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



 
                 THE IMPACT OF U.S. EXPORT CONTROLS ON
                     NATIONAL SECURITY, SCIENCE AND
                        TECHNOLOGICAL LEADERSHIP

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



                                HEARING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 15, 2010

                               __________

                           Serial No. 111-80

                               __________

        Printed for the use of the Committee on Foreign Affairs


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

                                 ______



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                      COMMITTEE ON FOREIGN AFFAIRS

                 HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York           ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American      CHRISTOPHER H. SMITH, New Jersey
    Samoa                            DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey          ELTON GALLEGLY, California
BRAD SHERMAN, California             DANA ROHRABACHER, California
ELIOT L. ENGEL, New York             DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts         EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York           RON PAUL, Texas
DIANE E. WATSON, California          JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri              MIKE PENCE, Indiana
ALBIO SIRES, New Jersey              JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia         JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York         J. GRESHAM BARRETT, South Carolina
JOHN S. TANNER, Tennessee            CONNIE MACK, Florida
GENE GREEN, Texas                    JEFF FORTENBERRY, Nebraska
LYNN WOOLSEY, California             MICHAEL T. McCAUL, Texas
SHEILA JACKSON LEE, Texas            TED POE, Texas
BARBARA LEE, California              BOB INGLIS, South Carolina
SHELLEY BERKLEY, Nevada              GUS BILIRAKIS, Florida
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
VACANTWexler leaves 1/4/
    10 deg.
                   Richard J. Kessler, Staff Director
                Yleem Poblete, Republican Staff Director
             Edmund Rice, Senior Professional Staff Member
                       Riley Moore, Deputy Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

John L. Hennessy, Ph.D., President, Stanford University and Co-
  Chairman, Committee on Science, Security and Prosperity, 
  National Research Council......................................    12
William C. Potter, Ph.D., Director, James Martin Center for 
  Nonproliferation Studies, Monterey Institute of International 
  Studies........................................................    26
Ms. Karen Murphy, Senior Director, Trade, Applied Materials, Inc.    43

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Dana Rohrabacher, a Representative in Congress from 
  the State of California: Excerpt from pages 66-69 of the 2009 
  U.S.-China Security and Economic Review Commission Report......     5
John L. Hennessy, Ph.D.: Prepared statement......................    16
William C. Potter, Ph.D.: Prepared statement.....................    31
Ms. Karen Murphy: Prepared statement.............................    46

                                APPENDIX

Hearing notice...................................................    70
Hearing minutes..................................................    71
The Honorable Howard L. Berman, a Representative in Congress from 
  the State of California, and Chairman, Committee on Foreign 
  Affairs: Prepared statement....................................    72


 THE IMPACT OF U.S. EXPORT CONTROLS ON NATIONAL SECURITY, SCIENCE AND 
                        TECHNOLOGICAL LEADERSHIP

                              ----------                              


                        FRIDAY, JANUARY 15, 2010

                  House of Representatives,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:30 a.m., at 
Stanford University, Arrillaga Alumni Center, First Floor, 326 
Galvez Street, Palo Alto, California, Hon. Howard L. Berman 
(chairman of the committee) presiding.
    Chairman Berman. To everyone, good morning. And to those 
who may be watching these proceedings in Washington via the 
Internet, good afternoon.
    Today's hearing is on the impact of U.S. export controls on 
our Nation's national security and on  deg.our 
leadership in science and technology. We are holding it here in 
Silicon Valley because no State is more heavily affected by 
export controls than California--with our cutting-edge high 
technology industry, academic institutions and scientific and 
research establishments--and no region of the State has more 
experience with such controls than this one.
    We are very grateful to Stanford University--and most 
especially to Dr. Hennessy, one of our witnesses--for hosting 
these proceedings and for all of the technical and logistical 
support they provide to make this day possible.
    For the benefit of the people who are new to the subject, 
let's start with defining our terms. Through export controls, 
the Federal Government restricts the international transfer of 
what are called ``dual-use'' technologies--those that have 
legitimate civilian uses but also can be used for military 
purposes. This is a critical aspect of our national security 
policy.
    But there is a growing consensus among security experts as 
well as academics and industry leaders that our current system 
of export controls needs to be updated in order to continue 
protecting sensitive technologies while also maintaining U.S. 
technological leadership.
    So this hearing serves at least two related purposes. The 
testimony will help our committee prepare for a complete 
revision of the statute that authorizes our system of licensing 
and controlling dual-use technologies. And what we learn today 
will contribute to congressional oversight of the export 
control policy review that President Obama has ordered, and 
that is now underway.
    Joining us on the dais today is a valued member of the 
committee for many years, Dana Rohrabacher from Southern 
California, who brings both a background and deep interest in 
national security issues but also many years of experience on 
the Science and Technology Committee in the House and a great 
interest in those issues as well; and Zoe Lofgren, who is the 
chair of the California Democratic congressional delegation and 
certainly familiar to people from this particular area and who, 
in fact, I remember back--it seems like 8 or 10 years ago--
being heavily engaged in one aspect of this in the encryption 
issue; and Anna Eshoo, in whose district Stanford University is 
located and who is chair of the Intelligence Community 
Management Subcommittee of the House Permanent Select Committee 
on Intelligence, as well as many other things. So great 
interest and background for all of the people who are on the 
panel today.
    While neither Zoe nor Anna are members of the Foreign 
Affairs Committee, they are highly interested in the issue. And 
given the nature of this as a field hearing, I have invited 
them to participate as if they were members of the committee.
    Export controls don't get a lot of public or media 
attention. They have been an important part of the U.S. 
national security establishment since 1949, when our current 
control system began as a part of NATO.
    Here in California, many of our 61,000 exporting firms, 
such as Applied Materials in Santa Clara, and an increasing 
number of our academic and research establishments, such as 
Stanford, have significant compliance responsibilities.
    You practically have to have a Ph.D., or a law degree--or 
maybe both--in order not to run afoul of  deg.the 
increasingly complex U.S. export control regimes. The 
regulations now fill more than 2,000 pages. There are frequent 
changes--two dozen were announced last year alone. More than 
2,600 items and technologies are subject to controls, just in 
the dual-use area.
    Exporters and universities are required to check six 
separate lists of potentially dangerous individuals and groups, 
with thousands of entries, before allowing access to controlled 
goods and technological information.
    In many cases, government approval is required, and the 
growth rate in applications and approvals of licenses is 
phenomenal: 21,000 licenses were issued in 2008; double the 
number from 10 years ago.
    Universities and other research institutions face a 
particular set of compliance challenges, as the U.S. moves to 
broaden and tighten the rules governing access by foreign 
students and researchers to science laboratories and research 
facilities.
    These rules, aimed at regulating the transfer of 
technological knowledge--as opposed to goods--increasingly are 
affecting our high-tech companies as well.
    Moreover, the worldwide diffusion of sensitive goods and 
technological knowledge has a significant impact on national 
security. These are the same technologies that drive scientific 
advances and commercial progress.
    Examples: Thermal imaging cameras are being used in the 
latest collision avoidance systems for vehicles, while 
remaining a key advantage for our forces on the battlefield; 
encryption is an important defense for individuals, companies 
and governments against cyberwarfare and cybercrime--this has 
been in the news lately--while at the same time shielding 
communications among terrorists from interception by law 
enforcement authorities; commercial software reportedly is 
being used to defeat our unmanned drones in Afghanistan; 
bioengineering and nanotechnology carry the promise of 
prolonging life and curing disease, but can also be turned to 
designing a new generation of bioweapons. These are just four 
examples; there are countless others.
    This area of public policy raises complex questions--and 
there are no easy answers. Clearly, our national security 
requires a continued effort to prevent our adversaries from 
misusing the benefits of science and industry against us and 
our allies.
    But just as clearly, we need to refine and update our 
export control policy and attendant regulations to sustain 
America's leadership in scientific research and discovery, and 
technology-driven industry. That, too, is part of protecting 
our national security.
    Our committee, the Foreign Affairs Committee, is beginning 
the process of trying to enact a new statute to be the 
foundation in this area for U.S. policy. And today's hearing is 
in some ways the first formal step in that process.
    I now would like to yield to my friend and colleague from 
the committee, Mr. Rohrabacher, for any opening comments he may 
wish to make.
    Mr. Rohrabacher. Thank you very much, Mr. Chairman. And, 
although there seems to have been a snafu caused by the holiday 
and communication between the Republican staff and the 
Democratic staff, I am sure that that will be corrected and 
more care will be taken. But I am very pleased to be here today 
to represent the Republican side of this issue. Although this 
is an issue that doesn't have, really, Republican and Democrat 
sides, it basically is an issue among all of us Americans about 
what standards we are going to have.
    So it is appropriate we have a hearing on export control 
here in Palo Alto, which, of course, has been the seed bed for 
technological innovation in our country. No doubt we hold this 
hearing for the reason that current export control regime 
regulations are a serious impediment to much of the work that 
is being done here.
    Let me state at the outset that I support export control 
reform. I support streamlining the system. I support removing 
barriers that hamstring U.S. companies. However, this reform 
needs to reflect the fact that there are nations who seek to do 
harm to both our national well-being and as far as our economic 
security as well.
    There are nations that are controlled by repressive and 
dictatorial governments which are hostile to the United States 
and to the democratic ideals that we represent. These nations 
should not benefit from any reform of U.S. export control laws.
    I strongly believe in free trade between free people, but 
trade with dictatorships almost by definition is trade that is 
manipulated, at least on one side of the equation. That would 
mean that it might end up being harmful to the United States 
economically as these repressive regimes manipulate the rules 
of the game on their end of the equation so that it helps their 
economy as compared to mutually beneficial trade, but also they 
manipulate it in a way in which they can receive the benefits 
of technological research that has taken place in the United 
States and now will be put to use benefitting not only their 
economy but their military power as well.
    I strongly support, then, a two-tiered system that rewards 
our allies and other democratic countries while keeping 
dictatorships and other rogue regimes at arm's length.
    I would like to place in the record at this point some 
information from U.S. economic China report and studied review 
by commission report that was frequently issued, which talks 
about how China, in particular, has manipulated our trade and 
gotten their hands on technology and has been abusive to some 
of the standards that we would think are essential to providing 
guarantees that our country is not hurt by such trade.
    Chairman Berman. Without objection, that will be included 
in the record.
    [The information referred to follows:]Rohrbacher 
FTR deg.








    Mr. Rohrabacher. Thank you. It will be part of my statement 
here.
    The bottom line is that if you export to what seems to be 
an innocuous civilian entity in places like China, you are 
essentially exporting U.S. technology straight into the hands 
of the Chinese military. And we have learned that lesson 
before, Mr. Chairman.
    We learned it the hard way in the 1990s when China received 
rocket design information from U.S. companies and that there 
was a transfer of technology that allowed China to perfect its 
missile technology.
    Now, just last week the Chinese demonstrated an anti-
missile system. We have to conclude that their ability to do 
this was probably helped back 15 years ago by U.S. companies. 
That's a travesty.
    We are trying to reform the system to make trade with 
technology products easier among democratic nations. We must 
make sure that we do nothing that is going to help the Chinese 
build better rockets or build rockets that can shoot down our 
rockets.
    Today we want to make sure that, for example, one of the 
issues that confronts us today is whether or not we are going 
to make our satellite companies more competitive by legislation 
that will permit them to launch their satellites on Chinese 
rockets. We should have learned our lesson 15 years ago when 
our national security was severely compromised by this very 
same policy.
    Let me finish by saying that while companies at Silicon 
Valley stand perhaps the most to gain from export control 
reforms, they also stand the most to lose if we don't do export 
controls right because while so much is developed here at the 
cost of so many invested dollars and also the investment of the 
genius of our people who work here, if indeed we end up with 
laws that are so lax that our competitors or the competitors of 
these people end up with this technology, we are doing not our 
Nation a disservice, but we are doing the high tech industries 
here in this area a disservice.
    And, finally, Mr. Chairman, it is fitting that we hold this 
meeting today considering that yesterday Google announced that 
it may be closing shop in China. Let me just note that by doing 
this, Google has demonstrated a very high standard, its 
patriotism, its high standards, commitment to ideals. 
Unfortunately, that does not reflect the same commitment from 
many people who head our corporations in the United States of 
America.
    I would say to the President of Google--and I sent him a 
letter yesterday commending him as a moral giant, as compared 
to some of the moral pygmies that we have seen in other 
industries anxious to make short-term profit.
    So today as we discuss this, let's keep that in mind. And, 
again, I would use this forum to applaud the high standards of 
patriotism and morality that the leaders of Google and I would 
hope that the rest of our technological leaders would follow 
their example.
    Thank you very much, Mr. Chairman.
    Chairman Berman. Thank you, Mr. Rohrabacher.
    Congresswoman Eshoo?
    Ms. Eshoo. Thank you. And good morning, Mr. Chairman, and 
welcome to not only Stanford but to the 14th congressional 
district, which I am so proud and privileged to represent to 
Congressman Rohrabacher.
    Thank you for being here. You two honor us with your 
presence here and, of course, to my partner and outstanding 
friend, Congresswoman Zoe Lofgren, who has distinguished 
herself on these issues over the years. We have a great sense 
of pride about our relationship because we like to think that 
in her district, that there are two Members of Congress that 
work for them. And I know that there are two who work for my 
constituents because she is my partner.
    It is so important, Mr. Chairman, to hold this hearing 
about potential legislative action to amend the Export 
Administration Act because of who and what we have here. Your 
leadership on this issue is vital to the future of our Nation's 
technology sector. And this hearing comes, as has been noted, 
at a very critical time in America's history.
    Your decision to overhaul the current law will finally 
update a system plagued by restrictive relics. How we deal with 
this issue will help determine our future as either a global 
leader in innovation or a nation that sacrificed our economic 
future at the altar of inefficient, outdated, and unnecessary 
security options.
    I commend your decision to jump start a debate that has 
been waiting so long for an effective champion. And a champion 
you are. We should all note that Howard Berman, Congressman 
Berman, is one of the most respected members of not only the 
House but the entire Congress. His knowledge of the issues that 
he takes on, no one really matches his knowledge. And so when I 
say an effective champion, I couldn't mean it more.
    Anything approaching a complete overhaul of this legal 
framework was last completed, imagine this, during the Carter 
administration. At that time, no one could have foreseen 
laptops on every desk and phones in everyone's hip pocket. Some 
here recall using a typewriter at that time. I certainly do. 
[Laughter.]
    I was really good at it. Spell check meant using Webster's 
Dictionary. And we considered a calculator to be the epitome of 
technological innovation. We chuckle now, but that is when this 
issue was really last seriously addressed. Computers were 
mostly relegated to the most very progressive office 
environments.
    So obviously the world has changed. And our policies must 
as well if we are going to survive as a player in the current 
worldwide marketplace. There is a saying, ``Adapt or perish.'' 
It is that simple.
    So with your leadership, Chairman Berman, we will quickly 
fast forward away from the Cold War era export control policies 
that still linger today. As we initiate this revision, we need 
to make certain that our legislative efforts actually 
accomplish our goals.
    At the most basic level, the export control debate 
represents the age-old tension between commercial and national 
security concerns. I identify with many of the things that 
Congressman Rohrabacher said. I have a serious and longstanding 
appreciation for the need to balance national security concerns 
with international competitiveness.
    As the chairman said, I not only serve as a member of the 
House Energy and Commerce Committee but also the House 
Intelligence Committee. So we have to address both concerns. 
And I believe that we can, we should, and we will.
    I am committed to safeguarding our borders, whether they're 
virtual or physical, but this security has to be smart. It has 
to be strategic and not a knee-jerk reaction to individual 
incidents.
    Most of all, our policies and our laws should serve as an 
actual national security purpose and not put restrictions on 
exports of products that are already widely available.
    This past week, as Congressman Rohrabacher stated, we were 
reminded of the importance of these industries, their integral 
relationship to daily life, and the bull's-eye placed on them 
by outside forced intent on theft and vandalism. When that 
vandalism takes place, I might add, it is the hijacking of 
American genius, intellectual property, and all that goes with 
it.
    The massive cyberattack on Google and as many as 20 other 
companies should serve as a reminder that we have to safeguard 
our cyber resources. At the same time, we have to keep our 
competitive edge.
    Decontrolling encryption products and making them more 
widely available globally will work to ensure that our data is 
protected and that the victims of attacks will be protected in 
the future.
    Policy decisions, such as decontrolling encryption and 
revising export control regulations, also will advance the 
competitive position of our country and its companies in the 
global marketplace. This is another reason that fear cannot 
drive commercial and security policies.
    So it is fitting that we are here, both at Stanford, which 
is in the heart of Silicon Valley. No region of the country is 
more heavily affected by export controls on technology. Our 
research institutions and cutting-edge technology companies 
play key roles in this discussion.
    And a special thanks to President John Hennessy for not 
only hosting us but for being a witness here today, to Dr. 
Potter, to Ms. Murphy, thank you for being willing to cast 
light on this issue. Congressional hearings are amongst the 
most important things that Members of Congress undertake. 
Without the hearings, without the expertise of those that bring 
forward information, we really cannot shape the kinds of 
policies that are befitting of our great country.
    So, Mr. Chairman, thank you once again for your leadership 
and for the courage for taking this on because it is a heavy 
lift, but it is a lift that we really must take on so that we 
can allow American technology companies to compete on a level 
playing field with their foreign competitors while retaining 
the essential safeguards to keep our Nation and our innovative 
economic assets secure.
    So thank you very, very much. And thank you to everyone 
that is in the audience as well.
    Chairman Berman. Thank you very much. And thank you for the 
very kind comments.
    Ms. Lofgren?
    Ms. Lofgren. Thank you, Mr. Chairman. And thank you for 
coming once again to the Silicon Valley. You have come here in 
the past on patent issues and other intellectual property 
issues. And we know of your commitment to make sure that the 
export control scheme that we have serves America well.
    This, as you have mentioned, is something that has been of 
great interest to me for many years. As has been mentioned, the 
export control scheme was really devised during the Cold War. 
And certainly the economy that we have today is quite different 
than at that time with information moving globally, the pace of 
technological change astronomically faster, even in the 
military arena with the civilian production of material, as 
compared to during the Cold War.
    So it is important that as we look at renewing the system, 
that we make sure that the controls are not over-broad, that 
they are not over-complicated, and that they are necessary. As 
we move forward, I know that we will be looking at what is in 
America's best interest as we control the export of material.
    As you know, I chair the Immigration Subcommittee in the 
House Judiciary Committee. And so I want to touch on something 
that many people don't even know about, and that is something 
called deemed exports. When I mention that, people go ``What 
the heck is that?''
    Well, a deemed export is essentially sharing information 
with a citizen of another country. And if that information is 
controlled, it's not classified but controlled. Then there are 
prohibitions.
    That is very problematic when it comes to a university 
setting. And I hope that Dr. Hennessy will mention it here, 
especially when you look at our wonderful advantage in American 
higher education by getting bright students from all across the 
world who come here and then want to stay here.
    If you take a look, for example, according to the United 
States Department of Education, in engineering, 42 percent of 
master's students and 64 percent of Ph.D. students in American 
universities are nonresident aliens. In computer and 
information sciences, 39 percent of master's students, 61 
percent of Ph.D. students are non-resident aliens.
    According to the National Science Foundation, of all 
science and engineering doctorate recipients, 43 percent were 
non-U.S. citizens. Specifically non-U.S. citizens comprised 64 
percent of Ph.D. graduates in computer science, 67 percent of 
Ph.D. graduates in engineering, 57 percent of Ph.D. graduates 
in math, and 51 percent of Ph.D. graduates in the physical 
sciences. And here at Stanford, more than 50 percent of the 
engineering and physical science Ph.D. students are foreign 
nationals.
    Now, certainly the vast majority of these graduate students 
wish to stay and become Americans here with us. And I am 
hopeful that as we move forward in this Congress, we will come 
up with a sensible way to allow the best and the brightest in 
the world who want to become Americans and stay here and throw 
in their lot with us to more easily do that.
    At any university setting, to prohibit science, basic 
science research, to half of your graduate students is a 
terrific impediment to the advance of basic science. And we 
have to come up with some solutions to this question.
    I remember a number of years ago, I was visiting the 
science departments in Berkeley, our competitor, and they 
talked about a science study measuring waves from the sun. It 
was on a satellite, but it had nothing to do with satellite 
technology and that because it was launched, the foreign 
students from France and from Germany and Asia couldn't work on 
the basic science.
    That really impedes the advance of knowledge. It doesn't 
help the Untied States in any way. So I am hopeful that we can 
update these rules and make sure that America is number one and 
stays number one when it comes to science research.
    And I thank you, Mr. Chairman, for being here and Stanford 
for hosting us.
    Chairman Berman. Thank you very much, Zoe. And I think 
President Hennessy's prepared testimony gets into a few of 
those issues as well.
    We are done for a while. [Laughter.]
    The reason we came here was to hear you. President 
Hennessy, again, thank you very much. And I want to thank all 
of the staff, both of the university and of our committee. It 
is not such an easy job to set up one of these things in a 
field hearing context. And Ed Rice and everybody else who 
worked on this, I am very grateful for their help.
    Dr. Hennessy?

   STATEMENT OF JOHN L. HENNESSY, PH.D., PRESIDENT, STANFORD 
UNIVERSITY AND CO-CHAIRMAN, COMMITTEE ON SCIENCE, SECURITY AND 
             PROSPERITY, NATIONAL RESEARCH COUNCIL

    Mr. Hennessy. Thank you, Mr. Chairman. And thank you all 
for coming today to talk about this important issue. We 
appreciate your interest.
    As you all know, I am President of Stanford University. And 
I also served as the co-chair with General Scowcroft of the 
National Academy's Committee on Science, Security, and 
Prosperity, which last year released the report, ``Beyond 
Fortress America: National Security Controls on Science and 
Technology in a Globalized World.''
    Although I will reference the committee's findings in my 
remarks today, I speak on behalf of the higher education and 
scientific research community, rather than as a representative 
of the committee or the academy.
    It has become a broadly accepted principle that United 
States leadership in science and technology is crucial, both to 
our national security and our country's economic prosperity. 
What is less well-understood, however, is how dramatically the 
conduct of science and the technology has changed over the past 
two decades.
    In this new century, the conduct of science takes place in 
a highly collaborative and geographically distributed research 
community. Thirty years ago, the United States dominated in 
many fields of science and technology. Today, the United States 
is still the overall leader. But in many fields, we are one of 
the leaders, rather than the sole leader. And in a few fields, 
including things such as flat panel displays, semiconductor 
memory, and advanced battery technologies, the United States 
is, arguably, not at the top.
    Consider the source of papers published over the past 25 
years by the American Physical Society. As you will see in the 
handout we attached to my written testimony, the trend is 
clear. The rate of publication among physicists outside of the 
United States and Western Europe has increased at an 
astonishing rate.
    In the coming decades, remaining a leader requires that we 
fully participate in the international research community. To 
do so requires that unclassified information be able to flow 
among researchers and industry leaders in the various fields. 
And it requires the United States to continue to attract the 
best and brightest minds from around the world to work in our 
laboratories.
    There is absolutely no question that the U.S. needs export 
controls to maintain military advantage on the battlefield and 
to sustain the homeland. However, as advances in science and 
technology have transformed our world and our ways of 
conducting research, many of the export control regulations 
that served the United States well 40 years ago no longer met 
the country's needs. The current system actually impedes our 
national security and thwarts our ability to compete.
    Leadership in science and technology begins with attracting 
the best minds. We have a long and rich tradition of doing so. 
The United States Twentieth Century dominance in science and 
technology owes much to immigrants, such as Nikola Tesla, 
Albert Einstein, Edward Teller, Enrico Fermi, and An Wang. 
Indeed, Intel, Google, Yahoo!, and Sun Microsystems, as well as 
an estimated 52 percent of the Silicon Valley start-ups have 
one or more founders who were born outside of the United 
States.
    At Stanford, we attract leading researchers and faculty 
from around the world. And, as Congresswoman Lofgren mentioned, 
more than half of our Ph.D. students in the physical sciences 
and engineering come from outside the United States.
    As a matter of policy, we do not engage in classified 
research. That would limit participation of any of our students 
or faculty on the basis of citizenship. Our focus is on 
fundamental research, which, by its very nature, is intended to 
be open to all and freely communicated.
    Nonetheless, current export controls and related security 
measures have caused us great difficulties. For example, in the 
gravity probe B project, we see a situation similar to the one 
mentioned by Congresswoman Lofgren. A satellite launches the 
gravity probe project, but the instrument itself is a space 
telescope designed to test Einstein's theory of relativity. The 
design and the fabrication were basic research, and the 
technical details were openly published. It doesn't have a 
strategic use, but it happens to be on a satellite.
    Because of ITARs, the international traffic and arms 
regulations, satellites are treated as munitions. Stanford 
researchers cannot share information about the particular 
design with foreign nationals. That limits our ability to 
publish about the design and to ensure that our colleagues 
accept and believe the results from the measurements. It also 
limits us with respect to deemed export as well, which requires 
us to monitor how that information might be shared with 
students here on our campus.
    In another example, a U.S.-based Fortune 100 high tech 
company was given a DARPA contract to build a microchip that 
will attempt to simulate the human brain based on what we know 
about its electrical properties, clearly basic research.
    A team from Stanford consisting of a faculty leader who is 
a U.S. citizen and a half-dozen students, some of whom come 
from the United States, but two are also from China, were 
proposed to collaborate on the project. But after the project 
began, we learned that the use of export control technology was 
central to the work. For the Stanford team to participate, our 
Chinese students would have to be excluded.
    Stanford does not, nor will it, restrict participation of 
students on the basis of citizenship. Since the export control 
technology was deemed central to the project, the Stanford 
research team involvement and the benefit of their 
contributions have been greatly reduced.
    A closely related problem was encountered in the area of 
biosecurity. Professor Stanley Falkow, one of the world's most 
distinguished researchers in the area of microbial 
pathogenesis, had been working on a non-pathogenic version of 
plague, a version that is actually used in the construction of 
the vaccine. After the USA PATRIOT Act, this organism was 
designated as a select agent, requiring greatly enhanced 
security and background checks on lab personnel.
    Falkow viewed this as incompatible with his research 
approach. He ended up destroying the organism and stopped 
working in the area. The result was clearly a net loss for our 
country.
    In these examples, our Nation can lose multiple times. We 
lose the benefits of the research. We lose senior faculty 
leadership in a field. And we reduce our ability to engage and 
retain young researchers.
    As these examples illustrate, the negative impacts of 
control regulations can lead to a loss of scientific leadership 
and a reduction in our Nation's security.
    Our goal should be to design national security controls 
without negatively impacting our ability to conduct fundamental 
research that can benefit the United States economically and 
militarily.
    The growing trend to label fundamental research as 
``sensitive but unclassified'' is a deep concern, since it 
would further blur the lines between controlled and 
uncontrolled research in an unpredictable fashion. There are 
policies in place that can serve as a straightforward and 
rational interpretation of export controls.
    Through national security decision directive 189, for 
example, government agencies with concerns about work could 
specify restrictions when they issue the contract, including, 
when appropriate and necessary, classifying the work. 
Maintaining the openness of basic research as clearly intended 
in NSDD-189 is crucially important for the long-term health of 
U.S. academic research.
    Export controls are a challenging and complex topic, and I 
am very pleased that this committee has undertaken this 
important task of examining them and considering the need for 
reform, which in the view of many is long overdue.
    As you move forward, if there is any way my colleagues in 
higher education and the scientific community can assist you, 
we would be honored to do so. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Hennessy 
follows:]John Hennessy deg.




















    Chairman Berman. Thank you, Dr. Hennessy.
    And, of course, I did proceed with your testimony without 
the introduction I was supposed to make of you regarding your 
background. I think it is probably known to most, but let me 
just for anyone who doesn't know remind people that, in 
addition to being the President of Stanford University, Dr. 
Hennessy started his career here as a professor of electrical 
engineering, chaired the Computer Science Department, served as 
the Dean of the School of Engineering, University Provost until 
now as President. And then in the information technology field, 
he is known internationally for his research and development of 
a revolutionary computer architecture. To this day, he 
continues his research in high-performing computing and as a 
co-founder of the MIPS Computer Systems, a cutting-edge 
developer of microprocessors.
    And, most importantly for purposes of today's testimony, he 
is co-chair of the Committee on Science, Security, and 
Prosperity of the National Research Council, which has a number 
of national security science and industry leaders.
    The committee issued a report last spring on national 
security controls, on science and technology. And that report 
was part of what got us to focus on moving ahead with our own 
project in this area.
    Dr. William Potter is our next witness. Here the 
introduction will come before the testimony. [Laughter.] He is 
Director of the James Martin Center for Nonproliferation 
Studies at the Monterey Institute for International Studies. 
Dr. Potter is one of the nation's leading experts on 
nonproliferation, arms control, technology transfer, and 
security.
    Twenty years ago he founded the Center for Nonproliferation 
Studies at the Monterey Institute. Under his direction, the 
center, now known as the James Martin Center, has become a 
recognized leader in the research and scholarship and the 
national security field.
    Dr. Potter continues his academic work as the Sam Nunn and 
Richard Lugar Professor of Nonproliferation Studies at the 
institute. He has written extensively on security issues, 
including his latest book, ``The Global Politics of 
Combatt deg.ing Nuclear Terrorism.''
    I have personally known and worked with Bill for many 
years. His institute does a very important job, I think, for 
our country and for the world in terms of the expertise and the 
people that it produces to work in this critical field. And he 
is well-prepared to give us expert advice on the security 
issues to be considered in updating and strengthening our 
export control system.
    I will now also introduce Karen Murphy. And then we can go 
right to both of your testimonies. She is Senior Director for 
Trade at Applies Materials located in Santa Clara.
    Ms. Murphy is responsible for export control compliance and 
other trade issues for this cutting-edge leader in 
nanotechnology, semiconductor manufacturing, and related 
fields. She has wide experience in the practical aspects of 
import and export, including as a licensed U.S. Customs broker. 
In recognition of her expertise, she serves on the Commerce 
Department's Advisory Committee on Export Control Regulations 
and has served on the Export Control Subcommittee of the 
President's Export Council. We are pleased to have you with us 
today.
    Dr. Potter, why don't you go ahead?

 STATEMENT OF WILLIAM C. POTTER, PH.D., DIRECTOR, JAMES MARTIN 
  CENTER FOR NONPROLIFERATION STUDIES, MONTEREY INSTITUTE OF 
                     INTERNATIONAL STUDIES

    Mr. Potter. Thank you. It is my honor and great pleasure to 
speak at the field hearing of the Committee on Foreign Affairs. 
I think the subject is very timely and important, and I applaud 
the committee and Chairman Berman for undertaking this 
initiative. It also is always a pleasure to return to Stanford, 
where I spent a wonderful time as a postdoctoral fellow many, 
many years ago.
    By way of introduction and as a caveat, I wish to emphasize 
that while the center I direct covers the entire range of 
weapons of mass destruction and their delivery systems, my own 
expertise lies primarily in the nuclear sector and issues 
associated with illicit nuclear trafficking and the dangers 
posed by nuclear terrorism. And, as such, my remarks will 
emphasize these areas.
    I also want to note that my remarks this morning constitute 
a much abbreviated version of my written testimony, which I 
have provided to the committee.
    A number of recent studies, including the important NRC 
Council report, on the  deg.``Beyond Fortress 
America,'' have correctly observed that many U.S. export 
controls developed during the Cold War are ill-suited to meet 
today's national security challenges.
    It is also the case that in an increasingly globalized 
world, one must be very cautious about imposing restrictions on 
the flow of information, technology, and scientists in the name 
of national security without very carefully weighing the costs 
and benefits of such action. It would be equally shortsighted, 
however, for the United States to abandon prudent export 
controls on dual-use technologies and materials directly 
relevant to nuclear, chemical, and biological weapons in the 
name of economic competitiveness on the grounds that some other 
states have failed to adopt stringent export controls.
    Similarly, it would be most unfortunate from the standpoint 
of weapons of mass destruction proliferation were the United 
States to signal its diminished support for adherence to the 
export control guidelines of existing international 
nonproliferation regimes, based on the premise that some states 
have already disregarded inconvenient nonproliferation export 
control norms and practices.
    Unfortunately, one can point to recent examples of both 
outmoded U.S. and international approaches to export controls 
and changes to export policy that have been detrimental to U.S. 
national security.
    Illustrative of the problem of outmoded U.S. export 
controls are current nonimmigrant visa regulations that make it 
difficult for credentialed academic researchers to work with 
U.S.-based colleagues and for international students with 
advanced degrees in the science and engineering sectors to 
extend their stays in the United States for employment 
purposes. And here I fully endorse the NRC's recommendations 
with respect to remedies in this sphere, but I also would note 
the need for more nonproliferation education and training in 
U.S. industry and academe.
    Greater self-awareness and self-regulation regarding the 
security and export of WMD-related material, technology, and 
know-how may be the best antidote to more intrusive government 
controls.
    Regrettably, it is also the case that U.S. national 
security was impaired when in the name of economic 
competitiveness and in pursuit of a new strategic partnership 
with India the United States gutted important components of its 
own domestic export control laws and led the charge to exempt 
one country from the export guidelines of the Nuclear Suppliers 
Group.
    A similarly ill-considered congressional initiative in 2005 
to make it easier to export highly enriched uranium to U.S. 
allies, promoted in the name of economics and medical 
necessity, directly undermined U.S. efforts to persuade other 
countries to combat nuclear terrorism by minimizing the use of 
highly enriched uranium in the civilian nuclear sector.
    My point is not to contest the desirability of reviewing 
and, where appropriate, revising export policies to reflect new 
realities. I fully endorse such a general approach. It is 
essential, however, to guard against changes in those U.S. 
export controls that have served us well in curbing the spread 
of WMD and whose abandonment might inadvertently contribute to 
the proliferation of nuclear, chemical, and biological weapons.
    Therefore, in thinking about where possible reform of 
export control regulations should be pursued, it may make sense 
to distinguish between export controls targeting WMD-relevant 
items and those directed at the much larger body of dual-use 
strategic goods unrelated to weapons of mass destruction.
    Moreover, it is important to recognize that to the extent 
that the United States wishes other states to attach greater 
priority to the development and implementation of domestic 
nonproliferation export controls, as is required by U.N. 
Security Council Resolution 1540, it must lead by example.
    I will leave it to leaders from industry and science to 
depict the shortcomings of the current U.S. export control 
system as they pertain to economic competitiveness and the 
unfettered exchange of ideas and information.
    What I would like to highlight in my remarks this morning 
are several new nonproliferation realities and how associated 
WMD proliferation risks are compounded by gaps and weaknesses 
in the U.S. export control system and related international 
controls. I will then conclude with a few specific 
recommendations about what might be done to improve the 
situation.
    Although the post-Cold War international environment has 
reduced the risks of a superpower nuclear exchange, it also has 
contributed to the growth of new challenges involving the 
spread and potential use of weapons of mass destruction. These 
challenges include the tendency on the part of many states to 
subordinate nonproliferation considerations to economic and 
political interests, the development of a global black market 
in sensitive dual-use technology and material related to the 
production and delivery of weapons of mass destruction, and the 
rise of non-state actors as nuclear suppliers, middlemen, and 
end users.
    Although discussions of nuclear terrorism typically focus 
on the potential use by non-state actors of nuclear explosives, 
it is important to recognize the proliferation risks posed by 
non-state actors as suppliers of nuclear material, technology, 
know-how, weapons design, and conceivably the weapons 
themselves.
    The extensive nuclear supplier network masterminded by 
Pakistani scientist A. Q. Khan is illustrative of this 
proliferation challenge. An analytically distinct but variant 
of this threat is the operation of non-state actors as 
middlemen, connecting nuclear suppliers, both state and non-
state entities, with end users, which also might be either 
state or non-state actors.
    Most available information indicates that Dr. Khan was the 
entrepreneur behind the emergence of what former IAEA Director 
General Mohamed El-Baradei has called a ``nuclear weapons Wal-
Mart.''
    Nevertheless, one should take care not to equate that 
international network with one individual or to assume that his 
enforced retirement has put illicit non-state nuclear suppliers 
out of business. Indeed, the so-called Khan network was 
relatively non-hierarchical and involved international 
leadership that was widely dispersed around the globe, 
including locations in Europe, Dubai, South Africa, and 
Malaysia. Few of its members were ever prosecuted, and even 
fewer were convicted and served prison terms.
    It is to be expected that middlemen seeking business in 
brokering illicit nuclear trade will gravitate toward bases of 
operations in states with weak or nonexistent export control 
regulations and underdeveloped enforcement mechanisms.
    Unfortunately, these traits are not limited to the 
developing world. Indeed, one is hard-pressed to find examples 
anywhere of successful prosecutions of illicit nuclear 
trafficking in which the accused received more than a slap on 
the wrist, leading some to conclude that there are greater 
penalties for driving under the influence in most countries 
than for driving with illicit nuclear goods.
    The NRC study, among other reports, catalogues a long list 
of shortcomings in the current U.S. system of dual-use exports, 
most of which pertain primarily to controls outside of the 
narrow area of WMD-related commodities.
    In my written testimony, I call attention to a number of 
those that do have relevance to the WMD sphere, including a 
cumbersome bureaucratic structure, morale problems among 
Customs inspectors and investigators, and the challenge of 
devising effective export controls in areas where new 
technologies are emerging most rapidly.
    Here I would only emphasize that the logic of adjusting 
export controls to changing conditions should not mean simply 
relaxing or reducing controls. In some instances, it may be 
necessary to introduce more sophisticated and tailored 
approaches that are more effective as well as simply more 
efficient.
    To be sure, one can identify significant shortcomings in 
both the design and performance of the major export control 
regimes internationally: The Nuclear Suppliers Group, the 
Missile Technology Control Regime, the Australia Group, and the 
Wassenaar Arrangement.
    These deficiencies include non-membership of some key 
exporting countries, inconsistent implementation of catch-all 
and no-undercut provisions, inadequate reporting and 
intelligence sharing practices among member states, and a lack 
of familiarity by industry in member states of the provisions 
governing exports. These problems, however, should not obscure 
the very useful contribution to WMD nonproliferation made by 
the NSG, the MTCR, and the Australia Group.
    It also should be noted that these nonproliferation regimes 
were not driven primarily by Cold War considerations or 
attempts to stymie the Soviet Union's quest for weapons of mass 
destruction.
    Indeed, in the nuclear sector during much of the Cold War, 
the United States and the Soviet Union pursued remarkably 
similar nuclear export control and nonproliferation policies. 
And, in fact, Washington often found it easier to cooperate 
closely with Moscow on nuclear nonproliferation and export 
control issues than it did with some of its close allies. As 
such, I would argue, it does not follow logically that these 
export control arrangements should be scrapped or substantially 
modified simply because the Cold War has ended.
    As one contemplates reforms for the U.S. export control 
system, one must be aware of the liabilities that result from 
divergent international practices and priorities as well as the 
shortcomings of existing international export control regimes.
    It is also the case, however, that many states do follow 
the U.S. lead on nonproliferation export policy and that, by 
and large, nonproliferation export control norms and practices 
globally have become more prudent and widespread over time.
    Although I would argue that the 2008 NSG exemption granted 
to India marked a major step backward in the international 
nuclear export control arena, it is all the more imperative to 
strengthen the NSG and other international mechanisms that 
focus on WMD proliferation.
    A sound U.S. approach to nonproliferation export controls 
requires in my mind a two-pronged approach: First, recognition 
and retention of those aspects of the system that have 
performed well; and, secondly, introduction of new features 
that will enhance economic competitiveness and information and 
technology flow without weakening the international 
nonproliferation regime.
    Let me conclude my prepared remarks by suggesting how these 
dual objectives may be pursued in tandem. Whatever the United 
States does, it must be very careful not to make matters worse 
for WMD proliferation. This dictum cautions against acceptance 
of the advice of those who would like to dilute or restrict 
further the catch-all provision that specifies the dual-use 
items or technologies not on the commerce control list may 
still require an export license if the exporter has reason to 
believe that the item is intended for the development, 
production, or delivery of nuclear, biological, or chemical 
weapons.
    In fact,--and I think this is a particularly important 
point--an increasing number of companies today have made 
strides in incorporating the catch-all philosophy into their 
internal compliance programs, and greater efforts should be 
made to encourage the adoption of WMD nonproliferation 
objectives as a component of corporate social responsibility 
goals.
    A major step forward in promoting WMD-related export 
controls internationally was taken in April 2004 when the U.N. 
Security Council adopted resolution 1540, which, among other 
things, requires all U.N. member states to adopt and enforce 
effective laws which prohibit non-state actors from acquiring 
WMD, their delivery systems, and the materials needed to 
produce them.
    Although few states directly challenge this mandate, its 
implementation has been undermined in many countries due to 
lack of resources and poor understanding of the relevance of 
the measure for their own security interests.
    If U.N. Security Council resolution 1540 is to be effective 
as an export control initiative, it will be necessary for the 
United States to increase its support for regional and national 
1540 training programs.
    In the U.S., effective export control enforcement continues 
to be hampered by the lack of sufficient personnel to undertake 
proper end-use checks and aggressively pursue investigations of 
suspected violations. It does little good, for example, to 
identify new cases that merit investigation if one is unable to 
assign trained personnel to conduct investigations at home and 
abroad.
    It is a necessary but not sufficient condition to adopt new 
rules and regulations internationally with respect to WMD-
related exports. Equally important is the need to build a 
global nonproliferation and security culture in which 
government and industry officials, scientists, faculty, and 
graduate students who work with dual use WMD-related technology 
and materials in the nuclear, biological, and chemical fields 
learn to appreciate the potential dangers posed by these items 
and become familiar with the domestic and international 
regulations governing their use.
    I will conclude my remarks by touching on the issue of 
nonproliferation export controls as it pertains to the 
university environment. At a time when the great majority of 
U.S. Government officials and politicians of different 
political persuasions agree on the dangers posed by WMD 
proliferation, it is surprising how limited the opportunities 
are for students at all levels of education to acquire formal 
training in the field.
    In a very small way, the Monterey Institute of 
International Studies is trying to address this knowledge gap 
by offering a new master's degree program in nonproliferation 
and terrorism studies, the first of its kind in the world. But 
many more universities will need to follow suit if we are to 
train the next generation of nonproliferation specialists or 
even introduce our future leaders in government, science, and 
industry to the subject.
    One practical step to remedy the problem, at least in the 
United States, would be to pass a National Nonproliferation 
Education Act, perhaps modeled after the National Defense 
Education Act or the National Security Education Act.
    Such legislation, ideally funded by a one-time 
appropriation of about $50 million, would provide up to 50 
fellowships per year to graduate students to pursue advanced 
multidisciplinary training in nonproliferation studies at the 
universities of their choice.
    An act of this sort would have the dual positive benefit of 
attracting top-notch young talent to the field and encouraging 
more universities to offer courses on nonproliferation issues, 
including export controls, in order to attract tuition-paying 
students.
    While not a short-term solution to our current predicament, 
this approach would help to create the next generation of 
experts on whom the United States will rely to tackle 
increasingly complex tasks of preventing the proliferation of 
nuclear, biological, and chemical weapons of mass destruction.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Potter 
follows:]William Potter deg.
























    Chairman Berman. Thank you very much, Dr. Potter. You have 
some very interesting ideas in there.
    And, Ms. Murphy, we look forward to hearing from you.

STATEMENT OF MS. KAREN MURPHY, SENIOR DIRECTOR, TRADE, APPLIED 
                        MATERIALS, INC.

    Ms. Murphy. Okay. Mr. Chairman and members of the 
committee, member of the committee, and distinguished guests, 
again, I am Karen Murphy, the Senior Director for Trade at 
Applied Materials. I thank you for holding this hearing on 
export controls and for offering me the opportunity to testify 
before you today.
    Mr. Chairman, in addition, thank you for your editorial in 
today's Mercury News. I particularly appreciated the comment on 
how export controls get little media attention. Holding a 
hearing in Silicon Valley is important because of the number of 
companies who have experience with these regulations and are 
located here.
    I think the fact that the room is full of such 
representatives is in support of this premise. And probably no 
one in this room doubts the need for updating our export 
control system.
    Applied Materials is based here in the Silicon Valley. We 
are a global leader in manufacturing equipment used to produce 
computer chips, flat panel displays, and solar photovoltaic 
cells. In our last fiscal year, our revenues were approximately 
$5 billion, of which more than 80 percent came from sales 
outside the United States. With so much of our business 
overseas, we devote considerable resources to trade compliance 
and welcome this opportunity to share our views.
    An important concern, in addition to the comments around 
the Cold War, is that current regulations were really written 
around a business model that a company designed the product, 
made the product, and sold the product to one end user. Over 
the past 30 years, this model has evolved into a global supply 
chain, including engineering collaboration over the Internet 
and distribution partners located in countries close to our 
customers.
    Today I will focus my oral comments on principles we need 
to keep in mind as we move forward on any export reform 
legislation and eventually regulations. My written testimony 
contains additional information you may find useful.
    These principles are both U.S. national security and 
economic competitiveness depend on a strong, technologically 
advanced industrial base. R&D and technological innovation are 
now global in nature. Control mechanisms must be cognizant of 
and keep pace with advances in technology. Control regimes 
should be premised on a cooperative effort between government 
and industry. Export controls should be multilateral. And, 
finally, the export control process should be clear and simple, 
from its policy foundations to its execution and review.
    We believe a modernized export control system built on 
these principles would do a much better job of protecting U.S. 
national security and facilitating our global competitiveness.
    I would like to now spend a few moments describing how a 
revamped system would affect Applied Materials. In every one of 
our business segments, we face intense international 
competition. In every business line, we are always looking for 
ways to run faster than that competition.
    This is why we spend more than $1 billion annually on 
research and development. We look for scientific and 
engineering talent wherever we can find it, but being able to 
hire and retain this brain power is often difficult and 
sometimes impossible.
    In physical terms, we perform research and development, 
both inside and outside the U.S. And, again, flexibility is 
essential if we are going to outrun our foreign competitors.
    Another tool we use to stay competitive is through our 
global supply chain. In short, everything about our business, 
employees; facilities; suppliers; and our customers; and, of 
course, our competitors, are globalized. We need a system that 
recognizes this.
    An effective control system should also be able to respond 
to technological changes. Our current system falls short, 
resulting in too many controls on technologies that are readily 
available from outside the United States.
    For example, one of our tools is an etch system, which is 
used to create nano-scale circuits. We have a competitor in 
China that is proving technically competent and is making gains 
in the marketplace. It is also important to note that there are 
no U.S. etch tools, whether from our company or our U.S. 
competitor, installed at the leading U.S. manufacturer of 
semiconductor devices.
    Our control lists are woefully outdated. And any updates to 
the Wassenaar control list take far to long to implement--that 
it is important to note that at the world's leading-edge 
manufacturer of semiconductor devices, there are no U.S. etch 
semiconductor pieces of equipment at that factory.
    Chairman Berman. Because of controls?
    Ms. Murphy. No. Yes. No. [Laughter.]
    Capability. What I am trying to say is the capability of 
the foreign equipment is clearly catching up, has caught up 
with the U.S.
    Chairman Berman. Got it.
    Ms. Murphy. So here is another example. We have a 
competitor in China who makes similar semiconductor equipment 
that is proving technically competent and is making gains in 
the marketplace. Our control lists are woefully outdated. And 
any updates to the Wassenaar control list take far too long to 
be implemented here.
    Recent example, the 2008 Wassenaar review list, the U.S. 
just published a few weeks ago, over 11 months after list 
changes were made. Is this acceptable? I don't believe so.
    Controls are published as multilateral, but they must be 
multilateral in more than just their formal sense. 
Implementation should be similar among regime members so 
American companies are not always at a disadvantage.
    Our competitors, including those in regimes and outside of 
regimes, are not subject to cumbersome multi-agency review 
process and conditions of approval that U.S. exporters are. 
Conditions are a problem for many U.S. exporters. Among our 
customers, for example, we have instances of identical tools 
with identical capabilities next to one another on a factory 
floor but with different license conditions.
    This is crazy. I have got one with a pink bow, a red bow, a 
green bow. And depending what day it is, you can do this or 
that.
    Finally, as technology and economies become more complex 
and intertwined around the world, the need for clarity and 
simplicity becomes even more imperative in an export control 
system. Our Cold War-based system implemented under IEPA is too 
creaky and unwieldy and, as the National Academies has pointed 
out, benefits no one but our competitors and adversaries.
    In closing, Mr. Chairman, we are encouraged by the current 
appetite for change among all stakeholders. The stars are 
aligned as never before among Congress, the Executive Branch, 
academia, and industry. We hope and urge that this concurrence 
can produce an export control system that serves the interest 
of all of us.
    I urge you to move forward to develop legislation that 
indeed protects the national security of the United States 
while enabling our global competitiveness.
    [The prepared statement of Ms. Murphy 
follows:]Karen Murphy deg.














    Chairman Berman. Well, thank you. Thank all of you very 
much. You have all touched on important aspects of this with 
slightly different perspectives. And it has been very helpful.
    We are not on a clock or anything, but maybe we will just 
sort of self-ration ourselves, which is dangerous when you deal 
with Members of Congress, [laughter] in terms of questions and 
perhaps have a few rounds, rather than asking every question I 
can think of before I yield to the next person.
    I have some questions I have based on the prepared 
testimony. But something that occurred to me in the context of 
your testimony, Dr. Hennessy, and Zoe Lofgren's discussion of 
deemed exports, in the late 1990s, everyone now is focused on 
Iran's nuclear program and their missile program. But this was 
an issue as far back as the late 1990s.
    At that time, one of the concerns was that Russian 
institutes were training Iranian students in some of the state-
of-the-art technologies that they had and that as part of the 
desire for funding, it wasn't even so much of a calculated 
policy approach or to ensure you want to have technology but 
simply to finance the institute's work and pay the salaries of 
professors and all of that.
    This line of basic research versus training in the 
knowledge of specific technologies that would have relevance 
for WMD programs or the means to deliver them, could you talk a 
little bit more about some of your thoughts on that?
    Mr. Hennessy. It is a very important area, obviously, Mr. 
Chairman. I think we neither seek from the university 
perspective to see people enter this country that would be a 
threat to the country. We don't want them as students. We don't 
want them as visitors. So I think an adequate visa screening 
process is certainly appropriate there.
    We also by focusing our research on what we truly believe 
to be basic research; that is, research that is intended to be 
published, we believe, that that simply excludes the university 
from working in certain areas that would create the kind of 
example that you have alluded to here between Russia and Iran.
    So, for example, in the case of building a highly precise 
telescope to go up in a missile, we are not dealing with the 
issue of how to design the missile or how to control it. We are 
simply designing the instrument that will ride atop that 
missile.
    In fact, we don't need to have specific details about how 
the missile works. We may need to know some things, like how 
much vibration and stress will be induced on the satellite for 
the purpose of designing the satellite, but we don't need to 
know the kinds of details that would be important, for example, 
to an individual who might be interested in using that to build 
a missile to attack the United States.
    Chairman Berman. Your research council that you co-chaired 
concluded that many of our current export control regulations 
no longer meet the country's needs. And that was a theme also 
of other witnesses here.
    Because of that, the current system impedes our national 
security and thwarts our ability to compete, even as you 
acknowledge that we do still need export controls. This is sort 
of the heart of the question for us as we embark on this 
process. Dual-use technologies by their nature can be used for 
benefit and for harm.
    So I'm curious. How did your committee deal with sort of 
the fundamental question, what are the criteria that should be 
used by us, although I think the last thing we want is Congress 
writing the lists, maybe on campaign technologies but not on 
the process for who write the lists, what are the criteria that 
should be used to determine what should be controlled? This I 
think is almost essential for what we want to try and do here.
    Mr. Hennessy. I agree 100 percent. It goes to the heart of 
the question. What should be controlled?
    I think here I would completely support what Dr. Potter 
said. We need to build very high walls around a set of very 
dangerous technologies, particularly related to weapons of mass 
destruction. That is the clear case that we absolutely need to 
deal with in our export controls. And we need to ensure that we 
are doing that in a way that is as effective as possible.
    There is a related set of truly dual-use technologies, as 
opposed to certain technologies, which are really only for use 
in devising weapons. There is a set of related technologies 
that are used perhaps not for weapons of mass destruction but 
related things. That is where we begin to get into an area 
where you need a rational way for dealing with it.
    I think one of the difficulties you see with the lists is 
that they tend to grow, they don't tend to shrink very much. So 
things go on the list. They never or rarely come off the list.
    That obviously impedes both our ability to do our work as 
well as our competitive interests. And so a rational method 
that would, for example, sunset the list, forcing a review 
based on some methodology, as opposed to simply taking the easy 
way out, which is you leave things on the list, I think would 
be a rational approach to try to deal with that problem.
    Chairman Berman. Dr. Potter, any thoughts on this?
    Mr. Potter. Well, I agree with what Dr. Hennessy just said, 
particularly the part where he agrees entirely with me. 
[Laughter.]
    I think, indeed, it is important to distinguish those items 
which are dual-use WMD-related and the much, much larger 
category of strategic items, which when I read the----
    Chairman Berman. Stop right there, though. If I were to 
take a list of, say, the Nuclear Suppliers Group, I would find 
technologies are directly for a nuclear weapons program, but 
wouldn't I also find dual-use technologies on such a list as 
well?
    Mr. Potter. That is correct. I mean, you have basically two 
lists for the Nuclear Suppliers Group. The one that was 
adopted, I think in 1992, focuses on dual-use nuclear 
technologies.
    And so I don't want to suggest that you will not have 
difficulties in defining where you are going to want to retain 
controls, but it is still the case that those items constitute 
a very, very small fraction of exports. And you have a 
relatively small number of countries who are involved in 
commerce in those items.
    So my sense is that the thrust of the NRC report really 
were related to those items which were not the focal point of 
my discussion, which was WMD-related. I think that distinction 
is probably a good starting point in terms of where you are 
going to be able to make meaningful reform.
    The greater difficulty is probably not in the nuclear 
sector, where the technologies have not been as dynamic. And so 
I think the lists basically that have served us well in the 
past continue to be for the most part useful.
    You have more difficulties when you move into the 
biological sector. And so you may also note when I talked about 
the international regimes, which I thought generally have been 
doing a good job, I did not include the Wassenaar agreement 
because it moves away from my own focus on WMD technologies, 
equipment, and material.
    Chairman Berman. I think for this round, I would like to 
ask one more question. Then I will pass it on to Mr. 
Rohrabacher. Go ahead. Yes, please?
    Ms. Murphy. I sort of want to comment on----
    Chairman Berman. Come into this, absolutely.
    Ms. Murphy [continuing]. The control list philosophy.
    Chairman Berman. Absolutely. Absolutely.
    Ms. Murphy. So I think that the control list should be--
those items which you can control. So if there is no foreign 
competition and it has been identified as critical for the 
manufacturing of weapons or non-civilian products, then maybe 
that item should be on the list.
    However, what is happening in the semiconductor device 
industry is that our customers are requiring us to achieve more 
and more devices in smaller and smaller spaces. And a lot of 
the materials that we are required to use and even some of the 
parts and components, such as items on the nuclear and chemical 
list, like baratrons and specialized valve and pressure 
systems, are on our machines now because those items achieve 
the results that our customers require.
    So no longer can you look at a piece of semiconductor 
equipment and see 100 percent dual-use items contained on the 
machine, but as our customers require more and more solutions 
to their problem, we have to seek what I would call better, 
tighter restrictions or tighter specifications on some of the 
delivery systems and especially some of the materials.
    And so I think that it is important to also acknowledge 
these requirements on clearly Applied Materials' and other 
companies' desire to have legitimate end users who make 
commercial products for civilian use.
    Chairman Berman. Dr. Potter, how would you deal with that 
very specific example?
    Mr. Potter. I think it is important to start by asking what 
the purpose is of export controls. And you have alluded to that 
in your opening remarks. This is something that also is 
addressed in the National Research Council report.
    I see export controls, first and foremost, as making it 
more difficult for some state and non-state actors to acquire 
military capabilities that could endanger U.S. national 
security. And although they may have the effect of impeding 
some legitimate U.S. exports, I think it is important that 
efficiency not be the only touchstone for determining what 
should constitute our reforms. I think one also has to talk 
about effectiveness. I mean, economic cost is certainly 
important, but it is not the only criterion.
    So I don't have a magic bullet to offer here. In some 
respects in the nuclear sector, it is even more complicated 
because you have Article 4 of the nonproliferation treaty, 
which also points to the inalienable right to peaceful use. And 
many countries will argue that they are not, in fact, being 
provided with the nuclear assistance to which they are 
entitled. So this simply further complicates the issue.
    I would argue that, by and large, in the nuclear sector our 
export controls, including those in the international sphere--
for example, the Nuclear Suppliers Group--have served us well. 
And so we need to be very, very careful in the name of reform 
not to inadvertently act in a fashion that compromises our 
national security in the weapons of mass destruction sphere.
    So it is more of a principle. I can't give you a more 
specific response.
    Chairman Berman. Shifting away from the nuclear, but let's 
take one of your examples, Dr. Hennessy. You talk about 
Professor Falco's work on plague vaccine and the obstacle that 
he ran into when security was tightened. It is a compelling 
story, but isn't there a case to be made that, especially with 
the plague, security needs to be tighter on that kind of 
research?
    Mr. Hennessy. I agree, Mr. Chairman, that there is a case 
for tightening security. Had he been working with the actual 
pathogen itself, then I think there was a very good case for 
it. He is working with a non-pathogenic version of the virus, 
specifically used in the design of the vaccine.
    So there is a lower level, particularly, of security. And I 
think the key is to distinguish these extremely complicated 
cases. And I think we all have to agree that when we get into 
these kinds of issues, we are getting into issues where we need 
a level of expertise that is very hard to find to judge how to 
structure----
    Chairman Berman. The kind you normally find in Congress. I 
understand. [Laughter.]
    Mr. Potter. I think that Karen made a point which applies 
to this case as well as others. And that really is the need for 
much greater cooperation among government, industry, and 
academe. If there is a readiness to try to be creative to 
address the legitimate security concerns as well as the obvious 
interests in academic freedom, then in most instances, one can 
find a reasonable solution.
    I think you mentioned, President Hennessy, that Falco 
viewed it as incompatible with his research approach. I mean, 
that may be the case, but at many universities, there is work 
being done on these issues, and we have been able to satisfy 
also the export control requirement.
    One can point to other cases at other universities where 
there have been clear violations. And most people would agree 
that the rules should have been followed and when they weren't, 
that there should have been consequences.
    So I think the key here, really, is the spirit of 
cooperation, an attempt to reduce the bureaucracy where it is 
unnecessary. There is a great deal that can be reduced, but 
also there is an educational role here.
    It is really important for those who choose to work in 
areas where there are these restrictions to better understand 
the restrictions and to also understand the reasons why there 
are restrictions. Nonproliferation awareness is crucial. And I 
don't think that, for the most part, industry and research on 
campuses have adequate access to that information and 
awareness.
    Chairman Berman. Mr. Rohrabacher?
    Mr. Rohrabacher. Thank you, Mr. Chairman.
    As usual, I don't think the issue is as complicated as is 
being presented. It is just that it requires tough decisions 
and requires us to be brutally frank about who is our enemy and 
a potential enemy of the United States and who isn't.
    See, so far we have talked about how difficult it is to 
identify which technologies, et cetera, but if we, instead, 
spend our time and effort focusing on trying to identify which 
countries should have the controls, that takes a lot of 
pressure off identifying which technologies if you believe in a 
relatively free trade with certain people as long as the final 
destination is that country.
    I am just going to ask the panel ``Yes'' or ``No.'' Would 
you agree that reforms that loosen control over the export of 
our technologies, which loosens those controls to democratic 
and friendly countries, while maintaining controls and perhaps 
even expanding them on countries that are controlled by 
tyrannical regimes that may be hostile to America's national 
security interest is an acceptable approach as how to go 
forward with looking at these export controls? Basically I am 
asking you if----
    Mr. Potter. I would say that here simplicity is, 
unfortunately, not helpful. [Laughter.]
    I am not sure how you characterize non-----
    Mr. Rohrabacher. So you are a no. What are you? [Laughter.]
    Mr. Hennessy. I am in favor of more complexity in a 
complicated issue.
    Mr. Rohrabacher. You are a no. [Laughter.]
    Ms. Murphy. I am not authorized to answer that question. 
[Laughter.]
    Mr. Rohrabacher. Well, let me just note if we are talking 
about Adolf Hitler or Joseph Stalin, there wouldn't be any 
laughs in the audience right now.
    Mr. Hennessy. Right.
    Ms. Murphy. Right.
    Mr. Rohrabacher. No, no. Let me. It is my time. Let me just 
note that in China, you have religious figures to this day that 
are being put in prison and the Falun Gong end up being put in 
these cells and they disappear. And we know what comes out of 
those prisons: The sale of human organs.
    We are dealing with a ghoulish regime here that a lot of 
people are making profit off of. What is troubling me most 
about this issue is that we are treating China like we would 
treat Belgium or England.
    The fact is we have a potential adversary that is the worst 
human rights abuser in the world, but we have companies that 
are making enormous profits, short-term profits, by taking our 
technology over there and improving their capabilities.
    My theory about the technology that we are talking about 
that they have in China now that you just talked about is that 
you can trace it right back to some American capitalist who 
went over there to make a short-term profit or it can be traced 
right back to research that we financed by the United States 
Government somehow getting over there. But now you don't have 
the technology, and they do.
    Well, I don't mind that when it comes to the English. I 
don't mind that if it comes to the Italians. I don't mind if it 
comes to some democratic country. But when you have a country 
that is still run by a group of people who throw people in 
prison for their religious convictions, a country that still 
looks at the United States as its long-term enemy, then there 
is something wrong.
    I think that we had better start discriminating about which 
countries we treat as our friends because we treat our friends 
the same way we treat our enemies. Our enemies are going to 
take advantage of what we give them.
    Back to your example, Dr. Hennessy, do you realize that 
Chinese students--have you ever read anything that Chinese 
students have been used by Chinese military intelligence to 
accomplish their goals?
    Mr. Hennessy. I am aware of that.
    Mr. Rohrabacher. Okay. And still you can make a statement 
to this committee that you are not going to discriminate 
against Chinese students?
    Mr. Hennessy. We are not going to take on research that 
would require us to exclude some students from the research 
program.
    Mr. Rohrabacher. Yes. And the one you were complaining 
about if I read it correctly was based on a DARPA grant.
    Mr. Hennessy. Correct.
    Mr. Rohrabacher. Okay. DARPA is what----
    Mr. Hennessy. Defense Research----
    Mr. Rohrabacher. Defense. My gosh. There is a relationship 
between defense and that grant. And you are complaining that we 
don't want to have Chinese students that will then take their 
knowledge back and be utilized by the world's worst human 
rights abuser?
    Mr. Hennessy. I think I am illustrating the difficulty that 
occurs in deemed export. The opportunity, then, is to conclude 
that you shouldn't do this kind of basic research in a 
university setting if you believe it really represents a threat 
to the country's security.
    Mr. Rohrabacher. Well, I would suggest that universities 
need to think that they are patriotic Americans, too, and that 
when we are up against an Adolf Hitler 10 years down the road, 
that yes, maybe it is a good idea that the American 
universities are helping build our capabilities. Don't you 
think that is true?
    Mr. Hennessy. I absolutely believe that. And I think you 
only have to look at this country's history to see that, in 
fact, academic scientists----
    Mr. Rohrabacher. Well, that is not consistent with what you 
just said. You know, the fact is that American universities 
don't have to worry about what we are building, the technology 
advances that we have as a country, and the competitiveness 
that we will have by that if, indeed, we are ensuring that that 
information isn't going to people who hate the very ideals that 
represent the heart of America.
    Scientists, university people are not citizens of the world 
because part of that world are people who are hostile gangsters 
who are murdering their fellow citizens to stay in power. The 
United States of America has higher ideals than that. And 
hopefully people in academe and hopefully people in the high 
tech industries understand that.
    Now, what has happened from my perspective--and I have been 
following this for 20 years--is we have got so many 
corporations going over there to make short-term profit that we 
can't make those decisions. And all of this inability to set 
different standards for different kinds of countries comes down 
to that: Money.
    Am I wrong that a lot of these big corporations finance 
this university and that that may be impacting decisions on 
what we can do to confront the possible hostile intent of China 
in the future?
    Mr. Hennessy. That is not a correct statement.
    Mr. Rohrabacher. Okay.
    Mr. Hennessy. While we do have money from various 
companies, the vast majority of our funding does not come from 
industry.
    Mr. Rohrabacher. Right. So there are not grants that have 
been brought in by major corporations to your university?
    Mr. Hennessy. There are grants from companies, but it is 
vastly overwhelmed by both the universities' own research 
dollars as well as, of course, research dollars coming down 
from the Federal Government.
    Mr. Rohrabacher. Not just this university, but I have seen 
this throughout our system where, time and again, we have these 
big corporate interests that are going over there to make a 
quick profit, by the way, at the expense of the American 
worker, who now doesn't make as much money because they have 
set up competition overseas.
    And those same companies were supposed to influence the 
Chinese to make them more democratic. That was the theory. But, 
instead, what we have done is we have allowed them to use their 
influence economically and otherwise to influence our policy 
right here in this country.
    And I think that this hearing is getting right to one of 
the very heart of the matter, that we are unable to set things 
up in a way that will prevent the Chinese, which is a potential 
hostile government to the United States, actually is hostile, 
maybe a potential enemy of our country, that it is impossible 
for us to differentiate between that and democratic countries. 
That is what is not working for us right now. That is why it is 
so complicated.
    And, Mr. Chairman, I will just note that I have gotten 
passionate about the issue again. And I exposed myself. But I 
do feel passionately about it.
    Chairman Berman. I know you do. I just will interject here. 
We had during the Cold War, my recollection of export control 
policies, the organization COCOM, which predated Wassenaar,----
    Mr. Rohrabacher. Right.
    Chairman Berman [continuing]. Was about saying that there 
were certain countries for which we will not send certain kinds 
of dual-use technologies. But I do wonder as you carry out that 
logic, does that mean that universities that want to do the 
kind of research that Dr. Hennessy talked about don't take 
Chinese students?
    And, by the way, my recollection from 1989 was ones of the 
strongest forces for the democracy movement in China that 
culminated in Tiananmen Square was Chinese students who were in 
the United States at that time and who did not let us and 
Congress forget about what was going on there, the nature of 
their repression. I mean, in other words, the question is, how 
do we take what you say, which bears I think a lot of truth, 
and extrapolate into a logical policy that helps?
    Mr. Hennessy. Let me just say none of us is naive about the 
issues we face here. As a board member of the company you 
earlier praised, Google, and as the president of a university 
who had one of its undergraduates' account's hacked by this 
attack, a young woman who has participated in the free Tibet 
movement, we are not naive about it. We understand there are 
real challenges there.
    Whether this country decides it needs to engage China or 
keep China at a distance I think is an important topic to 
discuss at the highest levels.
    Mr. Rohrabacher. Let us know this. If we have a student, 
Mr. Chairman, if a student comes here from China and he is a 
graduate student, and we are giving him the training and the 
access he needs to produce great things and he goes back to 
China, what we have done is subsidize China to the tune of 
hundreds of millions of dollars of research that that Chinese 
Ph.D. student now knows and can duplicate.
    Some of the competitiveness that we were just talking about 
comes from the fact that we have provided our economic 
adversary and an adversary to our democratic ideals with this 
type of treasure that we have invested in----
    Chairman Berman. Zoe, let's give him a green card. 
[Laughter.]
    [Applause.]
    Mr. Rohrabacher. All right. Thank you, Mr. Chairman.
    Chairman Berman. Anna?
    Ms. Eshoo. Thank you, Mr. Chairman.
    I said in my opening statement how important congressional 
hearings are. And for anyone who is in the audience who has 
never been a part of one, you are getting a real earful. You 
are being exposed to the various views that the Congress holds. 
And I think that it is healthy.
    Having said that, it was not that many years ago when we 
all celebrated the triple birth to the Rohrabachers, triplets. 
And now I don't know whether they will eventually want to apply 
to Stanford or not.
    Mr. Rohrabacher. Oh, no. [Laughter.]
    Ms. Eshoo. At any rate, thank you to our witnesses. What 
you have said is enlightening all the way around. Dr. Hennessy, 
from an academic standpoint, a scientific standpoint, 
unclassified materials, and how we grow that but also protect 
our national security.
    As you said, no one here is naive. We are all patriots. We 
are all patriots. And in reauthorizing this and writing all the 
new protocols that guide us, there will not be any naivete 
built into the legislation. We owe that to our great nation.
    Dr. Potter, the spotlight that you placed on WMD and your 
extensive experience in this area is really invaluable to us. 
And to Ms. Murphy, from a commercial standpoint and from a 
company that is very important, not only here but to our 
country and around the world, your testimony is extraordinarily 
valuable, too.
    I should add that there was an important announcement that 
that Secretary of Energy, Secretary Chu, made this morning. And 
I can say something about it because it was embargoed only up 
until 9 o'clock a.m. Pacific time. And that is that there are 
more than $37 million for next generation lighting. And 
obviously that creates opportunities for energy savings and 
manufacturing jobs. And Applied Materials will benefit 
significantly from that. So congratulations to you.
    What each one of you said, there were an awful lot of heads 
that were nodding. So as we take your individual slice of this, 
we agree with you. I agree with you anyway.
    I would like to mix it up a little bit. Where do you 
disagree with each other? Is there a disagreement? That would 
be helpful to us in how we draw this up.
    I would like to give some credence to what Mr. Rohrabacher 
is saying. I wouldn't state it the same way, nor do I think 
that at this stage of life on this planet that we can afford 
isolationism. On the other hand, there are non-state actors and 
others obviously that are actively plotting and planning 
against us. That is my intelligence hat. I know that. I am not 
naive about it. We can build in the safeguards, I believe, to 
safeguard our country.
    Where do you disagree with each other? Is there something 
in the testimony or knowledge that you have? Well, I am just 
asking you to kind of mix it up and maybe raise some red flags 
about what someone else said.
    And this is all in a professional setting. So no one is 
going to take offense. But I think that it would be helpful to 
me and to the members here and those that are going to draw up 
the legislation because it is all part of the record.
    Who would like to go first? Dr. Potter?
    Mr. Potter. Yes. I found the NRC report, which----
    Ms. Eshoo. Can you move your microphone just a little 
closer so everyone can hear you?
    Mr. Potter. Excuse me. I thought that the National Academy, 
National Research Council report was, by and large, right on. 
And I think that Dr. Hennessy and Brent Scowcroft deserve a 
great deal of credit for it.
    I would have preferred had there been a greater focus on 
how one could improve export controls in the WMD area, which I 
realize was not the principal orientation.
    Ms. Eshoo. Yes. That was not the focus of their report, 
though.
    Mr. Potter. Right. The one area where I would take 
exception has to do with the support for the creation of an 
economic competitiveness exemption, which would eliminate, as I 
understand it from the report and from subsequent discussion, 
export controls on dual-use technologies where they or their 
functional equivalents are available without restriction in 
markets outside of the United States.
    In my view, that recommendation, if implemented, would both 
be at odds with some international nonproliferation regimes to 
which the United States is party, and would also if it applied 
to the WMD area be foolhardy if a major U.S. national security 
goal is to make it more difficult for state and non-state 
actors to acquire sensitive WMD-related materials and 
technology.
    These export controls may not preclude the acquisition by 
other states of their desired technology, but they may raise 
the costs and increase the time. They may have to go to 
countries whose products are not regarded as highly as U.S. 
products.
    And so, if you wanted to put this more crudely, just 
because others are willing to sell us rope to hang ourselves, I 
don't think that means we should sell them the rope and make 
their task easier.
    You asked. I mean, you are trying to be provocative, stir 
things up. And, while I would agree with a very large number of 
the recommendations, both in the NRC report and in Dr. 
Hennessy's testimony, we have to be very careful not to give 
all of our attention to economic competitiveness without also 
bearing in mind other threats to national security, 
particularly in the WMD area.
    Chairman Berman. Would you yield?
    Ms. Eshoo. I would be glad to, Mr. Chairman.
    Chairman Berman. Wouldn't Dr. Hennessy if he were speaking 
right now say, ``Well, we never intended that this exception 
apply in areas where we are parties to international 
agreements, treaty obligations,''----
    Mr. Hennessy. Correct.
    Chairman Berman [continuing]. ``Maybe even more informal 
groups, that that exception would trump controls for which 
there is a multilateral consensus''?
    Mr. Hennessy. Correct. I think that is a correct 
interpretation. And, as well, neither would this exemption, 
this competitiveness exemption, apply to truly strategic 
weapons materials. I don't think that was ever the intention as 
well.
    The intention was to provide a rational way of dealing with 
the export controls around truly technologies which have true 
commercial use outside of that. And I think that was it.
    I think, responding to Congresswoman Eshoo's question, I 
think the place where we would have an intensive debate, I 
suppose, would be when we got to various dual-use issues in the 
biological sphere. We have not had a large-scale international 
biowarfare attack on the U.S., either by a non-state actor or 
by a state.
    The difficulty in the bio area is that essentially many of 
the core technologies other than, of course, the organisms 
themselves, are dual-use in nature. And that makes it extremely 
difficult.
    If you want to be manufacturing drugs, you need to use 
certain instruments, which, of course, could also be used to 
manufacture biowarfare agents.
    That is an extremely difficult area and one that has to be 
carefully looked at. It is one where the academic community and 
the scientific community have done some self-policing. And I 
think that perhaps gets back to something Dr. Potter said 
encouraging the use of the community to actually act as a self-
policing strategy with respect to certain technologies.
    Ms. Eshoo. Ms. Murphy?
    Ms. Murphy. It is hard to analyze the other speakers' 
testimony because, again, Applied Materials and most of the 
commercial companies, even here in the audience today, are not 
in the business of weapons. Our customers are not necessarily 
in the business of manufacturing weapons or delivery systems.
    Our customers are making equipment or devices that are the 
display, the televisions, the solar panels. And even the chips 
that most of our customers build with our machines are for 
computers, communications, your cell phones, and other types of 
electronic equipment used for a variety of commercial uses. 
Even I think my refrigerator has more chips in it than my old 
microwave oven did. So it is just becoming more and more, our 
cars with a lot of the devices in them today.
    But, again, the goal, again, is, really--I think some of 
the other comments--and I am sorry Mr. Rohrabacher left the 
room. I mean, we do have sanction availability to specific 
entities of concern. And we can't be scared to use that.
    Export control legislation, this usually ends up happening 
that we get to this point, and we can't argue that this is a 
very complicated area--we don't want bad people to make things 
that will be of harm to the U.S.
    So we do have sanctions available that we should use and 
lists of entities of concern that we can use as well in harmony 
with a rationalized control legislation.
    Also, we touched on immigration, which is not a purview of 
this committee, obviously, but those regulations as well, 
again, need to be in harmony to prevent----
    Chairman Berman. We do have the chair of the Immigration--
--[Laughter.]
    Ms. Murphy. Yes, I know. We visit her all the time as one 
of our employees was also impacted by being arrested and 
impacted by issues around immigration. Again, students and 
other people who come to the U.S. under temporary permissions 
should be able to stay here quicker under legal programs, such 
as permanent residency and citizenship.
    So, export controls should not be the focus of these other 
very complicated issues, such as sanctions and immigration. We 
still need a rationalized export control program that truly 
deals with the dual-use and commercial commodities.
    Ms. Eshoo. Thank you.
    I just have two other quick questions. Based on the 
testimony relating to the private sector and the university 
community, do you think, Dr. Hennessy, that they should be held 
to separate sets of export control laws and regulations? Would 
that help to bring a much clearer definition to the roles?
    Mr. Hennessy. It probably would because obviously there are 
different concerns that----
    Ms. Eshoo. Right.
    Mr. Hennessy [continuing]. And different issues that come 
up. And I think what the universities really want to ensure is 
the freedom of research around basic research, fundamental 
research, and less so about applications of various pieces.
    Ms. Eshoo. Something that hasn't come up in the testimony, 
we haven't mentioned it here at the dais, and that is that the 
agencies that are charged with the responsibility of carrying 
out the export control laws that we have, State Department and 
the Commerce Department, both very different in terms of their 
missions.
    Is that where all of this should be? Should they continue 
with their shared responsibility? Should we be looking at a new 
model? Has anyone given any thought to this? And if so, what 
might you suggest?
    Mr. Hennessy. I think there has been some thought about it. 
And I think what I would say is the current shared authority 
results in far more complexity and complication----
    Ms. Eshoo. Right.
    Mr. Hennessy [continuing]. Than is necessary, I think, to 
do a good job with export controls.
    Ms. Eshoo. Anyone else?
    Ms. Murphy. Yes. I believe it is touched in my testimony, 
the fact that, again, our partners in the regimes don't have 
the multi-agency. It is kind of a one-stop shop. They do seek 
expertise from their laboratories and their experts in defense 
community when making those difficult decisions.
    Ms. Eshoo. Who has the best model, do you think?
    Mr. Rohrabacher. Don't say Germany.
    Ms. Murphy. Don't say Germany?
    Ms. Eshoo. Don't say China. [Laughter.]
    We are going to have the Fourth of July here.
    Ms. Murphy. Actually, I have been having very good 
experience with the Singapore government, who is not in the 
Wassenaar arrangement. Their Customs authority is the group 
that handles export licensing. And we have been having some 
very good discussions with them; and then maybe, secondarily, 
the U.K.
    We have good discussions with them when we find we need 
export controls from their agency.
    Ms. Eshoo. Thank you very, very much. Thank you, Mr. 
Chairman.
    Chairman Berman. Zoe Lofgren?
    Ms. Lofgren. Well, thank you, Mr. Chairman.
    It is interesting what seems obvious and we all agree on 
when you get down to the details becomes more difficult. And I 
think this is a prime example of that.
    You know, in terms of controlling the export of material 
from the U.S., I think all of us agree that that is a burden 
and it is a burden that needs to be assumed if there is a 
benefit. The question I guess really can go, is there a benefit 
of any value that would justify that burden?
    I remember hearing Dr. Hennessy a few weeks ago saying it 
is the buy it at Fry's standard, which is something I have 
actually used on the floor of the House. If you can buy it at 
Fry's, it is too late. So it goes to not only what is on the 
list but how fast that list changes.
    At one point, a Sony PlayStation had too much computing 
power to be exported. And no one agreed that that was sensible. 
And, yet, it was impossible to change in any prompt way.
    So I think some of what needs to come out of this change in 
the legislation is a system that is agile and quick, I mean, 
that is accurate but doesn't take forever so that the 
technology has moved so much faster than the government has and 
that also that it has to be some way to inform the decision-
makers about the technology.
    We had big fights on MTOP standards and is that the right 
standard and supercomputers. Meanwhile the world moved past 
that into network computers. So the argument was meaningless. 
And, yet, we continue to hamper ourselves for no good reason.
    The burden did not yield the benefit and security of the 
U.S. So I am hopeful that we can come up with some way, perhaps 
even the National Academy or the Research Council, who there is 
no way the government itself is going to necessarily possess 
the breadth of that information, but there ought to be a very 
meaningful advisory capacity that helps us avoid those 
mistakes.
    In terms of--and I want to get back to the deemed export 
issue and what this means for universities today and where it 
leads us to. It has been interesting. Now, we know that if we 
are going to remain the first, we have to get the best minds in 
the world into our university systems and, to the maximum 
extent possible, allow those brightest people in the world to 
become Americans and be part of our team. That is part of our 
strategy for success.
    We have touched on the immigration issues that we hope to 
remedy, but part of that is, how do you compete for the 
smartest people in the world?
    Now, if you take a look at the universities--I mean, I 
don't want to give a whole list but Stanford and University of 
California and Harvard and M.I.T.--and others are others--are 
among the top universities in the world. And, yet, I have 
noticed in terms of competition for the elite minds of the 
world, we are now getting competition from Australia and 
Britain and other places for a variety of reasons.
    What role does the deemed export rule have in terms of 
being able to attract the very top? I am not talking about 
undergraduate, but for your Ph.D. programs, what role does that 
have in the competition for the elite scientific minds in the 
Ph.D.-level student competition, Dr. Hennessy?
    Mr. Hennessy. I would say that students don't immediately 
see deemed export. They see the normal visa process as the 
thing they encounter. And I must say there have been a lot of 
improvements in the visa process since the difficult days that 
occurred as quite predictable after 9/11, but we would have a 
difficult time, student visas. But there has been a lot of 
improvement in that.
    One of the lingering difficulties around visas is that 
there are still significant problems for short-term visitors 
coming to attend a conference. The result has been that a 
number of agencies have moved major conferences outside the 
United States. That means A) we are less well-represented at 
that conference but also that we don't send graduate students 
to international conferences. So our participation of our young 
people in that conference is hurt.
    The more immediate difficulty of deemed export, then, 
becomes when we are doing a research project that has the 
potential of a deemed export control around it. It simply makes 
it impossible for us to participate in that research because we 
would not only have to have the students undergo, essentially 
provide all of the information for a background check, 
international students, but they would be prohibited from 
talking to other students, they would be prohibited from having 
an open research group meeting, where a student who wasn't 
cleared couldn't come into the meeting and participate in the 
meeting. They couldn't discuss it with their fellow students. 
So all of the things I think that makes the U.S. academy work 
so well in terms of its intellectual vitality would break down 
if we started doing a lot of research that involved deemed 
exports.
    Ms. Lofgren. So essentially the universities are going to 
have to withdraw from an element of basic research?
    Mr. Hennessy. That is what basically happens. We basically 
don't do it or we at least try to limit it or we will try to 
find an industrial partner that can deal with that aspect of 
the research.
    One of the things that became quite a concern a few years 
ago was the notion that all uses of potentially export 
controlled equipment would be controlled. That would have 
basically prevented foreign students from walking into a large 
number of our laboratories in the biological sciences and 
chemistry and engineering and using the equipment in pursuit of 
perfectly legitimate basic research that had nothing to do with 
an export controlled entity, but because the instrument itself 
was export controlled, the use of the instrument would be 
covered by deemed exports.
    Ms. Lofgren. As mentioned, this is complicated stuff, but 
it seems to me that if we want to stay number one, we have got 
to find a way to make sure that the top minds in the world want 
to come here and be on our team. And getting this right is part 
of that answer.
    So I thank you, Mr. Chairman, for your work on this. And I 
look forward to not only following it but hopefully playing a 
positive role as we put together a sensible response to these 
challenges.
    And I yield back.
    Chairman Berman. Well, thank you. I notice it is 12:30. I 
have about 3 hours of questions left, but I think I am going to 
try and contain myself and follow up with some of you as 
individuals on some of these issues.
    Do any of my colleagues want to get into--I mean, we really 
just, I think very helpfully, scratched the surface of this. I 
would love to, but this is not the last. It is the first, but 
it is not the last, of these hearings. And I thank you both for 
helping to, in many ways all of you to helping to, join the 
issue for us, understand some of the ideals we are going to 
have to face.
    And I do want to make special note because I think Dana's 
comments about China, this will not be the last time that issue 
is raised. For one thing, Dana is going to still be around. 
[Laughter.]
    And, secondly, it is going to be on people's minds. And 
even the events of the last couple of days have renewed that. 
Finding a sensible way through all of that and what is really 
effective, as opposed to what might feel good or something is 
very important for us.
    Just on the issue of how do we in the U.S.--this is not the 
subject of this hearing, but the Internet repressive regimes 
and how should we react to them. They are different approaches. 
I think it is something our committee has to take another look 
at.
    We have actually systematically questioned information for 
a number of companies, many in this area, on their concerns 
regarding joining the global network initiative, which 
advocates the companies adopt corporate responsibility 
guidelines and collaborate with human rights NGOs to push back 
on some of these Internet repressive regime demands. I think we 
have to look at this more, but meanwhile we are going to 
proceed ahead with looking at the Export Administration Act.
    I came to Congress in 1983 and went on the Trade 
Subcommittee. And, actually, you are right. The real reform of 
this, the real act was done in 1979, in Carter's last year. We 
made one reauthorization effort, did some changes. It was a 
very arduous process in 1985 and '86.
    And I remember the fight was very much defined by the 
notion that you could not export an embedded microprocessor. 
But the Counsel General for the Soviet Union could walk down 
the street to the nearest toy store in San Francisco and buy a 
bunch and take them back with him when he went home.
    But it is a different time now. And that is where your, Dr. 
Potter's, I think, presence here is very important. There are 
still hugely critical national security issues we have to deal 
with.
    Thank you all for coming. We appreciate it. And, with that, 
the hearing will be adjourned.
    [Applause.]
    [Whereupon, at 12:32 p.m., the hearing was concluded.]
                                     

                                     

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