[Congressional Record Volume 140, Number 2 (Wednesday, January 26, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: January 26, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                        PRESIDENTIAL SUCCESSION

  Mr. LEAHY. Mr. President, I will take only a moment or two, but I 
hope the schoolchildren and others who watched the State of the Union 
Message yesterday and listened to some of the commentaries afterward do 
not make a mistake that can get them to flunk an exam on the U.S. 
Constitution or U.S. Government. I heard many commentators go on to 
talk about the fact that the President, the Vice President, Speaker of 
the House, and everybody is there in the Chamber and that they always 
hold back one member of the Cabinet so there would be somebody to take 
over as President if some terrible event happened.
  Well, I advise them to go and read the Constitution and the statutes 
governing Presidential succession, title 3, United States Code, section 
19. All they had to do was look down front and notice that the 
distinguished President pro tempore of the U.S. Senate was obviously at 
home watching the State of the Union Message. So I say to my friends in 
the national media, the Constitution says that if the President is 
disabled or can no longer serve, then the Vice President takes over. 
According to statute, in the absence of the Vice President, it is the 
Speaker of the House. In the absence of the Speaker of the House, it is 
the President pro tempore of the Senate. Only then does the Presidency 
succeed to a Cabinet member, the Secretary of State, followed by other 
Cabinet members in order as set out by the statute. It does not jump 
from the Speaker of the House to whichever member of the Cabinet 
happened to be asked to stay at home or in a pizza parlor the night of 
the State of the Union Message. I do not think most of the press corps 
that covers us would make that mistake. But every year we hear this. I 
hope they will check to see whether the President pro tempore of the 
Senate was there.
  I spoke to my very good friend, the President pro tempore of the 
Senate, the senior Senator from West Virginia, Senator Byrd, this 
morning. I told him I was going to mention this. He chuckled. So just 
for the record, it is a nice thing to talk about, which member of the 
Cabinet was not there, but the succession does not go from the Speaker 
of the House to the Cabinet; it goes to the President pro tempore of 
the Senate.
  I yield the floor.
  Mr. KERRY. Mr. President, we are about to proceed on another 
amendment, which will take a few moments. I ask unanimous consent that 
the pending amendments be temporarily laid aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 1255

    (Purpose: To control the export of items to terrorist countries)

  Mr. PRESSLER. Mr. President, I send an amendment to the desk on 
behalf of myself, Senator Helms, and Senator D'Amato and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

       The Senator from South Dakota [Mr. Pressler], for himself, 
     Mr. Helms and Mr. D'Amato, proposes an amendment numbered 
     1255.

  Mr. PRESSLER. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 179, after line 6, add the following:

     SEC. 714. CONTROL OF REEXPORTS TO TERRORIST COUNTRIES.

       Section 6(j) of the Export Administration Act of 1979 (50 
     U.S.C. App. 2405(j)) is amended by adding at the end the 
     following new paragraphs:
       ``(5) Upon the request of the chairman or ranking minority 
     member of the Committee on Foreign Relations or the Committee 
     on Banking, Housing and Urban Affairs of the Senate or the 
     Committee on Foreign Affairs or the Committee on Banking, 
     Finance and Urban Affairs of the House of Representatives, 
     the President shall include in the notification required by 
     paragraph (2)--
       ``(A) a detailed description of the goods or services to be 
     offered, including a brief description of the capabilities of 
     any article for which a license to export is sought;
       ``(B) an evaluation, prepared by the Director of the Arms 
     Control and Disarmament Agency, in consultation with the 
     Secretary of State and the Secretary of Defense, of the 
     manner, if any, in which the proposed export would--
       ``(i) contribute to an arms race;
       ``(ii) support international terrorism;
       ``(iii) increase the possibility of an outbreak or 
     escalation of conflict;
       ``(iv) prejudice the negotiation of any arms controls; or
       ``(v) adversely affect the arms control policy of the 
     United States;
       ``(C) the reasons why the foreign country or international 
     organization to which the export or transfer is proposed to 
     be made needs the goods or services which are the subject of 
     such export or transfer and a description of the manner in 
     which such country or organization intends to use such 
     articles, services, or design and construction services;
       ``(D) the reasons why the proposed export or transfer is in 
     the national interest of the United States;
       ``(E) an analysis by the President of the impact of the 
     proposed export or transfer on the military capabilities of 
     the foreign country or international organization to which 
     such export or transfer would be made;
       ``(F) an analysis by the President of the manner in which 
     the proposed export would affect the relative military 
     strengths of countries in the region to which the goods or 
     services which are the subject of such export would be 
     delivered and whether other countries in the region have 
     comparable kinds and amounts of articles, services, or design 
     and construction services;
       ``(G) an analysis of the impact of the proposed export or 
     transfer on the United States relations with the countries in 
     the region to which the goods or services which are the 
     subject of such export would be delivered;
       ``(H) the projected delivery dates of the goods or services 
     to be offered; and
       ``(I) a detailed description of weapons and levels of 
     munitions that may be required as support for the proposed 
     export.
       ``(6) If the Congress within 30 calendar days after 
     receiving a notification under paragraph (2) enacts a joint 
     resolution prohibiting the proposed export, then no license 
     may be issued, unless the President states in his 
     notification that an emergency exists which requires such 
     export in the national security interest of the United 
     States. If the President so states that an emergency exists, 
     he shall set forth in the notification a detailed 
     justification for his determination, including a description 
     of the emergency circumstances which necessitate the 
     immediate issuance of the license and a discussion of the 
     national security interest involved.
       ``(7)(A) Any joint resolution under this subsection shall 
     be considered in the Senate in accordance with the provisions 
     of section 601(b) of the International Security Assistance 
     and Arms Export Control Act of 1976.
       ``(B) For the purpose of expediting the consideration and 
     enactment of joint resolutions under this subsection, a 
     motion to proceed to the consideration of any such joint 
     resolution after it has been reported by the appropriate 
     committee shall be treated as highly privileged in the House 
     of Representatives.
       ``(8) For purposes of this section, the terms `export' and 
     `transfer' shall include any reexport, third party transfer 
     or other consignment of United States-origin goods or 
     services.''.

  Mr. PRESSLER. Mr. President, this amendment amends section 6j of the 
Export Administration Act to require, upon the request of the 
committee, a more detailed notification to Congress of potentially 
dangerous U.S. exports to terrorist states. It is supported by Senators 
Helms and D'Amato. The notification requirement parallels section 36B 
of the Arms Export Control Act almost exactly. It also gives Congress 
the right to disapprove the licensing of such sales by joint resolution 
within 30 days of notification and explicitly defines export and 
transfer to include the reexport of controlled items.
  Mr. President, I could go into some detail here about the Boeing 727 
jets transferred from Kuwait to Syria. Syria is a terrorist state, and 
the jets contain dual use items generally considered militarily useful. 
The State Department did not wish to notify Congress of this transfer 
of U.S. origin goods, but the Department of Commerce insisted. After 
consulting with congressional staff and meeting with almost universal 
disapproval of the transfer, State went ahead and, within hours, 
recommended to Commerce that they license the transfer.
  I believe this amendment has been agreed to on both sides. I urge its 
adoption.
  Mr. KERRY. Mr. President, this is a good amendment. I ask unanimous 
consent that I be added as a cosponsor.
  The PRESIDING OFFICER (Mr. Metzenbaum). Without objection, it is so 
ordered.
  Mr. KERRY. This amendment would significantly strengthen our arms 
control regime, and for the reasons the Senator described, we are 
supportive of it.
  Mr. HELMS. Mr. President, my amendment is a simple solution to a 
complicated problem. Basically, the law now says that every time U.S. 
origin goods are exported to a terrorist country, the Secretary of 
State should decide if those goods could help the terrorist state 
militarily. If he determines that is the case, Commerce must decide 
whether to issue a license and in the case of a positive decision, must 
inform Congress 30 days in advance.
  The laws seem clear on this matter, but not clear enough for State 
and Commerce. They disagree on what constitutes assistance to a 
terrorist state's military potential; they disagree on what the law 
means; they also disagree on what consultation and notification of 
Congress requires.
  Most recently, the State Department came up to consult with 
congressional staff on the proposed licensing of a transfer of three 
Kuwaiti 727's to Syria, a terrorist state. Republicans and Democrats 
alike were uncomfortable with the transfer as presented. Despite 
universal expressions of concern from the Hill, State went ahead on the 
same day of its briefing to Congress and recommended the license be 
issued.
  My amendment won't teach Commerce and State better manners toward 
Congress. What it will do is give Congress the option of a better 
explication of the proposed export, give Congress the option of an 
expedited resolution of disapproval, and I hope, bring some gravitas to 
future congressional expressions of concern about such exports to 
terrorist states.
  The PRESIDING OFFICER (Mr. Kerrey). The question is on agreeing to 
the amendment.
  The amendment (No. 1255) was agreed to.
  Mr. KERRY. Mr. President, I move to reconsider the vote.
  Mr. PRESSLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. FEINGOLD addressed the Chair.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. I ask unanimous consent that the pending amendment be 
set aside.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 1256

  (Purpose: To prohibit third-party incentive payments and requiring 
                    reporting on offset agreements)

  Mr. FEINGOLD. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The bill clerk read as follows:

        The Senator from Wisconsin [Mr. Feingold] proposes an 
     amendment numbered 1256.

  Mr. FEINGOLD. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place in the bill, insert the following 
     new sections:

     SEC.  . REPORTS UNDER THE ARMS EXPORT CONTROL ACT.

       (a) Quarterly Reports.--Section 36(a) of the Arms Export 
     Control Act (22 U.S.C. 2776(a)) is amended--
       (1) by striking ``and'' at the end of paragraph (10);
       (2) by striking the period at the end of paragraph (11) and 
     inserting ``; and''; and
       (3) by adding at the end the following new paragraph:
       ``(12) a listing of all offset agreements proposed to be 
     entered into in connection with the sale of any defense 
     article or defense service.''.
       (b) Numbered Certifications With Respect to Government-to-
     Government Sales.--Section 36(b)(1) of the Arms Export 
     Control Act (22 U.S.C. 2776(b)(1)) is amended after the 
     second sentence by inserting the following new sentence: 
     ``Each such numbered certification shall contain a 
     description of any offset agreement proposed to be entered 
     into in connection with such letter of offer to sell.''.
       (c) Numbered Certifications With Respect to Commercial 
     Exports.--Section 36(c)(1) of the Arms Export Control Act (22 
     U.S.C. 2776(c)(1)) is amended after the first sentence by 
     inserting the following new sentence: ``Each such numbered 
     certification shall also contain a description of any offset 
     agreement proposed to be entered into in connection with such 
     export.''.
       (d) Definitions.--Section 36 of the Arms Export Control Act 
     (22 U.S.C. 2776) is amended by adding at the end the 
     following:
       ``(e) For purposes of this section--
       ``(1) the term `offset agreement' means an agreement, 
     arrangement, or understanding between a United States 
     supplier of defense articles or defense services and a 
     foreign country under which the supplier agrees to purchase 
     or acquire, or to promote the purchase or acquisition by 
     other United States persons of, goods or services produced, 
     manufactured, grown, or extracted, in whole or in part, in 
     that foreign country in consideration for the purchase by the 
     foreign country of defense articles or defense service from 
     the supplier; and
       ``(2) the term `United States person' means--
       ``(A) an individual who is a national or permanent resident 
     alien of the United States;
       ``(B) any corporation, business association, partnership, 
     trust, or other juridical entity--
       ``(i) organized under the laws of the United States or any 
     State, district, territory, or possession thereof; or
       ``(ii) owned or controlled in fact by individuals described 
     in subparagraph (A); and
       ``(C) the United States Government or any agency or 
     instrumentality thereof.''.

     SEC.     . PROHIBITION ON THIRD PARTY INCENTIVE PAYMENTS 
                   UNDER THE ARMS EXPORT CONTROL ACT.

       Section 39 of the Arms Export Control Act (22 U.S.C. 2779) 
     is amended by adding at the end the following new subsection:
       ``(e)(1) No sale may be made, no credits may be extended, 
     no guarantees may be issued, and no licenses may be approved 
     under this Act with respect to the sale of any defense 
     article or defense service to a foreign country unless the 
     United States supplier of such articles or services first 
     certifies that neither the supplier nor any employee, agent, 
     or subcontractor thereof will make any third-party incentive 
     payments for the purpose of satisfying, in whole or in part, 
     any offset agreement with that country.
       ``(2) For purposes of this subsection--
       ``(A) the term `offset agreement' means any agreement, 
     arrangement, or understanding between a United States 
     supplier of defense articles or defense services and a 
     foreign country under which the supplier agrees to purchase 
     or acquire, or to promote the purchase or acquisition by 
     other United States persons of, goods or services produced, 
     manufactured, grown, or extracted, in whole or in part, in 
     that foreign country in consideration for the purchase by the 
     foreign country of defense articles or defense services from 
     the supplier;
       ``(B) the term `third-party incentive payments' means cash 
     incentives, fees, or compensation of any kind made by a 
     United States supplier of defense articles or defense 
     services or by any employee, agent, or subcontractor thereof 
     to any other United States person to include that United 
     States person to purchase or acquire goods or services 
     produced, manufactured, grown, or extracted, in whole or in 
     part, in the foreign country which is purchasing those 
     defense articles or services; and
       ``(C) the term `United States person' means--
       ``(i) an individual who is a national or permanent resident 
     alien of the United States;
       ``(ii) any corporation, business association, partnership, 
     trust, or other judicial entity--
       ``(I) organized under the laws of the United States or any 
     State, district, territory, or possession thereof; or
       ``(II) owned or controlled in fact by individuals described 
     in subparagraph (A); and
       ``(iii) the United States Government or any agency or 
     instrumentality thereof.''.

  Mr. FEINGOLD. Mr. President, I understand that this amendment will be 
accepted will be accepted by the managers. This amendment was approved 
last year by the Foreign Relations Committee. It deals with reporting 
requirements and third party payments relating to offset agreements in 
connection with foreign military sales subject to the Arms Export 
Control Act.
  This is an issue that I became interested in because of an experience 
earlier this year by a Wisconsin company that makes papermaking 
machinery and which could affect many jobs in the State of Wisconsin if 
this practice continues.
  I have consulted closely with the General Accounting Office in 
developing this amendment.
  The amendment would require additional information be included in the 
reports received by the Senate Foreign Relations Committee and close a 
loophole that the GAO has identified regarding third-party payments to 
induce American companies to purchase foreign goods.
  As I indicated, I became involved in this issue last year because of 
something that happened to a papermaking machine company in the State 
of Wisconsin, Beloit Corp. This Wisconsin company was in the process of 
making a bid on a rather large papermaking machine being purchased by a 
paper company. They were told by their potential customer that a 
defense contractor had approached them and had offered to pay $1.5 
million if the paper company would award the contract to a Finnish 
company over the American company. The Wisconsin company came to me 
asking whether this was legal.
  That inquiry led me into a fascinating, but rather obscure area of 
international arms sales--offset agreements whereby our defense 
contractors make commitments to secure sometimes dollar-for-dollar 
sales of foreign goods and services in the United States in exchange 
for foreign military sales.
  I asked the General Accounting Office and several Federal agencies to 
look into this area. GAO has been expressing concerns about these 
agreements that began a few years ago, and have been steadily growing.
  Our United States trade representative told me that the situation I 
had encountered demonstrated the potentially distortive effects of 
offsets and that while we had a memorandum of understanding with the 
Government of Finland that discouraged offsets, it does not 
significantly restrict them.
  The Department of Commerce indicated that it had long been concerned 
with the potential impact of military offsets on the U.S. industrial 
base, and pledged to look further into the specific case I had raised.
  The Department of Defense indicated that since 1990, U.S. Government 
agencies were prohibited from entering into or committing any U.S. 
firms to offset agreements and U.S. funds were prohibited from 
financing offsets, but defense contractors were free to enter into 
these commitments as part of their ongoing business activities.

  I also found out that information about these types of arrangements 
is not provided to the Foreign Relations Committee when it is notified 
under the Arms Export Control Act about a proposed sale, although this 
information can be requested if the offset commitment has been directly 
made by the United States.
  The amendment would require that the Senate Foreign Relations 
Committee, and the House of Representatives, be notified of the 
existence of an offset agreement at the time of notification of a 
pending sale under the Arms Export Control Act.
  The amendment would also prohibited the use of third party incentive 
payments to secure offset agreements in any sale subject to the Arms 
Export Control Act.
  I don't have any problems with the concept of defense contractors 
entering offset agreements for coproduction, or subcontracting, or many 
marketing assistance types of agreements. But I am deeply troubled by a 
defense company going into my State and offering to pay a third party 
$1.5 million if they will award a contract to a foreign company over an 
American competitor in a field like paper-making which is totally 
remote from the defense industry.
  The General Accounting Office advised me that this activity appears 
to fall between the cracks of various statutes. Neither the Anti-
Kickback Act nor the Foreign Corrupt Practices Act seems to clearly 
reach this kind of activity. The Anti-Kickback Act would prohibit these 
kinds of payments if it were a Government contract involved; the 
Foreign Corrupt Practices Act covers payments to foreign officials to 
secure contracts, not payments by U.S. companies to U.S. companies to 
direct business to foreign entities.
  Mr. amendment is directed only at the practice of offering third 
party incentive payments--that is cash payments--to induce American 
companies to purchase foreign goods and services. It doesn't prohibit 
offset agreements or other means of satisfying offset commitments--just 
the practice of paying U.S. companies to award contracts to foreign 
competitors.
  Mr. President, since the time the Foreign Relations Committee adopted 
these amendments, the defense company that was involved in the problem 
with the Wisconsin paper machinery company announced that it would no 
longer be making these types of third party incentive payments in the 
area of paper machinery. I applauded that decision. However, I believe 
that it is important to enact these amendments into law so that other 
companies are not subject to these kinds of tactics. I also believe 
that it is important that Congress receive information from the 
administration which discloses the nature of these agreements so that 
their impact upon other U.S. business interests can be taken into 
consideration when decisions are made about arms sales.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, this is a good amendment and, indeed, we 
are prepared to accept it. We hope it will have a positive impact on 
the procurement process, and the Senator is to be congratulated for 
bringing it. I think it will improve the current status.
  Does the Senator from South Dakota wish to speak?
  Mr. PRESSLER. We are prepared to accept this amendment.
  The PRESIDING OFFICER. Is there further debate on the amendment?
  Without objection, the amendment is agreed to.
  So the amendment (No. 1256) was agreed to.
  Mr. KERRY. Mr. President, I move to reconsider the vote.
  Mr. PRESSLER. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The Senator from Ohio is recognized.
  Mr. METZENBAUM. Mr. President, I ask unanimous consent that the 
Senate go into morning business for a period not to exceed 10 minutes.
  The PRESIDING OFFICER. Is there objection?
  Mr. KERRY. Mr. President, reserving the right to object, and I will 
not object, I simply would like to ask my colleague if I could propound 
a quick unanimous-consent request.


                      Unanimous-Consent Agreement

  Mr. KERRY. Mr. President, I ask unanimous consent that the vote on my 
motion to table amendment No. 1254 occur at 2 p.m.; that immediately 
following the disposition of that amendment the Senate vote on 
amendment No. 1253, with no amendments in order to either amendment or 
to the language proposed to be stricken.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. KERRY. Mr. President, I ask for the yeas and nays on the 
amendment No. 1254.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. KERRY. Mr. President, I move to table the amendment No. 1254, and 
I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  Mr. KERRY. I thank the Senator.
  The PRESIDING OFFICER. Under the order that vote will occur at 2 p.m.

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