[Congressional Record Volume 144, Number 80 (Thursday, June 18, 1998)]
[House]
[Pages H4748-H4772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    ESTABLISHING THE SELECT COMMITTEE ON U.S. NATIONAL SECURITY AND 
    MILITARY/COMMERCIAL CONCERNS WITH THE PEOPLE'S REPUBLIC OF CHINA

  Mr. SOLOMON. Mr. Speaker, pursuant to House Resolution 476, I call up 
the resolution (H. Res. 463), to establish the Select Committee on U.S. 
National Security and Military/Commercial Concerns With the People's 
Republic of China, and ask for its immediate consideration.
  The Clerk read the title of the resolution.
  The SPEAKER pro tempore. The resolution is considered read for 
amendment.
  The text of House Resolution 463 is as follows:

                              J. Res. 463

       Resolved,

     SECTION 1. ESTABLISHMENT.

       There is hereby created the Select Committee on U.S. 
     National Security and Military/Commercial Concerns With the 
     People's Republic of China, (hereafter in this Act referred 
     to as the ``Select Committee''). The Select Committee may sit 
     and act during the present Congress at such times and places 
     within the United States, including any Commonwealth or 
     possession thereof, or in any other country, whether the 
     House is in session, has recessed, or has adjourned, as it 
     shall deem appropriate for the completion of its work.

     SEC. 2. JURISDICTION.

       (a) In General.--The Select Committee shall conduct a full 
     and complete inquiry regarding the following matters and 
     report such findings and recommendations, including those 
     concerning the amendment of existing law or the enactment of 
     new law, to the House as it considers appropriate:
       (1) The transfer of technology, information, advice, goods, 
     or services that may have contributed to the enhancement of 
     the accuracy, reliability, or capability of nuclear-armed 
     intercontinental ballistic missiles or other weapons of the 
     People's Republic of China, or that may have contributed to 
     the enhancement of the domestic or foreign intelligence 
     capabilities of the People's Republic of China.
       (2) The transfer of technology, information, advice, goods, 
     or services that may have contributed to the manufacture of 
     weapons of mass destruction, missiles, or other weapons or 
     armaments by the People's Republic of China.
       (3) The effect of any transfer or enhancement referred to 
     in paragraphs (1) or (2) on regional security and the 
     national security of the United States, its friends, and its 
     allies.
       (4) The conduct of the executive branch of the United 
     States Government with respect to the transfers or 
     enhancements referred to in paragraphs (1) or (2), and the 
     effect of that conduct on the national security of the United 
     States, its friends, and its allies.
       (5) The conduct of defense contractors, weapons 
     manufacturers, satellite manufacturers, and other private or 
     government-owned commercial firms with respect to the 
     transfers or enhancements referred to in paragraphs (1) or 
     (2).
       (6) The enforcement of United States law, including 
     statutes, regulations, or executive orders, with respect to 
     the transfers or enhancements referred to in paragraphs (1) 
     or (2).
       (7) Any effort by the Government of the People's Republic 
     of China or any other person or entity to influence any of 
     the foregoing matters through political contributions, 
     bribery, influence-peddling, or otherwise.
       (8) Decision-making within the executive branch of the 
     United States Government with respect to any of the foregoing 
     matters.
       (9) Any effort to conceal or withhold information or 
     documents relevant to any of the foregoing matters or to 
     otherwise obstruct justice, or to obstruct the work of the 
     Select Committee or any other committee of the Congress in 
     connection with those matters.
       (10) All matters relating directly or indirectly to any of 
     the foregoing matters.
       (b) Permitting Reports To Be Made to House in Secret 
     Session.--Any report to the House pursuant to this section 
     may, in the Select Committee's discretion, be made under the 
     provisions of rule XXIX of the Rules of the House of 
     Representatives.

     SEC. 3. COMPOSITION; VACANCIES.

       (a) Composition.--The Select Committee shall be composed of 
     8 Members of the House to be appointed by the Speaker of the 
     House of Representatives, one of whom he shall designate as 
     Chairman. Service on the Select Committee shall not count 
     against the limitations on committee service in clause 
     6(b)(2) of rule X.
       (b) Vacancies.--Any vacancy occurring in the membership of 
     the Select Committee shall be filled in the same manner in 
     which the original appointment was made.

     SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

       (a) Quorum.--One-third of the members of the Select 
     Committee shall constitute a quorum for the transaction of 
     business other than the reporting of a matter, which shall 
     require a majority of the committee to be actually present, 
     except that the Select Committee may designate a lesser 
     number, but not less than two, as a quorum for the purpose of 
     holding hearings to take testimony and receive evidence.
       (b) Applicability of House Rules.--The Rules of the House 
     of Representatives applicable to standing committees shall 
     govern the Select Committee where not inconsistent with this 
     resolution.
       (c) Rules of Select Committee.--The Select Committee shall 
     adopt additional written rules, which shall be public, to 
     govern its procedures, which shall not be inconsistent with 
     this resolution or the Rules of the House of Representatives.

     SEC. 5. CLASSIFIED INFORMATION.

       No employee of the Select Committee or any person engaged 
     by contract or otherwise to perform services for or at the 
     request of such committee shall be given access to any 
     classified information by such committee unless such employee 
     or person has--
       (1) agreed in writing and under oath to be bound by the 
     rules of the House (including the jurisdiction of the 
     Committee on Standards of Official Conduct and of the Select 
     Committee as to the security of such information during and 
     after the period of his employment or contractual agreement 
     with the Select Committee); and
       (2) received an appropriate security clearance as 
     determined by the Select Committee in consultation with the 
     Director of Central Intelligence.
     The type of security clearance to be required in the case of 
     any such employee or person shall, within the determination 
     of the Select Committee in consultation with the Director of 
     Central Intelligence, be commensurate with the sensitivity of 
     the classified information to which such employee or person 
     will be given access by such committee.

     SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

       The Select Committee shall formulate and carry out such 
     rules and procedures as it deems necessary to prevent the 
     disclosure, without the consent of the person or persons 
     concerned, of information in the possession of such committee 
     which unduly infringes upon the privacy or which violates the 
     constitutional rights of such person or persons. Nothing 
     herein shall be construed to prevent such committee from 
     publicly disclosing any such information in any case in which 
     such committee determines that national interest in the 
     disclosure of such information clearly outweighs any 
     infringement on the privacy of any person or persons.

     SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

       (a) The Select Committee may, subject to the provisions of 
     this section, disclose publicly any information in the 
     possession of such committee after a determination by such 
     committee that the public interest would be served by such 
     disclosure. Whenever committee action is required to disclose 
     any information under this section, the committee shall meet 
     to vote on the matter within five days after any member of 
     the committee requests such a vote. No member of the Select 
     Committee shall disclose any information, the disclosure of 
     which requires a committee vote, prior to a vote by the 
     committee on the question of the disclosure of such 
     information or after such vote except in accordance with this 
     section. In any case in which the Select Committee votes to 
     disclose publicly any information, which has been classified 
     under established security procedures, which has been 
     submitted to it by the executive branch, and which the 
     executive branch requests be kept secret, the Select 
     Committee shall submit such classified information to the 
     Permanent Select Committee on Intelligence.

[[Page H4749]]

       (b)(1) As set forth in clause 7(b) of rule XLVIII, in any 
     case in which the Permanent Select Committee on Intelligence 
     votes to disclose publicly any information submitted pursuant 
     to subsection (a), which has been classified under 
     established security procedures, which has been submitted to 
     the Select Committee by the executive branch, and which the 
     executive branch has requested be kept secret, the Permanent 
     Select Committee on Intelligence shall notify the President 
     of such vote.
       (2) The Permanent Select Committee on Intelligence may 
     disclose publicly such information after the expiration of a 
     five-day period following the day on which notice of such 
     vote is transmitted to the President, unless, prior to the 
     expiration of such five-day period, the President, personally 
     in writing, notifies the Permanent Select Committee on 
     Intelligence that he objects to the disclosure of such 
     information, provides his reasons therefor, and certifies 
     that the threat to the national interest of the United States 
     posed by such disclosure is of such gravity that it outweighs 
     any public interest in the disclosure.
       (3) If the President, personally, in writing, notifies the 
     Permanent Select Committee on Intelligence of his objections 
     to the disclosure of such information as provided in 
     paragraph (2), the Permanent Select Committee on Intelligence 
     may, by majority vote, refer the question of this disclosure 
     of such information with a recommendation thereon to the 
     House for consideration. The Permanent Select Committee on 
     Intelligence shall not publicly disclose such information 
     without leave of the House.
       (4) Whenever the Permanent Select Committee on Intelligence 
     votes to refer the question of disclosure of any information 
     to the House under paragraph (3), the chairman of the 
     Permanent Select Committee on Intelligence shall, not later 
     than the first day on which the House is in session following 
     the day on which the vote occurs, report the matter to the 
     House for its consideration.
       (5) If within four calendar days on which the House is in 
     session, after such recommendation is reported, no motion has 
     been made by the chairman of the Permanent Select Committee 
     on Intelligence to consider, in closed session, the matter 
     reported under paragraph (4), then such a motion will be 
     deemed privileged and may be made by any Member. The motion 
     under this paragraph shall not be subject to debate or 
     amendment. When made, it shall be decided without intervening 
     motion, except one motion to adjourn.
       (6) If the House adopts a motion to resolve into closed 
     session, the Speaker shall then be authorized to declare a 
     recess subject to the call of the Chair. At the expiration of 
     such recess, the pending question, in closed session, shall 
     be, ``Shall the House approve the recommendation of the 
     Permanent Select Committee on Intelligence?''
       (7) After not more than two hours of debate on the motion, 
     such debate to be equally divided and controlled by the 
     chairman and ranking minority member of the Permanent Select 
     Committee on Intelligence, or their designees, the previous 
     question shall be considered as ordered and the House, 
     without intervening motion except one motion to adjourn, 
     shall immediately vote on the question, in open session but 
     without divulging the information with respect to which the 
     vote is being taken. If the recommendation of the Permanent 
     Select Committee on Intelligence is not agreed to, the 
     question shall be deemed recommitted to the Permanent Select 
     Committee on Intelligence for further recommendation.
       (c)(1) No information in the possession of the Select 
     Committee relating to the lawful intelligence or 
     intelligence-related activities of any department or agency 
     of the United States which has been classified under 
     established security procedures and which the Select 
     Committee, the Permanent Select Committee on Intelligence, or 
     the House pursuant to this section, has determined should not 
     be disclosed shall be made available to any person by a 
     Member, officer, or employee of the House except as provided 
     in paragraph (2).
       (2) The Select Committee shall, under such regulations as 
     the committee shall prescribe, make any information described 
     in paragraph (1) available to any other committee or any 
     other Member of the House and permit any other Member of the 
     House to attend any hearing of the committee which is closed 
     to the public. Whenever the Select Committee makes such 
     information available (other than to the Speaker), the 
     committee shall keep a written record showing, in the case of 
     any particular information, which committee or which Members 
     of the House received such information. No Member of the 
     House who, and no committee which, receives any information 
     under this paragraph, shall disclose such information except 
     in a closed session of the House.
       (d) The Committee on Standards of Official Conduct shall 
     investigate any unauthorized disclosure of intelligence or 
     intelligence-related information by a Member, officer, or 
     employee of the House in violation of subsection (c) and 
     report to the House concerning any allegation which it finds 
     to be substantiated.
       (e) Upon the request of any person who is subject to any 
     such investigation, the Committee on Standards of Official 
     Conduct shall release to such individual at the conclusion of 
     its investigation a summary of its investigation, together 
     with its findings. If, at the conclusion of its 
     investigation, the Committee on Standards of Official Conduct 
     determines that there has been a significant breach of 
     confidentiality or unauthorized disclosure by a Member, 
     officer, or employee of the House, it shall report its 
     findings to the House and recommend appropriate action such 
     as censure, removal from committee membership, or expulsion 
     from the House, in the case of a Member, or removal from 
     office or employment or punishment for contempt, in the case 
     of an officer or employee.

     SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

       Any committee of the House of Representatives having 
     custody of records, data, charts, and files concerning 
     subjects within the jurisdiction of the Select Committee 
     shall furnish the originals or copies of such materials to 
     the Select Committee. In the case of the Permanent Select 
     Committee on Intelligence, such materials shall be made 
     available pursuant to clause 7(c)(2) of rule XLVIII.

     SEC. 9. INFORMATION GATHERING.

       (a) In General.--The Select Committee is authorized to 
     require, by subpoena or otherwise, the attendance and 
     testimony of such witnesses, the furnishing of such 
     information by interrogatory, and the production of such 
     books, records, correspondence, memoranda, papers, documents, 
     calendars, recordings, electronic communications, data 
     compilations from which information can be obtained, tangible 
     objects, and other things and information of any kind as it 
     deems necessary, including all intelligence materials 
     however classified, White House materials, and materials 
     pertaining to unvouchered expenditures or concerning 
     communications interceptions or surveillance.
       (b) Subpoenas, Depositions and Interrogatories.--Unless 
     otherwise determined by the Select Committee, the Chairman, 
     upon consultation with the ranking minority member, or the 
     Select Committee may--
       (1) authorize and issue subpoenas;
       (2) order the taking of depositions, interrogatories, or 
     affidavits under oath or otherwise; and
       (3) designate a member or staff of the Select Committee to 
     conduct any deposition.
       (c) International Authorities.--Unless otherwise determined 
     by the Select Committee, the Chairman of the Select 
     Committee, upon consultation with the ranking minority member 
     of the Select Committee, or the Select Committee may--
       (1) order the taking of depositions and other testimony, 
     under oath or otherwise, anywhere outside the United States; 
     and
       (2) make application for issuance of letters rogatory, and 
     request through appropriate channels, other means of 
     international assistance, as appropriate.
       (d) Handling of Information.--Information obtained under 
     the authority of this section shall be--
       (1) considered as taken by the Select Committee in the 
     District of Columbia, as well as the location actually taken; 
     and
       (2) considered to be taken in executive session.

     SEC. 10. TAX RETURNS.

       Pursuant to sections 6103(f)(3) and 6104(a)(2) of the 
     Internal Revenue Code of 1986, for the purpose of 
     investigating the subjects set forth in this resolution and 
     since information necessary for this investigation cannot 
     reasonably be obtained from any other source, the Select 
     Committee shall be specially authorized to inspect and 
     receive for the tax years 1991 through 1998 any tax return, 
     return information, or other tax-related material, held by 
     the Secretary of the Treasury, related to individuals and 
     entities named by the Select Committee as possible 
     participants, beneficiaries, or intermediaries in the 
     transactions under investigation. As specified by section 
     6103(f)(3) of the Internal Revenue Code of 1986, such 
     materials and information shall be furnished in closed 
     executive session.

     SEC. 11. ACCESS TO INFORMATION OF THE SELECT COMMITTEE.

       The Select Committee shall provide other committees and 
     Members of the House with access to information and 
     proceedings, consistent with clause 7(c)(2) of rule XLVIII, 
     except that the Select Committee may direct that particular 
     matters or classes of matter shall not be made available to 
     any person by its members, staff, or others, or may impose 
     any other restriction. The Select Committee may require its 
     staff to enter nondisclosure agreements, and its chairman, in 
     consultation with the ranking minority member, may require 
     others, such as counsel for witnesses, to do so. The 
     Committee on Standards of Official Conduct may investigate 
     any unauthorized disclosure of such classified information by 
     a Member, officer, or employee of the House or other covered 
     person upon request of the Select Committee. If, at the 
     conclusion of its investigation, the Committee on Standards 
     of Official Conduct determines that there has been a 
     significant unauthorized disclosure, it shall report its 
     findings to the House and recommend appropriate sanctions for 
     the Member, officer, employee, or other covered person 
     consistent with clause 7(e) of rule XLVIII and any committee 
     restriction, including nondisclosure agreements. The Select 
     Committee shall, as appropriate, provide access to 
     information and proceedings to the Speaker and the minority 
     leader and their appropriately cleared and designated staff.

     SEC. 12. COOPERATION OF OTHER ENTITIES.

       (a) Cooperation of Other Committees.--The Select Committee 
     may submit to any

[[Page H4750]]

     standing committee specific matters within its jurisdiction 
     and may request that such committees pursue such matters 
     further.
       (b) Cooperation of Other Federal Entities.--The Chairman of 
     the Select Committee, upon consultation with the ranking 
     minority member, or the Select Committee may request 
     investigations, reports, and other assistance from any agency 
     of the executive, legislative, and judicial branches of the 
     Federal Government.

     SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

       In addition to any applications to court in response to 
     judicial process that may be made in behalf of the House by 
     its counsel, the Select Committee shall be authorized to 
     respond to any judicial or other process, or to make any 
     applications to court, upon consultation with the Speaker 
     consistent with rule L.

     SEC. 14. ADMINISTRATIVE MATTERS.

       (a) Personnel.--The Chairman, upon consultation with the 
     ranking minority member, may employ and fix the compensation 
     of such clerks, experts, consultants, technicians, attorneys, 
     investigators, clerical and stenographic assistants, and 
     other appropriate staff as the Chairman considers necessary 
     to carry out the purposes of this resolution. Detailees from 
     the executive branch or staff of the House or a joint 
     committee, upon the request of the Chairman of the Select 
     Committee, upon consultation with the ranking minority 
     member, shall be deemed staff of the Select Committee to 
     the extent necessary to carry out the purposes of this 
     resolution.
       (b) Payment of Expenses.--(1) The Select Committee may 
     reimburse the members of its staff for travel, subsistence, 
     and other necessary expenses incurred by them in the 
     performance of the duties vested in the Select Committee.
       (2) Not more than $2,500,000 are authorized for expenses of 
     the Select Committee for investigations and studies, 
     including for the procurement of the services of individual 
     consultants or organizations thereof, and for training of 
     staff, to be paid out of the applicable accounts of the House 
     of Representatives upon vouchers signed by the Chairman and 
     approved in the manner directed by the Committee on House 
     Oversight.

     SEC. 15. APPLICABILITY OF OTHER LAWS TO SELECT COMMITTEE.

       The Select Committee shall be deemed a committee of the 
     House for all purposes of the rules of the House of 
     Representatives and shall be deemed a committee for all 
     purposes of law, including, but not limited to, section 
     202(f) of the Legislative Reorganization Act of 1946 (2 
     U.S.C. 72a(f)), sections 102 and 104 of the Revised Statutes 
     (2 U.S.C. 192 and 194), sections 1001, 1505, 1621, 6002, and 
     6005 of title 18, United States Code, section 
     502(b)(1)(B)(ii) of the Mutual Security Act of 1954 (22 
     U.S.C. 1754(b)(1)(B)(ii)), and section 734 of title 31, 
     United States Code.

     SEC. 16. DISPOSITION OF RECORDS.

       At the conclusion of the existence of the Select Committee, 
     all records of the Select Committee shall be transferred to 
     other committees, or stored by the Clerk of the House, as 
     directed by the Select Committee, consistent with applicable 
     rules and law concerning classified information.

  The SPEAKER pro tempore. Pursuant to House Resolution 476, the 
amendment in the nature of a substitute printed in the resolution is 
adopted.
  The text of the amendment in the nature of a substitute is as 
follows:

       Resolved,

     SECTION 1. ESTABLISHMENT.

       There is hereby created the Select Committee on U.S. 
     National Security and Military/Commercial Concerns With the 
     People's Republic of China, (hereafter in this resolution 
     referred to as the ``Select Committee''). The Select 
     Committee may sit and act during the present Congress at such 
     times and places within the United States, including any 
     Commonwealth or possession thereof, or in any other country, 
     whether the House is in session, has recessed, or has 
     adjourned, as it shall deem appropriate for the completion of 
     its work.

     SEC. 2. JURISDICTION.

       (a) In General.--The Select Committee shall conduct a full 
     and complete inquiry regarding the following matters and 
     report such findings and recommendations, including those 
     concerning the amendment of existing law or the enactment of 
     new law, to the House as it considers appropriate:
       (1) The transfer of technology, information, advice, goods, 
     or services that may have contributed to the enhancement of 
     the accuracy, reliability, or capability of nuclear-armed 
     intercontinental ballistic missiles or other weapons of the 
     People's Republic of China, or that may have contributed to 
     the enhancement of the intelligence capabilities of the 
     People's Republic of China.
       (2) The transfer of technology, information, advice, goods, 
     or services that may have contributed to the manufacture of 
     weapons of mass destruction, missiles, or other weapons or 
     armaments by the People's Republic of China.
       (3) The effect of any transfer or enhancement referred to 
     in paragraphs (1) or (2) on regional security and the 
     national security of the United States.
       (4) The conduct of the executive branch of the United 
     States Government with respect to the transfers or 
     enhancements referred to in paragraphs (1) or (2), and the 
     effect of that conduct on regional security and the national 
     security of the United States.
       (5) The conduct of defense contractors, weapons 
     manufacturers, satellite manufacturers, and other private or 
     government-owned commercial firms with respect to the 
     transfers or enhancements referred to in paragraphs (1) or 
     (2).
       (6) The enforcement of United States law, including 
     statutes, regulations, or executive orders, with respect to 
     the transfers or enhancements referred to in paragraphs (1) 
     or (2).
       (7) Any effort by the Government of the People's Republic 
     of China or any other person or entity to influence any of 
     the foregoing matters through political contributions, 
     commercial arrangements, or bribery, influence-peddling, or 
     other illegal activities.
       (8) Decision-making within the executive branch of the 
     United States Government with respect to any of the foregoing 
     matters.
       (9) Any effort to conceal or withhold information or 
     documents relevant to any of the foregoing matters or to 
     obstruct justice, or to obstruct the work of the Select 
     Committee or any other committee of the House of 
     Representatives in connection with those matters.
       (10) All matters relating directly or indirectly to any of 
     the foregoing matters.
       (b) Permitting Reports To Be Made to House in Secret 
     Session.--Any report to the House pursuant to this section 
     may, in the Select Committee's discretion, be made under the 
     provisions of rule XXIX of the Rules of the House of 
     Representatives.

     SEC. 3. COMPOSITION; VACANCIES.

       (a) Composition.--The Select Committee shall be composed of 
     9 or fewer Members of the House to be appointed by the 
     Speaker of the House of Representatives, one of whom he shall 
     designate as Chairman. Service on the Select Committee shall 
     not count against the limitations on committee service in 
     clause 6(b)(2) of rule X.
       (b) Vacancies.--Any vacancy occurring in the membership of 
     the Select Committee shall be filled in the same manner in 
     which the original appointment was made.

     SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

       (a) Quorum.--One-third of the members of the Select 
     Committee shall constitute a quorum for the transaction of 
     business other than the reporting of a matter, which shall 
     require a majority of the committee to be actually present, 
     except that the Select Committee may designate a lesser 
     number, but not less than 2, as a quorum for the purpose of 
     holding hearings to take testimony and receive evidence.
       (b) Applicability of House Rules.--The Rules of the House 
     of Representatives applicable to standing committees shall 
     govern the Select Committee where not inconsistent with this 
     resolution.
       (c) Rules of Select Committee.--The Select Committee shall 
     adopt additional written rules, which shall be public, to 
     govern its procedures, which shall not be inconsistent with 
     this resolution or the Rules of the House of Representatives.

     SEC. 5. CLASSIFIED INFORMATION.

       No employee of the Select Committee or any person engaged 
     by contract or otherwise to perform services for or at the 
     request of such committee shall be given access to any 
     classified information by such committee unless such employee 
     or person has--
       (1) agreed in writing and under oath to be bound by the 
     rules of the House (including the jurisdiction of the 
     Committee on Standards of Official Conduct and of the Select 
     Committee as to the security of such information during and 
     after the period of his employment or contractual agreement 
     with the Select Committee); and
       (2) received an appropriate security clearance as 
     determined by the Select Committee in consultation with the 
     Director of Central Intelligence.

     The type of security clearance to be required in the case of 
     any such employee or person shall, within the determination 
     of the Select Committee in consultation with the Director of 
     Central Intelligence, be commensurate with the sensitivity of 
     the classified information to which such employee or person 
     will be given access by such committee.

     SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

       The Select Committee shall formulate and carry out such 
     rules and procedures as it deems necessary to prevent the 
     disclosure, without the consent of the person or persons 
     concerned, of information in the possession of such committee 
     which unduly infringes upon the privacy or which violates the 
     constitutional rights of such person or persons. Nothing 
     herein shall be construed to prevent such committee from 
     publicly disclosing any such information in any case in which 
     such committee determines that national interest in the 
     disclosure of such information clearly outweighs any 
     infringement on the privacy of any person or persons.

     SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

       (a) The Select Committee may, subject to the provisions of 
     this section, disclose publicly any information in the 
     possession of such committee after a determination by such 
     committee that the public interest would be served by such 
     disclosure. Whenever committee action is required to disclose 
     any information under this section, the committee shall meet 
     to vote on the matter within five days after any member of 
     the committee requests such a vote. No member of the Select 
     Committee shall disclose any information, the disclosure of 
     which requires a committee vote, prior to a vote by the 
     committee on the question of the disclosure of such 
     information or after such vote except in accordance with this 
     section. In any case in which the Select Committee votes to 
     disclose publicly any information, which has been classified 
     under established security procedures, which has been 
     submitted to it by the executive branch, and which the 
     executive branch requests be kept secret, the Select

[[Page H4751]]

     Committee shall submit such classified information to the 
     Permanent Select Committee on Intelligence.
       (b)(1) As set forth in clause 7(b) of rule XLVIII, in any 
     case in which the Permanent Select Committee on Intelligence 
     votes to disclose publicly any information submitted pursuant 
     to subsection (a), which has been classified under 
     established security procedures, which has been submitted to 
     the Select Committee by the executive branch, and which the 
     executive branch has requested be kept secret, the Permanent 
     Select Committee on Intelligence shall notify the President 
     of such vote.
       (2) The Permanent Select Committee on Intelligence may 
     disclose publicly such information after the expiration of a 
     five-day period following the day on which notice of such 
     vote is transmitted to the President, unless, prior to the 
     expiration of such five-day period, the President, personally 
     in writing, notifies the Permanent Select Committee on 
     Intelligence that he objects to the disclosure of such 
     information, provides his reasons therefor, and certifies 
     that the threat to the national interest of the United States 
     posed by such disclosure is of such gravity that it outweighs 
     any public interest in the disclosure.
       (3) If the President, personally, in writing, notifies the 
     Permanent Select Committee on Intelligence of his objections 
     to the disclosure of such information as provided in 
     paragraph (2), the Permanent Select Committee on Intelligence 
     may, by majority vote, refer the question of this disclosure 
     of such information with a recommendation thereon to the 
     House for consideration. The Permanent Select Committee on 
     Intelligence shall not publicly disclose such information 
     without leave of the House.
       (4) Whenever the Permanent Select Committee on Intelligence 
     votes to refer the question of disclosure of any information 
     to the House under paragraph (3), the chairman of the 
     Permanent Select Committee on Intelligence shall, not later 
     than the first day on which the House is in session following 
     the day on which the vote occurs, report the matter to the 
     House for its consideration.
       (5) If within four calendar days on which the House is in 
     session, after such recommendation is reported, no motion has 
     been made by the chairman of the Permanent Select Committee 
     on Intelligence to consider, in closed session, the matter 
     reported under paragraph (4), then such a motion will be 
     deemed privileged and may be made by any Member. The motion 
     under this paragraph shall not be subject to debate or 
     amendment. When made, it shall be decided without intervening 
     motion, except one motion to adjourn.
       (6) If the House adopts a motion to resolve into closed 
     session, the Speaker shall then be authorized to declare a 
     recess subject to the call of the Chair. At the expiration of 
     such recess, the pending question, in closed session, shall 
     be, ``Shall the House approve the recommendation of the 
     Permanent Select Committee on Intelligence?''
       (7) After not more than two hours of debate on the motion, 
     such debate to be equally divided and controlled by the 
     chairman and ranking minority member of the Permanent Select 
     Committee on Intelligence, or their designees, the previous 
     question shall be considered as ordered and the House, 
     without intervening motion except one motion to adjourn, 
     shall immediately vote on the question, in open session but 
     without divulging the information with respect to which the 
     vote is being taken. If the recommendation of the Permanent 
     Select Committee on Intelligence is not agreed to, the 
     question shall be deemed recommitted to the Permanent Select 
     Committee on Intelligence for further recommendation.
       (c)(1) No information in the possession of the Select 
     Committee relating to the lawful intelligence or 
     intelligence-related activities of any department or agency 
     of the United States which has been classified under 
     established security procedures and which the Select 
     Committee, the Permanent Select Committee on Intelligence, or 
     the House pursuant to this section, has determined should not 
     be disclosed shall be made available to any person by a 
     Member, officer, or employee of the House except as provided 
     in paragraph (2).
       (2) The Select Committee shall, under such regulations as 
     the committee shall prescribe, make any information described 
     in paragraph (1) available to any other committee or any 
     other Member of the House and permit any other Member of the 
     House to attend any hearing of the committee which is closed 
     to the public. Whenever the Select Committee makes such 
     information available (other than to the Speaker), the 
     committee shall keep a written record showing, in the case of 
     any particular information, which committee or which 
     Members of the House received such information. No Member 
     of the House who, and no committee which, receives any 
     information under this paragraph, shall disclose such 
     information except in a closed session of the House.
       (d) The Committee on Standards of Official Conduct shall 
     investigate any unauthorized disclosure of intelligence or 
     intelligence-related information by a Member, officer, or 
     employee of the House in violation of subsection (c) and 
     report to the House concerning any allegation which it finds 
     to be substantiated.
       (e) Upon the request of any person who is subject to any 
     such investigation, the Committee on Standards of Official 
     Conduct shall release to such individual at the conclusion of 
     its investigation a summary of its investigation, together 
     with its findings. If, at the conclusion of its 
     investigation, the Committee on Standards of Official Conduct 
     determines that there has been a significant breach of 
     confidentiality or unauthorized disclosure by a Member, 
     officer, or employee of the House, it shall report its 
     findings to the House and recommend appropriate action such 
     as censure, removal from committee membership, or expulsion 
     from the House, in the case of a Member, or removal from 
     office or employment or punishment for contempt, in the case 
     of an officer or employee.

     SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

       Any committee of the House of Representatives having 
     custody of records, data, charts, and files concerning 
     subjects within the jurisdiction of the Select Committee 
     shall furnish the originals or copies of such materials to 
     the Select Committee. In the case of the Permanent Select 
     Committee on Intelligence, such materials shall be made 
     available pursuant to clause 7(c)(2) of rule XLVIII.

     SEC. 9. INFORMATION GATHERING.

       (a) In General.--The Select Committee is authorized to 
     require, by subpoena or otherwise, the attendance and 
     testimony of such witnesses, the furnishing of such 
     information by interrogatory, and the production of such 
     books, records, correspondence, memoranda, papers, documents, 
     calendars, recordings, electronic communications, data 
     compilations from which information can be obtained, tangible 
     objects, and other things and information of any kind as it 
     deems necessary, including all intelligence materials however 
     classified, White House materials, and materials pertaining 
     to unvouchered expenditures or concerning communications 
     interceptions or surveillance.
       (b) Subpoenas, Depositions and Interrogatories.--Unless 
     otherwise determined by the Select Committee, the Chairman, 
     upon consultation with the ranking minority member, or the 
     Select Committee may--
       (1) authorize and issue subpoenas;
       (2) order the taking of depositions, interrogatories, or 
     affidavits under oath or otherwise; and
       (3) designate a member or staff of the Select Committee to 
     conduct any deposition.
       (c) International Authorities.--Unless otherwise determined 
     by the Select Committee, the Chairman of the Select 
     Committee, upon consultation with the ranking minority member 
     of the Select Committee, or the Select Committee may--
       (1) authorize the taking of depositions and other 
     testimony, under oath or otherwise, anywhere outside the 
     United States; and
       (2) make application for issuance of letters rogatory, and 
     request through appropriate channels, other means of 
     international assistance, as appropriate.
       (d) Handling of Information.--Information obtained under 
     the authority of this section shall be--
       (1) considered as taken by the Select Committee in the 
     District of Columbia, as well as the location actually taken; 
     and
       (2) considered to be taken in executive session.

     SEC. 10. TAX RETURNS.

       Pursuant to sections 6103(f)(3) and 6104(a)(2) of the 
     Internal Revenue Code of 1986, for the purpose of 
     investigating the subjects set forth in this resolution and 
     since information necessary for this investigation cannot 
     reasonably be obtained from any other source, the Select 
     Committee shall be specially authorized to inspect and 
     receive for the tax years 1988 through 1998 any tax return, 
     return information, or other tax-related material, held by 
     the Secretary of the Treasury, related to individuals and 
     entities named by the Select Committee as possible 
     participants, beneficiaries, or intermediaries in the 
     transactions under investigation. As specified by section 
     6103(f)(3) of the Internal Revenue Code of 1986, such 
     materials and information shall be furnished in closed 
     executive session.

     SEC. 11. ACCESS TO INFORMATION OF THE SELECT COMMITTEE.

       The Select Committee shall provide other committees and 
     Members of the House with access to information and 
     proceedings, consistent with clause 7(c)(2) of rule XLVIII, 
     except that the Select Committee may direct that particular 
     matters or classes of matter shall not be made available to 
     any person by its members, staff, or others, or may impose 
     any other restriction. The Select Committee may require its 
     staff to enter nondisclosure agreements, and its chairman, in 
     consultation with the ranking minority member, may require 
     others, such as counsel for witnesses, to do so. The 
     Committee on Standards of Official Conduct may investigate 
     any unauthorized disclosure of such classified information by 
     a Member, officer, or employee of the House or other covered 
     person upon request of the Select Committee. If, at the 
     conclusion of its investigation, the Committee on Standards 
     of Official Conduct determines that there has been a 
     significant unauthorized disclosure, it shall report its 
     findings to the House and recommend appropriate sanctions for 
     the Member, officer, employee, or other covered person 
     consistent with clause 7(e) of rule XLVIII and any committee 
     restriction, including nondisclosure agreements. The Select 
     Committee shall, as appropriate, provide access to 
     information and proceedings to the Speaker and the minority 
     leader and an appropriately cleared and designated member of 
     each staff.

     SEC. 12. COOPERATION OF OTHER ENTITIES.

       (a) Cooperation of Other Committees.--The Select Committee 
     may submit to any standing committee specific matters within 
     its jurisdiction and may request that such committees pursue 
     such matters further.
       (b) Cooperation of Other Federal Entities.--The Chairman of 
     the Select Committee, upon consultation with the ranking 
     minority member, or the Select Committee may request 
     investigations, reports, and other assistance from any agency 
     of the executive, legislative, and judicial branches of the 
     Federal Government.

     SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

       In addition to any applications to court in response to 
     judicial process that may be made in

[[Page H4752]]

     behalf of the House by its counsel, the Select Committee 
     shall be authorized to respond to any judicial or other 
     process, or to make any applications to court, upon 
     consultation with the Speaker consistent with rule L.

     SEC. 14. ADMINISTRATIVE MATTERS.

       (a) Personnel.--The Chairman, upon consultation with the 
     ranking minority member, may employ and fix the compensation 
     of such clerks, experts, consultants, technicians, attorneys, 
     investigators, clerical and stenographic assistants, and 
     other appropriate staff as the Chairman considers necessary 
     to carry out the purposes of this resolution. Detailees from 
     the executive branch or staff of the House or a joint 
     committee, upon the request of the Chairman of the Select 
     Committee, upon consultation with the ranking minority 
     member, shall be deemed staff of the Select Committee to the 
     extent necessary to carry out the purposes of this 
     resolution.
       (b) Payment of Expenses.--(1) The Select Committee may 
     reimburse the members of its staff for travel, subsistence, 
     and other necessary expenses incurred by them in the 
     performance of the duties vested in the Select Committee.
       (2) Not more than $2,500,000 are authorized for expenses of 
     the Select Committee for investigations and studies, 
     including for the procurement of the services of individual 
     consultants or organizations thereof, and for training of 
     staff, to be paid out of the applicable accounts of the House 
     of Representatives upon vouchers signed by the Chairman and 
     approved in the manner directed by the Committee on House 
     Oversight.

     SEC. 15. APPLICABILITY OF OTHER LAWS TO SELECT COMMITTEE.

       The Select Committee shall be deemed a committee of the 
     House for all purposes of the rules of the House of 
     Representatives and shall be deemed a committee for all 
     purposes of law, including, but not limited to, section 
     202(f) of the Legislative Reorganization Act of 1946 (2 
     U.S.C. 72a(f)), sections 102 and 104 of the Revised Statutes 
     (2 U.S.C. 192 and 194), sections 1001, 1505, 1621, 6002, and 
     6005 of title 18, United States Code, section 
     502(b)(1)(B)(ii) of the Mutual Security Act of 1954 (22 
     U.S.C. 1754(b)(1)(B)(ii)), and section 734 of title 31, 
     United States Code.

     SEC. 16. DISPOSITION OF RECORDS.

       At the conclusion of the existence of the Select Committee, 
     all records of the Select Committee shall be transferred to 
     other committees, or stored by the Clerk of the House, as 
     directed by the Select Committee, consistent with applicable 
     rules and law concerning classified information.

  The SPEAKER pro tempore. The gentleman from New York (Mr. Solomon) 
and the gentleman from Texas (Mr. Frost) each will control 30 minutes.
  The Chair recognizes the gentleman from New York (Mr. Solomon).
  Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume.
  Today the Committee on Rules brings to the floor this resolution 
establishing a Select Committee of the House on United States National 
Security and Military/Commercial Concerns With the People's Republic of 
China.
  Beginning in April of this year, Mr. Speaker, the New York Times has 
focused on the somewhat sordid history of the transfer of American 
satellite technology to Communist China. These press accounts have 
asserted, Mr. Speaker, that American national security has been 
severely damaged, and campaign contributions may have been a factor in 
the decisions made.
  Mr. Speaker, there has been bipartisan commentary in this Congress 
and in our national public debate agreeing that there is a pressing 
need to get to the bottom of this matter that does affect the national 
security of our country.
  The resolution before the House will establish a select committee to 
answer, among other things, did the transfer of technology contribute 
to the enhancement of the accuracy of nuclear armed intercontinental 
ballistic missiles of the People's Republic of China, missiles that 
right this minute are aimed at the United States of America?
  Did these transfers contribute to the manufacture of weapons of mass 
destruction by the People's Republic of China?
  What effect did these transfers have on U.S. national security?
  Was there any effort by the People's Republic of China or other 
person or entity to influence these matters through political 
contributions, commercial arrangements, or bribery, influence peddling 
or other illegal activities?
  Keep in mind, Mr. Speaker, we ought to remember the Foreign Corrupt 
Practices Act, because it may very well be involved in this situation 
here today.
  Mr. Speaker, every Member of this House would agree that these are 
critical and serious questions which deserve to have truthful answers.
  Mr. Speaker, this resolution is brought forward in a bipartisan 
spirit, a development which brings great credit I think to this House. 
I applaud the work of the gentleman from California (Mr. Cox) sitting 
to my right, the proposed chairman of this select committee, and the 
gentleman from Washington (Mr. Dicks), again, one of the most respected 
and admired Members of this House, the proposed ranking member of the 
Select Committee.
  These two honorable gentlemen worked out a package of bipartisan 
improvements to the legislation that I introduced several days ago, 
which the Committee on Rules was pleased to incorporate during the 
markup. We have taken all of their suggestions so that there is nothing 
controversial in this resolution before us right now.
  Now, Mr. Speaker and Members, every American citizen is deeply 
concerned about nuclear proliferation around this world, whether it be 
in India, whether it be in Pakistan, in North Korea, in other rogue 
states like Iran, Iraq and Libya. Mr. Speaker, they are concerned that 
in the People's Republic of China, that in the last decade has been 
able to develop and now deploy intercontinental ballistic missiles, 
according to our estimates and that of the press, 13 of the 18 are 
aimed at the United States of America.
  Mr. Speaker, as we all know, President Clinton is fond of defending 
his ``commerce-at-any-cost'' policy toward China by saying that he is 
merely continuing the policy of previous Republican Presidents. Mr. 
Speaker, last Tuesday we heard from Richard Allen, who knows a little 
bit about previous Republican policy. He was in the Nixon 
administration during the opening of China in 1972, whether that was 
right or wrong, and was National Security Adviser to President Reagan 
during the early years of his presidency.
  Mr. Allen said that given today's changed context, and this is very, 
very important, given today's changed context, it is patently obvious 
to him that President Nixon or President Reagan or President Bush would 
have caused this policy to study the cumulative impact of these massive 
transfers of technology to a country like China.
  Mr. Allen also offered this common-sense piece of wisdom that has so 
far eluded the Clinton administration. He said, quote, ``If a policy 
does not work any longer, you reevaluate it, you adjust it according to 
those new circumstances.''
  Also, and this is terribly, terribly important, we heard from Jim 
Woolsey, who was President Clinton's first CIA director. What I found 
stunning about his testimony, Mr. Speaker, was the array of different 
materials and technologies that we have recently begun selling to 
China. This was his testimony: ``In addition to satellites, we are now 
giving China aircraft machine tools that can be used to construct 
military aircraft; we are giving them supercomputers that can be used 
to build and test nuclear weapons with more accuracy than they even 
have today. We are giving them high-temperature furnaces that also have 
nuclear uses. We are giving them encryption technology and cruise 
missile technology,'' all of which is very ominous, Mr. Speaker, to the 
future of this country. This is absolutely incredible in light of what 
is going on in the world today with nuclear proliferation around this 
world.
  Just 2 days ago a headline appeared noting that China not only 
continues to help Iran, but also Libya. Here is the article. This 
article is from the Washington Times and was repeated in the New York 
Times and in the Washington Post. It says, ``China Assists Iran, Libya 
on Missile Sales.''
  Mr. Speaker, Libya, as Members are well aware, has nuclear weapons 
programs, and the assistance continues after innumerable promises by 
the Chinese that they have stopped these transfers.
  Mr. Speaker, another headline recently was that North Korea has 
thumbed its nose at the Clinton administration and at this country and 
said that it too would continue to export its military technology, much 
of which has been provided by China, to its rogue friends around the 
world.
  Mr. Speaker, we know our technology transfer policies, our 
nonproliferation policies, and our overall China policies are bankrupt. 
They have to be changed. What we do not know, Mr. Speaker, at this 
point is exactly how we got into this mess and whether and how all of 
these developments are connected.

[[Page H4753]]

                              {time}  1400

  We also do not know the full extent of the national security damage 
done to the United States of America. And I pointed out, this is not 
just me standing here saying so, Mr. Speaker.
  Here is a cartoon that appeared in a local newspaper and these are 
typical of cartoons appearing around the country. It is a picture of 
the White House and up in the corner it is President Clinton saying, 
``Relax, Hillary, I have convinced the Chinese to return the 
technology.'' Well, Mr. Speaker, then there is a picture of an 
intercontinental ballistic missile; that is the technology that is 
being returned to the United States of America at the White House. That 
is how serious this matter is.
  Mr. Speaker, all of these revelations that I have alluded to have 
appeared in mainstream press accounts across this country and, Mr. 
Speaker, at this point I insert in the Record a series of articles from 
the New York Times and other publications that document what we know so 
far.

                [From the New York Times, Apr. 4, 1998]

         Companies Are Investigated For Aid to China on Rockets

                  (By Jeff Gerth with Raymond Bonner)

       A Federal grand jury is investigating whether two American 
     companies illegally gave China space expertise that 
     significantly advanced Beijing's ballistic missile program, 
     according to Administration officials.
       But the officials said the criminal inquiry was dealt a 
     serious blow two months ago when President Clinton quietly 
     approved the export to China of similar technology by one of 
     the companies under investigation.
       The decision was opposed by Justice Department officials, 
     who argued that it would be much more difficult to prosecute 
     the companies if the Government gave its blessing to the 
     deal, the officials said.
       Under investigation, the officials said, are Loral Space 
     and Communications of Manhattan and Hughes Electronics, a Los 
     Angeles-based division of the General Motors Corporation. The 
     companies denied wrongdoing, but declined to discuss the 
     investigation.
       Loral has numerous business deals with China and close ties 
     to the White House. Its chairman and chief executive, Bernard 
     L. Schwartz, was the largest personal contributor to the 
     Democratic National Committee last year.
       Loral's vice president for government relations, Thomas B. 
     Ross, said Mr. Schwartz had not spoken about the matter with 
     Mr. Clinton or any other Administration official.
       The Federal inquiry stems from a 1996 incident in which a 
     Chinese rocket carrying aloft a satellite built by Loral 
     exploded shortly after liftoff. The two companies took part 
     in an independent review of the failure, and reported to the 
     Chinese on what went wrong.
       Those exchanges, officials believe, may have gone beyond 
     the sharing of information that the companies had been 
     permitted, giving the Chinese crucial assistance in improving 
     the guidance systems of their rockets. The technology needed 
     to put a commercial satellite in orbit is similar to that 
     which guides a long-range nuclear missile to its target.
       In February, with the investigation of this incident well 
     under way, Mr. Clinton gave Loral permission to launch 
     another satellite on a Chinese rocket and provide the Chinese 
     with the same expertise that is at issue in the criminal 
     case, officials said.
       A senior official said the Administration recognized the 
     sensitivity of the decision, but approved the launching 
     because the investigation had reached no conclusions and 
     because Loral had properly handled subsequent launchings. The 
     Administration, he said, could still take administrative 
     action against the companies if they were found to have 
     violated export laws in their earlier dealings with the 
     Chinese.
       Michael D. McCurry, the White House spokesman, said the 
     launching that President Clinton approved in February ``will 
     not contribute to Chinese military capabilities'' because 
     Loral has agreed to ``stringent safeguards'' to prevent the 
     unauthorized transfer of technology.
       Emery Wilson, public relations manager for Hughes Space and 
     Communications, a division of Hughes Electronics, said the 
     company had not been notified of any Federal criminal 
     investigation.
       ``In response to a letter from the State Department,'' Mr. 
     Wilson said, ``we conducted a thorough review and concluded 
     that no Hughes employee had engaged in the unauthorized 
     export of controlled technology or equipment.''
       The Administration has been hoping to reach a broader 
     agreement with Beijing that would make it much easier to 
     launch American satellites on China's rockets. Mr. Clinton is 
     to visit China this summer in the first Presidential trip to 
     the country since the suppression of the pro-democracy 
     movement in the 1989 Tiananmen Square massacre.
       There are huge commercial interests at stake. A host of 
     companies, from cellular telephone networks to international 
     television conglomerates, are waiting in line for low-cost 
     satellites to be sent into orbit. An important bottleneck 
     facing the companies is a shortage of rocket systems 
     available to launch satellites.
       China is eager to offer its low-cost--but not always 
     reliable--services.
       For American companies, there is a significant 
     complication. All American satellites sent into orbit by 
     China's rockets require Presidential approval, a waiver of 
     the sanctions imposed after the Tiananmen massacre. Congress 
     must be told of each waiver. Thus far, Presidents Bush and 
     Clinton have issued 11 waivers for satellite launchings.
       The policy under consideration by the Clinton 
     Administration would end the case-by-case waivers and would 
     treat future launchings of American satellites like any other 
     export of sensitive technology, which require Government 
     licenses.
       Critics in Congress argue that Mr. Clinton is putting 
     commercial interests ahead of national security. They caution 
     that China has yet to prove it will abide by previous 
     pledges it has made not to share missile technology with 
     countries like Iran.
       Few nations can deliver intercontinental ballistic 
     missiles. China has lagged because, among other reasons, it 
     lacks the guidance technology, also used for satellites, that 
     allows multiple warheads to be sent from a single missile.
       President Clinton signed the waiver to allow the Loral 
     satellite launching on Feb. 18. The waiver states that the 
     deal is ``in the national interest.''
       ``We are more engaged with China,'' Mr. McCurry said. ``One 
     area of that engagement has been commercial satellite 
     technology, which we perceive to be in our interests as well 
     as that of China's.''
       But law-enforcement officials argued against the waiver, 
     saying the approval jeopardized their investigation because 
     it sanctioned the export of essentially the same guidance 
     expertise involved in the possibly illegal transfer two years 
     ago, Administration officials say.
       Administration officials said the inquiry is focused on the 
     events following the Feb. 15, 1996, explosion of a Chinese 
     rocket carrying a $200 million Loral satellite seconds after 
     liftoff at the Xichang Satellite Launch Center in Sichuan 
     Province, in southern China.
       After the explosion, the Chinese asked two American 
     companies to help conduct an independent study of what went 
     wrong. The team was led by Loral and included two experts 
     from Hughes, according to Hughes.
       According to Administration officials, the American experts 
     provided crucial data and information to the Chinese to 
     prevent future accidents. Later, Loral gave a copy of the 
     written report to the State Department, which licenses the 
     export of defense-related items.
       Government officials immediately began to assess whether 
     there had been a security breach. Last year, a criminal 
     inquiry was begun by the United States Customs Service and 
     the Department of Justice, officials said.
       Under Federal export rules, American companies are supposed 
     to take careful precautions to safeguard classified 
     technology when their satellites are launched by Chinese 
     rockets.
       Satellites are shipped to China in sealed containers, and 
     only American officials can mount them in the nose cones of 
     the launching rockets. The Commerce Department approves the 
     export of the satellites. But the more sensitive support 
     activities must be approved by the State Department.
       That process is meant to insure tight controls over the 
     testing, repair and maintenance of the satellite so the 
     Chinese cannot learn related classified information.
       The State Department license issued several years ago for 
     the Loral satellite was silent on the issue of what role, if 
     any, the American experts could play in an analysis of a 
     failed launching.
       After United States companies took part in more than one 
     study of failed Chinese launchings, the Federal Government 
     changed its regulations and now requires companies to obtain 
     a separate license to take a role in any accident review, an 
     Administration official said.
                                  ____


                [From the New York Times, Apr. 13, 1998]

        U.S. Business Role in Policy on China is Under Question

                            (By Jeff Gerth)

       In the 1992 election, many of America's aerospace 
     manufacturers backed Bill Clinton. But when President Clinton 
     took office, he immediately disappointed some of them on a 
     key issue, barring them from launching their most lucrative 
     satellites on China's low-cost rockets.
       The aerospace companies' counterattack was vehement--and 
     effective. After a lobbying campaign that included appeals to 
     the President by C. Michael Armstrong, then the chief 
     executive of Hughes Electronics, Mr. Clinton gradually came 
     to take the industry's side.
       But there was an important caveat: The companies had to 
     keep a tight rein on sophisticated technology sought by the 
     Chinese military.
       So in May 1997 the Administration was jolted by a 
     classified Pentagon report concluding that scientists from 
     Hughes and Loral Space and Communications had turned over 
     expertise that significantly improved the reliability of 
     China's nuclear missiles, officials said.
       The report, whose existence has been secret, prompted a 
     criminal investigation of the companies, which officials said 
     was undermined this year when Mr. Clinton approved Loral's 
     export to China of the same

[[Page H4754]]

     information about guidance systems. Loral's chairman was the 
     largest personal donor to the Democratic Party last year.
       An examination of the Administration's handling of the 
     case, based on interviews with Administration officials and 
     industry executive, illustrates the competing forces that 
     buffet Mr. Clinton on China policy. In this instance, the 
     President's desire to limit the spread of missile technology 
     was balanced against the commercial interests of powerful 
     American businesses, many of which were White House allies 
     and substantial supporters of the Democratic Party.
       ``From the Chinese point of view, this was the key case 
     study on how the Administration would operate on contentious 
     issues,'' an Administration expert on China said. The 
     message, the official added, was that Administration policy 
     on issues like the spread of weapons and human rights abuses 
     ``could be reversed by corporations.''
       The White House denied any political interference in the 
     issue.
       ``I am certainly not aware that our policy has been 
     influenced by domestic political considerations,'' said Gary 
     Samore, the senior director for nonproliferation and export 
     controls at the National Security Council. ``From where I 
     sit, this has been handled as a national security issue: 
     seeking to use China's interest in civilian space cooperation 
     as leverage to obtain nonproliferation goals.''
       The Administration's China policy has come under intense 
     scrutiny in the last year. Congressional investigators have 
     been examining whether China sought to influence policy 
     through illegal campaign contributions to Democratic 
     candidates in 1996. The connection, first suggested in 
     intelligence reports and echoed by Senator Fred Thompson, the 
     Tennessee Republican who led hearings on campaign finance, 
     was never proved.
       The handling of the satellite case raises questions about 
     the influence of American contributors on China policy, 
     according to officials.


                   2 Companies Tilt Toward Democrats

       Since 1991, the aerospace industry has divided its 
     political contributions equally between Democrats and 
     Republicans. In the same period, however, Loral and Hughes 
     tilted toward the Democratic Party, giving $2.5 million to 
     Democratic candidates and causes and $1 million to the 
     Republicans.
       Administration officials say the contributions played no 
     role in the decisions to permit China to launch American 
     satellites.
       ``The Government has to balance risks: the risk in not 
     letting American companies get their satellites launched by 
     the Chinese, which would reduce our high-tech advantages, and 
     the inherent risks of technology transfer,'' said James P. 
     Rubin, the State Department spokesman.
       ``That's why we impose such strict safeguards, and we are 
     determined to investigate and use our laws to prevent that 
     possibility,'' Mr. Rubin said.


                    Waivers Required After Tiananmen

       The criminal investigation of Hughes and Loral has its 
     roots in 1989, when sanctions were imposed after the massacre 
     of pro-democracy demonstrators at Tiananmen Square, requiring 
     a Presidential waiver for satellite launchings. Eleven such 
     waivers have been granted by President Clinton and his 
     predecessor, George Bush.
       But in late 1992, American intelligence discovered that 
     Chinese companies had sold missile technology to Pakistan, 
     raising tensions on the subcontinent.
       In the first months of Mr. Clinton's Presidency, Democrats 
     and Republicans in Congress pressed the Administration to 
     take action. Mr. Clinton responded with sanctions that barred 
     American companies from sending military goods to any of 
     the Chinese concerns involved in the Pakistan deal.
       The move had the effect of halting several pending and 
     future American satellite deals because the Chinese rocket-
     launching company was one of those under sanctions.
       Mr. Armstrong of Hughes, a subsidiary of the General Motors 
     Corporation, wasted no time in getting the President's 
     attention. He wrote two blunt letters in September and 
     October 1993 that reminded Mr. Clinton of his support for 
     several Presidential policy initiatives like the North 
     American Free Trade Agreement, officials said.
       He bemoaned his company's loss of business to foreign 
     competitors and requested Mr. Clinton's personal involvement. 
     Hughes's biggest loss, the company says, was the opportunity 
     for a joint satellite manufacturing plant in China, which the 
     Chinese awarded to a European competitor.


                  Clinton Confronts Department Tussle

       A key issue was whether Hughes satellites were civilian or 
     military, a murky question in the export control laws. If the 
     satellites were labeled commercial, the sanctions invoked 
     over the Pakistan deal did not apply. Mr. Armstrong told Mr. 
     Clinton, officials said, that Hughes satellites should not be 
     considered military because their technology did not have 
     military applications.
       Soon after the letters, Mr. Clinton assured Mr. Armstrong 
     in an open meeting that he was trying to resolve the tussle 
     between the State Department, which licensed military exports 
     and wanted to keep authority over satellites, and the 
     Commerce Department, which licensed all other exports and was 
     on the side of the satellite industry.
       ``I'm trying to get on top of this to decide what to do,'' 
     Mr. Clinton told Mr. Armstrong.
       At about the same time, the Administration gave signals 
     that it was moving toward the industry's position. After one 
     signal, Mr. Armstrong sent a letter to a senior White House 
     official relaying a positive reaction from Chinese officials, 
     White House officials said.
       In early January 1994, the President sent another positive 
     signal--what Hughes officials then called a ``a good first 
     step.'' Three satellites were lableded as civilian, including 
     one slightly modified Hughes satellite, which allowed their 
     launchings to proceed.
       Mr. Clinton's decision helped the industry. But the 
     satellite makers wanted a broader decision that made the 
     Commerce Department the primary licensing authority for 
     virtually all satellites. The Commerce Department weighs the 
     economic consequences when it considers an export license. 
     The State Department looks at security concerns.
       In 1994, Loral's chairman and chief executive, Bernard L. 
     Schwartz, went to China with Commerce Secretary Ron Brown. 
     Mr. Brown helped Loral close a mobile telephone satellite 
     network deal in Beijing.
       A few weeks later, the President's top political aide, 
     Harold Ickes, wrote a memo to Mr. Clinton in which he said 
     Mr. Schwartz ``is prepared to do anything he can for the 
     Administration.''
       In December 1994, the President selected Mr. Armstrong to 
     head his Export Council.
       And the sanctions stemming from the Pakistan sale were 
     lifted in late 1994 as China promised to curb missile sales 
     to other countries.
       Still, the satellite industry had not achieved a major 
     objective. So in 1995, Mr. Armstrong sent another letter to 
     Mr. Clinton, signed by Mr. Schwartz, arguing that the 
     Commerce Department should become the primary licensing 
     authority for satellite exports, an industry executive said. 
     (Mr. Armstrong, who recently became the chief executive of 
     AT&T, declined through a spokeswoman to comment.)
       The debate not only affected national security but also had 
     enormous commercial implications. The businesses that rely on 
     satellites are highly competitive, and European companies 
     were more than willing to take advantage of China's low-cost 
     services. Without the Chinese, American companies faced long 
     waits to get their satellites sent into orbit because of a 
     shortage of rockets. Satellite technology is crucial to an 
     increasing number of businesses, from cellular telephone 
     networks to global broadcast conglomerates.


                    Chinese Rocket For Loral Crashes

       Finally in March 1996, Mr. Clinton shifted major licensing 
     responsibilities for almost all satellites to the Commerce 
     Department. The State Department retained control over a few 
     highly sophisticated satellites as well as any sensitive 
     support activities, or technical assistance, in connection 
     with civilian satellites.
       The industry and the Chinese applauded the action. But the 
     events that followed a failed launching in China immediately 
     raised questions about whether the new policy sent a wrong 
     signal.
       On Feb. 15, 1996, a Chinese rocket carrying a $200 million 
     Loral satellite crashed 22 seconds after liftoff at the 
     Xichang Satellite Launching Center in southern China.
       Chinese officials needed to figure out what went wrong. By 
     April an outside review commission, headed by Loral, was 
     assembled to help the Chinese study the accident. It included 
     two scientists from Hughes.
       On May 10, the commission completed a preliminary report, 
     based on over ``200 pages of data, analysis evaluation and 
     reports,'' documents show. It found that the cause of the 
     accident was an electrical flaw in the electronic flight 
     control system.
       But the report, which was promptly shared with the Chinese, 
     discussed other sensitive aspects of the rocket's guidance 
     and control systems, which is an area of weakness in China's 
     missile programs, according to Government and industry 
     officials.
       The State Department learned about the report and made 
     contact with Loral.
       Loral, in what officials said was a cooperative effort, 
     provided the review commission's report and a long letter 
     explaining what happened. Loral told other commission 
     members, including the two Hughes scientists, to retrieve 
     all copies of the report because of the serious security 
     concerns of the Government, officials said,
       But the two Hughes employees believed that there was no 
     legal obligation to comply with the request, officials also 
     said. In late May, Hughes received a letter from the State 
     Department charging that the transfer of information was a 
     violation of the arms export control laws, according to 
     officials. Loral received no such letter.
       One year later, the Pentagon completed its damage 
     assessment of the incident. It concluded, officials said, 
     that ``United States national security has been harmed.''
       The Pentagon report prompted a criminal investigation into 
     Loral and Hughes by the Justice Department and the Customs 
     Service. The companies say their employees have acted 
     properly, but they decline to discuss the matter.
       One key issue is whether the data turned over to the 
     Chinese required a State Department license and, if so, 
     whether the company officials were aware of that fact. The 
     criminal inquiry has found evidence that several days before 
     the review committee had its first meeting with Chinese 
     officials, Loral executives were told by their security 
     advisers that any sharing of information required

[[Page H4755]]

     a State Department license, according to Administration 
     officials. Loral never sought a license, but it may have 
     sounded out the State Department.
       An industry official said Loral had immediately told the 
     State Department about the review commission meeting with the 
     Chinese but had received no reply.


                 More High-Tech Data Exported Recently

       Whatever the evidence, criminal charges may never be 
     brought because Mr. Clinton approved the export to China by 
     Loral of similar satellite guidance information two months 
     ago. He acted despite the strong opposition of the Justice 
     Department, whose officials argued that the approval would 
     seriously undercut any criminal case.
       The required notice to Congress by the President of his 
     action was sent during a recess.
       Administration officials say the decision was politically 
     sensitive but correct because no wrongdoing had been proven 
     and Loral had subsequently acted responsibly.
       Since the inquiry began, Beijing and Washington have been 
     exploring even more space cooperation.
       Last fall President Jiang Zemin visited the United States 
     and stopped at a Hughes site to talk about satellites. In 
     advance of Mr. Clinton's trip to China in June, the 
     Administration is seeking a broader agreement with Beijing on 
     space cooperation.
       But the chairman of the House International Relations 
     Committee, Benjamin A. Gilman, Republican of New York, says 
     the Administration should provide a ``thorough review'' of 
     the Hughes-Loral case to Congress before it goes ahead with a 
     plan to expedite approvals for American satellite launchings 
     by China.
                                  ____


                [From the New York Times, May 15, 1998]

             Democrat Fund-Raiser Said to Detail China Tie

                            (By Jeff Gerth)

 (This article is based on reporting by Jeff Gerth, David Johnston and 
              Don Van Natta and was written by Mr. Gerth.)

       A Democratic fund-raiser has told Federal investigators he 
     funneled tens of thousands of dollars from a Chinese military 
     officer to the Democrats during President Clinton's 1996 re-
     election campaign, according to lawyers and officials with 
     knowledge of the Justice Department's campaign finance 
     inquiry.
       The fund-raiser, Johnny Chung, told investigators that a 
     large part of the nearly $100,000 he gave to Democratic 
     causes in the summer of 1996--including $80,000 to the 
     Democratic National Committee--came from China's People's 
     Liberation Army through a Chinese lieutenant colonel and 
     aerospace executive whose father was Gen. Liu Huaqing, the 
     officials and lawyers said.
       General Liu was then not only China's top military 
     commander but also a member of the leadership of the 
     Communist Party.
       Mr. Chung said the aerospace executive, Liu Chao-ying, told 
     him the source of the money. At one fund-raiser to which Mr. 
     Chung gained admission for her, she was photographed with 
     President Clinton.
       A special adviser to the White House counsel, Jim Kennedy, 
     said today, ``We had no knowledge about the source of Mr. 
     Chung's money or the background of his guest. In hindsight it 
     was clearly not appropriate for Chung to bring her to see the 
     President.''
       Mr. Chung's account, coupled with supporting documents like 
     bank records, is the first direct evidence obtained by the 
     Justice Department that elements of the Chinese Government 
     made illegal contributions to the Democratic Party. Under 
     American law, foreign governments are prohibited from 
     contributing to political campaigns.
       While the amount described is a tiny part of the $194 
     million that Democrats raised in 1996, investigators regard 
     the identification of Ms. Liu as a breakthrough in their long 
     search for confirmation of a ``China Plan.'' The hunt was 
     prompted after American intelligence intercepted telephone 
     conversations suggesting that Beijing considered covertly 
     influencing the American elections.
       Senator Fred Thompson, Republican of Tennessee and chairman 
     of the Senate committee investigating campaign finance, 
     sought evidence of the plan, but Mr. Chung's account did not 
     come until the committee issued its report this year. 
     Tonight, the Federal Bureau of Investigation briefed Senate 
     staff members about Mr. Chung's cooperation, according to 
     officials.
       Mr. Chung, a Southern California businessman, began 
     cooperating with investigators after he pleaded guilty in 
     March to campaign-related bank and tax fraud. He is the first 
     defendant in the Justice Department inquiry to agree to 
     cooperate.
       It is not clear whether other Chinese officials or 
     executives were involved in the purported payments by Ms. 
     Liu, or what her motivation or the Chinese military's might 
     have been. At the time, President Clinton was making it 
     easier for American civilian communication satellites to be 
     launched by Chinese rockets, a key issue for the Chinese army 
     and for Ms.Liu's company, which sells missiles for the 
     military and also has a troubled space subsidiary.
       The President's decision was valuable to Ms. Liu because it 
     enabled her company to do more business with American 
     companies, but it has also been sought by American aerospace 
     corporations, including Loral Space and Communications and 
     the Hughes Electronics Corporation, a subsidiary of the 
     General Motors Corporation, seeking to do more business in 
     China. It is not known, however, whether anyone in the 
     Democratic Party or the Clinton Administration had reason to 
     suspect the source of the contributions from Mr. Chung.
       A lawyer for Mr. Chung, Brian A. Sun, declined to comment 
     on his client's conversations with investigators, citing his 
     client's sealed plea agreement with the Justice Department. 
     ``I'm shocked that sources at the Justice Department would 
     attribute anything like that to my client.''
       Mr. Chung has denied being an agent of the Chinese 
     Government. ``Nor did Mr. Chung ever try to lobby the 
     American Government on any type of issue involving technology 
     or anything else,'' Mr. Sun said.
       A National Security Council spokesman, Eric Rubin, said, 
     ``It is ludicrous to suggest there was any influence on the 
     determination of U.S. policy on this matter.'' He said he did 
     not know whether any executives from Ms. Liu's company 
     expressed an interest in the issue.
       Ms. Liu did not return a message left with her office 
     today.
       Mr. Chung's revelations have opened an avenue of inquiry 
     leading in a diplomatically sensitive direction: next month, 
     Mr. Clinton goes to Beijing, where he hopes to announce 
     increased space cooperation between China and the United 
     States.
       A representative of the Chinese Government denied that 
     Beijing was behind the purported contributions. ``China has 
     always abided by the laws and regulations in this country,'' 
     said Yu Shu-ning, a press counselor for the Chinese Embassy. 
     ``We have nothing to do whatsoever with political 
     contributions in this country.''
       Mr. Chung, an American who was born in Taiwan, owned a 
     floundering facsimile company in Torrance, Calif. He became 
     involved with the Democratic Party in early 1995 through 
     Asian-American contacts at the White House and was known for 
     trying to use his connections in Washington with Chinese 
     Government officials and executives.
       Despite being labeled a ``hustler'' by one Presidential 
     aide in 1995, Mr. Chung managed to visit the White House at 
     least 49 times. He and his company contributed $366,000 to 
     the Democratic National Committee--most of it before he 
     met Ms. Liu. The full amount was later returned after 
     questions were raised about Democratic fund-raising.
       A Democratic National Committee spokesman, Richard W. Hess, 
     said, ``We did not know and had no way of knowing the source 
     of his funds.''
       Mr. Chung met Ms. Liu in June 1996 in Hong Kong. She was 
     not only a lieutenant colonel in the military, but a senior 
     manager and vice president in charge of international trading 
     for China Aerospace International Holdings Ltd., according to 
     the company's 1996 annual report.
       The company is the Hong Kong arm of China Aerospace 
     Corporation, a state-owned jewel in China's military 
     industrial complex with interests in satellite technology, 
     missile sales and rocket launches.
       Ms. Liu's father, General Liu, was China's senior military 
     officer, and as vice chairman of the powerful Central 
     Military Commission was in charge of China's drive to 
     modernize the People's Liberation Army by selling weapons to 
     other countries and using the hard currency to acquire 
     Western technology. In that role, he oversaw his country's 
     missile deals.
       In addition, General Liu was a member of the Standing 
     Committee of the Politburo of the Communist Party, the very 
     top circle of political leadership in China. He retired from 
     his official positions last fall at the time of the Party's 
     15th Congress.
       China Aerospace sells satellites, launches them and owns a 
     large part of a Hong Kong satellite operator, but the 
     financial viability of many of these ventures depends on 
     American satellites. In 1996 President Clinton made it easier 
     for American satellites to be launched by Chinese rockets. 
     The decision was announced in March but due to delays did not 
     take effect until election day.
       As Ms. Liu began her relationship with Mr. Chung, her 
     company and father were trying to fix China's troubled rocket 
     program. That spring, China Aerospace had brought in outside 
     experts, including officials from Hughes and Loral to help 
     analyze why a launch the previous February had failed. The 
     Pentagon later concluded that the outside review harmed 
     American national security by advancing China's rocket and 
     missile capabilities. Both companies denied wrongdoing.
       In 1991 and 1993 the United States barred all American 
     companies from doing business with two China Aerospace units 
     that had made illegal missile sales to Pakistan. In each 
     instance, Mr. Liu was assistant to the president of the 
     sanctioned company.
       Writing about who in China may have benefited from the 1991 
     missile deal, former Secretary of State James A. Baker 3d, in 
     his memoirs, said, ``In all probability, several senior 
     government and party officials or their families stood to 
     gain from the performance of those contracts.''
       The missile deals were part of General Liu's strategy of 
     selling Chinese weapons to other countries to raise money to 
     acquire Western technology.
       ``Liu was a proponent of P.L.A. modernization who was very 
     much interested in obtaining Western technology,'' said 
     retired Rear Adm. Eric A. McVadon, the American defense 
     attache in Beijing in the early 1990's. He said Mr. Liu 
     constantly rebuffed American concerns about China's weaponry 
     sales.
       Those concerns were front and center in 1996, when General 
     Liu was still in charge of

[[Page H4756]]

     the P.L.A. They included China's sale of missiles to Iran and 
     of nuclear equipment to Pakistan, as well as its own 
     bellicose military maneuvers near Taiwan.
       Ms. Liu, Mr. McVadon recalled, was a ``gladhander'' who 
     ``brokered deals.'' In 1990 she was granted a visa to visit 
     the United States as a representative of a China Aerospace 
     subsidiary.
       At the first meeting between Mr. Chung and Ms. Liu in June 
     1996, Mr. Chung is said to have told investigators, Ms. Liu 
     told him she was interested in again visiting the United 
     States. Soon learning that Mr. Chung could arrange meetings 
     with the President, she expressed an interest in meeting Mr. 
     Clinton.
       Mr. Chung helped Ms. Liu obtain a visa on July 11, 1996, 
     according to a law-enforcement official. Five days later, he 
     wrote the Democratic National Committee that he wanted to 
     bring Ms. Liu and a Chinese medical executive to a July 22 
     fund-raising dinner to be held at the Brentwood, Calif., home 
     of the financier Eli Broad.
       Both of his guests' names were placed on the guest list 
     after Mr. Chung wrote a check for $45,000 to the Democratic 
     National Committee on July 19. A week later, Mr. Chung set up 
     a California corporation for Ms. Liu and himself, records 
     show.
       Ms. Liu arrived in Los Angeles on July 21, and the next day 
     Mr. Chung accompanied her to two fund-raising events attended 
     by Mr. Clinton, according to a law-enforcement official. The 
     first was an early evening $1,000-per-plate gala at the 
     Beverly Hilton.
       Later that night, Mr. Chung and Ms. Liu attended a $25,000-
     per-couple dinner at Mr. Broad's home that raised more than 
     $1.5 million for the Democrats. The President was 
     photographed with Ms. Liu, a routine courtesy at such events.
       Mr. Sun, Mr. Chung's lawyer, said, ``I don't think she was 
     any different from any of his business contacts--they thought 
     Johnny was influential and someone they would like to know as 
     they furthered their business dealings in the United 
     States.''
       The previous year, photos from another Chung visit with Mr. 
     Clinton had caused a problem. The President had expressed 
     concerns about some of Mr. Chung's Chinese business clients--
     unrelated to Ms. Liu--whom the fund-raiser brought to a March 
     1995 radio address by Mr. Clinton.
       Mr. Clinton's director of Oval Office operations, Nancy 
     Hernreich, in testimony taken by Senate investigators, said 
     Mr. Clinton told her later the visit shouldn't have happened. 
     She took that to mean that Mr. Clinton thought Mr. Chung's 
     clients were ``inappropriate foreign people.''
                                  ____


                [From the New York Times, May 17, 1998]

          How Chinese Won Rights to Launch Satellites for U.S.

                  (By Jeff Gerth and David E. Sanger)

       On Oct. 9, 1995, Secretary of State Warren Christopher 
     ended a lengthy debate within the Clinton Administration by 
     initialing a classified order that preserved the State 
     Department's sharp limits on China's ability to launch 
     American-made satellites aboard Chinese rockets.
       Both American industry and state-owned Chinese companies 
     had been lobbying for years to get the satellites off what is 
     known as the ``munitions list,'' the inventory of America's 
     most sensitive military and intelligence-gathering 
     technology. But Mr. Christopher sided with the Defense 
     Department, the intelligence agencies and some of his own 
     advisers, who noted that commercial satellites held 
     technological secrets that could jeopardize ``significant 
     military and intelligence interests.''
       There was one more reason not to ease the controls, they 
     wrote in a classified memorandum. Doing so would ``raise 
     suspicions that we are trying to evade China sanctions'' 
     imposed when the country was caught shipping weapons 
     technology abroad--which is what happened in 1991 and 1993 
     for missile sales to Pakistan.
       The Secretary of State's decision to keep satellites on the 
     munitions list, making it harder for them to be exported, did 
     not stand for long. Five months later, President Clinton took 
     the unusual step of reversing it.
       Control of export licensing for communications satellites 
     was shifted to the Commerce Department, then run by Ronald H. 
     Brown, who was deeply interested in promoting American 
     businesses overseas and had been one of the Democratic 
     Party's key fund-raising strategists. Several licenses have 
     since been approved.
       A reconstruction of Mr. Clinton's decision to change the 
     export control rules, based on interviews and documents, 
     shows that it followed a turf war between the State and 
     Commerce Departments, and a broader debate over how to 
     balance America's security concerns and commercial 
     competition in the hottest of all the emerging markets.
       It also illustrates the intersection of the interests of 
     both large American donors and surreptitious foreign donors 
     to the 1996 campaign.
       Both American satellite makers and the Chinese were 
     delighted with the decision because the Commerce Department 
     has dual responsibilities: licensing sensitive exports and 
     promoting sales of American goods around the world.
       One of the beneficiaries of that decision, it now turns 
     out, was China Aerospace because its rockets could launch 
     American satellites. An executive of the state-owned Chinese 
     company, Liu Chaoying, is said to have provided tens of 
     thousands of dollars from Chinese military intelligence to 
     the Democratic Party in the summer of 1996.
       Ms. Liu's involvement was described to Federal 
     investigators recently by Johnny Chung, a Democratic fund-
     raiser who says he took $300,000 from Ms. Liu--who is also a 
     lieutenant colonel in the Chinese military--and donated 
     almost $100,000 of it to Democratic causes, apparently 
     keeping the rest for his businesses.
       President Clinton's decision was announced in March 1996, 
     several months before the donations were made. But the actual 
     change was delayed until the fall.
       The White House said it did not know the source of Mr. 
     Chung's donations and denies that the decision was influenced 
     by campaign donations, domestic or foreign.
       ``This was motivated by competitiveness and streamlining 
     bureaucracy concerns, and nothing else,'' Samuel R. Berger, 
     Mr. Clinton's national security adviser, said in an interview 
     two weeks ago.
       On Friday, Mr. Berger's spokesman, Eric Rubin, said the 
     decision was also part of the Administration's China policy, 
     and specially its effort to encourage China to clamp down on 
     military exports.
       ``On many occasions, this was discussed with the Chinese 
     Government because we believe that policy on satellite 
     licenses is one of the tools we have to strengthen our 
     nonproliferation policy,'' Mr. Rubin said.
       Mr. Clinton's decision took place after months of tension 
     with Beijing.
       In January reports of China's export of nuclear technology 
     to Pakistan and missiles to Iran caused considerable concern 
     in Congress and the Pentagon. In early May, two months after 
     Mr. Clinton reversed the Secretary of State, the 
     Administration said China had agreed to curb its missile and 
     nuclear exports. But that announcement was greeted with 
     considerable skepticism by Republican critics, including Bob 
     Dole, who was well on the way to getting the nomination for 
     President.
       During the campaign, the Republicans attacked Mr. Clinton 
     for failing to curb China's sales of nuclear and missile 
     technology to other countries.
       The satellite decision in March was one element of the 
     Administration's ``carrot-and-stock-approach to working with 
     China,'' said James Lilley, a former United States Ambassador 
     to Beijing.
       But in the way business and diplomacy mix in Washington's 
     dealings with China, the decision also resonated in 
     boardrooms on both sides of the Pacific. It satisfied the 
     commercial interests of the American aerospace industry, 
     which had long sought access to China's low-cost ability to 
     launch satellites into space, aboard rockets called the Long 
     March.
       And it bolstered China's own commercial interests. Ms. 
     Liu's parent company, China Aerospace, owns a large piece of 
     a Hong Kong satellite operator. It also owns the China 
     Great Wall Industry Corporation, the rocket company that 
     launches both private satellites and tests and provides 
     equipment for the missiles in China's nuclear arsenal. It 
     was Great Wall that the State Department sanctioned in 
     1991 and 1993 for selling missiles to Pakistan.
       Other powerful Chinese state enterprises also had 
     multibillion-dollar stakes in getting access to American 
     satellites. Among them was the China International Trade and 
     Investment Corporation, whose chairman, Wang Jun, gained 
     unwanted attention in the United States last year when it was 
     revealed that he attended one of Mr. Clinton's campaign 
     coffee meetings in the White House. The day of Mr. Wang's 
     visit, Mr. Clinton, in what Mr. Rubin said was a coincidence, 
     signed waivers allowing the Chinese to launch four American 
     satellites--though they were unrelated to the business 
     interests of China International Trade.
       ``Any suggestions that these decisions were influenced by 
     Wang Jun's presence in the U.S. is completely unfounded,'' 
     Mr. Rubin said.
       It is not known what motivated Ms. Liu or the Chinese 
     military to make the donations. Ms. Liu's father, Gen. Liu 
     Huaqing, was not only China's highest military officer but a 
     member of the leadership of the Communist Party.
       The White House and the Democratic National Committee deny 
     any knowledge of the source of Mr. Chung's $266,000 in 
     donations, most predating his connection with Ms. Liu, and 
     all of which was returned.
       But there is no doubt that American companies--partners and 
     suppliers of China International Trade and China Aerospace--
     put enormous pressure on the White House. They were also 
     important campaign contributors. For example, the chief 
     executive of Loral Space and Communications gave $275,000 
     between November 1995 and June 1996 to the Democrats


           the precursor: a lobbying effort to persuade bush

       China's drive to obtain a steady stream of satellite 
     technology from the United States preceded the Clinton 
     Administration's arrival in Washington.
       In 1990, just a year after the killings at Tiananmen 
     Square, officials from China Aerospace and the Chinese 
     Government approached Mr. Lilley, the American Ambassador, 
     pressing for President Bush to waive restrictions enacted in 
     the aftermath of Tiananmen that barred China from launching 
     American satellites.
       ``They hit me very hard,'' Mr. Lilley recalled recently. 
     ``It was a prestige national

[[Page H4757]]

     program. It was putting China on the map as the big space 
     country of the 21st century.''
       Mr. Bush, who become America's first permanent 
     representative in Communist China in 1974, granted a waiver 
     that allowed a launching on one of China's Long March 
     rockets. In 1992, a number of Senators--including Al Gore, 
     then still a Senator from Tennessee--wrote to the Bush 
     Administration warning that China was using the launchings to 
     ``gain foreign aerospace technology that would be otherwise 
     unavailable to it.''
       In the last days of the 1992 Presidential campaign, Mr. 
     Gore made the waivers an issue, contending that President 
     Bush ``has permitted five additional American-built 
     satellites to be launched by the Chinese.''
       ``President Bush really is an incurable patsy for those 
     dictators he sets out to coddle,'' Mr. Gore said in a speech 
     at the Goddard Space Flight Center in Greenbelt, Md.


            the argument: business leaders pressure clinton

       Almost as soon as Mr. Clinton took office, business leaders 
     began their campaign to drastically change his views about 
     China.
       Both Chinese and American companies were working to get 
     satellites off the State Department's munitions list. The 
     rules for exporting goods that are on the list are 
     particularly tough. Congress must be notified 30 days in 
     advance. Moreover, the State Department considers only 
     nonproliferation issues and defers to the Pentagon's 
     judgments.
       In contrast, the Commerce Department's export-control 
     administration solicits a host of views and must weigh the 
     effects of its decisions on America's competitive position.
       Mr. Christopher's aides also noted in their 1995 classified 
     memorandum that ``U.S. firms remain concerned there could be 
     additional sanctions imposed on China precluding future 
     munitions licenses,'' exactly the kind of sanctions that had 
     been only recently lifted for China Aerospace's subsidiaries.
       And there was a lot at stake: an estimated 14 commercial 
     communications satellite launchings a year worldwide, costing 
     several hundred million dollars apiece.
       ``The business community regarded the inclusion of civilian 
     satellites on the munitions list as an insult,'' said William 
     A. Reinsch, the Under Secretary of Commerce for export 
     control, who fought Mr. Christopher's decision. ``We're the 
     only country that treats them that way.''
       The Chinese also understood that they had a huge stake in 
     the outcome of the decision. Zuoyi Huang, president of the 
     California subsidiary of China Great Wall, a part of the 
     China Aerospace empire, said in an interview that his company 
     was eager for any changes that would insure easier access to 
     American technology.
       ``The license takes time,'' he said. ``You have to get a 
     waiver from the President. The customers can't wait. It's 
     just pure commercial use. It's not a military threat to the 
     United States.''


           the review: a decision against and a quick appeal

       The arguments came to a head in 1995. C. Michael Armstrong, 
     then the chief executive of Hughes Electronics and newly 
     chosen as the head of President Clinton's export council, 
     asked to meet Mr. Christopher. He urged that satellites, 
     which his company produces, no longer be treated as military 
     goods.
       The Secretary of State promised that he would conduct a 
     detailed review in consultation with the Department of 
     Defense, the C.I.A. and the National Security Agency and the 
     Department of Commerce.
       But the majority of the interagency group quickly found 
     itself at odds with the aerospace industry. A major issue was 
     how to protect encryption equipment, which is built into a 
     satellite and interprets instructions from ground controllers 
     who manipulate the satellite once it is in orbit. Similar 
     devices are used to communicate with American spy satellites, 
     and the Pentagon and intelligence agencies worried that 
     anyone who could crack the code could take control of the 
     satellites themselves.
       On Aug. 17, 1995, a memorandum prepared for the interagency 
     group noted that the chief executive of a satellite company 
     told Mr. Christopher that ``once it is embedded in the 
     satellite, the encryption device has no military 
     significance.'' Thus, the industry argued, there was little 
     risk that the Chinese would get their hands on the encryption 
     devices--especially because American military officials are 
     supposed to watch the satellites with care when they are in 
     Chinese hands.
       But, the memorandum went on, ``the national security 
     position'' is that ``the nature of the device itself,'' not 
     its location, ``should be used to determine whether it must 
     be controlled as a military item.''
       The encryption issue was one of the main reasons the 
     interagency group--over the objections of the Commerce 
     Department--recommended that satellites remain on the 
     munitions list. Mr. Christopher concurred. Soon after Mr. 
     Christopher put his initials on the decision memorandum, 
     Commerce Secretary Ronald H. Brown appealed the decision to 
     the President.


         the turnaround: the commerce dept. wins a turf battle

       The debate surrounding the appeal did not heat up for four 
     months. The nature of the arguments that went to the White 
     House is still unclear: many of the documents remain 
     classified. But those that have been reviewed by The New York 
     Times show that the White House and the Commerce Department 
     began communicating again about the issue on Feb. 8, 1996, 
     two days after President Clinton broke a backlog of 
     applications for launchings by China, by approving four of 
     them that day.
       Mr. Clinton signed those waivers the same day that Wang 
     Jun, the man who was often referred to during the campaign 
     finance investigations as a ``Chinese arms dealer,'' visited 
     Washington. His company, the China International Trade and 
     Investment Corporation, has a multibillion-dollar stake in 
     one of Hong Kong's largest satellite companies.
       That same day, Mr. Wang met with Mr. Brown, at his 
     expansive office in the Commerce Department. And that 
     evening, Mr. Wang attended a coffee at the White House, an 
     event Mr. Clinton later called ``clearly inappropriate.'' 
     Others at the coffee said Mr. Wang never spoke during the 
     session.
       By mid-February, for reasons that are still murky, there 
     seemed to be some urgency at the White House to decide 
     whether to reverse Mr. Christopher's decision, shifting 
     satellite export licensing to the Commerce Department.
       A Feb. 15 State Department memorandum talks about speeding 
     up the process because ``the Administration wanted to wrap 
     this up.''
       In the end, the State Department relented. Participants in 
     the final debate said that the President concluded that the 
     technology could be protected through the Commerce 
     Department, just as the department protects supercomputers 
     and other sensitive technologies.
       The President's decision was announced on March 14. 
     Commerce officials, who had just won one of Washington's 
     nastiest turf wars, were jubilant.
       ``Good news,'' officials were told by E-mail. The 
     electronic message went on to recommend a ``low key'' spin on 
     the news that would ``not draw attention to the decision.''
       Internal commerce Department documents show that officials 
     were anticipating questions from reporters and Congress about 
     whether the decision represented an effort to ease technology 
     transfers to China and remove items from sanctions--some of 
     the same concerns that figured in Mr. Christopher's decision.
       In the days preceding the announcement, China had raised 
     tensions with its Asian neighbors and the United States to 
     new heights, firing M-9 ballistic missiles, which carried 
     dummy warheads, into target zones 30 miles off the shore of 
     Taiwan.
       The March 14 announcement said that regulations putting 
     into effect the President's decision would be issued within 
     30 days. But the bureaucratic infighting continued.
       Finally, the State Department issued the regulations 
     shifting most satellite licensing to the Commerce Department.
       They were published on Nov. 5, 1996, the day President 
     Clinton was re-elected.
       Correction: A chart last Sunday about China's effort to win 
     the right to launch American satellites referred incorrectly 
     to the message conveyed in September and October 1993 to 
     President Clinton by Michael Armstrong, the chief executive 
     officer of the Hughes Electronics Corporation, an American 
     maker of communications satellites. Mr. Armstrong, in letters 
     to Mr. Clinton, complained that State Department sanctions 
     against Chinese missile companies hurt his business; he did 
     not mention the China Aerospace Corporation specifically.
       Between 1993 and 1996, the Clinton Administration dropped 
     its sanctions on China Aerospace, a state-owned Chinese 
     company, for selling missiles to Pakistan and gave the 
     company permission to launch private United States 
     communications satellites, despite some lingering concerns in 
     the Administration about security.
       August 1993--State Department imposes economic sanctions 
     against subsidiaries of Beijing-based China Aerospace for 
     selling missiles to Pakistan. The sanctions bar American 
     companies from doing business with the concerns.
       Sept.-Oct. 1993--Michael Armstrong, the chief executive of 
     Hughes Electronics Corp., tells the President the sanctions 
     hurt his company because China Aerospace is a low-cost 
     launcher of satellites.
       Nov. 1993--The Administration signals it might ease 
     satellite licensing procedures and Mr. Armstrong relays to 
     the White House an encouraging reaction from his contacts in 
     China.
       April 1995--Secretary of State Warren Christopher begins an 
     interagency review of restrictions on the export of 
     communications satellites at Mr. Armstrong's urging. The 
     companies want to see responsibility for the issue shifted to 
     the Commerce Department.
       Oct. 9, 1995--Following the recommendation of the Pentagon, 
     intelligence agencies and his advisers, Mr. Christopher keeps 
     satellites under the purview of the State Department. The 
     Commerce Department appeals this decision to President 
     Clinton.
       Feb. 6, 1996--With the relations between the United States 
     and China tense over Beijing's military operations and sales, 
     President Clinton approves the launch of four American 
     satellites by Chinese rockets.
       Mid-February 1996--The White House revives the effort to 
     ease restrictions on satellite exports, reviewing anew Mr. 
     Christopher's decision.
       March 8-15, 1996--China conducts missile tests near Taiwan, 
     signalling its displeasure over talk of Taiwanese 
     independence during Taiwan's elections.

[[Page H4758]]

       March 14, 1996--In a low-key announcement, the 
     Administration says that Mr. Clinton has shifted 
     responsibility for communications satellites to the Commerce 
     Department. Regulations, it says, are to be issued in 30 
     days.
       May 3, 1996--Three top satellite executives write to Mr. 
     Clinton complaining about the delay in issuing the 
     regulations.
       Nov. 5, 1996--The State Department publishes the new 
     regulations in the Federal Register. President Clinton is re-
     elected.
                                  ____


                [From the New York Times, May 19, 1998]

        Satellite Maker Gave Report to China Before Telling U.S.

                            (By Jeff Gerth)

       Washington.--A leading American satellite maker 
     acknowledged for the first time Monday that a committee 
     headed by one of its top executives provided a report in 1996 
     to the Chinese on a failed Chinese rocket, without first 
     consulting federal officials, and contrary to the company's 
     own internal policies.
       But the company, Space Systems/Loral, a subsidiary of Loral 
     Space and Communications, based in Manhattan, said it ``does 
     not believe any of its employees dealing with China acted 
     illegally or damaged U.S. national security.'' The company 
     issued a two-page statement, which it called a ``fact 
     sheet.''
       In the statement, Loral said it was cooperating with the 
     Justice Department, which is investigating whether sensitive 
     technological information was passed to the Chinese during 
     industry reviews of an accidental explosion of a Chinese 
     rocket seconds after liftoff in February 1996.
       The criminal inquiry is focusing on whether officials from 
     Loral and other companies who participated in the review 
     violated American export control laws.
       Loral maintained Monday that no secret or sensitive 
     information was conveyed to the Chinese. But a classified 
     Pentagon study concluded the review had helped Chinese 
     missile capabilities and harmed American security, 
     administration officials said. The Pentagon study prompted 
     the Justice Department's inquiry.
       In recent days, the Clinton administration's policies on 
     Chinese-launched American satellites have come under intense 
     scrutiny because of information that a Chinese military 
     officer had funneled nearly $100,000 into Democratic campaign 
     committees during President Clinton's re-election campaign.
       The New York Times has reported that lawyers and officials 
     have said that Johnny Chung, a fund-raiser, provided 
     information to federal investigators about the Chinese 
     officer, Lt. Col. Liu Chaoying, who was a senior Hong Kong 
     executive for China Aerospace, the Chinese conglomerate whose 
     rocket exploded with a Loral satellite in 1996.
       The information provided by Chung, which followed his 
     pleading guilty to campaign-related bank and tax fraud 
     charges, has re-ignited Republicans' zeal to investigate 
     whether the Chinese government tried to influence Clinton 
     administration policy.
       Speaker Newt Gingrich is considering creating a special 
     select committee to investigate the transfer of advanced 
     space technology to China, and House Republicans are 
     threatening to attach amendments to the Pentagon's budget 
     bill later this week that would bar the sale of commercial 
     satellites and technology to China.
       Loral's statement Monday said that ``no political favors or 
     benefits of any kind were requested or extended, directly or 
     indirectly, by any means whatever.''
       It also said that the company's chairman, Bernard Schwartz, 
     who has been one of the largest individual Democratic Party 
     donors in the last few years, ``was not personally involved 
     in any aspect of this matter.''
       In outlining its involvement with the Chinese rocket, 
     Loral's statement said insurance companies asked Loral and 
     other satellite concerns, including the Hughes Electronics 
     Corp., to review the results of an accident investigation 
     done by the Chinese.
       The outside review was headed by a senior executive at 
     Space Systems/Loral. The review committee's report shows that 
     the senior Loral executive had been requested by the 
     president of China Aerospace, which controls China's 
     satellite and space enterprises.
       In the end, the review committee affirmed what the Chinese 
     found: ``that a failed solder joint was the most likely cause 
     of the failure,'' Loral said Monday.
       Loral also said that while the 1996 review was under way, 
     unidentified Loral officials ``discussed the review 
     committee's work with a number of U.S. officials interested 
     in China's space program.'' But the company acknowledged that 
     it had not followed its own procedures.
       ``Contrary to SS/L's own internal policies, the committee 
     provided a report to the Chinese before consulting with State 
     Department export licensing authorities,'' Loral said without 
     elaborating.
       The company has privately told investigators in a report 
     that Loral's security advisers had told the company to seek 
     State Department approval before talking to the Chinese but 
     those instructions were not followed, industry executives and 
     federal officials said.
       Loral has private conceded another mistake: ignoring 
     license conditions that required Pentagon monitors during the 
     transmission of any information, the executives and officials 
     said.
       Last February, President Clinton approved the Chinese 
     launch of another Loral satellite. That license, according to 
     American officials, explicitly requires  separate government 
     approval to participate in any accident review and 
     contains stringent safeguards against transfer of any 
     technology. Administration officials have said that being 
     under investigation was insufficient grounds to deny Loral 
     a license.
       But the Justice Department opposed the recent presidential 
     approval for Loral's license, officials said. Department 
     lawyers feared that the approval would undercut the viability 
     of a criminal case--if one were to go forward--by creating 
     the appearance for a jury of government support for Loral's 
     previous conduct.
       Law-enforcement officials also had initial concerns about 
     some of the licensing language, but those concerns appear to 
     have been allayed as the inquiry is going forward, officials 
     said.
       The expertise needed to put satellites into orbit is 
     similar to that used to deliver nuclear warheads. The 
     overlapping commercial and military uses lie at the heart of 
     both the criminal inquiry and congressional concern about 
     Clinton's policies on satellite launches in China.
       On Capitol Hill Monday, senior Republicans continued to 
     call for a broad investigation into whether the transfer of 
     space technology to China threatened United States security.
       Gingrich Monday called on Clinton to delay his trip to 
     China in June.
       The Speaker is also proposing the creation of a special 
     committee, with five Republicans and three Democrats, and 
     headed by Rep. Christopher Cox, R-Calif., who served as 
     deputy counsel in the Reagan administration, said Christina 
     Martin, Gingrich's spokeswoman.
       ``The purpose would be to assess whether U.S. policy was 
     affected by Communist Chinese efforts,'' Ms. Martin said.
       But Rep. Richard A. Gephardt of Missouri, the House 
     democratic leader, argued that the House had several standing 
     committees that could handle the task.
                                  ____


                [From the New York Times, June 1, 1998]

       The White House Dismissed Warnings on China Satellite Deal

                   (By Jeff Gerth and John M. Broder)

       Washington.--The caution signs made it evident that the 
     application by Loral Space & Communications to export a 
     satellite to China earlier this year was anything but 
     routine.
       Justice Department prosecutors warned that allowing the 
     deal could jeopardize possible prosecution of the company for 
     an earlier unauthorized technology transfer to Beijing. The 
     Pentagon reported that Loral had provided ``potentially very 
     significant help'' to China's military rocket program. And 
     senior White House aides cautioned that the deal was certain 
     to spark opposition from critics of the Administration's 
     nonproliferation and human rights policies toward China.
       But the White House pressed ahead, concerned about the 
     financial costs to Loral of delaying approval of the deal and 
     certain that it could defend the decision against subsequent 
     criticism.
       Rarely is the public given a detailed look inside the White 
     House decision-making process on a matter of national 
     security as sensitive as the export of a satellite to China. 
     These records ordinarily remain sealed for years, buried 
     under the Government's strict regime of secrecy.
       But documents produced by the White House 10 days ago in 
     response to a demand from Congress provide an unusually rich 
     account of the evolution of a Presidential decision in which 
     numerous warning signals were raised and then dismissed.
       According to the records, the February decision by 
     President Clinton to approve the Loral satellite launching 
     was treated as an urgent matter not because of its importance 
     to the national security, but because the company was facing 
     heavy fines for delay.
       Concerns about European competition for the satellite 
     business and fears that denying the deal would damage the 
     United States-China relationship overrode words of caution 
     from other Government agencies.
       The presumption throughout was that the deal would be 
     approved, as had 19 previous applications under Presidents 
     Clinton and Bush. The documents reflect the White House 
     staffs search for a defensible rationale for the decision.
       Federal and Congressional investigators are now examining 
     what led the President to risk political embarrassment by 
     creating the perception that he might be letting Loral--
     headed by the Democratic Party's largest campaign 
     contributor--off the hook in a serious criminal inquiry into 
     whether Loral executives helped China's missile program.


                  Decision Traced To a Satellite Crash

       Samuel R. Berger, the national security adviser, had a 
     preemptive answer in the decision memorandum he forwarded to 
     the President on Feb. 12. The memo briefly noted the Justice 
     Department's concerns and referred to the possibility that 
     Loral might have significantly aided China's military rocket 
     program.
       But he urged the President to approve the deal regardless.
       ``In any case,'' Berger wrote, ``we believe that the 
     advantages of this project outweigh this risk, and that we 
     can effectively rebut criticism of the waiver.''
       Clinton approved it with his distinctive backward check 
     mark six days later.
       Since 1989, the export of American satellites for launching 
     on Chinese rockets has

[[Page H4759]]

     been suspended as a result of sanctions imposed after the 
     killings in Tiananmen Square. A deal can go forward only if 
     the President concludes that the export is in the national 
     interest and issues a waiver.
       President Bush approved all nine waiver requests that 
     reached this desk; President Clinton routinely followed the 
     practice in his first four years in office, signing 10 
     waivers with little internal debate or external controversy.
       But the waiver Clinton signed on Feb. 18 was not routine. 
     The roots of his unusual decision trace back two years when a 
     Chinese rocket carrying a Loral satellite crashed into a 
     village seconds after liftoff, killing and injuring dozens of 
     civilians.
       A few months later, Loral led an outside review team to 
     help the Chinese figure out what had happened. The company 
     says its officials did nothing wrong. But Loral also 
     acknowledged serious mistakes in a June 1996 disclosure to 
     the State Department, including an admission that it allowed 
     the Chinese to see its lengthy review of the rocket mishap 
     without prior Federal approval. Such technological assistance 
     to the Chinese requires prior Government approval, which 
     Loral had not received.
       At virtually the same time that Loral made its disclosure 
     to the Government, the company was seeking another 
     Presidential waiver for a satellite. Its chairman, Bernard L. 
     Schwartz, donated $100,000 to the Democratic Party four weeks 
     before the waiver application was approved in early July 1996 
     by Clinton.
       It is not known whether Loral's help for the Chinese was 
     mentioned in the memorandum that went to the President 
     because the White House has not released documentation on 
     that decision.
       It is known that the State Department had already alleged 
     in a letter to satellite industry executives that there had 
     been a violation of American export control laws in the 
     accident review.
       But as of July 1996, no criminal inquiry was under way. The 
     Justice Department began its investigation only after the 
     Pentagon completed an assessment of the accident review in 
     May 1997.
       That is the same month Loral applied for its most recent 
     waiver, for the Chinasat 8 satellite.


                  Company's Concerns Reach White House

       The first notice to the White House of unusual problems 
     with the Chinasat 8 waiver application came in an early 
     January memorandum from the State Department detailing the 
     factors for the President to consider.
       Although couched in careful bureaucratic language, the 
     State Department document made it clear that this was no 
     routine export license application.
       The State Department pointed out that China's transfer of 
     missile technology to Iran might prohibit the export of the 
     Loral satellite or any other satellites or related items.
       ``Moreover'' the State Department memo stated, 
     ``information about unauthorized defense services provided by 
     Space Systems/Loral and another U.S. firm to China's Long 
     March 3B Launch Vehicle'' could lead to imposition of harsh 
     sanctions against the company.
       But the State Department and other agencies nonetheless 
     recommended granting the waiver, because the deal would 
     enhance the United States' leadership in commercial 
     telecommunications, provide an incentive for China to adhere 
     to international nonproliferation rules and improve trade 
     ties with Beijing.
       After virtually no debate at the White House, the State 
     Department memorandum was rewritten as a decision paper for 
     the President.
       The State Department's concern about technology transfers 
     to Iran appeared nowhere in the decision document, but a new 
     element is inserted in the first and in most subsequent 
     drafts. The President must act quickly, the draft states; any 
     delay will cost Loral money.
       ``Due to severe contractual penalties which Loral will 
     incur if it cannot begin technical discussions with the 
     Chinese by next week, we recommend that you take action on 
     this issue by January 20,'' read the first draft of the 
     Presidential memorandum, dated Jan. 13.
       A day earlier, Loral officials had made known to the White 
     House their frustration at the slow Government response to 
     their waiver application, which was submitted in May 1997.
       A Loral letter found in White House files stated that 
     unless the approval is granted within a week, the launching 
     scheduled for November, would be delayed by several months, 
     costing the company at least $6 million. Any such delay would 
     give the Chinese grounds for canceling the project, which 
     would cost Loral $20 million, the company warned.
       ``Our competitors in Europe,'' Loral officials complained, 
     ``do not suffer delays due to export licensing or legal 
     complications.''
       The company's concerns clearly were heard at the White 
     House.
       A senior aide at the National Security Council, Maureen E. 
     Tucker, repeatedly pressed for a rapid decision in forwarding 
     early drafts of the Presidential decision paper to associates 
     at the council.
       She described the memorandum and accompanying documents as 
     ``a very quick turnaround package for which I am seeking your 
     clearance by tomorrow,'' she wrote on Jan. 13.
       By Jan. 20, one frustrated aide scrawled on a draft of the 
     memo, ``Needs to go to POTUS today!!'' POTUS is the White 
     House jargon for President of the United States.
       But the waiver request was held up by questions from 
     Berger, who asked his legal aides to research the status of 
     the Justice Department investigation and determine whether it 
     would bar approval of the waiver.
       Tellingly, Berger asked Gary Samore, the National Security 
     Council's top weapons aides to research the status of the 
     Justice Department investigation and determine whether it 
     would bar approval of the waiver.
       Tellingly, Berger asked Gary Samore, the National Security 
     Council's top weapons proliferation export, in a handwritten 
     note if the approval can be granted in phases ``to get over 
     immediate crunch.''
       Berger did not ask whether Loral's cooperation with the 
     Chinese after the 1996 accident would require denial of the 
     export license. Instead, he wonders in the note to Samore 
     where there is ``anything we can hang our hat on to 
     characterize Loral's `offense.' ''
       Berger's aides sought advice from officials at the State 
     Department, who informed them that Loral's offenses appear to 
     be ``criminal'' and ``knowing.'' Ms. Tucker was told that the 
     Pentagon investigated Loral's assistance to the Chinese after 
     the 1996 missile explosion and concluded that the company 
     provided ``potentially very significant help'' to Beijing's 
     ballistic missile program.


                   behind decision to grant a waiver

       The White House counsel Charles F. C. Ruff told a Security 
     Council lawyer that the Justice Department's investigation 
     mattered less than maintaining close diplomatic and business 
     relations with China.
       ``Issue is not [underlined twice] impact on DOJ 
     litig(ation),'' the Security Council deputy counsel Newell 
     Highsmith wrote in notes of his conversation with Ruff, ``but 
     whether bilateral U.S.-China concerns and economic factors 
     outweigh risk of political embarrassment.''
       A principal argument behind Clinton's decision was that it 
     would be unfair to penalize Loral by denying it a license if 
     it was under investigation but had not been charged with any 
     crimes.
       The export law allows the President to deny a license if 
     the license seeker has been indicted or if there is 
     ``reasonable cause to believe'' the license seeker ``has 
     violated'' United States export control laws. The White House 
     documents show that some White House and State Department 
     officials believed the latter, but Administration officials 
     say they relied on a 1993 State Department memo which said 
     that companies will be denied licenses only after indictment.
       ``In an ideal world we would wait until this matter is 
     resolved,'' Malcolm R. Lee, a National Security Council aide, 
     told other White House officials in an electronic message a 
     month before the President's decision, referring to the 
     pending Justice Department inquiry. But, Lee added, ``that is 
     impracticable.''
       A senior Administration official, speaking not for 
     attribution, said that waiting for the results of the Justice 
     Department investigation could delay the satellite launching 
     for months, if not years.
       And, the official added, ``There were some imperatives to 
     get a timely decision because of the penalties facing the 
     company.''
       But the company acknowledges that no such penalties have 
     been imposed and the launching is still scheduled for 
     November, as it has been for the last year.
       ``We believe we will not incur penalties because we can 
     work around the problem,'' a Loral official said late last 
     week.


                   pentagon Troubled BY LorAL's ROLE

       The President did not receive a detailed assessment of the 
     potential damage to American security caused by Loral's help 
     to China in determining the cause of the 1996 launching 
     failure. The Pentagon was troubled by Loral's technological 
     assistance because the rocket science involved in putting a 
     satellite into orbit is similar to that needed to deliver a 
     nuclear warhead.
       The Pentagon relying on Air Force missile and intelligence 
     experts, did not find grave damage but did conclude that the 
     United States national security had been harmed, according to 
     Administration officials.
       A White House official said that the National Security 
     Council never received the Pentagon report, which was 
     prepared to assist the State Department. ``We did the best we 
     could in the memo for the President in describing what we 
     understood to be the allegations,'' the official said. ``We 
     didn't beat around the bush.''
       White House aides overcame the major impediment to the 
     waiver--the concern of Justice Department prosecutors that it 
     would jeopardize any possible prosecution--by relying on the 
     fact that ``the Department had every opportunity to weigh in 
     against the waiver at the highest levels and elected not to 
     do so,'' as Ruff, the White House counsel, wrote on Feb. 13.
       But Justice Department officials say that Ruff, in his 
     discussion with Robert Litt, the top aide to the Deputy 
     Attorney General, asked only about the impact of the waiver 
     on possible prosecution--not whether the department opposed 
     the waiver.
       It is not known how the Justice Department would have 
     answered that question.

[[Page H4760]]

     
                                  ____
                       [From MSNBC, May 27, 1998]

                  Time Line of Clinton China Decisions

                   (By Tom Curry and Robert Windrem)

       As the Clinton administration debated whether to allow U.S. 
     satellites to be lofted into orbit aboard Chinese missiles, 
     Bernard Schwartz, chairman of Loral Space & Communications, 
     and Democratic fund-raiser Johnny Chung, allegedly using 
     money from the Chinese army, gave more than $500,000 in soft 
     money, ostensibly used for ``party-building efforts,'' to the 
     Democrats.
       The Justice Department and Congress are investigating how a 
     technical report on the explosion of a Chinese missile in 
     1996--a report that could help China assess the reliability 
     of its missile arsenal--found its way into the hands of the 
     Chinese.
       That report was prepared by employees of Loral, Hughes 
     Electronics and other firms.
       In a statement issued May 18, Loral said that ``Bernard 
     Schwartz, chairman of Loral Space & Communications Ltd. . . . 
     was not personally involved in any aspect of this matter. No 
     political favors or benefits of any kind were requested or 
     extended, directly or indirectly, by any means whatever.''
       The firm also declared that: ``Allegations of a connection 
     between the launch failure and a subsequent presidential 
     authorization for use of Chinese launch services for another 
     [Loral] satellite to China are without foundation.''
       Nonetheless, Justice Department and congressional 
     investigators are sure to scrutinize the chronology of gifts 
     and decisions.
       The time line does not prove any cause-and-effect 
     relationship between donations and decisions. It does give 
     investigators a basis for their criminal inquiry.
       April 24, 1995: Loral chairman Schwartz gives $25,000 to 
     the Democratic National Committee.
       June 30, 1995: Schwartz gives $20,000 to Democratic 
     Senatorial Campaign Committee, which provide support for 
     Democratic Senate candidates.
       Aug. 30, 1995: Schwartz gives $75,000 to DNC.
       Sept. 30, 1995: Schwartz gives $20,500 to DSCC.
       Oct. 9, 1995: Secretary of State Warren Christopher decides 
     satellites should remain a military munitions item.
       Nov. 29, 1995: Schwartz gives $100,000 to DNC.
       Nov. 29, 1995: A Chinese government agency writes Loral, 
     asking for help in getting an upgrade for its dual-use 
     imaging technology, exports of which are prohibited under 
     U.S. sanctions.
       Jan. 26, 1996: Loral is sold to Lockheed for $9 billion.


                        clinton approves launch

       Feb. 6, 1996: Clinton approves the launch of four 
     communications satellites on Chinese rockets.
       Feb. 6, 1996: Wang Jun of CITIC, owners of percentages in 
     Chinese satellite companies, visits the White House for 
     coffee and dines with Commerce Secretary Ron Brown.
       Feb. 8, 1996: The White House and Commerce Department begin 
     to talk about the satellite export issue again.
       Feb. 14, 1996: A Chinese rocket carrying Loral Intelsat 
     satellite explodes, destroying a Chinese village.
       Feb. 15, 1996: Schwartz gives $15,000 to DSCC.
       Feb. 15, 1996: The State Department gets an urgent request 
     from the White House to speed up the process of switching the 
     satellite licensing to the Commerce Department.
       Feb. 29, 1996: Schwartz gives $50,000 to Democratic 
     Congressional Campaign Committee, which bankrolls Democratic 
     House candidates.
       March 8, 1996: China launches missiles.
       March 14, 1996: Clinton decides to move the satellite 
     licensing function to the Commerce Department.
       March 15, 1996: Loral President J.A. Lindfelt writes 
     Commerce to say the export of a dual-use technology, known as 
     synthetic aperture radar, is being held up by the Defense, 
     State and Commerce departments.
       April 1996: Schwartz announces the formation of Loral Space 
     and Communications.
       April 24, 1996: Schwartz gives $50,000 to DSCC.
       June 10, 1996: Schwartz gives $100,000 to DNC.
       July 22, 1996: Liu Chao-Ying of China Aerospace meets 
     Clinton with Johnny Chung.
       July 31, 1996: Schwartz gives $5,000 to DSCC.


                        influx of chinese money

       August 1996: Chung accounts show an influx of $300,000 from 
     Liu Chao-Ying.
       Aug. 18, 1996: Chung gives $20,000 to DNC to attend 
     Clinton's birthday party.
       Aug. 28, 1996: Chung gives $15,000 to DNC at Democratic 
     National Convention in Chicago.
       Sept. 16, 1996: Schwartz gives $30,000 to DSCC.
       Sept. 20, 1996: Schwartz gives $20,000 to DSCC.
       Oct. 16, 1996: Schwartz gives $10,000 to DSCC.
       Oct. 18, 1996: Schwartz gives $70,000 to DNC.
       Oct. 24, 1996: Schwartz gives $5,000 to DSCC.
       Nov. 5, 1996: New guidelines on Commerce licensing of 
     satellites are published.
       Nov. 5, 1996: Clinton is elected to his second term as 
     president.
       Oct., 1997: A federal investigation of Loral begins.
       Feb. 12, 1998: As Clinton ponders whether to sign another 
     waiver allowing launch of a Loral satellite aboard a Chinese 
     missile, National Security Adviser Sandy Berger sends him a 
     memo saying the Justice Department ``has cautioned that a 
     national interest waiver in this case could have a 
     significant adverse impact on any prosecution [of Loral] that 
     might take place based on a pending investigation of export 
     violation.''
       But Berger adds that ``the advantages of this project 
     outweigh the risk,'' and ``it is inappropriate to penalize 
     [Loral] before they have even been charged with any crime.''
       Feb. 18, 1998: Clinton signs a waiver allowing Loral 
     satellite to be lifted into orbit by the Chinese.
                                  ____


                              [From MSNBC]

                    The Man Behind the China Trouble

                          (By Robert Windrem)

       For a working class, Depression-era kid from Brooklyn, 
     N.Y., Bernard ``Bernie'' Schwartz has done quite well for 
     himself.
       As CEO of Loral Space and Satellites, the 71-year-old 
     Schwartz is a leader in the world of satellite 
     communications, with significant holdings in satellite 
     manufacturing (Loral), broadcasting (Britain's Skynet and 
     Mexico's Satmex), Internet linkage (Orion Network Systems) 
     and global personal communications (Globalstar). His personal 
     wealth is measured in the hundreds of millions of dollars, 
     much of it coming from his sale in April 1996 of Loral's 
     defense business.
       As important, Schwartz is a friend of the president. In 
     December 1996 alone, he celebrated his birthday with an 
     intimate dinner with President Bill Clinton and Hillary 
     Rodham Clinton at the White House, was their guest at the 
     Kennedy Center honors and shared a podium with Clinton at the 
     Democratic Leadership Conference, the spawning ground for the 
     Clinton revolution.
       In March 1996, according to White House records, he got a 
     perk that few others have recieved--dinner and a movie in the 
     White House theater, along with a cast of celebrities to 
     share popcorn: singer Billy Joel, baseball great Hank Aaron, 
     actress Jennifer Jason Leigh, directors Ethan and Joel Coen, 
     comedian Al Franken and political strategist Dick Morris.
       All together, Schwartz was invited to 21 White House events 
     during Clinton's first term.
       And why not? Bernie Schwartz is the single biggest 
     contributor to the Democratic Party in the Clinton era. A 
     review of campaign finance databases by NBC News and the 
     Center for Responsive Politics shows that between 1992 and 
     1998. Schwartz gave the Democratic Party $1,131,500 while he, 
     his family, his companies, their political action committees 
     and executives gave another $881,565 to Democratic 
     candidates. Schwartz gave another $217,000 to the Democratic 
     Leadership Conference. Schwartz and Loral gave $367,000 to 
     the Republicans during that same period.
       The man Mother Jones magazine called the orbiter of power, 
     Schwartz has increased his contributions to the Democrats 
     year by year. In the 1991-'92 campaign cycle, he gave 
     $12,500; in 1993-'94, $112,000; in 1995-'96, $586,000, and in 
     1997-'98, $421,000. Schwartz was the single biggest donor in 
     the 1996 and 1998 campaigns.
       Schwartz has been dependent on a number of government 
     programs and regulatory processes, including the export of 
     communications satellites. In letters to the late Commerce 
     Secretary Ron Brown in March and May of 1993, Schwartz laid 
     out some of those businesses.
       ``Loral Corp. is the provider of [weather] satellites for 
     the Department of Commerce's GOES program, ``Schwartz wrote, 
     in seeking a meeting with Brown, ``In addition, there are 
     other matters that would be of interest to Commerce in which 
     Loral has a significant position, including the auction of 
     radio frequencies and the exporting of highly advanced 
     technical equipment, e.g., satellites and military hardware. 
     Further, Loral is the principle [sic] supplier of satellites 
     for Intelsat.''
       When the two men's schedules didn't mesh in March or April, 
     Schwartz wrote Brown again, noting, ``We are affect [sic] by 
     a number of general areas overseen by the Commerce 
     Department. The Department's guidance in these areas will be 
     meaningful.'' Included in the list was Commerce's role in 
     communications-satellite licensing.
       Brown ultimately took Schwartz with him to China on a trade 
     mission in August and September 1994. Schwartz was invited 
     one month after he gave his first big contribution, $100,000, 
     to the Democratic National Committee.
       On that trip, Schwartz asked the Department to help set him 
     up with officials of the Chinese military and space 
     organizations.
       A Loral spokesman initially said that Schwartz had never 
     ``talked business'' with administration officials. But when 
     confronted with the letters and other indications of meetings 
     between Schwartz and Brown, the spokesman said any meetings 
     were ``routine and proper'' and that Schwartz had always 
     acted ``scrupulously.''
       To the question of whether the contributions were meant to 
     help Loral with the various issues before the government, 
     including satellite launches in China, the spokesman 
     dismissed the idea as ``ridiculous'' and said there was 
     ``never'' a time when Schwartz discussed any of this with the 
     president.
       ``Bernie Schwartz is a Roosevelt Democrat who believes that 
     Roosevelt saved his family,'' the spokesman added, noting 
     that he has been a longtime supporter of Clinton.

[[Page H4761]]

     
                                  ____
                [From the Weekly Standard, June 1, 1998]

                      Selling China the Rope . . .

                          (By Henry Sokolski)

       Presidential spokesman Mike McCurry last week justified the 
     Clinton administration policy that allowed the transfer of 
     satellite technology to the Chinese military with the hoary 
     ``they started it'' defense. ``This administration,'' said 
     McCurry, ``has pursued the exact same policy pursued by the 
     Bush administration.''
       This is not really a defense of the policy, of course, but 
     is it true? Republican officials, as we shall see, were not 
     without sin. But you might say that they worried enough to go 
     to confession: They tried to control against the leaking of 
     sensitive technology in their dealings with China by at least 
     monitoring and limiting the transactions. Not so the Clinton 
     administration, which from 1993 on not only showed contempt 
     for enforcing existing satellite controls but loosened them 
     so as to make it all but impossible to know whether they were 
     being violated. You might say they not only skipped 
     confession, but burned the church down.
       Today's controversy surrounds what the Chinese have managed 
     to learn through launching satellites made by two American 
     companies, Loral Space and Communications and Hughes 
     Electronics. Details of a federal grand-jury investigation 
     have been leaked to New York Times reporter Jeff Gerth and 
     others that make this much clearer. In February 1996 a 
     Chinese Long March rocket carrying a Loral-made satellite 
     blew up shortly after liftoff. In an effort to clarify to 
     insurers who was to blame for this accident, analysis done by 
     Loral and Hughes was presented to the Chinese, which the U.S. 
     Defense Department later determined could help China perfect 
     more reliable, accurate, long range ballistic missiles. 
     (According to a CIA report leaked this spring, 13 Long March 
     missiles with nuclear warheads are aimed at American cities.) 
     The federal grand jury is now trying to determine what, if 
     any, U.S. export-control laws may have been broken.
       This story has exploded because of the tandem revelations 
     that the Chinese military may have made illegal campaign 
     donations to aid Clinton's reelection and that Loral's CEO is 
     a top donor to the Democratic party. Despite Justice 
     Department warnings that he might undermine the grand-jury 
     investigation of Loral, the president went ahead earlier this 
     year and allowed the company to transfer and additional 
     satellite to China. Eager to connect the dots of the scandal, 
     the House last week voted 364 to 54 to suspend all transfer 
     of U.S. satellites to China.
       Focusing on the money is exciting, but probably misses the 
     point when it comes to assessing the potential damage done to 
     national security. In fact, not just Loral and Hughes, but 
     Lockheed Martin, Motorola, and Martin Marietta have all 
     worked closely with the Chinese launch industry--work which 
     began not in 1996, but nearly a decade ago in 1989. And all 
     of this history (not just the 1996 Loral-Hughes case) bears 
     investigating. There is no way to judge the administration's 
     performance in the Loral-Hughes matter without knowing what 
     was attempted by prior administrations.
       It was Ronald Reagan, after all, who first allowed the 
     launch of U.S.-made satellites on Chinese rockets, after the 
     Challenger space shuttle crash in 1986 deprived the satellite 
     industry of launch alternatives. And it was George Bush who 
     waived Tiananmen Square sanctions to allow the Chinese launch 
     of up to five U.S.-made satellites, three of which--all made 
     by Hughes--were launched before he left office.
       If this larger record is examined, three points emerge. 
     First, all of our satellite transfers have helped China 
     perfect its military rocketry. China's launching of U.S.-made 
     satellites--worth up to a half-billion dollars in revenue to 
     date--has helped finance China's own missile-modernization 
     efforts and missile exports to nations like Pakistan and 
     Iran. It also has given the Chinese access to U.S. rocket 
     know-how. U.S. contractors have a natural inclination to 
     tutor the Chinese on what they should do to make their crude 
     rockets precise and reliable (they don't want to lose their 
     satellites, which are worth up to 10 times the value of the 
     launcher). Anticipating this, State and Defense officials 
     drew up strict rules in the late 1980s covering precisely 
     what information companies could share with the Chinese. 
     These rules required monitoring of all contractor-Chinese 
     exchanges (including discussions) by a U.S. government 
     rocket-engineer enforcement agent.
       Did this prevent militarily useful information from being 
     conveyed to the Chinese? No. But because all exchanges were 
     monitored, there was a clear record of what was conveyed and 
     a concerted effort to keep such transfers to a minimum. Were 
     there infractions? Yes, but when they were reported, senior 
     officials in the Defense and State departments reprimanded 
     the contractors and got them to stop. Yet despite these 
     enforcement measures, a number of key technologies were 
     transferred before 1993. Clean-rooms were constructed in 
     China to assure Hughes' sensitive communications satellites 
     wouldn't be ruined by dust, humidity, or major temperature 
     changes before they were launched. And clean-room technology, 
     as it happens, is also crucial in preparing any advanced 
     system for launch, including reconnaissance satellites and 
     complex warhead packages.
       In an attempt to clear up liability for two launch failures 
     in 1992, U.S. contractors also discussed how to improve 
     Chinese payload farings (the nose cone at the rocket's top 
     that shields the satellite) and attitude and engine controls, 
     which fire the rocket's stages and keep them and the payload 
     (either military or civilian) at the precise angles required 
     for proper functioning. Finally, each launch of a Chinese 
     Long March vehicle helped improve the reliability of 
     China's intercontinental ballistic missile fleet, since 
     the rockets are the same.
       Republican officials, then, had a spotty record, with the 
     advantage that they worried about it and tried to enforce the 
     law. By the end of the Bush administration, proposals were 
     made to loosen controls over satellite transfers. Whether 
     they would have succeeded no one can know, because the 1992 
     elections intervened.
       The industry, however, correctly sensed that with Clinton's 
     election the time for pushing for decontrol was ripe. Their 
     first step came in late 1993 when they asked the Commerce 
     Department to persuade the White House to drop government 
     monitoring of contractors' discussions with the Chinese. They 
     wanted to share, unimpeded by monitors, a key technology 
     known as ``coupling load analysis.'' The crude Chinese 
     rockets were originally designed to be so rigid that 
     vibration from the rocket's separating stages and engines 
     risked shattering delicate satellites of the sort the U.S. 
     companies would want to launch (and the Chinese would want to 
     develop later on their own). Using coupling load analysis, 
     the Chinese would ``soften'' their launchers, allowing them 
     to carry more sensitive payloads--be it satellites or the 
     latest in highly accurate, multiple-warhead systems.
       The space industry was so eager to share this technology, 
     it lobbied Congress and the executive branch throughout 1993 
     to be given a free hand to do so. Meanwhile, government 
     monitors continued to file compliance reports on a host of 
     issues. Now, however, their concerns were handled 
     differently: Where before senior State and Defense officials 
     took action, now little or nothing happened. Word got out: 
     Increasingly, industry officials disobeyed government 
     guidance, shared their know-how with the Chinese, and 
     discovered that contempt for the law paid off.
       By 1995, the satellites being launched by the Chinese were 
     more sophisticated. One of these, AsiaSat 2, a communications 
     satellite made by Martin Marietta, was to be placed in its 
     orbit with a Chinese solid-rocket kick motor--a final rocket 
     stage strapped to the satellite itself. This kick motor's 
     propellant had to be configured with extreme precision to 
     ensure that it would propel the satellite to an exact point 
     in space and no further and that it would do so without 
     shattering the satellite though vibration or jolts of 
     acceleration.
       Martin Marietta and its Hong Kong customers were concerned 
     that the Chinese kick motor might not be capable of such 
     precision. They asked State if they could witness a Chinese 
     test-firing of the motor. Their wish was granted. What's 
     unknown is what, if anything, was then said to the Chinese 
     engineers by the company's foreign staff, who are not bound 
     by U.S. restrictions. Were they briefed by the contractor? 
     Did they speak with the Chinese or otherwise convey U.S. 
     solid-rocket propulsion know-how? We don't know. Why might it 
     matter? Perfecting kick motors can also help in China's 
     development of a warhead-delivery system known among experts 
     as a ``post-boost vehicle''--which is designed to penetrate 
     missile defenses. Boosting a satellite up into a precise 
     position in space with a kick motor is little different from 
     blasting warheads off their predictable course down through 
     space and the atmosphere.
       The good news in this case is we may have a clue whether 
     this technology was leaked: Industry's campaign to do away 
     with monitoring didn't fully bear fruit until 1996. In 1995, 
     U.S. law still required government monitoring agents, and 
     compliance reports were still being filed. This paper trail 
     and government monitoring work didn't grind to a halt until 
     1996. That's when President Clinton quietly removed virtually 
     all commercial satellites and related technology from State 
     Department munitions controls (which required official 
     monitors). The responsibility was transferred to the Commerce 
     Department, which (no surprise) trusts industry to monitor 
     itself.
       In his defense of the Clinton policy last week, Mike 
     McCurry cited this transfer to Commerce as the one change 
     that distinguished the Clinton administration's policy from 
     Bush administration practices. But the transfer to Commerce 
     was no simple ``change.'' It was tantamount to a complete 
     overthrow of the old export-control regime.
       It was under Commerce ``controls'' that Motorola and 
     Lockheed worked with the Chinese to launch a series of small 
     communications satellites known as Iridium. Two of these 
     satellites at a time were successfully launched on a Long 
     March rocket with a multiple-satellite dispenser of Chinese 
     design. A host of issues about the satellite dispenser were 
     somehow addressed--from proper mounting and release of the 
     satellites to coupling load analysis and attitude control. 
     And all were resolved. The result? China now has mastered 
     a technology virtually interchangeable with that of 
     multiple independently targetable warhead vehicles (MIRV), 
     a delivery system used on America's most advanced 
     intercontinental ballistic missiles. Indeed, the MIRV 
     system that our military uses today was borrowed from 
     dispensers that the commercial-satellite industry first 
     developed.

[[Page H4762]]

       One could go into greater detail on the potential military 
     significance of our satellite transfers to China. But this 
     much is already abundantly clear: Our national security 
     demands that Congress learn all the facts. This will require 
     going beyond the narrow legal question of whether Loral and 
     Hughes broke the law in 1996. Indeed, allegations of 
     influence peddling by the Chinese and the contractors should 
     not divert attention from the crucial questions raised by a 
     decade of U.S. satellite commerce with China.
       Among them are these: Have we already given the Chinese 
     everything of value (in which case, continued satellite 
     commerce could hardly do much harm)? Or is there more that 
     they need or want that we should control and protect? What, 
     if anything, should be done to improve enforcement of 
     controls and assure effective executive-branch backing? 
     Finally, is the spread of missile technology so tied up in 
     the transfer of satellites that we delude ourselves in trying 
     to control their transfer? Would it make more sense to accept 
     this connection and expand such trade, or in the case of 
     China, cut it off entirely?
       To get it these questions, Congress will have to hold its 
     own hearings--but it will need the time and depth and 
     expertise that can only come with the creation of an 
     independent commission. The commission and Congress, 
     moreover, are unlikely to get anywhere if U.S. contractors 
     are unwilling to speak freely. Only they know what has 
     actually been transferred to the Chinese since 1996. To 
     encourage them to be forthcoming, Congress and the executive 
     branch should grant contractors immunity from prosecution. 
     Meantime, a moratorium should be placed on further transfers 
     of satellites to China until the commission and Congress get 
     the answers they need. This will hurt industry only to the 
     extent that it drags its heels in providing information about 
     past transfers.
       Certainly, given the seriousness of these matters, it would 
     be shortsighted of Congress to focus exclusively on the 
     political and legal issues surrounding the 1996 Loral case. 
     There is, after all, a broader set of concerns at stake. The 
     president is duty bound to provide for the common defense. 
     Not until we know the truth about the U.S. role in China's 
     missile program can we know whether the Clinton 
     administration has met this most basic obligation.
                                  ____


                [From the Weekly Standard, June 1, 1998]

                        Clinton's China Commerce

                           (By Matthew Rees)

       The Clinton administration made a fateful decision in 1996 
     to put the Commerce Department in charge of overseeing 
     exports of American satellite technology. Under fire now for 
     transferring this weighty responsibility from the more 
     security-conscious State Department, the administration 
     insists the decision had nothing to do with campaign 
     contributions from eager exporters. Instead, say the 
     president's spokesmen, the transfer was just the outcome of a 
     ``bureaucratic squabble.''
       Whatever role donations may be played in strengthening 
     Commerce's hand, allowing that department to license 
     militarily sensitive goods for export was not garden-variety 
     Washington turf battle. It was the equivalent of 
     decontrolling such exports entirely. The current 
     congressional investigations of technology transfers to the 
     Chinese military would not be taking place if, over the past 
     five years, the administration had not given Commerce 
     unprecedented power to promote American technology sales 
     abroad, with dangerously little attention paid to how these 
     exports can contribute to nuclear proliferation, threaten the 
     supremacy of the U.S. military, and undermine America's 
     national security.
       The decontrolling mentality of the Commerce Department is 
     exemplified by William Reinsch, who heads the department's 
     Bureau of Export Administration. This is where American 
     companies go if they want to sell sensitive products, like 
     supercomputers in foreign countries. The bureau's role is 
     both to stop exports that might compromise national security 
     and to help guarantee that the sensitive products it does 
     approve for sale abroad don't end up in the hands of 
     untrustworthy governments.
       But Reinsch has effectively made the bureau a servant of 
     Commerce's central mission: unbridled export promotion. His 
     motto is ``Yesterday's adversaries are today's customers.'' 
     This mentality has led Commerce to minimize the danger of 
     sharing sensitive technology with countries like China. The 
     Pentagon concluded last year that ``United States national 
     security has been harmed'' by the assistance American 
     aerospace companies have provided to China. Nonetheless, 
     Reinsch was apoplectic when the House overwhelmingly voted on 
     May 20 to block further exports of U.S. satellites to China: 
     ``We're talking about the potential loss of major 
     contracts,'' he whined to the Wall Street Journal. ``It could 
     really complicate people's lives.''
       The controversy over the transfer of technology to China is 
     but one outgrowth of Commerce's policy of giving American 
     high-technology companies unprecedented freedom to sell their 
     products in foreign markets. Another startling illustration 
     of the fervor with which Commerce promotes the sale of even 
     the most sensitive exports came early in 1996. According to 
     Gary Milhollin, of the Washington-based Wisconsin Project on 
     Nuclear Arms Control, that's when U.S. government nuclear 
     experts asked Commerce to provide American computer companies 
     with a list of nuclear laboratories in Russia and China. The 
     goal was to prevent the companies from selling their high-
     performance supercomputers to these laboratories, which the 
     companies might not otherwise know to be in the nuclear 
     business. But Commerce officials refused to provide such a 
     list, claiming U.S. policy prevented them from sharing such 
     information.
       While Commerce aggressively pushed exports in the Reagan 
     and Bush administrations, it had not yet triumphed over its 
     bureaucratic rivals elsewhere in the executive branch, who 
     acted as a brake on Commerce's salesmanship. The Defense 
     Department, notably, would frequently challenge export 
     licenses that posed a potential threat to America's strategic 
     position. But a further sign of Commerce's ascendancy in the 
     Clinton administration is that the Pentagon, too, has become 
     an enthusiastic partner in promoting the sale of American 
     goods in overseas markets. (Reinsch said in an interview last 
     November that relations between Commerce and the Pentagon are 
     ``the best they've been in 20 years.'') This is not just a 
     matter of politically savvy defense officials' knowing which 
     way the wind is blowing. An array of these officials 
     appointed to senior positions by the president--William 
     Perry, Ashton Carter, Mitch Wallerstein, Ken Flamm, to cite a 
     few--had made names for themselves as longtime supporters of 
     easing export controls.
       A key official is Peter Leitner, a 12-year veteran of the 
     Pentagon office that oversees export controls. He notes that 
     the Defense Department now instructs its employees to side 
     with Commerce in interagency debates over export controls. In 
     congressional testimony last year, Leitner observed that 
     ``this bizarre role change finds the State Department at 
     times in the farcical position of being the lone agency 
     making the national security case and opposing liberalization 
     positions from DoD.''
       Despite their generally pro-export posture, State and 
     Defense still had reservations about transferring 
     responsibility for licensing the export of satellite 
     technology to Commerce. And their reservations were 
     justified: For items under State's jurisdiction, the decision 
     to grant an export license is supposed to be based only on 
     national security. Moreover, Congress must be notified 30 
     days in advance of an export. By contrast, Commerce is 
     mandated to weigh commercial and economic interests, and it 
     is not required to notify Congress of its decisions. With 
     communications satellites costing upwards of $100 million, 
     it's easy to see how commerical concerns would tip the scales 
     away from export controls.
       When Clinton announced the transfer of licensing 
     responsibility on March 14, 1996. Commerce officals--who had 
     lobbied hard to be given licensing repsonsibility--were 
     thrilled. The New York Times reported that an e-mail was 
     circulated at Commerce announcing ``good news'' but warning 
     recipients not to publicize the decision in a way that would 
     ``draw attention'' to it. Clinton officials did their best to 
     bury the news by not publishing the new rules in the Federal 
     Register until Election Day 1996. The strategy worked: One of 
     the most important national-security decisions made in 
     Clinton's first term received scant attention during his 
     reelection campaign from Congress and the press.
       Satellites weren't the only technology transferred from 
     State to Commerce two years ago. Clinton also took something 
     known as ``hot section'' technology of the State Department's 
     munitions list and empowered Commerce to license such 
     exports. Hot-section technology boosts the performance and 
     durability of fighter jets. Steve Bryen, who oversaw export 
     controls in the Reagan administration, says this technology 
     is so sensitive that in previous administrations it wasn't 
     even shared with allies like the French and the Germans.
       During the internal debate over transferring hot-section 
     jurisdiction from State to Commerce, some Clinton 
     administration officials raised questions about whether 
     America's national security would be compromised and whether 
     it might reduce the combat advantage of U.S. aircraft. But 
     Commerce officials argued it would be impossible for the 
     technology to be used by foreign manufacturers in such a way 
     that U.S. military power could ever be equaled or surpassed. 
     To the amazement of many Pentagon officials, this argument 
     prevailed and responsibility for licensing exports of the 
     technology was handed from State to Commerce.
       Commerce officials have gone to extraordinary lengths to 
     circumvent even the most modest restraints placed on them. 
     Last year, Congress approval a measure requiring American 
     computer companies exporting to countries believed to pose a 
     proliferation risk (that is, Russia and China) to give the 
     executive branch 10 days' notice to determine whether a 
     proposed supercomputer export requires an individual license. 
     The measures also requires that, once supercomputers have 
     been licensed and shipped to countries of proliferation 
     concern, U.S. government officials must check whether the 
     buyers are using the computers as proposed.
       Yet Commerce has made a ``deliberate effort to circumvent'' 
     the post-shipment verifications, according to Milhollin. 
     Indeed, under Commerce's interpretation, in order for the 
     government to block an export, only the most senior cabinet 
     officials--undersecretaries or higher are permitted to 
     intervene. This prompted David Tarbell, who

[[Page H4763]]

     heads the Pentagon agency that monitors export controls, to 
     warn in an internal memo that the National Security Council 
     and Commerce were using the undersecretary requirement to 
     ``ensure that no (or very few) objections would ever be 
     received.'' Tarbell's complaint is echoed by three Senate 
     Democrats, and 10 Republicans, who have sent the president a 
     letter asking for the law to be enforced.
       There was a very precise reason Congress required the 
     regulations: It has become disturbingly clear that Commerce 
     had little clue about the ultimate destination of an 
     extremely sensitive product--supercomputers. Silicon 
     Graphics, for example, has acknowledged having sold four 
     supercomputers to one of Russia's premier nuclear-weapons 
     design laboratories, Chelyabinsk-70, and claimed it made the 
     sale only because company officials didn't know the 
     laboratory was involved in nuclear production.
       Even more troubling was Reinsch's announcement last June 
     that 47 supercomputers had been sold to China. Technical 
     experts say these computers provide unprecedented 
     technological capabilities to Beijing are likely to become a 
     key element in China's nuclear program. But when Reinshc was 
     asked about this at a congressional hearing last November, he 
     said there was no evidence any of the computers was being 
     used for nuclear purposes. When pressed by Rep. Duncan Hunter 
     on whether Commerce even knew where the computers were 
     located, Reinsch bobbed and weaved until finally giving an 
     answer that summed up the bankruptcy of the Clinton 
     administration's export policy: ``With respect to some of 
     them, yes. With respect to all of them, not yet.''
       There's a simple reason Reinsch couldn't be more 
     definitive: China won't allow American officials to conduct 
     post-shipment verifications, designed to guarantee that 
     materials exported from the United States are being used as 
     promised. Thus Reinsch acknowledged last December--six months 
     after learning about the 47 supercomputers sold to China--
     that ``no formal post-shipment verifications have yet been 
     requested.'' And now that another six months have passed, 
     there's no evidence Commerce knows anything more about where 
     the supercomputers are or how they're being used.
       So what has the Clinton administration learned about the 
     pitfalls of a permissive export-control policy? Apparently 
     nothing. Consider this: The Defense Technology Security 
     Administration--the agency charged with overseeing export 
     controls for the Pentagon--is scheduled to be abolished this 
     fall. Its successor agency will be moved within Defense to an 
     acquisitions department that has traditionally been hostile 
     to export controls. Even more ominous is a recent Defense 
     News report that the Commerce Department is pushing to grant 
     an export license for the sale of a high-temperature furnace, 
     manufactured by a New Jersey-based company called Consarc, to 
     a Chinese government agency. This sale--already approved in 
     an interagency process--is all the more remarkable because 
     the furnace will bolster Beijing's ability to produce nuclear 
     warheads.
       There's an interesting story behind the furnace. Consarc 
     was all set to ship it to Iraq in 1990, one month before the 
     invasion of Kuwait. The sale was blocked at the last minute 
     by senior officials at the Pentagon and the National Security 
     Council. Had it gone through, there's little doubt Saddam 
     would have used it to bolster his arsenal. Clinton 
     administration officials should have learned something from 
     this. Short of a missile attack, what will wake them up?
                                  ____


                [From the New York Times, June 18, 1998]

    U.S. Rethinking a Satellite Deal Over Links to Chinese Military

                            (By Jeff Gerth)

       Washington, June 17.--Faced with growing criticism of its 
     satellite exports to China, the Clinton Administration is 
     rethinking whether to allow one of the biggest sales to date, 
     a $650 million deal President Clinton quietly approved two 
     years ago.
       Government officials said the Pentagon and State Department 
     were raising new questions about whether a Chinese-controlled 
     company with close ties to China's military should be allowed 
     to buy the satellites, which contain some of the United 
     States' most sophisticated communications equipment.
       The satellites are the cornerstone of a commercial mobile 
     phone network planned for China and 21 other Asian nations. 
     American officials said their design included a powerful 
     antenna that could eavesdrop on mobile phone calls in China 
     or other countries in the region. It could also be used by 
     the Chinese military to transmit messages through hand-held 
     phones to remote parts of China.
       Antennas of these dimensions are a mainstay of the United 
     States' and Russia's eavesdropping satellites and have not 
     previously been exported to China, though a sale to the 
     United Arab Emirates is pending. They also can be used to 
     extend the range of mobile phones.
       Mr. Clinton leaves next week for China, and the 
     Administration had hoped to use the trip to showcase a 
     variety of business deals and agreements, including 
     cooperation on civilian satellite and rocket projects. 
     Meanwhile, the House continued investigating the export of 
     space technology today.
       Administration officials said concerns about the pending 
     satellite sale had been deepened by American intelligence 
     reports about Shen Rongjun, the Chinese Army general who 
     oversees his country's military satellite programs. The 
     reports quote the general as saying he planned to emphasize 
     the role of satellites in gathering information.
       In an unusual arrangement, Hughes Space and Communications 
     hired General Shen's son, a dual citizen of Canada and China, 
     to work on the project as a manager. The company said it was 
     aware of his familial ties; it is not clear whether the 
     Clinton Administration knew.
       Father and son were both directly involved in the project, 
     and American officials said the intelligence reports said the 
     general was pressing his son to move it forward.
       The New York Times reported last week that the Chinese 
     military was sending many of its coded messages through 
     American-made commercial satellites sold to Asian companies. 
     China's military satellite network collapsed in 1996, when 
     its first satellites wore out and the replacements failed to 
     work as planned.
       President Clinton approved the Hughes project on June 23, 
     1996, after advisers assured him the communications satellite 
     technology was readily available from European suppliers and 
     would not contribute to Chinese military capabilities.
       China already has a burgeoning  cellular telephone system, 
     which relies on ground-based transmitters. There are 
     almost 1.5 million cellular phones in Beijing and 
     Shanghai, but the system is less developed in the 
     country's more remote areas, industry officials say.
       Donald O'Neal, a spokesman for Hughes, said the satellites 
     were ``inherently dual use,'' meaning that they have both 
     civilian and military potential. ``The satellite is not 
     designed for military application,'' Mr. O'Neal said. ``But I 
     don't know how you can prevent it.''
       The Federal Government could still stop the deal. Mr. 
     O'Neal said Hughes, which is part of Hughes Electronics, a 
     subsidiary of the General Motors Corporation, was waiting for 
     the Commerce Department to review its application to sell the 
     satellite to the Asian consortium, A.P.M.T. or Asia-Pacific 
     Mobile Telecommunications.
       Liu Tsun Kie, a spokesman for the consortium, said in a 
     telephone interview from Singapore that the satellite network 
     would be marketed to civilians by regional telecommunications 
     operators. It would be up to Chinese Government regulators, 
     Mr. Liu said, to decide if China's military could use the 
     satellites.
       Mr. Liu predicted that the Clinton Administration would 
     eventually approve the deal. ``In view of the improving Sino-
     American relationship, as well as the close rapport 
     established between the U.S. satellite industry and major 
     industry leaders in China and the Asia Pacific,'' he said, 
     ``we are confident that A.P.M.T. will obtain all the 
     necessary approval and export license to insure no delay in 
     satellite launch.''
       Mr. Liu said the project would attract more than 200,000 
     mobile phone customers in China within its first two years.


               the two crucial steps in a satellite sale

       Making a satellite sale to China involves two crucial steps 
     that occur simultaneously. Aerospace manufacturers must 
     persuade the President to sign a waiver of the sanctions 
     imposed on Beijing after the Tiananmen Square killings in 
     1989. Each project requires a separate waiver.
       At the same time, companies apply to Federal Government 
     agencies for permission to export specific technologies used 
     in the satellites. Satellite exports to the Chinese military 
     are banned, but sales to Chinese companies are generally 
     allowed, unless they would advance military development in 
     areas like intelligence gathering and nuclear weapons.
       Mr. Clinton granted the waiver for the Hughes project two 
     years ago and the company obtained the necessary export 
     licenses. Since then, however, Hughes has changed the design 
     to enhance the satellite's capabilities, requiring it to 
     return to the Government for a new license.
       That decision is now before a Government Department and 
     including officials from the Pentagon, State Department, the 
     Arms Control and Disarmament Agency and the Department of 
     Energy. Each department casts a single vote, with the 
     decision made by majority rule. A dissenting agency can 
     appeal to the President, but that has never happened.
       A Commerce Department spokesman declined to discuss the 
     case, saying it involved confidential business information.
       Privately, Commerce Department officials are arguing that 
     the deal should go forward because the design approved in 
     1996 is substantially the same as the current configuration, 
     Administration and Congressional officials said.
       But some Pentagon and State Department officials believe 
     the license should face more scrutiny in light of the new 
     information about General Shen and the capabilities of the 
     satellite. Administration officials also said that the 
     increased scrutiny by Congress of the Chinese military and 
     American satellites has prompted officials to pay closer 
     attention to exports to China.
       Several Congressional committees are investigating whether 
     the policies on technology exports hurt the national 
     security.


               technical questions determine fate of deal

       The issue turns on highly technical questions. An 
     Administration official who disagrees with the Commerce 
     Department's

[[Page H4764]]

     analysis said the Hughes design is substantially different 
     from what was approved two years ago.
       ``The antenna sent up the flags,'' the official said. ``It 
     is more powerful than what we have licensed before.''
       The antenna allows the satellite to receive incoming 
     signals. But a sophisticated antenna, like the one currently 
     under review, can become a listening device that is very 
     effective against ground-based interception efforts, 
     Government reports show.
       Before 1996, the Pentagon could easily have stopped the 
     license, because satellites were treated as military items 
     and subject to State Department authority. That year 
     President Clinton shifted jurisdiction to the Commerce 
     Department, easing the controls and lessening the 
     influence of the Pentagon, a senior Government auditor 
     told Congress earlier this month.
       A.P.M.T. was organized in the early 1990's. Most of its 
     stock was held by five Chinese state-owned entities: China 
     Satellite Launch and Tracking Control, a unit of Costind, and 
     scientific and research arm of the Chinese military, the 
     China Aerospace Corporation, part of the defense-industrial 
     complex, China Resource Holdings, a trading company that owns 
     a bank in Hong Kong with the Riady family of Indonesia, and 
     subsidiaries of Chinese electronics and telecommunications 
     ministries. A small stake was held by a Singapore company.
       In February 1996, the consortium authorized Hughes to 
     proceed with the design and construction of a sweeping mobile 
     satellite telecommunications network that would span 22 
     countries in Asia and the Pacific, from Pakistan to 
     Indonesia.
       China's own space program--both rockets and satellites--was 
     then under severe strain.
       A Chinese rocket exploded shortly after liftoff in 
     February. Two months later, engineers from Hughes and Loral 
     Space Communications were brought in by insurers and China 
     Aerospace to help figure out what went wrong.
       The conversations that ensured between the companies and 
     Chinese technicians are now the subject of a criminal 
     investigation, which is seeking to determine whether American 
     export laws were violated. Both companies deny wrongdoing.
       While China is trying to repair its rocket program, its 
     satellites began to fail. The first domestically produced 
     satellites, launched by the Chinese military in the early 
     1990's were wearing out, and the first replacement, built in 
     cooperation with the German company Daimler-Benz, had failed 
     to achieve proper orbit after its 1994 launch.
       In early 1996, all this led China's most senior military 
     official, Gen Liu Huaqing, to discuss his concern with 
     General Shen, who until a recent reorganization was a senior 
     Costind official and oversees China's satellite and rocket 
     launching programs, American officials said.
       General Shen and General Liu have publicly promoted 
     satellite technology as crucial to the future development of 
     China's military capabilities. General Shen has privately 
     assured his colleagues about his ability to fix China's 
     satellite problems and improve the military's surveillance 
     and intelligence-gathering capabilities, American officials 
     said.
       At about the same time, there were concerns within Hughes 
     and A.P.M.T. over how long it was taking President Clinton to 
     make a decision about the deal, Mr. O'Neal and American 
     officials said.
       Commercial satellite exports to China have been banned 
     since the killings in Tiananmen Square in 1989, but the 
     President can waive the prohibition, which Presidents George 
     Bush and Clinton have done 20 times.


               `expedited handling' of waiver was sought

       Hughes officials wanted ``an expedited handling'' of the 
     waiver in order to meet a contractual deadline, Mr. O'Neal 
     said. And recently released White House documents show that 
     the company hoped to have the President sign off on the deal 
     before Hughes' chairman left China on June 19, 1996.
       The staff memorandum that the President relied on to 
     approve the deal made no mention of the Loral-Hughes help for 
     China's rocket program. Three weeks before the memorandum to 
     the President, the State Department had alleged, in a letter 
     to Hughes, that there had been a violation of the arms export 
     control law during the rocket accident review.
       The President granted the waiver on June 23.
       Soon after the Presidential action, Hughes received a 
     license to export a satellite. Later that summer, Hughes 
     applied for another export license that would allow Shen Jun, 
     the son of General Shen, to work on projects subject to 
     United States export controls, including the A.P.M.T. 
     project, Mr. O'Neal said.
       ``We applied for and received an export license that 
     allowed him to participate as a translator in the A.P.M.T. 
     preliminary design review,'' Mr. O'Neal said.
       Mr. Shen was hired in 1994 by Hughes for his computer 
     expertise, though the company was also aware of his family 
     ties before he joined the company, Mr. O'Neal said.
       General Shan has been involved in the A.P.M.T. project as 
     the overseer of the Chinese launch and tracking company and 
     his son has given Hughes marketing advice about China and 
     technical advice about mobile telephone networks, Mr. Liu and 
     a Hughes executive said.
       Mr. O'Neal said he had no comment on the Shen family 
     discussions because ``anything he said to his dad is 
     personal.''
       Despite all the flurry of activity in mid-1996 between 
     Hughes and A.P.M.T., the deal bogged down amid internal 
     squabbles. But by this year the pace had picked up again and 
     last month the consortium reorganized itself and signed 
     another deal with Hughes for an upgraded satellite.
       The new satellite will have greater power to transmit and 
     receive signals. Its payload includes a large scale antenna 
     reflector and a digital on board processor, Mr. Liu and Mr. 
     O'Neal said.
       The antenna and processor enabled the consortium's network 
     to pinpoint low-power hand-held phones and simultaneously 
     handle 16,000 phone conversations. Mr. Liu said that the 
     regional affiliates ``will be able to intercept calls if 
     required by local authorities'' but the consortium will not 
     be able to intercept.
       As a result of the recent reorganization, the consortium is 
     now two thirds owned by its Chinese affiliates China 
     A.P.M.T., said Mr. Liu, the consortium's deputy president. 
     China A.P.M.T., in turn, is owned by the same five Chinese 
     entities, including the Costind unit, and it will be the 
     local A.P.M.T. franchise in China.
       The president of A.P.M.T. and China A.P.M.T. is Li Baoming 
     and A.P.M.T.'s chief engineer is Feng Ruming. Mr. Liu said 
     both men have senior posts with the China Satellite Launch 
     and Tracking Control Corporation, the unit of Costind 
     overseer by General Shen. American intelligence reports say 
     Mr. Feng and Mr. Li are top military officers, according to 
     Administration officials.
       Mr. O'Neal said that Hughes was ``not aware'' of A.P.M.T.'s 
     military ties and while ``there could be'' some, it was up to 
     the Federal Government to vet those connections. That is 
     precisely what is now happening.
  Mr. Speaker, the House should heed the advice of former CIA Director 
Jim Woolsey who testified before the Committee on Rules that, quote, 
this is what he said, ``I can think of no subject that more closely 
would require a careful and thorough investigation by a select 
committee of Congress, and I could think of few that would even be in 
the same league.'' That is what the former CIA director said, that was 
appointed by President Clinton.
  Mr. Speaker, I would urge all Members to support the creation of the 
Select Committee so that Americans can have some answers to the 
questions about the formulation of United States security policy with 
regard to Communist China.
  Mr. Speaker, I yield such time as he may consume to the gentleman 
from Florida (Mr. Goss).
  (Mr. GOSS asked and was given permission to revise and extend his 
remarks.)
  Mr. GOSS. Mr. Speaker, I rise in support of this resolution, which, I 
am pleased to say is the result of much hard work and bipartisan 
cooperation on the part of the leadership, the Rules Committee, and the 
prospective chairman and ranking member of the proposed select 
committee. I am very proud of the manner in which this process has been 
handled, and I think this resolution is a credit to all involved and to 
the entire House.
  To the minority members of our Rules Committee, who raised in their 
views accompanying our report repeated concerns about the manner in 
which this inquiry will be handled, I point to the remarks of both the 
chairman-designate, Mr. Cox, and the ranking member-designate, Mr. 
Dicks, before our Rules Committee panel. They are developing a strong 
bipartisan working relationship and came to the Rules Committee 
together in full agreement about the particulars of this resolution.
  They both spoke of commitment to running a professional, serious and 
collegial inquiry.
  Mr. Speaker, it's fair to say that we all would prefer not to be here 
today creating a select committee to review U.S. national security and 
military/commercial concerns with the People's Republic of China. We 
would certainly all prefer that we did not have before us very serious 
allegations of illegal foreign influence in our Democratic process, 
troubling concerns about the transfer of highly sensitive military 
information and technology to the Chinese, and the very real potential 
that palpable damage has been done to our national security.

  But the fact is that we have been presented with serious and credible 
allegations on these points--and the American people want us to get to 
the bottom of what happened, how it happened, and what the impact has 
been for the security of our citizens and our interests.
  We have an obligation to accomplish this goal in a thorough and 
timely manner, and I am convinced that the only good way to do that is 
to establish this select committee.
  Members know I do not take this step lightly. As chairman of the 
House Intelligence Committee, I am aware of the jurisdictional 
authorities relevant to this subject, not just in my own committee, but 
in as many as 7 other House committees. I know that many of these 
permanent committees of the House have, in fact, been pursuing pieces 
of this investigation up to this point.

[[Page H4765]]

  But the fact remains that we need to move on this and start getting 
some answers to these serious questions now. For that we need to have a 
relatively small, singly focused panel with the enhanced investigatory 
authorities provided by this resolution. The resolution provides 
mechanisms to ensure that the Select Committee has the clout to get its 
work done and has proper channels through which to have maximum 
cooperation with, and assistance from, the existing House committees.

  It certainly makes sense to me that on matters of such grave 
importance as the national security and the sanctity of our domestic 
political system, we should all pull together in a bipartisan way to 
shed light on the truth and, if necessary, consider means to ensure 
that proper protections and safeguards do exist in our policies on 
technology transfers and controls over sensitive information with 
respect to foreign nations.
  I agree with former Director of Central Intelligence James Woolsey 
who said in testimony at the Rules Committee this week that he can 
think of no subject that more clearly would require careful and 
thorough investigation by a select committee of the Congress.
  Finally, Mr. Speaker, let me say that I very much hope the 
administration will make good on its pledge to cooperate fully with 
this important inquiry. And by cooperate I mean not just talking about 
being helpful, but about actually providing all relevant material to 
the inquiry, helping the select committee gain access to the 
individuals it needs to interview, and offering a full and complete 
accounting of its relevant policies.
  I would hope that we do not see more of the practice we've become 
used to with this administration of attempting to change the subject, 
throw up roadblocks and shoot the messenger when serious questions are 
raised about its policies and decisionmaking. The American people 
expect and deserve better than that from this administration.
  Mr. SOLOMON. Mr. Speaker, I reserve the balance of my time.
  Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the gentleman from New York (Mr. Solomon) and I had a 
discussion about an hour ago on the rule, and at that time I urged the 
gentleman to not engage in a public hanging before the facts are in. 
And I would repeat that at this point.
  Mr. Speaker, it is a foregone conclusion that the House will vote 
today to create a new Select Committee to investigate the allegations 
that a U.S. company transferred sensitive technology to the People's 
Republic of China that could endanger national security and that 
campaign contributions played a role in obtaining the licenses 
necessary for U.S. companies to launch their satellites on Chinese 
missiles. I support the creation of the Select Committee. But I do so 
with some reservations.
  Mr. Speaker, my reservations are shared by my Democratic colleagues 
on the Committee on Rules which has original jurisdiction to create 
this Select Committee. In our committee report minority views, we have 
laid out our concerns about the structure of the Select Committee and 
the decision-making process that is provided for by the enabling 
resolution.
  We are heartened that the designated ranking minority member, the 
gentleman from Washington (Mr. Dicks) feels that he has reached an 
understanding with the designated chairman of the Select Committee on 
several matters that are vitally important to assuring that the Select 
Committee's work product is viewed as fair and that the rights of the 
minority have not been ignored.
  However, Mr. Speaker, there are matters which I do feel compelled to 
bring to the attention of the House. The Committee on Rules majority 
states at the outset that they have used the Iran-Contra Select 
Committee as a model for this Select Committee. While this model 
bestows extraordinary powers on the chairman, Iran-Contra also stands 
as a model of bipartisan cooperation and the joint leadership of that 
committee acted jointly on all matters of procedural concern.
  The Democratic members of the Committee on Rules hope that the model 
of bipartisanship on the Iran-Contra Select Committee holds true on 
this Select Committee.
  Our fears of abuse, while tempered by the reputation for fairness of 
the designated chairman of the Select Committee, are based on the 
experience of the past year and a half. Granting unilateral powers to 
the chairman of such a serious investigation gives us serious concern, 
and we hope, for the sake of the integrity of this body and for the 
finding of truth in this matter, that the assurances that we have been 
given that the rights of the minority will be protected in this 
investigative process and that the minority will be consulted on all 
important matters coming before the Select Committee.
  This happened during Iran-Contra, and if that Select Committee is to 
serve as a model for this one, we hope that the same level of 
bipartisan cooperation would exist over the course of this 
investigation.
  Mr. Speaker, we are concerned about the unilateral subpoena power, 
unilateral deposition power, as well as the ability of the Select 
Committee to gain access to 10 years' worth of tax returns of 
individuals and entities under investigation by the Select Committee. 
We are concerned about how this information will be handled, and under 
what circumstances it will be released to the public.
  These are all legitimate concerns, but we remain hopeful that the 
participants in this investigation will realize that if it is tainted 
by accusations of partisan high-handedness, that any findings and 
recommendations that may be made will be tainted as well.
  Finally, Mr. Speaker, my Committee on Rules Democratic colleagues and 
I are particularly concerned about the breadth and scope of this 
investigation. This resolution rightfully empowers the Select Committee 
with the authority to make a full and complete inquiry into not just 
technology transfers which may have contributed to the enhancement of 
the offensive capabilities of the People's Republic of China and its 
effect on the national security concerns of the United States, but 
other issues relating to export policies and the influence of campaign 
contributions. These are legitimate areas of investigation, but I am 
concerned that the authorities granted in this resolution are so broad 
that the Select Committee could go on working well into the future.
  In addition, Mr. Speaker, I would like to point out that the 
designated ranking member of the Select Committee, the gentleman from 
Washington (Mr. Dicks), has asked that the many other investigations 
now ongoing suspend their investigations of those matters under the 
jurisdiction of the Select Committee while it is in operation.
  This is necessary, Mr. Speaker, to ensure that the Select Committee 
can get its work done and not find the need to go on ad infinitum, and 
I hope the other committees of the House will cooperate in this matter. 
We need to find out what has happened and the Select Committee needs to 
go on about its business and report back to the House as soon as 
possible.
  Mr. Speaker, I support the creation of the Select Committee, but I do 
so with an important caveat: If this investigation wanders from the 
focus of determining the answers to the questions at hand and if some 
of my colleagues insist upon demagoguing this issue, they risk damaging 
not only the legitimacy of any of the findings of the committee, they 
risk damaging the integrity of this institution. I urge the Select 
Committee to ensure that its investigation is fair and thorough.
  Mr. SOLOMON. Mr. Speaker, will the gentleman yield?
  Mr. FROST. I yield to the gentleman from New York.
  Mr. SOLOMON. Mr. Speaker, I would point out to the gentleman, because 
I know the gentleman from California (Mr. Condit) brought this up, 
worrying that this might go into another Congress and may run up costs 
of up to $5 million, I would just point out that the language speaks 
specifically for this Congress and this Congress only. It would take a 
further action by this body. So I wanted to call that to the attention 
of the gentleman.
  Mr. FROST. Mr. Speaker, reclaiming my time, I appreciate the comments 
of the gentleman. There is an underlying question here which may well 
drive this investigation into the next Congress, which of course would 
have to be authorized by the next Congress. The underlying issue is the 
concern that the gentleman from New York (Mr. Solomon), who is the 
chairman of the Committee on Rules, has raised for many years about 
whether we ought to be doing any of this.
  Of course, the gentleman who is the chairman of the committee has 
objected to and opposed the transfer of

[[Page H4766]]

technology which began during Republican administrations. And my 
concern is that if this committee goes to the fundamental issue of 
whether we ought to be doing business with China, that is a bottomless 
pit and that is a matter that could go on for a very long time.
  There are legitimate differences within the Republican Party on this 
issue, as there are legitimate differences within the Democratic Party 
on this issue. So there is the potential for this investigation, even 
though it must be renewed at the beginning of the next Congress, to go 
on for a very long time if we go into the underlying foreign policy 
question of whether we ought to be doing any business with China.
  Mr. SOLOMON. Mr. Speaker, if the gentleman would continue to yield, I 
think it might help to clarify. The gentleman is absolutely right. He 
and I were around during the Iran-Contra debate and I have here the 
final report of the Iran-Contra Committee. The last paragraph says, 
``The President cooperated,'' and this is talking about President 
Reagan, ``cooperated with the investigation. He did not assert 
executive privilege. He instructed all relevant agencies to produce 
their documents and witnesses, and he made extracts available.''
  Mr. Speaker, I wanted to point out if we do get full bipartisan 
cooperation, I do not expect this to go any further because of the 
narrow scope.
  Mr. FROST. Mr. Speaker, reclaiming my time, while the scope of the 
matter under discussion today is fairly narrow, the resolution itself 
is very broad. It is possible that this resolution could be used in a 
future Congress as a means for examining the entire foreign policy of 
the United States as it relates to China, regardless of whether there 
was any wrongdoing found by this investigation.
  I only raise that cautionary flag, as I did in the Committee on 
Rules, because that is really a legitimate matter to be determined by 
our foreign policy committees of this Congress, perhaps even by our 
Select Committee on Intelligence, perhaps by our Committee on National 
Security, but not necessarily by this Select Committee. Because the 
gentleman and previous Republican Presidents have a philosophical 
difference on this issue, and I would hope this Select Committee does 
not go to that philosophical difference of whether we ought to be 
engaging China, but simply limits itself to the matters at hand which 
raise the question of whether there was improper conduct in terms of 
the implementation of that policy.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New Jersey (Mrs. Roukema), an outstanding veteran Member of this 
Congress from Ridgewood, New Jersey.
  Mrs. ROUKEMA. Mr. Speaker, I do appreciate the gentleman from New 
York (Mr. Solomon) yielding me this time at this point in this debate.
  Mr. Speaker, I rise in strong support of this proposal. It is 
essential and timely. There is a compelling need for this committee. 
New evidence has come to light that against the recommendations of the 
Defense Department and the State Department, how conditions were waived 
and national security considerations were waived, and Loral Space and 
Communications transferred sensitive satellite and missile technology 
to China.
  Mr. Speaker, I must also say that the technology, as we now know, 
allowed the Chinese to greatly improve their ballistic missile and 
guidance capability. We have recently learned about proliferation of 
nuclear weapons in India and Pakistan. That may or may not have any 
relationship. But in any case, the timeliness has been proven and these 
are important national security issues at hand.
  But I must say we must put politics aside. As the gentleman from 
Florida (Mr. Goss) said during the earlier debate, this is not about 
fault-finding. I would therefore call upon all of us, Republicans, 
Democrats, to put politics aside and proceed with a strong interest and 
fairness to find the truth in this matter. The national security 
ramifications of this investigation are too important to become mired 
in politics.
  Then I must feel compelled to say that I am so pleased that we have 
as chairman the gentleman from California (Mr. Cox). We all have utmost 
faith in the gentleman's ability to lead this investigation. He has the 
experience, he has the knowledge, and above all, he has the trust, 
based on that experience, of all of his colleagues because he is known 
as the essence of honesty, fairness and tact.
  In conclusion, I want to be very clear. This is not about a real 
estate deal. We must, we must approve this and get on with the business 
of the security interests of our country.
  Mr. Speaker I rise in strong support of H. Res. 463--Establishing a 
Select Committee to Investigate Concerns with the Peoples Republic of 
China. This is essential and timely.
  The Investigation. This could become one of the important 
Congressional investigations to date. This Committee will focus on the 
real National Security concerns that have been surfaced, hence its 
title. The Members of the Select Committee will have experience and 
knowledge of defense, national security, and intelligence issues.
  There is Compelling Need for the Committee. New evidence has come to 
light that against the recommendations of the Departments of Defense, 
State, and Justice, in February 1998, President Clinton waived national 
security considerations and allowed Loral Space and Communications to 
transfer sensitive satellite and missile technology to China.
  This technology allowed the Chinese to greatly improve their 
ballistic missile and guidance capability. The consequences of this 
transaction poses the greatest nuclear threat to the United States 
since the end of the Cold War.
  We have seen in the last few months, the proliferation of nuclear 
weapons to India and Pakistan. With the Chinese perfecting their 
weapons systems, the world is becoming a much more dangerous place. 
This investigation will not only help us get the facts but it will help 
inform us on these important national security issues.
  We Must Put Politics Aside. Our colleague Representative Goss stated: 
This is not about fault finding. These allegations have serious 
national security implications and should be investigated in a serious, 
bi-partisan manner.
  I call on all Republicans and Democrats to put politics aside and 
proceed with a strong interest in integrity to find the truth in this 
matter. The National Security ramifications of this investigation is 
too important to become mired in politics.
  I call on the President to act in good faith with the investigation 
and to release all documents relating to the case.
  Congressman Cox. My good friend from California, Congressman 
Christopher Cox will be in charge of this investigation. I have the 
utmost faith and confidence in Congressman Cox.
  He has the Experience: He was senior counsel on the Iran-Contra 
Investigation and an accomplished attorney.
  He has the Knowledge: Congressman Cox is a recognized expert on 
foreign affairs and the intelligence community.
  He has the Trust: Throughout his career in Congress, Mr. Cox has 
commanded respect from all of his colleagues for his honesty, fairness, 
and tact.
  He will lead this investigation fairly and with a firm hand. He will 
not allow this very important matter to dissolve into ``political 
theater.'' I strongly urge my colleagues on both sides of the aisle to 
work closely with Congressman Cox to find the truth.
  In conclusion, let me be very clear. This is not a real estate deal 
or a sex scandal and this is not about partisan politics. These charges 
go to the heart of our national security and potentially threaten every 
American. This Congress must rise to the challenge. A serious, 
professional and comprehensive investigation must be conducted to 
assure our national defense, and control over the laws of our land. I 
urge all Members to support this Resolution.
  Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Fazio).
  Mr. FAZIO of California. Mr. Speaker, I have enjoyed listening to the 
debate thus far where we have been asked on the one hand to put 
politics aside, and on the other hand we have heard the alarm sounded 
about all these terrible transgressions that have occurred supposedly 
in China. Prejudging the case as we create the jury system seems to be 
in vogue these days.
  But Mr. Speaker, I support this resolution for a couple of reasons. 
One, I do not want to miss the opportunity to congratulate the 
Republicans on finally investigating something in the proper manner.
  We have had 50 separate investigations in this Congress, 38 of them 
continuing. Not one of them has been brought to the floor in this 
manner so that all the Members could hear the

[[Page H4767]]

evidence and decide whether they want to spend the public's money to 
conduct them. The rest of them are funded by the slush fund, we used to 
call it the Speaker's slush fund until we got a new Speaker. But it is 
really operated out of the Committee on House Oversight with a partisan 
majority and no input from the minority. They make the decisions as to 
whether or not we are going to pursue an investigation.

                              {time}  1415

  So I support this one because it is done at least intentionally in 
the right manner. I support the gentleman from California (Mr. Cox) and 
the gentleman from Washington (Mr. Dicks). I think they are honorable 
people.
  I have confidence that, even though this may be somewhat too broad in 
its basic premise that the two of them working together as they have 
thus far will make sure that it does not go too far, does not really go 
from what I think is the consensus need we have in this institution to 
look at our policies in regard to technology transfer and exports to 
China.
  There has been a lot of Clinton bashing, and I think unfortunately 
so. There has been a certain amount of unwarranted China bashing, the 
purple rhetoric I guess is expected in a campaign year.
  But what is most important here is that we review American policy, 
policy that began with President Reagan, was implemented by President 
Bush, and this President. The same debates that we have had on export 
administration acts, on the armed services authorizations is occurring 
on this issue.
  Those kinds of debates that we have had frequently on this floor the 
20 years that the gentleman from Texas (Mr. Frost) and the gentleman 
from New York (Mr. Solomon) and I have served in this institution are 
the very subject that ought to be looked at by this Select Committee.
  There is no question that we do have some policies that may need to 
be changed, but the implication that somehow we have acted here because 
of campaign funds flowing in one direction or another is I think a 
little bit hard to take from a Congress that refuses to even consider 
whether or not we are going to do away with soft money or reform the 
campaign finance system that we all, like it or not, have to live with.
  I think this committee has been given the power to really move toward 
a solution to all the rhetorical debate that we have heard, some of 
which may really warrant policy changes.
  I hope this committee's leadership will be given the membership that 
will focus on the details and on the issues that really need to be 
addressed and not the politics of election 1998. With that caveat, I 
support this effort and wish them well.
  Mr. FROST. Mr. Speaker, I yield 7 minutes to the gentleman from 
Washington (Mr. Dicks).
  (Mr. DICKS asked and was given permission to revise and extend his 
remarks.)
  Mr. DICKS. Mr. Speaker, for several months, no less than seven 
committees of the House of Representatives have been investigating 
issues relating to the transfer of technology between the United States 
and the People's Republic of China.
  The resolution now before us would vest primary responsibility for 
the conduct of these inquiries in a select committee. Given the complex 
and contentious nature of these matters, many of which involve highly 
classified information, consolidating the current investigations in one 
committee with the authority to consider matters which cross 
jurisdictional lines is, in my judgment, appropriate.
  The technology transfer matter raises important questions of national 
security. The House deserves to have these questions addressed in a 
manner which is thorough and which focuses on substance rather than 
seeking to maneuver for partisan advantage.
  Based on my discussions as the perspective ranking Democrat over the 
past week with the gentleman from California (Mr. Cox), prospective 
chairman of the Select Committee, I believe we share a commitment to 
make sure that the investigation is conducted, and the Select Committee 
operates, in a manner which brings credit to the House.
  I want to commend the gentleman from California (Mr. Cox) for his 
willingness to consider my views on ways in which the rights of the 
minority to participate in the work of the Select Committee can be 
better ensured. We have begun to forge the kind of working relationship 
which will increase the likelihood that H. Res. 463, the rules which 
the Select Committee will adopt, and the understandings which the two 
of us have reached and will reach are implemented fairly.
  The Select Committee would have a limited amount of time to review 
some complex and potentially contentious issues. At this point, I 
believe the inquiry needs to examine the following matters:
  First, the Select Committee must review the policy devised under 
President Reagan and continued in the Bush and Clinton administrations 
to permit U.S.-owned satellites to be launched on foreign rockets, 
particularly those of the People's Republic of China. Is this a sound 
policy which appropriately balances potential economic, technological, 
and national security risks and benefit for the United States?
  In this context, we need to examine changes in that policy and its 
implementation over the past decade. We must also look at the proposed 
sale of satellites containing sophisticated communications equipment to 
the People's Republic of China.
  The second matter arises from the failed launch of a satellite 
undertaken pursuant to that policy and concerns whether, in assisting 
the People's Republic of China in determining the causes of that 
failure, information harmful to the national security of the United 
States was transferred to the Chinese by representatives of U.S. 
companies.
  I would note that any information transferred which might have had 
negative national security implications was apparently done without the 
approval or knowledge of Executive Branch officials.
  Was there an enhancement of the reliability of the ballistic missiles 
of the People's Liberation Army as a result of these transfers; and if 
so, how did that happen? This is an area in which we must proceed 
carefully, because legal proceedings are under way, but I believe the 
American people deserve as clear a determination as possible on the 
national security implications of these transfers.
  The fact that the Department of Defense and the Central Intelligence 
Agency apparently reached different conclusions on this question 
underscores the difficulty of the Select Committee's task.
  Finally, the Select Committee must examine whether money flowed into 
the political process in the United States from either domestic or 
foreign sources in an effort to influence Federal decisions on 
technology transfers. Were any decisions made to benefit a company, 
whether it be Loral or any other firm, because of campaign 
contributions? In this matter, as well, pending legal proceedings may 
affect our work.
  As I noted, the Select Committee would have a relatively short life, 
and there is much to do. If it is the will of the House that a Select 
Committee be formed to conduct this inquiry, I would hope that the 
permanent committees which have had aspects of these matters under 
investigation will follow precedent and defer to the new committee.
  It will not assist the Select Committee, nor will it justify the 
considerable amount of taxpayer funds to be authorized for this effort 
if it is to be but one of many investigations of these matters 
involving the same documents and the same witnesses. I hope the Select 
Committee can get the cooperation of the House in this area and in all 
others which may affect its ability to do its job.
  Mr. Speaker, I urge the adoption of this resolution.
  Mr. Speaker, I would like to enter into a colloquy with the 
distinguished chairman designee of the committee.
  To the gentleman from California (Mr. Cox), in the discussion of 
section 7, ``Procedures for Handling Information,'' the Committee on 
Rules' report on H. Res. 463 makes clear that classified information 
may be disclosed publicly only pursuant to a vote of the Select 
Committee. Section 7, however, discusses the making public of any 
information in the Select Committee's

[[Page H4768]]

possession, not only classified information.
  Is it the gentleman's interpretation of section 7 that the Select 
Committee will vote to disclose publicly any information whether the 
information is classified or unclassified?
  Mr. COX of California. Mr. Speaker, will the gentleman yield?
  Mr. DICKS. I yield to the gentleman from California.
  Mr. COX of California. Mr. Speaker, I thank the gentleman for 
yielding to me. That interpretation is the correct interpretation. As 
the gentleman knows, that section of this resolution, section 7, is 
taken essentially verbatim from the rules of the House concerning the 
procedures for the Permanent Select Committee on Intelligence of which 
the gentleman is the ranking member. Our procedure on the Select 
Committee will be the same as it is on the Permanent Select Committee 
on Intelligence.
  Mr. DICKS. I thank the gentleman from California (Mr. Cox) for that 
answer. In its discussion of section 10 of H. Res. 463, ``Tax 
Returns,'' the report of the Committee on Rules notes the committee's 
intention that the authority granted by section 10 extends to the 
Select Committee ``acting collegially.''
  Is it the gentleman's interpretation of sections 10 and 4 of the 
resolution that the act of ``naming'' an individual or entity under 
section 10 for purpose of inspecting and receiving tax information 
about that individual or entity shall be done pursuant to a vote of the 
committee?
  Mr. COX of California. Mr. Speaker, will the gentleman yield to me?
  Mr. DICKS. I yield to the gentleman from California.
  Mr. COX of California. Mr. Speaker, that is, again, the correct 
interpretation. As the gentleman and I have discussed privately, this 
is a very important power that the Select Committee will possess. It 
should be used sparingly, not only after a vote, but after consultation 
and I would hope deliberation not only of the chairman and ranking 
member but all of our members.
  Mr. DICKS. Mr. Speaker, I would also say, as the prospective ranking 
Democrat on this select committee if the House approves this 
resolution, we will be very careful and judicious about the use of this 
authority.
  Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentleman from 
Colorado Springs, Colorado (Mr. Hefley), one of the most knowledgeable 
Members of this House on national security and the chairman of the 
Subcommittee on Military Installations and Facilities.
  Mr. HEFLEY. Mr. Speaker, I rise in strong support of this resolution. 
As a member of the Committee on National Security, I believe it is 
imperative that we form this investigative committee. We need to find 
out whether or not America's national security has been or is being 
harmed by current policies which govern the transfer of dual-use 
missile and satellite technology to China.
  Presently, the Committee on National Security and the Committee on 
International Relations are holding a joint hearing on this very 
subject. One thing we are consistently being told by the Clinton 
administration officials is that the current policies are no different 
than the policies under President Reagan and President Bush. Mr. 
Speaker, that is simply not true.
  Under Presidents Reagan and Bush, all military sensitive technology 
was licensed by the State Department. This licensing authority was 
further backed up by the veto power granted to the Department of 
Defense if they felt our national security could be compromised by a 
particular transfer.
  Under President Clinton, the licensing authority has been taken away 
from the State Department and given to the Department of Commerce. The 
Commerce Department's goal is to promote business, not to protect 
national security. Additionally, the veto power of the Department of 
Defense has been removed. Clearly, economic and commercial benefits 
have become the most important factor in this administration's 
licensing determinations.
  But all of that aside, that is not why I support this resolution. 
This committee is not to serve as a political witch-hunt, but instead a 
bipartisan investigation into whether or not we should be more worried 
about our national security today than we were yesterday.
  We are dealing with the only Communist country in the world with 
nuclear capability. I urge the support of all Members on this 
resolution, because we are talking about the safety of our Nation. We 
are talking about the safety of our families.
  The SPEAKER pro tempore (Mr. Foley). The gentleman from Texas (Mr. 
Frost) has 11 minutes remaining. The gentleman from New York (Mr. 
Solomon) has 17 minutes remaining.
  Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Texas 
(Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, four years ago now, Speaker Newt Gingrich 
said this as quoted in the Washington Post, ``Clinton Democrats should 
be portrayed as, quote, the enemy of normal Americans.'' He then goes 
on to say, ``Republicans will use the subpoena power to investigate the 
administration.''
  Some 4 years later, 50 investigations later in this House, some $17 
million later of taxpayers' money, recently in the Congressional 
Quarterly, a senior Republican leadership aide was quoted as saying 
this, ``It has been very expensive, and it has not amounted to much.''
  In light of the use of taxpayer dollars and duplicative and, in many 
cases, dead-end investigations, my original intent would be not to 
support with taxpayers' money one more investigation. But I think, 
because of the quality of the leadership of this committee and because 
of the importance of this issue, many of us, if not all of us, in this 
House want to support this resolution.
  But I must express one reservation. I would imagine what an appeals 
court would say in reviewing a previous judge's decision in a case if, 
in the first statement in that court, the judge stood up and said in 
reference to the defendant in the case, talked about his sordid 
history, sordid history. Those were the words used in the very first 
statement by the gentleman from New York, the chairman of the Committee 
on Rules, in opening up what I thought was intended to be an 
investigation to get the facts first and then make the judgment what 
those facts can be concluded to say.

                              {time}  1430

  I would hope that perhaps I misunderstood, and I would be very happy 
to yield time to the distinguished chairman of the committee. I hope 
perhaps I misunderstood the context of his statement.
  Mr. SOLOMON. Mr. Speaker, will the gentleman yield?
  Mr. EDWARDS. I yield to the gentleman from New York.
  Mr. SOLOMON. Since 1988, under Presidents Reagan, Bush and Clinton, I 
have opposed this policy. So there is no politics involved.
  Mr. EDWARDS. So, to clarify for the record, the reference to ``sordid 
history'' refers to multiple administrations' policy in regard to 
technology transfer to China, and those remarks were not focused on 
this administration's particular actions that we are supposed to be 
reviewing in this matter?
  I think this is an important point. If the first statement on the 
floor of this House is to say we are now going to review the sordid 
history of the person we are supposed to be investigating before we 
draw a conclusion, then a reasonable person in or out of this House 
must conclude that perhaps this will be somewhat like the Burton 
investigation, where the chairman of the committee was quoted as saying 
he wants to ``get'' the President before he has even concluded the 
investigation.
  Again, I would hope to work with the distinguished chairman and 
others in reviewing all of the facts, listening to the committee before 
we determine whether this administration has been part of a sordid 
history or not. And, again, perhaps the chairman could better put in 
context the meaning of those words. I think that would be helpful to 
get this investigation started on a bipartisan, objective basis.
  Mr. SOLOMON. Mr. Speaker, I yield myself 30 seconds to say to the 
gentleman, I do not know of any previous administrations where there 
were sordid facts, as far as companies like Loral that were involved. 
This is what we were referring to, that we want to get to the bottom of 
it; which has nothing to do with administration politics.

[[Page H4769]]

  Mr. Speaker, I yield 2 minutes to the gentleman from Dallas, Texas 
(Mr. Sam Johnson), a very distinguished Member and former prisoner of 
war for 7 long years, and a great American.
  (Mr. SAM JOHNSON of Texas asked and was given permission to revise 
and extend his remarks.)
  Mr. SAM JOHNSON of Texas. Mr. Speaker, according to this 
administration, the President's trip to China next week marks a new 
high in U.S.-China relations. I am not sure that is true. The national 
security of this Nation is at serious risk today due to actions taken 
by this President and his administration regarding missile technology 
transfers. It is not a reason for celebration. It is not a high point.
  The transfer of U.S. missile technology to China, with the direct 
approval of the Clinton administration, raises some rather significant 
questions:
  One, why the authority over the waiver program was shifted from State 
to Commerce; two, why an American company was granted a second launch 
waiver when it was already being investigated by the Justice 
Department; three, why the Clinton administration tried to shield China 
from sanctions; and finally, what military benefit did China gain as a 
result of that technology transfer?
  Mr. Speaker, today we have the opportunity to set up a committee that 
will search for the honest answers, and I think the honest answers are 
going to be forthcoming. We have a minority leader and our own majority 
chairman that are going to get the answers, for our national security 
is not a partisan issue.
  I urge my colleagues to demand the truth and support this resolution 
today.
  Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Texas 
(Mr. Edwards).
  Mr. EDWARDS. Mr. Speaker, following up with my exchange with the 
chairman of the Committee on Rules, it seems to me that one of the 
serious subjects of discussion and review of facts for this committee 
is, what was the role of the Loral Corporation in this process.
  The chairman of the Committee on Rules, on the floor of the House in 
response to my question, referred to Loral's sordid history and its 
involvement in this process. Once again, I would point out that for a 
judge, or one of the judges, in this basically being a court case or 
investigation, to say in the very first remarks that there has been a 
sordid history of involvement by one of the groups being reviewed by 
this investigation seems to me to be drawing conclusions before we get 
the facts. It seems to me to sound more like the Burton committee, 
which had a chairman that wanted to draw the conclusions before he even 
had the hearing.
  So, in the midst of this discussion, my intent is not to question the 
motives of the chairman of the Committee on Rules; my intent is to try 
to start out this process on a bipartisan, objective, fair basis. And I 
hope the distinguished gentleman would make clear what he means by 
referring to the ``sordid history'' of Loral or any others in this 
case.
  Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume 
to quote from my opening statement. It says, ``Beginning in April of 
this year, the New York Times has focused on `the somewhat sordid 
history,' '' repeating exactly what they say. The gentleman should read 
the newspapers.
  Mr. Speaker, I yield 1 minute to the gentleman from Ohio (Mr. 
Traficant), a very admired Member of the other side of the body, and I 
wish I had more time to yield to him.
  Mr. FROST. Mr. Speaker, I yield 1 minute. The gentleman from Ohio 
(Mr. Traficant).
  The SPEAKER pro tempore (Mr. Foley). The gentleman from Ohio (Mr. 
Traficant) is recognized for 2 minutes.
  Mr. TRAFICANT. Mr. Speaker, I thought I would just rise to tell it 
exactly like it is.
  Last week North Korea threatened Uncle Sam. I want to quote what 
North Korea said. They said they will not only continue to build 
ballistic missiles, but they will sell ballistic missiles to the 
enemies of Uncle Sam or to whomever they choose. And if Uncle Sam does 
not like it, they can compensate us for it. They can compensate us; 
that is unbelievable.
  Intelligence sources said North Korea is taking this bold stand 
because they see the way China and Communists are being treated around 
the globe, and that there is a weakening of resolve in Washington.
  Now, there is nobody that opposed Reagan's economic policies more 
than I, maybe right or wrong. But one thing about Ronald Reagan, North 
Korea would have never made that threat to Ronald Reagan. Never. And 
Ronald Reagan was firm in his resolve about Communists. But if 
Communist China can get $50-plus billion a year in trade surpluses, get 
free missile technology, have access to the Lincoln bedroom, why cannot 
all the other Communists do it? In fact, why cannot communism make a 
comeback, colleagues?
  It is time to question the White House. We have put China on the back 
page because of Monica. Let me tell my colleagues, the time now is to 
look at China. What did they do, and did they attempt to influence our 
national security? I do not think President Clinton sold our country 
out, but I believe they have been damn casual with China and with 
Communists.
  And I would just like to say that we have had brave military that 
gave their lives fighting in foreign wars to defeat communism and to 
secure America. And I will be damned if I am going to be a part of any 
situation that is going to weaken or threaten our national security 
because of some political partisanship here. We should investigate and 
find the truth, and let the chips fall where they may. Because I will 
tell my colleagues what, it sounds awfully stinky to me.
  Mr. FROST. Mr. Speaker, I would ask about the remaining time.
  The SPEAKER pro tempore. The gentleman from Texas (Mr. Frost) has 6 
minutes remaining, and the gentleman from New York (Mr. Solomon) has 
13\1/2\ minutes remaining.
  Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Jacksonville, Florida (Mrs. Tillie Fowler), a member of the Committee 
on National Security, who is so very knowledgeable about this issue.
  Mrs. FOWLER. Mr. Speaker, I rise in strong support of this 
resolution. As a member of the House Committee on National Security, I 
cannot overstate the significance of the mission we are undertaking 
with the creation of this Select Committee.
  More than 1 year ago, the gentleman from Illinois (Mr. Henry Hyde) 
and I wrote to the Attorney General, asking her to investigate the 
loosening of export controls on a host of sensitive dual-use equipment 
and technology.
  We asked the Attorney General to investigate the questionable 
decision to allow McDonnell Douglas to sell sophisticated machine tools 
to the PRC. Just last week ``60 Minutes'' reported that those machines 
have ended up in a Chinese Silkworm missile plant.
  The Loral incident is what has brought us to this point today, and 
for good reason. According to press reports, the Defense Technology 
Security Administration concluded that, ``United States national 
security has been harmed.'' And an April 9th, 1996, Air Force 
Intelligence report reached a similar conclusion.
  Clearly, the questionable actions of both Loral and the 
administration have serious implications for our national security. But 
so do the questions surrounding transfers of sophisticated machine 
tools, supercomputers, hot section technology and telecommunications 
technology.
  The Select Committee we are creating today faces a daunting but 
critical task. In a nutshell, it must answer the question: Did the 
United States provide technology to China that will benefit its 
military? And, if so, why did this administration allow it to happen?
  I urge my colleagues to vote ``yes'' on the resolution so that the 
American people can find out the answers to these questions.
  Mr. Speaker, the letter to the Attorney General referred to earlier 
is provided for the Record as follows:
                                                     May 22, 1997.
     Hon. Janet Reno,
     U.S. Department of Justice,
     Washington, DC.
       Dear General Reno: We are writing to request that the 
     Justice Department's investigation of alleged illegal foreign 
     campaign contributions to the Clinton campaign and the 
     Democratic National Committee include an investigation of the 
     possible link between

[[Page H4770]]

     contributions from various Asian donors and the Clinton 
     Administration's loosening of export controls on sensitive 
     dual-use equipment and technology, which has specifically 
     benefited the military and intelligence services of the 
     People's Republic of China (PRC).
       The PRC makes no secret of the fact that it is attempting 
     to acquire a diverse, highly flexible, strategically 
     dispersed and survivable military production capability, with 
     force projection a key goal. The administration's pattern of 
     decontrol and failure to enforce existing law with regard to 
     both export procedures and punitive sanctions has 
     substantially benefited the military goals of the People's 
     Republic of China and presented serious new challenges to the 
     security interests of the United States.
       In our minds, there are a number of cases that raise 
     serious questions about whether improper outside influence 
     was brought to bear on Administration officials--including 
     the President--and if that influence has resulted in 
     decisions and policies that have liberalized the transfer of 
     defense-related technologies, something which is clearly 
     incompatible with the interest of our nation.

                   Examples of Questionable Decisions

       Sales of sophisticated machine tools to the PRC.--A U.S. 
     company, McDonnell Douglas, was allowed to ship an almost 
     complete intact missile and strategic bomber factory to the 
     PRC, despite strong opposition from specialists at the 
     Department of Defense and evidence that the equipment was 
     going to be diverted to military production facilities. Prior 
     to the issuance of the original export licenses, the case was 
     discussed with concern at the highest levels of the 
     government, yet it was approved in the end.
       News stories and a GAO report requested by the House 
     National Security Committee (HNSC) all show that before the 
     equipment was shipped, U.S. officials were aware that the 
     conditions placed upon issuance of the export licenses were 
     unenforceable, and that the Chinese possibly intended to 
     divert the equipment they had purchased for civilian use to a 
     military production facility.
       During the period immediately before the sale--and before 
     the export licenses had been approved--McDonnell Douglas 
     officials showed officials from CATIC (China National Aero-
     Technology Import-Export Corporation) through the plant 
     during operating hours, allowing them to videotape classified 
     production lines in operation--a violation of current export 
     law, which was brought to the attention of Administration 
     officials and ignored.
       Finally, once it was determined that the diversion had 
     occurred, political appointees at the Departments of Commerce 
     and Defense approved new licenses with different end-use 
     conditions and destinations rather than expressing 
     displeasure with the Chinese or exercising their legal 
     obligation to sanction the PRC.
       While aspects of this case are now under review by a grand 
     jury in the District of Columbia, it is imperative that this 
     matter receive full scrutiny in the context of the Justice 
     Department's investigation of campaign finance improprieties.
       Supercomputers.--The extraordinary loosening of controls on 
     militarily-sensitive supercomputers, which began in 1994, has 
     resulted in the sale of 46 supercomputers rated at 2,000 
     MTOPS and above to China in the last 15 months. According to 
     a former Under Secretary of Defense who testified before the 
     HNSC Procurement Subcommittee, these sales may have given the 
     PRC more supercomputing capacity than the entire Department 
     of Defense. Uses for supercomputers include: design and 
     testing of nuclear weapons; sophisticated weather 
     forecasting; weapons optimization studies crucial for the 
     efficient use of chemical and biological weapons; aerospace 
     design and testing; creating and breaking codes; 
     miniaturizing nuclear weapons, and finding objects on the 
     ocean floor, including submarines.
       The decision to loosen U.S. controls on supercomputers was 
     made in spite of the opposition of a number of Defense 
     Department staff experts, senior military and intelligence 
     officials, and Members of Congress. It was justified by a 
     report commissioned and paid for by the Department of 
     Commerce using outside consultants supplied by political 
     appointees at the Department of Defense. The contract for the 
     report was awarded noncompetitively to a well-known opponent 
     of export controls. Viewed in the context of recent 
     revelations about Chinese efforts to influence the U.S. 
     political scene, the significant policy changes that have 
     been pursued in this area bring into question the 
     Administration's motives for decontrol.
       Hot Section Technology.--The Administration's decision to 
     change the jurisdiction on so-called ``hot section'' 
     technology from the Department of State, which had guarded it 
     jealously, to the Department of Commerce, which is in the 
     business of making it easier for foreign entities to purchase 
     U.S. products and technology also raises serious concerns. 
     Hot section technology allows U.S. fighter and bomber 
     aircraft to fly for thousands of hours longer than those 
     produced by less sophisticated manufacturers, providing our 
     military forces with significant cost and readiness 
     advantages over those of other nations. Again, serious 
     questions arise with respect to policy changes in light of 
     Chinese efforts to influence Administration actions.
       Telecommunications.--In 1994, sophisticated 
     telecommunications technology was transferred to a U.S.-
     Chinese joint venture called Hua Mei, in which the Chinese 
     partner is an entity controlled by the Chinese military. This 
     particular transfer included fiber optic communications 
     equipment which is used for high-speed, secure communications 
     over long distances. Also included in the package was 
     advanced encryption software.
       Both of these transfers have obvious and significant 
     military applications, and, again, this transfer was 
     accomplished despite opposition from technical experts at the 
     NSA and within the Pentagon.
       The administration's actions in the above-mentioned cases, 
     and others, have resulted in a significant increase in 
     indigenous Chinese military production capabilities. Given 
     China's willingness to sell weapons and technology to the 
     highest bidder--including rogue nations such as Iran, Iraq, 
     and Libya--these transfers could represent a profound threat 
     to U.S. military personnel. Moreover, the increased 
     capabilities that China has gained portend a regional arms 
     race and increase the possibility of conflict in a region ion 
     which the United States has major interests.
       Under the circumstances, if flies in the face of common 
     sense for us to provide the PRC with the means to achieve 
     their military and strategic goals. The administration's 
     decision seem very suspect to us, and we strongly believe 
     they should be investigated.
       In closing, we would note that this letter does not reflect 
     a change in our belief that a special counsel should be 
     appointed to investigate allegations of improper fund-raising 
     and campaign contributions, but rather an acknowledgement of 
     the investigation as it presently exists.
       Thank you for your consideration of this request. We look 
     forward to your timely response.
           Sincerely,
                                                 Tillie K. Fowler,
                                   Committee on National Security.
                                                       Henry Hyde,
                             Chairman, Committee on the Judiciary.

  Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I think it is vitally important that this matter be 
approached on a bipartisan and objective basis. The two people who are 
involved, the designated chair and the designated ranking minority 
member, clearly are fair-minded and will proceed in a reasonable and 
forthright manner. I would urge other Members on the other side of the 
aisle to give the gentleman from California (Mr. Cox) and the gentleman 
from Washington (Mr. Dicks) the opportunity to conduct a fair and 
bipartisan examination into these vital questions.
  We will support this resolution. We would urge that this 
investigation be done promptly and fairly and in a bipartisan manner.
  Mr. Speaker, I have concluded my remarks. I urge adoption of the 
resolution.
  Mr. Speaker, I yield back the balance of my time.
  Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume 
to, first of all, just concur in exactly what the gentleman from Texas 
has just said.
  Mr. Speaker, I yield the balance of my time to the gentleman from 
California (Mr. Cox) to conclude for the majority. We have heard a lot 
of praise heaped on this gentleman. I only wish I had his demeanor and 
his calmness in the way that he approaches measures on this floor. He 
would make a great Supreme Court Justice some day, as well as a great 
Congressman.
  Mr. COX of California. Mr. Speaker, I certainly thank the chairman of 
the Committee on Rules for those generous comments and, obviously, all 
of us being in politics here know that at this point I should sit down, 
because never will people say nice things like this about me again and 
I am enjoying the opportunity.
  But I want to begin by saying exactly the same kinds of things about 
my colleagues who have brought us to this point, the threshold of 
investigating in exactly the right way a very serious matter. In 
particular, the ranking member on the Permanent Select Committee on 
Intelligence, the gentleman from Washington (Mr. Dicks), with whom it 
has been my pleasure to work for the last several days in a very 
serious and urgent way; and, as well, the minority leader of the House, 
who made this his priority, exactly as did the Speaker of the House.
  As a consequence, I can thank the gentleman from Texas (Mr. Frost), 
who has conducted the debate on the minority side today, for his 
recommendation of an ``aye'' vote. And I can thank my colleagues for 
what I believe is the collective and considered

[[Page H4771]]

wisdom of the House in proceeding in this way.
  Much of what we will undertake, much of what we will look at in this 
Select Committee will be secret information, and we will keep it to 
ourselves. Much of the reason that we are here, frankly, rests upon 
classified information. But the reason that we are here is also largely 
a matter of public record, and so what I would like to do now is begin 
with what is publicly known about why it is important for us to proceed 
in this way with this Select Committee.
  In 1996, the People's Republic of China's Long March rocket, carrying 
a Loral satellite, exploded shortly after lift-off. It was at least the 
fifth Long March rocket to fail in the last 7 years. On April 4th, 
1998, the New York Times, in a story by Jeff Gerth, first reported that 
a Federal grand jury was investigating whether, during the 
investigation of that 1996 launch failure, Loral and Hughes provided 
any information to the Chinese People's Liberation Army without the 
necessary State Department approval, and whether such illegal actions 
may have advanced the Chinese People's Liberation Army nuclear missile 
capabilities.
  According to the April 4 New York Times article, since this proposed 
export could involve the transfer of the same kind of expertise that 
prompted the Justice Department to investigate in the first place, some 
Clinton administration officials claimed that the February waiver 
undermined the investigation.

                              {time}  1445

  The Justice Department made these very concerns known to the White 
House prior to the February 1998 waiver.
  On April 5, 1998, Ronald Ostrow and Jim Mann reported in the Los 
Angeles Times that missile guidance technology transferred to the 
People's Liberation Army may have gone beyond China's own nuclear 
arsenal. They quoted a Defense Department official, who stated, 
``Guidance for missiles seems to be a critical factor for Iran and 
North Korea. And they are getting it from China.''
  On April 13, the New York Times reported further that in May 1997, 
the Pentagon issued a classified report which concluded that Loral and 
Hughes provided information that ``significantly improved China's 
nuclear missile capabilities.''
  The New York Times reported on May 15, 1998, that a Chinese military 
officer, Lieutenant Colonel Liu Chao-Ying, funneled nearly $300,000 to 
Democratic fund-raiser Johnny Chung. Lieutenant Colonel Liu is an 
officer of China Aerospace, a state-owned company directly involved in 
China's satellite launching program. Lieutenant Colonel Liu was 
previously an officer of China Great Wall Industries, the manufacturers 
and sellers of M-11 missiles components to Pakistan.
  On May 23, the New York Times reported that on February 18, 1998, 
while the Justice Department investigation of Loral was ongoing, 
President Clinton issued another waiver for Loral to export a satellite 
to China.
  On June 1, 1998, the New York Times reported that the State 
Department also advised the White House prior to the February 1998 
waiver that Loral's actions in 1996 appeared to be ``criminal'' and 
``knowing'' and that U.S. law might prohibit satellite exports to the 
People's Republic of China in any event due to the PRC's transfer of 
missile technology to Iran.
  The June 1 article also reported that the administration was aware of 
the Defense Department's concerns over possibly aiding the People's 
Liberation Army's nuclear missile program, citing a February 12 
memorandum to the President from National Security Adviser Samuel 
Berger.
  Also, according to the June 1 article, and again citing internal 
White House and State Department memoranda, National Security Adviser 
Berger and the President were made aware of the fact that Loral stood 
to lose the contract and to incur a financial penalty if the waiver 
were not granted soon.
  The waiver was issued shortly after the supposed deadline. The launch 
project was kept on schedule for November 1998, and Loral did not incur 
any penalties from the Communist Chinese Government.
  The press has also reported that the CEO of Loral, Bernard Schwartz, 
has become a close personal friend of the President and was the largest 
single donor to the Democratic Party in 1996.
  On June 10, the General Accounting Office testified before the Senate 
Intelligence Committee that President Clinton's March 14, 1996, 
decision to transfer ultimate control of satellite exports from the 
State Department to the Commerce Department diminished the ability of 
the Defense Department to block satellite exports for national security 
reasons.
  Until that 1996 decision by the President, the Department of Defense 
was routinely deferred to by the Department of State and national 
security was paramount when waivers were sought. Now, however, the 
Commerce Department, whose mission it is to promote exports, is the 
agency in control.
  In testimony before the House Committee on National Security in 
November of 1997, Commerce Department official William Reinsch 
acknowledged that while some 47 supercomputers have been sold to the 
People's Republic of China, the United States Government was unaware of 
their whereabouts. These supercomputers may be used for, among other 
purposes, simulating testing of nuclear weapons.
  60 minutes, on CBS, reported on June 7, 1998, that the People's 
Liberation Army illegally diverted enormous McDonnell Douglas 
aeronautics machine tools, approaching the length of a football field, 
for use in People's Liberation Army military aircraft production. 
McDonnell Douglas is now the subject of a grand jury investigation of 
the diversion.
  All of these media reports give rise to a number of unanswered 
questions that will be the object of the Select Committee's focus. 
There is no more important question before the Select Committee than 
the one with which we will begin. ``Has the reliability or accuracy of 
nuclear missiles in the arsenal of the People's Liberation Army been 
enhanced; and, if so, how did this happen?''
  I agree with all those who have spoken that this Select Committee is 
the most effective means to inquire into these matters. There are some 
8 committees of the House of Representatives, with nearly 300 members, 
that properly have jurisdiction over these committees. Consolidating 
this investigation into a Select Committee whose members have been 
chosen by the Speaker of the House and by the minority leader, who are 
expert in the matter, who can consult collegially with one another, and 
who can maintain discretion and confidentiality, will reflect credit 
upon this House.
  I urge my colleagues to support this resolution, to support the 
creation of the Select Committee, and to answer this serious question 
in the serious manner that it deserves.
  Mr. SOLOMON. Mr. Speaker, I yield such time as he may consume to the 
gentleman from New York (Mr. Gilman).
  (Mr. GILMAN asked and was given permission to revise and extend his 
remarks.)
  Mr. GILMAN. Mr. Speaker, I thank the gentleman from New York for 
yielding.
  I rise in strong support of this measure to establish a Select 
Committee on U.S. National Security and Military/Commercial Concerns of 
the People's Republic of China. I commend the gentleman from California 
(Mr. Cox) for his statement.
  I want my colleagues to know, we have just concluded 2 days of 
extensive hearings on this measure, which underscores the importance of 
moving ahead with the Select Committee. I urge my colleagues to support 
the measure.
  Mr. Speaker, I want to thank the gentleman from New York, Mr. 
Solomon, for allowing me the opportunity to provide my views on the 
establishment of a Select Committee to examine U.S. policy regarding 
the transfer of U.S. satellites to China.
  I strongly support the creation of this Select Committee. The 
Committee, headed by the able gentleman from California, Mr. Cox, will 
be well-positioned to examine not only such issues, as whether American 
satellite companies divulged militarily-sensitive technology enabling 
China to improve its ballistic missiles.
  The Committee will also be able to engage major policy issues, 
including whether our national security has been jeopardized by this 
Administration's policy of placing commercial interests above national 
security interests in granting licenses and national interest waivers

[[Page H4772]]

for the export of commercial communication satellites to China.
  In the 1992 Presidential campaign, Governor Clinton attacked 
President Bush for ``coddling dictators'' including those who ordered 
the massacre of pro-democracy demonstrators at Tiananmen Square.
  Who could have imagined then that President Clinton's Administration 
would face questions about compromising our national security at the 
hands of those same Chinese leaders.
  Yet, in May of 1997 a highly classified Pentagon report has 
reportedly concluded that scientists from two leading American 
satellite companies, Loral Space and Communications and Hughes 
Engineering, provided expertise that significantly improved the 
guidance and reliability of China's ballistic missiles.
  Moreover, documents released by the White House disclose that the 
Justice Department had concerns about issuing a waiver in February 1998 
for the export of a Loral satellite, and the Clinton Administration 
knew it. Accordingly to a memo prepared for the President by his 
National Security Advisor, Justice ``has cautioned that a national 
interest waiver in this case could have a significant adverse impact on 
any prosecution that might take place * * *''
  Despite this, the President decided to grant Loral a waiver for the 
export of a satellite to China.
  I am concerned that in its desire to promote the commercial interests 
of key U.S. companies, the Administration may have undercut its own 
efforts to limit the spread of missile technology to China, which today 
is the world's leading exporter of weapons of mass destruction.
  The Administration has insisted, that nothing untoward has occurred, 
that no inappropriate decisions or actions have been taken that 
resulted in harm to U.S. national security.
  We will look to this proposed Select Committee to examine these 
issues and look forward to its conclusions and recommendations. 
Accordingly, I urge Members of the House to support the establishment 
of this important panel.
  Mr. SOLOMON. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Foley). Pursuant to House Resolution 
476, the previous question is ordered on the resolution, as amended.
  The question is on the resolution, as amended.
  The question was taken; and the Speaker pro tempore announced that 
ayes appeared to have it.
  Mr. SOLOMON. Mr. Speaker, I object to the vote on the ground that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The SPEAKER (during the voting). The Chair will remind Members that 
it is their responsibility to be in the Chamber when a vote is 
underway.
  The vote was taken by electronic device, and there were--yeas 409, 
nays 10, not voting 14, as follows:

                             [Roll No. 245]

                               YEAS--409

     Abercrombie
     Ackerman
     Aderholt
     Allen
     Andrews
     Archer
     Armey
     Bachus
     Baesler
     Baker
     Baldacci
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berman
     Berry
     Bilbray
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (CA)
     Brown (FL)
     Brown (OH)
     Bryant
     Bunning
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Campbell
     Canady
     Cannon
     Capps
     Cardin
     Carson
     Castle
     Chabot
     Chambliss
     Chenoweth
     Christensen
     Clay
     Clyburn
     Coble
     Coburn
     Collins
     Combest
     Condit
     Cook
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crapo
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (FL)
     Davis (IL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Ensign
     Eshoo
     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fawell
     Fazio
     Filner
     Foley
     Forbes
     Ford
     Fossella
     Fowler
     Fox
     Frank (MA)
     Franks (NJ)
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Granger
     Greenwood
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hamilton
     Hansen
     Harman
     Hastert
     Hastings (WA)
     Hayworth
     Hefley
     Hefner
     Herger
     Hill
     Hilleary
     Hilliard
     Hinchey
     Hinojosa
     Hobson
     Hoekstra
     Holden
     Hooley
     Horn
     Hostettler
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inglis
     Istook
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (WI)
     Johnson, E. B.
     Johnson, Sam
     Jones
     Kaptur
     Kasich
     Kelly
     Kennedy (MA)
     Kennedy (RI)
     Kennelly
     Kildee
     Kilpatrick
     Kim
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Klink
     Klug
     Knollenberg
     Kolbe
     Kucinich
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lee
     Levin
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     Livingston
     LoBiondo
     Lofgren
     Lowey
     Lucas
     Luther
     Maloney (CT)
     Maloney (NY)
     Manton
     Manzullo
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McDade
     McGovern
     McHale
     McHugh
     McInnis
     McIntosh
     McIntyre
     McKeon
     McKinney
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Metcalf
     Mica
     Millender-McDonald
     Miller (CA)
     Miller (FL)
     Minge
     Mink
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Neal
     Nethercutt
     Neumann
     Ney
     Northup
     Norwood
     Nussle
     Obey
     Olver
     Ortiz
     Owens
     Oxley
     Packard
     Pallone
     Pappas
     Parker
     Pascrell
     Pastor
     Paul
     Paxon
     Payne
     Pease
     Pelosi
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pickett
     Pitts
     Pombo
     Pomeroy
     Porter
     Portman
     Poshard
     Price (NC)
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Rangel
     Redmond
     Regula
     Reyes
     Riggs
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Roybal-Allard
     Royce
     Rush
     Ryun
     Sabo
     Salmon
     Sanchez
     Sanders
     Sandlin
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaefer, Dan
     Schaffer, Bob
     Schumer
     Scott
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Shimkus
     Shuster
     Sisisky
     Skaggs
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (OR)
     Smith (TX)
     Smith, Adam
     Smith, Linda
     Snowbarger
     Snyder
     Solomon
     Souder
     Spence
     Spratt
     Stabenow
     Stark
     Stearns
     Stenholm
     Stokes
     Strickland
     Stump
     Stupak
     Sununu
     Talent
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Thomas
     Thompson
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tierney
     Traficant
     Turner
     Upton
     Velazquez
     Vento
     Visclosky
     Walsh
     Wamp
     Waters
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weldon (PA)
     Weller
     Wexler
     Weygand
     White
     Whitfield
     Wicker
     Wise
     Wolf
     Woolsey
     Wynn
     Young (AK)
     Young (FL)

                                NAYS--10

     Conyers
     Furse
     Kanjorski
     Lewis (GA)
     McDermott
     Mollohan
     Murtha
     Nadler
     Oberstar
     Yates

                             NOT VOTING--14

     Clayton
     Clement
     Cooksey
     Gonzalez
     Green
     Gutknecht
     Hastings (FL)
     Houghton
     Martinez
     McNulty
     Moakley
     Torres
     Towns
     Weldon (FL)

                              {time}  1511

  Mr. OBERSTAR, Mr. NADLER and Ms. FURSE changed their vote from 
``yea'' to ``nay.''
  Ms. CARSON changed her vote from ``nay'' to ``yea.''
  So the resolution was agreed to.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________