognize technologies that are no longer ours
    alone to control, and to permit the rapid sharing of emerging
    R&D technologies with our friends and allies. Based on a number
    of scholarly studies, including the National Academies' Beyond
    Fortress America report, it is clear to me that the current
    export control regime fails I think to meet these standards.
        Industry and academia endure enormous costs in an effort to
    comply with ITAR. The price of direct compliance is fairly easy
    to calculate, but the more difficult cost is the self-imposed
    conservatism put into place by industry and academia because
    they do not understand what is and what is not a violation of
    clear and evolving standards. Technology is constantly shifting
    the landscape. What is cutting edge today may be outmoded in
    six months or a year from now. So too are the threats posed by
    our adversaries, and for that matter, the adversaries
    themselves.
        As a consequence of these uncertainties and the lack of
    transparency within the exporting licensing bureaus, industry
    and academia are shying away from bringing products and ideas
    into the international arena or collaborating with our friends
    and allies. This result is less business and less engagement
    with leading researchers the entire world over. It is, in
    essence, a system that is designed to slowly erode our
    technological superiority which we don't want.
        The current system has no transparency, and as a result,
    export licensing is bogging down the very same R&D enterprise
    that made our economy the largest in the world.
        And as I stated just a moment ago, we have to continue to
    deny our adversaries access to emerging technologies, but I am
    convinced the current export control regime is working against
    our own national self-interest.
        So I am anxious to hear from these gentlemen who put long
    hours in taking their time to come before us. I yield back my
    time. Yes, I am sorry, Mr. Chair. I yield to the gentleman from
    California the remaining time I have which is three or four
    minutes.
        [The prepared statement of Mr. Hall follows:]
               Prepared Statement of Representative Ralph M. Hall
        Thank you, Mr. Chairman, for calling today's hearing on the
    implementation of the International Traffic in Arms Regulations (ITAR)
    program, and the serious, unanticipated consequences it has imposed on
    our industry, academia, national security, and technological readiness.
        First I want to thank our distinguished panel of witnesses for
    taking time out of their busy schedules to appear before the Committee.
    I know you have put in long hours to prepare for your appearance this
    morning, and we are grateful for the wisdom and insights you bring to
    today's discussion.
        Mr. Chairman, export controls are crucial and necessary to prevent
    the proliferation of militarily-useful technologies from falling into
    the wrong hands, and it's critically important that we continue, to the
    best of our abilities, to deny the transfer of these technologies to
    our adversaries.
        In today's global marketplace, as our witnesses will soon point
    out, it's equally important that export control regulations recognize
    technologies that are no longer ours alone to control, and to permit
    the rapid sharing of emerging R&D technologies with our friends and
    allies. Based on a number of scholarly studies, including the National
    Academies' Beyond Fortress America report, it is clear to me that the
    current export control regime fails to meet these standards.
        Industry and academia endure enormous costs in an effort to comply
    with ITAR. The price of direct compliance is easy to calculate, but the
    more difficult cost is the self-imposed conservatism put into place by
    industry and academia, because they do not understand what is--and is
    not--a violation of unclear and evolving standards. Technology is a
    constantly shifting landscape; what is cutting-edge today may be
    outmoded six months or a year from now. So too are the threats posed by
    our adversaries, and for the matter, the adversaries themselves.
        As a consequence of these uncertainties and the lack of
    transparency within the export licensing bureaus, industry and academia
    are shying away from bringing products and ideas into the international
    arena--or collaborating with our friends and allies. The result is less
    business and less engagement with leading researchers the world over.
    It is, in essence, a system that is designed to slowly erode our
    technological superiority.
        The current system has no transparency, and as a result, export
    licensing is bogging down the very same R&D enterprise that made our
    economy the largest in the world.
        As I stated a moment ago, we must continue to deny our adversaries
    access to emerging technologies, but I am convinced the current export
    control regime is working against our own national self-interest.
        Thank you, Mr. Chairman.

        Mr. Rohrabacher. Thank you very much, Mr. Chair, and
    Ranking Member Hall. Clearly, America needs to nurture its
    aerospace and--we are going to welcome General Scowcroft here.
    America needs to nurture its aerospace and space technology-
    related industries. This is vital to the security of our
    country to have these industries on the cutting edge of
    technology but also to be competitive with their competition
    overseas. And everyone understands that there is a big problem
    and has been a big problem for a long time with the ITAR
    regulations. And everyone agrees that reform is needed. But we,
    when discussing this issue, need to make sure that our high-
    tech exports, again, number one, the regulations are not
    strangling the industry but at the same time, these high-tech
    exports are not going to potential enemies of the United
    States, are not going to countries which proliferate weapons of
    mass destruction in a way that would be detrimental to our
    security and the security of other western democracies.
        We know exactly who the nations are that are proliferators.
    We also have a good understanding about which nations pose a
    potential threat to the United States, who are our potential
    enemies versus who are not our potential enemies. So whatever
    changes that we enact into ITAR and other export regulations
    should basically differentiate between the scofflaw and rogue
    nations or potential enemies on one hand and those countries
    that pose no threat to us and in fact, the largest numbers of
    countries that are just wishing to be trading partners. But let
    us note, there is a difference between the People's Republic of
    China, which is the world's worst human rights abuser and also
    a potential enemy of the United States, versus countries like
    Brazil or Belgium or any number of other countries that we
    could name. North Korea is not equivalent to The Netherlands.
    Well, neither is the People's Republic of China equivalent to
    India.
        Ten years ago the Cox Report clearly demonstrated that U.S.
    technology transfers to the People's Republic of China helped
    improve and enhance the efficiency of China's arsenal of
    missiles that are aimed at the United States. As a consequence,
    we passed the Strom Thurmond Act which established requirements
    that before any satellite technology could be exported to
    China, the President of the United States had to first certify
    to Congress that the tech transfer was not against our national
    security interests or our domestic launch for satellite
    industries. Since the Strom Thurmond Act became law 10 years
    ago, not a single such certification by the President of the
    United States has been made, and as a consequence, no western
    satellite payloads have been flown in Chinese rockets. Let us
    note that when we see the progress that is very clearly now
    evident in the Chinese rockets and missiles, that could
    probably be traced back to the transfer of technology from the
    United States. Ironically, perhaps even worse, tragically, that
    money that was taken from the American taxpayer's pocket for
    research and missile technology has now ended up in the hands
    of not only our competitors, but a potential enemy that aims
    missiles at the United States of America.
        So just as our Secretary of State Hillary Clinton was
    visiting the People's Republic of China, let us note that
    European satellite operator, Eutelsat, was cutting a deal with
    Beijing to launch a satellite on a Long March rocket. Again, a
    Long March rocket system that benefited greatly in its
    development from the technology transfer from the United States
    two decades ago.
        Incidentally, the Eutel Satellite Corporation, these
    satellites also make millions of dollars worth of profit from
    selling satellite services to the United States Government
    through defense contracts. These things are vitally important,
    but Mr. Chair, as we discuss this issue, I hope that we keep in
    mind the history of this issue as well as the potential
    problems that lie ahead and not simply look about the aerospace
    industry and technology today but where America will be in the
    future. Thank you very much.
        [The prepared statement of Mr. Rohrabacher follows:]
             Prepared Statement of Representative Dana Rohrabacher

    Mr. Chairman:

        America needs a vibrant Aerospace and Space Technology industry.
    Everyone agrees ITAR reform needs to happen. We need to make sure that
    our high tech experts aren't strangled by regulations. On the other
    hand, we need to remain vigilant that our advanced technology doesn't
    end up in the hands of potential enemies or nations which proliferate
    weapons of mass destruction. We know exactly which nations these are,
    and we must make absolutely sure that whatever changes we enact to ITAR
    and other export regulations, that these scofflaw and rogue nations are
    barred from receiving our high tech systems. Chief among them is the
    Peoples Republic of China.
        Ten years ago, the Cox Report clearly demonstrated that U.S.
    technology transfers to the Peoples Republic of China helped to improve
    and enhance the efficiency of China's arsenal of missiles that were
    aimed at us. As a consequence, we passed the Strom Thurmond Act, which
    established the requirement that before any satellite technology could
    be exported to China, the President of the United States had to first
    certify to Congress that the tech transfer was not inimical to our
    national security or our domestic launch or satellite industries. Since
    the Strom Thurmond Act became law 10 years ago, not a single such
    certification has been made by any Administration, and as a consequence
    no Western satellite payload has flown on a Chinese rocket.
        But the resolve of the Obama Administration is now being tested in
    this area. Just as our Secretary of State, Hillary Clinton was visiting
    the Peoples Republic of China, European satellite operator Eutelsat was
    cutting a deal with Beijing for a launch on a Long March rocket.
    Incidentally, Eutelsat sells tens of millions of dollars worth of
    satellite services to the U.S. Government through DISA contracts.
    Clearly, this is the beginning of a game of chicken between Eutelsat
    and the Obama Administration. If the Obama Administration does nothing,
    the message is clear: transferring technology to proliferators of
    weapons of mass destruction like the Peoples Republic of China is a
    perfectly acceptable business model. Surely we can make sensible
    changes to ITAR and other export regulations, but we must not go so far
    as to make them at the expense of our national security. Let us reward
    our friends with openness in trade; and conversely let us be as single-
    minded as possible in stopping items from the United States Munitions
    List--like Eutelsat payloads--from falling into the hands of the
    Peoples Republic of China and other proliferators.

        Chair Gordon. Thank you. If there are Members who wish to
    submit additional opening statements, including Mr.
    Rohrabacher, your statements will be added to the record at
    this point.

        [The prepared statement of Mr. Costello follows:]
             Prepared Statement of Representative Jerry F. Costello
        Thank you, Chairman Gordon, for convening this hearing on U.S.
    export control policies and continuing to keep this committee's focus
    on our nation's technological competitiveness in a global market.
        This committee has held numerous hearings on global competitiveness
    in the science and technology fields and recently spent a great deal of
    effort on the COMPETES Act, which commits a renewed investment into our
    children's education in math and science. During the last session of
    Congress, this committee heard from Bill Gates, Chairman of the
    Microsoft Corporation, on the many obstacles that face a hi-tech giant
    due to this country's falling position in the global competitive
    market.
        Despite the work of this committee to pass the COMPETES Act and
    other federal investments in research and development initiatives, our
    national security controls on science and technology remain so
    antiquated that they severely restrict commercial and academic
    innovation in these fields. If our scientists cannot share information,
    cannot receive licenses, cannot expand their field of research because
    of government restrictions in the name of national security, no amount
    of investment dollars will allow this country to regain its competitive
    edge in the global marketplace.
        I look forward to a constructive dialogue on this issue and the
    recently released report, Beyond ``Fortress America'': National
    Security Controls on Science and Technology in a Globalized World.
    Thank you, Mr. Chairman for your leadership of this committee and for
    my time, I yield back.

        [The prepared statement of Ms. Johnson follows:]
           Prepared Statement of Representative Eddie Bernice Johnson
        Good morning, Mr. Chairman and Ranking Member.
        Today's hearing on exports controls has significant impacts on the
    space and defense industries.
        As you know, the space and aeronautics industry is an important
    economic driver in Texas.
        Johnson Space Center and NASA contractors provide jobs and
    facilitate innovation in our state and around the Nation.
        Investments in human space exploration and development have been
    responsible for valuable new technologies, and at the center of many of
    these innovations is the Johnson Space Center.
        Johnson Space Center's combined workforce in the Bay Area of
    Houston alone accounts for more than 16,000 jobs.
        When the economic multiplier effect of these jobs is considered,
    the total impact from the space center and Texas exceeds more than
    26,000 employees with personal incomes of more than $2.5 billion; and
    total spending exceeds $3.5 billion.
        Truly, the space and aeronautics industries have dynamic and broad
    based impacts on the economic, educational and quality of life on the
    entire State of Texas.
        NASA provides $72 million for grants and contracts to Texas
    universities and colleges as well as $44 million to Texas non-profit
    organizations.
        NASA is so important for our nation and the State of Texas.
        Since the Cold War, investments in NASA and other agencies have
    created a robust science and engineering workforce, driven innovation,
    fueled economic growth, and established the United States' preeminence
    in science and technology.
        Mr. Chairman, I will be interested to know whether America's
    friends and allies perceive a climate of export controls that is
    conducive for long-term international collaborations to expand human
    and robotic presence in the solar system.
        I would like to welcome all of today's witnesses.
        It is my hope that they can help the Committee assess the
    implications and unintended consequences of current export control
    policies for the conduct of United States Government science and
    technology activities.
        Thank you, Mr. Chairman. I yield back the balance of my time.

        [The prepared statement of Ms. Giffords follows:]
            Prepared Statement of Representative Gabrielle Giffords
        I want to thank our distinguished witnesses for appearing here
    today to share their insights on a very important topic--the impacts of
    our export control system on U.S. science and technology activities and
    competitiveness. Export control is not a subject that Americans discuss
    at the dinner table, but it is something that affects every American,
    because the intent of the policies is to help protect the Nation from
    harm.
        Today, our witnesses will shed light on the importance of science
    and technology to our economic and national security and on the need to
    ensure that the Nation's export control policies and procedures do not
    inadvertently undermine that security as well as weaken our
    competitiveness in science and technology in a very challenging global
    economy. In that regard, I am especially interested our witnesses'
    perspectives on the implications of current U.S. export control
    policies for our nation's civil and commercial space activities,
    because many of the technologies and information involved in space
    activities are regulated by export control policies.
        Space is increasingly a global undertaking, with new space-faring
    nations emerging that will provide both competition and opportunities
    for cooperation in the coming years. As a study of the Center for
    Strategic and International Studies noted, ``Other space-faring nations
    continue to make strides whether they have access to U.S. technology or
    not'' and ``United States preeminence in space is under challenge in
    many areas.'' We need to make sure that our export control policies are
    structured to enable us to meet that challenge while still protecting
    our legitimate security needs.
        I am particularly concerned about the challenges that current
    export control policies present to the effective conduct of fundamental
    space research. According to a National Academies workshop summary on
    space science and the International Traffic in Arms Regulations (ITAR),
    some researchers report that ITAR makes it difficult to develop space
    research projects, which are typically conducted in partnership with
    industry, government labs, and international institutions. Some
    researchers are also uncertain about whether they can discuss their
    research in a university classroom that includes non-U.S. students. Our
    universities are a significant source of innovation for our science and
    technology enterprise, for our space program, and for our economic
    strength. I think it is important that we look carefully at the impacts
    of current U.S. export controls policies on our universities and take
    whatever steps are appropriate to mitigate the unintended consequences.
        In closing, I am pleased that the Science and Technology Committee
    is taking the lead in addressing these important issues. I hope that
    this hearing will be the first step in a thorough review of our current
    export control system by Congress, including the House Armed Services
    and House Foreign Affairs Committees on which I also serve and which
    have important oversight and legislative roles to play with regard to
    these issues.

        [The prepared statement of Mr. Mitchell follows:]
             Prepared Statement of Representative Harry E. Mitchell
        Thank you, Mr. Chairman.
        Today we will review the impacts of current export control policies
    on U.S. science and technology activities and competitiveness.
        As we addressed last year with the America COMPETES Act, it is
    critical to ensure that our nation is prepared to lead in science and
    technology in an increasingly globalized economy.
        However, export control policies, which were established decades
    ago, fail to consider the present-day realities of a global economy.
        As the National Academies report, Beyond ``Fortress America'':
    National Security Controls on Science and Technology in a Globalized
    World states, ``the export control system enforced in the U.S. today
    has failed to evolve with changing global conditions and now produces
    significant harm to U.S. military capability, to homeland security, and
    to the Nation's economic competitiveness.''
        While we work to establish export control policies that reflect
    present day realities, we must also be careful to ensure that these
    policies continue to protect U.S. national security.
        I look forward to hearing more from our witnesses on the commercial
    and national security concerns related current export control policies.

        Chair Gordon. At this time, I would like to introduce our
    witnesses. First up we have Lieutenant General Brent Scowcroft
    who is the Co-Chair of the National Academies Committee on
    Science Security and Prosperity and former National Security
    Advisor for Presidents Gerald Ford and George H. W. Bush. And
    General Scowcroft, I had a sick daughter and got caught in
    traffic this morning, so I was late for my first meeting. They
    couldn't start without me, but we could start without you. And
    so we didn't think you would mind. Mr. Thomas Young is the Co-
    Chair of the Center for Strategic and International Studies
    Working Group on the health of the U.S. Space Industrial Base
    and the Impact of Export Controls. Dr. Claude Canizares is the
    Vice President for Research and Associate Provost and the Bruno
    Rossi Professor of Physics at the Massachusetts Institute of
    Technology, MIT. And finally, we have Major General Robert
    Dickman who is the Executive Director for the American
    Institute of Aeronautics and Astronautics.
        As our witnesses should know, you each have five minutes
    for your spoken testimony. Your written testimony will be
    included in the record for the hearing, and when you have
    completed your spoken testimony, we will begin our questions.
    Each Member then will have five minutes for their questions. As
    the former Chair Sherry Boehlert used to frequently say,
    although we have five minutes, this is a very important issue
    and we do not want you to feel that you have to cut off mid-
    sentence. So we do want to hear from you.
        So we will start with Lieutenant General Scowcroft.

     STATEMENT OF LIEUTENANT GENERAL BRENT SCOWCROFT (USAF, RET.),
               PRESIDENT AND FOUNDER, THE SCOWCROFT GROUP

        Lieutenant General Scowcroft. Thank you very much, Mr.
    Chair, Mr. Hall, Members of the Committee. I appreciate the
    opportunity to appear before you as a Co-Chair of the National
    Research Council's Committee on Science, Security and
    Prosperity.
        The study we have done on export controls and technology in
    a globalized world concludes that the national security
    controls on science and technology are broken. They harm our
    national security and reduce our economic competitiveness.
    These controls which were established during the Cold War work
    well as long as three conditions prevail. The U.S. science and
    technology establishment has only one significant competitor,
    the Soviet Union, and that was a weak competitor. Two, military
    research and development production took place separately from
    the commercial sector and generally led it by a great degree.
    And third, a common sense of purpose existed among the United
    States and its allies regarding the nature of the threat.
        These three conditions no longer obtain. First, the United
    States has competition in most areas of advanced research and
    development, including military-related science and technology.
    The number of access points to advanced science and technology
    has grown considerably and perhaps more to the point, outside
    the control of the United States.
        Second, most military production in the United States is
    now commercially based, thus blurring the distinction between
    commercial grade and weapons grade for thousands of so-called
    dual-use goods and technologies. And third, the alliance has
    lost its Cold War consensus. As a result, we are not hurting
    ourselves both in terms of science and technology and economic
    competitiveness.
        The Fortress America approach of current controls cuts us
    off from information and technologies that we need for our
    national security.
        There is clearly a better way to manage the application of
    American science and technology abroad that protects our
    national security and our competitiveness. We need to change
    the mindset, and we need an agile system of security controls
    that can adapt quickly to the changing political and
    technological landscapes. Our mindset is now negative. Don't
    let anything out which might be of use abroad or don't let any
    H-1 visa applicants in who might be a problem. We need to turn
    to an open mindset. Export unless there is a reason not to. Let
    H-1 visa applicants in unless there is a reason not to. And to
    improve our ability, the committee recommends the establishment
    of two administrative entities, perhaps within the National
    Security Council. The first would be a coordinating center for
    export controls that would be a one-stop shop for people
    seeking export licenses. This would determine whether the
    Commerce Department or the State Department should handle the
    application. Now, the applicant has to decide, and if he
    guesses wrong, there is months of delay in determining it. The
    second entity is an appeals panel that would hear and decide
    disputes about whether export licenses are required and whether
    particular decisions to grant or deny those licenses were
    properly made and also hear appeals on sunset requirements and
    how they are being carried out. Our committee proposes that
    sunset requirements be applied to all items on the export
    control list and reviewed annually.
        Another recommendation dealing with the mindset proposes
    the administration of existing export control statutes should
    assure the science and technological competitiveness of the
    United States as a prerequisite to both national security and
    economic prosperity. To assure the conditions for scientific
    and technological competitiveness, the committee has
    recommended that the fundamental research exemption, also known
    as NSDD-189 should be maintained and properly implemented.
        The committee also proposes the establishment of an
    economic competitiveness exemption that eliminates export
    controls on dual-use technologies where they or their
    functional equivalent are available without restriction in open
    markets outside the United States.
        The final recommendation addresses the need to maintain and
    enhance access to the reservoir of human talent from foreign
    sources through H-1 visas to strengthen the U.S. science and
    technology base. The committee recommends that the President
    issue an executive order to put these provisions into effect.
    This order would not and cannot contravene current law, rather
    it would govern the exercise of Presidential authorities
    established under existing law. The executive order would not
    affect anything that is protected by the national security
    classification system, nor would it address export controls
    that the State Department imposes strictly on foreign policy
    grounds. As a first step in overhauling the overall system of
    controls, putting these provisions into effect would create a
    record and experience base that the Congress can evaluate and
    modify as it sees fit at such time as new export control
    legislation can be successfully addressed.
        Perhaps the most significant challenge to implementing
    these recommendations is to help the relevant agencies
    understand that these reforms will not micro-manage their own
    licensing procedures or challenge agency expertise.
        In closing, I am grateful for the interest that the
    Committee on Science and Technology has taken in this report
    and hope that your Members will continue to be involved in this
    issue. Thank you, Mr. Chair.
        [The prepared statement of Lieutenant General Scowcroft
    follows:]
            Prepared Statement of Lieutenant General Brent Scowcroft
        Chairman Gordon, Ranking Member Hall, and other Members of the
    Committee on Science and Technology, thank you for this opportunity to
    appear before you this morning to discuss the effects of U.S. export
    control policies on science and technology activities and
    competitiveness.
        I am President of the Scowcroft Group, an international business
    advisory firm. I speak before you today as Co-Chair of the National
    Research Council's Committee on Science, Security and Prosperity. I am
    here to discuss the findings and recommendations of this committee's
    report, Beyond ``Fortress America'': National Security Controls on
    Science and Technology in a Globalized World.
        The national security controls on science and technology are
    broken. They were established during the Cold War to help maintain the
    United States' superiority in military-related science and technology.
    These controls worked fairly well as long as the following three
    conditions held:

    (1) The U.S. S&T establishment had only one significant competitor--and
    we knew that they had a weak R&D base. This meant that we did not have
    to look much beyond ourselves to find the most advanced S&T. (2)
    Military research, development and production took place separately
    from the commercial sector. Thus denying the transfer of military goods
    did not affect the commercial economy. (3) A common sense of purpose
    existed among the United States and its allies regarding the nature of
    the threat and the means to manage it; thus the West was largely
    unified about denying weapons-grade materials and technologies to its
    adversaries.

        These three conditions no longer obtain. First, today the United
    States has competition in most areas of advanced research and
    development, including military-related S&T. Advances in science and
    technology now occur throughout Europe, in Russia and Japan, and also
    in the developing economies of China, India and Brazil. Thus the number
    of access points to advanced science and technology have grown
    considerably and perhaps more to the point, outside the control of the
    United States. Second, most military production in the U.S. is now
    commercially based, thus blurring the distinction between commercial
    grade and weapons grade for thousands of so called ``dual-use'' goods
    and technologies. And third, the Western alliance has lost its Cold War
    consensus; NATO member countries and Japan no longer agree on what
    countries need to be controlled, what items should be controlled, and
    what kinds of controls are needed. Together, these changes make it much
    more difficult for the United States to successfully control the
    transfer of goods and technologies that have both commercial and
    military applications. As a result, many national security controls on
    science and technology no longer work in the ways they were intended.
    We endanger our own national security in thinking that unilaterally
    controlling dual-use items here prevents others from obtaining them
    elsewhere.
        Because science and technology research, development and production
    have become a global enterprise, the ``Fortress America'' approach of
    current controls cuts us off from information and technologies that we
    need for our national security. If we sustain these export control and
    visa barriers, we will increasingly lose touch with the cutting edge of
    science and technology, and we risk missing emerging national security
    threats.
        Following are just a few of the unintended consequences that the
    inappropriate application of export controls have on our national
    security and our economic competitiveness:

              At a time when battlefield inter-operability is
            increasingly the norm, the licensing process can prevent repair
            at facilities closest to the theater of operation.

              Export controls constrain both U.S. commercial and
            military capabilities from expanding into new fields and from
            applying new scientific developments.

              The government's rules are accelerating the
            development of technologies in capable research centers outside
            the United States.

              As foreign companies and governments fill these
            competitive gaps, valuable technical developments occur outside
            the U.S. to which the U.S. military and intelligence agencies
            then have no access.

              U.S. scientists are hobbled by rules that prevent
            them from working with world-class foreign scientists and
            laboratories located overseas, making it less likely that
            valuable discoveries and inventions will occur in the U.S.

              The government's rules are driving jobs abroad-
            knowledge-intensive jobs that are critical to the U.S. economy.

        There is clearly a better way to manage the application of American
    science and technology abroad that protects our national security and
    our competitiveness. This report articulates the need for the U.S. S&T
    sector to ``run faster'' by anticipating and capitalizing on research
    breakthroughs more quickly than those who would use these advances to
    harm us or compete against us economically, and by developing
    qualitatively better products and services with the best talent
    available. In policy terms, running faster means having an agile system
    of national security controls that can adapt quickly to the changing
    geopolitical and technological landscapes.
        The first recommendation proposes the establishment of two
    administrative entities, possibly within the National Security Council.
    The first is a coordinating center for export controls that will
    constitute a ``one-stop-shop'' for all export-license applications. The
    chief role of this small coordinating center is to determine whether
    the Department of Commerce or the Department of State should handle the
    license application and then dispatch the application to the
    appropriate place for decision.
        The second entity is an appeals panel, possibly composed of retired
    federal judges, that will hear and decide disputes about whether export
    licenses are required, and whether particular decisions to grant or
    deny licenses were made properly. This panel will also hear appeals on
    whether ``sunset'' requirements have been carried out properly. The
    committee proposes that ``sunset'' requirements be applied to all items
    on U.S. export control lists, and it would require findings to be made
    every 12 months that removing controls on an item would present a
    substantial risk to national security.
        The second recommendation proposes that the administration of
    existing export control statutes--the Arms Export Control Act and the
    Export Administration Act--should assure the scientific and
    technological competitiveness of the United States as a prerequisite
    for both national security and economic prosperity. To assure the
    conditions for scientific and technological competitiveness, the
    committee has recommended that the Fundamental Research Exemption (also
    known as National Security Decision Directive 189), which has been in
    effect since 1985 and reaffirmed by then National Security Advisor,
    Condoleezza Rice in November 2001, be maintained and properly
    implemented.
        In addition, the committee proposes the establishment of an
    economic competitiveness exemption that eliminates export controls on
    dual-use technologies where they, or their functional equivalents, are
    available without restriction in open markets outside the United
    States. Just as NSDD-189 precludes the conduct and reporting of
    unclassified information from being restricted, the economic
    competitiveness exemption would preclude the export of so called
    ``dual-use'' items that are, or soon will be, legally available in open
    markets overseas, from being restricted.
        The third recommendation addresses the need to maintain and enhance
    access to the reservoir of human talent from foreign sources to
    strengthen the U.S. science and technology base. Put simply, this will
    help ensure that the United States remains the destination of choice
    for the world's ``best and brightest.''
        These innovations can help to bring transparency, efficiency and
    consistency to a system that is now lacking all three of these
    qualities. They will help to protect what needs to be protected without
    harming the economy or our scientific leadership. The committee
    recommends that the President sign an Executive Order in early 2009
    that will put these provisions into effect ninety days hence.
        This Executive Order will be fully consistent with existing
    legislation. It would not and cannot contravene current law, but rather
    would govern the exercise of Presidential authorities established under
    existing law. The Executive Order would not affect anything that is
    protected by national security classification, which is addressed by a
    separate Executive Order, nor would it address export controls that the
    State Department imposes strictly on foreign policy grounds. The
    Executive Order signifies that the President will bring discipline into
    a process over which he already has primary authority. As a first step
    in overhauling the national security controls over science and
    technology, putting these provisions into effect will create a record
    and experience base that Congress can evaluate--and modify as it sees
    fit--at such time as export control legislation can be successfully
    addressed.
        Perhaps the most significant challenge to implementing these
    recommendations is to help the relevant agencies understand that these
    reforms will not micro-manage their own licensing procedures or
    challenge agency expertise. They will, however, bring consistency and
    efficiency to the application process, and transparency to the
    agencies' decisions.
        If these reforms are not implemented, the system will continue to
    bog down, with multiplying negative effects to our national security
    and competitiveness. There will be nothing to prevent the continued
    erosion of our defense industrial base; the loss of market-share
    globally in advanced technologies; the off-shoring of knowledge
    intensive jobs; the bureaucratic wrangling among the agencies to name a
    few.
        In closing, I am grateful for the interest that the Committee on
    Science and Technology has taken in this report and hope that your
    Members will remain involved in these efforts, particularly in helping
    to assure the scientific and technological competitiveness of the
    United States.

                         Biography for Brent Scowcroft
        As President and founder of The Scowcroft Group and one of the
    country's leading experts on international policy, Brent Scowcroft
    provides Group clients with unparalleled strategic advice and
    assistance in dealing in the international arena.
        Brent Scowcroft has served as the National Security Advisor to both
    Presidents Gerald Ford and George H.W. Bush. From 1982 to 1989, he was
    Vice Chairman of Kissinger Associates, Inc., an international
    consulting firm. In this capacity, he advised and assisted a wide range
    of U.S. and foreign corporate leaders on global joint venture
    opportunities, strategic planning, and risk assessment.
        His prior extraordinary twenty-nine-year military career began with
    graduation from West Point and concluded at the rank of Lieutenant
    General following service as the Deputy National Security Advisor. His
    Air Force service included Professor of Russian History at West Point;
    Assistant Air Attache in Belgrade, Yugoslavia; Head of the Political
    Science Department at the Air Force Academy; Air Force Long Range
    Plans; Office of the Secretary of Defense International Security
    Assistance; Special Assistant to the Director of the Joint Chiefs of
    Staff; and Military Assistant to President Nixon.
        Out of uniform, he continued in a public policy capacity by serving
    on the President's Advisory Committee on Arms Control, the Commission
    on Strategic Forces, and the President's Special Review Board, also
    known as the Tower Commission.
        He currently serves on numerous corporate and nonprofit boards. He
    earned his Master's and doctorate in international relations from
    Columbia University.

        Chair Gordon. Mr. Young, you are recognized for five
    minutes.

     STATEMENT OF MR. A. THOMAS YOUNG, LOCKHEED MARTIN CORPORATION
       (RET.); CO-CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL
     STUDIES (CSIS), WORKING GROUP ON THE HEALTH OF THE U.S. SPACE
           INDUSTRIAL BASE AND THE IMPACT OF EXPORT CONTROLS

        Mr. Young. Thank you, Mr. Chair, Mr. Hall, Committee
    Members, I greatly appreciate the opportunity to provide the
    views of the committee I co-chair on the impact of export
    controls on our space endeavors.
        One of the things we highlighted is that we strongly
    support the United States' need for export controls that really
    do two things, one, protect technologies that are critical to
    our national security and two, maximize the opportunity to
    maintain our leadership in critical areas. It is our
    overarching view that our current export controls have an
    adverse impact on our national security, a negative impact on
    our industrial base, particularly at the second and third tier
    of the base and they complicate the relationships necessary to
    mutually-beneficial, international cooperative endeavors.
        These deficiencies are both serious and correctable. We
    found that we are controlling technologies that are not
    critical to our national security and are readily available in
    the global marketplace. The most obvious are commercial
    communications satellite systems which are a globally available
    commodity today. The result of this over-control is that our
    space industry loses international sales, second and third
    level suppliers which depend upon the international market have
    questionable viability, other countries have determined that it
    is in their best interest to develop indigenous capabilities
    rather than be dependent upon the United States as a supplier.
    For cooperative endeavors, the United States ceases to be the
    partner of choice. Our access to international innovation is
    greatly diminished. This is extraordinarily important because
    the United States has always been a technology vacuum cleaner.
    We are incredibly good at taking technology no matter where it
    comes from and turning it to our military and our economic
    benefit. And we are cutting ourselves off from having access to
    some of the world's best human capital.
        In summary, this over control by our current export control
    policies and procedures have accelerated the development of an
    international space community resulting in the United States'
    preeminence being challenged in many areas. It has resulted in
    us becoming somewhat insular which always results in a
    technological decline. Our national security and our space
    community have been adversely impacted. Without change, our
    export control policies and regulations for space will continue
    to erode as both a national security and an economic advantage.
        The recommendations in the report that General Scowcroft
    talked about, Fortress America, are consistent with the
    recommendations in our report and they would help to mitigate
    the adverse impact of export controls on the space sector.
        Our current export controls need major correction by both
    the Administration and the Congress to reconcile the strategic
    intent. Items that are globally available such as commercial
    communication satellite systems should be removed from the
    controls. The process of implementation of the controls should
    be user-friendly for both the public and the private sectors.
    The process and procedures must be structured in a manner that
    allows access to international technology and human capital
    with minimum restrictions. We must change the policies and
    procedures that affect the way we treat our partners in
    international cooperative programs. Such programs allow us to
    be a full participant in the international space community
    resulting in knowing what is going on, having access to
    technology, and builds relationships with some of the world's
    best minds.
        Thank you.
        [The prepared statement of Mr. Young follows:]
                     Prepared Statement of A. Thomas Young

    Chairman Gordon and Mr. Hall,

        It is a privilege to appear before this distinguished committee to
    present the findings and recommendations of an independent Working
    Group from the Center on Strategic and International Studies (CSIS) on
    the Health of the U.S. Space Industrial Base and the Impact of Export
    Controls.
        It was my honor to co-chair this expert study group with Dr.
    William Ballhaus, The Aerospace Corporation, and Mr. Pierre Chao,
    Senior Associate, CSIS. The other distinguished members of our Working
    Group were:

             Richard Albrecht, Moog
             Jeffrey Bialos, Johns Hopkins
             Lincoln Bloomfield Jr., Palmer Coates
             David Danzillio, Emcore Photovoltaics
             John Douglas, Aerospace Industries Association
             Paul Kaminski, Technovation
             John Klineberg, Consultant
             Lon Levin, SkySeven Ventures
             Tom Marsh, Lockheed Martin, retired
             Tom Moorman, Booz, Allen Hamilton
             J.R. Thompson, Orbital Sciences
             John Tilelli, Cypress International
             Robert Walker, Wexler & Walker Public Policy Associates

        Our task was as follows:

              1) Review previous and ongoing studies on export-
            controls and the U.S. space-industrial base and 2) assess the
            health of the U.S. space-industrial base and determine if there
            is any adverse impact from export controls, particularly on the
            lower-tier contractors.

              Review the results of the economic survey of the U.S.
            space industrial base conducted by the Department of Commerce
            and analyzed by the Air Force Research Laboratory (AFRL).

              Integrate the findings of the study group with the
            result of the AFRL/Department of Commerce survey to determine
            overall conclusions and recommendations regarding the impact of
            export controls on the U.S. space-industrial base.

        The methodology we used to meet this task was:

              Leverage a broad set of interviews and data from:

                      the U.S. Government

                              Department of State, Department of
                            Defense (OSD/Policy, OSD/AT&L, DTSA, STRATCOM,
                            General Council(??)), NRO, Department of
                            Commerce, NASA, FAA, and GAO

                              the U.S. Congress

                      Foreign Governments and agencies (Asia and Europe)

                      U.S. industry

                              Boeing, Lockheed Martin, Northrop
                            Grumman, ATK, Moog, Swales, GeoEye and SES
                            Americom

                      Other experts

                              IDA, Aerospace Corporation, Booz
                            Allen Hamilton, Satellite Industry Association,
                            Space Foundation, U.S. Chamber of Commerce,
                            CSIS, and Aviation Week

              Leverage the comprehensive survey of space-industrial
            base undertaken by AFRL/Department of Commerce

        In doing this study, we were guided by the following set of
    principles:

              Space is critically important to U.S. national
            security

              Global leadership in space is a national imperative

              Similarly, sustaining technological superiority in
            space is a U.S. national interest

              Given the interdependence between the defense,
            intelligence, civil and commercial sectors of space, U.S.
            leadership in all four is important

              A strong space-industrial base is important

              A prudent export control policy is necessary to
            control sensitive technologies, and

              The U.S. must have unimpeded access to the
            technologies (global and domestic) needed for national space
            systems

        Mr. Chairman and distinguished Members of the Committee, the
    Working Group recognizes that the United States must have export
    controls that protect technologies critical to our national security
    and maximize the opportunity to maintain our leadership in critical
    areas. However, it was the overarching conclusion of our study that our
    current export controls have had an adverse impact on our national
    security, a negative impact on our industrial base, most particularly
    at the second and third tiers of the industry, and has complicated the
    relationships necessary for mutually-beneficial, international
    cooperative endeavors.
        It is our view though that all of the deficiencies in our export
    control processes can be corrected without an adverse impact on our
    national security. It is also our view that correcting these
    deficiencies will have a positive impact on our national security.
        We found not only that the intent of current export controls was
    not being realized, but it was also having an adverse impact on the
    health of the space-industrial base. Specifically, we are controlling
    technologies that are not critical to our national security and are
    readily available in the global marketplace. Most obvious are
    commercial communications satellite systems that are a widely available
    commodity today. There are clearly others, such as some aspects of
    weather satellites. The result of this over-control is that our space
    industry loses international sales; other countries conclude it is more
    advantageous to develop indigenous capabilities rather than be subject
    to our export control requirements; and countries that throughout the
    space age have been our partners in space exploration no longer
    consider the U.S. the partner of choice.
        Instead of maintaining our leadership, this over-control has been a
    catalyst for other nations to develop their own capabilities. An
    example is India. Clearly, U.S. export controls have been a motivation
    for their current most impressive development of a comprehensive
    national space program. In the last decade, the space community has
    grown from a very exclusive Club X into a very broad array of countries
    with substantial space capabilities. As an example, a dozen nations are
    able to launch their own satellites, and 38 countries have operational
    control over their own communications satellites. Although this
    expansion of space capabilities would have eventually occurred, U.S.
    export controls have caused it to accelerate to the degree that today,
    the U.S. does not control its proliferation, and U.S. preeminence in
    space is under challenge in many areas. Other unintended consequences
    of our over-control are that we have become insular, meaning we are not
    a full player in international space, and consequently we have somewhat
    diminished our access to foreign innovation and human capital.
        Our report presents 13 findings and nine recommendations, which are
    summarized below.

    Finding 1: Overall financial health of the top-tier manufacturers in
    the space industrial base is ``good,'' but there are areas of concern
    within the broader health of the industry.

    Finding 2: As earlier studies have documented, the ability of the
    government and industry to meet program-execution commitments remains
    inadequate.

    Finding 3: The U.S. space-industrial base is largely dependent on the
    U.S. defense/national security budget.

    Finding 4: There are rapidly emerging foreign space capabilities, and
    the U.S. does not control their proliferation.

    Finding 5: U.S. preeminence in space is under challenge in many areas.

    Finding 6: The current export-control policy has not prevented the rise
    of foreign space capabilities and in some cases has encouraged it
    (International Traffic in Arms Regulations (ITAR)-free space products).

    Finding 7: U.S. leadership in space benefits significantly from access
    to foreign innovation and human capital. That access is becoming
    increasingly difficult.

    Finding 8: The current export control policy is constricting U.S.
    engagement and partnership with the rest of the global space community
    and is feeding a growing separation between the U.S. space community
    and an emerging, non-U.S. space community.

    Finding 9: Some elements of the export-control laws are in conflict
    with the U.S. National Space Policy, which has as one of its goals to
    ``encourage international cooperation with foreign nations on space
    activities that are of mutual benefit'' and states that ``space-related
    exports that are currently available or are planned to be available in
    the global marketplace shall be considered favorably.''

    Finding 10: The U.S. share of the global space markets is steadily
    declining, and U.S. companies are finding it increasingly difficult to
    participate in foreign space markets.

    Finding 11: Export controls are adversely affecting U.S. companies'
    ability to compete for foreign space business, particularly the second
    and third tiers. And it is the second and third tiers of industry that
    is the source of much innovation, and is normally the most engaged in
    the global marketplace in the aerospace/defense sector.

    Finding 12: A U.S. export-control policy that protects sensitive
    security space capabilities is important.

    Finding 13: There is unanimous agreement that the export-control
    process can be improved without adversely affecting national security.

    Working Group Recommendations

            1.  The Administration and Congress should review and reconcile
            the strategic intent of space export controls.

            2.  Critical space technologies should be identified and should
            remain on the Munitions List and under the State Department
            ITAR process.

            3.  Remove from the Munitions List commercial communications
            satellite systems, dedicated subsystems, and components
            specifically designed for commercial use; provide safeguards by
            having the Department of Defense identify critical space
            components and technologies that should always require
            licensing and referral. Have the appropriate Executive branch
            departments conduct a study to see if other space technologies
            should be removed from the Munitions List (e.g., weather
            satellites).

            4.  Annually review the appropriateness of designating specific
            satellite and other space systems, components, and capabilities
            as Munitions List items based on criticality of items and on
            their availability outside the U.S.

            5.  Additionally, Congress could amend the legislation related
            to satellite export licensing and adopt some of the best
            practices being used in other processes--set timelines,
            technology thresholds, de minimus rules, and special licensing
            vehicles.

            6.  The Secretary of Defense and NASA Administrator, in
            addition to the Secretary of State, should have the authority
            to grant real-time, case-by-case, specific time period
            exemptions for anomaly resolutions deemed to be in the national
            interest based on criteria from the National Space Policy.

            7.  Create a special program authority to permit timely
            engagement of U.S. participants in multinational space
            projects.

            8.  Increase the dollar threshold for satellite exports,
            increase Congressional notification and establish a mechanism
            to enable the threshold to adjust with inflation.

            9.  Relevant space-related government agencies should
            collaboratively undertake an annual assessment of their
            industrial base.

        Mr. Chairman, I have attached a copy of the Working Group's full
    report [see Appendix 2: Additional Material for the Record] and I look
    forward to your questions.

                         Biography for A. Thomas Young
        Mr. Young retired from Lockheed Martin Corp. in 1995 after having
    served as an executive vice president from March 1995 to July 1995.
        Prior to its merger with Lockheed Corporation, Young served as the
    President and Chief Operating Officer of Martin Marietta Corp. from
    1990 to 1995.
        Mr. Young is on the Board of Directors of the Goodrich Corporation
    and Science Applications International Corporation.

        Chair Gordon. Thank you. Professor Canizares.

       STATEMENT OF DR. CLAUDE R. CANIZARES, VICE PRESIDENT FOR
       RESEARCH AND ASSOCIATE PROVOST, BRUNO ROSSI PROFESSOR OF
             PHYSICS, MASSACHUSETTS INSTITUTE OF TECHNOLOGY

        Dr. Canizares. Thank you, Mr. Chair, Mr. Hall, and
    distinguished Members. I greatly appreciate the opportunity to
    appear before you today.
        Allow me to begin by quoting one sentence: ``The strength
    of American science requires a research environment conducive
    to creativity, an environment in which the free exchange of
    ideas is a vital component.''
        This sentence comes from President Ronald Reagan's National
    Security Decision Directive NSDD-189 which establishes as
    national policy, and I quote, ``that, to the maximum extent
    possible, the products of fundamental research remain
    unrestricted.'' Promulgated in 1985 and still in force today,
    the directive provides the basis for the so-called Fundamental
    Research Exclusion that is embodied in current export control
    regulations.
        Our report described by General Scowcroft, Beyond Fortress
    America, finds that freedom of scientific inquiry and the free
    exchange of technical information are even much more important
    now than they were in 1985. He alluded to this, and I will cite
    four reasons.
        First, whatever dominance we might have enjoyed in our
    scientific leadership in 1985, we are now clearly one among
    many international players in nearly every technical field.
        Second, even within our borders, a significant fraction of
    our scientific and engineering workforce is international. By
    the year 2000, nearly a quarter of the science and engineering
    workers in the U.S. were foreign nationals. I imagine it was
    considerably higher today. Two-thirds of the post-doctoral
    researchers in the United States are international.
        Third, thanks to the Internet, both the pace of scientific
    communications is now instantaneous and geography is global.
    The Internet does not have national boundaries.
        And fourth, in the present national security and economic
    climate, a vigorous and innovative research community is more
    much important than ever. Universities are the prime performers
    of basic research in the U.S., and they are also the source of
    our future scientific and technical workforce, both of which
    are essential for both national security and for economic
    prosperity of our country.
        As one measure of economic impact from my own institution,
    MIT, a Kauffman Foundation report released just last week
    estimates that approximately 26,000 currently active companies
    were founded by MIT alumni employing over three million workers
    with annual world revenues over $2 trillion.
        For universities, the primary area of concern regarding
    export controls involves restrictions on the sharing of
    technical information about controlled items with non-U.S.
    persons within the United States often referred to as deemed
    exports. The scope of regulated technologies is broad and
    includes many that are available outside the U.S. as my
    colleagues have already mentioned.
        Despite a Presidential directive protecting fundamental
    research, export controls continue to inhibit, retard or
    eliminate university research projects, and there are hundreds
    of stories of sand in the gears because of export controls.
        While several positive actions have been taken in recent
    years by the Department of Commerce and the Department of
    Defense, our report suggests that a more systematic and
    fundamental change is required, to move from a philosophy of
    containment and retrenchment to one of prudent engagement.
    Specifically, the report recommends as General Scowcroft has
    mentioned, this Fundamental Research Exemption be maintained
    but also that it be properly implemented which has not always
    been the case.
        We also recommend an Economic Competitiveness Exemption and
    the adjustment of visa policies to access the reservoir of
    human talent in science and technology.
        Because you asked, Mr. Chair, for specific recommendation
    for this committee, allow me personally to respectfully suggest
    that this committee, through its oversight of key science
    agencies, could play a very important role by endorsing the
    change in philosophy that was recommended in our report as well
    as the detailed recommendations and by maintaining that each
    federal agency under your oversight must implement a plan and
    periodically report how it is addressing these issues.
        Thank you for your attention.
        [The prepared statement of Dr. Canizares follows:]
                   Prepared Statement of Claude R. Canizares
        Mr. Chairman and distinguished Members, thank you for taking up
    this very important topic and for your invitation. I am honored to be
    sitting with two very distinguished co-panelists, Gen. Scowcroft and
    Mr. Young.
        I am Vice President for Research at MIT and a space scientist. For
    over 35 years I have designed, built and used space instrumentation for
    scientific research. Although I represent the university community on
    this panel, I also have experience with matters of national security. I
    have served on the Scientific Advisory Board of the U.S. Air Force, and
    I currently oversee MIT's Lincoln Laboratory, a facility that does
    classified national security research. I am also a Director of L-3
    Communications, a Fortune 200 corporation. And I was privileged to
    contribute to the recently released National Academies' report ``Beyond
    Fortress America,'' summarized by Gen. Scowcroft. My testimony is based
    in part on that report.
        Allow me to begin by quoting one sentence: ``The strength of
    American science requires a research environment conducive to
    creativity, an environment in which the free exchange of ideas is a
    vital component.'' [National Security Decision Directive 189, 1985]
        This sentence comes from President Ronald Reagan's National
    Security Decision Directive 189. NSDD 189 establishes as national
    policy ``that, to the maximum extent possible, the products of
    fundamental research remain unrestricted.''
        Reagan's NSDD 189 was promulgated in 1985, reaffirmed in 2001, and
    is still in force today. It provides the basis for the so-called
    Fundamental Research Exclusion embodied in current export control
    regulations in order to protect the enormous benefits derived from the
    ``free exchange of ideas.''
        Our report finds that freedom of scientific inquiry and the free
    exchange of technical information are even much more important now than
    they were over 20 years ago when President Reagan signed his directive.
        Let me cite four points:

        First, whatever dominance we might have enjoyed in our scientific
    leadership in 1985, we are now one among many international players in
    nearly every technical field. In my own discipline of physics, both the
    world's biggest fusion energy facility, ITER, and the most powerful
    particle accelerator, the Large Hadron Collider, are located abroad. In
    our own, U.S. Physics journals in 2006, 70 percent of the publications
    now come from international authors--ten years ago it was 50 percent.
    In 2006 international inventors accounted for one half of the patents
    filed with the U.S. Patent Office [Beyond Fortress America, p. 30]. No
    doubt both figures are higher now.
        Second, even within our borders, a significant fraction of our
    scientific and engineering workforce comes from overseas. ``The
    percentage of science and engineering workers in the U.S. who are
    foreign nationals increased from 14 percent to 22 percent from 1990-
    2000. In 2006 more than half the doctorate-level graduating engineers
    in the United States were foreign-born, as were 45 percent of the Ph.D.
    recipients in the physical sciences, computer sciences, and life
    sciences'' [Beyond Fortress America, p. 34].
        Universities, like MIT, are international melting pots. Roughly
    one-third of MIT's current faculty were born outside the U.S. Forty
    percent of MIT's 6,000 graduate students are international, and each
    year approximately 1,600 international scholars bring their skills to
    MIT.
        Third, thanks to the Internet, both the pace and geography of
    scientific communications have exploded since 1985--the pace is now
    instantaneous and the geography is global. This rapid and pervasive
    interchange of ideas and innovation fuels remarkable advances. For
    example, the information technology revolution of the 1990's was a
    significant factor in fueling a remarkable three percent annual growth
    in U.S. productivity.
        My fourth point is to suggest that, in the present national
    security and economic climate, a vigorous and innovative research
    community is more important than ever.
        Universities are the primary performers of basic research in the
    U.S., and they are also the source of our future scientific and
    technical workforce. This human and intellectual capital is essential
    contributors to the national security and economic prosperity of the
    United States.
        As a measure of economic impact, MIT research results in roughly
    125 licenses for new technology and spawns 20-25 new start-up companies
    each year. A great many more companies, nearly 1,000, are founded each
    year by MIT alumni. A Kauffman Foundation report on MIT
    Entrepreneurship released last week gives a conservative estimate that
    if a nation were formed from the active companies founded by MIT
    alumni, it would have the 17th largest economy in the world. The real
    number is plausibly higher: 26,000 MIT alumni-founded companies
    employing over three million workers with annual world revenues over $2
    trillion, comparable to the 11th largest Nation's economy.
    Interestingly, half the companies formed by our non-U.S.-citizen alumni
    are located in the U.S., employing over 100,000 people [Roberts &
    Eesley, Entrepreneurial Impact: The Role of MIT, Kauffman Foundation,
    2009]. Nationwide, roughly two-thirds of internationals receiving
    Ph.D.s in the U.S. stay in our country [Nature Vol. 457, p. 522, 2009].
        For universities, the primary area of concern regarding export
    controls involves restrictions on the sharing of technical data and
    information about controlled items with non-U.S. persons within the
    U.S. or abroad. These are often referred to as ``deemed exports.''
    There has always been considerable ambiguity around how or when NSDD
    189's protection of fundamental research applies and whether--despite
    clear language to that effect in NSDD 189--it covers the conduct as
    well as the products of research. Moreover, because the exclusion
    applies to universities, it does not facilitate interactions between
    universities and industry or national laboratories.
        So, despite a Presidential directive protecting fundamental
    research, export controls continue to inhibit, retard or eliminate
    research projects that do not involve militarily relevant technology.
    Just last year one MIT research group abandoned a fruitful
    international space astronomy mission because of export-control
    impediments. The foreign partners are proceeding with out us, thereby
    leaving us out of the advances in science and technology they will be
    making on their own. Many more projects have been delayed by many
    months as control issues are sorted out. One colleague, leader of a
    major NASA mission, had to wait 18 months for a Technical Assistance
    Agreement so her French graduate student could access Mars data from a
    NASA computer system. There are hundreds of such stories of ``sand in
    the gears'' from export controls [e.g., see Space Science and the
    International Traffic in Arms Regulations: A Workshop, National
    Academies Press, 2008; The Deemed Export Rule in the Era of
    Globalization, Department of Commerce, 2007; Science and Security in a
    Post 9/11 World, National Academies Press 2007].
        A major difficulty is the broad scope of the export control
    regulations. For example, the State Department controls virtually all
    spacecraft systems, associated equipment and data, regardless of their
    actual military utility. And both State and Commerce often control
    technologies that are widely available outside the U.S. For many
    categories of the Commerce Control List, one-third to one-half of the
    items are controlled only by the U.S. [Beyond Fortress America, p. 34,
    p. 86]. And most importantly, none of the other countries has a
    provision comparable to our deemed export regulation [The Deemed Export
    Rule in the Era of Globalization, Department of Commerce, 2007, p. 6].
        Several positive actions have been taken in recent years. The
    Department of Commerce formed the Deemed Export Advisory Committee
    (DEAC) and the Emerging Technology and Research Advisory Committee
    (ETRAC), on which I serve. And last June, Undersecretary of Defense
    John Young reaffirmed the fundamental research exclusion in DOD
    sponsored activities. But when I recently asked a senior Pentagon
    official if the John Young letter was having an effect, he replied that
    it was ``too soon to tell.''
        Our report suggests that a more systematic and fundamental change
    is required, to move from a philosophy of containment and retrenchment
    to one of prudent engagement.
        As Gen. Scowcroft describes, Beyond Fortress America recommends
    maintenance and proper implementation of the Fundamental Research
    Exemption. Proper implementation is critical, as numerous forces
    continue to eviscerate the spirit and letter of Reagan's NSDD 189. We
    also recommend the creation of an Economic Competitiveness Exemption to
    eliminate controls on dual-use technologies that are readily available
    outside the U.S. And we recommend steps for adjusting visa policies
    that will enhance our access to the reservoir of human talent in
    science and technology from foreign sources.
        Your invitation, Mr. Chairman, asked me what your committee might
    do to address the negative effects of export controls. Allow me to
    respectfully suggest that this committee, through its oversight of key
    science agencies, could play a very important role by endorsing the
    change in philosophy as well as the detailed recommendations in our
    report, and by mandating that each federal agency under your oversight
    must formulate, implement a plan to carry them out and report to you on
    its progress.
        Thank you for your attention.

                       Biography for Claude R. Canizares
        Professor Canizares is the Vice President for Research and
    Associate Provost and the Bruno Rossi Professor of Physics at MIT. He
    has overall responsibility for research activity and policy at the
    Institute. He oversees more than a dozen interdisciplinary research
    laboratories and centers, including the MIT Lincoln Laboratory, the
    Broad Institute, the Plasma Science and Fusion Center, the Research
    Laboratory of Electronics, the Institute for Soldier Nanotechnology,
    the Singapore-MIT Alliance for Research & Technology, the Francis
    Bitter Magnet Laboratory,the Haystack Observatory and the Division of
    Health Sciences and Technology. The Technology Licensing Office, the
    International Scholars Office and the Division of Comparative Medicine,
    among others, report to Professor Canizares. He also has policy
    oversight for the Office of Sponsored Programs. In addition, Professor
    Canizares is a member of several MIT committees: Academic Council and
    the Academic Appointments committee, the Committee for Renovation and
    Space Planning, the Conflict of Interest Management Group, and the
    Research Policy Committee.
        Professor Canizares earned his BA, MA and Ph.D. in physics from
    Harvard University. He came to MIT as a postdoctoral fellow in the
    Physics Department in 1971 and joined the faculty as an Assistant
    Professor of Physics in 1974. He progressed to an Associate Professor
    of Physics in 1978, to a Professor of Physics in 1984, and to his
    current position as the Bruno Rossi Professor of Experimental Physics
    in 1997. From 1988 to 1992 he was the Head of the Astrophysics Division
    in the Physics Department; from 1990 to 2002 he was the Director of the
    Center for Space Research (since named the Kavli Institute for
    Astrophysics and Space Research); and from 2001 to 2006 he was
    Associate Provost. Professor Canizares is currently the Associate
    Director of the Chandra X-ray Observatory Center and a principal
    investigator on NASA's Chandra X-ray Observatory, having led the
    development of the Chandra High Resolution Transmission Grating
    Spectrometer. He has also worked on several other space astronomy
    missions, including as Co-investigator on the Einstein Observatory
    (HEAO-2). Professor Canizares' main research interests are high
    resolution x-ray spectroscopy and plasma diagnostics of supernova
    remnants and clusters of galaxies, X-ray studies of dark matter, X-ray
    properties of quasars and active galactic nuclei, and observational
    cosmology. He is author or co-author of more than 218 scientific
    papers.
        His service outside MIT includes the Department of Commerce's
    Emerging Technology and Research Advisory Committee and the National
    Research Council (NRC) committees on Science Engineering and Public
    Policy and on Science Communication and National Security. His past
    service includes the National Academy of Sciences Governing Council,
    the Air Force Scientific Advisory Board, the NASA Advisory Council,
    chair of the Space Studies Board of the NRC and of NASA's Space Science
    Advisory Committee. He is a member of the of L-3 Communications, Inc.,
    Board of Directors and he served on the Board of Trustees of the
    Associated Universities Inc. Professor Canizares is a member of the
    National Academy of Sciences and the International Academy of
    Astronautics and is a fellow of the American Academy of Arts &
    Sciences, the American Physical Society, and the American Association
    for the Advancement of Science. Professor Canizares has also received
    several awards including decoration for Meritorious Civilian Service to
    the United States Air Force, a NASA Public Service Medal for his
    service to the NASA Advisory Council, a NASA Public Service Medal for
    his contributions to the Chandra X-ray Observatory, and the Goddard
    Medal of the American Astronautical Society.

        Chair Gordon. Thank you, sir. General Dickman.

        STATEMENT OF MAJOR GENERAL ROBERT S. DICKMAN, EXECUTIVE
      DIRECTOR, AMERICAN INSTITUTE OF AERONAUTICS AND ASTRONAUTICS

        Major General Dickman. Mr. Chair, Mr. Hall, Members of the
    Committee, I thank you for the opportunity to be with you today
    to represent our members as we address this extremely important
    issue.
        Each year many of AIAA's 30,000 professional and 6,000
    student members visit the Congress to express our views on
    issues important to the aerospace profession. Last year for the
    first time the subject of export controls had become such an
    important concern to our individual members that it was on our
    key issue list, along with such topics as the overall level of
    R&D funding and creating an integrated aerospace workforce
    development strategy. It is again on the list that we will
    address when we are back for our 2009 visit three weeks from
    today.
        My words about whom I represent are carefully chosen.
    General Scowcroft, Mr. Young, and Dr. Canizares have drawn an
    enormous amount of information from government, industry and
    academic sources. There is little I can add to what they say,
    but what I do have to add reflects the views expressed by
    aerospace professionals. AIAA is the largest technical society
    in the world serving the global aerospace workforce. The vast
    majority of our members are scientists and engineers who are
    involved day to day in designing, developing, and building the
    miraculous systems that fly in air and space, serving
    commercial travelers, scientific research and national
    security. Export controls are a major concern to this
    workforce.
        Almost continually since the dawn of man's space flight and
    certainly shortly after the beginning of the space age, the
    United States has enjoyed global technological leadership in
    air and space systems. Even today in many areas of space
    capabilities, our competencies are unmatched. However, as you
    have heard, that leadership is being challenged in many areas
    and has been lost in some. There isn't a single class of space
    systems, launch vehicles, imaging and signals intelligence
    collection, position navigation and timing, mobile and fixed
    communications, environmental sensing, tactical warning, and
    even space tourism where there isn't a qualified foreign
    competitor. All of these systems have national security
    implications, and all are available for purchase on the global
    market.
        Not only are there competitors, one of the attributes often
    touted by foreign suppliers is that they have no U.S.
    components. They don't phrase it quite that way, though. What
    they say is they are ITAR free. Our arms control regulations as
    applied to space systems not only have failed to meet the goals
    of slowing proliferation of technologies with national security
    application, they fostered the international development of
    comparable technologies and severely impacted the ability of
    U.S. firms to sell commercial products on the world market.
        Each year AIAA administers about 25 technical conferences
    across the whole spectrum of aerospace. In 2008 over 5,300
    technical papers were published in our conference proceedings.
    Every one of these conferences has a requirement, that all
    papers comply with ITAR. How much collaboration, how much
    information wasn't exchanged because of that limitation? On the
    one hand you could say that the authors were appropriately
    protecting information important to our national security, and
    in many cases, I am sure that was correct. On the other hand,
    we also weren't getting insight into what is being done
    overseas. When our companies can't sell to overseas
    manufacturers, we will lose understanding of what else is in
    those foreign systems. When a company or individual is
    reluctant to even discuss the design of a simple commercial
    component in a spacecraft and enter into technical dialogue
    with an international colleague because of the very real
    criminal penalties associated with ITAR, we lose a source of
    information that simply isn't available any other way.
        As you have heard, our export policies also ripple directly
    into the workforce, into our ability to hire foreign nationals
    to work on U.S. space systems. Let there be no doubt that these
    individuals are still receiving the best aerospace education in
    the world at universities around the United States, including
    that of my distinguished colleague. However, unlike several
    decades ago when many of the best and brightest stayed in the
    United States because the work was more interesting and
    compensation was better, now most have no choice but to return
    home. We will train them, but we can't put them to work on our
    most challenging problems, not while they are graduate students
    and not while they can enter the workforce later, either. In a
    very real sense, we the American taxpayer, are subsidizing the
    development of a technical workforce that is building the
    systems that are taking business away from U.S. companies and
    threatening our security.
        I am not an advocate for protectionist policies. However,
    we obviously should restrict access to technologies, software
    and hardware, that are critical to national security. On the
    other hand, I think we are doing far more harm than good with a
    blanket approach to export control to space systems that is in
    place today.
        We at AIAA know this is a busy time for the Congress, and
    we appreciate you holding this hearing. We look forward to your
    questions and offer our help in any way we can serve.
        [The prepared statement of Major General Dickman follows:]
             Prepared Statement of Major General Robert S. Dickman
        Chairman Gordon, Representative Hall, Members of the Committee, I
    want to thank you for this opportunity to address this extremely
    important issue today. This is a timely and necessary discussion, and I
    applaud your willingness to address the topic.
        U.S. trade and visa policies put in place to provide additional
    layers of national security are having severe and long-term effects on
    advanced systems technology sectors and the professional workforce that
    serve them. As a result industries are faltering, innovation is
    stifled, competencies are withering, and the technology workforce is
    becoming less competitive in the global marketplace.
        As Executive Director of the American Institute of Aeronautics and
    Astronautics, I represent a constituency of nearly 30,000 aerospace
    professionals, located in all fifty states and in 80 countries
    internationally. These are the men and women who are ``in the
    trenches'' and see first hand everyday the effects of export controls
    policies and International Trafficking in Arms Restrictions (ITAR).
    This is an area of great concern for our members.
        I also sit before you as a retired military officer with 37 years
    of service to our nation and am deeply committed to its security. I
    have seen the effects that these policies have had from the
    acquisitions side as well. I understand the need to protect our current
    advantages in capabilities.
        We all understand the reasons why our export control policies were
    put in place. We have enjoyed technical superiority from decades of
    investment in education and RDT&E, and from producing and attracting
    generations of the best intellectual talent pool the world has ever
    seen. To maintain that superiority, these policies were established to
    insulate our advantages from the rest of the world, and specifically
    from regimes that maintain a different and adversarial world view from
    our own.
        However, we need to make a realistic evaluation of how these
    policies are being implemented, and what effects they are having. We
    need to be willing to act if these policies are falling short, if these
    policies have become detrimental to our goals. Today, the reality is
    that these policies are counterproductive to their stated objectives.
        We need to begin corrective steps so that we do not continue to
    exacerbate the crisis the current policies have created that are
    actually harming our national security as key vendors in our technology
    sectors go out of business due to lack of export opportunities thus
    denying us the very technology we are trying to protect. We need to
    make certain that we develop and implement integrated policies and
    holistic strategies that enable us to remain technologically superior
    to threats against our national security, embrace participation in the
    international science community, and regain competitiveness in the
    global marketplace.
        There are things we can begin to do in the current regimen that
    will reestablish some faith in the system and that will enable us to
    adapt rather than start from scratch with an entirely new set of
    policies. At the very least this will enable us to correct some of the
    more detrimental aspects of the current policy while developing the
    next generation of export policies.
        As a point of departure, we need to reevaluate the technologies and
    their components listed that we believe provide us with a distinct
    advantage in the national security arena. This needs to be done on a
    regular basis so that the list can keep up with changes and advances in
    technologies and capabilities. One problem with the current lists is
    that they have not been examined comprehensively since their inception.
    What we now have are broad lists of components with little rationale
    for why many of these items were originally restricted and whether that
    rationale is still correct. There is also a lack of explanation for how
    a component is evaluated for export release and how decisions are made
    in the certification process. It is frustrating to both venders and
    purchasers to have so many unknowns up-front in the process.
        Recommendation 1 in the National Academies' ``Fortress America''
    report focuses on balancing interests and objectives. Several of the
    action items included in the recommendation revolve around this idea of
    evaluating the components on the lists, individually justifying
    inclusion both on a basis of what makes the item unique in capability
    and in what way its export would present a substantial national
    security risk. In other words, technologies and components would be
    restricted from export on a ``by exemption'' basis, rather than the
    current approval for export on an individual basis. This recommendation
    also stresses the need to regularly examine these lists, and goes so
    far as to recommend ``sunsetting'' the list and starting over as often
    as every 12 months.
        At AIAA, we are performing an independent evaluation of satellite
    components similar to the suggestions in the ``Fortress America''
    report. We have drawn on subject matter experts for this evaluation,
    and have created a process to analyze components based on several
    criteria. Our objective is to produce a survey, and a well-developed
    process that will be helpful in developing a regular evaluation of
    listed components.
        The first step is to re-evaluate whether these components are truly
    commercial use, dual use, or exclusively military use. This will mean
    developing a definition of what each of these categories involves, and
    then providing a compelling national interest for listing components
    within these categories. I think we would all agree that those
    components that fall into that last category should remain restricted,
    and a number of the components that fall into that second category
    should also remain restricted. A major part of the problem today is
    that many dual-use items with little or no unique military value are
    controlled. However, because the state-of-the-art changes, and the
    evolution of the commercial marketplace, we must continually re-
    evaluate whether each component remains correctly categorized. This is
    really a process that should take place within the national security
    community as an honest discussion, not a protectionist blanket.
        Second, we need to examine whether the manufacturing capacity,
    either domestic or foreign, offers some strategic advantage. By this I
    mean we should examine whether the ability to produce a component or
    system provides some military advantage, and then determine which other
    nations have that capability. This is to provide a criterion for
    determining whether the ability to produce a particular component
    merits greater security restrictions than would just the capabilities
    of that component.
        These first two steps should help us to narrow the list of
    components that are subject to the third step, which is to evaluate the
    performance of those components on this shortened list, and compare
    them to the capabilities of foreign manufacturers. In some of the
    recent reports and studies on this issue some examples have been
    provided of foreign technology far out-pacing its U.S. counterpart and
    have revealed the absurdity of applying ITAR restrictions unilaterally
    on all satellite components. These include instances where the
    performance of multiple foreign designed and manufactured components'
    performance exceed the capabilities of the U.S. equivalent, and are
    readily available in the global marketplace. However, while the U.S.
    product may enjoy some economically competitive advantages such as
    costs associated with the manufacturing process, the U.S. product is
    put at a disadvantage in this marketplace because it remains subject to
    ITAR and the export control licensing process. The ``Fortress America''
    report well describes this in the following terms: ``(t)he artificial
    limitations on trade imposed by lists of controlled technologies have
    had predictable results with respect to the U.S. position in global
    markets. With U.S. companies prevented by export controls from
    competing in certain markets, foreign competitors . . . spring to fill
    these competitive gaps. As these competitors have proliferated, U.S.
    companies have suffered challenges in the marketplace that would not
    have been present but for export controls.''
        Fourth, we need to evaluate the trends in capabilities of foreign
    components. While we may still maintain the state-of-the-art
    capabilities, we need to examine how far equivalent components'
    capabilities have come and project when we may expect those
    capabilities to surpass our own.
        I understand that there are practical constraints that limit this
    process. I know that the licensing office within the Department of
    State has been streamlined, and that they have become much more
    efficient in processing licensing applications. However, they are still
    limited in the human capital available to perform these evaluations,
    and I understand it would be placing an unrealistic burden upon that
    staff to complete periodic comprehensive evaluations of the components
    that they may not possess the expertise to perform, and while still
    maintaining their workload. To make the problem manageable, the list
    must be shortened carefully but quickly. I also believe that the
    Directorate of Defense Trade Controls can be instrumental in working
    with policy-makers to develop a defined standard that is used in the
    evaluation of applications, and I do think that it would be very
    helpful for both the venders and the purchasers to understand the
    standard when assessing the utility of moving forward with a licensing
    application.

    CONCLUSION

        There are some encouraging signs. Just five years ago nobody was
    having this conversation in the public forum even though the problem
    clearly existed. Our policy-makers did not seem ready to accept the
    realities of the effects of current export control policies, and they
    certainly did not want to open up the possibility of loosening
    restrictions on sensitive technologies during these uncertain and
    unsettling times. Industry leaders were concerned with drawing further
    scrutiny on their applications, were reluctant to be seen as badgering
    their largest customer, the U.S. Government, and were frankly timid on
    this issue because they did not want to be accused of putting their
    bottom line before national security. Now, however, there is widespread
    agreement that the time has come to fully address these issues, and I
    believe this is in large part attributable to these studies that have
    been mentioned, as well as other reports that have also discussed the
    direct decline in national security caused by these and other
    restrictive national policies on export of technologies.
        The effects we are seeing are troubling. It is a multi-faceted
    issue, and the current state in each of these areas is alarming. Early
    on, we noticed the economic impacts of ITAR and export controls. The
    belief at the time was that we should endure the economic costs to
    preserve national security. Nobody can fault the philosophy of putting
    national security before economics. However, this is clearly a
    situation where it was not an either/or dynamic. The policies that we
    have put in place are having severe impacts on both.
        In recent years, this committee has focused on America's ability to
    compete as the world continues its transformation into the information
    age. How we approach educating and developing our workforce is just as
    important as the approach we take to global trade. We need to increase
    and improve our investments into RDT&E to ensure that these programs
    continue to attract the best minds, capture the imagination and
    creativity of the next generation, and provide the technological return
    on investment that we are enjoying by the foresight put in our
    investments in these areas 20 to 30 years ago and longer.
        While these are not irreversible trends, further inaction will put
    us dangerously close to the point were it may well be. Our course
    moving forward must be proactive. We must change the process and the
    philosophy that we used in restricting technology sales. We should look
    beyond technology restrictions, and improve the intellectual discourse
    in R&D in our universities, our industry programs, and our federal
    research facilities. We should focus on preparing the next generation
    workforce to compete in advanced technology industry. This includes
    loosening visa constraints, and encouraging the worlds' brightest minds
    to come to the U.S. We must also be willing to make long-term
    investments in R&D and the infrastructure that supports it.

    QUESTIONS POSED BY THE HOUSE COMMITTEE ON SCIENCE AND TECHNOLOGY

    1.  What are the implications and unintended consequences of current
    export control policies and regulations on U.S. science and technology
    competitiveness, including its space research activities?

        I believe some of the more obvious include the reverse ``brain
    drain,'' the loss of institutional knowledge, the stifling of
    industrial advantages and entrepreneurial success, and the
    strengthening of foreign industrial competitors with the direct
    reduction in our own industrial capacity. For example, I think you are
    also seeing U.S. industrial space research become even more risk averse
    because of the reduction of profit margins for
        U.S. technologies caused by the increased competition and reduction
    of foreign markets for U.S. products.
        In 2008, the Center for Strategic and International Studies
    released Health of the U.S. Space Industrial Base and the Impact of
    Export Controls, which reported the findings of a study specifically
    focused on this topic. I know Tom Young co-chaired this study. That
    working group did an outstanding job of examining the many implications
    that export controls have had on the space industry. The conclusions of
    this study were startling. The study also identified seven principles,
    or truths about the role of space science and technology, and the
    national space industrial base as they apply to our national security.
        This committee, the Congress and the Administration must consider
    what is happening to the U.S. industrial base and look at it from more
    than the economic perspective, which in itself have been detrimental.
    It really needs to be viewed from a more inclusive holistic view of our
    national security perspective. Do our export control policies help or
    hinder our ability to design and build the capabilities that we would
    need to defend ourselves, no matter the adversary?
        I think it is important that our national security goals should
    also ensure a robust and sustainable aerospace sciences, technology,
    and industrial base. When you examine those principles defined in the
    CSIS study, you cannot help but to realize how imperative this point
    is. We must stop looking at these issues from a standpoint of what it
    will cost, or what we will lose control of. Instead, it must become a
    matter of what it will cost to not to take bold action, and what will
    we have left to maintain.
        Whether we are talking about creating this change of course in
    months, or over the next several years, the one thing that is clear is
    that it serves us no good to do this piecemeal. There has to be some
    real strategy with a defined intended outcome.

    2.  The National Academies recently issued a report, Beyond ``Fortress
    America'': National Security Controls on Science and Technology in a
    Globalized World. To what extent would action on the report's
    recommendations help mitigate the unintended consequences of export
    controls on trade, and research and education, including space
    research?

        I don't want to go into a long discussion about visa policy since
    that is not the focus of this hearing. However, that is a conversation
    this committee needs to continue having. I bring it up because of the
    influence of these federal policies on foreign technology professionals
    and the adverse effects these policies have had on our science and
    engineering research base. I sincerely believe that for changes to
    either technology or the human capital associated with technology to be
    successful, you must also make modifications to the both. The 2007
    National Academies report, Rising Above the Gathering Storm, that study
    group made several recommendations to improve national visa policy that
    would increase the flow of intellectual talent coming to and remaining
    in the U.S. to train, work, and teach. If we are going to regain our
    role as the recognized leader in research and development then we must
    reverse the barriers to foreign technology professionals thriving in
    the U.S. to create the advantage of the international ``brain drain''
    from overseas that we enjoyed from the 1940s through the 1970s.
        In Recommendation 3 of the ``Fortress America'' report, the authors
    specified action items that mirror those earlier recommendations from
    the Gathering Storm report. We need to provide the opportunities for
    foreign talent to come and stay in the U.S. as part of our R&D
    strategy, and we must ensure that there is a pathway for them to enter
    and remain to take advantage of these opportunities.
        I believe the recommendations in this report to be sound, and a
    good foundation for the fundamental changes that we must adopt if the
    U.S. is to remain competitive. As I mentioned earlier, I believe that
    the correct approach will consist of adopting changes in several areas
    of federal policy including trade, RDT&E investment, and visa policies.
    That approach must be integrated, and we must be willing to make long-
    term investments of time and funding to ensure that these policies
    bring about those intended objectives for national security and
    economic stability. I think we have a lot of supporting documentation,
    and the real task before us is incorporating many of these
    recommendations into a cohesive comprehensive strategy.

    3.  In your view, what are the most critical issues regarding the
    export control system that the Committee on Science and Technology
    should consider as part of its oversight responsibilities for the
    Nation's civil and commercial space programs? What actions, if any,
    would you expect the Committee to take?

        I realize there are limitations due to oversight jurisdictions
    placed on this committee and by jurisdiction given to other
    congressional committees, and that not all of the changes that are
    needed can originate here. But given the role that this committee fills
    and comparing that especially to ``Fortress America,'' but also with
    the Rising Above the Gathering Storm report, I would recommend starting
    in four areas. These are not in order of importance, but more in order
    with what is practical and can be implemented more rapidly.
        First, we need to make certain that we are committed to the ideals
    of initiatives such as the America COMPETES Act, and really invest in
    our education system and workforce. We need to create and support
    programs and facilities that captivate our students at a young age with
    hands-on instruction and training, so that we are developing a home-
    grown workforce that is enthusiastic and capable in science,
    technology, engineering, and mathematics. They will be the foundation
    for our nation's ability to compete and excel in an evermore-
    competitive global marketplace. We must ensure that future generations
    of the U.S. technology workforce are able to sustain and build upon the
    advances that our nation has achieved.
        Next, I believe this committee can encourage global engagement in
    science and technology. We need to once again invest in our research &
    test facilities to make them attractive to international collaborators
    and researchers. We need to develop policies that allow and encourage
    U.S. researchers to talk and share ideas, findings, and recommendations
    without a fear of violating U.S. trade policy. We need to make certain
    that the U.S. is once again considered a valued and necessary research
    partner in international collaborations.
        Third, I believe that the Committee can support appropriate changes
    to current visa policies to promote access and inclusion of
    international students and researchers into U.S. colleges and
    universities, industry research programs, and federal research programs
    and facilities. This will help us to insure that the talent pool
    participating in U.S. research continues to be drawn from among the
    brightest in the world, so as to reduce the capable talent available to
    foreign competitors, and challenge the perspectives and paradigms of
    American-produced scientists and engineers, improving the overall
    quality of their research.
        Finally, and most directly related to the export control system, I
    think the Committee can be instrumental in prescribing a process by
    which the Administration can review and update technology and their
    components lists on a regular basis, streamline the several lists for
    some uniformity, and standardize licensing considerations and
    requirements. I agree with the report's recommendation that this needs
    to be done with a focus on understanding why items should or should not
    continue to be controlled, rather than on adding components to an
    increasingly restrictive and misunderstood list.

    4.  In the absence of any changes to export control policies and
    regulations, what is the outlook for the competitiveness of our space
    industry, our ability to execute U.S. Government-funded space programs,
    and our overall leadership in space over the next five years?

        Without a change of course, we will certainly witness dramatic
    changes in our competitiveness and level of superiority. We are really
    talking about generational effects, well beyond five years.
        When the European Union brokered an agreement on aerospace R&D,
    European Vision 2020 was designed with the goal of developing an
    aerospace sector that would be unrivaled even by the U.S. Their
    partnerships and collaborative agreements have allowed Europeans access
    to state-of-the-art facilities where world-class research is being
    conducted. When this was first brokered, American aerospace executives
    believed their hold on aerospace markets to be too great to be
    concerned by the Europeans' aspirations. It took a decade from their
    original declaration for Airbus to surpass Boeing in annual global
    sales.
        ``ITAR-free'' marketing is designed specifically to compete with
    U.S. systems and components with contracts that have much less
    regulation, and can be completed in a much shorter timeline. These are
    policies developed specifically to make the European manufacturers a
    more attractive alternative to U.S. industry and the marketing has been
    very successful, even for almost purely commercial products. The effect
    has been a dwindling U.S. industrial base largely dependent on
    government contracts to keep production lines open.
        The policies we have implemented that have sent us on this path
    were not established for a five-year course. As we have ceded
    superiority in space technologies, we have seen growth of competencies
    around the world increase significantly. While it has taken some of
    these federal policies 20 and in some cases 40 years to take their real
    toll, now that we are at this point, we are now seeing rapid technology
    gains around the world and more rapid deterioration within our own
    industrial base. Nations and companies no longer need to come to the
    U.S. for our knowledge, facilities, or technology because our
    restrictions and their own advancing technology. As they continue to
    institutionalize their education, research, and manufacturing capacity,
    they will gain a greater edge. To be direct, we will be noticeably less
    competitive in five years without a change in course and far more so in
    ten, 15, 20 years and beyond. The issue is whether the U.S. is willing
    to invest in regaining that superiority or whether we will continue to
    shield our eyes from this glaring problem, and see our capacity and
    capabilities continue to whither.

                        Biography for Robert S. Dickman
        Bob Dickman is the Executive Director of the American Institute of
    Aeronautics and Astronautics, a professional membership technical
    society with more than 36,000 members in 80 countries.
        Mr. Dickman was born in Brooklyn, N.Y., grew up in New Jersey and
    entered the Air Force in 1966 as a distinguished graduate of the ROTC
    program at Union College, Schenectady, N.Y. His military career spans
    the space business from basic research in particle physics to command
    of the 45th Space Wing and Director of the Eastern Range at Cape
    Canaveral, FL. He served as the Air Force's Director of Space Programs,
    the Department of Defense Space Architect and the senior military
    officer at the National Reconnaissance Office. He retired from active
    duty in 2000 as a major general. From 2002 to 2005, he was the Under
    Secretary of the Air Force's Deputy for Military Space.
        Mr. Dickman has graduate degrees in Space Physics and Management
    and is a distinguished graduate of the Air Command and Staff College
    and the Naval War College.
        He is a member of the Air Force Scientific Advisory Board and the
    DOT Commercial Space Transportation Advisory Committee. He has been
    recognized by Union College with its Nott Medal, was the National Space
    Club's Astronautics Engineer of the Year, was selected as one of Space
    News ``100 Who Made a Difference'' and is a Fellow of the American
    Institute of Aeronautics and Astronautics.
        Bob, his wife Barbara and their son, Tad, live in Springfield,
    Virginia.

                                   Discussion

        Chair Gordon. Thank you, General Dickman. Unfortunately, we
    are going to be having a series of votes coming up soon, and
    this is a very, very important hearing. But I am going to try
    to expedite things for everybody's convenience. So I had my
    say, although I have some questions, but I am going to skip
    myself now and move to Ms. Giffords and recognize her for first
    questions.

              Executive Order Relating to Relief for Universities

        Ms. Giffords. Thank you, Mr. Chair. I appreciate your
    bringing such a distinguished panel of speakers today on this
    incredibly important topic. I know that export controls is not
    the subject that most Americans are having around their dining
    room table every night. However, they probably should be
    because as the testimony from the gentlemen today really
    indicated, this is an incredibly important aspect of our
    economy, our national security, and the way we became as
    prosperous as a nation because of its focus on space and
    exploration and certainly science and technology.
        My first question is for Dr. Canizares. In terms of the
    National Academy report that identified several challenges that
    export controls present for universities in carrying out the
    fundamental research and education for the next generation, if
    President Obama implements the recommendations of the National
    Academy's report, can you talk about how much relief will
    actually be provided to the universities?
        Dr. Canizares. Thank you for the question. I think that the
    recommendations in the report would be a very important step.
    However, the real issue with the implementation of the
    fundamental research exclusion is how it gets implemented over
    and over and over again in numerous contracts, awards,
    technical interchanges. And one of the difficulties has been
    that with the philosophy, as General Scowcroft indicated, of
    primarily sort of trying to contain everything, we have managed
    to do what was described in the report that Norm Augustine put
    out recently from the Department of Commerce who quoted George
    Bundy saying if you protect your diamonds and your toothbrushes
    with equal zeal, you will lose fewer toothbrushes but more
    diamonds. And I think in that sense, unfortunately, that is
    largely what has happened. And so in the case of ITAR, we have
    many space projects where technical information simply on, you
    know, where to put the screw holes to attach your scientific
    instruments to a satellite is ITAR-controlled and not available
    to a graduate student who would be normally be drilling the
    holes.
        And therefore, I think the real key will be to have a
    change in mindset that encourages all the contracting officers,
    all the agencies, to really implement with proper attention the
    intent of keeping as much open as can be kept open. That will
    be a difficult, long process, but with the attention of this
    committee and we hope of many others in the government, it is
    achievable but it will take some time.

                   International Dual-use Technology Balance

        Ms. Giffords. Following that for members of the panel, I
    know that we will not be able to take a go-it-alone approach
    when it comes to space initiatives that we plan to pursue,
    including the human exploration of the moon, beyond obviously
    the Mars sample return, global climate change. I am curious
    about the balance of our desire to cooperate with emerging
    space-faring nations like China and perhaps India on specific
    projects against concerns about that dual-use nature of some of
    those nations' activities. And certainly we have seen other
    countries, specifically Iran for example, launch a satellite,
    and we know that the quest of those who control the skies
    control the battlefields. If members of the panel could talk
    about that balance?
        Mr. Young. I will try and then others may want to comment.
    I think in my opening remarks, there are things that need to be
    controlled, and so I don't want to leave the impression that,
    you know, we are advocating abolishing controls. But the
    advantages of international cooperation are enormous, not only
    technologically but above and beyond as a policy, part of our
    foreign policy. I think if we go back and take a look at even
    at the height of the Cold War, as General Scowcroft was talking
    about, our cooperative arrangements with the Soviet Union on
    things like Apollo-Soyuz and other programs were
    extraordinarily mutually beneficial. And I think that, you
    know, we gave us a stronger appreciation of some of the things
    that were going on with their programs and vice versa without
    compromising our national security. So I think relative to
    adversaries, I personally am an advocate that we cooperate
    there but we do it in a very thoughtful manner which is what
    you are suggesting.
        But equally important is--our current controls have really
    an adverse impact on cooperating with our friends, and I will
    give you, you know, a few examples. One is that if we sat down
    today and developed a relationship with the most friendly of
    countries for a space program and after we had reached all the
    conclusions, then we give this country a raft of documents, I
    guess technical assistant agreements. And if you scan through
    them, you know, they sure don't communicate that this partner
    is a true partner. And they sign away an awful lot. You know,
    partners say why in the world after I have reached all these
    agreements, you know, do I need to go through that aspect of
    it?
        Let me give you one more example. Today on the Atlas 5, we
    use a Russian engine called the RD-180. The people who were
    doing that program selected it because they concluded it was
    one of the world's best engines. You might say it fit my
    earlier comment of being a technology vacuum cleaner in that
    regard. But if we have a launch problem, we cannot sit down--
    this is a Russian-developed, Russian-produced engine, we cannot
    sit down with them and have a discussion as to what the problem
    is without having a new license to establish it. It goes even
    further if I may just add one other. Tommy Holloway who many of
    you know who managed both the shuttle program and the
    International Space Station program, chaired a study recently
    and said that this inability to do problem resolution in a
    real-time fashion added enormously to the risk associated with
    flying on the International Space Station. I could go on and
    on.
        Chair Gordon. Yes, well, thank you, Mr. Young. We were
    going to try to beat the bells. Mr. Hall, you are recognized
    for five minutes.

            Differentiating Military Weapons and Dual-use Technology

        Mr. Hall. Thank you, Mr. Chair. I want to ask some of you
    about the military components. The Fortress America report
    recommends that export controls, ``treat weapons separately but
    define them narrowly and precisely.'' I guess my question is
    how does this process distinguish between a weapons system and
    a component that might be integral to the system? I remember
    somehow about the CAT scan and when it came aboard. Medical
    production and medical people and maybe some folks that think
    different to others of us that don't recognize barters. They
    want to share breakthroughs like that with the nations of the
    world because it is medical and it helps everybody in the
    world. But I believe I remember and either you generals might
    remember or you other men, when the CAT scan came on, we didn't
    share that with anyone because about 15 percent of the
    technology there was involved in the M-1 bomb or the M-2 bomb
    or whatever it was that was powerful at that time. It is shared
    with the world now, but that is just the kind of thing I am
    asking about, how this might distinguish between a weapons
    system and any components that might be integral to the system
    like that part of the CAT scan was. General, do you want to
    give that----
        Lieutenant General Scowcroft. Well, Mr. Hall, let me take a
    crack at it.
        Mr. Hall. I remember it, and I remember Phil Barnaro, too--
    --
        Lieutenant General Scowcroft. What our study is dealing
    with is not items that are under the military classification
    system, a weapons system or essential component parts, if it is
    a screw that holds things together. That is something else, but
    only those dual-use items where they have a commercial use and
    they have a valid military use. And our tendency now is not to
    let anything out.
        Mr. Hall. That describes the CAT scan.
        Lieutenant General Scowcroft. Well, it does describe the
    CAT scan.
        Mr. Hall. But we found a way, or someone found a way to
    share that with the world, and I don't object to that because I
    think the secrecy of the type bomb mechanism is outside our
    borders, too.
        Lieutenant General Scowcroft. Look, we are not going to
    solve all of these problems, and there are problems to
    distinguish. What we are saying is let us try to make those
    distinctions clear and more apparent and not simply say we put
    the blanket over everything and we don't let everything go
    unless you can demonstrate----
        Mr. Hall. General, thank you. Thank you, sir.
        Lieutenant General Scowcroft.--where it should go.
        Mr. Hall. I have used three minutes. Could I yield my two
    minutes to Mr. Rohrabacher? He is hurting.
        Chair Gordon. Sure.
        Mr. Rohrabacher. Thank you very much, and thank you both,
    the Chair and the Ranking Member, for this very important
    hearing and the courtesy they have displayed to me to let me
    have a chance to ask a couple questions and to give an opening
    statement.

                       Dual-track Export Control Systems

        First and foremost, let me just note I represent a district
    that is very rich in aerospace technology, and I take the
    employment of my constituents very seriously. And I realize the
    issues that you brought up today are risking--we are putting at
    risk our aerospace industry and the jobs of all of my people by
    having an irrational ITAR regulation system. We understand
    that. What direction are we going to go, how do we get out of
    it is a whole other issue and quite frankly, I believe that we
    have had these restrictions because there was a transfer of
    technology 20 years ago during the 1990's to a potential enemy
    of the United States, China. And all of your suggestions about
    how we need to work with the people overseas is absolutely
    correct for the health of our industry. But I take it that none
    of you believe that the United States should be working and
    having this possibility of transferring technology in order to
    get a contract or to build your industries at the expense of
    building up the capabilities of Iran or North Korea or some
    enemy like that which is clearly an enemy of the United States.
    But with China, no one wants to face that. Let me just ask down
    the line, would you be willing to try, in order to open up
    trade, high-tech industries and the type of business that we
    need to do to keep our aerospace industry and other high-tech
    industries competitive. Would you be willing to have a dual-
    track system which places heavier restrictions on trade with
    non-democratic countries like China, and including China,
    versus having just the idea that we have to open up and loosen
    up the controls for everybody?
        Chair Gordon. Mr. Hall's time is up, so if you would, I
    think that deserves an answer but if you could move forward
    maybe with an answer.
        Mr. Rohrabacher. Could I just have a yes or no from the
    panel? Would you be willing to have tougher controls on China
    and other potential enemies versus ITAR that would have to be
    opened, just overall change?
        Lieutenant General Scowcroft. I don't want to answer yes or
    no because I think it is a more complicated question.
        Mr. Rohrabacher. Okay. I don't think it is, General. I am
    sorry. What would be your answer? This is not a complicated
    issue. Why don't we have tighter controls on an issue that
    poses a potential danger to our country than we do with
    democratic countries?
        Dr. Canizares. Yes, I believe we should, and certainly all
    the export regulations have that, and in fact the
    recommendations of our report also allow for it.
        Mr. Rohrabacher. So we should still have controls----
        Dr. Canizares. I will not decide which countries--it is not
    at all appropriate for me to decide which countries should be
    on the list. However----
        Mr. Rohrabacher. All right. So the answer is yes, we should
    have a dual system.
        Dr. Canizares. Yes.
        Mr. Rohrabacher. Mr. Young.
        Mr. Young. Yes, I think we should have a dual system, but
    like General Scowcroft, it is more involved in the answer----

                    Export Control Dangers With the Chinese

        Mr. Rohrabacher. Nobody wants to say China. The bottom line
    is our major industries are making billions of dollars off of
    trade with China that could potentially cause damage to our
    national security. When our businessmen acknowledge that, we
    are going to have some progress on this. Until then, we are
    going to have controls because the American people can't count
    on our big businessmen to watch out for the security interests
    of our country over temporary and short-term profit.
        Mr. Hall. I yield back my time.
        Mr. Rohrabacher. That is what this is all about.
        Lieutenant General Scowcroft. Mr. Rohrabacher, if the
    Chinese can get the same product from the British or the French
    that they could get from us, then we don't solve your problem
    but we injure the American economic competitiveness. That is
    why it is a complicated answer.
        Mr. Rohrabacher. I will tell you----
        Chair Gordon. Mr. Rohrabacher, if you would yield, it is
    really a----
        Mr. Rohrabacher.--in aiding Adolf Hitler because the French
    have been aiding Adolf Hitler----
        Chair Gordon. Thank you, Mr. Rohrabacher. There are a lot
    of nuances to this, and it is unfortunate that we are under
    this gun because this does need to be discussed more. But we
    are going to try to keep some regular order.
        Ms. Dahlkemper, did you have a question that you wanted
    to--okay. Mr. Smith, did you have a--well, Mr. Rohrabacher,
    would you like to rant just a little bit longer?
        Mr. Rohrabacher. Listen, again, my people are aerospace
    employees, and I am very concerned about the issues they
    brought up.
        Chair Gordon. Why don't you--okay. Why don't we--Mr. Young?
        Mr. Young. Yeah, I would like to respond because I think
    the comments are quite good. I really want to highlight the
    fact that the reason, the primary reason in my view for making
    the changes we are talking about, is not American industry, it
    is national security. And our concern, when we really got into
    this, and it is no matter what country we are dealing with, the
    way we are currently implementing our export controls is having
    a detrimental effect on our national security. In other words,
    I think if we make a mistake, I would be in favor of making a
    mistake on the conservative side relative to not harming
    national security. But what alarmed us, when we really got into
    this, is that the way we are currently going about it,
    including even with adversaries, is we are doing it in a manner
    that has a negative impact on our national security. If I could
    just add one item, not an adversary, but we had various foreign
    governments come in and talk to us. Indian government came in
    and talked to us. They said the best thing that ever happened
    to them was ITAR, that it accelerated their program beyond what
    would have ever been possible if it had not been for U.S.
    export controls. The reason I point that out is that that
    really is a broad way that it is being implemented.
        Chair Gordon. Thank you, Mr. Young.
        Mr. Rohrabacher. But don't you think----
        Chair Gordon. Mr. Rohrabacher, if I could just----
        Mr. Rohrabacher. I thought I was going to rant some more.

                             Conclusion of Hearing

        Chair Gordon. Well, you had your opportunity. We only have
    four minutes and 45 seconds to go. As I said earlier, this
    really is just not fair. I mean, this is such an important
    question. There are lots of nuances. As we stated earlier,
    though, this is sort of the opening, and I am glad that
    hopefully we can, this committee hearing, has put it on the
    table. There needs to be other hearings. This needs to be
    something that is talked about. I am going to contact the
    President and ask him to--once again, as we sit in this, in our
    earlier to our authorization last year is that they need to
    take a quick look at this, or not a quick look, I mean they
    need to quickly start to take a serious look at this. But as
    today, I am afraid that we are going to have to come to
    conclusion. The record will remain open for two weeks for
    additional statements for Members and for answers to any of the
    follow-up questions the Committee might ask. And Mr.
    Rohrabacher, the witnesses would welcome you to go down and
    have a conversation as we continue with going to vote.
        Mr. Rohrabacher. All right.
        Chair Gordon. And again, I thank all of you. The witnesses
    are excused.
        [Whereupon, at 11:05 a.m., the Committee was adjourned.]
                                  Appendix 1:

                                  ----------

                       Answers to Post-Hearing Questions

                       Answers to Post-Hearing Questions
    Responses by Lieutenant General Brent Scowcroft (USAF, Ret.), President
            and Founder, The Scowcroft Group

    Questions submitted by Chair Bart Gordon

    Q1.  In discussing the Presidential Executive Order recommended by your
    committee, the report states: ``Not only will these reforms support
    economic vitality and promote national security, but they will create a
    track record and experience base that Congress can evaluate--and modify
    as it sees fit.'' What should Congress look for in evaluating the
    effectiveness of changes to the export control system directed in such
    an Executive Order, should the President decide to issue one?

            a.  At what point after the proposed Order is put into effect
            should Congress expect to see improvements?

    A1. The changes that the report proposes are intended to make the
    export licensing system easier to navigate because the ``one-stop-
    shop'' coordinating center will reduce the bureaucratic ambiguity that
    both industry and the agencies currently experience. Over time, these
    should lead to such quantifiable improvements as shorter license-
    processing times, increased defense industry cooperation among allies,
    and up-to-date controls lists (both the CCL and the USML). The report
    does not specify when improvements should become evident; however, in
    my view, nine-months from the time that the system is fully operational
    should be sufficient to begin to see positive changes.

    Q2.  Your prepared statement notes that ``the most significant
    challenge to implementing these [National Academies] recommendations is
    to help the relevant agencies understand that these reforms will not
    micro-manage their own licensing procedures or challenge agency
    expertise.'' Do you have any specific suggestions on how to address
    this challenge?

    A2. Although the report does not address this issue, members of the
    committee are conducting briefings throughout the relevant agencies to
    explain that the new processes do not change how each agency conducts
    its own licensing reviews. This explanation should be included in any
    materials that accompany the launch of the coordinating center and
    licensing appeals panel.

    Q3.  Dr. Canizares' testimony suggests that some of the actions our
    committee could take to address the impacts of export controls include
    1) endorsing the recommendations in the National Academies report and
    2) requiring that each agency under our jurisdiction develop and
    implement a plan to execute the recommendations and report to Congress
    on their progress. Do you agree with Dr. Canizares' suggestions? Are
    there other actions this committee could take, within its jurisdiction,
    to address the impacts of export controls on science and technology
    competitiveness and to ensure America's leadership in space?

    A3. It would certainly be beneficial for this committee to endorse
    these recommendations.
        Dr. Canizares has explained what he meant by the part of his
    testimony that would require ``each agency under our jurisdiction [to]
    develop and implement a plan to execute the recommendations and report
    to Congress on their progress.'' He was not referring to agencies that
    administer and enforce export controls, but rather to those that
    conduct and support research (at universities and industry). He gave as
    an example, the 2008 John Young Memo that reaffirmed ``free scientific
    exchanges and dissemination of research results to the maximum extent
    possible.'' He would like to see agencies being asked to explicitly
    meet our recommendation for reaffirming the Fundamental Research
    Exemption (NSDD 189). I think this is a very good idea.

    Q4.  Your committee's report recommends that sunset requirements be
    applied to all items on export control lists that are controlled
    unilaterally by the U.S. Who did the committee think should review the
    lists to be in compliance with the report's recommendation for
    sunsetting?

            a.  Does this recommendation for sunsetting apply only to the
            Commerce Control List or does it also apply to the ITAR?

            b.  Would satellites be covered under the sunset requirements?
            If not, did the Committee consider what actions are necessary
            to assess the effectiveness of export controls for satellites
            and satellite components?

    A4. The report proposes that the coordinating committee should have
    oversight of the ``sunset'' process but does not get more specific than
    that regarding who ought to participate in the process. In my view, the
    technical expertise of those who are directly involved in research
    (from university, national and commercial laboratories) is an essential
    component of this process. While the report is not specific as to who
    should participate, it discusses an approach that includes several of
    the principles listed in Recommendation #1 and the proposed Economic
    Competitiveness Exemption.
        The sunset process is intended to be applied to both the Commerce
    Control List and the International Traffic in Arms Regulations. The
    report does not discuss satellites per se because they are covered by
    statute, but in my own view, yes, they should be included under sunset
    requirements.

    Q5.  The National Academies report recommends the creation of a
    Coordinating Center for Export Controls to receive applications,
    determine agency jurisdiction, maintain timetables on license
    application processing, and managing the appeals process, for example.
    How big of an operation would this be? What is required for the Center
    to be successful?

            a.  If both the federal agencies that administer export control
            regulations and the export control license applicants can
            appeal decisions on licenses and on whether sunset requirements
            have been properly implemented, what measures are in place to
            ensure that the appeals process recommended in the report does
            not become overly burdened and time-consuming?

    A5. Although it is not discussed in the report, the committee
    recommends that the coordinating center should be a small
    administrative office. In order for the coordinating center to be
    successful, the report specifies that the coordinating center's
    director should have binding authority (1) to determine which agency--
    Commerce or State--will review a particular application, and (2) to
    establish default-to-decision orders with respect to licensing decision
    timetables and sunsetting timetables.
        The report does not discuss in detail how to prevent the appeals
    process from becoming over-burdened. However, the committee believes
    that the establishment of an appeals process that does not reside in
    Commerce, State or Defense and does reside in the National Security
    Council will dampen the tendency to abuse the appeals process.

    Q6.  During the hearing, Congressman Rohrabacher stated that ``the
    American people can't count on our big businessmen to watch out for the
    security interests of our country over temporary and short-term
    profit.'' How, if at all, would implementation of the recommendations
    in your report address this concern?

    A6. The report does not recommend an end to export controls, but to
    implement ``reforms based on the realities of the risks and
    opportunities of today's threats to the Nation.'' Nor does the report
    recommend putting industrial stakeholders in charge of any aspect of
    the export control process. Indeed, the recommendations proposed in the
    report would not make it any easier for American businessmen to ignore
    or undermine export control policy. In fact, the system would very
    likely close some loopholes that currently exist because of the multi-
    agency application process. Also, many businesses would no longer be
    compelled to build research laboratories outside the United States in
    order to get around export controls.

    Q7.  To what extent do current American export controls prevent China
    from gaining access to advanced technologies?

            a.  How would the approach recommended in Beyond ``Fortress
            America'' protect U.S. technologies from being exploited by
            China?

    A7. The United States and its allies do not see eye-to-eye on selling
    advanced ``dual-use'' goods and technologies to China. For example, as
    stated in the report: ``despite U.S. protests on the transfer of dual-
    use technology, the European Union signed an agreement with China in
    2003 that allowed China to invest 230 million Euros in the European
    Union's satellite navigation system.'' Furthermore, China is able to
    buy U.S. products from third country manufacturers who are the original
    legal buyers; there are no international legal restraints to prevent
    this. Thus it is a mistake to think that withholding U.S. products from
    the Chinese actually prevents them from getting the same advanced
    ``dual-use'' goods elsewhere.
        The report does not deal specifically with China's efforts to gain
    access to American advanced technologies that could have a military
    purpose. However, it articulates the need to redesign the multi-lateral
    regimes, such as the Wassenaar Arrangement, in ways that will better
    respond to today's globalized and threat-diffuse world.

    Questions submitted by Representative Gabrielle Giffords

    Q1.  Your testimony states that ``If we sustain these export control
    and visa barriers, we will increasingly lose touch with the cutting
    edge of science and technology, and we risk missing emerging national
    security threats.'' Could you elaborate on this point, especially with
    respect to emerging national security threats?

    A1. The emerging threats in my statement refer to technological
    advances taking place elsewhere that could weaken America's position in
    the battlefield, and to technologies that could have catastrophic
    consequences if unleashed on the American population. As the report
    states, ``[w]hile the United States remains a world leader in advanced
    science and technology, it no longer dominates; it is now among the
    leaders. We are increasingly interdependent with the rest of the
    world.'' Therefore advanced science and technology will develop in the
    United States, but also, for example, in China, Germany, India, and
    Russia. If export controls prevent foreign scientists from coming here
    to study, or from collaborating with American scientists, the United
    States will lose vital information about what is going on elsewhere.

    Q2.  The State Department maintains a Technology Alert List (TAL) which
    establishes a list of major fields of technology transfer concern. That
    list expanded greatly after 9/11, and some have argued that it is too
    exhaustive. As a result, consular officers with little or no scientific
    training of their own will request an additional review, called a Visa
    Mantis review, for the overwhelming majority of visa applicants with
    advanced science and engineering degrees. However, what is being
    recommended in the National Academies report seems to be the opposite
    approach: preferential treatment for those with advanced STEM degrees,
    with no discussion at all of security concerns or of how to achieve
    improvements within the current system. Can you elaborate on how you
    approached your recommendations with respect to visas?

    A2. With all due respect, the question is a mischaracterization of the
    committee's recommendations with regard to visas. The report does not
    seek in any way to end the screening process, but to make it more
    rational, so that ``legitimate and qualified students and researchers''
    (emphasis added) can attend school, attend conferences, and ultimately
    seek employment. For example, see Recommendation 4 which states that
    ``The committee recommends the President's Executive Order require that
    a non-immigrant visa applicant who is a graduate student, researcher,
    or professional in any field of science or technology, and whose
    application is supported by a qualified university, scientific body, or
    corporation receive a determination on the visa application within 30
    days'' (emphasis added). The recommendation also affirms that graduates
    should be eligible for employment only after the ``pass security
    screening measures.'' The vouching process that is recommended is not
    meant to replace screening measures, but to augment them.
        As has been the case throughout its history, ``It is important to
    both the national security and to our country's economic prosperity to
    maintain the flow of human talent into the United States.''

    Q3.  One of the visa recommendations in the National Academies report
    calls for an executive order requiring determination on visa
    applications for scientists and engineers within 30 days provided the
    application is supported by a U.S. university, scientific body, or
    corporation. In the report, it is noted that this is already common
    practice and few reviews slip beyond 30 days. If that is the case, are
    there more specific recommendations to the relevant agencies to
    mitigate those few delays that do still occur?

    A3. The current system works for 95 percent of visa applications;
    however, the difficult five percent is precisely the population with
    which the report is concerned--scientific students, researchers and
    professionals. The report does not specify actions that the relevant
    agencies need to take.

    Questions submitted by Representative Ralph M. Hall

    Q1.  You state that the export control system is ``broken,'' that it is
    slowly wiping away any technological advantages we may have once had,
    and is crippling our ability to maintain superiority. The Fortress
    America report proposes changes that could be implemented using
    existing Executive authorities to improve the export license process.
    If the Administration were to embrace the report's recommendations,
    from the applicants' perspective, what improvements would likely
    result?

    A1. The changes recommended in the report will bring about greater
    transparency, openness, consistency and agility, all of which are
    lacking in the current system. The ``one-stop-shop'' will reduce
    licensing timetables and therefore promote consistency and agility. The
    appeals process, which recommends publication of decisions, will
    promote transparency and openness. A process that applies principled
    and consistent sunset requirements will be able to bring about
    consistency and rationality. The Economic Competitiveness Exemption
    will make the system more realistic because it takes into account the
    fact that the U.S. gains no significant protection by prohibiting
    legitimate U.S. companies from exporting dual-use items that are, or
    soon will be, legally available in open markets overseas.

    Q2.  What would be the best approach to conduct the first round of
    `sunset' reviews for items currently on export control lists?
    Presumably, it would be a massive undertaking. Who should populate such
    a review committee?

    A2. The report does not address the specifics for how to manage the
    first round of ``sunset'' reviews, although the committee members agree
    that the initial pruning of the list will be ``arduous.''
        Technical experts currently working in their fields (see the answer
    to Chairman Gordon's fourth question) will be essential. Per my
    colleague, Claude Canizares' answer to Ranking Member Hall's first
    question, ``the Emerging Technology and Research Advisory Committee
    (ETRAC) recently established by the Department of Commerce's is
    currently working to define a methodology that may well be relevant to
    reviewing the Commerce Control List and possibly also sections of the
    Munitions Control List.'' I would propose consideration of their
    recommendation as it becomes available.

    Q3.  Foreign satellite builders have been openly marketing satellites
    as being ``ITAR-free.'' What has been the record of their marketing
    efforts? Is there any evidence that they are taking away sales from
    U.S. builders? Technologically, how do their satellites compare to
    ours?

    A3. I would like to refer you to the 2008 CSIS report, ``Health of the
    U.S. Space Industrial Base and the Impact of Export Controls.''

    Q4.  Since imposition of export controls decades ago, is there a public
    record of opinions on licenses that would give industry and academia
    roadmaps about what is acceptable, and what isn't. How transparent and
    consistent is the licensing process? To what degree can applicants cite
    previous license approvals to gain quick consideration of similar,
    pending applications?

    A4. It is unlikely that such a record exists. The current system is
    anything but transparent. Because technologies are in a constant state
    of change, precedents are not necessarily a useful guide.

    Questions submitted by Representative Pete Olson

    Q1.  What are examples of capabilities in satellite and launch systems
    where the U.S. excels and should hold tight to the underlying
    technologies?

    A1. This issue is not dealt with directly in the report, nor are
    satellites my area of expertise. This is a question that is best put to
    space scientists.

    Q2.  In statements presented during the hearing, several witnesses
    cited difficulties engaging in collaborative space research missions,
    given that all U.S. satellites are controlled by the State Department's
    munitions list. Yet the State Department claims they have streamlined
    the licensing process. From your vantage point, has the Department made
    real improvements, or is the system still weighed down with too many
    uncertainties, making future science collaborations a difficult
    proposition?

    A2. The State Department has made some changes in response to President
    Bush's January 2008 Presidential Directives designed to streamline and
    improve export control policies and procedures. These include moving to
    an online application system and correcting the severe backlog of
    applications from 2006-7. However, their efforts have not addressed
    either the lack of transparency or ``commodity jurisdiction'' issues--
    issues that are dealt with in the committee's recommendations. Thus
    while the improvements are real and necessary, they are not sufficient.
                       Answers to Post-Hearing Questions
    Responses by A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-
            Chair, Center for Strategic and International Studies (CSIS),
            Working Group on the Health of the U.S. Space Industrial Base
            and the Impact of Export Controls

    Questions submitted by Chair Bart Gordon

    Q1.  Dr. Canizares' testimony suggests that some of the actions our
    committee could take to address the impacts of export controls include
    1) endorsing the recommendations in the National Academies report and
    2) requiring that each agency under our jurisdiction develop and
    implement a plan to execute the recommendations and report to Congress
    on their progress. Do you agree with Dr. Canizares' suggestions? Are
    there other actions this committee could take, within its jurisdiction,
    to address the impacts of export controls on science and technology
    competitiveness and to ensure America's leadership in space?

    A1. I agree with Dr. Canizares' recommendations.

    Q2.  The first recommendation of the CSIS working group is: ``The
    Administration and Congress should review and reconcile the strategic
    intent of space export controls.'' What specifically do you think needs
    to occur in such a.strategic review and what entity should lead that
    effort? Does the strategic intent of space export controls need to be
    resolved before any structural changes to the export control system are
    put into place, such as those recommended by the National Academies?

    A2. Our view is that the strategic intent of space export controls
    should be uniquely to protect the national security of the U.S. Current
    controls are so broad and unfocused that the net result is an erosion
    of our national security. The administration and Congress should
    together make the changes to space export controls to assure the
    objective stated above is accomplished.
        While it would be useful, this issue does not have to be resolved
    before other important structural changes are implemented.

    Q3.  What specifically does the CSIS recommend to address concerns
    about the impact of export controls on the commercial sale and use of
    satellites for research purposes?

    A3. Specifically, the law that makes satellites controlled items should
    be repealed and only those elements of satellites that are critical to
    our national security should be controlled.

    Q4.  The CSIS study, as noted in your testimony, refers to the negative
    impact of export controls on the second and third tiers of the
    aerospace industry, which is where much of the innovation and global
    engagement in the industry occurs. How serious are the impacts to
    innovation at this level of industry? What does CSIS recommend to
    mitigate these impacts?

            a.  Do you have a perspective on whether any weaknesses in our
            supplier base are causing U.S. companies to increase
            dependencies on non-U.S. suppliers?

    A4. The impact on second and third tier companies is severe. These
    companies require both domestic and international sales to be viable
    and to be able to invest in innovation. Today, we are becoming
    dependent on, non-U.S. suppliers in areas such as traveling wave tubes
    and batteries.

    Q5.  One of the recommendations of the CSIS study is for relevant
    space-related government agencies to collaborate on conducting an
    assessment of the space industrial base on an annual basis. Could you
    elaborate on why an annual assessment is needed? How would this
    information be used in informing export control regulations? How
    feasible would it be to carry out such assessments every year?

    A5. The CSIS study had a dual objective to assess the health of the
    space industrial base and the impact of export controls. A conclusion
    of the study is that government funding directly defines the health of
    the base. Periodic assessments are necessary to assure the base
    continues to be healthy at the prime contractor level and that
    appropriate corrective action is being effective at the second and
    third times.

    Q6.  The CSIS working group recommended that ``a special program
    authority to permit timely engagement of U.S. participants in
    multinational space projects'' be created. Could you please elaborate
    on the nature of such a program authority and how, in practice, it
    would work? How broad or narrow should the special program authority
    be?

    A6. When the U.S. participates in a multinational space project export
    controls have a chilling effect on the partnership. International
    partners are required to approve onerous documents above and beyond the
    international agreements that define the project. Anomaly resolution
    cannot take place without further approvals. Meetings and meeting
    attendees are affected. These are some examples of the adverse impact
    of space export controls that cause potential international partners to
    no longer consider the U.S. as the partner of choice.
        A solution would be to include export controls that are critical to
    the U.S. national security, as well as those of our partners, in the
    project defining documents with implementing responsibility assigned to
    the U.S. organization lead for the project.

    Questions submitted by Representative Gabrielle Giffords

    Q1.  The CSIS study on export controls that you co-chaired noted
    concerns regarding the negative impact of export controls on selected
    areas of the space supplier base such as solar cell and solar cell
    substrate technologies. These would appear to be space technologies
    that could have applications for the development of advanced renewable
    energy technologies for civil applications. Can you elaborate on the
    basis of those concerns?

            a.  Are you aware of any broader implications of export
            controls for achieving the Nation's objectives to invest in
            ``green technologies'' and renewable energies?

    A1. We did not examine the impact of space export controls on ``green
    technologies'' and renewable energies; thus, I cannot elaborate on
    these concerns.

    Questions submitted by Representative Ralph M. Hall

    Q1.  What would be the best approach to conduct the first round of
    `sunset' reviews for items currently on export control lists?
    Presumably, it would be a massive undertaking. Who should populate such
    a review committee?

    A1. The conduct of the first round of ``sunset'' reviews would be a
    massive undertaking but critical to our national security. It should
    include those organizations responsible for implementing space export
    controls, such as the Department of State, and those organizations with
    the capability of assessing technologies critical to our national
    security, such as DOD and the NRO.

    Q2.  Foreign satellite builders have been openly marketing
    satellites,as being ``ITAR-free.'' What has been the record of their
    marketing efforts? Is there any evidence that they are taking away
    sales from U.S. builders? Technologically, how do their satellites
    compare to ours?

    A2. Foreign commercial communication satellites today have comparable
    capability to U.S. satellites. Foreign sales have grown at the expense
    of U.S. builders.

    Q3.  Since imposition of export controls decades ago, is there a public
    record of opinions on licenses that would give industry and academia
    roadmaps about what is acceptable, and what isn't: How transparent and
    consistent is the licensing process? To what degree can applicants cite
    previous license approval to gain quick consideration of similar,
    pending applications?

    A3. The licensing process is not very transparent, is very time
    consuming, and while the reported approval rate is very high most
    approvals come with required change. Large companies have learned to
    deal with these difficulties and consider the associated impacts as a
    ``cost of doing business.'' Again, the critical impact is to second and
    third tier companies.

    Questions submitted by Representative Pete Olson

    Q1.  What are examples of capabilities in satellite and launch systems
    where the U.S. excels and should hold tight to the underlying
    technologies?

    A1. Capabilities that are critical to our national security should be
    determined by our defense and intelligence organizations.

    Q2.  In statements presented during the hearing, several witnesses
    cited difficulties engaging in collaborative space research missions,
    given that all U.S. satellites are controlled by the State Department's
    munitions list. Yet the State Department claims they have streamlined
    the licensing process. From your vantage point, has the Department made
    real improvements, or is the system still weighed down with too many
    uncertainties, making future science collaborations a difficult
    proposition?

    A2. The State Department has made progress; however, when we conducted
    our review the process continued to be very onerous.
                       Answers to Post-Hearing Questions
    Responses by Claude R. Canizares, Vice President for Research and
            Associate Provost, Bruno Rossi Professor of Physics,
            Massachusetts Institute of Technology

    Questions submitted by Chair Bart Gordon

    Q1.  Your testimony identifies ``deemed exports'' as particularly
    problematic for the academic environment. What types of impacts have
    ``deemed exports'' had in the university environment?

            a.  Does National Academies study recommend any actions to
            mitigate these effects? If so, please discuss them.

    Q2.  Your testimony notes that ``Despite a Presidential directive
    protecting fundamental research, export controls continue to inhibit,
    retard or eliminate university research projects.'' Can you provide
    examples of the negative impacts to clarify the extent of the problem?

            a.  The National Academies report recommends that the
            Fundamental Research Exemption be maintained and implemented
            properly. Your testimony refers to the need for a ``change in
            mindset that encourages all the contracting officers, all the
            agencies, to really implement with proper attention the intent
            of keeping as much open as can be kept open.'' What are your
            thoughts on any specific actions that could be taken to help
            change the mindset?

    A1, 2. Because of the similarity of Questions 1 and 2, I believe it
    would be appropriate to provide a single answer that attempts to
    address all the issues raised in both questions.
        First, allow me to note that I use the term ``deemed export'' in
    its generic sense to encompass both the Department of Commerce Export
    Administration Regulations (EAR) and the Department of State
    International Traffic in Arms Regulations (ITAR). In ITAR, transfer of
    technical information to a non-U.S. person within or outside the U.S.
    is referred to as a ``defense service.''
        While there has never been a systematic study of the impacts of
    deemed exports on universities, university researchers have reported
    serious negative impacts in numerous workshops and other informal
    venues. For example, see ``Space Science and the International Traffic
    in Arms Regulations'' [National Academies Press, 2008]. That workshop
    report lists, for example, the following categories of impact in the
    space science arena alone (pp. 16ff): (i) Controls at odds with
    international character of science; (ii) Diminishing U.S. access to
    foreign expertise; (iii) Handicaps on effective space-mission designs;
    (iv) compromising the quality of student experience; (v) effects of
    regulatory uncertainties on faculty and staff; (vi) costs and
    administrative burden; In fact, many of these same factors also apply
    to other areas of deemed export controls (such as the control of ``use
    technology'' by the EAR). Item (v) above deserves special mention: The
    ``chilly climate'' engendered by deemed export controls dissuades
    researchers and students from undertaking forefront research projects
    that might otherwise yield important results for the Nation. I gave one
    such example in my testimony, involving a putative space mission to
    detect extra-solar planets that was not conducted because of ITAR's
    perceived impediments. In that sense, a significant part of the impact
    resembles Sherlock Holmes' ``dog not barking in the night.'' It is true
    that these impacts are not easily quantifiable, but all of us in the
    research university community who deal with this issue are convinced
    that the aggregate impacts are substantial.
        The potential impact of a stricter application of deemed export
    regulations by the Department of Commerce is even more problematic, as
    it could cover hundreds to thousands of pieces of equipment on
    university campuses and require thousands of licenses. This impact was
    chronicled in hundreds of comments received by DOC in response to a
    Notice of Public Rule Making several years ago. This response led DOC
    to form the Deemed Export Advisory Committee, and more recently the
    Emerging Technology and Research Advisory Committee. As a member of
    ETRAC, I am hopeful that some of the potentially very negative effects
    that had been foreseen might be mitigated by actions that DOC can
    undertake to simplify and limit the application of deemed export rules.
        Our report, ``Beyond Fortress America,'' recommends maintaining the
    ``Fundamental Research Exemption (FRE)'' which has permitted
    universities to operate with relative freedom, and ``ensur[ing] that it
    is properly implemented.'' As I noted in my testimony, that last phrase
    is essential. There is a natural tendency for individual contracting
    officers to always take the most conservative interpretation of any
    situation and to find reasons why the FRE should NOT apply, rather than
    the other way around. An example is the continual struggle that all
    universities have had with funding agencies, particularly those in the
    Department of Defense and NASA, to apply ``inappropriate contract
    clauses'' to research activities that do not contain any classified
    components. This practice has been described in several reports of the
    American Association of Universities and the Council on Government
    Relations. In my personal opinion proper implementation of the FRE will
    require each cognizant agency to issue appropriate direction to all
    contracting officers, and establish a process of review and, if
    necessary, appeal of their actions. In this regard, the letter issued
    last June by the Undersecretary of Defense (AT&L), Mr. John Young,
    appears to be a positive step.

    Q3.  Satellites are directed by law to be regulated as exports under
    the ITAR. What particular challenges does this designation of
    satellites as defense articles have for conducting fundamental space
    research? What would you recommend be done to mitigate those
    challenges?

    A3. Our report did not focus on this issue, although it certainly
    constitutes one of the significant areas of concern for research
    universities. Some of the points in the previous answer also apply
    here, so I will not repeat them (see the referenced National Academies
    workshop report). A major concern for universities has been ITAR's
    overly broad categorization of virtually all spacecraft systems,
    associated equipment and data as subject to control, regardless of
    their actual military utility or their widespread availability outside
    the U.S. This is particularly problematic when, as is usually the case,
    universities must work together with industry in order to accommodate a
    space science instrument on a research satellite. Even the dimension of
    the screws used to attach a piece of hardware will generally be marked
    ``ITAR Controlled.'' Fundamental science data is also affected, as I
    noted in the example in my testimony of the 18 months it took a French
    graduate student to gain access to data about Mars.
        Our report's recommendation regarding the Fundamental Research
    Exclusion, if properly implemented, could mitigate some of the negative
    effects of ITAR on space research. In the future, a more systematic
    approach to addressing this matter could be undertaken by Congress and
    the Department of State.
        One personal suggestion would be for the Department of State to
    provide a ``carve-out'' for scientific instruments developed in an open
    university setting, and which extends to the necessary interface
    information required to accommodate such scientific instruments on a
    spacecraft. I understand that the Department's Directorate of Defense
    Trade Controls is indeed considering new definitions that might
    accomplish such a carve-out. DTC's Defense Trade Advisory Committee has
    been tasked to undertake a review of ITAR definitions.

    Questions submitted by Representative Gabrielle Giffords

    Q1.  Your prepared statement as well as various reports and materials
    note that export controls may be hurting or preventing the U.S. from
    participating in international collaborations on space research and
    encouraging other nations to seek partnerships that do not include the
    U.S. Could you give us some examples of how export controls have
    affected existing or potential space research collaborations?

            a.  If universities, companies or other institutions lose
            opportunities for international space activities, are not
            invited to participate, or opt out of collaborative projects,
            what are the broad consequences?

            b.  Are there any national security impacts?

    A1. Please see answer #1 to the questions posed by Chairman Gordon,
    which I believe addresses the first part of this question. As to the
    consequences, the most extreme result is the exclusion of U.S.
    researchers from forefront research areas that are instead advanced by
    other, international partners. The U.S. has long attempted to retain a
    position of significant leadership across the spectrum of the sciences
    and engineering. As a result of globalization, as our report states, we
    may no longer be the sole leader in some fields, but our economic,
    social and political strength requires us to at least maintain our
    position at the forefront along with a small number of other advanced
    nations. Keeping that place is by no means easy nor is it assured. To
    voluntarily cede that place in return for no apparent gain, as we are
    doing by overly strict application of export controls, is unwise and
    counterproductive. Because the technical information involved does not
    deal explicitly with national security information, I believe that our
    security will actually be improved by following the recommendations of
    our report.

    Q2.  How might qualified U.S. scientists go about vouching for the
    credentials of foreign scientists seeking visas, as recommended in the
    National Academies report? Is it sufficient for any U.S. university
    professor to send a letter to the appropriate consulate on behalf of an
    applicant?

            a.  Does it make sense to set up a more formal process through
            a single credible institution such as the National Academies or
            some other entity? Was the panel able to explore possible
            mechanisms for implementing this recommendation?

    A2. Our panel chose not make a more detailed recommendation about about
    how best to implement the proposed vouching for foreign scientists. We
    believe that the implementation details should be defined jointly by
    the appropriate government agencies working together with scientific
    representatives. Those representatives could well be organized through
    the National Academies, as you suggest, as well as several other
    national professional scientific associations and societies.

    Questions submitted by Representative Ralph M. Hall

    Q1.  What would be the best approach to conduct the first round of
    `sunset' reviews for items currently on export control lists?
    Presumably, it would be a massive undertaking. Who should populate such
    a review committee?

    A1. Our panel did not attempt to specify a mechanism for carrying out
    such a review, but I note that the Emerging Technology and Research
    Advisory Committee (ETRAC) recently established by the Department of
    Commerce is currently working to define a methodology that may well be
    relevant to reviewing the Commerce Control List and possibly also
    sections of the Munitions Control List. It is important that any review
    committee include appropriate technical expertise and representatives
    from several stakeholders, including universities. It would also be
    important that the charge to such a committee reflect the concept of a
    ``culture of openness and engagement,'' as articulated in our report,
    rather than the ``culture of containment'' represented by our current
    export control regime.

    Q2.  Since imposition of export controls decades ago, is there a public
    record of opinions on licenses that would give industry and academia
    roadmaps about what is acceptable, and what isn't? How transparent and
    consistent is the licensing process? To what degree can applicants cite
    previous license approvals to gain quick consideration of similar,
    pending applications?

    A2. With all respect, I believe that these questions should really be
    answered by the appropriate offices in the Departments of Commerce and
    State. Both agencies have indeed made attempts to reach out to their
    constituencies in order to facilitate the licensing process. And both
    have attempted to shorten the time for review and approval of licenses.
    However, the primary problem for universities is Deemed Export. If
    licenses were routinely required even for so-called ``use technology,''
    thousands of licenses would be needed to accommodate the large number
    of international students and the thousands of pieces of equipment on
    the campuses of our research universities. The administrative burden on
    both the universities and the federal agencies would be substantial,
    with little or no gain in national security.

    Questions submitted by Representative Pete Olson

    Q1.  What are examples of capabilities in satellite and launch systems
    where the U.S. excels and should hold tight to the underlying
    technologies?

    A1. I do not feel qualified to identify specific capabilities, but feel
    confident that an appropriately composed panel of industry, academic
    and government experts would be able to do so.

    Q2.  In statements presented during the hearing, several witnesses
    cited difficulties engaging in collaborative space research missions,
    given that all U.S. satellites are controlled by the State Department's
    munitions list. Yet the State Department claims they have streamlined
    the licensing process. From your vantage point, has the Department made
    real improvements, or is the system still weighed down with too many
    uncertainties, making future science collaborations a difficult
    proposition?

    A2. I do believe that the State Department, like the Commerce
    Department, has made good faith efforts to streamline the licensing
    process. However, there are still many stories of excessive delays
    (such as the one I mentioned in my testimony, in which it took 18
    months for a graduate student to get permission to download Mars data).
    Furthermore, while expedited licensing might make sense for the
    physical export of a piece of hardware, it is generally not practical
    for the implied ``deemed export'' or ``defense service'' associated
    with the transfer of technical information. The major difficulty is
    that scientific research is normally conducted in an open environment
    with a diverse population of students, visiting scientists, and often
    with international collaborators. It is simply impractical to obtain
    large numbers of licenses nor is it even known which license might be
    needed at which time. Finally, one might ask why we should go through
    such a licensing process in the first place if the technology in
    question is, in fact, of no national security importance or widely
    available outside the U.S.
                       Answers to Post-Hearing Questions
    Responses by Major General Robert S. Dickman, Executive Director,
            American Institute of Aeronautics and Astronautics

    Questions submitted by Chair Bart Gordon

    Q1.  Dr. Canizares' testimony suggests that some of the actions our
    committee could take to address the impacts of export controls include
    1) endorsing the recommendations in the National Academies report and
    2) requiring that each agency under our jurisdiction develop and
    implement a plan to execute the recommendations and report to Congress
    on their progress. Do you agree with Dr. Canizares' suggestions? Are
    there other actions this committee could take, within its jurisdiction,
    to address the impacts of export controls on science and technology
    competitiveness and to ensure America's leadership in space?

    A1. I believe Dr. Canizares is correct to endorse the recommendations
    of the ``Fortress America'' report. These recommendations are designed
    to provide more consistency to the regimen, account for changes in the
    marketplace, encourage ingenuity, and ensure strategic competitiveness.
    I also agree that Congress should place accountability on federal
    agencies that impact, and that are impacted by export control policies.
    This is necessary to gauge the effectiveness of any changes in policy
    and evaluate whether agencies are implementing the kinds of changes
    Congress may call for. It may also help to indicate when and where
    future changes are needed.
        There are other areas within the jurisdiction of the House Science
    Committee where actions can be taken to address the impacts of export
    controls. With its oversight responsibilities over federal scientific
    research, development, and demonstration, there are opportunities to
    examine, adjust and affect policies that restrict collaborative
    research and access to research. As I mentioned in my testimony before
    the Committee, I believe the House Science Committee possesses the
    jurisdiction to encourage global engagement in science and technology.
    We need to invest in our research & test facilities to ensure that we
    maintain the state-of-the-art in capabilities in those areas. If visa
    policies are indeed changed to provide more access for foreign
    scientist and students, we must make certain that we have the
    infrastructure and programs in place that capture their passions and
    imaginations once they are here so as to increase our available talent
    pool at the expense of the talent pool foreign competitors have to draw
    from.
        I certainly would not want to see the Committee limited to these
    suggestions. I believe that as new policies are put in place, more
    obvious opportunities will also present themselves for the Committee to
    examine and enact. The first step is taking the first step, and I
    believe that the Committee has already committed to that through its
    efforts to examine where improvements can be made in the current export
    control regimens.

    Q2.  Your testimony states that ``We need to make certain that we
    develop and implement integrated policies and holistic strategies that
    enable us to remain technologically superior to threats against our
    national security, embrace participation in the international science
    community, and regain competitiveness in the global marketplace.'' That
    sounds like a pretty challenging task. How in practical terms should we
    go about doing that? What entity should be involved in leading the
    development and implementation of an integrated policy and strategy?

    A2. While the challenge is not insignificant, it simply proposes is
    that we regain a position we held for many decades--that we do the
    things that got us there in the first place. The process should begin
    with defining core principles that serve as a foundation for policies
    and programs that are developed. Whether in government, academia, or
    industry, it is a common business practice to define a core mission and
    goals and then develop a strategic plan around those defining
    principles. Over the course of time, it is necessary to step back and
    evaluate what you are doing strategically, moving towards evolving
    opportunities, and retiring outdated pursuits. The key is having that
    core mission and associated values to act as an axis for the strategic
    plan and its subsequent evolutions to revolve around.
        I believe that this needs to take place at a sufficiently high
    level so as to have the authority to provide coordination and cohesion
    among the many departments, agencies and offices involved. The National
    Security Council (NSC) comes to mind because of the level of the office
    and its ability to coordinate policies and initiatives through the
    Office of Science and Technology Policy, the Office of the United
    States Trade Representative, and the President's Intelligence Advisory
    Board and Intelligence Oversight Board.
        Of course, policies have little practical effect without the
    support of implementing authorization and appropriation.

    Q3.  What specifically does the AIAA recommend for addressing concerns
    about the impact of export controls on the commercial sale and use of
    satellites for research purposes?

    A3. As I elaborated upon in my testimony before the Committee, I
    believe we need to take on the task of evaluating why we are protecting
    capabilities, and then examine those capabilities that are currently
    restricted to ensure that we are not building the fence higher than is
    necessary to protect national security at the expense of the innovation
    and industrial base we are depending on to provide those national
    security capabilities. I think it is important that our national
    security goals should also ensure a robust and sustainable aerospace
    sciences, technology and industrial base.
        Once that bar has been set, the same constraints should apply to
    specific components of research satellites as are applicable to
    commercial service satellites (e.g., communications satellites). Once
    the components are in foreign hands, there is really no further control
    regarding their application.

    Q4.  You testified that the AIAA is undertaking an independent effort
    to create a process for evaluating the list of controlled satellite
    components on a regular basis. Could you please elaborate on the
    process you envision creating? What is the timetable for AIAA to
    complete its work? Who should conduct those regular evaluations?

    A4. AIAA has a cataloguing effort underway that is analyzing components
    of the communications satellite. What we are currently examining is
    just a start of what is necessary, and it will have its limitations. To
    begin with, we understand that Congress will need to provide authority
    to someone within the executive branch to make determinations on how to
    use the findings of an examination such as what belongs on which list,
    and to what degree a component should be subjected to restrictions. We
    also are working with unclassified data. Certainly there are going to
    be directorates and offices within our national security agencies that
    have control of data that is not and should not be publicly available.
    That can include anything from alloy characteristics and structural
    traits to capabilities and manufacturing technologies that would give a
    domestic component a national security-designated advantage.
        For our purposes, we started with just the satellite bus, and broke
    it down by component. We then worked throughout our membership to
    identify appropriate subject matter experts (SMEs) who could examine
    those components in a comparison with commercially available foreign
    designed and manufactured components. We use a series of criteria that
    include metric for performance, analyze the range of U.S. suppliers,
    compare against the best non-U.S. component, and make a determination
    of whether or not a competitive advantage exist for the U.S. component.
    Finally, we analyze whether there is a discriminating value between
    military and non-military applications. Once an SME has completed,
    documented and submitted a survey, it is then subjected to a peer
    review process that evaluates both the conclusion of the survey, and
    the process and support provided by the SME in making these
    determinations.
        Our timeline for this process is to complete this initial
    examination and have a compilation of surveys completed by early
    summer. This will not be a formal report, and is only intended to
    provide supporting data for a much larger process.
        I would suggest that the cataloguing process and the determinations
    on which control list components should be placed should reside
    somewhere within the national security community where there is access
    to current classified data on components, capabilities and uses, both
    domestic and foreign. That office must consist of a highly-technical,
    highly-competent workforce, and the staff should be rotated regularly
    to maintain an appropriate mix of individuals from government, industry
    and academia who have a strong familiarity with current research,
    technology and capabilities in this area. The review committee should
    include relevant discipline experts from a number of different
    organizational entities to provide a balanced perspective and should
    include at least the Department of Defense, NASA, the National Security
    Agency, the Department of Commerce, the National Security Space Office
    (NSSO), National Reconnaissance Office (NRO), the Office of the
    Director of National Intelligence (ODNI), and some recognized non-
    governmental organizations with resident experts on applicable
    technologies.

    Q5.  In your prepared statement, you recommend that ``we need to
    evaluate the trends in capabilities of foreign components . . . examine
    how far equivalent components' capabilities have come and project when
    we may expect those capabilities to surpass U.S. components to inform
    periodic reevaluation of technologies.'' Could you please discuss this
    evaluation process? Is the data on foreign component capabilities
    available to allow an evaluation of foreign capabilities? Who should
    have responsibility for regular evaluations of foreign capabilities?

    A5. Once a systematic evaluation survey process is established with
    qualified and confirmed data and SMEs capable of executing those
    evaluations with sufficient peer review, the goal of this
    recommendation becomes institutionalized. As part of that survey, we
    should be evaluating the progression in foreign capabilities perhaps
    building a timeline that shows that progression that corresponds with
    the surveys. A ratio between the metric that measures the capability
    with correlating timeline that competitors have achieved progressing
    levels of capability would illustrate those trends. That is much easier
    said than done, but it is not so difficult that we cannot complete this
    initial step in a reasonable timeframe.
        After that point, it is a matter of continuing to invest resources
    and maintaining oversight so that this survey office does not develop a
    culture similar to other parts of the export control sector where
    decisions can be arbitrary and become unnecessarily conservative in
    their approach to moving technologies and services off the most rigid
    control lists, or, conversely, overly aggressive in removing sensitive
    technologies off those same lists. It really becomes a balancing act at
    that level, and the key will be sufficient oversight from Congress and
    upper levels within the Administration.
        I would refer to my response for Question 4 on much of this. I
    believe that the U.S. national security community has and does collect
    much of this data, however, I am not able to venture a guess on whether
    a centralized clearinghouse for this type of highly sensitive
    classified information exists, or whether it would involve several
    individual collections of data housed among several agencies and
    offices. For the sake of consistency in the process, the same
    individuals charged with examining the U.S. capabilities should
    probably examine those foreign capabilities and progression trends.

    Questions submitted by Representative Gabrielle Giffords

    Q1.  The CSIS study on export controls noted concerns regarding the
    negative impact of export controls on selected areas of the space
    supplier base such as solar cell and solar cell substrate technologies.
    These would appear to be space technologies for civil applications.
    From your AIAA perspective, are you aware of any implications of export
    controls on our ability to achieve the Nation's objectives to invest in
    ``green technologies'' and renewable energy capabilities?

    A1. Excluding nuclear power sources and perhaps state-of-the-art high
    efficiency, space-qualified solar cells, I know of no reason why
    satellite power system technologies should be sufficiently sensitive
    from a national security perspective to be on the ITAR list. To the
    extent that these technologies can contribute to cost-effective means
    for supplying renewable energy, it is in the national interest to
    assure they get maximum use. Achieving the maximum potential to reduce
    greenhouse gas emissions globally using space-derived renewable energy
    technologies can only be realized with minimum restriction on their
    export. Applying the ITAR regimen to these technologies will inhibit
    realization of that objective.
        An example of the effects of export controls have had in limiting
    the ability of technology, though not a green technology, would be
    Magnetic Resonance Imaging (MRI) medical equipment. While this
    technology has shown great benefit to the medical community, it was
    slow to gain exclusion from export controls because of its advanced
    technology systems that were subject to those controls. It is a medical
    technology that has improved the human condition worldwide. However, it
    has only become widely available after an exclusion was included in
    Category 3 of the Commercial Control list.
        As has long been the case with aerospace and aerospace systems
    technologies, we are bound to discover civil and commercial ``green
    technology'' uses well beyond the original design intent through
    technology transfers as we look to reduce our consumption of carbon-
    based fuels. In that process, it should be expected that there will be
    export control obstacles. The hope is that as innovation progresses, we
    will be able to overcome many of those hurdles and bring those
    technologies to bear in our efforts to reduce our carbon footprint.

    Q2.  Stories have appeared in the foreign press regarding the possible
    repatriation of foreign-born scientist and engineers being lured by the
    promise of expanding space programs in their native countries. From
    your position in AIAA, what does this mean for the workforce of
    agencies such as NASA and for the U.S. aerospace industry? What types
    of incentives do foreign scientists and engineers educated or working
    in the U.S. have for staying in the U.S. as opposed to taking their
    talent and experience overseas?

    A2. The U.S. remains the leader in many science, technology and
    engineering research disciplines. In many instances, there remains
    considerable esteem for being a part of U.S. research and development,
    in U.S. innovation. About 15 percent of the membership of AIAA is made
    up of foreign aerospace professionals. There are measurable benefits
    that they receive for that membership, but first and foremost they come
    to us for the esteem of being a part of the American Institute of
    Aeronautics and Astronautics.
        For all the faults that `experts' find in U.S. science and
    technology policy and programs, we are a stable base for innovation and
    research. Many foreign scientist and students continue to come to the
    U.S. to be apart of that. What often gets lost in the budget
    discussions is that, while the percentages of our federal budget
    designated for research and development has waned, we are still
    investing more in this area than any other single country in the world.
    That investment goes a long way in influencing foreign scientist and
    students to be apart of the U.S. system.

    Questions submitted by Representative Ralph M. Hall

    Q1.  What would be the best approach to conduct the first round of
    `sunset' reviews for items currently on export control lists?
    Presumably, it would be a massive undertaking. Who should populate such
    a review committee?

    A1. We must first examine the principles for why we restrict
    technologies and build a sound strategy for examining and listing the
    technologies based on those principles. As I've previously mentioned,
    once a systematic evaluation survey process is established with
    qualified and confirmed data and SMEs capable of executing those
    evaluations with sufficient peer review, the goal of this
    recommendation becomes institutionalized. As part of that survey, we
    should be evaluating the progression in foreign capabilities, building
    a timeline that shows the progression that corresponds with the
    surveys.
        I don't believe that we should have the same people who evaluate
    the applications also performing this technical analysis of the
    capabilities of technologies and services. I would suggest that the
    cataloguing process and the determinations on which control list
    components should be place should reside somewhere within the national
    security community where there is access to current highly classified
    data on components, capabilities and uses, both domestic and foreign.
    That office must consist of a highly-technical, highly-competent
    workforce, and the staff should be rotated regularly to maintain an
    appropriate mix of individuals from government. industry and academia
    who have strong familiarity with current research, technology and
    capabilities in this area. The review committee should include relevant
    discipline experts from a number of different organizational entities
    to provide a balanced perspective and should include at least the
    Department of Defense, NASA, the National Security Agency, the
    Department of Commerce, the National Security Space Office (NSSO),
    National Reconnaissance Office (NRO), the Office of the Director of
    National Intelligence (ODNI), and some recognized non-governmental
    organizations with resident experts on applicable technologies.

    Q2.  Foreign satellite builders have been openly marketing satellites
    as being ``ITAR-free.'' What has been the record of their marketing
    efforts? Is there any evidence that they are taking away sales from
    U.S. builders? Technologically, how do their satellites compare to
    ours?

    A2. I believe there are six specific cases where the stated determining
    factor in the decision to use a foreign manufactured satellite was
    ``ITAR-free'' marketing. However, the real impact is being felt
    downstream in the second and third tier companies who design,
    manufacture and sell satellite and launch components and services. This
    is where satellite manufacturers have become very vocal about their
    intent to seek ``ITAR-free'' components, and this is where the U.S. is
    beginning to see a real consolidation and reduction in the industrial
    base. Our primes are still delivering enough hardware to the U.S.
    Government, that they have been able to sustain market share losses in
    other markets due to ITAR and other export control regulations up to
    this point.
        Unfortunately, much of the innovation that drives this sector of
    the economy comes from these second and third tier companies. As these
    areas fade away, so does the culture that is willing to take on risk in
    their research, design, & development, and that is able to adapt to
    changes and challenges in the marketplace at the fastest pace.
        I believe that in most instances, U.S. satellites still lead the
    world in design and capability. However, where we are losing footing is
    in the components that make up those satellites. As this happens, it is
    only a matter of time before we begin to see the playing field in the
    satellites begin to level.

    Q3.  Since imposition of export controls decades ago, is there a public
    record of opinions on licenses that would give industry and academia
    roadmaps about what is acceptable, and what isn't? How transparent and
    consistent is the licensing process? To what degree can applicants cite
    previous license approvals to gain quick consideration of similar,
    pending applications?

    A3. The roadmap question is an interesting one. In the National
    Academies report, Recommendation 1.a states, ``(The President should)
    Recognize the interdependence of national security and economic
    competitiveness factors in making export control decisions with respect
    to individual requests for licenses through a principle-based system.''
    Recommendation 1.c continues, ``(The President should) Establish as a
    new administrative entity, a coordinating center for export controls,
    with responsibilities for coordinating all interfaces with persons or
    entities seeking export licenses and expediting agency processes with
    respect to the granting or denial of export licenses.'' Recommendation
    1.d concludes, `` (The President should) Establish an independent
    export license appeals panel to hear and decide disputes about whether
    export licenses are required, whether particular decisions to grant or
    deny licenses were made properly, and whether sunset requirements have
    been carried out properly.
        From the book United States Export Controls, Fifth Edition, which
    appears in Appendix F of the ``Fortress America'' report, Table 1-1
    lists the U.S. Government entities with statutory authority to control
    exports. This table lists 16 departments and agencies, under 35
    different regulations, many with similar areas of controlling
    authority. Further, Table 1-3 shows the decision tree for determining
    agency jurisdiction. This table shows 17 steps, many with several
    substeps to use in determining whether an export is subject to a
    control regimen, and, if so, where. Much of the delay in the
    application process is a matter of figuring out under just exactly
    which jurisdiction a particular product or service falls. These two
    tables well illustrate the lack of transparency and clarity in the
    current process. If Recommendation 1.c is enacted establishing a
    central clearinghouse, much of this confusion in the front end of the
    process would be removed, and businesses could have a single source to
    seek information on what controlling authority exists for a given
    product or service, and to which their application is filed.
        Recommendations 1.a and 1.d both address the question about the
    citation of previous applications in the consideration of similar
    pending applications. Currently, no standards or precedence exist that
    are used in processing applications. Each new application is viewed in
    a vacuum that creates much of the uncertainty of the process. By
    creating a principled-based system that uses standards and precedence
    in the certification process, we can remove much of the current
    ambiguity in the process, and reduce the time spent in the evaluation
    of the applications. It further streamlines the process for appeals
    with a governing entity to hear those appeals using guiding principles
    to do so.

    Questions submitted by Representative Pete Olson

    Q1.  What are examples of capabilities in satellite and launch systems
    where the U.S. excels and should hold tight to the underlying
    technologies?

    A1. The list of what falls in this category is getting shorter all the
    time as other nations independently make advances to achieve the same
    technical prowess we have been trying to protect. While probably not
    limited to these, the following are some specific areas where we still
    selectively excel and may therefore want to restrict export for
    national security reasons:

              Some very specific features of engines and fuel
            containment systems for the following:

                    1.  LH2-based propulsion

                    2.  Hypergolic propulsion

                    3.  Solid propellant propulsion

                    4.  Advanced electric and magnetohydrodynamic
                    propulsion

              Precision inertial navigation systems

              Re-entry guidance and control algorithms

              Communication encryption systems

              Advanced data processing, reduction, and compression
            algorithms

              Advanced observation devices

              Optical wave-front control technologies

              High slew-rate momentum transfer devices

    Q2.  In statements presented during the hearing, several witnesses
    cited difficulties engaging in collaborative space research missions,
    given that all U.S. satellites are controlled by the State Department's
    munitions list. Yet the State Department claims they have streamlined
    the licensing process. From your vantage point, has the Department made
    real improvements, or is the system still weighed down with too many
    uncertainties, making future sciences collaborations a difficult
    proposition?

    A2. The fact is that the Department of State has been able to reduce
    processing times and reduce the pending caseload for certification
    licenses. However, I don't believe that they have improved the lot of
    the applicants. The approval rate for applications has historically
    been relatively high assuming the correct application was completed and
    filed to the correct oversight agency. However, under the previous
    system, applications could sit for months before any review took place.
    Once the appropriate jurisdiction had been established, it could take
    several more weeks or possibly months before an evaluation of the
    application was completed and a determination made.
        Under the new system, the application processing times have been
    greatly reduced, and most reviews are completed in weeks or just a few
    months. Now, however, companies are reporting that most applications
    return with qualifying language that place more uncertainty than was
    experienced under the previous system. So while the State Department
    has streamlined its processes, these caveats often place reporting and
    verification obligations on the companies that they have no ability to
    satisfy, and the certification is for naught, leaving the companies in
    no better position than they were under the longer waiting periods.

                                  Appendix 2:

                                  ----------

                       Additional Material for the Record

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]