Congressional Record, Volume 147 Issue 113 (Tuesday, September 4, 2001)

[Congressional Record Volume 147, Number 113 (Tuesday, September 4, 2001)]
[Senate]
[Pages S9018-S9065]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

EXPORT ADMINISTRATION ACT OF 2001

The PRESIDING OFFICER. Under the previous order, the Senate will now
begin consideration of S. 149, which the clerk will report.
The legislative clerk read as follows:

A bill (S. 149) to provide authority to control exports and
for other purposes.

The Senate proceeded to consider the bill, which had been reported
from the Committee on Banking, Housing, and Urban Affairs, with an
amendment to strike all after the enacting clause and insert in lieu
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Export
Administration Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.

TITLE I--GENERAL AUTHORITY

Sec. 101. Commerce Control List.
Sec. 102. Delegation of authority.
Sec. 103. Public information; consultation requirements.

[[Page S9019]]

Sec. 104. Right of export.
Sec. 105. Export control advisory committees.
Sec. 106. President's Technology Export Council.
Sec. 107. Prohibition on charging fees.

TITLE II--NATIONAL SECURITY EXPORT CONTROLS

Subtitle A--Authority and Procedures

Sec. 201. Authority for national security export controls.
Sec. 202. National Security Control List.
Sec. 203. Country tiers.
Sec. 204. Incorporated parts and components.
Sec. 205. Petition process for modifying export status.

Subtitle B--Foreign Availability and Mass-Market Status

Sec. 211. Determination of foreign availability and mass-market status.
Sec. 212. Presidential set-aside of foreign availability status
determination.
Sec. 213. Presidential set-aside of mass-market status determination.
Sec. 214. Office of Technology Evaluation.

TITLE III--FOREIGN POLICY EXPORT CONTROLS

Sec. 301. Authority for foreign policy export controls.
Sec. 302. Procedures for imposing controls.
Sec. 303. Criteria for foreign policy export controls.
Sec. 304. Presidential report before imposition of control.
Sec. 305. Imposition of controls.
Sec. 306. Deferral authority.
Sec. 307. Review, renewal, and termination.
Sec. 308. Termination of controls under this title.
Sec. 309. Compliance with international obligations.
Sec. 310. Designation of countries supporting international terrorism.
Sec. 311. Crime control instruments.

TITLE IV--PROCEDURES FOR EXPORT LICENSES AND INTERAGENCY DISPUTE
RESOLUTION

Sec. 401. Export license procedures.
Sec. 402. Interagency dispute resolution process.

TITLE V--INTERNATIONAL ARRANGEMENTS; FOREIGN BOYCOTTS; SANCTIONS; AND
ENFORCEMENT

Sec. 501. International arrangements.
Sec. 502. Foreign boycotts.
Sec. 503. Penalties.
Sec. 504. Missile proliferation control violations.
Sec. 505. Chemical and biological weapons proliferation sanctions.
Sec. 506. Enforcement.
Sec. 507. Administrative procedure.

TITLE VI--EXPORT CONTROL AUTHORITY AND REGULATIONS

Sec. 601. Export control authority and regulations.
Sec. 602. Confidentiality of information.

TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. Annual report.
Sec. 702. Technical and conforming amendments.
Sec. 703. Savings provisions.

SEC. 2. DEFINITIONS.

In this Act:
(1) Affiliate.--The term ``affiliate'' includes both
governmental entities and commercial entities that are
controlled in fact by the government of a country.
(2) Control or controlled.--The terms ``control'' and
``controlled'' mean any requirement, condition,
authorization, or prohibition on the export or reexport of an
item.
(3) Control list.--The term ``Control List'' means the
Commerce Control List established under section 101.
(4) Controlled country.--The term ``controlled country''
means a country with respect to which exports are controlled
under section 201 or 301.
(5) Controlled item.--The term ``controlled item'' means an
item the export of which is controlled under this Act.
(6) Country.--The term ``country'' means a sovereign
country or an autonomous customs territory.
(7) Country supporting international terrorism.--The term
``country supporting international terrorism'' means a
country designated by the Secretary of State pursuant to
section 310.
(8) Department.--The term ``Department'' means the
Department of Commerce.
(9) Export.--
(A) The term ``export'' means--
(i) an actual shipment, transfer, or transmission of an
item out of the United States;
(ii) a transfer to any person of an item either within the
United States or outside of the United States with the
knowledge or intent that the item will be shipped,
transferred, or transmitted to an unauthorized recipient
outside the United States; or
(iii) a transfer of an item in the United States to an
embassy or affiliate of a country, which shall be considered
an export to that country.
(B) The term includes a reexport.
(10) Foreign availability status.--The term ``foreign
availability status'' means the status described in section
211(d)(1).
(11) Foreign person.--The term ``foreign person'' means--
(A) an individual who is not--
(i) a United States citizen;
(ii) an alien lawfully admitted for permanent residence to
the United States; or
(iii) a protected individual as defined in section
274B(a)(3) of the Immigration and Nationality Act. (8 U.S.C.
1324b(a)(3));
(B) any corporation, partnership, business association,
society, trust, organization, or other nongovernmental entity
created or organized under the laws of a foreign country or
that has its principal place of business outside the United
States; and
(C) any governmental entity of a foreign country.
(12) Item.--
(A) In general.--The term ``item'' means any good,
technology, or service.
(B) Other definitions.--In this paragraph:
(i) Good.--The term ``good'' means any article, natural or
manmade substance, material, supply or manufactured product,
including inspection and test equipment, including source
code, and excluding technical data.
(ii) Technology.--The term ``technology'' means specific
information that is necessary for the development,
production, or use of an item, and takes the form of
technical data or technical assistance.
(iii) Service.--The term ``service'' means any act of
assistance, help or aid.
(13) Mass-market status.--The term ``mass-market status''
means the status described in section 211(d)(2).
(14) Multilateral export control regime.--The term
``multilateral export control regime'' means an international
agreement or arrangement among two or more countries,
including the United States, a purpose of which is to
coordinate national export control policies of its members
regarding certain tems. The term includes regimes such as the
Australia Group, the Wassenaar Arrangement, the Missile
Technology Control Regime (MTCR), and the Nuclear Suppliers'
Group Dual Use Arrangement.
(15) National security control list.--The term ``National
Security Control List'' means the list established under
section 202(a).
(16) Person.--The term ``person'' includes--
(A) any individual, or partnership, corporation, business
association, society, trust, organization, or any other group
created or organized under the laws of a country; and
(B) any government, or any governmental entity, including
any governmental entity operating as a business enterprise.
(17) Reexport.--The term ``reexport'' means the shipment,
transfer, transshipment, or diversion of items from one
foreign country to another.
(18) Secretary.--The term ``Secretary'' means the Secretary
of Commerce.
(19) United states.--The term ``United States'' means the
States of the United States, the District of Columbia, and
any commonwealth, territory, dependency, or possession of the
United States, and includes the outer Continental Shelf, as
defined in section 2(a) of the Outer Continental Shelf Lands
Act (42 U.S.C. 1331(a)).
(20) United states person.--The term ``United States
person'' means--
(A) any United States citizen, resident, or national (other
than an individual resident outside the United States who is
employed by a person other than a United States person);
(B) any domestic concern (including any permanent domestic
establishment of any foreign concern); and
(C) any foreign subsidiary or affiliate (including any
permanent foreign establishment) of any domestic concern
which is controlled in fact by such domestic concern, as
determined under regulations prescribed by the President.

TITLE I--GENERAL AUTHORITY

SEC. 101. COMMERCE CONTROL LIST.

(a) In General.--Under such conditions as the Secretary may
impose, consistent with the provisions of this Act, the
Secretary--
(1) shall establish and maintain a Commerce Control List
(in this Act referred to as the ``Control List'') consisting
of items the export of which are subject to licensing or
other authorization or requirement; and
(2) may require any type of license, or other
authorization, including recordkeeping and reporting,
appropriate to the effective and efficient implementation of
this Act with respect to the export of an item on the Control
List or otherwise subject to control under title II or III of
this Act.
(b) Types of License or Other Authorization.--The types of
license or other authorization referred to in subsection
(a)(2) include the following:
(1) Specific exports.--A license that authorizes a specific
export.
(2) Multiple exports.--A license that authorizes multiple
exports in lieu of a license for each export.
(3) Notification in lieu of license.-- A notification in
lieu of a license that authorizes a specific export or
multiple exports subject to the condition that the exporter
file with the Department advance notification of the intent
to export in accordance with regulations prescribed by the
Secretary.
(4) License exception.--Authority to export an item on the
Control List without prior license or notification in lieu of
a license.
(c) After-Market Service and Replacement Parts.--A license
to export an item under this Act shall not be required for an
exporter to provide after-market service or replacement parts
in order to replace on a one-for-one basis parts that were in
an item that was lawfully exported from the United States,
unless--
(1) the Secretary determines that such license is required
to export such parts; or
(2) the after-market service or replacement parts would
materially enhance the capability of an item which was the
basis for the item being controlled.
(d) Incidental Technology.--A license or other
authorization to export an item under this Act includes
authorization to export technology related to the item, if
the level of the technology does not exceed the minimum
necessary to install, repair, maintain, inspect, operate, or
use the item.
(e) Regulations.--The Secretary may prescribe such
regulations as are necessary to carry out the provisions of
this Act.

[[Page S9020]]

SEC. 102. DELEGATION OF AUTHORITY.

(a) In General.--Except as provided in subsection (b) and
subject to the provisions of this Act, the President may
delegate the power, authority, and discretion conferred upon
the President by this Act to such departments, agencies, and
officials of the Government as the President considers
appropriate.
(b) Exceptions.--
(1) Delegation to appointees confirmed by senate.--No
authority delegated to the President under this Act may be
delegated by the President to, or exercised by, any official
of any department or agency the head of which is not
appointed by the President, by and with the advice and
consent of the Senate.
(2) Other limitations.--The President may not delegate or
transfer the President's power, authority, or discretion to
overrule or modify any recommendation or decision made by the
Secretary, the Secretary of Defense, or the Secretary of
State under this Act.

SEC. 103. PUBLIC INFORMATION; CONSULTATION REQUIREMENTS.

(a) Public Information.--The Secretary shall keep the
public fully informed of changes in export control policy and
procedures instituted in conformity with this Act.
(b) Consultation With Persons Affected.--The Secretary
shall consult regularly with representatives of a broad
spectrum of enterprises, labor organizations, and citizens
interested in or affected by export controls in order to
obtain their views on United States export control policy and
the foreign availability or mass-market status of controlled
items.

SEC. 104. RIGHT OF EXPORT.

No license or other authorization to export may be required
under this Act, or under regulations issued under this Act,
except to carry out the provisions of this Act.

SEC. 105. EXPORT CONTROL ADVISORY COMMITTEES.

(a) Appointment.--Upon the Secretary's own initiative or
upon the written request of representatives of a substantial
segment of any industry which produces any items subject to
export controls under this Act or being considered for such
controls, the Secretary may appoint export control advisory
committees with respect to any such items. Each such
committee shall consist of representatives of United States
industry and Government officials, including officials from
the Departments of Commerce, Defense, and State, and other
appropriate departments and agencies of the Government. The
Secretary shall permit the widest possible participation by
the business community on the export control advisory
committees.
(b) Functions.--
(1) In general.--Export control advisory committees
appointed under subsection (a) shall advise and assist the
Secretary, and any other department, agency, or official of
the Government carrying out functions under this Act, on
actions (including all aspects of controls imposed or
proposed) designed to carry out the provisions of this Act
concerning the items with respect to which such export
control advisory committees were appointed.
(2) Other consultations.--Nothing in paragraph (1) shall
prevent the United States Government from consulting, at any
time, with any person representing an industry or the general
public, regardless of whether such person is a member of an
export control advisory committee. Members of the public
shall be given a reasonable opportunity, pursuant to
regulations prescribed by the Secretary, to present
information to such committees.
(c) Reimbursement of Expenses.--Upon the request of any
member of any export control advisory committee appointed
under subsection (a), the Secretary may, if the Secretary
determines it to be appropriate, reimburse such member for
travel, subsistence, and other necessary expenses incurred by
such member in connection with the duties of such member.
(d) Chairperson.--Each export control advisory committee
appointed under subsection (a) shall elect a chairperson, and
shall meet at least every 3 months at the call of the
chairperson, unless the chairperson determines, in
consultation with the other members of the committee, that
such a meeting is not necessary to achieve the purposes of
this section. Each such committee shall be terminated after a
period of 2 years, unless extended by the Secretary for
additional periods of 2 years each. The Secretary shall
consult with each such committee on such termination or
extension of that committee.
(e) Access to Information.--To facilitate the work of the
export control advisory committees appointed under subsection
(a), the Secretary, in conjunction with other departments and
agencies participating in the administration of this Act,
shall disclose to each such committee adequate information,
consistent with national security and intelligence sources
and methods, pertaining to the reasons for the export
controls which are in effect or contemplated for the items or
policies for which that committee furnishes advice.
Information provided by the export control advisory
committees shall not be subject to disclosure under section
552 of title 5, United States Code, and such information
shall not be published or disclosed unless the Secretary
determines that the withholding thereof is contrary to the
national interest.

SEC. 106. PRESIDENT'S TECHNOLOGY EXPORT COUNCIL.

The President may establish a President's Technology Export
Council to advise the President on the implementation,
operation, and effectiveness of this Act.

SEC. 107. PROHIBITION ON CHARGING FEES.

No fee may be charged in connection with the submission or
processing of an application for an export license under this
Act.

TITLE II--NATIONAL SECURITY EXPORT CONTROLS

Subtitle A--Authority and Procedures

SEC. 201. AUTHORITY FOR NATIONAL SECURITY EXPORT CONTROLS.

(a) Authority.--
(1) In general.--In order to carry out the purposes set
forth in subsection (b), the President may, in accordance
with the provisions of this Act, prohibit, curtail, or
require a license, or other authorization for the export of
any item subject to the jurisdiction of the United States or
exported by any person subject to the jurisdiction of the
United States. The President may also require recordkeeping
and reporting with respect to the export of such item.
(2) Exercise of authority.--The authority contained in this
subsection shall be exercised by the Secretary, in
consultation with the Secretary of Defense, the intelligence
agencies, and such other departments and agencies as the
Secretary considers appropriate.
(b) Purposes.--The purposes of national security export
controls are the following:
(1) To restrict the export of items that would contribute
to the military potential of countries so as to prove
detrimental to the national security of the United States,
its allies or countries sharing common strategic objectives
with the United States.
(2) To stem the proliferation of weapons of mass
destruction, and the means to deliver them, and other
significant military capabilities by--
(A) leading international efforts to control the
proliferation of chemical and biological weapons, nuclear
explosive devices, missile delivery systems, key-enabling
technologies, and other significant military capabilities;
(B) controlling involvement of United States persons in,
and contributions by United States persons to, foreign
programs intended to develop weapons of mass destruction,
missiles, and other significant military capabilities, and
the means to design, test, develop, produce, stockpile, or
use them; and
(C) implementing international treaties or other agreements
or arrangements concerning controls on exports of designated
items, reports on the production, processing, consumption,
and exports and imports of such items, and compliance with
verification programs.
(3) To deter acts of international terrorism.
(c) End Use and End User Controls.--Notwithstanding any
other provision of this title, controls may be imposed, based
on the end use or end user, on the export of any item, that
could contribute to the proliferation of weapons of mass
destruction or the means to deliver them.
(d) Enhanced Controls.--
(1) In general.--Notwithstanding any other provisions of
this title, the President may determine that applying the
provisions of section 204 or 211 with respect to an item on
the National Security Control List would constitute a
significant threat to the national security of the United
States and that such item requires enhanced control. If the
President determines that enhanced control should apply to
such item, the item may be excluded from the provisions of
section 204, section 211, or both, until such time as the
President shall determine that such enhanced control should
no longer apply to such item. The President may not delegate
the authority provided for in this subsection.
(2) Report to congress.--The President shall promptly
report any determination described in paragraph (1), along
with the specific reasons for the determination, to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on International Relations of the
House of Representatives.

SEC. 202. NATIONAL SECURITY CONTROL LIST.

(a) Establishment of List.--
(1) Establishment.--The Secretary shall establish and
maintain a National Security Control List as part of the
Control List.
(2) Contents.--The National Security Control List shall be
composed of a list of items the export of which is controlled
for national security purposes under this title.
(3) Identification of items for national security control
list.--The Secretary, with the concurrence of the Secretary
of Defense and in consultation with the head of any other
department or agency of the United States that the Secretary
considers appropriate, shall identify the items to be
included on the National Security Control List provided that
the National Security Control List shall, on the date of
enactment of this Act, include all of the items on the
Commerce Control List controlled on the day before the date
of enactment of this Act to protect the national security of
the United States, to prevent the proliferation of weapons of
mass destruction and the means to deliver them, and to deter
acts of international terrorism. The Secretary shall review
on a continuing basis and, with the concurrence of the
Secretary of Defense and in consultation with the head of any
other department or agency of the United States that the
Secretary considers appropriate, adjust the National Security
Control List to add items that require control under this
section and to remove items that no longer warrant control
under this section.
(b) Risk Assessment.--
(1) Requirement.--In establishing and maintaining the
National Security Control List, the risk factors set forth in
paragraph (2) shall be considered, weighing national security
concerns and economic costs.
(2) Risk factors.--The risk factors referred to in
paragraph (1), with respect to each item, are as follows:
(A) The characteristics of the item.
(B) The threat, if any, to the United States or the
national security interest of the United States from the
misuse or diversion of such item.
(C) The effectiveness of controlling the item for national
security purposes of the United States, taking into account
mass-market status, foreign availability, and other relevant
factors.

[[Page S9021]]

(D) The threat to the national security interests of the
United States if the item is not controlled.
(E) Any other appropriate risk factors.
(c) Report on Control List.--Not later than 90 days after
the date of enactment of this Act, the Secretary shall submit
a report to Congress which lists all items on the Commerce
Control List controlled on the day before the date of
enactment of this Act to protect the national security of the
United States, to prevent the proliferation of weapons of
mass destruction and the means to deliver them, and to deter
acts of international terrorism, not included on the National
Security Control List pursuant to the provisions of this Act.

SEC. 203. COUNTRY TIERS.

(a) In General.--
(1) Establishment and assignment.--In administering export
controls for national security purposes under this title, the
President shall, not later than 120 days after the date of
enactment of this Act--
(A) establish and maintain a country tiering system in
accordance with subsection (b); and
(B) based on the assessments required under subsection (c),
assign each country to an appropriate tier for each item or
group of items the export of which is controlled for national
security purposes under this title.
(2) Consultation.--The establishment and assignment of
country tiers under this section shall be made after
consultation with the Secretary, the Secretary of Defense,
the Secretary of State, the intelligence agencies, and such
other departments and agencies as the President considers
appropriate.
(3) Redetermination and review of assignments.--The
President may redetermine the assignment of a country to a
particular tier at any time and shall review and, as the
President considers appropriate, reassign country tiers on an
on-going basis. The Secretary shall provide notice of any
such reassignment to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
International Relations of the House of Representatives.
(4) Effective date of tier assignment.-- An assignment of a
country to a particular tier shall take effect on the date on
which notice of the assignment is published in the Federal
Register.
(b) Tiers.--
(1) In general.--The President shall establish a country
tiering system consisting of not less than 3 tiers for
purposes of this section.
(2) Range.--Countries that represent the lowest risk of
diversion or misuse of an item on the National Security
Control List shall be assigned to the lowest tier. Countries
that represent the highest risk of diversion or misuse of an
item on the National Security Control List shall be assigned
to the highest tier.
(3) Other countries.--Countries that fall between the
lowest and highest risk to the national security interest of
the United States with respect to the risk of diversion or
misuse of an item on the National Security Control List shall
be assigned to a tier other than the lowest or highest tier,
based on the assessments required under subsection (c).
(c) Assessments.--The President shall make an assessment of
each country in assigning a country tier taking into
consideration risk factors including the following:
(1) The present and potential relationship of the country
with the United States.
(2) The present and potential relationship of the country
with countries friendly to the United States and with
countries hostile to the United States.
(3) The country's capabilities regarding chemical,
biological, and nuclear weapons and the country's membership
in, and level of compliance with, relevant multilateral
export control regimes.
(4) The country's capabilities regarding missile systems
and the country's membership in, and level of compliance
with, relevant multilateral export control regimes.
(5) Whether the country, if a NATO or major non-NATO ally
with whom the United States has entered into a free trade
agreement as of January 1, 1986, controls exports in
accordance with the criteria and standards of a multilateral
export control regime as defined in section 2(14) pursuant to
an international agreement to which the United States is a
party.
(6) The country's other military capabilities and the
potential threat posed by the country to the United States or
its allies.
(7) The effectiveness of the country's export control
system.
(8) The level of the country's cooperation with United
States export control enforcement and other efforts.
(9) The risk of export diversion by the country to a higher
tier country.
(10) The designation of the country as a country supporting
international terrorism under section 310.
(d) Tier Application.--The country tiering system shall be
used in the determination of license requirements pursuant to
section 201(a)(1).

SEC. 204. INCORPORATED PARTS AND COMPONENTS.

(a) Export of Items Containing Controlled Parts and
Components.--Controls may not be imposed under this title or
any other provision of law on an item solely because the item
contains parts or components subject to export controls under
this title, if the parts or components--
(1) are essential to the functioning of the item,
(2) are customarily included in sales of the item in
countries other than controlled countries, and
(3) comprise 25 percent or less of the total value of the
item,

unless the item itself, if exported, would by virtue of the
functional characteristics of the item as a whole make
a significant contribution to the military or
proliferation potential of a controlled country or end
user which would prove detrimental to the national
security of the United States, or unless failure to
control the item would be contrary to the provisions of
section 201(c), section 201(d), or section 309 of this
Act.
(b) Reexports of Foreign-Made Items Incorporating United
States Controlled Content.--
(1) In general.--No authority or permission may be required
under this title to reexport to a country an item that is
produced in a country other than the United States and
incorporates parts or components that are subject to the
jurisdiction of the United States, if the value of the
controlled United States content of the item produced in such
other country is 25 percent or less of the total value of the
item; except that in the case of reexports of an item to a
country designated as a country supporting international
terrorism pursuant to section 310, controls may be maintained
if the value of the controlled United States content is more
than 10 percent of the total value of the item.
(2) Definition of controlled united states content.--For
purposes of this paragraph, the term ``controlled United
States content'' of an item means those parts or components
that--
(A) are subject to the jurisdiction of the United States;
(B) are incorporated into the item; and
(C) would, at the time of the reexport, require a license
under this title if exported from the United States to a
country to which the item is to be reexported.

SEC. 205. PETITION PROCESS FOR MODIFYING EXPORT STATUS.

(a) Establishment.--The Secretary shall establish a process
for interested persons to petition the Secretary to change
the status of an item on the National Security Control List.
(b) Evaluations and Determinations.--Evaluations and
determinations with respect to a petition filed pursuant to
this section shall be made in accordance with section 202.

Subtitle B--Foreign Availability and Mass-Market Status

SEC. 211. DETERMINATION OF FOREIGN AVAILABILITY AND MASS-
MARKET STATUS.

(a) In General.--The Secretary shall--
(1) on a continuing basis,
(2) upon a request from the Office of Technology
Evaluation, or
(3) upon receipt of a petition filed by an interested
party,

review and determine the foreign availability and the mass-
market status of any item the export of which is controlled
under this title.
(b) Petition and Consultation.--
(1) In general.--The Secretary shall establish a process
for an interested party to petition the Secretary for a
determination that an item has a foreign availability or
mass-market status. In evaluating and making a determination
with respect to a petition filed under this section, the
Secretary shall consult with the Secretary of Defense,
Secretary of State, and other appropriate Government agencies
and with the Office of Technology Evaluation (established
pursuant to section 214).
(2) Time for making determination.--The Secretary shall,
within 6 months after receiving a petition described in
subsection (a)(3), determine whether the item that is the
subject of the petition has foreign availability or mass-
market status and shall notify the petitioner of the
determination.
(c) Result of Determination.--In any case in which the
Secretary determines, in accordance with procedures and
criteria which the Secretary shall by regulation establish,
that an item described in subsection (a) has--
(1) a foreign availability status, or
(2) a mass-market status,

the Secretary shall notify the President (and other
appropriate departments and agencies) and publish the notice
of the determination in the Federal Register. The Secretary's
determination shall become final 30 days after the date the
notice is published, the item shall be removed from the
National Security Control List, and a license or other
authorization shall not be required under this title with
respect to the item, unless the President makes a
determination described in section 212 or 213, or takes
action under section 309, with respect to the item in that
30-day period.
(d) Criteria for Determining Foreign Availability and Mass-
Market Status.--
(1) Foreign availability status.--The Secretary shall
determine that an item has foreign availability status under
this subtitle, if the item (or a substantially identical or
directly competitive item)--
(A) is available to controlled countries from sources
outside the United States, including countries that
participate with the United States in multilateral export
controls;
(B) can be acquired at a price that is not excessive when
compared to the price at which a controlled country could
acquire such item from sources within the United States in
the absence of export controls; and
(C) is available in sufficient quantity so that the
requirement of a license or other authorization with respect
to the export of such item is or would be ineffective.
(2) Mass-market status.--
(A) In general.--In determining whether an item has mass-
market status under this subtitle, the Secretary shall
consider the following criteria with respect to the item (or
a substantially identical or directly competitive item):
(i) The production and availability for sale in a large
volume to multiple potential purchasers.
(ii) The widespread distribution through normal commercial
channels, such as retail stores, direct marketing catalogues,
electronic commerce, and other channels.
(iii) The conduciveness to shipment and delivery by
generally accepted commercial means of transport.

[[Page S9022]]

(iv) The use for the item's normal intended purpose without
substantial and specialized service provided by the
manufacturer, distributor, or other third party.
(B) Determination by secretary.--If the Secretary finds
that the item (or a substantially identical or directly
competitive item) meets the criteria set forth in
subparagraph (A), the Secretary shall determine that the item
has mass-market status.
(3) Special rules.--For purposes of this subtitle--
(A) Substantially identical item.--The determination of
whether an item in relation to another item is a
substantially identical item shall include a fair assessment
of end-uses, the properties, nature, and quality of the item.
(B) Directly competitive item.--
(i) In general.--The determination of whether an item in
relation to another item is a directly competitive item shall
include a fair assessment of whether the item, although not
substantially identical in its intrinsic or inherent
characteristics, is substantially equivalent for commercial
purposes and may be adapted for substantially the same uses.
(ii) Exception.--An item is not directly competitive with a
controlled item if the item is substantially inferior to the
controlled item with respect to characteristics that resulted
in the export of the item being controlled.

SEC. 212. PRESIDENTIAL SET-ASIDE OF FOREIGN AVAILABILITY
STATUS DETERMINATION.

(a) Criteria for Presidential Set-Aside.--
(1) General criteria.--
(A) In general.--If the President determines that--
(i) decontrolling or failing to control an item constitutes
a threat to the national security of the United States, and
export controls on the item would advance the national
security interests of the United States,
(ii) there is a high probability that the foreign
availability of an item will be eliminated through
international negotiations within a reasonable period of time
taking into account the characteristics of the item, or
(iii) United States controls on the item have been imposed
under section 309,

the President may set aside the Secretary's determination of
foreign availability status with respect to the item.
(B) Nondelegation.--The President may not delegate the
authority provided for in this paragraph.
(2) Report to congress.--The President shall promptly--
(A) report any set-aside determination described in
paragraph (1), along with the specific reasons for the
determination, to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
International Relations of the House of Representatives; and
(B) publish the determination in the Federal Register.
(b) Presidential Action in Case of Set-Aside.--
(1) In general.--
(A) Negotiations.--In any case in which export controls are
maintained on an item because the President has made a
determination under subsection (a), the President shall
actively pursue negotiations with the governments of the
appropriate foreign countries for the purpose of eliminating
such availability.
(B) Report to congress.--Not later than the date the
President begins negotiations, the President shall notify in
writing the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on International Relations of
the House of Representatives that the President has begun
such negotiations and why the President believes it is
important to the national security that export controls on
the item involved be maintained.
(2) Periodic review of determination.--The President shall
review a determination described in subsection (a) at least
every 6 months. Promptly after each review is completed, the
Secretary shall submit to the committees of Congress referred
to in paragraph (1)(B) a report on the results of the review,
together with the status of international negotiations to
eliminate the foreign availability of the item.
(3) Expiration of presidential set-aside.--A determination
by the President described in subsection (a)(1)(A) (i) or
(ii) shall cease to apply with respect to an item on the
earlier of--
(A) the date that is 6 months after the date on which the
determination is made under subsection (a), if the President
has not commenced international negotiations to eliminate the
foreign availability of the item within that 6-month period;
(B) the date on which the negotiations described in
paragraph (1) have terminated without achieving an agreement
to eliminate foreign availability;
(C) the date on which the President determines that there
is not a high probability of eliminating foreign availability
of the item through negotiation; or
(D) the date that is 18 months after the date on which the
determination described in subsection (a)(1)(A) (i) or (ii)
is made if the President has been unable to achieve an
agreement to eliminate foreign availability within that 18-
month period.
(4) Action on expiration of presidential set-aside.--Upon
the expiration of a Presidential set-aside under paragraph
(3) with respect to an item, the Secretary shall not require
a license or other authorization to export the item.

SEC. 213. PRESIDENTIAL SET-ASIDE OF MASS-MARKET STATUS
DETERMINATION.

(a) Criteria for Presidential Set-Aside.--
(1) General criteria.--If the President determines that--
(A)(i) decontrolling or failing to control an item
constitutes a serious threat to the national security of the
United States, and
(ii) export controls on the item would advance the national
security interests of the United States, or
(B) United States controls on the item have been imposed
under section 309,
the President may set aside the Secretary's determination of
mass-market status with respect to the item.
(2) Nondelegation.--The President may not delegate the
authority provided for in this subsection.
(b) Presidential Action in Case of Set-Aside.--
(1) In general.--In any case in which export controls are
maintained on an item because the President has made a
determination under subsection (a), the President shall
promptly report the determination, along with the specific
reasons for the determination, to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
International Relations of the House of Representatives, and
shall publish notice of the determination in the Federal
Register not later than 30 days after the Secretary publishes
notice of the Secretary's determination that an item has
mass-market status.
(2) Periodic review of determination.--The President shall
review a determination made under subsection (a) at least
every 6 months. Promptly after each review is completed, the
Secretary shall submit a report on the results of the review
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on International Relations of
the House of Representatives.

SEC. 214. OFFICE OF TECHNOLOGY EVALUATION.

(a) In General.--
(1) Establishment of office.--The Secretary shall establish
in the Department of Commerce an Office of Technology
Evaluation (in this section referred to as the ``Office''),
which shall be under the direction of the Secretary. The
Office shall be responsible for gathering, coordinating, and
analyzing all the necessary information in order for the
Secretary to make determinations of foreign availability and
mass-market status under this Act.
(2) Staff.--
(A) In general.--The Secretary shall ensure that the Office
include persons to carry out the responsibilities set forth
in subsection (b) of this section that have training,
expertise, and experience in--
(i) economic analysis;
(ii) the defense industrial base;
(iii) technological developments; and
(iv) national security and foreign policy export controls.
(B) Detailees.--In addition to employees of the Department
of Commerce, the Secretary may accept on nonreimbursable
detail to the Office, employees of the Departments of
Defense, State, and Energy and other departments and agencies
as appropriate.
(b) Responsibilities.--The Office shall be responsible
for--
(1) conducting foreign availability assessments to
determine whether a controlled item is available to
controlled countries and whether requiring a license, or
denial of a license for the export of such item, is or would
be ineffective;
(2) conducting mass-market assessments to determine whether
a controlled item is available to controlled countries
because of the mass-market status of the item;
(3) monitoring and evaluating worldwide technological
developments in industry sectors critical to the national
security interests of the United States to determine foreign
availability and mass-market status of controlled items;
(4) monitoring and evaluating multilateral export control
regimes and foreign government export control policies and
practices that affect the national security interests of the
United States;
(5) conducting assessments of United States industrial
sectors critical to the United States defense industrial base
and how the sectors are affected by technological
developments, technology transfers, and foreign competition;
and
(6) conducting assessments of the impact of United States
export control policies on--
(A) United States industrial sectors critical to the
national security interests of the United States; and
(B) the United States economy in general.
(c) Reports to Congress.--The Secretary shall make
available to the Committee on International Relations of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate as part of the
Secretary's annual report required under section 701
information on the operations of the Office, and on
improvements in the Government's ability to assess foreign
availability and mass-market status, during the fiscal year
preceding the report, including information on the training
of personnel, and the use of Commercial Service Officers of
the United States and Foreign Commercial Service to assist in
making determinations. The information shall also include a
description of determinations made under this Act during the
preceding fiscal year that foreign availability or mass-
market status did or did not exist (as the case may be),
together with an explanation of the determinations.
(d) Sharing of Information.--Each department or agency of
the United States, including any intelligence agency, and all
contractors with any such department or agency, shall,
consistent with the need to protect intelligence sources
and methods, furnish information to the Office concerning
foreign availability and the mass-market status of items
subject to export controls under this Act.

TITLE III--FOREIGN POLICY EXPORT CONTROLS

SEC. 301. AUTHORITY FOR FOREIGN POLICY EXPORT CONTROLS.

(a) Authority.--

[[Page S9023]]

(1) In general.--In order to carry out the purposes set
forth in subsection (b), the President may, in accordance
with the provisions of this Act, prohibit, curtail, or
require a license, other authorization, recordkeeping, or
reporting for the export of any item subject to the
jurisdiction of the United States or exported by any person
subject to the jurisdiction of the United States.
(2) Exercise of authority.--The authority contained in this
subsection shall be exercised by the Secretary, in
consultation with the Secretary of State and such other
departments and agencies as the Secretary considers
appropriate.
(b) Purposes.--The purposes of foreign policy export
controls are the following:
(1) To promote the foreign policy objectives of the United
States, consistent with the purposes of this section and the
provisions of this Act.
(2) To promote international peace, stability, and respect
for fundamental human rights.
(3) To use export controls to deter and punish acts of
international terrorism and to encourage other countries to
take immediate steps to prevent the use of their territories
or resources to aid, encourage, or give sanctuary to those
persons involved in directing, supporting, or participating
in acts of international terrorism.
(c) Foreign Products.--No authority or permission may be
required under this title to reexport to a country an item
that is produced in a country other than the United States
and incorporates parts or components that are subject to the
jurisdiction of the United States, except that in the case of
reexports of an item to a country designated as a country
supporting international terrorism pursuant to section 310,
controls may be maintained if the value of the controlled
United States content is more than 10 percent of the value of
the item.
(d) Contract Sanctity.--
(1) In general.--The President may not prohibit the export
of any item under this title if that item is to be exported--
(A) in performance of a binding contract, agreement, or
other contractual commitment entered into before the date on
which the President reports to Congress the President's
intention to impose controls on that item under this title;
or
(B) under a license or other authorization issued under
this Act before the earlier of the date on which the control
is initially imposed or the date on which the President
reports to Congress the President's intention to impose
controls under this title.
(2) Exception.--The prohibition contained in paragraph (1)
shall not apply in any case in which the President determines
and certifies to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on International
Relations of the House of Representatives that--
(A) there is a serious threat to a foreign policy interest
of the United States;
(B) the prohibition of exports under each binding contract,
agreement, commitment, license, or authorization will be
instrumental in remedying the situation posing the serious
threat; and
(C) the export controls will be in effect only as long as
the serious threat exists.

SEC. 302. PROCEDURES FOR IMPOSING CONTROLS.

(a) Notice.--
(1) Intent to impose foreign policy export control.--Except
as provided in section 306, not later than 45 days before
imposing or implementing an export control under this title,
the President shall publish in the Federal Register--
(A) a notice of intent to do so; and
(B) provide for a period of not less than 30 days for any
interested person to submit comments on the export control
proposed under this title.
(2) Purposes of notice.--The purposes of the notice are--
(A) to provide an opportunity for the formulation of an
effective export control policy under this title that
advances United States economic and foreign policy interests;
and
(B) to provide an opportunity for negotiations to achieve
the purposes set forth in section 301(b).
(b) Negotiations.--During the 45-day period that begins on
the date of notice described in subsection (a), the President
may negotiate with the government of the foreign country
against which the export control is proposed in order to
resolve the reasons underlying the proposed export control.
(c) Consultation.--
(1) Requirement.--The President shall consult with the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on International Relations of the
House of Representatives regarding any export control
proposed under this title and the efforts to achieve or
increase multilateral cooperation on the issues or problems
underlying the proposed export control.
(2) Classified consultation.--The consultations described
in paragraph (1) may be conducted on a classified basis if
the Secretary considers it necessary.

SEC. 303. CRITERIA FOR FOREIGN POLICY EXPORT CONTROLS.

Each export control imposed by the President under this
title shall--
(1) have clearly stated and specific United States foreign
policy objectives;
(2) have objective standards for evaluating the success or
failure of the export control;
(3) include an assessment by the President that--
(A) the export control is likely to achieve such objectives
and the expected time for achieving the objectives; and
(B) the achievement of the objectives of the export control
outweighs any potential costs of the export control to other
United States economic, foreign policy, humanitarian, or
national security interests;
(4) be targeted narrowly; and
(5) seek to minimize any adverse impact on the humanitarian
activities of United States and foreign nongovernmental
organizations in the country subject to the export control.

SEC. 304. PRESIDENTIAL REPORT BEFORE IMPOSITION OF CONTROL.

(a) Requirement.--Before imposing an export control under
this title, the President shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on International Relations of the House of
Representatives a report on the proposed export control. The
report may be provided on a classified basis if the Secretary
considers it necessary.
(b) Content.--The report shall contain a description and
assessment of each of the criteria described in section 303.
In addition, the report shall contain a description and
assessment of--
(1) any diplomatic and other steps that the United States
has taken to accomplish the intended objective of the
proposed export control;
(2) unilateral export controls imposed, and other measures
taken, by other countries to achieve the intended objective
of the proposed export control;
(3) the likelihood of multilateral adoption of comparable
export controls;
(4) alternative measures to promote the same objectives and
the likelihood of their potential success;
(5) any United States obligations under international trade
agreements, treaties, or other international arrangements,
with which the proposed export control may conflict;
(6) the likelihood that the proposed export control could
lead to retaliation against United States interests;
(7) the likely economic impact of the proposed export
control on the United States economy, United States
international trade and investment, and United States
agricultural interests, commercial interests, and employment;
and
(8) a conclusion that the probable achievement of the
objectives of the proposed export control outweighs any
likely costs to United States economic, foreign policy,
humanitarian, or national security interests, including any
potential harm to the United States agricultural and business
firms and to the international reputation of the United
States as a reliable supplier of goods, services, or
technology.

SEC. 305. IMPOSITION OF CONTROLS.

The President may impose an export control under this title
after the submission of the report required under section 304
and publication in the Federal Register of a notice of the
imposition of the export control .

SEC. 306. DEFERRAL AUTHORITY.

(a) Authority.--The President may defer compliance with any
requirement contained in section 302(a), 304, or 305 in the
case of a proposed export control if--
(1) the President determines that a deferral of compliance
with the requirement is in the national interest of the
United States; and
(2) the requirement is satisfied not later than 60 days
after the date on which the export control is imposed under
this title.
(b) Termination of Control.--An export control with respect
to which a deferral has been made under subsection (a) shall
terminate 60 days after the date the export control is
imposed unless all requirements have been satisfied before
the expiration of the 60-day period.

SEC. 307. REVIEW, RENEWAL, AND TERMINATION.

(a) Renewal and Termination.--
(1) In general.--Any export control imposed under this
title shall terminate on March 31 of each renewal year unless
the President renews the export control on or before such
date. For purposes of this section, the term ``renewal year''
means 2003 and every 2 years thereafter.
(2) Exception.--This section shall not apply to an export
control imposed under this title that--
(A) is required by law;
(B) is targeted against any country designated as a country
supporting international terrorism pursuant to section 310;
or
(C) has been in effect for less than 1 year as of February
1 of a renewal year.
(b) Review.--
(1) In general.--Not later than February 1 of each renewal
year, the President shall review all export controls in
effect under this title.
(2) Consultation.--
(A) Requirement.--Before completing a review under
paragraph (1), the President shall consult with the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on International Relations of the House of
Representative regarding each export control that is being
reviewed.
(B) Classified consultation.--The consultations may be
conducted on a classified basis if the Secretary considers it
necessary.
(3) Public comment.--In conducting the review of each
export control under paragraph (1), the President shall
provide a period of not less than 30 days for any interested
person to submit comments on renewal of the export control.
The President shall publish notice of the opportunity for
public comment in the Federal Register not less than 45 days
before the review is required to be completed.
(c) Report to Congress.--
(1) Requirement.--Before renewing an export control imposed
under this title, the President shall submit to the
committees of Congress referred to in subsection (b)(2)(A) a
report on each export control that the President intends to
renew.
(2) Form and content of report.--The report may be provided
on a classified basis if the Secretary considers it
necessary. Each report shall contain the following:
(A) A clearly stated explanation of the specific United
States foreign policy objective that the existing export
control was intended to achieve.

[[Page S9024]]

(B) An assessment of--
(i) the extent to which the existing export control
achieved its objectives before renewal based on the objective
criteria established for evaluating the export control; and
(ii) the reasons why the existing export control has failed
to fully achieve its objectives and, if renewed, how the
export control will achieve that objective before the next
renewal year.
(C) An updated description and assessment of--
(i) each of the criteria described in section 303, and
(ii) each matter required to be reported under section
304(b) (1) through (8).
(3) Renewal of export control.--The President may renew an
export control under this title after submission of the
report described in paragraph (2) and publication of notice
of renewal in the Federal Register.

SEC. 308. TERMINATION OF CONTROLS UNDER THIS TITLE.

(a) In General.--Notwithstanding any other provision of
law, the President--
(1) shall terminate any export control imposed under this
title if the President determines that the control has
substantially achieved the objective for which it was
imposed; and
(2) may terminate at any time any export control imposed
under this title that is not required by law.
(b) Exception.--Paragraphs (1) and (2) of subsection (a) do
not apply to any export control imposed pursuant to section
310.
(c) Effective Date of Termination.--The termination of an
export control pursuant to this section shall take effect on
the date notice of the termination is published in the
Federal Register.

SEC. 309. COMPLIANCE WITH INTERNATIONAL OBLIGATIONS.

Notwithstanding any other provision of this Act setting
forth limitations on authority to control exports and except
as provided in section 304, the President may impose controls
on exports to a particular country or countries--
(1) of items listed on the control list of a multilateral
export control regime, as defined in section 2(14); or
(2) in order to fulfill obligations or commitments of the
United States under resolutions of the United Nations and
under treaties, or other international agreements and
arrangements, to which the United States is a party.

SEC. 310. DESIGNATION OF COUNTRIES SUPPORTING INTERNATIONAL
TERRORISM.

(a) License Required.--Notwithstanding any other provision
of this Act setting forth limitations on the authority to
control exports, a license shall be required for the export
of any item to a country if the Secretary of State has
determined that--
(1) the government of such country has repeatedly provided
support for acts of international terrorism; and
(2) the export of the item could make a significant
contribution to the military potential of such country,
including its military logistics capability, or could enhance
the ability of such country to support acts of international
terrorism.
(b) Notification.--The Secretary and the Secretary of State
shall notify the Committee on International Relations of the
House of Representatives and the Committee on Banking,
Housing, and Urban Affairs and the Committee on Foreign
Relations of the Senate at least 30 days before issuing any
license required by subsection (a).
(c) Determinations Regarding Repeated Support.--Each
determination of the Secretary of State under subsection
(a)(1), including each determination in effect on the date of
the enactment of the Antiterrorism and Arms Export
Amendments Act of 1989, shall be published in the Federal
Register.
(d) Limitations on Rescinding Determination.--A
determination made by the Secretary of State under subsection
(a)(1) may not be rescinded unless the President submits to
the Speaker of the House of Representatives and the Chairman
of the Committee on Banking, Housing, and Urban Affairs and
the Chairman of the Committee on Foreign Relations of the
Senate--
(1) before the proposed rescission would take effect, a
report certifying that--
(A) there has been a fundamental change in the leadership
and policies of the government of the country concerned;
(B) that government is not supporting acts of international
terrorism; and
(C) that government has provided assurances that it will
not support acts of international terrorism in the future; or
(2) at least 45 days before the proposed rescission would
take effect, a report justifying the rescission and
certifying that--
(A) the government concerned has not provided any support
for international terrorism during the preceding 6-month
period; and
(B) the government concerned has provided assurances that
it will not support acts of international terrorism in the
future.
(e) Information To Be Included in Notification.--The
Secretary and the Secretary of State shall include in the
notification required by subsection (b)--
(1) a detailed description of the item to be offered,
including a brief description of the capabilities of any item
for which a license to export is sought;
(2) the reasons why the foreign country or international
organization to which the export or transfer is proposed to
be made needs the item which is the subject of such export or
transfer and a description of the manner in which such
country or organization intends to use the item;
(3) the reasons why the proposed export or transfer is in
the national interest of the United States;
(4) an analysis of the impact of the proposed export or
transfer on the military capabilities of the foreign country
or international organization to which such export or
transfer would be made;
(5) an analysis of the manner in which the proposed export
would affect the relative military strengths of countries in
the region to which the item which is the subject of such
export would be delivered and whether other countries in the
region have comparable kinds and amounts of the item; and
(6) an analysis of the impact of the proposed export or
transfer on the United States relations with the countries in
the region to which the item which is the subject of such
export would be delivered.

SEC. 311. CRIME CONTROL INSTRUMENTS.

(a) In General.--Crime control and detection instruments
and equipment shall be approved for export by the Secretary
only pursuant to an individual export license.
Notwithstanding any other provision of this Act--
(1) any determination by the Secretary of what goods or
technology shall be included on the list established pursuant
to this subsection as a result of the export restrictions
imposed by this section shall be made with the concurrence of
the Secretary of State, and
(2) any determination by the Secretary to approve or deny
an export license application to export crime control or
detection instruments or equipment shall be made in
concurrence with the recommendations of the Secretary of
State submitted to the Secretary with respect to the
application pursuant to section 401 of this Act,

except that, if the Secretary does not agree with the
Secretary of State with respect to any determination under
paragraph (1) or (2), the matter shall be referred to the
President for resolution.
(b) Exception.--The provisions of this section shall not
apply with respect to exports to countries that are members
of the North Atlantic Treaty Organization or to Japan,
Australia, or New Zealand, or to such other countries as the
President shall designate consistent with the purposes of
this section and section 502B of the Foreign Assistance Act
of 1961 (22 U.S.C. 2304).

TITLE IV--PROCEDURES FOR EXPORT LICENSES AND INTERAGENCY DISPUTE
RESOLUTION

SEC. 401. EXPORT LICENSE PROCEDURES.

(a) Responsibility of the Secretary.--
(1) In general.--All applications for a license or other
authorization to export a controlled item shall be filed in
such manner and include such information as the Secretary
may, by regulation, prescribe.
(2) Procedures.--In guidance and regulations that implement
this section, the Secretary shall describe the procedures
required by this section, the responsibilities of the
Secretary and of other departments and agencies in reviewing
applications, the rights of the applicant, and other relevant
matters affecting the review of license applications.
(3) Calculation of processing times.--In calculating the
processing times set forth in this title, the Secretary shall
use calendar days, except that if the final day for a
required action falls on a weekend or holiday, that action
shall be taken no later than the following business day.
(4) Criteria for evaluating applications.--In determining
whether to grant an application to export a controlled item
under this Act, the following criteria shall be considered:
(A) The characteristics of the controlled item.
(B) The threat to--
(i) the national security interests of the United States
from items controlled under title II of this Act; or
(ii) the foreign policy of the United States from items
controlled under title III of this Act.
(C) The country tier designation of the country to which a
controlled item is to be exported pursuant to section 203.
(D) The risk of export diversion or misuse by--
(i) the exporter;
(ii) the method of export;
(iii) the end-user;
(iv) the country where the end-user is located; and
(v) the end-use.
(E) Risk mitigating factors including, but not limited to--
(i) changing the characteristics of the controlled item;
(ii) after-market monitoring by the exporter; and
(iii) post-shipment verification.
(b) Initial Screening.--
(1) Upon receipt of application.--Upon receipt of an export
license application, the Secretary shall enter and maintain
in the records of the Department information regarding the
receipt and status of the application.
(2) Initial procedures.--
(A) In general.--Not later than 9 days after receiving any
license application, the Secretary shall--
(i) contact the applicant if the application is improperly
completed or if additional information is required, and hold
the application for a reasonable time while the applicant
provides the necessary corrections or information, and such
time shall not be included in calculating the time periods
prescribed in this title;
(ii) refer the application, through the use of a common
data base or other means, and all information submitted by
the applicant, and all necessary recommendations and analyses
by the Secretary to the Secretary of Defense, the Secretary
of State, and the heads of and other departments and agencies
the Secretary considers appropriate;
(iii) ensure that the classification stated on the
application for the export items is correct; and
(iv) return the application if a license is not required.

[[Page S9025]]

(B) Referral not required.--In the event that the head of a
department or agency determines that certain types of
applications need not be referred to the department or
agency, such department or agency head shall notify the
Secretary of the specific types of such applications that the
department or agency does not wish to review.
(3) Withdrawal of application.--An applicant may, by
written notice to the Secretary, withdraw an application at
any time before final action.
(c) Action by Other Departments and Agencies.--
(1) Referral to other agencies.--The Secretary shall
promptly refer a license application to the departments and
agencies under subsection (b) to make recommendations and
provide information to the Secretary.
(2) Responsibility of referral departments and agencies.--
The Secretary of Defense, the Secretary of State, and the
heads of other reviewing departments and agencies shall take
all necessary actions in a prompt and responsible manner on
an application. Each department or agency reviewing an
application under this section shall establish and maintain
records properly identifying and monitoring the status of the
matter referred to the department or agency.
(3) Additional information requests.--Each department or
agency to which a license application is referred shall
specify to the Secretary any information that is not in the
application that would be required for the department or
agency to make a determination with respect to the
application, and the Secretary shall promptly request such
information from the applicant. The time that may elapse
between the date the information is requested by that
department or agency and the date the information is received
by that department or agency shall not be included in
calculating the time periods prescribed in this title.
(4) Time period for action by referral departments and
agencies.--Within 30 days after the Secretary refers an
application under this section, each department or agency to
which an application has been referred shall provide the
Secretary with a recommendation either to approve the license
or to deny the license. A recommendation that the Secretary
deny a license shall include a statement of reasons for the
recommendation that are consistent with the provisions of
this title, and shall cite both the specific statutory and
regulatory basis for the recommendation. A department or
agency that fails to provide a recommendation in accordance
with this paragraph within that 30-day period shall be deemed
to have no objection to the decision of the Secretary on the
application.
(d) Action by the Secretary.--Not later than 30 days after
the date the application is referred, the Secretary shall--
(1) if there is agreement among the referral departments
and agencies to issue or deny the license--
(A) issue the license and ensure all appropriate personnel
in the Department (including the Office of Export
Enforcement) are notified of all approved license
applications; or
(B) notify the applicant of the intention to deny the
license; or
(2) if there is no agreement among the referral departments
and agencies, notify the applicant that the application is
subject to the interagency dispute resolution process
provided for in section 402.
(e) Consequences of Application Denial.--
(1) In general.--If a determination is made to deny a
license, the applicant shall be informed in writing,
consistent with the protection of intelligence information
sources and methods, by the Secretary of--
(A) the determination;
(B) the specific statutory and regulatory bases for the
proposed denial;
(C) what, if any, modifications to, or restrictions on, the
items for which the license was sought would allow such
export to be compatible with export controls imposed under
this Act, and which officer or employee of the Department
would be in a position to discuss modifications or
restrictions with the applicant and the specific statutory
and regulatory bases for imposing such modifications or
restrictions;
(D) to the extent consistent with the national security and
foreign policy interests of the United States, the specific
considerations that led to the determination to deny the
application; and
(E) the availability of appeal procedures.
(2) Period for applicant to respond.--The applicant shall
have 20 days from the date of the notice of intent to deny
the application to respond in a manner that addresses and
corrects the reasons for the denial. If the applicant does
not adequately address or correct the reasons for denial or
does not respond, the license shall be denied. If the
applicant does address or correct the reasons for denial, the
application shall be considered in a timely manner.
(f) Appeals and Other Actions by Applicant.--
(1) In general.--The Secretary shall establish appropriate
procedures for an applicant to appeal to the Secretary the
denial of an application or other administrative action under
this Act. In any case in which the Secretary proposes to
reverse the decision with respect to the application, the
appeal under this subsection shall be handled in accordance
with the interagency dispute resolution process provided for
in section 402(b)(3).
(2) Enforcement of time limits.--
(A) In general.--In any case in which an action prescribed
in this section is not taken on an application within the
time period established by this section (except in the case
of a time period extended under subsection (g) of which the
applicant is notified), the applicant may file a petition
with the Secretary requesting compliance with the
requirements of this section. When such petition is filed,
the Secretary shall take immediate steps to correct the
situation giving rise to the petition and shall immediately
notify the applicant of such steps.
(B) Bringing court action.--If, within 20 days after a
petition is filed under subparagraph (A), the processing of
the application has not been brought into conformity with the
requirements of this section, or the processing of the
application has been brought into conformity with such
requirements but the Secretary has not so notified the
applicant, the applicant may bring an action in an
appropriate United States district court for an order
requiring compliance with the time periods required by this
section.
(g) Exceptions From Required Time Periods.--The following
actions related to processing an application shall not be
included in calculating the time periods prescribed in this
section:
(1) Agreement of the applicant.--Delays upon which the
Secretary and the applicant mutually agree.
(2) Prelicense checks.--A prelicense check (for a period
not to exceed 60 days) that may be required to establish the
identity and reliability of the recipient of items controlled
under this Act, if--
(A) the need for the prelicense check is determined by the
Secretary or by another department or agency in any case in
which the request for the prelicense check is made by such
department or agency;
(B) the request for the prelicense check is initiated by
the Secretary within 5 days after the determination that the
prelicense check is required; and
(C) the analysis of the result of the prelicense check is
completed by the Secretary within 5 days.
(3) Requests for government-to-government assurances.--Any
request by the Secretary or another department or agency for
government-to-government assurances of suitable end-uses of
items approved for export, when failure to obtain such
assurances would result in rejection of the application, if--
(A) the request for such assurances is sent to the
Secretary of State within 5 days after the determination that
the assurances are required;
(B) the Secretary of State initiates the request of the
relevant government within 10 days thereafter; and
(C) the license is issued within 5 days after the Secretary
receives the requested assurances.
(4) Exception.--Whenever a prelicense check described in
paragraph (2) or assurances described in paragraph (3) are
not requested within the time periods set forth therein, then
the time expended for such prelicense check or assurances
shall be included in calculating the time periods established
by this section.
(5) Multilateral review.--Multilateral review of a license
application to the extent that such multilateral review is
required by a relevant multilateral regime.
(6) Congressional notification.--Such time as is required
for mandatory congressional notifications under this Act.
(7) Consultations.--Consultation with foreign governments,
if such consultation is provided for by a relevant
multilateral regime as a precondition for approving a
license.
(h) Classification Requests and Other Inquiries.--
(1) Classification requests.--In any case in which the
Secretary receives a written request asking for the proper
classification of an item on the Control List or the
applicability of licensing requirements under this title, the
Secretary shall promptly notify the Secretary of Defense and
the head of any department or agency the Secretary considers
appropriate. The Secretary shall, within 14 days after
receiving the request, inform the person making the
request of the proper classification.
(2) Other inquiries.--In any case in which the Secretary
receives a written request for information under this Act,
the Secretary shall, within 30 days after receiving the
request, reply with that information to the person making the
request.

SEC. 402. INTERAGENCY DISPUTE RESOLUTION PROCESS.

(a) In General.--All license applications on which
agreement cannot be reached shall be referred to the
interagency dispute resolution process for decision.
(b) Interagency Dispute Resolution Process.--
(1) Initial resolution.--The Secretary shall establish,
select the chairperson of, and determine procedures for an
interagency committee to review initially all license
applications described in subsection (a) with respect to
which the Secretary and any of the referral departments and
agencies are not in agreement. The chairperson shall consider
the positions of all the referral departments and agencies
(which shall be included in the minutes described in
subsection (c)(2)) and make a decision on the license
application, including appropriate revisions or conditions
thereto.
(2) Intelligence community.--The analytic product of the
intelligence community should be fully considered with
respect to any proposed license under this title.
(3) Further resolution.--The President shall establish
additional levels for review or appeal of any matter that
cannot be resolved pursuant to the process described in
paragraph (1). Each such review shall--
(A) provide for decision-making based on the majority vote
of the participating departments and agencies;
(B) provide that a department or agency that fails to take
a timely position, citing the specific statutory and
regulatory bases for a position, shall be deemed to have no
objection to the pending decision;
(C) provide that any decision of an interagency committee
established under paragraph

[[Page S9026]]

(1) or interagency dispute resolution process established
under this paragraph may be escalated to the next higher
level of review at the request of an official appointed by
the President, by and with the advice of the Senate, or an
officer properly acting in such capacity, of a department or
agency that participated in the interagency committee or
dispute resolution process that made the decision; and
(D) ensure that matters are resolved or referred to the
President not later than 90 days after the date the completed
license application is referred by the Secretary.
(c) Final Action.--
(1) In general.--Once a final decision is made under
subsection (b), the Secretary shall promptly--
(A) issue the license and ensure that all appropriate
personnel in the Department (including the Office of Export
Enforcement) are notified of all approved license
applications; or
(B) notify the applicant of the intention to deny the
application.
(2) Minutes.--The interagency committee and each level of
the interagency dispute resolution process shall keep
reasonably detailed minutes of all meetings. On each matter
before the interagency committee or before any other level of
the interagency dispute resolution process in which members
disagree, each member shall clearly state the reasons for the
member's position and the reasons shall be entered in the
minutes.

TITLE V--INTERNATIONAL ARRANGEMENTS; FOREIGN BOYCOTTS; SANCTIONS; AND
ENFORCEMENT

SEC. 501. INTERNATIONAL ARRANGEMENTS.

(a) Multilateral Export Control Regimes.--
(1) Policy.--It is the policy of the United States to seek
multilateral arrangements that support the national security
objectives of the United States (as described in title II)
and that establish fairer and more predictable competitive
opportunities for United States exporters.
(2) Participation in existing regimes.--Congress encourages
the United States to continue its active participation in and
to strengthen existing multilateral export control regimes.
(3) Participation in new regimes.--It is the policy of the
United States to participate in additional multilateral
export control regimes if such participation would serve the
national security interests of the United States.
(b) Annual Report on Multilateral Export Control Regimes.--
Not later than February 1 of each year, the President shall
submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on International
Relations of the House of Representatives a report evaluating
the effectiveness of each multilateral export control regime,
including an assessment of the steps undertaken pursuant to
subsections (c) and (d). The report, or any part of this
report, may be submitted in classified form to the extent the
President considers necessary.
(c) Standards for Multilateral Export Control Regimes.--The
President shall take steps to establish the following
features in any multilateral export control regime in which
the United States is participating or may participate:
(1) Full membership.--All supplier countries are members of
the regime, and the policies and activities of the members
are consistent with the objectives and membership criteria of
the multilateral export control regime.
(2) Effective enforcement and compliance.--The regime
promotes enforcement and compliance with the regime's rules
and guidelines.
(3) Public understanding.--The regime makes an effort to
enhance public understanding of the purpose and procedures of
the multilateral export control regime.
(4) Effective implementation procedures.--The multilateral
export control regime has procedures for the uniform and
consistent interpretation and implementation of its rules and
guidelines.
(5) Enhanced cooperation with regime nonmembers.--There is
agreement among the members of the multilateral export
control regime to--
(A) cooperate with governments outside the regime to
restrict the export of items controlled by such regime; and
(B) establish an ongoing mechanism in the regime to
coordinate planning and implementation of export control
measures related to such cooperation.
(6) Periodic high-level meetings.--There are regular
periodic meetings of high-level representatives of the
governments of members of the multilateral export control
regime for the purpose of coordinating export control
policies and issuing policy guidance to members of the
regime.
(7) Common list of controlled items.--There is agreement on
a common list of items controlled by the multilateral export
control regime.
(8) Regular updates of common list.--There is a procedure
for removing items from the list of controlled items when the
control of such items no longer serves the objectives of the
members of the multilateral export control regime.
(9) Treatment of certain countries.--There is agreement to
prevent the export or diversion of the most sensitive items
to countries whose activities are threatening to the national
security of the United States or its allies.
(10) Harmonization of license approval procedures.--There
is harmonization among the members of the regime of their
national export license approval procedures, practices, and
standards.
(11) Undercutting.--There is a limit with respect to when
members of a multilateral export control regime--
(A) grant export licenses for any item that is
substantially identical to or directly competitive with an
item controlled pursuant to the regime, where the United
States has denied an export license for such item, or
(B) approve exports to a particular end user to which the
United States has denied export license for a similar item.
(d) Standards for National Export Control Systems.--The
President shall take steps to attain the cooperation of
members of each regime in implementing effective national
export control systems containing the following features:
(1) Export control law.--Enforcement authority, civil and
criminal penalties, and statutes of limitations are
sufficient to deter potential violations and punish violators
under the member's export control law.
(2) License approval process.--The system for evaluating
export license applications includes sufficient technical
expertise to assess the licensing status of exports and
ensure the reliability of end users.
(3) Enforcement.--The enforcement mechanism provides
authority for trained enforcement officers to investigate and
prevent illegal exports.
(4) Documentation.--There is a system of export control
documentation and verification with respect to controlled
items.
(5) Information.--There are procedures for the coordination
and exchange of information concerning licensing, end users,
and enforcement with other members of the multilateral export
control regime.
(6) Resources.--The member has devoted adequate resources
to administer effectively the authorities, systems,
mechanisms, and procedures described in paragraphs (1)
through (5).
(e) Objectives Regarding Multilateral Export Control
Regimes.--The President shall seek to achieve the following
objectives with regard to multilateral export control
regimes:
(1) Strengthen existing regimes.--Strengthen existing
multilateral export control regimes--
(A) by creating a requirement to share information about
export license applications among members before a member
approves an export license; and
(B) harmonizing national export license approval procedures
and practices, including the elimination of undercutting.
(2) Review and update.--Review and update multilateral
regime export control lists with other members, taking into
account--
(A) national security concerns;
(B) the controllability of items; and
(C) the costs and benefits of controls.
(3) Encourage compliance by nonmembers.--Encourage
nonmembers of the multilateral export control regime--
(A) to strengthen their national export control regimes and
improve enforcement;
(B) to adhere to the appropriate multilateral export
control regime; and
(C) not to undermine an existing multilateral export
control regime by exporting controlled items in a manner
inconsistent with the guidelines of the regime.
(f) Transparency of Multilateral Export Control Regimes.--
(1) Publication of information on each existing regime.--
Not later than 120 days after the date of enactment of this
Act, the Secretary shall, for each multilateral export
control regime, to the extent that it is not inconsistent
with the arrangements of that regime (in the judgment of the
Secretary of State) or with the national interest, publish in
the Federal Register and post on the Department of Commerce
website the following information with respect to the regime:
(A) The purposes of the regime.
(B) The members of the regime.
(C) The export licensing policy of the regime.
(D) The items that are subject to export controls under the
regime, together with all public notes, understandings, and
other aspects of the agreement of the regime, and all changes
thereto.
(E) Any countries, end uses, or end users that are subject
to the export controls of the regime.
(F) Rules of interpretation.
(G) Major policy actions.
(H) The rules and procedures of the regime for establishing
and modifying any matter described in subparagraphs (A)
through (G) and for reviewing export license applications.
(2) New regimes.--Not later than 60 days after the United
States joins or organizes a new multilateral export control
regime, the Secretary shall, to the extent that it is not
inconsistent with arrangements under the regime (in the
judgment of the Secretary of State) or with the national
interest, publish in the Federal Register and post on the
Department of Commerce website the information described in
subparagraphs (A) through (H) of paragraph (1) with respect
to the regime.
(3) Publication of changes.--Not later than 60 days after a
multilateral export control regime adopts any change in the
information published under this subsection, the Secretary
shall, to the extent not inconsistent with the arrangements
under the regime or the national interest, publish such
changes in the Federal Register and post such changes on the
Department of Commerce website.
(g) Support of Other Countries' Export Control Systems.--
The Secretary is encouraged to continue to--
(1) participate in training of, and provide training to,
officials of other countries on the principles and procedures
for implementing effective export controls; and
(2) participate in any such training provided by other
departments and agencies of the United States.

SEC. 502. FOREIGN BOYCOTTS.

(a) Purposes.--The purposes of this section are as follows:
(1) To counteract restrictive trade practices or boycotts
fostered or imposed by foreign countries

[[Page S9027]]

against other countries friendly to the United States or
against any United States person.
(2) To encourage and, in specified cases, require United
States persons engaged in the export of items to refuse to
take actions, including furnishing information or entering
into or implementing agreements, which have the effect of
furthering or supporting the restrictive trade practices or
boycotts fostered or imposed by any foreign country against a
country friendly to the United States or against any United
States person.
(b) Prohibitions and Exceptions.--
(1) Prohibitions.--In order to carry out the purposes set
forth in subsection (a), the President shall issue
regulations prohibiting any United States person, with
respect to that person's activities in the interstate or
foreign commerce of the United States, from taking or
knowingly agreeing to take any of the following actions with
intent to comply with, further, or support any boycott
fostered or imposed by a foreign country against a country
that is friendly to the United States and is not itself the
object of any form of boycott pursuant to United States
law or regulation:
(A) Refusing, or requiring any other person to refuse, to
do business with or in the boycotted country, with any
business concern organized under the laws of the boycotted
country, with any national or resident of the boycotted
country, or with any other person, pursuant to an agreement
with, or requirement of, or a request from or on behalf of
the boycotting country (subject to the condition that the
intent required to be associated with such an act in order to
constitute a violation of the prohibition is not indicated
solely by the mere absence of a business relationship with or
in the boycotted country, with any business concern organized
under the laws of the boycotted country, with any national or
resident of the boycotted country, or with any other person).
(B) Refusing, or requiring any other person to refuse, to
employ or otherwise discriminate against any United States
person on the basis of the race, religion, sex, or national
origin of that person or of any owner, officer, director, or
employee of such person.
(C) Furnishing information with respect to the race,
religion, sex, or national origin of any United States person
or of any owner, officer, director, or employee of such
person.
(D) Furnishing information (other than furnishing normal
business information in a commercial context, as defined by
the Secretary) about whether any person has, has had, or
proposes to have any business relationship (including a
relationship by way of sale, purchase, legal or commercial
representation, shipping or other transport, insurance,
investment, or supply) with or in the boycotted country, with
any business concern organized under the laws of the
boycotted country, with any national or resident of the
boycotted country, or with any other person that is known or
believed to be restricted from having any business
relationship with or in the boycotting country.
(E) Furnishing information about whether any person is a
member of, has made a contribution to, or is otherwise
associated with or involved in the activities of any
charitable or fraternal organization which supports the
boycotted country.
(F) Paying, honoring, confirming, or otherwise implementing
a letter of credit which contains any condition or
requirement the compliance with which is prohibited by
regulations issued pursuant to this paragraph, and no United
States person shall, as a result of the application of this
paragraph, be obligated to pay or otherwise honor or
implement such letter of credit.
(2) Exceptions.--Regulations issued pursuant to paragraph
(1) shall provide exceptions for--
(A) compliance, or agreement to comply, with requirements--
(i) prohibiting the import of items from the boycotted
country or items produced or provided, by any business
concern organized under the laws of the boycotted country or
by nationals or residents of the boycotted country; or
(ii) prohibiting the shipment of items to the boycotting
country on a carrier of the boycotted country or by a route
other than that prescribed by the boycotting country or the
recipient of the shipment;
(B) compliance, or agreement to comply, with import and
shipping document requirements with respect to the country of
origin, the name of the carrier and route of shipment, the
name of the supplier of the shipment, or the name of the
provider of other services, except that, for purposes of
applying any exception under this subparagraph, no
information knowingly furnished or conveyed in response to
such requirements may be stated in negative, blacklisting, or
similar exclusionary terms, other than with respect to
carriers or route of shipment as may be permitted by such
regulations in order to comply with precautionary
requirements protecting against war risks and confiscation;
(C) compliance, or agreement to comply, in the normal
course of business with the unilateral and specific selection
by a boycotting country, or a national or resident thereof,
or carriers, insurers, suppliers of services to be performed
within the boycotting country, or specific items which, in
the normal course of business, are identifiable by source
when imported into the boycotting country;
(D) compliance, or agreement to comply, with export
requirements of the boycotting country relating to shipment
or transshipment of exports to the boycotted country, to any
business concern of or organized under the laws of the
boycotted country, or to any national or resident of the
boycotted country;
(E) compliance by an individual, or agreement by an
individual to comply, with the immigration or passport
requirements of any country with respect to such individual
or any member of such individual's family or with requests
for information regarding requirements of employment of such
individual within the boycotting country; and
(F) compliance by a United States person resident in a
foreign country, or agreement by such a person to comply,
with the laws of the country with respect to the person's
activities exclusively therein, and such regulations may
contain exceptions for such resident complying with the laws
or regulations of the foreign country governing imports into
such country of trademarked, trade-named, or similarly
specifically identifiable products, or components of
products for such person's own use, including the
performance of contractual services within that country.
(3) Limitation on exceptions.--Regulations issued pursuant
to paragraphs (2)(C) and (2)(F) shall not provide exceptions
from paragraphs (1)(B) and (1)(C).
(4) Antitrust and civil rights laws not affected.--Nothing
in this subsection may be construed to supersede or limit the
operation of the antitrust or civil rights laws of the United
States.
(5) Evasion.--This section applies to any transaction or
activity undertaken by or through a United States person or
any other person with intent to evade the provisions of this
section or the regulations issued pursuant to this
subsection. The regulations issued pursuant to this section
shall expressly provide that the exceptions set forth in
paragraph (2) do not permit activities or agreements
(expressed or implied by a course of conduct, including a
pattern of responses) that are otherwise prohibited, pursuant
to the intent of such exceptions.
(c) Additional Regulations and Reports.--
(1) Regulations.--In addition to the regulations issued
pursuant to subsection (b), regulations issued pursuant to
title III shall implement the purposes set forth in
subsection (a).
(2) Reports by united states persons.--The regulations
shall require that any United States person receiving a
request to furnish information, enter into or implement an
agreement, or take any other action referred to in
subsection (a) shall report that request to the Secretary,
together with any other information concerning the request
that the Secretary determines appropriate. The person
shall also submit to the Secretary a statement regarding
whether the person intends to comply, and whether the
person has complied, with the request. Any report filed
pursuant to this paragraph shall be made available
promptly for public inspection and copying, except that
information regarding the quantity, description, and value
of any item to which such report relates may be treated as
confidential if the Secretary determines that disclosure
of that information would place the United States person
involved at a competitive disadvantage. The Secretary
shall periodically transmit summaries of the information
contained in the reports to the Secretary of State for
such action as the Secretary of State, in consultation
with the Secretary, considers appropriate to carry out the
purposes set forth in subsection (a).
(d) Preemption.--The provisions of this section and the
regulations issued under this section shall preempt any law,
rule, or regulation that--
(1) is a law, rule, or regulation of any of the several
States or the District of Columbia, or any of the territories
or possessions of the United States, or of any governmental
subdivision thereof; and
(2) pertains to participation in, compliance with,
implementation of, or the furnishing of information regarding
restrictive trade practices or boycotts fostered or imposed
by foreign countries against other countries.

SEC. 503. PENALTIES.

(a) Criminal Penalties.--
(1) Violations by an individual.--Any individual who
willfully violates, conspires to violate, or attempts to
violate any provision of this Act or any regulation, license,
or order issued under this Act shall be fined up to 10 times
the value of the exports involved or $1,000,000, whichever is
greater, imprisoned for not more than 10 years, or both, for
each violation.
(2) Violations by a person other than an individual.--Any
person other than an individual who willfully violates,
conspires to violate, or attempts to violate any provision of
this Act or any regulation, license, or order issued under
this Act shall be fined up to 10 times the value of the
exports involved or $5,000,000, whichever is greater, for
each violation.
(b) Forfeiture of Property Interest and Proceeds.--
(1) Forfeiture.--Any person who is convicted under
paragraph (1) or (2) of subsection (a) shall, in addition to
any other penalty, forfeit to the United States--
(A) any of that person's security or other interest in,
claim against, or property or contractual rights of any kind
in the tangible items that were the subject of the violation;
(B) any of that person's security or other interest in,
claim against, or property or contractual rights of any kind
in the tangible property that was used in the export or
attempt to export that was the subject of the violation; and
(C) any of that person's property constituting, or derived
from, any proceeds obtained directly or indirectly as a
result of the violation.
(2) Procedures.--The procedures in any forfeiture under
this subsection, and the duties and authority of the courts
of the United States and the Attorney General with respect to
any forfeiture action under this subsection, or with respect
to any property that may be subject to forfeiture under this
subsection, shall be governed by the provisions of chapter 46
of title 18, United States Code (relating to criminal
forfeiture), to the same extent as property subject to
forfeiture under that chapter.
(c) Civil Penalties; Administrative Sanctions.--

[[Page S9028]]

(1) Civil penalties.--The Secretary may impose a civil
penalty of up to $500,000 for each violation of a provision
of this Act or any regulation, license, or order issued under
this Act. A civil penalty under this paragraph may be in
addition to, or in lieu of, any other liability or penalty
which may be imposed for such a violation.
(2) Denial of export privileges.--The Secretary may deny
the export privileges of any person, including the suspension
or revocation of the authority of such person to export or
receive United States-origin items subject to this Act, for a
violation of a provision of this Act or any regulation,
license, or order issued under this Act.
(3) Exclusion from practice.--The Secretary may exclude any
person acting as an attorney, accountant, consultant, freight
forwarder, or in any other representative capacity from
participating before the Department with respect to a license
application or any other matter under this Act.
(d) Payment of Civil Penalties.--
(1) Payment as condition of further export privileges.--The
payment of a civil penalty imposed under subsection (c) may
be made a condition for the granting, restoration, or
continuing validity of any export license, permission, or
privilege granted or to be granted to the person upon whom
such penalty is imposed. The period for which the payment of
a penalty may be made such a condition may not exceed 1 year
after the date on which the payment is due.
(2) Deferral or suspension.--
(A) In general.--The payment of a civil penalty imposed
under subsection (c) may be deferred or suspended in whole or
in part for a period no longer than any probation period
(which may exceed 1 year) that may be imposed upon the person
on whom the penalty is imposed.
(B) No bar to collection of penalty.--A deferral or
suspension under subparagraph (A) shall not operate as a bar
to the collection of the penalty concerned in the event that
the conditions of the suspension, deferral, or probation are
not fulfilled.
(3) Treatment of payments.--Any amount paid in satisfaction
of a civil penalty imposed under subsection (c) shall be
covered into the Treasury as miscellaneous receipts.
(e) Refunds.--
(1) Authority.--
(A) In general.--The Secretary may, in the Secretary's
discretion, refund any civil penalty imposed under subsection
(c) on the ground of a material error of fact or law in
imposition of the penalty.
(B) Limitation.--A civil penalty may not be refunded under
subparagraph (A) later than 2 years after payment of the
penalty.
(2) Prohibition on actions for refund.--Notwithstanding
section 1346(a) of title 28, United States Code, no action
for the refund of any civil penalty referred to in paragraph
(1) may be maintained in any court.
(f) Effect of Other Convictions.--
(1) Denial of export privileges.--Any person convicted of a
violation of--
(A) a provision of this Act or the Export Administration
Act of 1979,
(B) a provision of the International Emergency Economic
Powers Act (50 U.S.C. 1701 et seq.),
(C) section 793, 794, or 798 of title 18, United States
Code,
(D) section 4(b) of the Internal Security Act of 1950 (50
U.S.C. 783(b)),
(E) section 38 of the Arms Export Control Act (22 U.S.C.
2778),
(F) section 16 of the Trading with the Enemy Act (50 U.S.C.
App. 16),
(G) any regulation, license, or order issued under any
provision of law listed in subparagraph (A), (B), (C), (D),
(E), or (F),
(H) section 371 or 1001 of title 18, United States Code, if
in connection with the export of controlled items under this
Act or any regulation, license, or order issued under the
International Emergency Economic Powers Act, or the export of
items controlled under the Arms Export Control Act,
(I) section 175 of title 18, United States Code,
(J) a provision of the Atomic Energy Act (42 U.S.C. 201 et
seq.),
(K) section 831 of title 18, United States Code, or
(L) section 2332a of title 18, United States Code,

may, at the discretion of the Secretary, be denied export
privileges under this Act for a period not to exceed 10 years
from the date of the conviction. The Secretary may also
revoke any export license under this Act in which such person
had an interest at the time of the conviction.
(2) Related persons.--The Secretary may exercise the
authority under paragraph (1) with respect to any person
related through affiliation, ownership, control, or position
of responsibility to a person convicted of any violation of a
law set forth in paragraph (1) upon a showing of such
relationship with the convicted person. The Secretary shall
make such showing only after providing notice and opportunity
for a hearing.
(g) Statute of Limitations.--
(1) In general.--Except as provided in paragraph (2), a
proceeding in which a civil penalty or other administrative
sanction (other than a temporary denial order) is sought
under subsection (c) may not be instituted more than 5 years
after the later of the date of the alleged violation or the
date of discovery of the alleged violation.
(2) Exception.--
(A) Tolling.--In any case in which a criminal indictment
alleging a violation under subsection (a) is returned within
the time limits prescribed by law for the institution of such
action, the limitation under paragraph (1) for bringing a
proceeding to impose a civil penalty or other administrative
sanction under this section shall, upon the return of the
criminal indictment, be tolled against all persons named as a
defendant.
(B) Duration.--The tolling of the limitation with respect
to a defendant under subparagraph (A) as a result of a
criminal indictment shall continue for a period of 6 months
from the date on which the conviction of the defendant
becomes final, the indictment against the defendant is
dismissed, or the criminal action has concluded.
(h) Violations Defined by Regulation.--Nothing in this
section shall limit the authority of the Secretary to define
by regulation violations under this Act.
(i) Construction.--Nothing in subsection (c), (d), (e),
(f), or (g) limits--
(1) the availability of other administrative or judicial
remedies with respect to a violation of a provision of this
Act, or any regulation, order, or license issued under this
Act;
(2) the authority to compromise and settle administrative
proceedings brought with respect to any such violation; or
(3) the authority to compromise, remit, or mitigate
seizures and forfeitures pursuant to section 1(b) of title VI
of the Act of June 15, 1917 (22 U.S.C. 401(b)).

SEC. 504. MISSILE PROLIFERATION CONTROL VIOLATIONS.

(a) Violations by United States Persons.--
(1) Sanctions.--
(A) In general.--If the President determines that a United
States person knowingly--
(i) exports, transfers, or otherwise engages in the trade
of any item on the MTCR Annex, in violation of the provisions
of section 38 (22 U.S.C. 2778) or chapter 7 of the Arms
Export Control Act, title II or III of this Act, or any
regulations or orders issued under any such provisions,
(ii) conspires to or attempts to engage in such export,
transfer, or trade, or
(iii) facilitates such export, transfer, or trade by any
other person,

then the President shall impose the applicable sanctions
described in subparagraph (B).
(B) Sanctions described.--The sanctions which apply to a
United States person under subparagraph (A) are the
following:
(i) If the item on the MTCR Annex involved in the export,
transfer, or trade is missile equipment or technology within
category II of the MTCR Annex, then the President shall deny
to such United States person, for a period of 2 years,
licenses for the transfer of missile equipment or technology
controlled under this Act.
(ii) If the item on the MTCR Annex involved in the export,
transfer, or trade is missile equipment or technology within
category I of the MTCR Annex, then the President shall deny
to such United States person, for a period of not less than 2
years, all licenses for items the export of which is
controlled under this Act.
(2) Discretionary sanctions.--In the case of any
determination referred to in paragraph (1), the Secretary may
pursue any other appropriate penalties under section 503.
(3) Waiver.--The President may waive the imposition of
sanctions under paragraph (1) on a person with respect to an
item if the President certifies to Congress that--
(A) the item is essential to the national security of the
United States; and
(B) such person is a sole source supplier of the item, the
item is not available from any alternative reliable supplier,
and the need for the item cannot be met in a timely manner by
improved manufacturing processes or technological
developments.
(b) Transfers of Missile Equipment or Technology by Foreign
Persons.--
(1) Sanctions.--
(A) In general.--Subject to paragraphs (3) through (7), if
the President determines that a foreign person, after the
date of enactment of this section, knowingly--
(i) exports, transfers, or otherwise engages in the trade
of any MTCR equipment or technology that contributes to the
design, development, or production of missiles in a country
that is not an MTCR adherent and would be, if it were United
States-origin equipment or technology, subject to the
jurisdiction of the United States under this Act,
(ii) conspires to or attempts to engage in such export,
transfer, or trade, or
(iii) facilitates such export, transfer, or trade by any
other person,

or if the President has made a determination with respect to
a foreign person under section 73(a) of the Arms Export
Control Act, then the President shall impose on that foreign
person the applicable sanctions under subparagraph (B).
(B) Sanctions described.--The sanctions which apply to a
foreign person under subparagraph (A) are the following:
(i) If the item involved in the export, transfer, or trade
is within category II of the MTCR Annex, then the President
shall deny, for a period of 2 years, licenses for the
transfer to such foreign person of missile equipment or
technology the export of which is controlled under this Act.
(ii) If the item involved in the export, transfer, or trade
is within category I of the MTCR Annex, then the President
shall deny, for a period of not less than 2 years, licenses
for the transfer to such foreign person of items the export
of which is controlled under this Act.
(iii) If, in addition to actions taken under clauses (i)
and (ii), the President determines that the export, transfer,
or trade has substantially contributed to the design,
development, or production of missiles in a country that is
not an MTCR adherent, then the President shall prohibit, for
a period of not less than 2 years, the importation into the
United States of products produced by that foreign person.

[[Page S9029]]

(2) Inapplicability with respect to mtcr adherents.--
Paragraph (1) does not apply with respect to--
(A) any export, transfer, or trading activity that is
authorized by the laws of an MTCR adherent, if such
authorization is not obtained by misrepresentation or fraud;
or
(B) any export, transfer, or trade of an item to an end
user in a country that is an MTCR adherent.
(3) Effect of enforcement actions by mtcr adherents.--
Sanctions set forth in paragraph (1) may not be imposed under
this subsection on a person with respect to acts described in
such paragraph or, if such sanctions are in effect against a
person on account of such acts, such sanctions shall be
terminated, if an MTCR adherent is taking judicial or other
enforcement action against that person with respect to such
acts, or that person has been found by the government of an
MTCR adherent to be innocent of wrongdoing with respect to
such acts.
(4) Advisory opinions.--The Secretary, in consultation with
the Secretary of State and the Secretary of Defense, may,
upon the request of any person, issue an advisory opinion to
that person as to whether a proposed activity by that person
would subject that person to sanctions under this subsection.
Any person who relies in good faith on such an advisory
opinion which states that the proposed activity would not
subject a person to such sanctions, and any person who
thereafter engages in such activity, may not be made
subject to such sanctions on account of such activity.
(5) Waiver and report to congress.--
(A) Waiver.--In any case other than one in which an
advisory opinion has been issued under paragraph (4) stating
that a proposed activity would not subject a person to
sanctions under this subsection, the President may waive the
application of paragraph (1) to a foreign person if the
President determines that such waiver is essential to the
national security of the United States.
(B) Report to congress.--In the event that the President
decides to apply the waiver described in subparagraph (A),
the President shall so notify Congress not less than 20
working days before issuing the waiver. Such notification
shall include a report fully articulating the rationale and
circumstances which led the President to apply the waiver.
(6) Additional waiver.--The President may waive the
imposition of sanctions under paragraph (1) on a person with
respect to a product or service if the President certifies
to the Congress that--
(A) the product or service is essential to the national
security of the United States; and
(B) such person is a sole source supplier of the product or
service, the product or service is not available from any
alternative reliable supplier, and the need for the product
or service cannot be met in a timely manner by improved
manufacturing processes or technological developments.
(7) Exceptions.--The President shall not apply the sanction
under this subsection prohibiting the importation of the
products of a foreign person--
(A) in the case of procurement of defense articles or
defense services--
(i) under existing contracts or subcontracts, including the
exercise of options for production quantities to satisfy
requirements essential to the national security of the United
States;
(ii) if the President determines that the person to which
the sanctions would be applied is a sole source supplier of
the defense articles and services, that the defense articles
or services are essential to the national security of the
United States, and that alternative sources are not readily
or reasonably available; or
(iii) if the President determines that such articles or
services are essential to the national security of the United
States under defense coproduction agreements or NATO Programs
of Cooperation;
(B) to products or services provided under contracts
entered into before the date on which the President publishes
his intention to impose the sanctions; or
(C) to--
(i) spare parts,
(ii) component parts, but not finished products, essential
to United States products or production,
(iii) routine services and maintenance of products, to the
extent that alternative sources are not readily or reasonably
available, or
(iv) information and technology essential to United States
products or production.
(c) Definitions.--In this section:
(1) Missile.--The term ``missile'' means a category I
system as defined in the MTCR Annex, and any other unmanned
delivery system of similar capability, as well as the
specially designed production facilities for these systems.
(2) Missile technology control regime; mtcr.--The term
``Missile Technology Control Regime'' or ``MTCR'' means the
policy statement, between the United States, the United
Kingdom, the Federal Republic of Germany, France, Italy,
Canada, and Japan, announced on April 16, 1987, to restrict
sensitive missile-relevant transfers based on the MTCR Annex,
and any amendments thereto.
(3) MTCR adherent.--The term ``MTCR adherent'' means a
country that participates in the MTCR or that, pursuant to an
international understanding to which the United States is a
party, controls MTCR equipment or technology in accordance
with the criteria and standards set forth in the MTCR.
(4) MTCR annex.--The term ``MTCR Annex'' means the
Guidelines and Equipment and Technology Annex of the MTCR,
and any amendments thereto.
(5) Missile equipment or technology; mtcr equipment or
technology.--The terms ``missile equipment or technology''
and ``MTCR equipment or technology'' mean those items listed
in category I or category II of the MTCR Annex.
(6) Foreign person.--The term ``foreign person'' means any
person other than a United States person.
(7) Person.--
(A) In general.--The term ``person'' means a natural person
as well as a corporation, business association, partnership,
society, trust, any other nongovernmental entity,
organization, or group, and any governmental entity operating
as a business enterprise, and any successor of any such
entity.
(B) Identification in certain cases.--In the case of
countries where it may be impossible to identify a specific
governmental entity referred to in subparagraph (A), the term
``person'' means--
(i) all activities of that government relating to the
development or production of any missile equipment or
technology; and
(ii) all activities of that government affecting the
development or production of aircraft, electronics, and space
systems or equipment.
(8) Otherwise engaged in the trade of.--The term
``otherwise engaged in the trade of'' means, with respect to
a particular export or transfer, to be a freight forwarder or
designated exporting agent, or a consignee or end user of the
item to be exported or transferred.

SEC. 505. CHEMICAL AND BIOLOGICAL WEAPONS PROLIFERATION
SANCTIONS.

(a) Imposition of Sanctions.--
(1) Determination by the president.--Except as provided in
subsection (b)(2), the President shall impose both of the
sanctions described in subsection (c) if the President
determines that a foreign person, on or after the date of
enactment of this section, has knowingly and materially
contributed--
(A) through the export from the United States of any item
that is subject to the jurisdiction of the United States
under this Act, or
(B) through the export from any other country of any item
that would be, if it were a United States item, subject to
the jurisdiction of the United States under this Act,

to the efforts by any foreign country, project, or entity
described in paragraph (2) to use, develop, produce,
stockpile, or otherwise acquire chemical or biological
weapons.
(2) Countries, projects, or entities receiving
assistance.--Paragraph (1) applies in the case of--
(A) any foreign country that the President determines has,
at any time after the date of enactment of this Act--
(i) used chemical or biological weapons in violation of
international law;
(ii) used lethal chemical or biological weapons against its
own nationals; or
(iii) made substantial preparations to engage in the
activities described in clause (i) or (ii);
(B) any foreign country whose government is determined for
purposes of section 310 to be a government that has
repeatedly provided support for acts of international
terrorism; or
(C) any other foreign country, project, or entity
designated by the President for purposes of this section.
(3) Persons against which sanctions are to be imposed.--
Sanctions shall be imposed pursuant to paragraph (1) on--
(A) the foreign person with respect to which the President
makes the determination described in that paragraph;
(B) any successor entity to that foreign person;
(C) any foreign person that is a parent or subsidiary of
that foreign person if that parent or subsidiary knowingly
assisted in the activities which were the basis of that
determination; and
(D) any foreign person that is an affiliate of that foreign
person if that affiliate knowingly assisted in the activities
which were the basis of that determination and if that
affiliate is controlled in fact by that foreign person.
(b) Consultations With and Actions by Foreign Government of
Jurisdiction.--
(1) Consultations.--If the President makes the
determinations described in subsection (a)(1) with respect to
a foreign person, Congress urges the President to initiate
consultations immediately with the government with primary
jurisdiction over that foreign person with respect to the
imposition of sanctions pursuant to this section.
(2) Actions by government of jurisdiction.--In order to
pursue such consultations with that government, the President
may delay imposition of sanctions pursuant to this section
for a period of up to 90 days. Following the consultations,
the President shall impose sanctions unless the President
determines and certifies to Congress that government has
taken specific and effective actions, including appropriate
penalties, to terminate the involvement of the foreign person
in the activities described in subsection (a)(1). The
President may delay imposition of sanctions for an additional
period of up to 90 days if the President determines and
certifies to Congress that government is in the process of
taking the actions described in the preceding sentence.
(3) Report to congress.--The President shall report to
Congress, not later than 90 days after making a determination
under subsection (a)(1), on the status of consultations with
the appropriate government under this subsection, and the
basis for any determination under paragraph (2) of this
subsection that such government has taken specific corrective
actions.
(c) Sanctions.--
(1) Description of sanctions.--The sanctions to be imposed
pursuant to subsection (a)(1) are, except as provided in
paragraph (2) of this subsection, the following:
(A) Procurement sanction.--The United States Government
shall not procure, or enter into any contract for the
procurement of, any goods or services from any person
described in subsection (a)(3).

[[Page S9030]]

(B) Import sanctions.--The importation into the United
States of products produced by any person described in
subsection (a)(3) shall be prohibited.
(2) Exceptions.--The President shall not be required to
apply or maintain sanctions under this section--
(A) in the case of procurement of defense articles or
defense services--
(i) under existing contracts or subcontracts, including the
exercise of options for production quantities to satisfy
United States operational military requirements;
(ii) if the President determines that the person or other
entity to which the sanctions would otherwise be applied is a
sole source supplier of the defense articles or services,
that the defense articles or services are essential, and that
alternative sources are not readily or reasonably available;
or
(iii) if the President determines that such articles or
services are essential to the national security under defense
coproduction agreements;
(B) to products or services provided under contracts
entered into before the date on which the President publishes
his intention to impose sanctions;
(C) to--
(i) spare parts,
(ii) component parts, but not finished products, essential
to United States products or production, or
(iii) routine servicing and maintenance of products, to the
extent that alternative sources are not readily or reasonably
available;
(D) to information and technology essential to United
States products or production; or
(E) to medical or other humanitarian items.
(d) Termination of Sanctions.--The sanctions imposed
pursuant to this section shall apply for a period of at least
12 months following the imposition of sanctions and shall
cease to apply thereafter only if the President determines
and certifies to the Congress that reliable information
indicates that the foreign person with respect to which the
determination was made under subsection (a)(1) has ceased to
aid or abet any foreign government, project, or entity in its
efforts to acquire chemical or biological weapons capability
as described in that subsection.
(e) Waiver.--
(1) Criterion for waiver.--The President may waive the
application of any sanction imposed on any person pursuant to
this section, after the end of the 12-month period beginning
on the date on which that sanction was imposed on that
person, if the President determines and certifies to Congress
that such waiver is important to the national security
interests of the United States.
(2) Notification of and report to congress.--If the
President decides to exercise the waiver authority provided
in paragraph (1), the President shall so notify the Congress
not less than 20 days before the waiver takes effect. Such
notification shall include a report fully articulating the
rationale and circumstances which led the President to
exercise the waiver authority.
(f) Definition of Foreign Person.--For the purposes of this
section, the term ``foreign person'' means--
(1) an individual who is not a citizen of the United States
or an alien admitted for permanent residence to the United
States; or
(2) a corporation, partnership, or other entity which is
created or organized under the laws of a foreign country or
which has its principal place of business outside the United
States.

SEC. 506. ENFORCEMENT.

(a) General Authority and Designation.--
(1) Policy guidance on enforcement.--The Secretary, in
consultation with the Secretary of the Treasury and the heads
of other departments and agencies that the Secretary
considers appropriate, shall be responsible for providing
policy guidance on the enforcement of this Act.
(2) General authorities.--
(A) Exercise of authority.--To the extent necessary or
appropriate to the enforcement of this Act, officers and
employees of the Department designated by the Secretary,
officers and employees of the United States Customs Service
designated by the Commissioner of Customs, and officers and
employees of any other department or agency designated by the
head of a department or agency exercising functions under
this Act, may exercise the enforcement authority under
paragraph (3).
(B) Customs service.--In carrying out enforcement authority
under paragraph (3), the Commissioner of Customs and
employees of the United States Customs Service designated by
the Commissioner may make investigations within or outside
the United States and at ports of entry into or exit from the
United States where officers of the United States Customs
Service are authorized by law to carry out law enforcement
responsibilities. Subject to paragraph (3), the United States
Customs Service is authorized, in the enforcement of this
Act, to search, detain (after search), and seize items at the
ports of entry into or exit from the United States where
officers of the United States Customs Service are
authorized by law to conduct searches, detentions, and
seizures, and at the places outside the United States
where the United States Customs Service, pursuant to
agreement or other arrangement with other countries, is
authorized to perform enforcement activities.
(C) Other employees.--In carrying out enforcement authority
under paragraph (3), the Secretary and officers and employees
of the Department designated by the Secretary may make
investigations within the United States, and may conduct,
outside the United States, pre-license and post-shipment
verifications of controlled items and investigations in the
enforcement of section 502. The Secretary and officers and
employees of the Department designated by the Secretary are
authorized to search, detain (after search), and seize items
at places within the United States other than ports referred
to in subparagraph (B). The search, detention (after search),
or seizure of items at the ports and places referred to in
subparagraph (B) may be conducted by officers and employees
of the Department only with the concurrence of the
Commissioner of Customs or a person designated by the
Commissioner.
(D) Agreements and arrangements.--The Secretary and the
Commissioner of Customs may enter into agreements and
arrangements for the enforcement of this Act, including
foreign investigations and information exchange.
(3) Specific authorities.--
(A) Actions by any designated personnel.--Any officer or
employee designated under paragraph (2), in carrying out the
enforcement authority under this Act, may do the following:
(i) Make investigations of, obtain information from, make
inspection of any books, records, or reports (including any
writings required to be kept by the Secretary), premises, or
property of, and take the sworn testimony of, any person.
(ii) Administer oaths or affirmations, and by subpoena
require any person to appear and testify or to appear and
produce books, records, and other writings, or both. In the
case of contumacy by, or refusal to obey a subpoena issued
to, any such person, a district court of the United States,
on request of the Attorney General and after notice to any
such person and a hearing, shall have jurisdiction to issue
an order requiring such person to appear and give testimony
or to appear and produce books, records, and other writings,
or both. Any failure to obey such order of the court may be
punished by such court as a contempt thereof. The attendance
of witnesses and the production of documents provided for in
this clause may be required from any State, the District of
Columbia, or in any territory of the United States at any
designated place. Witnesses subpoenaed under this subsection
shall be paid the same fees and mileage allowance as paid
witnesses in the district courts of the United States.
(B) Actions by office of export enforcement and customs
service personnel.--
(i) Office of export enforcement and customs service
personnel.--Any officer or employee of the Office of Export
Enforcement of the Department of Commerce (in this Act
referred to as ``OEE'') who is designated by the Secretary
under paragraph (2), and any officer or employee of the
United States Customs Service who is designated by the
Commissioner of Customs under paragraph (2), may do the
following in carrying out the enforcement authority under
this Act:

(I) Execute any warrant or other process issued by a court
or officer of competent jurisdiction with respect to the
enforcement of this Act.
(II) Make arrests without warrant for any violation of this
Act committed in his or her presence or view, or if the
officer or employee has probable cause to believe that the
person to be arrested has committed, is committing, or is
about to commit such a violation.
(III) Carry firearms.

(ii) OEE personnel.--Any officer or employee of the OEE
designated by the Secretary under paragraph (2) shall
exercise the authority set forth in clause (i) pursuant to
guidelines approved by the Attorney General.
(C) Other actions by customs service personnel.--Any
officer or employee of the United States Customs Service
designated by the Commissioner of Customs under paragraph (2)
may do the following in carrying out the enforcement
authority under this Act:
(i) Stop, search, and examine a vehicle, vessel, aircraft,
or person on which or whom the officer or employee has
reasonable cause to suspect there is any item that has been,
is being, or is about to be exported from or transited
through the United States in violation of this Act.
(ii) Detain and search any package or container in which
the officer or employee has reasonable cause to suspect there
is any item that has been, is being, or is about to be
exported from or transited through the United States in
violation of this Act.
(iii) Detain (after search) or seize any item, for purposes
of securing for trial or forfeiture to the United States, on
or about such vehicle, vessel, aircraft, or person or in such
package or container, if the officer or employee has probable
cause to believe the item has been, is being, or is about to
be exported from or transited through the United States in
violation of this Act.
(4) Other authorities not affected.--The authorities
conferred by this section are in addition to any authorities
conferred under other laws.
(b) Forfeiture.--
(1) In general.--Any tangible items lawfully seized under
subsection (a) by designated officers or employees shall be
subject to forfeiture to the United States.
(2) Applicable laws.--Those provisions of law relating to--
(A) the seizure, summary and judicial forfeiture, and
condemnation of property for violations of the customs laws;
(B) the disposition of such property or the proceeds from
the sale thereof;
(C) the remission or mitigation of such forfeitures; and
(D) the compromise of claims,

shall apply to seizures and forfeitures incurred, or alleged
to have been incurred, under the provisions of this
subsection, insofar as applicable and not inconsistent with
this Act.
(3) Forfeitures under customs laws.--Duties that are
imposed upon a customs officer or any other person with
respect to the seizure and forfeiture of property under the
customs laws may be performed with respect to seizures and
forfeitures of property under this subsection by

[[Page S9031]]

the Secretary or any officer or employee of the Department
that may be authorized or designated for that purpose by the
Secretary (or by the Commissioner of Customs or any officer
or employee of the United States Customs Service designated
by the Commissioner), or, upon the request of the Secretary,
by any other agency that has authority to manage and dispose
of seized property.
(c) Referral of Cases.--All cases involving violations of
this Act shall be referred to the Secretary for purposes of
determining civil penalties and administrative sanctions
under section 503 or to the Attorney General for criminal
action in accordance with this Act or to both the Secretary
and the Attorney General.
(d) Undercover Investigation Operations.--
(1) Use of funds.--With respect to any undercover
investigative operation conducted by the OEE that is
necessary for the detection and prosecution of violations of
this Act--
(A) funds made available for export enforcement under this
Act may be used to purchase property, buildings, and other
facilities, and to lease equipment, conveyances, and space
within the United States, without regard to sections 1341 and
3324 of title 31, United States Code, the third undesignated
paragraph under the heading of ``miscellaneous'' of the Act
of March 3, 1877, (40 U.S.C. 34), sections 3732(a) and 3741
of the Revised Statutes of the United States (41 U.S.C. 11(a)
and 22), subsections (a) and (c) of section 304 of the
Federal Property and Administrative Services Act of 1949 (41
U.S.C. 254 (a) and (c)), and section 305 of the Federal
Property and Administrative Services Act of 1949 (41 U.S.C.
255);
(B) funds made available for export enforcement under this
Act may be used to establish or to acquire proprietary
corporations or business entities as part of an undercover
operation, and to operate such corporations or business
entities on a commercial basis, without regard to sections
1341, 3324, and 9102 of title 31, United States Code;
(C) funds made available for export enforcement under this
Act and the proceeds from undercover operations may be
deposited in banks or other financial institutions without
regard to the provisions of section 648 of title 18, United
States Code, and section 3302 of title 31, United States
Code; and
(D) the proceeds from undercover operations may be used to
offset necessary and reasonable expenses incurred in such
operations without regard to the provisions of section 3302
of title 31, United States Code,

if the Director of OEE (or an officer or employee designated
by the Director) certifies, in writing, that the action
authorized by subparagraph (A), (B), (C), or (D) for which
the funds would be used is necessary for the conduct of the
undercover operation.
(2) Disposition of business entities.--If a corporation or
business entity established or acquired as part of an
undercover operation has a net value of more than $250,000
and is to be liquidated, sold, or otherwise disposed of, the
Director of OEE shall report the circumstances to the
Secretary and the Comptroller General of the United States as
much in advance of such disposition as the Director of the
OEE (or the Director's designee) determines is practicable.
The proceeds of the liquidation, sale, or other disposition,
after obligations incurred by the corporation or business
enterprise are met, shall be deposited in the Treasury of the
United States as miscellaneous receipts. Any property or
equipment purchased pursuant to paragraph (1) may be retained
for subsequent use in undercover operations under this
section. When such property or equipment is no longer needed,
it shall be considered surplus and disposed of as surplus
government property.
(3) Deposit of proceeds.--As soon as the proceeds from an
OEE undercover investigative operation with respect to which
an action is authorized and carried out under this subsection
are no longer needed for the conduct of such operation, the
proceeds or the balance of the proceeds remaining at the time
shall be deposited into the Treasury of the United States as
miscellaneous receipts.
(4) Audit and report.--
(A) Audit.--The Director of OEE shall conduct a detailed
financial audit of each closed OEE undercover investigative
operation and shall submit the results of the audit in
writing to the Secretary. Not later than 180 days after an
undercover operation is closed, the Secretary shall submit to
Congress a report on the results of the audit.
(B) Report.--The Secretary shall submit annually to
Congress a report, which may be included in the annual report
under section 701, specifying the following information:
(i) The number of undercover investigative operations
pending as of the end of the period for which such report is
submitted.
(ii) The number of undercover investigative operations
commenced in the 1-year period preceding the period for which
such report is submitted.
(iii) The number of undercover investigative operations
closed in the 1-year period preceding the period for which
such report is submitted and, with respect to each such
closed undercover operation, the results obtained and any
civil claims made with respect to the operation.
(5) Definitions.--For purposes of paragraph (4)--
(A) the term ``closed'', with respect to an undercover
investigative operation, refers to the earliest point in time
at which all criminal proceedings (other than appeals)
pursuant to the investigative operation are concluded, or
covert activities pursuant to such operation are concluded,
whichever occurs later; and
(B) the terms ``undercover investigative operation'' and
``undercover operation'' mean any undercover investigative
operation conducted by the OEE--
(i) in which the gross receipts (excluding interest earned)
exceed $25,000, or expenditures (other than expenditures for
salaries of employees) exceed $75,000, and
(ii) which is exempt from section 3302 or 9102 of title 31,
United States Code, except that clauses (i) and (ii) shall
not apply with respect to the report to Congress required by
paragraph (4)(B).
(e) Wiretaps.--
(1) Authority.--Interceptions of communications in
accordance with section 2516 of title 18, United States Code,
are authorized to further the enforcement of this Act.
(2) Conforming amendment.--Section 2516(1) of title 18,
United States Code, is amended by adding at the end the
following:
``(q)(i) any violation of, or conspiracy to violate, the
Export Administration Act of 2001 or the Export
Administration Act of 1979.''.
(f) Post-Shipment Verification.--The Secretary shall target
post-shipment verifications to exports involving the greatest
risk to national security.
(g) Refusal To Allow Post-Shipment Verification.--
(1) In general.--If an end-user refuses to allow post-
shipment verification of a controlled item, the Secretary
shall deny a license for the export of any controlled item to
such end-user until such post-shipment verification occurs.
(2) Related persons.--The Secretary may exercise the
authority under paragraph (1) with respect to any person
related through affiliation, ownership, control, or position
of responsibility, to any end-user refusing to allow post-
shipment verification of a controlled item.
(3) Refusal by country.--If the country in which the end-
user is located refuses to allow post-shipment verification
of a controlled item, the Secretary may deny a license for
the export of that item or any substantially identical or
directly competitive item or class of items to all end-users
in that country until such post-shipment verification is
allowed.
(h) Freight Forwarders Best Practices Program
Authorization.--There is authorized to be appropriated for
the Department of Commerce $3,500,000 and such sums as may be
necessary to hire 20 additional employees to assist United
States freight forwarders and other interested parties in
developing and implementing, on a voluntary basis, a ``best
practices'' program to ensure that exports of controlled
items are undertaken in compliance with this Act.
(i) End-Use Verification Authorization.--
(1) In general.--There is authorized to be appropriated for
the Department of Commerce $4,500,000 and such sums as may be
necessary to hire 10 additional overseas investigators to be
posted in the People's Republic of China, the Russian
Federation, the Hong Kong Special Administrative Region, the
Republic of India, Singapore, Egypt, and Taiwan, or any other
place the Secretary deems appropriate, for the purpose of
verifying the end use of high-risk, dual-use technology.
(2) Report.--Not later than 2 years after the date of
enactment of this Act and annually thereafter, the Department
shall, in its annual report to Congress on export controls,
include a report on the effectiveness of the end-use
verification activities authorized under subsection (a). The
report shall include the following information:
(A) The activities of the overseas investigators of the
Department.
(B) The types of goods and technologies that were subject
to end-use verification.
(C) The ability of the Department's investigators to detect
the illegal transfer of high risk, dual-use goods and
technologies.
(3) Enhancements.--In addition to the authorization
provided in paragraph (1), there is authorized to be
appropriated for the Department of Commerce $5,000,000 to
enhance its program for verifying the end use of items
subject to controls under this Act.
(j) Enhanced Cooperation With United States Customs
Service.--Consistent with the purposes of this Act, the
Secretary is authorized to undertake, in cooperation with the
United States Customs Service, such measures as may be
necessary or required to enhance the ability of the United
States to detect unlawful exports and to enforce violations
of this Act.
(k) Reference to Enforcement.--For purposes of this
section, a reference to the enforcement of this Act or to a
violation of this Act includes a reference to the enforcement
or a violation of any regulation, license, or order issued
under this Act.
(l) Authorization for Export Licensing and Enforcement
Computer System.--There is authorized to be appropriated for
the Department $5,000,000 and such other sums as may be
necessary for planning, design, and procurement of a computer
system to replace the Department's primary export licensing
and computer enforcement system.
(m) Authorization for Bureau of Export Administration.--The
Secretary may authorize, without fiscal year limitation, the
expenditure of funds transferred to, paid to, received by, or
made available to the Bureau of Export Administration as a
reimbursement in accordance with section 9703 of title 31,
United States Code (as added by Public Law 102-393). The
Secretary may also authorize, without fiscal year limitation,
the expenditure of funds transferred to, paid to, received
by, or made available to the Bureau of Export Administration
as a reimbursement from the Department of Justice Assets
Forfeiture Fund in accordance with section 524 of title 28,
United States Code. Such funds shall be deposited in an
account and shall remain available until expended.
(n) Amendments to Title 31.--
(1) Section 9703(a) of title 31, United States Code (as
added by Public Law 102-393) is

[[Page S9032]]

amended by striking ``or the United States Coast Guard'' and
inserting ``, the United States Coast Guard, or the Bureau of
Export Administration of the Department of Commerce''.
(2) Section 9703(a)(2)(B)(i) of title 31, United States
Code is amended (as added by Public Law 102-393)--
(A) by striking ``or'' at the end of subclause (I);
(B) by inserting ``or'' at the end of subclause (II); and
(C) by inserting at the end, the following new subclause:

``(III) a violation of the Export Administration Act of
1979, the Export Administration Act of 2001, or any
regulation, license, or order issued under those Acts;''.

(3) Section 9703(p)(1) of title 31, United States Code (as
added by Public Law 102-393) is amended by adding at the end
the following: ``In addition, for purposes of this section,
the Bureau of Export Administration of the Department of
Commerce shall be considered to be a Department of the
Treasury law enforcement organization.''.
(o) Authorization for License Review Officers.--
(1) In general.--There is authorized to be appropriated to
the Department of Commerce $2,000,000 to hire additional
license review officers.
(2) Training.--There is authorized to be appropriated to
the Department of Commerce $2,000,000 to conduct professional
training of license review officers, auditors, and
investigators conducting post-shipment verification checks.
These funds shall be used to--
(A) train and certify, through a formal program, new
employees entering these positions for the first time; and
(B) the ongoing professional training of experienced
employees on an as needed basis.
(p) Authorization.--
(1) In general.--There are authorized to be appropriated to
the Department of Commerce to carry out the purposes of this
Act--
(A) $72,000,000 for the fiscal year 2002, of which no less
than $27,701,000 shall be used for compliance and enforcement
activities;
(B) $73,000,000 for the fiscal year 2003, of which no less
than $28,312,000 shall be used for compliance and enforcement
activities;
(C) $74,000,000 for the fiscal year 2004, of which no less
than $28,939,000 shall be used for compliance and enforcement
activities;
(D) $76,000,000 for the fiscal year 2005, of which no less
than $29,582,000 shall be used for compliance and enforcement
activities; and
(E) such additional amounts, for each such fiscal year, as
may be necessary for increases in salary, pay, retirement,
other employee benefits authorized by law, and other
nondiscretionary costs.
(2) Limitation.--The authority granted by this Act shall
terminate on September 30, 2004, unless the President carries
out the following duties:
(A) Provides to Congress a detailed report on--
(i) the implementation and operation of this Act; and
(ii) the operation of United States export controls in
general.
(B)(i) Provides to Congress legislative reform proposals in
connection with the report described in subparagraph (A); or
(ii) certifies to Congress that no legislative reforms are
necessary in connection with such report.

SEC. 507. ADMINISTRATIVE PROCEDURE.

(a) Exemptions From Administrative Procedure.--Except as
provided in this section, the functions exercised under this
Act are excluded from the operation of sections 551, 553
through 559, and 701 through 706 of title 5, United States
Code.
(b) Procedures Relating to Civil Penalties and Sanctions.--
(1) Administrative procedures.--Any administrative sanction
imposed under section 503 may be imposed only after notice
and opportunity for an agency hearing on the record in
accordance with sections 554 through 557 of title 5, United
States Code. The imposition of any such administrative
sanction shall be subject to judicial review in accordance
with sections 701 through 706 of title 5, United States Code,
except that the review shall be initiated in the United
States Court of Appeals for the District of Columbia Circuit,
which shall have jurisdiction of the review.
(2) Availability of charging letter.--Any charging letter
or other document initiating administrative proceedings for
the imposition of sanctions for violations of the regulations
issued under section 502 shall be made available for public
inspection and copying.
(c) Collection.--If any person fails to pay a civil penalty
imposed under section 503, the Secretary may ask the Attorney
General to commence a civil action in an appropriate district
court of the United States to recover the amount imposed
(plus interest at currently prevailing rates from the date of
the final order). No such action may be commenced more than 5
years after the order imposing the civil penalty becomes
final. In such an action, the validity, amount, and
appropriateness of such penalty shall not be subject to
review.
(d) Imposition of Temporary Denial Orders.--
(1) Grounds for imposition.--In any case in which there is
reasonable cause to believe that a person is engaged in or is
about to engage in any act or practice which constitutes or
would constitute a violation of this Act, or any regulation,
order, or license issued under this Act, including any
diversion of goods or technology from an authorized end use
or end user, and in any case in which a criminal indictment
has been returned against a person alleging a violation of
this Act or any of the statutes listed in section 503, the
Secretary may, without a hearing, issue an order temporarily
denying that person's United States export privileges
(hereafter in this subsection referred to as a ``temporary
denial order''). A temporary denial order shall be effective
for such period (not in excess of 180 days) as the Secretary
specifies in the order, but may be renewed by the Secretary,
following notice and an opportunity for a hearing, for
additional periods of not more than 180 days each.
(2) Administrative appeals.--The person or persons subject
to the issuance or renewal of a temporary denial order may
appeal the issuance or renewal of the temporary denial order,
supported by briefs and other material, to an administrative
law judge who shall, within 15 working days after the appeal
is filed, issue a decision affirming, modifying, or vacating
the temporary denial order. The temporary denial order shall
be affirmed if it is shown that--
(A) there is reasonable cause to believe that the person
subject to the order is engaged in or is about to engage in
any act or practice that constitutes or would constitute a
violation of this Act, or any regulation, order, or license
issued under this Act; or
(B) a criminal indictment has been returned against the
person subject to the order alleging a violation of this Act
or any of the statutes listed in section 503.

The decision of the administrative law judge shall be final
unless, within 10 working days after the date of the
administrative law judge's decision, an appeal is filed with
the Secretary. On appeal, the Secretary shall either affirm,
modify, reverse, or vacate the decision of the administrative
law judge by written order within 10 working days after
receiving the appeal. The written order of the Secretary
shall be final and is not subject to judicial review, except
as provided in paragraph (3). The materials submitted to the
administrative law judge and the Secretary shall constitute
the administrative record for purposes of review by the
court.
(3) Court appeals.--An order of the Secretary affirming, in
whole or in part, the issuance or renewal of a temporary
denial order may, within 15 days after the order is
issued, be appealed by a person subject to the order to
the United States Court of Appeals for the District of
Columbia Circuit, which shall have jurisdiction of the
appeal. The court may review only those issues necessary
to determine whether the issuance of the temporary denial
order was based on reasonable cause to believe that the
person subject to the order was engaged in or was about to
engage in any act or practice that constitutes or would
constitute a violation of this title, or any regulation,
order, or license issued under this Act, or whether a
criminal indictment has been returned against the person
subject to the order alleging a violation of this Act or
of any of the statutes listed in section 503. The court
shall vacate the Secretary's order if the court finds that
the Secretary's order is arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.
(e) Limitations on Review of Classified Information.--Any
classified information that is included in the administrative
record that is subject to review pursuant to subsection
(b)(1) or (d)(3) may be reviewed by the court only on an ex
parte basis and in camera.

TITLE VI--EXPORT CONTROL AUTHORITY AND REGULATIONS

SEC. 601. EXPORT CONTROL AUTHORITY AND REGULATIONS.

(a) Export Control Authority.--
(1) In general.--Unless otherwise reserved to the President
or a department (other than the Department) or agency of the
United States, all power, authority, and discretion conferred
by this Act shall be exercised by the Secretary.
(2) Delegation of functions of the secretary.--The
Secretary may delegate any function under this Act, unless
otherwise provided, to the Under Secretary of Commerce for
Export Administration or to any other officer of the
Department.
(b) Under Secretary of Commerce; Assistant Secretaries.--
(1) Under secretary of commerce.--There shall be within the
Department an Under Secretary of Commerce for Export
Administration (in this section referred to as the ``Under
Secretary'') who shall be appointed by the President, by and
with the advice and consent of the Senate. The Under
Secretary shall carry out all functions of the Secretary
under this Act and other provisions of law relating to
national security, as the Secretary may delegate.
(2) Additional assistant secretaries.--In addition to the
number of Assistant Secretaries otherwise authorized for the
Department of Commerce, there shall be within the Department
of Commerce the following Assistant Secretaries of Commerce:
(A) An Assistant Secretary for Export Administration who
shall be appointed by the President, by and with the advice
and consent of the Senate, and who shall assist the Secretary
and the Under Secretary in carrying out functions relating to
export listing and licensing.
(B) An Assistant Secretary for Export Enforcement who shall
be appointed by the President, by and with the advice and
consent of the Senate, and who shall assist the Secretary and
the Under Secretary in carrying out functions relating to
export enforcement.
(c) Issuance of Regulations.--
(1) In general.--The President and the Secretary may issue
such regulations as are necessary to carry out this Act. Any
such regulations the purpose of which is to carry out title
II or title III may be issued only after the regulations are
submitted for review to such departments or agencies as the
President considers appropriate. The Secretary shall consult
with the appropriate export control advisory committee

[[Page S9033]]

appointed under section 105(a) in formulating regulations
under this title. The second sentence of this subsection does
not require the concurrence or approval of any official,
department, or agency to which such regulations are
submitted.
(2) Amendments to regulations.--If the Secretary proposes
to amend regulations issued under this Act, the Secretary
shall report to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on International
Relations of the House of Representatives on the intent and
rationale of such amendments. Such report shall evaluate the
cost and burden to the United States exporters of the
proposed amendments in relation to any enhancement of
licensing objectives. The Secretary shall consult with the
appropriate export control advisory committees appointed
under section 105(a) in amending regulations issued under
this Act.

SEC. 602. CONFIDENTIALITY OF INFORMATION.

(a) Exemptions From Disclosure.--
(1) Information obtained on or before june 30, 1980.--
Except as otherwise provided by the third sentence of section
502(c)(2) and by section 507(b)(2), information obtained
under the Export Administration Act of 1979, or any
predecessor statute, on or before June 30, 1980, which is
deemed confidential, including Shipper's Export Declarations,
or with respect to which a request for confidential treatment
is made by the person furnishing such information, shall not
be subject to disclosure under section 552 of title 5, United
States Code, and such information shall not be published or
disclosed, unless the Secretary determines that the
withholding thereof is contrary to the national interest.
(2) Information obtained after june 30, 1980.--Except as
otherwise provided by the third sentence of section 502(c)(2)
and by section 507(b)(2), information obtained under this
Act, under the Export Administration Act of 1979 after June
30, 1980, or under the Export Administration regulations as
maintained and amended under the authority of the
International Emergency Economic Powers Act (50 U.S.C. 1706),
may be withheld from disclosure only to the extent permitted
by statute, except that information submitted, obtained, or
considered in connection with an application for an export
license or other export authorization (or recordkeeping or
reporting requirement) under the Export Administration Act of
1979, under this Act, or under the Export Administration
regulations as maintained and amended under the authority of
the International Emergency Economic Powers Act (50 U.S.C.
1706), including--
(A) the export license or other export authorization
itself,
(B) classification requests described in section 401(h),
(C) information or evidence obtained in the course of any
investigation,
(D) information obtained or furnished under title V in
connection with any international agreement, treaty, or other
obligation, and
(E) information obtained in making the determinations set
forth in section 211 of this Act,

and information obtained in any investigation of an alleged
violation of section 502 of this Act except for information
required to be disclosed by section 502(c)(2) or 507(b)(2) of
this Act, shall be withheld from public disclosure and shall
not be subject to disclosure under section 552 of title 5,
United States Code, unless the release of such information is
determined by the Secretary to be in the national interest.
(b) Information to Congress and GAO.--
(1) In general.--Nothing in this title shall be construed
as authorizing the withholding of information from Congress
or from the General Accounting Office.
(2) Availability to the congress--
(A) In general.--Any information obtained at any time under
this title or under any predecessor Act regarding the control
of exports, including any report or license application
required under this title, shall be made available to any
committee or subcommittee of Congress of appropriate
jurisdiction upon the request of the chairman or ranking
minority member of such committee or subcommittee.
(B) Prohibition on further disclosure.--No committee,
subcommittee, or Member of Congress shall disclose any
information obtained under this Act or any predecessor
Act regarding the control of exports which is submitted on
a confidential basis to the Congress under subparagraph
(A) unless the full committee to which the information is
made available determines that the withholding of the
information is contrary to the national interest.
(3) Availability to the gao.--
(A) In general.--Notwithstanding subsection (a),
information described in paragraph (2) shall, consistent with
the protection of intelligence, counterintelligence, and law
enforcement sources, methods, and activities, as determined
by the agency that originally obtained the information, and
consistent with the provisions of section 716 of title 31,
United States Code, be made available only by the agency,
upon request, to the Comptroller General of the United States
or to any officer or employee of the General Accounting
Office authorized by the Comptroller General to have access
to such information.
(B) Prohibition on further disclosures.--No officer or
employee of the General Accounting Office shall disclose,
except to Congress in accordance with this paragraph, any
such information which is submitted on a confidential basis
and from which any individual can be identified.
(c) Information Exchange.--Notwithstanding subsection (a),
the Secretary and the Commissioner of Customs shall exchange
licensing and enforcement information with each other as
necessary to facilitate enforcement efforts and effective
license decisions.
(d) Penalties for Disclosure of Confidential Information.--
(1) Disclosure prohibited.--No officer or employee of the
United States, or any department or agency thereof, may
publish, divulge, disclose, or make known in any manner or to
any extent not authorized by law any information that--
(A) the officer or employee obtains in the course of his or
her employment or official duties or by reason of any
examination or investigation made by, or report or record
made to or filed with, such department or agency, or officer
or employee thereof; and
(B) is exempt from disclosure under this section.
(2) Criminal penalties.--Any such officer or employee who
knowingly violates paragraph (1) shall be fined not more than
$50,000, imprisoned not more than 1 year, or both, for each
violation of paragraph (1). Any such officer or employee
may also be removed from office or employment.
(3) Civil penalties; administrative sanctions.--The
Secretary may impose a civil penalty of not more than $5,000
for each violation of paragraph (1). Any officer or employee
who commits such violation may also be removed from office or
employment for the violation of paragraph (1). Sections 503
(e), (g), (h), and (i) and 507 (a), (b), and (c) shall apply
to violations described in this paragraph.

TITLE VII--MISCELLANEOUS PROVISIONS

SEC. 701. ANNUAL REPORT.

(a) Annual Report.--Not later than February 1 of each year,
the Secretary shall submit to Congress a report on the
administration of this Act during the fiscal year ending
September 30 of the preceding calendar year. All Federal
agencies shall cooperate fully with the Secretary in
providing information for each such report.
(b) Report Elements.--Each such report shall include in
detail--
(1) a description of the implementation of the export
control policies established by this Act, including any
delegations of authority by the President and any other
changes in the exercise of delegated authority;
(2) a description of the changes to and the year-end status
of country tiering and the Control List;
(3) a description of the petitions filed and the
determinations made with respect to foreign availability and
mass-market status, the set-asides of foreign availability
and mass-market status determinations, and negotiations to
eliminate foreign availability;
(4) a description of any enhanced control imposed on an
item pursuant to section 201(d);
(5) a description of the regulations issued under this Act;
(6) a description of organizational and procedural changes
undertaken in furtherance of this Act;
(7) a description of the enforcement activities,
violations, and sanctions imposed under this Act;
(8) a statistical summary of all applications and
notifications, including--
(A) the number of applications and notifications pending
review at the beginning of the fiscal year;
(B) the number of notifications returned and subject to
full license procedure;
(C) the number of notifications with no action required;
(D) the number of applications that were approved, denied,
or withdrawn, and the number of applications where final
action was taken; and
(E) the number of applications and notifications pending
review at the end of the fiscal year;
(9) summary of export license data by export identification
code and dollar value by country;
(10) an identification of processing time by--
(A) overall average, and
(B) top 25 export identification codes;
(11) an assessment of the effectiveness of multilateral
regimes, and a description of negotiations regarding export
controls;
(12) a description of the significant differences between
the export control requirements of the United States and
those of other multilateral control regime members, and the
specific differences between United States requirements and
those of other significant supplier countries;
(13) an assessment of the costs of export controls;
(14) a description of the progress made toward achieving
the goals established for the Department dealing with export
controls under the Government Performance Results Act; and
(15) any other reports required by this Act to be submitted
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on International Relations of
the House of Representatives.
(c) Federal Register Publication Requirements.--Whenever
information under this Act is required to be published in the
Federal Register, such information shall, in addition, be
posted on the Department of Commerce or other appropriate
government website.

SEC. 702. TECHNICAL AND CONFORMING AMENDMENTS.

(a) Repeal.--The Export Administration Act of 1979 (50
U.S.C. App. 2401 et seq.) is repealed.
(b) Energy Policy and Conservation Act.--
(1) Section 103 of the Energy Policy and Conservation Act
(42 U.S.C. 6212) is repealed.
(2) Section 251(d) of the Energy Policy and Conservation
Act (42 U.S.C. 6271(d)) is repealed.
(c) Alaska Natural Gas Transportation Act.--Section 12 of
the Alaska Natural Gas Transportation Act of 1976 (15 U.S.C.
719j) is repealed.
(d) Mineral Leasing Act.--Section 28(u) of the Mineral
Leasing Act (30 U.S.C. 185(u)) is repealed.
(e) Exports of Alaskan North Slope Oil.--Section 28(s) of
the Mineral Leasing Act (30 U.S.C. 185(s)) is repealed.

[[Page S9034]]

(f) Disposition of Certain Naval Petroleum Reserve
Products.--Section 7430(e) of title 10, United States Code,
is repealed.
(g) Outer Continental Shelf Lands Act.--Section 28 of the
Outer Continental Shelf Lands Act (43 U.S.C. 1354) is
repealed.
(h) Arms Export Control Act.--
(1) Section 38 of the Arms Export Control Act (22 U.S.C.
2778) is amended--
(A) in subsection (e)--
(i) in the first sentence, by striking ``subsections (c)''
and all that follows through ``12 of such Act,'' and
inserting ``subsections (b), (c), (d) and (e) of section 503
of the Export Administration Act of 2001, by subsections (a)
and (b) of section 506 of such Act, and by section 602 of
such Act,''; and
(ii) in the third sentence, by striking ``11(c) of the
Export Administration Act of 1979'' and inserting ``503(c) of
the Export Administration Act of 2001''; and
(B) in subsection (g)(1)(A)(ii), by inserting ``or section
503 of the Export Administration Act of 2001'' after
``1979''.
(2) Section 39A(c) of the Arms Export Control Act (22
U.S.C. 2779a(c)) is amended--
(A) by striking ``subsections (c),'' and all that follows
through ``12(a) of such Act'' and inserting ``subsections
(c), (d), and (e) of section 503, section 507(c), and
subsections (a) and (b) of section 506, of the Export
Administration Act of 2001''; and
(B) by striking ``11(c)'' and inserting ``503(c)''.
(3) Section 40(k) of the Arms Export Control Act (22 U.S.C.
2780(k)) is amended--
(A) by striking ``11(c), 11(e), 11(g), and 12(a) of the
Export Administration Act of 1979'' and inserting ``503(b),
503(c), 503(e), 506(a), and 506(b) of the Export
Administration Act of 2001''; and
(B) by striking ``11(c)'' and inserting ``503(c)''.
(i) Other Provisions of Law.--
(1) Section 5(b)(4) of the Trading with the Enemy Act (50
U.S.C. App. 5(b)(4)) is amended by striking ``section 5 of
the Export Administration Act of 1979, or under section 6 of
that Act to the extent that such controls promote the
nonproliferation or antiterrorism policies of the United
States'' and inserting ``titles II and III of the Export
Administration Act of 2001''.
(2) Section 502B(a)(2) of the Foreign Assistance Act of
1961 (22 U.S.C. 2304(a)(2)) is amended in the second
sentence--
(A) by striking ``Export Administration Act of 1979'' the
first place it appears and inserting ``Export Administration
Act of 2001''; and
(B) by striking ``Act of 1979)'' and inserting ``Act of
2001)''.
(3) Section 140(a) of the Foreign Relations Authorization
Act, Fiscal Years 1988 and 1989 (22 U.S.C. 2656f(a)) is
amended--
(A) in paragraph (1)(B), by inserting ``or section 310 of
the Export Administration Act of 2001'' after ``Act of
1979''; and
(B) in paragraph (2), by inserting ``or 310 of the Export
Administration Act of 2001'' after ``6(j) of the Export
Administration Act of 1979''.
(4) Section 40(e)(1) of the State Department Basic
Authorities Act of 1956 (22 U.S.C. 2712(e)(1)) is amended by
striking ``section 6(j)(1) of the Export Administration Act
of 1979'' and inserting ``section 310 of the Export
Administration Act of 2001''.
(5) Section 205(d)(4)(B) of the State Department Basic
Authorities Act of 1956 (22 U.S.C. 305(d)(4)(B)) is amended
by striking ``section 6(j) of the Export Administration Act
of 1979'' and inserting ``section 310 of the Export
Administration Act of 2001''.
(6) Section 110 of the International Security and
Development Cooperation Act of 1980 (22 U.S.C. 2778a) is
amended by striking ``Act of 1979'' and inserting ``Act of
2001''.
(7) Section 203(b)(3) of the International Emergency
Economic Powers Act (50 U.S.C. 1702(b)(3)) is amended by
striking ``section 5 of the Export Administration Act of
1979, or under section 6 of such Act to the extent that such
controls promote the nonproliferation or antiterrorism
policies of the United States'' and inserting ``the Export
Administration Act of 2001''.
(8) Section 1605(a)(7)(A) of title 28, United States Code,
is amended by striking ``section 6(j) of the Export
Administration Act of 1979 (50 U.S.C. App. 2405(j))'' and
inserting ``section 310 of the Export Administration Act of
2001''.
(9) Section 2332d(a) of title 18, United States Code, is
amended by striking ``section 6(j) of the Export
Administration Act of 1979 (50 U.S.C. App. 2405)'' and
inserting ``section 310 of the Export Administration Act of
2001''.
(10) Section 620H(a)(1) of the Foreign Assistance Act of
1961 (22 U.S.C. 2378(a)(1)) is amended by striking ``section
6(j) of the Export Administration Act of 1979 (50 U.S.C. App.
2405(j))'' and inserting ``section 310 of the Export
Administration Act of 2001''.
(11) Section 1621(a) of the International Financial
Institutions Act (22 U.S.C. 262p-4q(a)) is amended by
striking ``section 6(j) of the Export Administration Act of
1979 (50 U.S.C. App. 2405(j))'' and inserting ``section 310
of the Export Administration Act of 2001''.
(12) Section 1956(c)(7)(D) of title 18, United States Code,
is amended by striking ``section 11 (relating to violations)
of the Export Administration of 1979'' and inserting
``section 503 (relating to penalties) of the Export
Administration Act of 2001''.
(13) Subsection (f) of section 491 and section 499 of the
Forest Resources Conservation and Shortage Relief Act of 1990
(16 U.S.C. 620c(f) and 620j) are repealed.
(14) Section 904(2)(B) of the Trade Sanctions Reform and
Export Enhancement Act of 2000 is amended by striking
``Export Administration Act of 1979'' and inserting ``Export
Administration Act of 2001''.
(15) Section 983(i)(2) of title 18, United States Code (as
added by Public Law 106-185), is amended--
(A) by striking the ``or'' at the end of subparagraph (D);
(B) by striking the period at the end of subparagraph (E)
and inserting ``; or''; and
(C) by inserting the following new subparagraph:
``(F) the Export Administration Act of 2001.''.
(j) Civil Aircraft Equipment.--Notwithstanding any other
provision of law, any product that--
(1) is standard equipment, certified by the Federal
Aviation Administration, in civil aircraft, and
(2) is an integral part of such aircraft, shall be subject
to export control only under this Act. Such product shall not
be subject to controls under section 38(b)(2) of the Arms
Export Control Act (22 U.S.C. 2778(b)).
(k) Repeal of Certain Export Controls.--Subtitle B of title
XII of division A of the National Defense Authorization Act
for Fiscal Year 1998 (50 U.S.C. App. 2404 note) is repealed.

SEC. 703. SAVINGS PROVISIONS.

(a) In General.--All delegations, rules, regulations,
orders, determinations, licenses, or other forms of
administrative action which have been made, issued,
conducted, or allowed to become effective under--
(1) the Export Control Act of 1949, the Export
Administration Act of 1969, the Export Administration Act of
1979, or the International Emergency Economic Powers Act when
invoked to maintain and continue the Export Administration
regulations, or
(2) those provisions of the Arms Export Control Act which
are amended by section 702,

and are in effect on the date of enactment of this Act, shall
continue in effect according to their terms until modified,
superseded, set aside, or revoked under this Act or the Arms
Export Control Act.
(b) Administrative and Judicial Proceedings.--
(1) Export administration act.--This Act shall not affect
any administrative or judicial proceedings commenced or any
application for a license made, under the Export
Administration Act of 1979 or pursuant to Executive Order
12924, which is pending at the time this Act takes effect.
Any such proceedings, and any action on such application,
shall continue under the Export Administration Act of 1979 as
if that Act had not been repealed.
(2) Other provisions of law.--This Act shall not affect any
administrative or judicial proceeding commenced or any
application for a license made, under those provisions of the
Arms Export Control Act which are amended by section 702, if
such proceeding or application is pending at the time this
Act takes effect. Any such proceeding, and any action on such
application, shall continue under those provisions as if
those provisions had not been amended by section 702.
(c) Treatment of Certain Determinations.--Any determination
with respect to the government of a foreign country under
section 6(j) of the Export Administration Act of 1979, or
Executive Order 12924, that is in effect on the day before
the date of enactment of this Act, shall, for purposes of
this title or any other provision of law, be deemed to be
made under section 310 of this Act until superseded by a
determination under such section 310.
(d) Lawful Intelligence Activities.--The prohibitions
otherwise applicable under this Act do not apply with respect
to any transaction subject to the reporting requirements of
title V of the National Security Act of 1947. Notwithstanding
any other provision of this Act, nothing shall affect the
responsibilities and authorities of the Director of Central
Intelligence under section 103 of the National Security Act
of 1947.
(e) Implementation.--The Secretary shall make any revisions
to the Export Administration regulations required by this Act
no later than 180 days after the date of enactment of this
Act.

Mr. SARBANES. Mr. President, I rise in very strong support of S. 149,
the Export Administration Act of 2001.
Earlier this year, I was pleased to join with my colleagues, Senator
Enzi, Senator Johnson, and Senator Gramm, in introducing this
legislation.
This legislation was reported out of the Senate Banking, Housing, and
Urban Affairs Committee by a vote of 19-1. It was a bipartisan vote,
obviously, of 19-1. The legislation has been very strongly endorsed by
the administration. That was in early April of this year. The Export
Administration Act provides for the President to control exports for
reasons of national security and foreign policy.
Let me begin by saying I believe there is a very strong national
interest in reauthorizing the Export Administration Act. I think that
is a view held by a clear majority of the Congress.
It is important to understand a bit about the historical situation as
we consider this legislation. Regrettably, the Export Administration
Act has not been reauthorized since 1990, except for three temporary
extensions in 1993, in 1994, and again last year. At the end of the
last Congress, we passed a temporary extension of the Export
Administration Act that expired on August 20 of this year, just a few
weeks ago.
Prior to this most recent temporary extension and since the EAA
expired on August 20, the authority of the President to impose export
controls has been exercised pursuant to the International Economic
Emergency Powers

[[Page S9035]]

Act, the so-called IEEPA. This is generally how we have been
functioning throughout this decade with respect to export controls.
I believe strongly that Congress should put in place a permanent
statutory framework for the imposition of export controls. They should
not be imposed pursuant to an emergency economic authority of the
President. It can be done that way. It has been done that way. That is
the currently existing situation. But I don't think that is the most
desirable way to proceed. It doesn't give you the most substantial
statutory framework, obviously. It doesn't introduce an element of
stability and permanency into the arrangements. In fact, I believe
strongly that this legislation provides greater protection for national
security and foreign policy concerns than is provided under IEEPA or
provided under the previous Export Administration Act.
Just one example: The penalties that can be imposed under IEEPA for
violation of export controls are significantly less than the penalties
that are provided for in the legislation that is before us. Let me
repeat that.
Under the current arrangement in which the export control regime has
been put in place by the President's invoking of his economic emergency
powers, the penalties for violation are substantially less than the
penalties which we provide in this legislation. This legislation is a
carefully balanced effort to provide the President authority to control
exports for reasons of national security and foreign policy while also
responding to the need of U.S. exporters to compete in the global
marketplace.
I point out that effective competition by U.S. exporters in the
global marketplace, which will strengthen their economic position--that
is, the economic position of U.S. exporters--and thereby strengthen the
economic position of the United States in the global marketplace, also
has important national security and foreign policy implications for the
United States. In the end, our national security and foreign policy
strength rests in part on our economic strength. I think we need to
keep that in mind as we consider this legislation.

In preparation for acting on this legislation, the Banking Committee
this year held two hearings with representatives of industry groups and
former Defense Department officials.
I might note that the committee held extensive hearings in the prior
Congress with respect to this issue. So there has been a continual
period now, over a number of years, of very careful examination of
export controls and how to address this matter. Extensive consultation
took place with representatives of the new administration, including
the Commerce Department, the Defense Department, the State Department,
the intelligence agencies, and the National Security Council.
Prior to the markup of the legislation in the Banking Committee
earlier this year, Dr. Rice, the Assistant to the President for
National Security Affairs, sent a letter to the committee dated March
21 of this year, which I quote:

The Administration has carefully reviewed the current
version of S. 149, the Export Administration Act of 2001,
which provides authority for controlling exports of dual-use
goods and technologies. As a result of its review, the
Administration has proposed a number of changes to S. 149.
The Secretary of State, Secretary of Defense, Secretary of
Commerce, and I agree that these changes will strengthen the
President's national security and foreign policy authorities
to control dual-use exports in a balanced manner, which will
permit U.S. companies to compete more effectively in the
global market place. With these changes, S. 149 represents a
positive step towards the reform of the U.S. export control
system supported by the President. If the Committee
incorporates these changes into S. 149, the Administration
will support the bill.

Mr. President, a major effort was made to work through the list of
proposals by the administration. That resulted in those proposals being
incorporated into the bill during the Banking Committee's markup. As a
consequence, in effect we met the standard that the administration set
for us. They were incorporated in the markup.
The administration is supportive of this bill. It has expressed that
support on more than one occasion. They have been in constant
communication with us about this matter. We are obviously proceeding
not only in accordance with our own judgment, but it also represents
the judgment of the administration as well. In fact, in late March
President Bush, in speaking to high-tech leaders in the White House,
urged quick passage of the bill by the Senate. He reiterated that
support in May in a speech he gave in Washington.
In April, the Office of Management and Budget submitted to the
Congress a statement of administration policy on S. 149, which said in
part:

As reported, S. 149 includes a number of changes that the
administration sought to strengthen the President's national security
and foreign policy authorities to control dual-use exports.
Let me underscore: changes they sought to strengthen the President's
national security and foreign policy authorities to control dual-use
exports.

The Administration will continue to work with Congress to
ensure that our national security needs are incorporated into
a rational export control system.

Mr. President, I ask unanimous consent that the Statement of
Administration Policy submitted by the Office of Management and Budget
with respect to S. 149 be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Office of Management and Budget,

Washington, DC, April 26, 2001.

Statement of Administration Policy

s. 149--export administration Act of 2001

The Administration supports S. 149, as reported by the
Senate Banking Committee. The bill provides authority for
controlling exports of dual-use goods and technologies. The
Administration believes that S. 149 would allow the United
States to successfully meet its national security and foreign
policy objectives without impairing the ability of U.S.
companies to compete effectively in the global marketplace.
As reported, S. 149 includes a number of changes that the
Administration sought to strengthen the President's national
security and foreign policy authorities to control duel-use
exports. The Administration will continue to work with
Congress to ensure that our national security needs are
incorporated into a rational export control system.
Pay-As-You-Go Scoring
S. 149 would affect receipts and direct spending;
therefore, it is subject to the pay-as-you-go (PAYGO)
requirement of the Omnibus Budget Reconciliation Act (OBRA)
of 1990. OMB's preliminary scoring estimates is that the
PAYGO effect of this bill is minimal. Final scoring of this
legislation may deviate from this estimate.

Mr. SARBANES. Mr. President, I commend Senator Gramm, who was
actually chairman of the committee at the time that we brought the
legislation forward. And I commend Senator Enzi and Senator Johnson.
Senator Enzi and Senator Johnson, respectively, were the chairman and
ranking member of the Subcommittee on International Trade and Finance
of the Banking Committee in the last Congress. They carried forward
their strong interest in this legislation in this Congress and have
played an instrumental role in helping to shape the legislation. I
thank them for their very dedicated efforts, and the efforts of their
staff which contributed so much to developing a bipartisan consensus on
this legislation.
Also, I acknowledge the significant contributions made by Senator
Bayh and by Senator Hagel, who are the chairman and ranking member of
the International Trade and Finance Subcommittee in this Congress, for
their contributions in moving the legislation forward this year.
The legislation generally tracks the authorities provided the
President under the Export Administration Act which expired in 1990.
However, a significant effort was made, with the assistance of the
legislative counsel's office, to provide these authorities in a more
clear and straightforward manner. We believe this will make the statute
both easier for the executive branch agencies to administer and for
exporters to comply with.
The bill also makes a number of significant improvements to the EAA.
I would like to mention a few. The legislation provides, for the first
time, a

[[Page S9036]]

statutory basis for the resolution of interagency disputes over export
license applications. The intent is to provide an orderly process for
the timely resolution of disputes while allowing all interested
agencies a full opportunity to express their views. This was an issue
of significant concern to the administration, to the national security
community, and to industry. And I believe we have reached a reasonable
resolution of this issue in the bill.
One of the things that industry was seeking was a process whereby
they would get an ultimate decision. This bill sets out a process of
interagency consultation that provides for moving it up to the next
level, if there is not agreement, so that it keeps moving forth. In the
end, it can reach the President for decision. But at least it works
within a framework in which the industry knows that at the end they
will get a decision; it will not simply disappear into the great void
with no decision of any sort forthcoming.
We think this is a very reasonable way to structure the situation. I
simply note that it is still reserved to the President, in the end, the
ultimate authority to rule on the matter with respect to export
controls.
As I mentioned earlier, the bill significantly increases both
criminal and civil penalties for violations of the Export
Administration Act, reflecting the seriousness of such violations.
The bill provides new authority to the President to determine that a
good has mass market status in the United States. And because it has
mass market status--in other words, there is a set of criteria, but
essentially generally available in the marketplace--it should be
controlled. But the President retains authority to set aside a mass
market determination if he determines that it would constitute a
serious threat to national security and that continued export controls
would be likely to advance the national security interests of the
United States.
We have tried to recognize changes that are taking place in the
marketplace, to factor them into the thinking, but even so in the last
analysis reserving to the President the authority to set aside a mass
market determination. I think this is, again, another example of the
concern of those of us who have helped to shape this legislation to
make sure that we are able to protect national security and foreign
policy interests. We are trying to, in effect, accommodate the market
changes and the needs of our exporters in terms of participating
effectively and competitively in the global marketplace but, at the
same time, making sure the President retains the power and the
authority that might be necessary, under certain circumstances, to
protect our national security interests and our foreign policy
interests.
At the urging of Senator Enzi, who has been a very thoughtful and
dedicated exponent of this legislation--and in my perception has bent
over backwards to try to accommodate concerns in shaping this
legislation--the bill contains a provision that would require the
President to establish a system of tiers to which countries would be
assigned based on their perceived threat to U.S. national security. The
legislation requires that there be at least three such tiers. The
intent is to provide exporters a clear guide as to the licensing
requirements of the export of a particular item to a particular
country.
The bill would also require that any foreign company that declined a
U.S. request for a postshipment verification of an export would be
denied licenses for future exports. The President would have authority
to deny licenses to affiliates of the company and to the country in
which the company is located as well.
Overall, I believe this bill is a very balanced piece of work. As I
mentioned at the outset, it commanded overwhelming bipartisan support
in the committee. It has the strong support of the administration. It
is my belief it will receive broad bipartisan support in the full
Senate.
In criticizing this bill when it was brought up in this Chamber in
April--it was up for 1 day; we had 1 day of debate on the legislation--
some of my colleagues registered objections. They thought that the bill
tipped the balance towards meeting commercial needs versus national
security needs, that it placed an emphasis on export decontrol without
an adequate assessment of the national security implications of that
decontrol. Others said that the bill's restriction on Presidential
authorities to regulate national security-related exports, the
liberalization of exports of all goods, poses a problem and needs to be
resolved. And we had other comments in that vein.
I want to take a moment to respond to these assertions because I
respectfully disagree with them. First of all, it is very important to
note that the alternative to reauthorizing the Export Administration
Act is the International Emergency Economic Powers Act.
As we indicated earlier, that is really not a satisfactory framework
under which to operate.
This was made clear in letters that Dr. Rice, Assistant to the
President for National Security Affairs, sent to Senator Gramm and
myself on August 2. In the course of that letter she stated:

I am pleased that the Senate plans to take up S. 149.
Because the current Export Administration Act (EAA) will
expire on August 20, 2001, the President is prepared to use
the authorities provided to him under the International
Emergency Economic Powers Act (IEEPA) to extend the existing
dual-use export control programs. As you know, IEEPA
authority has previously been used to administer our export
control programs. Since a new EAA will provide us the
strongest authority to administer dual-use export controls,
particularly as related to enforcement, penalties for export
control violations, and the protection of business
proprietary information, we support swift enactment of S.
149.

Mr. President, I ask unanimous consent to print the full text of the
letter in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

The White House,

Washington, August 2, 2001.
Hon. Paul Sarbanes,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: Thank you for your efforts to advance
the Senate's consideration of S. 149, the Export
Administration Act of 2001. This bill has the
Administration's strong support.
I am pleased that the Senate plans to take up S. 149 on
September 4, 2001. Because the current Export Administration
Act (EAA) will expire on August 20, 2001, the President is
prepared to use the authorities provided to him under the
International Emergency Economic Powers Act (IEEPA) to extend
the existing dual-use export control program. As you know,
IEEPA authority has previously been used to administer our
export control programs. Since a new EAA will provide us the
strongest authority to administer dual-use export controls,
particularly as related to enforcement, penalties for export
control violations, and the protection of business
proprietary information, we support swift enactment of S.
149.
I look forward to continuing to work with you on these
important national security issues.
Sincerely,

Condoleezza Rice,

Assistant to the President
for National Security Affairs.

Mr. SARBANES. Aside from the issue that the Export Administration Act
is better than IEEPA, which I think is clear, let me address the
assertions that S. 149 would weaken the national security protections
in the previous Export Administration Act.
I believe quite strongly that just the opposite is the case, as
witnessed by the support the administration and the national security
community have extended to this legislation. We have already talked
about the increased civil and criminal penalties for violations of the
EAA. The penalties are stronger in this legislation, not only with
respect to the existing ones in IEEPA but also with respect to the
penalties in the previously existing Export Administration Act.
Let me mention some other provisions that significantly expand the
President's authority to impose export controls on dual-use goods and
technology in regard to the EAA.
Section 201(c) of this legislation states:

Notwithstanding any other provision of this title, controls
may be imposed, based on the end use or end user, on the
export of any item, that could contribute to the
proliferation of weapons of mass destruction or the means to
deliver them.

This authority did not exist in the EAA. It is the so-called enhanced
proliferation control initiative which until now has been implemented
through an executive order. This provision would give the President
broad

[[Page S9037]]

statutory authority to impose controls on any export that could
contribute to proliferation or delivery of weapons of mass destruction,
if there was a concern about the end use or the end user of the export.
Section 201(d) of this legislation, the so-called enhanced controls
provision, provides:

Notwithstanding any other provision of this title, the
President may determine that applying the provisions of
section 204 or 211 with respect to an item on the National
Security Control List would constitute a significant threat
to the national security of the United States and that such
item requires enhanced control.

It goes on to say:

If the President determines that enhanced control should
apply to such item, the item may be excluded from the
provisions of section 204, section 211, or both, until such
time as the President shall determine that such enhanced
control should no longer apply to such item.

Section 204 is a section on containing parts and components that says
you can't put on controls if the parts and components are less than 25
percent of the total value of the export. But the President will be
given the power, in effect, to ignore that restriction and impose the
controls. Under the previous EAA, the President did not have the
authority to set aside the parts and components or the foreign
availability provisions, which is what 211 requires refers to. So this
represents a very significant expansion of the President's export
control authority.
We have had a lot of discussions about foreign availability, mass
market provisions and the President's standards to set aside this
authority. It should be clear that this broad setaside power, separate
and apart from the powers the President has in the foreign availability
and mass market provisions themselves, is a very important addition to
Presidential authority and one that was important to the national
security community.
Furthermore, the legislation provides that notwithstanding any other
provisions of the act setting forth limitations on the authority to
control exports, the President may impose controls listed on a control
list of a multilateral export control regime.
This is a very broad authority for the President to set aside all the
requirements of the EAA and impose controls on any export that is on a
control list pursuant to an international agreement.
This is an important provision because export controls are most
effective when they are implemented in concert with the controls of
other supplier nations. One of the things we seek to do in this
legislation is encourage the development of such multilateral export
control regimes. Actually, the majority of items today subject to
export controls in the U.S. are controlled by most of the other
supplier nations through four multilateral export control regimes: the
Waasenaar agreement, which relates to arms and dual-use items useful
for conventional arms purposes; the nuclear suppliers group; the
missile technology control regime; and the Australia group, which
relates to items useful for chemical and biological weapons. These four
regimes form the multilateral basis for export controls, and they are
obviously an important element for effective nonproliferation.
One of our objectives here, of course, is to work closely with others
in further developing multilateral cooperation and strengthening the
contribution of these regimes to the nonproliferation objectives.
Let me point out, we are constantly encouraging other countries to
put in place a thoroughly considered, rational export control regime.
We go to other countries and say: We need you to put this in place. We
want you to join the multilateral regimes, and we want you to establish
your own bilateral control systems so we can get a handle on this
problem worldwide. I am very supportive of those efforts.
What position does it put our interlocutors and our negotiators in
when they go to these countries and then they say, ``You don't seem to
have established your own regimes''? What is the U.S. regime?
It is another argument for putting this legislation into place so
that the U.S. has a fully developed, rational, comprehensive framework
dealing with export controls, and then we, in a sense, try to pull
other countries towards it or in that direction in order to enhance the
multilateral controls that exist worldwide.
Now one other point I want to underscore is, of course, the regime is
designed to prevent exporters from moving out, moving overseas, exports
with dual-use technology. When we make the judgment and go through this
process, it has a negative effect on our national security or foreign
policy interests, and of course you are going to have people trying to
get around this all the time--some few people.
We have enforcement provisions now that are much tougher. One of the
things in this bill is a significant increase in the authorization
levels for the Department of Commerce in a whole host of areas in order
to try to tighten up the enforcement of this regime. In fact, we have a
number of various provisions that are designed to strengthen our
various export controls and to ensure that the resources the Department
needs are available to it in order to carry out the provisions of the
legislation.
Now most exporters want to comply with the regime. They are not out
to try to send abroad technology that can be abused to the harm of
American interests. A number of them invest significant amounts of
money in trying to comply with the regime's reporting and recording
requirements. So it is important to the export community to have a
comprehensive, rational statutory framework. They know, then, what the
rules of the game are. I think it encourages compliance; it draws, in a
sense, on the business community to help implement this matter. So I
think that also represents an important step.
Let me draw to a conclusion by once again saying this is a balanced
effort to address a complex area of national security concerns that
also impact U.S. trade interests. We received just this morning a
letter sent to Senator Daschle, the majority leader of the Senate,
signed by Secretary of State Powell, Secretary of Defense Rumsfeld, and
Secretary of Commerce Evans. Mr. President, I think this letter is of
sufficient import that I am going ask unanimous consent it be printed
in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

September 4, 2001.
Hon. Thomas A. Daschle,
Majority Leader, U.S. Senate,
Washington, DC.
Dear Senator Daschle: We would like to bring to your
attention proposed legislation that will be before you
shortly for consideration: S. 149, the Export Administration
Act of 2001. This bill addresses the subject of export
controls, which is very important to the President. He spoke
definitively about reforming our export control policies and
process during his campaign.
Earlier this year, our agencies conducted an intensive
review of S. 149, as proposed by Senators Gramm, Enzi,
Sarbanes, and Johnson. As a result of the review, we
recommended that the Senate Banking Committee make a number
of changes to the bill to strengthen the President's ability
to control sensitive dual-use goods and technology. The
Committee made the requested changes. Accordingly, we
strongly support the bill passed by the Senate Banking
Committee.
S. 149 is an important step in our efforts to improve the
effectiveness and efficiency of our export control system. S.
149 will provide the President with the authority and
flexibility he needs to administer a stronger, updated export
control system. The Administration will continue to review
our policies and procedures in this area and will consult
with Congress as we identify any additional necessary
changes.
President Bush strongly supports the bill as passed by the
Senate Banking Committee and wants to move forward in this
important area. We urge you to support S. 149 so that the
President will be able to sign a new export control law soon.
Sincerely,
Colin L. Powell,
Secretary of State.
Donald H. Rumsfeld,
Secretary of Defense.
Donald L. Evans,
Secretary of Commerce.

Mr. SARBANES. Mr. President, as we move forward in the debate, I
presumably will have a chance to examine in greater detail the
provisions of the legislation. I read through this legislation again
over the weekend, from start to finish. I must say to you, on this
issue I have always been sensitive to the national security and foreign
policy arguments. In the past, in considering this legislation, I have
never been one who sort of willy-nilly wanted to remove export
controls. I think they have a very important role to play.

[[Page S9038]]

I think this legislation substantially strengthens the ability of the
President and the administration to exercise export controls on behalf
of national security and foreign policy interests. So I very much hope
my colleagues will be supportive of this legislation as we move ahead.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, I rise in support of S. 149, the Export
Administration Act of 2001. Consideration and passage of this bill are
essential for the advancement of our national security, our foreign
policy, and our economic interests.
I am very excited that today is here. This is the culmination of a
lot of effort on the part of Senator Johnson, myself, Senator Sarbanes,
and Senator Gramm. Almost 3 years ago now, Senator Johnson and I, as
chairman and ranking member of the International Finance Trade
Subcommittee of the Banking Committee, were given the task of looking
at the Export Administration Act to see if it could be renewed. It had
expired in 1994, and there was recognition that there was a huge gap in
our national security. That was brought to light a lot, of course, by
the Cox commission, which looked at some of the ways China was stealing
secrets from the United States. A very extensive document during the
original part of this process was a top secret document, and later a
public version was put out; it brought a lot of attention to the issue.
There had been 12 previous attempts to renew the Export Administration
Act. They had failed. Only one version in the House had even gotten out
of committee.
It is an interesting bill because here in the Senate there are 100
Senators who are concerned about national security. There are also 100
Senators who are concerned about the economic interests of the United
States. When a bill is balanced, it will have more than 50 percent in
favor, but we have found that the way these coalitions merge, there are
more than a majority in opposition to everything that has happened. We
faced the unique challenge of trying to do what the other 12 bills had
not been able to do. To do that, Senator Johnson and I went through a
process and saw exactly how the whole process worked. We visited each
stage of the licensing process.
It occurs to me at this moment that there may be people who don't
understand the licensing process. There is a lot of confusion among
people about the different licensing processes because there isn't just
one. We are only talking about the Export Administration Act.
The Export Administration Act is different from the Arms Export
Control Act. It is different by way of what is controlled. The Arms
Export Control Act, of course, handles defense articles and services.
The Export Administration Act, on the other hand, handles dual-use
products. That could be very confusing. Dual-use products are primarily
not used for a military purpose but could have a military purpose. That
is the main distinction between the Arms Export Control Act and the
Export Administration Act.
The jurisdiction between these two acts is different because the
State Department and the Defense Department, of course, have a much
greater interest and need to control the defense articles and services.
The Commerce Department has been given the jurisdiction over dual-use
products provided they are involved with the Department of Defense, the
Department of State, and the security agencies, all of which have some
voice in the licensing process.
One of the big changes in this bill is the way that licensing process
happens so that each of those agencies has a little greater role in
being able to object to a license.
At any rate, the Republicans and the Democrats on the Banking
Committee and on the subcommittee went through a bipartisan process and
worked together to reach a point of balance with a majority of the
security folks who are interested in the bill and a majority of the
economic interest folks who are interested in the bill. And there is
overlap. That is how it is possible to have a vast majority from both
sides. I am pleased to have a bill before us today that, after a lot of
changes, I think has reached that point.
I have to thank Senator Sarbanes and Senator Gramm for giving us the
opportunity to pursue this. I know it is not the most exciting bill in
the world. In fact, some people would say it is an accounting sort of
thing, a boring sort of thing. But it is one of the most important
bills that will pass. It is just very detailed. That makes it difficult
to consider.
Over the last 3 years, a lot of people have looked at this, a lot of
people have given suggestions and, in fact, the handful of people who
have provided the most opposition have also provided the most change.
We have put in 59 changes based on their suggestions for how we needed
to increase national security. We have been working with everyone. We
are still willing to work with everyone. Of course, the latest one we
worked with is the President. The President suggested 16 changes that
are also included in the bill.
At this point, we appear to have a balance that still has a vast
working majority to pass the bill and I think a bill that will provide
national security. Of course, the best evidence that it will provide
national security is the President himself. The President has strongly
urged the Senate to pass it quickly.
I have a chart of President Bush's support:

In working with the Senate, we're working to tighten
control of sensitive technology products with unique military
applications, and to give our industry an equal chance in
world markets. I believe we've got a good bill, and I urge
the Senate to pass it quickly.

That was March 28. Later:

During the campaign, I promised to lead an effort to reform
our export control system, so that it safeguards genuine
military technology while letting American companies sell
items that are already widely available. I'm pleased to
report the Senate Banking Committee passed a revised EAA,
which my administration strongly supports. It's now time to
pass it for the House, so I can sign it into law.

There have been numerous statements by the President. He has had an
interest in this bill, clear back to when he was campaigning and this
was part of his Web site. Since August 20, we have been operating under
the International Economic Emergency Powers Act, IEEPA, that was
referred to by the chairman of the committee, Senator Sarbanes, due to
the expiration of the EAA. It is one of those temporary extensions we
passed.
Operating EAA under IEEPA is unacceptable. IEEPA applies minimal
penalties to exporters of unlicensed technologies and puts confidential
business records of the business community at risk of exposure. I want
to mention some of the changes and the differences between penalties
because that is a big security portion of this bill.
Under criminal penalties, for companies that willfully violate under
IEEPA, there is a penalty of $50,000 per violation. Under the old EAA
of 1979, which has been extended a few times, there is a $1 million
penalty, considerably greater than the $50,000 penalty, or five times
the value of the exports, whichever is greater.
Under the bill we are considering, instead of even the $1 million
fine under EAA, it will be $5 million per violation or 10 times the
value of the exports, whichever is greater.
Persons who willfully violated under the IEEPA would have gotten a
$50,000 penalty or 10 years imprisonment or both. Under the EAA, they
would get $250,000 or 10 years imprisonment or both. But under the bill
we are considering at the present time, instead of the $250,000, it
will be $1 million or 10 times the value of the exports, whichever is
greater, or 10 years imprisonment, or both. We have considerably
increased the penalties.
Under IEEPA, the penalties are almost the cost of doing business or
perhaps less than that. Under the EAA, the amount of the violations has
been bypassed by inflation, but that has been easily taken care of in
this bill.
Under civil penalties, it is the same situation. Under IEEPA a civil
penalty is $10,000, and under EAA a civil penalty is $100,000. Under
this bill, a civil penalty will be $500,000.
The last major revision to the EAA came when the Soviet Union was
still in existence and considered a threat to our national security.
That revision of the EAA of 1979 occurred before the Berlin Wall came
crumbling down and freedom was unleashed for the first time in almost a
generation for millions of Europeans.

[[Page S9039]]

At that time, almost all of the new invention development was also
Government funded. Today most of it is done by the private sector which
is forging ahead without Government money involved. There is no need to
postpone passage of this critical legislation any further.
The issues surrounding the reauthorization of the EAA have been
studied and studied and restudied. The President, Secretary Rumsfeld,
Secretary Powell, Secretary Evans, and National Security Adviser
Condoleezza Rice have endorsed this bipartisan and responsible
legislation.
Here is one of the messages from Condoleezza Rice, National Security
Adviser:

The Secretary of State, Secretary of Defense, Secretary of
Commerce, and I agree that [S. 149 as reported] will
strengthen the President's national security and foreign
policy authorities to control dual-use exports in a balanced
manner, which will permit U.S. companies to compete more
effectively in the global marketplace. S. 149 represents a
positive step towards the reform of the U.S. export control
system supported by the President.

In listening to the arguments of the critics of this reasonable bill,
there seems to be a misunderstanding about what the current law is. If
a comparison of the 1979 EAA and S. 149 were made, one would find
numerous similarities, as were pointed out by Senator Sarbanes,
chairman of the committee. In addition, one would find several new and
more extensive national security control authorities included in S. 149
that allow the President to restrict the export of technologies
critical to our national security.
Senator Sarbanes has covered that in his remarks. Contrary to what
the critics would have you believe, this bill is not a radical new
approach to export controls or a radical departure from the current
export control system. It updates and simplifies certain aspects of the
act that are outdated or unnecessary but keeps the basic structure of
the 1979 act.
There are reasons why this administration's national security experts
are unified in their support of S. 149. It builds upon the framework of
the current law, or the 1979 act, while modernizing, simplifying, and
streamlining the act and export control processes, again involving all
of the people who have been involved in it in the past in this
administration and the previous administration to come up with a
balanced proposal.
It requires a risk analysis of proposed exports and emphasizes
transparency and accountability to both the Congress and the exporter.
With transparency and accountability, we and the people trying to put
products out will have a better opportunity to follow the process and
stay within the law.
S. 149 embraces national security and foreign policy export controls
even going well beyond the 1979 act in several respects. For example,
the bill grants to the President special control authorities for cases
involving national security and international terrorism, as well as
international commitments made by the United States. Section 201(c)
allows controls to be imposed based on end user and end use of an item
if it would contribute to the proliferation of weapons of mass
destruction. Section 201(d) adds enhanced controls which allow the
President to impose controls on any item, including those items with
incorporated parts for national security purposes.
These two national security protections are not in current law and
could be used regardless of the foreign availability or mass market
status of the item. In addition, the bill retains the Presidential set-
aside authority in the case of foreign availability determination,
section 212, as well as unlimited set-aside authority for mass market
determination.
Those are two determinations. Foreign availability, of course, is if
the same product of the same quality is available from other countries
that can compete with our industry and do not have to follow our export
laws, under some very careful criteria that has been outlined in the
bill, then they have the right to export those properties. The
President has the right to override it.
Mass market, of course, has already been explained as those items you
can go to the store and buy at a relatively low price anywhere in the
country, which makes any regulation over their export very difficult. A
tourist coming to the country can go to the store, pick up the item,
put it in their suitcase, and take it home. If it is that widely
available, then it is very difficult to control.
The purpose of our bill, of course, is to build a higher fence around
fewer items and really concentrate on those things that can be
controlled and need to be controlled and put more effort and resources
into it. The general authorities contained throughout the bill are
entirely consistent with the current law. The bill requires concurrence
with the Secretary of Defense for identifying which items are to be
included on the control list for national security purposes.
There are three stages to this. There is a control list which gives
people an idea of what kinds of items need to be licensed. There is a
country tiering system. This is the one that evaluates countries in the
world. No countries are named specifically, but the President, in
cooperation with the experts that he has, would rank these people
through three tiers from bad to good, with a whole bunch in the middle,
which would all have different rights to access things on the control
list based on their sensitivity. Then, of course, if it has to be
licensed, it has to go through a licensing process.

So we are talking about concurrence of the Secretary of Defense for
identifying items to be included on the control list for national
security purposes, and this is consistent with current law.
The foreign policy export control authorities in title III are
exercised by the Secretary of Commerce in consultation with the
Secretary of State. This is also identical to current law. In addition,
the authority for the issuance of regulations is the same as the EAA of
1979.
The Banking Committee determined that a flexible but transparent
process was essential to keep the export control system from becoming
obsolete the day after it becomes law. S. 149 allows flexibility for
the administration in implementation of export controls because
technology is changing at a phenomenal rate. Business models are very
different from those employed a decade ago and, of course,
globalization is breaking down some of the traditional barriers to
trade and investment.
As a result, it is vital that Congress resist the temptation to lock
into a statute policy toward a specific country or a specific item.
Experience has shown that this is not an advisable course of action in
most cases. Flexibility is needed in the light of rapid technological
change. To illustrate this point, the Congress placed in fiscal year
1998 the National Defense Authorization Act provisions relating to
high-performance computers. Concerns were genuine about the export of
computers to potentially dangerous end users. However, to my knowledge,
never before had the Congress locked into statute a specific parameter
of control for an item.
In addition, the Congress initially required a 180-day waiting period
before the President could change the MTOPS control threshold, the
speed of the computers. As we all know, this was in the midst of some
of the most rapid advancements in computing power constraining the
administration's ability to keep pace with technological progressions.
In keeping with the need for flexibility, the Banking Committee
adopted an amendment offered by Senator Bennett that would repeal the
MTOPS 180-day waiting period. This does not mean computers would not be
controlled. Instead, it means the President may control computer
exports in a way that is more effective, more updated.
S. 149 emphasizes the need for strengthened multilateral export
control regimes. Multilateral controls are the most desirable because
they are the most effective. This is where we get our allies and our
friends, again any country that we can talk into it, to join us in the
control effort. As Senator Sarbanes pointed out, we have been
emphasizing to other countries they need to have a good export control
act, a good export licensing process. We are the ones who are behind
the curve on doing that.
The multilateral controls need to be more emphasized. We used to have
a process, a regime, called COCOM, and it was a mandatory group of our
allies that under agreement would eliminate

[[Page S9040]]

exports on which they agreed across the board.
After the fall of the Berlin Wall, COCOM disappeared. We have a
process called Wassenaar now, the Wassenaar Arrangement, which is more
of a voluntary effort. Section 501 of this act urges the President to
undertake efforts to strengthen or build upon multilateral export
control regimes.
I had the distinct pleasure of serving as a cochair with Senator
Bingaman and Congressman Cox and Congressman Berman on the
congressionally mandated Study Group on Enhancing Multilateral Export
Controls for U.S. National Security. The study group, with the
assistance of the Stimson Center, came to the conclusion that reform of
the export control system is vital to U.S. national security
objectives. Now we recommend that the U.S. should seek to improve the
Wassenaar Arrangement with the long-term goal of merging existing
multilateral regimes.
Additionally, the study group recommended that the U.S. should reform
its export control laws to build confidence and support among allies
and friends for improving multilateral export control regimes. The
provisions in S. 149 are consistent with these recommendations and
should help to guide the administration as it seeks to strengthen the
multilateral efforts and arrangements so we do not unnecessarily punish
U.S. firms with unilateral controls.
Finally, and importantly, the bill greatly enhances enforcement. It
substantially increases criminal and civil penalties for violators, and
I went through some of those differences between what happens with the
Executive order we are under now and the previous EAA act of 1979 and
the present one. It adds new resources for enforcement activities
including an additional $4.5 million for end-use checks.

It strengthens postshipment verifications, checking to see if the
product actually went where the product was supposed to go.
By targeting resources to exports involving the greatest risk rather
than focusing solely on computers--there are other things out there
that need to be checked on--this puts more money into the checking and
targets those things that create the greatest risk to the United
States.
The Banking Committee took a tough stand on violators of postshipment
verifications. We do not believe we should reward those entities that
deny postshipment verifications. Therefore, the bill requires the
Secretary to deny licenses to end users that do not allow postshipment
verification for a controlled item. That is pretty well nailed down
with the company involved, any subsidiaries of the company. I think it
keeps them from getting around any provision of that. It strengthens
postshipment verification, which is something that needed to be done.
In conclusion, I offer a couple of quotes from a general and a former
National Security Adviser, Brent Scowcroft. On June 8, 2001, when the
Center for Strategic and International Studies publicly released its
report on computer exports and national security in the global era,
General Scowcroft said that some seem chained to the same policies that
are largely not useful, and that there is a natural bureaucratic
tendency to cling to the current rules.
As we consider S. 149, I urge my colleagues to be mindful of General
Scowcroft's comment and do the right thing and support passage of the
Export Administration Act of 2001. Export control issues have been
intensely reviewed and all the results of the studies come to the same
conclusion. It is best for Congress to reauthorize the EAA now. The
Senate should act now and pass this bill.
I express thanks to the chairman, Senator Sarbanes, and Senator
Gramm, to my coworker on this, Senator Johnson, and the new chairman
and ranking member of the Subcommittee on International Trade and
Finance, Senators Bayh and Hagel who have done a great job.
I would be remiss if I did not mention some of the staff people:
Katherine McGuire; my legislative director, Amy Dunathan; the Banking
Committee staff, Joel Oswald, who used to be on my staff. There was a
3-year time and there has been some transition. Paul Nash, Naomi
Campbell, and Marty Gruenberg have done a tremendous job working around
the clock in putting together this bill. They have been good at
coordinating our efforts so we could get together with everybody.
As I mentioned, we are still willing to talk to anybody about any of
the provisions but think that a bill has been put in place now that has
some balance to it. Of course, 16 changes we made on behalf of the
President incorporated a number of issues that some of the security
chairmen had been concerned about. We think we have a bill that should
and can be passed.
I yield the floor.
The PRESIDING OFFICER (Mr. Corzine). The Senator from South Dakota.
Mr. JOHNSON. Mr. President, I rise today in support of S. 149, the
Export Administration Act of 2001. It is difficult to overstate the
urgency of reauthorizing EAA, which expired on August 20. We are now
operating under the International Emergency Economic Powers Act, an
improvised export control measure that has weak enforcement powers and
that has been challenged in the courts. President Bush and his national
security team have repeatedly urged Congress to pass S. 149, and I rise
today to urge my colleagues to do just that.
S. 149 is both a national security and a trade bill. It is one of the
best examples that I have seen of a law that accounts for the vast
geopolitical and commercial changes of the past decade and at the same
time provides flexibility for the continued changes we must expect over
the coming decades.
The Export Administration Act has seen no major revisions since 1985.
Since that time, the Soviet Union has collapsed, the cold war has ended
and a new world order, including new threats, have emerged. At the time
the political landscape has changed dramatically, so too has the
commercial landscape. A global marketplace for goods, services and
technology has developed, and once unimaginable technological
advancements are now available on a widespread basis. The high tech
sector is largely responsible for the remarkable change in our access
to computers and the Internet, and we must take great care not to
jeopardize that economic vitality.
I have spent the last few years working on EAA with my colleagues
across the aisle. When we started this effort, Senator Enzi and I were,
respectively, the ranking member and chairman of the International
Trade and Finance Subcommittee of the Banking Committee. From the
beginning, we have had the full support of Chairman Sarbanes and
Senator Gramm, and I am hard pressed to recall a situation in my 15
years in Congress where a bipartisan team was completely cohesive.
There is a reason why our team of unlikely bedfellows has held together
so well, and the reason is that S. 149 is a very good bill.
I believe in this bill. I believe it will help our nation. It will
strengthen our national security. It will create an environment that
promotes further technological advancement and fosters economic
vitality. And it provides a structure that can grow and change into the
future.
S. 149 creates a new framework for export controls on dual-use items.
By targeting enforcement efforts on problem areas, this more focused
approach is just good, common sense. S. 149 will make exporting some
items easier, and make exporting other items much more difficult. As
Representative Cox has stated, ``We ought not to have export controls
to pretend to make ourselves safe as a country. We ought to have export
controls that work.'' At the same time, S. 149 will impose real costs
and penalties on those who violate the law. Some violators will serve
prison terms along with their hefty fines.
While no one has more respect than I do for the deliberative process
that allows the Senate to create thoughtful and responsible laws, I am
struck by the irony of today's debate. I understand that several of my
distinguished colleagues will object to reauthorization of EAA on the
grounds that S. 149 will somehow compromise our national security. They
will urge us to delay passage of EAA in the interest of our national
security. They will demand further study before we move forward

[[Page S9041]]

with S. 149, which has nearly unanimous support of both industry and
government, including the national security community. I look forward
to hearing from those colleagues because I am having some difficulty
understanding how delaying passage of EAA does anything but harm our
nation and our national security. I must remind my colleagues that EAA
has expired. We are operating under IEEPA and will continue to do so
until we enact S. 149. This is the real national security threat.
The argument that S. 149 compromises our national security is, I
believe, based on a false premise. That premise is that national
security and a strong export economy are incompatible. In fact, our
national security depends on a strong export economy and America's
continued leadership in the high tech field. I agree with the way
Senator Gramm framed the question last year:

Is our security tied to our being the leader in technology,
or is it tied to our ability to hold onto the technology we
have and not share it with anybody?

Clearly, our security is tied to being the leader in technology, and
security experts confirm this point.

As Dr. Donald A. Hicks, former Under Secretary of Defense for
Research & Engineering and chairman of the Defense Science Board Task
Force on Globalization and Security testified before the Banking
Committee on February 14, 2001:

Today, the ``U.S. defense industrial base'' no longer
exists in its Cold War form . . . DoD is relying increasingly
on the U.S. commercial advanced technology sector to push the
technological envelope and enable the Department to ``run
faster'' than its competitors. DoD is not a large enough
customer, however, to keep the U.S. high-tech sector vibrant.
Exports are now the key to growth and good health. . . . If
U.S. high-tech exports are restricted in any significant
manner, it could well have a stifling effect on the U.S.
military's rate of technological advancement.

Without a vibrant high technology sector, our national security will
suffer. And without the ability to export dual-use items, the high tech
sector will simply not be able to support our national security needs.
We must not lose sight of this critical point.
This is not to say that we should never restrict exports of our
goods, services and technologies. On the contrary. In fact, S. 149 is
largely about establishing the most effective mechanism for restricting
the export of dual-use items that pose a potential national security or
foreign policy threat. Based on recommendations from national security
experts, including the Cox Committee and the WMD Commission, S. 149
takes a risk-based approach to export control. This approach is
sensible, and allows resources to be used where they are most
effective.
More specifically, S. 149 targets export controls on those items and
destinations that the U.S. determines to pose the greatest risk to
national security and foreign policy, while removing ineffective
controls that serve as unnecessary barriers to trade. This so-called
``tiering'' approach is an ingenious solution to the current situation.
Today, 99.4 percent of all export applications are approved. This leads
me to believe that the current system is not making effective use of
our export control resources.
My colleagues on the Banking Committee determined that the U.S.
export control regime should focus on controlling those items that pose
the greatest risk to national security. A useful way of thinking about
the right approach was voiced by Dr. Hicks before our committee. He
said the U.S. ``must put up higher walls around a much smaller group of
capabilities and technologies.''
We on the Banking Committee identified two categories of exports
whose control does little to enhance our national security, and the
control of which could in fact undermine our security interests by
endangering America's technology leadership. We determined that it is
best to heed the wise counsel of former Secretary of Defense and
National Security Advisor Frank Carlucci that ``we should do only that
which has an effect, not that which simply makes us feel good. . . .''
Based on this principle, we concluded that there is little national
security benefit derived from controlling U.S. items if substantially
identical items can be acquired through another source or if such items
are produced and available for sale in large volume to multiple
purchasers. For these reasons, we created the so-called ``foreign
available'' and ``mass market'' exceptions to export controls.
Specifically, the foreign available exception acknowledges that
unilateral control on items that are readily available from foreign
sources are ineffective, and in fact may be counterproductive. The
Defense Science Board Task Force on Globalization and Security noted in
its final report that:

Shutting U.S. companies out of markets served instead by
foreign firms could inhibit the competitiveness of the U.S.
commercial advanced technology and defense sectors upon which
U.S. economic security and military-technical advantage
depend.

Stated another way, Mr. John Douglass, president of the Aerospace
Industries Association, noted before our committee that such unilateral
measures punish the exporter rather than the importer.
The ``mass market'' exception likewise acknowledges the futility of
trying to control items that are virtually uncontrollable by the nature
of their wide distribution channels, large volumes, and general
purposes.
While S. 149 strives to be as targeted as possible, it also provides
appropriate flexibility by recognizing that the President should have
the ability to impose controls in certain critical circumstances,
including cases involving national security, international obligations,
and international terrorism. At the same time, the bill promotes
accountability, discipline and transparency in the decision-making
process through review and other procedures.
Some have criticized S. 149 for reducing the power of the President
in a way that I believe is, frankly, misleading. In fact, S. 149 grants
the President unprecedented authority to set aside foreign availability
or mass market determinations. President Bush and his national security
team themselves believe that S. 149 as reported gives the President
full and sufficient authority to maintain controls when it is in
America's national security or foreign policy interest.
One other aspect of the bill worthy of note involves how risk
management techniques can be used to target our export control
resources. First, the bill's system builds in controls for
technological and political change by imposing a risk analysis
requirement and continual review of controlled items. In addition, S.
149 establishes a country tiering system that assigns items and
countries to tiers according to their potential threat to U.S. national
security. This flexibility to classify risk by both destination and
product will be highly effective in targeting our efforts. In addition,
a new Office of Technical Evaluation would be established in the
Department of Commerce to assess, evaluate and monitor technological
and other developments. And finally, S. 149 places a great emphasis on
post-shipment verification resources of exports posing the greatest
risk to U.S. national security.
As a final matter, I would like to discuss the role of penalties in
S. 149. Under the 1979 act, and especially under IEEPA, which we
currently operate under, penalties are modest from any perspective. In
fact, penalties are modest enough that businesses intent on violating
our export laws simply factor the penalties in as a cost of doing
business. That is how inadequate, how modest, how unsatifactory the
current regime, both under the old 1949 act and under IEEPA are. A
company that willfully violates export laws today is liable for a mere
$50,000 per violation--chicken feed. Under S. 149, that company would
pay a minimum penalty of $5 million per violation, and could owe
significantly more. Individuals who willfully violate the law will owe
a minimum penalty of $1 million and could serve up to a 10-year prison
sentence. Civil penalties for any violation of export law rise from
$10,000 per violation under IEEPA to $500,000 per violation under S.
149.
My distinguished colleagues, reauthorization of EAA is critical to
our nation's interests.
We are now operating under a grossly inadequate emergency control
system, IEEPA, and that situation will not change until we enact S.
149. Our situation is urgent. Under current law, exporters face anemic
penalties for violations, and in fact the entire structure

[[Page S9042]]

is vulnerable to court challenge. Until we pass EAA, we do indeed face
a national security crisis.
In addition, we must not lose sight of the impact our export control
system on dual-use items could have on our high tech sector. The
American economy has achieved unprecedented growth largely as a result
of high tech innovations. In addition to creating wealth for our
citizens, new technologies have enhanced our national security by
giving us a competitive edge in development of our own security
systems. The bill beefore us does nothing to compromise our security.
On the contrary, S. 149 takes a common sense approach to export
controls that significantly enhances our national security and economic
vitality.
S. 149 is bipartisan, and has the strong support of the
administration, the national security community, and business
organizations.
This morning, our chairman, Chairman Sarbanes, submitted for the
Record the most recent letter expressing support for the passage of
this bill from President Bush, Secretary of Defense Rumsfeld, Secretary
of State Powell, Secretary of Commerce Evans, and National Security
Adviser Condoleezza Rice previously indicated her support for this
bill--not the concept but this bill.
I thank many for the extraordinary effort they have given to the
creation of this bipartisan legislation. This kind of legislation has
the support of Republicans and Democrats. It passed the Senate Banking
Committee on a vote of 19-1. It has the support of the administration
as well as the Senate.
A lot of significant work ought to be credited to Marty Gruenberg of
Senator Sarbanes' staff; Amy Dunathan of Senator Gramm's staff;
Katherine McGuire of Senator Enzi's staff; Joel Oswald, Senator Enzi's
former Banking Committee staff; Paul Nash, my former Banking Committee
staffer; Naomi Campbell of my staff; and certainly Senator Bayh of
Indiana and Senator Hagel of Nebraska have made significant
contributions as well to the furthering of this legislation.
This legislation has been reviewed by the Bush administration. They
state in their letters there is intensive review of S. 149. They
express their strong support. I express my strong support. It is my
hope that this debate will proceed in an expedited fashion and that we
will very quickly pass this legislation by the overwhelming bipartisan
margin it deserves, and that it will go to the President who asked that
it be presented to him for his signature.
I yield the floor.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. THOMPSON. Mr. President, I would like to address S. 149. I
believe my colleagues who have spoken are correct in that they have
substantial support for this legislation. I do not doubt they have a
majority of the Democrats and a majority of the Republicans. I do not
doubt they have the support of the administration. My understanding was
that the President made a campaign statement or commitment with regard
to this issue during the last campaign. President Clinton made the same
commitment during his campaign for President.
The President had a group of high-tech executives to the White House,
just as President Clinton did, to promote this sort of legislation. My
colleagues are correct in that the President now supports essentially a
continuation of the Clinton policy with regard to the liberalization or
loosening of our export controls law. I disagreed with it when
President Clinton was President. I disagree with it now.
While we need an Export Administration Act and while we need to take
into consideration commercial circumstances and changes in the world, I
think the balance between our national security interests and our
commerce interests is not there.
This is not really a bill, as I think about it, that is supposed to
balance as such. It is a bill that has very specific purposes. It is
consistent with our export administration process that we have had for
decades in this country. It is based on the notion that there are some
items we need to try to keep out of the hands of some people for as
long as we can. The most ardent proponents of liberalized trade
restrictions, of course, would acknowledge that. We have the so-called
rogue nations, and so forth, to which, we all acknowledge, we should
not let any of this high-tech stuff get through. If we were really in a
world where the technology genie were totally out of the bottle, I
suppose we would not bother ever making the distinctions between really
bad countries and pretty bad countries and friends because it would be
out there for all to have. This is based on the proposition that is not
the case, that there are some things controllable and that we should
try to keep these things out of the hands of some entities and some
countries for as long as we can.

When you look at the purpose of the act we are dealing with today, I
think it correctly states that the purpose is about national security
export controls, it is not about enhancing exports. In fact, you might
say it is kind of anti-export. I think the norm is and should be that
this country is for free trade. I certainly have tried to be one of the
leaders in that area. I think the President ought to have trade
promotion authority. I think we need to do more in that area. I think
it is the basis for a large segment of our economic security and
prosperity in this country.
We had a debate with regard to a section of NAFTA recently. I think
most of us are very committed to the process. But the fact that we have
an export administration process and an Export Administration Act
acknowledges that, be that as it may, there are some things that bring
in extremely serious national security considerations.
I refer to S. 149. It says the purposes of this act are to restrict
the export of items that would contribute to the military potential of
countries so as to prove detrimental to the national security of the
United States. It further says the purpose is to stem the proliferation
of weapons of mass destruction. It doesn't really talk about a balance
of those grave and primary considerations that we all must acknowledge
are, more than anything else, against some commercial considerations.
Here we are talking about I think our total exports to these control
countries, which are about 3 percent of our exports. So we are talking
about a small fraction--3 percent of our exports as balanced against
what I just described in the act.
I am not for some kind of equipoise, or some kind of a balance, when
it comes to these things. We shouldn't control things that are
uncontrollable. We shouldn't be foolish about it. But we ought to have
a very careful process that is not weighted or prejudiced in any way by
those whose interest it is to get things out the door, whose interest
is to export, whose interest is to come to the White House and come to
the Congress and lobby on behalf of more and more exports for economic
reasons. You don't have the average man on the street with a lobbying
team coming up here saying be very, very careful about how you
liberalize our export control laws because we are concerned about what
we read about what is going on in the world in terms of proliferation.
The world has changed a lot. We should look at these matters from
time to time to see whether or not we are operating in the right
century. We don't have the old Soviet Union anymore. We don't have the
threat that posed. But in its place are several new threats which, in
many cases, are more dangerous than the ones we had.
We know, for example, that with the development of technology,
weapons of mass destruction can now kill many, many more people than
they otherwise could. There are ways of delivering weapons of mass
destruction that did not exist a short time ago to countries such as
the United States.
We have biological weapons that stagger the imagination with the
description of the devastation that just a small amount of it can
wreak, again, accompanying that with the means to deliver them, the
means that did not exist a short time ago. That is the other side of
the technological coin, the technology that has helped us in so many
ways and has made the world a better place. That is the other side of
that coin. It is real.
Of course, the world has changed in another way. My colleagues are
correct when they say that more of this technology is available around
the world. In some cases, to some extent perhaps, there is nothing we
can do about it. But in some cases, to some extent, there is something
we can do about it.

[[Page S9043]]

Therein lies what we are trying to deal with here with regard to our
export administration policy; that is, being very careful in making
sure, with regard to the things we can have some control over, even if
it is just to slow down the bad actors that wish our country and our
national security ill, that it is a good thing to do. If we are not
willing and committed to doing that, regardless of what it does to
trade in a certain segment of exports, then we should not have any
export policy at all; we should not have any export restrictions at
all. I do not think we are there. I do not think that anyone would
advocate that.
But it concerns me to hear that my colleagues think by passing this
bill we are in some way enhancing our security. We are not. You can
make a case that it is out of balance the other way, that we are trying
to control things that are uncontrollable, and it is hurting our
exports to the extent we need a new balance. I disagree with that
strongly, but you can make that case. But I do not think you can have
your cake and eat it, too.
I do not think you can liberalize trade so people do not have to have
licenses anymore for some of this dangerous stuff while at the same
time claiming you are enhancing national security. It is just not the
case. And it is not as if I have the answer as to where to draw the
line. It is not as if my colleagues have the answer as to where to draw
the line. Reasonable export controls that do not do any more harm than
is necessary but protect us to the extent possible: It is very
difficult to draw that line.
What is important is that we have a process because that line has to
be drawn every day. There are thousands of applications--15,000 to
20,000 applications--for exports on an annual basis. We must have a
very carefully thought-out process where responsible people, in all
objectivity, with requisite expertise, have an opportunity to pass on
these things and make those judgments. That is what this is all about:
whether or not we are setting up the right responsible framework, not
to be so irresponsible that we shut things down, but, on the other
hand, that we recognize that the world is a much more dangerous place,
that countries have the ability to harm us and harm our allies, which
would directly involve us immediately, more so than ever before, and
that we must do what is reasonably necessary to keep these things out
of the hands--as the world's leading manufacturer in the creative
genius behind most of the advanced technology that is going on in the
world in so many areas now, that we have a stewardship, we have a
responsibility to use that in a proper and correct way.

As I said, it may be difficult to draw that line, but we must have a
procedure that errs, if it is to err, on the side of national security.
Because even the bill, as drafted, points out that this is the purpose
of the Export Administration Act. This is the fundamental purpose of an
Export Administration Act.
So does this act take into consideration sufficiently the matters of
national security? And does it take into consideration sufficiently the
matters of commerce and exports?
If we are going to talk about balance, let's talk for a minute about
the side where we have our concern, the things that we are trying to
address. In many different ways this is just a part of an overall
policy of recognizing we live in a more dangerous world. But while
realizing that genie is out of the bottle, we are trying to--through
our policies, through our diplomacy, and through our policies--mitigate
somewhat the danger that we see.
As I have stated, because of the proliferation of weapons of mass
destruction, the world is a more dangerous place in many respects than
ever before. Numerous reports have confirmed that a ballistic missile
strike on the United States is not a distant but an imminent threat.
The Rumsfeld report, published in July of 1998, concluded that
emerging ballistic missile powers such as Iran and North Korea could
strike the United States within 5 years of deciding to acquire missile
capability.
Shortly after that, North Korea surprised our intelligence agencies
by successfully launching a three-stage rocket over Japan, essentially
confirming the Rumsfeld conclusions. Certainly they, along with Iraq,
Syria, Libya, and others, can strike our allies and our troops
stationed abroad today.
In September of 1999, the national intelligence estimate of the
ballistic missile threat concluded that the United States would ``most
likely'' face ICBM threats from Russia, China, North Korea, and
possibly from Iran and Iraq over the next 15 years, and that North
Korea could deliver a light payload sufficient for biological or
chemical weapons to the United States right now. It has also said that
some rogue states may have some ICBMs much sooner than previously
thought, and those missiles would be more sophisticated and dangerous
than previously estimated.
The classified briefings are even more disconcerting. Perhaps the
most alarming report from these commissions and intelligence sources is
that, despite the urgency of this problem, the United States' lax
export controls are contributing to the proliferation of weapons of
mass destruction by global bad actors--our own export policies. The Cox
commission concluded that U.S. export control policies have
facilitated, rather than impeded, China's ability to acquire military-
useful technology. The Rumsfeld commission has said the U.S. export
control policies make it a major, albeit unintentional, contributor to
the proliferation of ballistic missiles and associated weapons of mass
destruction.
There you have it. I do not know how it can be stated much plainer
than that and with more authority than that; that we have a serious
problem on our hands and that our own policies are contributing to that
problem.
Nowhere is it more clear than in the case of China, which is really
the country that stands to benefit from changes to our export control
laws the most, and, ironically, is also the country of greatest
proliferation concern.
China was described by the Rumsfeld commission as a significant
proliferator of ballistic missiles, weapons of mass destruction, and
enabling technologies. The PRC has sold missiles to Pakistan, missile
parts to Libya, cruise missiles to Iran, and shared sensitive
technologies with North Korea. All these actions have occurred despite
the PRC's public assurances and commitments to several international
proliferation regimes.
Within the last few days, this Government sanctioned a Chinese
company again for transferring missile components to Pakistan. Even
more disturbing is that many of the items that China is proliferating
to rogue nations around the world may have been legally acquired from
the United States. The Cox commission notes that China has deliberately
taken advantage of our lax export enforcement policies to further its
proliferation efforts.
China has illegally diverted or misused many sensitive dual-use
technologies or items to further their military modernization. In
January of 2000, the licensing threshold for high-performance computers
was 2,000 MTOPS. In January of 2001, the licensing threshold was 75,000
MTOPS, a fortyfold increase in a 12-month period.
(Mr. NELSON of Nebraska assumed the chair.)
Mr. THOMPSON. As the Cox committee points out, no threat assessment
was ever conducted. As we have seen the rapid decontrol of
supercomputers in this country to countries such as China, under the
notion that, well, MTOP is not a valid criteria anymore and they will
get it from somebody else anyway, the defense authorization bill in
1998 required that if we are going to do this rapid decontrol of our
computers, that we do a national security assessment as a part of that,
because the real bottom line is, we don't know what the effects of this
rapid decontrol are. We don't know what the significance to national
security is.
We operated for a long time under the notion that it was very
important--and the Cox committee will bear this out--to try to keep the
supercomputers at a certain level out of the hands of Russia and China
and countries such as that because they use them for nuclear
simulation, their stockpile enhancement programs, things of that
nature. We have totally changed our view about that based on no study,
based on anecdotal comments by people who come and testify before these
committees who have a direct or indirect interest in companies or
represent companies that are interested in

[[Page S9044]]

exporting in many cases--not all of them, but many--time after time. We
have not really had any in-depth study or analysis by this Government
as to what the effect of this substantial change in our policy is to
our national security.
I am not saying I know the answer. I rest assured that no one else,
even in this body, has the answer. It is extremely complex, but it is
extremely important. I know of no other change of that importance in
that short period of time that has undergone less assessment. That is
one of the things we should address.
The PRC diverted and used these American supercomputers to improve
their nuclear weapons. The Cox commission notes that in 1992, U.S.
satellite manufacturers transferred missile design information to the
PRC without obtaining the legally required license, and China used that
information to improve the reliability of its rockets.
We are all familiar with the Hughes-Loral problem. I noticed the
report in the Wall Street Journal the other day that Loral apparently
is about to cut a deal with the State Department and Justice to pay a
fine and still be allowed to go ahead and launch Chinese rockets in the
future, going back to their business. I will be interested in comparing
the amount of that civil fine with the profit they make over the
subsequent launches that they have in their deals with the Chinese.
In 1993, China diverted six high-precision machine tools it obtained
from McDonnell-Douglas and used them to manufacture military aircraft
and cruise missile components. Just months ago we learned that Chinese
technicians were installing fiber optic cable for Iraqi air defense in
violation of U.N. sanctions. This fiber optic system is based on U.S.
technology sold to China in the mid-1990s.
According to published reports, we have discovered twice that
companies in China were assisting Saddam Hussein with regard to his
antiaircraft capability, which is what this fiber optic cable is used
for, in order to help him shoot down our aircraft in the no-fly zone.
There have been over 300 incidents where Saddam's troops have shot at
our aircraft over that no-fly zone. I hope and pray they never hit one.
I hope and pray that if they do, we don't discover that the
technology used to shoot that airplane down did not originally emanate
from the United States of America. I would not want to be the one to
try to tell the mother of that pilot who was shot down: Ma'am, we are
sorry about your son, but they probably could have gotten this ability
from someone else if we hadn't given it to them.

The Cox commission informs us that China pursues a deliberate policy
of using commercial contacts to advance its efforts to obtain U.S.
military technology. The commission states that China uses access to
its markets to induce U.S. businesses to provide military-related
technology and to lobby on behalf of liberalized export standards, a
policy that has had significant success.
We see from the Rumsfeld report, the Deutch commission, the biennial
CIA reports, the nature of this threat and the fact that it is based on
technology, technology in some cases where we are certainly the leader.
We know that a lot of this proliferation activity from these rogue
nations, a lot of their assistance comes from China. We claim we need a
missile defense system. I believe we do because of the threats these
rogue nations present to us. They, in turn, are getting their
capability in significant part from countries such as China and Russia.
We simultaneously, with all of that liberalizing of our export laws,
make it easier to sell high tech items and equipment to China and
Russia. That does not make sense.
Where is the balance? What do we balance that threat against? What is
the concern--that our export licensing procedure is too onerous? It is
not like we are stopping these exports. As was said, 99 percent of them
are approved. It is just the ones that are disapproved that are really
important, important to our national security. It is not like we are
trying to stop a great many exports because we are not. We are trying
to have a procedure where we are more likely to not let something
important slip through the cracks.
Let's be clear about how much business is at stake. The total value
of goods subject to export controls in 1998 was approximately $20
billion, less than 3 percent of U.S. exports. The fact that an item is
controlled does not mean that it can't be exported. It only means that
it has to go through a review process. The overwhelming majority of
them are approved.
But what this legislation does is take certain categories,
incorporated parts, mass marketing, foreign availability, and says,
with regard to those items, with regard to those matters, if someone
within the bowels of the Department of Commerce essentially decides
that they fit into these categories, you don't have to have a license
at all. You don't have to go through that process. It decontrols those
matters and takes them outside of the regulatory process altogether.
They say the President can stop it. We will talk about that in a
minute.
First of all, let's understand what we are doing here. In the past
there was no such animal as the one I just described. In the past,
foreign availability was legitimate as a consideration, and it ought to
be. When the licensers looked at the matter, if there was foreign
availability, that was something they could take into consideration in
issuing the license. Now it is taken out of their hands. If someone in
commerce, their technical evaluation team, decides that there is
foreign availability, it doesn't even come through the process anymore.
Mass marketing is a whole new concept. Mass marketing was not even
used, that concept was not even used in prior administrations.
Now I am sad to say that the embedded component was, but it makes
less sense of all. If an item is controlled and deemed to be
significant from a potential national security purpose, under this bill
if it constitutes 25 percent or less of the item that it is
incorporated in, then it is decontrolled.
So if you have a controlled item and it is put into an item that is
bigger and worth more, that is not controlled, that makes the item that
is controlled decontrolled. Of course, all an importer has to do, in
some cases, is to buy the larger item and take out the item that
perhaps he wants, which is the embedded part.
If it is significant from a national security standpoint before it
goes into the larger item, it is significant from a national security
standpoint after it is put into it. What does money have to do with it?
What is the fact that it is or is not 25 percent of the price of a
larger item? Of what significance is that? Especially from a national
security standpoint. That makes no sense whatsoever.
So when we talk about building higher walls around fewer things,
point out the higher walls to me. When we talk about making it more
difficult to export some things, making it easier for some and harder
for others, somebody point out to me the things that this bill makes it
more difficult to export.
This legislation provides broad and sometimes exclusive authority to
the Secretary of Commerce on important procedural issues such as
commodity classifications, license and dispute referrals, license
exemptions, and development of export administration regulations.
I have a lot of faith in our new Secretary of Commerce. I think he is
a fine man, excellent choice, and is doing a great job. But the fact
remains that the mission of the Department of Commerce is to promote
exports. We used to criticize Secretary Ron Brown for his export
policies and getting items changed from one list to another to make it
easier to export, and things of that nature. The Commerce Department
simply doesn't have the personnel and expertise to protect national
security. It should not have to. That is not their job. Somehow we have
set it up this way.
We are letting the tail wag the dog. If national security concerns
ought to be given adequate consideration in an export decision, the
Departments of State and Defense must be given greater authority and a
greater role in this process. This legislation doesn't do that. Really,
to the contrary, it increases the authority of the Department of
Commerce.
Let me go over a few things here, and keep in mind, first of all, the
purposes of this bill, the stated purposes of this bill. I didn't hear
it discussed much

[[Page S9045]]

when we were talking about the details of it. I think it is probably
the most important part:

To restrict the export of items that would contribute to
the military potential of countries so as to prove
detrimental to the national security of the United States.

And also:

To stem the proliferation of weapons of mass destruction. .
. .

That is the stated purpose. Whose job is it to do that? Well, we are
going to give it to the guy who is in charge of commercial activities.
Look at some of these areas. The Secretaries of Commerce and Defense
must concur in order to add items to the control list. While this is an
improvement over the previous draft of S. 149, which left sole
discretion to the Department of Commerce, S. 149 still gives the
Department of Commerce a veto over the Department of Defense if the
Secretary of Defense believes an item should be controlled on the
national security control list.
Secondly, on commodity classification, the Secretary of Commerce has
sole discretion over classifying items when exporters make commodity
classification requests. These classifications determine whether items
will require license or not and are particularly critical for new
technologies. Commerce must notify Defense, but it is not required to
solicit any input.
What about the interagency dispute resolution process? Well, S. 149
gives the Secretary of Commerce sole authority to select a chairperson
of, and determine procedures for, the interagency committee to review
license applications. The chairperson considers the positions of all
the reviewing agencies but then makes the final decision on the license
application. The only role of the Department of Defense is to provide a
position, and additional levels of review are resolved by a majority
vote.
What about foreign availability and mass marketing? The Secretary of
Commerce has sole authority to determine whether items are foreign
available or mass marketed. He must consult with other agencies,
including the Department of Defense. Since items determined to be
foreign available and mass marketed are automatically removed from the
national control list and decontrolled, this authority to Commerce
essentially creates a loophole around the Department of Defense veto
over removing items from the national security control list.
What about issuing regulations? The Department of Commerce and the
President have the authority to issue regulations. These regulations
must be submitted for review to any department or agency the President
considers appropriate, but the legislation explicitly notes that the
requirement to submit the regulations for review doesn't require the
concurrence or approval of any reviewing department.
Finally, the catch-all provision in S. 149 provides that unless
otherwise reserved to the President or department or agency in the
United States, all power, authority, and discretion conferred by this
act shall be exercised by the Secretary of Commerce.
Mr. President, that is substantial authority and control by the
Office of the Secretary of Commerce. Regarding matters of national
security, they should not have to bear that much responsibility. So now
in the act here, we are not really building higher walls around
anything. We are not trying to come up with a procedure to determine
the national security implications of what we are about to do. We
recognize that there is more dangerous technology out there than ever
before, and we are providing it to people who are misusing it, but we
want to continue to do that at a more efficient rate.
With regard to the increased penalties on exporters, I think by and
large that is an improvement. But the act totally decontrols large
segments of exports. So if you are decontrolled, how are you going to
get in trouble? If I were an exporter, I would make that tradeoff, too.
Give me a penalty on something that there is no way I could ever be
accused of violating if it falls under one of these items that don't
even require a license. How do you violate something like that? We are
going to make a higher, more onerous penalty on you for violating this,
but we are going to amend the law so it doesn't apply to you.
The Presidential override: It is true that there is a section here
that, as the proponents indicate, really does override both the
incorporated parts provision and the mass marketing and foreign
availability provisions. In other words, the President can step in
regardless of any of those provisions. To me, it is inconsistent with
and renders a nullity many of the provisions in the foreign
availability section, for example, because that section says the
President must jump through all these hoops and go negotiate with all
these countries and report back to Congress.
In other words, Mr. President, if you are going to step in on behalf
of national security, we are going to make it awfully tough on you; you
have to jump through all these hoops. They are saying: Enhanced control
provisions, no, no; the President, if he wants to use this section,
does not have to do all that; in other words, if there is a significant
threat, not just a threat to national security but a significant threat
to national security.
I am not sure how all that operates. I think it bears more studying.
I think we are going to have to look at those sections together. If it
does what is suggested, I still think we need to ask ourselves: Do we
want to create whole new categories that are essentially determined by
the Secretary of Commerce to decontrol and then say to our President:
Catch me if you can?
If we have made a mistake out of these thousands of applications we
get every year--another section says the President cannot delegate this
authority, so let's make it as tough on him as we can; he does not have
many other responsibilities; let's create these whole new avenues of
decontrol and then say to the President: You have the authority if you
can come up with something.
I do not know how much longer he is going to sit over there with a
skeletal staff in some of these departments. Some people are estimating
it will be 14 months before he gets his full team together, as far as
his government is concerned.
Assuming the President does have the authority ultimately to step in,
is that a wise idea? We are not just giving him new authority to step
in with regard to an old situation. We are creating a whole new
situation, a much more decontrolled situation, and giving him the
invitation without delegating any authority. If he personally wants to
step into one of these situations, he has the authority to do that. He
did not need this authority before because we did not have a concept
such as foreign availability except as something to be considered. We
did not have a concept of decontrol based on foreign availability or
mass marketing up until this bill.
Under those sections, if a company can persuade the Department of
Commerce that it ought to be decontrolled, then it is decontrolled;
there is no license requirement. We cannot even keep up with the number
of computers we are sending to China or anywhere else. We do not even
have a list to make some cumulative effect assessment if we wanted to.
The business community ought to have their say. I get the top
rankings from the businesses and small businesses. I do pretty good by
them. But I must say, when it comes to matters of export controls based
on national security in a world where we are being threatened as we
speak by weapons of mass destruction, it irritates me somewhat when I
see in this export bill ``the Secretary shall permit the widest
possible participation by the business community on the export control
advisory committees.''
This bill allows the Secretary to appoint advisory committees to
advise the Secretary on these matters--quite objectively, I am sure. It
also says the Secretary has to disclose to them information consistent
with national security and intelligence sources and methods pertaining
to the reasons for the export controls which are in effect or
contemplated.
If you want to impose any export controls for national security
purposes, you have to go to these business entities and explain what
you are doing and why you are doing it. Not only is that unnecessary, I
am afraid it gives an indication or it belies the purposes of this act.

This bill is going to pass, and we all know that. The forces behind
it are strong. When you have the administration and probably the
majority of both

[[Page S9046]]

parties supporting it, that is a pretty fair indicator. I understand
that. But for some time now, starting back a couple of years ago, the
chairman of the Intelligence Committee, the chairman of the Foreign
Relations Committee, the chairman of the Armed Services Committee, the
chairman of the Governmental Affairs Committee, and the chairman of the
Commerce Committee, along with Senator Kyl, who is an expert in these
matters, have had grave concerns about the balance we are striking;
that we are continuing a policy based upon the tremendous pressures
that are being brought to bear and based on campaign commitments that
were made. It is not in the best long-term interests of this Nation.
I do not think any of us can say for sure to what extent it is not or
in what way our security might be harmed, but we are concerned that the
process is not properly weighted. We are concerned that if we are going
to err, we err on the part of national security; that when we are
willing to engage in such debate to take on our European allies, to
take on Russia and China all for the sake of a national missile defense
system, based on the concept of tremendous threats this country faces--
and I believe in the system--we must move forward on it because I
believe in the threats, but we are refusing to acknowledge and
recognize what is right before us and that we are helping to create the
threat.
When we are exporting high-tech items to countries that have already
shown that they will take them legally or illegally, that they will
divert them for military purposes, that they will send them to rogue
nations, and we come up with a concept to make it even easier because
it takes 40 days to go through a licensing process--we do not want our
companies to have to wait 40 days for people take an adequate look at
this before they do that--I do not think we have our values in the
right place; I do not think we are looking at what is right before us.
I am not suggesting we not reauthorize the Export Administration Act.
I am not suggesting we build a wall around our technology. We know we
cannot do that. But we must have a procedure that is not dominated by
commercial interests, either outside Government or inside Government.
And those in the Department of Commerce who are rightfully concerned
about our commercial interests, that is their job. It cannot be
dominated that way. We have to have a fair shot. All this is weighted
too heavily on the side of people who have vested interests in foreign
commercial relationships.
We have a $100 billion trade deficit with China today. I just got
back from China with the distinguished chairman of the Banking
Committee. The biggest meeting we had was with the American Chamber of
Commerce in Shanghai. We have tremendous foreign investment over there.
That is fine. That is well and good. But surely to goodness we are not
going to let that cause us, when we are considering matters of this
nature, to come down too heavily on making the process more efficient
for exports of potentially sensitive materials.
Again, we are not even talking about stopping exports. What we are
talking about is a procedure where, more likely than not, we can stop
from making one substantial mistake. We should not back end load this
process and put all that responsibility on the President, if he or his
people are fortunate enough to catch something on which those who, with
good intentions, just simply do not have the expertise to make a call.
That is what we are concerned about. So I hope in the rush to get
this bill approved and passed, which will eventually happen, we will
have an opportunity to get some fair considerations for some
amendments. I would overhaul this whole bill if it were left up to me,
but it is not, and I do not have the votes. I am not going to stand in
the way any longer. We have held this up now for a couple of years, and
we cannot do it any longer. The votes are too great, and I see that. We
could not filibuster it successfully if we wanted.
Surely we can consider some amendments that just as an example might
give a little bit more time to an agency to review a complicated export
request based on the potential impact of the export on national
security. An agency now only has 30 days. If they do not get back
within 30 days, it is deemed to be approved. Thirty days is fine for
most things, but they ought to be able to have 60 days, if they need
it, for the complexity of the analysis or if the reviewing agency
requires additional time based on the potential impact of export on
national security, a bit of additional time under those circumstances.
I hope we consider an amendment requiring the Secretary of Commerce
to refer commodity classification requests to the Secretary of Defense
and the Secretary of State. The current draft of the bill requires the
Secretary of Commerce to notify the Secretary of Defense of commodity
classification requests, but there is no referral, and the Secretary of
State is not even required to be notified.
That is a prudent addition, an improvement. We should have unanimous
consent of all the reviewing agencies on a license application. The Cox
committee recommended that. It can still be taken up and ultimately
approved if need be, but if the Department of Defense, for example,
objects and no one else does, or the CIA or whoever, should that not
require their sign-off?
As to postshipment verification, S. 149 says the Secretary of
Commerce may deny licenses to countries that deny postshipment
verification, although it says the Secretary shall deny licenses to
particular end users. I suggest we add to that language that the
Secretary of Commerce shall deny licenses to countries. Why do we
mandate denying a license to an end user that will not let you verify
it but leave it discretionary with the Secretary of Commerce to deny to
a country that will not let you verify, when in many, if not all, of
these cases it is a country policy?
We have an agreement, for example, with the country of China. If we
are being denied the right to go in and do our postshipment
verification, it makes no sense to blame it on a company. It is the
country that is denying us. So why should we make it mandatory on a
company but discretionary with the country that is calling the shots?
As to foreign availability, the definition of ``foreign
availability'' requires only that an item or substantially identical or
directly competitive item be available to control countries from
sources outside the United States in sufficient quantities at a price
not reasonably excessive. This definition does not speak to relative
quality. In other words, if it is out there, if other countries can
supply it but if it is not the same quality as that of the United
States, and it is potentially dangerous and it is something that can
potentially be used for military purposes to a country of some concern,
would we not want to take into consideration the fact we are
liberalizing or loosening our standards because they have access to a
similar item even though it is not of the same quality as our item? We
ought to consider that carefully.

The deemed export issue, the definition of ``exports'' in S. 149
includes transfers of items out of the country or transfers of items
within the country with the knowledge and intent that a person will
take the item out of the country, but it does not cover any transfer of
technology to a foreign national.
We have had a concept of deemed exports in this country for a long
time, and that is if you give a foreign national the same kind of
controlled information that is sent abroad, it ought to operate under
the same rules if it is the same information because of the
potentiality of it getting back, and we know that happens.
Under the current definition of the statute, the Secretary of
Commerce has discretion over whether to control deemed exports. I do
not think the Secretary of Commerce ought to have that discretion.
Now my concern here is that there has been pressure from the business
community to eliminate the deemed export requirement altogether, and S.
149 includes language stating it is the committee's understanding that
the administration will be reviewing the deemed export process with a
view toward clarifying its application. I do not have any idea what
that means. What I think it means is that we are going to work to get
rid of this sucker, but we need a deemed export rule and we need it to
be mandatory.

[[Page S9047]]

We had hearings and heard countless hours of testimony about what was
happening in our National Laboratories when we were concerned about the
information was getting out, and we saw the thousands of hours and
thousands of people who were coming in from other countries who had
access to information. Private industry was doing much better than the
Government, but our own Government people were not submitting the
necessary documentation for deemed exports to tell our people what
information these folks had access to. It was common sense. We do not
want to cut off foreign students. We do not want to cut off foreign
experts, the technology; it benefits our own economy; we need that
interplay. But it is common sense to protect yourself a little bit. We
need to do that.
There are others we might consider, but those are some I hope within
the next couple of days we have the opportunity to consider in some
detail with an idea toward tightening it up some, and making it so when
we leave this, having passed it, we have not unwittingly done something
that made it more difficult in the operation of this process. It all
sounds pristine when we describe it.
It goes here and here and here, and then someone has this right and
the other fellow has the other right and these thousands of things that
come rushing through, but in actual application it is not always quite
that smooth. This bill, thank goodness, devotes some additional funding
for this licensing process, which I think is a good thing. Let us make
sure that in all of this we do what we can, at least around the edges,
is the way I would look at it, to make sure we give enough time to
properly consider these things, and we have them considered by the
entities that ought to be looking at it and not being totally weighted
or unduly weighted toward the commercial side.
So I look forward to the discussion. I congratulate my colleagues on
their perseverance to get this bill this far. We have been arguing and
discussing this bill for a long time. It is one of those cases where
people have strong feelings on both sides and make valid points on both
sides. Everyone is trying to strive for the right thing and the proper
balance, and hopefully at the end of the day we will have something
that will not produce grave concern among the American people.
I yield the floor.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. SARBANES. Mr. President, I will take a few moments to make a
brief response to my able colleague from Tennessee. I know the
distinguished Senator from Wyoming also wants to speak.
Much of what was contained in my colleague's statement I agree with
regarding concerns and how to address them. I think there are basic
differences of perception of this bill and what it does. As I said at
the outset, I am frank to say I think the bill provides greater
protection for national security and foreign policy interests than
either the previous Export Administration Act or the regime in place
under IEEPA.
In my opening statement I didn't have the material at hand and I made
reference to the significant improvement in the commitment of resources
for enforcement which is extremely important in any regime. You can
have a nice paper regime, and if you do not have the resources for
enforcement it does not have any reality. I will go through those
quickly.
Beginning on page 296, we have a number of provisions of additional
resources for enforcement programs. I want those in the Record because
I think they are important: $3.5 million additional authorization to
the Department of Commerce to hire 20 additional employees to assist
U.S. freight forwarders and other interested parties in developing and
implementing on a voluntary basis, a ``best practices'' program to
ensure that exports of controlled items are undertaken in compliance
with this act.
We are trying to draw on the export community, in effect, to become
an active partner in trying to maintain the controls and support the
regime. The freight forwarders are an integral aspect of the export
process. This provision would be very important.
We go on to $4.5 million to hire new investigators to be posted
abroad in order to verify the end use of high-risk dual-use technology;
$5 million for the end-use verification program. That is in addition to
the authorization I was just talking about. The station oversees
investigators. There is $5 million for upgrading the computer licensing
and enforcement system within the Department of Commerce; $2 million
for additional license review officers, and $2 million to train license
review officers, auditors, and investigators. That is a total of $22
million in additional enforcement programs. It significantly boosts the
budget by about 50 percent. We are talking about a 50-percent increase
in the commitment of resources.
I listened carefully to my colleague. A fair amount of what the
Senator discussed involved matters that are not affected in the export
control regime. If a nation is transferring military technology, that
is not part of the export regime which deals with dual-use technology.
We confront that situation in some instances.
I was interested by the reference of the Senator to these various
commissions. My colleague from Wyoming, in fact, was the cochair of one
of those commissions investigating some of the problems. There were a
number of references to the commission chaired by Rumsfeld in terms of
our export program. I point out to my colleague we have a letter today
from the same Rumsfeld, as far as I understand it, endorsing this
legislation and urging Members to act on it. That is the very Rumsfeld,
unless I am mistaken, being cited in terms of a particular point of
view with respect to export controls.
One item the Senator mentioned as a possible amendment, the notion
that there had to be a unanimous decision of the interagency group with
respect to a license approval. What that means is the issue then would
never get off of the first tier in terms of going up the appeals
process because any one of the departments or agencies involved in the
interagency review could, in effect, stop it at that level.

That is not the scheme of the legislation. The scheme of the
legislation is that the matter can move forward as long as there is a
majority decision, but the dissenting voice in the majority decision
can take it to the next level for review so it can be moved up the line
in terms of the officials examining this matter, and eventually, of
course, can be taken right to the President for an ultimate decision
that will resolve a dispute between one department and another with
respect to the issuance of a license. If they all agree that the
license should be issued, it will be issued; if they all agree it
should not be issued, it will not be issued.
What do you do if they differ? If they differ and you require
unanimity for issuing the license, in effect, it is blocked at that
level. What this arrangement provides is that you can continue to move
forward, but an appeal can be taken to the next level and to the level
beyond that and eventually to the President for a determination. I
think that is a much fairer process. It is a more open process. It is a
more transparent process and that means that the exporters at least
will get a decision and will not simply disappear into the great void
where they are left without any decision.
Much of what has motivated the business community is the argument
that ``we need to know, we need a judgment.'' If we can't do the
license, let us know we cannot do the license within a limited period
of time and we will go on about our business in other ways. If we can
do the license, let us know within a period so we are in the bidding or
competitive process in terms of trying to land this contract.
I don't think we can go from the majority to unanimity because then
we are right back where we were. One of the old problems we have
confronted is an impediment and a burden on trade without making a
contribution to national security that can't be achieved according to
the procedures in this legislation. It is not as though we say if there
is a majority decision at the lowest level, that decides the matter.
That only begins the process and the department that has been outvoted
can appeal the matter and take it up the line.
It seems to me that is a much more sensible way in which to proceed.
I think one of the things this bill provides to industry, which I think
they

[[Page S9048]]

are reasonable in seeking, is a defined process within a limited time
period that in the end gives them an answer, yes or no. But it gives
them an answer.
That is an improvement over current arrangements where they may well
be simply left in limbo. It is reasonable to expect the Government
decisionmakers and the Government process to work in such a way that in
the end they get a decision.
One of the premises on tightening up is that if you have foreign
availability or mass market, that you are not contributing in any
significant way to stemming the spread of technology by inhibiting it
because it is available from other sources generally available. So it
seems sensible to try to take those goods and services out of the
surveillance as a starter. We do not do that anywhere near completely
because in both instances we provide authorities whereby that can be
suspended.
The reason we have the double Presidential authority--for example, on
foreign availability--is the part in the foreign availability section
is designed to get the executive to try to negotiate and arrive at a
multilateral restraint. This technology is available, foreign
available, so it can be acquired there--comparable technology. If that
is so, we are saying to the President: You should try to see if you can
negotiate an agreement. We have the three 6-month periods, the 18-month
period, in which if he has not been successful in doing that, that
authority, in effect, comes to an end. But we have the general catch-
all authority which enables the President to, in effect, limit or
control it or prohibit it on the basis of the general authority.
The mass marketing does not have that. He can keep rolling that over,
if he chooses. But, in any event, he has this reserve power under the
enhanced control that enables him to deal with parts and components. It
enables him to deal with foreign availability. It enables him to deal
with mass marketing in which, in effect, a very, very broad authority
and power has been committed to the President. That is one of the
reasons it seems to me clear that the administration and the various
officials are supportive of this legislation.
We are trying to improve the process, provide some certainty in how
it works, make sure the private sector gets answers, and at the same
time reserve to the President the ultimate authority to make control
decisions based on national security and foreign policy interests. So I
think the basic scheme, the basic arrangement is one that, in fact,
deals more adequately with national security and foreign policy
interests than either the existing regime now under IEEPA or the
previous Export Administration Act.
Mr. THOMPSON. Will the Senator yield?
Mr. SARBANES. Surely.
Mr. THOMPSON. I would appreciate a clarification on comparing the
Presidential set-aside on foreign availability with the enhanced
controls; the former section, section 212, and enhanced controls is
under 201.
I will ask a question in a moment. I know the Senator knows that
under 212, the Presidential set-aside, if he determines that failing to
control an item would constitute a threat to the national security, the
President can set aside the Secretary's determination of foreign
availability. Then it requires the President to pursue negotiations, as
the Senator has described. It requires the President to notify Congress
that he has begun such negotiations. The President shall review a
determination at least every 6 months and notify the committees. Then,
18 months after the date, the determination is made; if the President
has been unable to achieve an agreement to eliminate foreign
availability with these other countries he is negotiating with within
the 18 months, then the set-aside is lifted. But when you come over
here to enhanced controls, it seems to give the President broad
authority to lift the application of provisions of, in this case,
foreign availability.

I take it from what the Senator said a moment ago he thinks with
enhanced controls the President would still be required to enter into
the negotiations with foreign countries, for example. And, if so, which
of these other provisions--the notifying Congress--presumably the
cutoff would not apply, the 18-month cutoff.
I am a little curious, if the President has enhanced controls, you
would think that would obviate all of these other reporting conditions
and negotiation requirements and things of that nature because that 18-
month requirement certainly would be obviated, and it would make the
requirements under the set-aside unnecessary.
Will the Senator comment or give me his view on that? There is a lot
of legislation here. I have referred to it once. We will have an
opportunity to discuss it.
Mr. SARBANES. I understand exactly what the Senator is referring to.
The Presidential set-aside of foreign availability status
determination, which is section 212, is designed to encourage the
President, in a foreign availability issue, to achieve, if possible, a
multilateral agreement through international negotiations. And that is
sort of spelled out in there as part of the purpose. You know, we
emphasize negotiations, the reports to the Congress, the periodic
review of determination, and the expiration of the set-aside at a
certain period, although he can renew it for 6 months over three times,
for an 18-month period.
Over and above that, the President is given an enhanced control
authority in section 201(d). That is on page 183, section 201(d). Let
me read that because I think it makes it clear that, without being
bound up in the process of section 211:

Notwithstanding any other provisions of this title, the
President may determine that applying the provisions of
section 204 or 211--

Section 204 is the parts and components section. ``Incorporated Parts
and Components,'' is section 204.
Section 211 is, of course, the ``Foreign Availability and Mass-Market
Status'' section--

the President may determine that applying the provisions of
sections 204 or 211 with respect to an item on the National
Security Control List would constitute a significant threat
to the national security of the United States and that such
item requires enhanced control. If the President determines
that enhanced controls should apply to such item, the item
may be excluded from the provisions of section 204,
section 211, or both until such time as the President
shall determine that such enhanced control should no
longer apply to such item. The President may not delegate
the authority provided for in this section.

That is a pretty far-reaching authority. We seek the President's
determination on that. Then the only report is, the President shall
promptly report any determination described in paragraph 1 along with
specific reasons for the determination to the Banking Committee in the
Senate and the International Relations Committee in the House.
Mr. THOMPSON. Will the Senator yield for a moment?
Mr. SARBANES. Sure.
Mr. THOMPSON. I just noticed when the Senator was reading under
enhanced control that it refers to control 204, incorporated parts,
211, which has to do with the determination of foreign availability
along with mass marketing. But it does not refer to 212. Enhanced
control does not refer to 212; it refers to 211, which has to do with
making the determination of foreign availability, but it does not refer
to 212, which has to do with Presidential set-aside.
The first question would be, Do in fact the enhanced controls
override 212?
Mr. SARBANES. Surely 212 defines how the President can carve out from
211 foreign availability, and 213 defines how the President can set
aside mass market status determinations, both of which are in section
211. So 211 sets out these things, and then 212 and 213 provide the
Presidential carve-out from the requirements of 211. This isn't
relevant if the President invokes section 201(d) because 201(d) in
effect negates section 211. So there is no reason to go to the carve-
outs in 212 or 213. The President doesn't have to invoke 201(d). And he
can do the carve-outs according to 212 and 213, depending on whether it
is foreign availability or mass market.
Mr. THOMPSON. I see what the Senator is saying. If you are assuming
that the determination made by the Secretary of foreign availability
and the President's decision to set that aside were made
simultaneously, I am wondering whether or not there could be a
situation where that would not be the case, that a determination could
be

[[Page S9049]]

made of foreign availability by the Secretary. The President doesn't
have anything to do with that. Then at a later date the President makes
a determination that this is not working out very well and he wants to
use his enhanced authority. But enhanced authority doesn't refer to
212, which gives him the right to set aside which foreign availability
would subsume.
Mr. SARBANES. No. I don't want to bring in 201(d) under 212 or 213
because 201(d) is over and above 212 and 213. This is a tremendous
authority to give to the President. It is over and above. If you
subsumed them under, then you would be creating problems.
Mr. THOMPSON. That gets to my second point, if I may. I go back to my
original question. If that is the case, then why is the section under
212--the set-aside that has to do with the President's actions in the
case of set-aside, which has to do with pursuing negotiations with
foreign governments, notifying Congress, periodic review, exploration
of Presidential set-aside --if the President did in fact decide to use
his enhanced control authority, why would any of that be applicable?
Certainly the exploration of the Presidential set-aside would not be
applicable. Or would it?
Mr. SARBANES. Why do you have it at all? It is a reasonable question.
Here is the answer as I perceive it. You are trying to set up a
framework and a regime in the way of proceeding. As a general
proposition, for the sake of transparency, for rationality, for
understanding in the export community what is being done, the sort of
standard way of proceeding, so to speak, on both foreign availability
and mass marketing would be to follow the procedures in 212 and 213
which have been worked out and are designed, as I said, certainly in
the case of foreign availability, to accomplish the objective of trying
to develop multilateral negotiations.
So this is the process you set out to be followed. Conceivably, that
is the process which, generally speaking, the executive branch would
pursue. But in a sense, in an abundance of caution, with respect to
national security and foreign policy interests, we give the enhanced
control power to the President contained in 201(d). There he doesn't
have to go through these notices. He doesn't have to go through these
procedures. He is not bound into a timeframe.
But you don't simply do that. If you just did that and nothing else,
you would have, in a sense, sort of a process without any sort of
standards or review.
We have a process of standards and review. But then we go on to say,
as I said, with an abundance of caution, that in any event the
President can exercise the 201(d) authority. That is essentially to
take care of the argument--actually, I think the Senator used the
phrase earlier in his statement about unintended consequences. This is
really to foreclose any unintended consequences in sections 212 and 213
by giving the President this broad authority contained in 201(d) on
enhanced controls.
Mr. THOMPSON. It seems to me what we are getting down to is that if a
foreign availability determination has been made, the President has the
discretion of operating under 211, going through the notice
requirements, going through the consultation requirements, and going
through the negotiation with foreign governments----
Mr. SARBANES. It is 212.
Mr. THOMPSON. Yes.
Mr. SARBANES. It is not 211?
Mr. THOMPSON. That is correct. But he may not proceed linearly. When
a determination is made of foreign availability, if he at the outset
wants to use his enhanced control authority under 201, he may do that.
Then none of the provisions having to do with 212 would apply. Would
that be correct?
Mr. SARBANES. Yes. The President could do that. Generally speaking,
the President would use 212 and 213 in addressing foreign availability
and mass marketing, because that is the process, as I spelled out, that
has certain benefits that flow from its use. But he would not have to
do that. He could invoke 201(d). That is why I said earlier in my
opening statement that I thought this legislation gave very significant
authorities to the President to make these judgments about national
security and foreign policy interests, and it is one of the reasons
that I think the administration, after very careful review of this
legislation, is so supportive of it.
Mr. THOMPSON. I thank the Senator.
Mr. SARBANES. I yield the floor.
The PRESIDING OFFICER (Mrs. Clinton). The Senator from Wyoming.
Mr. ENZI. Madam President, I will make brief comments while my
colleagues are preparing to speak.
I am pleased we have had the opening statements that we have had so
far, and particularly I am pleased with this colloquy we have just had
which shows that we have built some supreme authority into the
Presidential position that gives the President the right to trump the
other provisions that are in the bill but that still puts a process in
place which we hope will be followed because foreign availability will
definitely bite us if we do not work with other countries to control
it.
Mr. SARBANES. Right.
Mr. ENZI. That is why we are concentrating on the multilateral
control as opposed to the way we have been doing it which is the
unilateral control. Unilateral control does not work. Every report
shows that.
I also thank the Senator from Tennessee for his comments about the
commission that was chaired by Mr. Rumsfeld and the expertise that he
alluded to--and I would confirm--that Mr. Rumsfeld has on weapons of
mass destruction. Of course, one of the reasons that I am very willing
to point that out is to reemphasize the letter that we had printed in
the Record this morning from the Secretary of State, Colin Powell, the
Secretary of Defense, Donald Rumsfeld, and the Secretary of Commerce,
Donald Evans, which is dated today, and was delivered to us, that shows
the support of these three Secretaries for S. 149. It isn't a hedged
support; it is a very specific support. We appreciate the expertise of
Mr. Rumsfeld in the area of weapons of mass destruction and, while
these are dual-use items, he gives the same level of credence to our
bill as to his report.
Another fine line that needs to be pointed out is that in our bill
one of the things we did not do was turn the process over to the
bureaucrats. We turned the process over to the elected officials. We
went to the power at the top. The reason we did that is because there
is a tendency among bureaucrats to pigeonhole things, to avoid
decisions; and if you build a process that allows them to avoid
decisions, they will avoid decisions. That is why we put some of the
time limits that are in here in here. But there is, at any step of the
process, the capability of stopping the whole process. And that is also
built in this bill.
Mr. Thompson. Would the Senator yield for a moment?
Mr. ENZI. Yes.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. I am supposed to be a witness in the Judiciary
Committee. I wonder if I could be allowed to lay down an amendment
before I leave the Chamber.
Mr. ENZI. I appreciate that. I was hoping we would get to amendments.
I yield for that purpose.

Amendment No. 1481

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

The Senator from Tennessee [Mr. Thompson] proposes an
amendment numbered 1481.

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

(Purpose: To modify the exceptions for required time periods)

On page 232, strike lines 16 through 18, and insert the
following:
(1) Agreement of the applicant; complexity of analysis;
national security impact.--
(A) Agreement of the applicant.--Delays upon which the
Secretary and the applicant mutually agree.
(B) Complexity of analysis.--The reviewing department or
agency requires more time due to the complexity of the
analysis, if the additional time is not more than 60 days.
(C) National security impact.--The reviewing department or
agency requires additional time because of the potential
impact

[[Page S9050]]

on the national security of foreign policy interests of the
United States, if the additional time is not more than 60
days.

Mr. THOMPSON. Madam President, the amendment I have offered makes a
small but significant change in the license application review process.
This amendment allows executive branch agencies such as the
Department of Defense or the Department of State that are reviewing
licensing applications to have an extension of up to 60 days to review
the license if the analysis involved in reviewing the license is
complex or based on the potential impact of the export on the national
security or foreign policy interests of the United States. This
amendment should not be controversial. The amendment is simple and easy
to understand and, in my view, it is very hard to oppose. For example,
if the Department of Defense is reviewing a license application for
sensitive dual-use technologies that are controlled under our export
control process, it should be able to get additional time if the
analysis is complex or if the export presents particularly sensitive
national security concerns.
This change is small but very important. The House International
Relations Committee accepted this amendment unanimously by voice vote
in its recent markup of the Export Administration Act of 2001. And this
amendment reflects a recommendation made by the Cox commission on U.S.
National Security and Military/Commercial Concerns with the People's
Republic of China. The Cox commission report concluded that U.S. export
control policies and practices have ``facilitated the PRC's efforts to
obtain militarily useful technology.'' One of the issues the Cox
commission discussed was the fact that in 1995, the U.S. reduced the
time available for national security agencies to consider export
licenses. The commission said that these new deadlines placed national
security agencies under ``significant time pressures.'' It concluded
that the time allowed for consideration of licenses was ``not always
sufficient for the Department of Defense to determine whether a license
should be granted, or if conditions should be imposed.'' The Cox
commission recommends:

With respect to those controlled technologies and items
that are of greatest national security concern, current
licensing procedures should be modified. . .to provide
longer review periods when deemed necessary by any reviewing
Executive department or agency on national security grounds.

The current version of the legislation contains strict time
restrictions. Reviewing agencies, such as the Department of Defense,
the Department of State, or the Department of Energy, have 30 calendar
days to provide a recommendation to the Department of Commerce. If they
do not provide a recommendation within 30 days, they are deemed not to
have any objection. This means that if the Department of Defense, for
example, has inadequate time to complete a complex review, the license
application is automatically granted and sensitive dual-use technology
is exported. Allowing additional time in particularly complex or
sensitive cases would protect our national security at little cost to
any economic interests.
Under the current draft of the legislation, the longest time an
applicant could wait for an answer under the legislation is 129 days.
The Secretary of Commerce has 9 days from receipt of the license
application to refer it to the appropriate reviewing agencies. These
agencies have 30 days to respond. If there is an interagency dispute
regarding whether to grant the license, it is referred to the
interagency dispute resolution process. The interagency process must
resolve the issue or refer it to the President within 90 days after the
license application is referred to the interagency process by the
Secretary of Commerce. In fiscal year 1999, average processing time for
all applications was 40 days. Applications that did not need to be
referred to another agency, which comprised 14 percent of all
applications, had an average processing time of 20 days, and
applications that were referred to reviewing agencies had an average
processing time of 43 days. This amendment would provide up to 60
additional days of review for export license applications that are
complex or based on the potential impact on U.S. national security or
foreign policy interests. While this could lengthen the process
somewhat in the most sensitive cases, it would have little or no impact
on the majority of export licenses.
Madam President, this change to the legislation is small, but
significant. It is designed to address a national security issue
identified by the Cox commission and it implements one of the Cox
commission's recommendations. The House International Relations
Committee accepted this amendment unanimously during its markup of the
Export Administration Act. I hope that my colleagues will join me in
supporting this important amendment.
I yield the floor.
Mr. HELMS addressed the Chair.
The PRESIDING OFFICER. The Senator from North Carolina.
Mr. HELMS. I thank the Chair.
Mr. SARBANES. Will the Senator yield for just a moment?
Mr. HELMS. Yes, of course.
Mr. SARBANES. Madam President, we have an amendment pending. I would
just hold it pending because I believe a number of Members wish to make
opening statements on the legislation. I invite Members who have
opening statements to come to the Chamber so we can get the opening
statements done, and then presumably later in the afternoon we will
revert back to the amendment.
Mr. THOMPSON. My understanding is that this will probably be the vote
at 5 o'clock.
Mr. SARBANES. In between, I was hoping we would get the opening
statements out of the way.
Mr. THOMPSON. Yes.
Mr. SARBANES. A number of Members have gotten in touch with us and
have indicated they wish to do so. I just wanted to set out the
procedure.
Mr. THOMPSON. I say to my colleague also that if, by chance, after
reviewing this, we could come to an agreement on this amendment, I will
tell the leadership that we would have another amendment which we could
vote on by 5 o'clock. So we would still have a vote at 5 o'clock, as
the leadership wishes.
Mr. SARBANES. Does the Senator from Tennessee have a total list of
amendments he is thinking of offering so we can put these amendments in
context? That helps to make a judgment as to whether we are simply
unraveling carpet step by step or whether there is a finite picture we
can look at to make some determination.
Mr. THOMPSON. If I may respond, the Senator has a floating list that
I would be glad, when I get back, to sit down and go over with him.
Frankly, I am evaluating several that I have prepared based on the
debate and the remarks that are made. I would enjoy the opportunity to
sit down and discuss with him and other Members some of the ones I
probably will introduce in the next day or two.
Mr. SARBANES. I thank the Senator, and I thank the Senator from North
Carolina for his usual courtesy in allowing us to have this exchange.
The PRESIDING OFFICER. The Senator from North Carolina has the floor.
Mr. HELMS. Madam President, I ask unanimous consent that at a time
deemed to be appropriate by the managers of the bill I be recognized to
be heard for 30 minutes on this bill.
The PRESIDING OFFICER. Without objection, it is so ordered. The
Senator from North Carolina is recognized for 30 minutes.
Mr. HELMS. Madam President, I ask unanimous consent that it be in
order for me to deliver my remarks seated at my desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HELMS. Madam President, I feel obliged to voice my strong
opposition to S. 149, the pending Export Administration Act of 2001.
I do this because this bill does not protect the national security of
the American people. It does not control the export of our most
sensitive dual-use items. It does not promote U.S. foreign policy.
Instead, this is an indiscriminate trade promotion bill, and I am
obliged to state that I am troubled by the fact that this bill, S. 149,
was written in fact, by the business community to maximize future sales
to Communist China, and to other such countries that represent the
highest risk of technology diversion and proliferation.
Make no mistake about it, this legislation will enable dangerous
regimes around the world to arm themselves through the use of the best
dual-use technology America has to offer.

[[Page S9051]]

This bill's sponsors argue that because the cold war is over, the
world is a much safer place and that we need to rid ourselves of
outdated export controls that inhibit trade and harm the economy. These
Pollyannas could not be more mistaken.
As the ranking Republican on the Foreign Relations Committee, I feel
obliged to make clear that I hold a very different view. It is a view
based on years of experience in foreign policy and national security
matters, and sharpened by ongoing intelligence assessments. My view is
shared by the other ranking members of the national security committees
of the Senate; that is why we have joined together in opposing this
legislation.
The fact is, despite the fall of the Soviet Union, the world is
actually a far more complicated and dangerous place due to the
proliferation of weapons of mass destruction and ballistic missiles.
During the past 30 years alone, the number of countries pursuing
nuclear weapons programs has doubled, the number of countries pursuing
ballistic missile programs has tripled, and more than a dozen
countries, including most state sponsors of terrorism, have offensive
biological and chemical weapons programs.
Even worse, this activity is being fueled by Russia and Communist
China, two members of the United Nations Security Council who are
illicitly selling to rogue countries the dual-use technologies so
critical to their weapons of mass destruction and missile programs.
For years, some other Senators and I have cautioned the Senate about
these growing threats; we have argued forcefully for a national missile
defense system to make the United States less vulnerable to blackmail
or missile attack itself. But missile defense cannot alone keep us
safe. What we desperately need, and don't have, is a comprehensive
strategy that ranges from a credible strategic deterrent to rigorus
export controls as our first line of defense.

At a time when the United States of America is becoming increasingly
vulnerable to rogue states and others armed with WMD-tipped ballistic
missiles, it makes absolutely no sense for the United States to
liberalize its export controls over the technology and know-how so
critical to these weapons programs. Moreover, doing so sends all of the
wrong signals to our allies, and others, about our commitment to
nonproliferation.
I have also tried as best I can to make clear my view about the need
to deal firmly with Communist China, which is dramatically increasing
its military spending and modernizing and expanding its nuclear forces.
China's leaders talk openly about preparing for a future conflict with
the United States. Meanwhile, Communist China is making every effort to
acquire U.S. technology and know-how, through theft, circumvention of
export laws, or legitimate commercial activity.
In the past year and a half alone, Communist China illegally used
U.S. supercomputers to improve its nuclear weapons. And just a few
months ago, we learned that Chinese technicians were installing fiber
optic cable for Iraq's air defenses, a clear violation of U.N.
sanctions. Worse yet, this assistance and technology--which was
provided to Chinese companies by American business firms when the
previous administration mistakenly decontrolled this equipment over--
and I must emphasize ``over''--the objections of the National Security
Agency in 1994--has been of great help to Saddam Hussein in his quest
to shoot down American pilots.
Seven months ago, a CIA report made clear that China continues ``to
take a very narrow interpretation of their non-proliferation
commitments with the United States.'' Just recently, we learned that
the Communist Chinese are continuing to ship missile parts and
components to Pakistan despite Beijing's pledge in November 2000 to
stop all such transfers and set up an export control system.
Consideration of this bill by the Senate sends all of the wrong
signals, wrong messages, to China. It reminds Beijing that the United
States is all too willing to place profit before principle.
Let me address some of the major elements of this legislation that
have convinced me that its passage will seriously jeopardize the
national security of the United States.
To begin, no one--and I repeat no one--has conducted a thorough
national security risk assessment to determine the possible impact of
this bill's sweeping changes on our national security. Rather, many
have blindly accepted the anecdotes and assertions of industry as the
basis for changes in the bill.
Second, this bill does not adequately cover ``deemed exports,'' more
commonly understood as the transfers of sensitive knowledge from one
person to another within the United States. Under this bill, the
information and know-how passed to visiting scientists and others does
not appear to be illegal.
Third, this bill creates a new licensing exemption category called
mass marketed items, which allows companies to produce their products
off of the control lists, notwithstanding the sensitivity of the item.
If an item is widely available in the United States, then the bill's
authors argue that it shouldn't be controlled.
Fourth, when coupled with a new definition of foreign availability
that further loosens controls, this bill has the potential to decontrol
large numbers of items. For example, according to one outside expert,
under S. 149, the high-precision electronic switches needed to detonate
atomic bombs could be up for sale by claiming that they are needed as
spare parts for medical equipment; this is what Iraq tried as recently
as 1998.
Fifth, despite the fact that the purpose of the EAA is to safeguard
our nation's security, the various advisory committees and consultative
requirements placed on the administration in the bill do not require
that national security or non-proliferation experts be included, while
labor organizations and the business community are clearly mentioned.
Sixth, this legislation prohibits export controls on sensitive parts
if they are incorporated into more expensive commercial items or if the
controlled item in shipping overseas for final assembly. In other
words, despite the national security importance of an item, whether or
not it's controlled depends to some degree on its relative monetary
value and where it is produced. So if a special airborne navigation or
radar system requires a license when exported individually, a license
would not be required if it were merely a part of an expensive
aircraft.
And last, but certainly not least, S. 149 provides extraordinary
authority to the Secretary of Commerce on important procedural issues
such as commodity classifications, license referrals, dispute
resolutions, and the development of export administration regulations.
If national security concerns are to be given adequate consideration in
export decisions, then the Departments of State and Defense must be
given greater authority in the export licensing process. And if these
two departments are found already to have sufficient authority under
current practice, then why not codify it?
The bottom line is that there seem to be more loopholes and
exemptions from export controls in this bill than there are export
controls. Could it be that the drafters of this legislation assume that
any effort to obtain a license will meet with failure, and that no
effort should therefore be spared in ensuring that companies need not
bother to ask for one.
I cannot understand why the bill goes to such great lengths to ensure
that no exporter will ever be required to tell the U.S. government what
he proposes to export, and to whom he intends to sell it. Just because
an exporter is required to obtain a license for a sale does not mean
that the sale is going to be denied. In fact, over 80 percent of all
license applications are approved.
At the same time, the requirement for a license enables the United
States Government to ensure that U.S. companies do not contribute,
either intentionally or unintentionally, to the arming of potentially
hostile regimes. Licenses also allow the government to track
acquisition efforts by various countries and groups. Without the
licensing of dual-use commodities, the U.S. will know less about the
potential proliferation of dangerous technologies, will be less able to
combat that proliferation, and will lose the ability to exhort other
nations to take steps to strengthen their regimes.
Notwithstanding these facts, the bill's authors will argue that they
have

[[Page S9052]]

made considerable changes to the bill that address many of the concerns
my colleagues and others have raised in the past. For example, the
Banking Committee will argue that:
Penalties for violations of this Act have been raised in order to
punish violators and deter others. While this is true, this bill also
raises the evidentiary standard for illicit transfers. Moreover,
raising penalties doesn't make much difference when fewer items are
being controlled, or when enforcement procedures--such as the mandatory
conduct of post-shipment verifications on high-performance computers--
are stripped from the law.
An Executive order will be issued to cover deemed exports, give the
Department of Defense more visibility and a larger role in the
commodity classification process, and strengthen the voice and role of
other agencies. However, to date, a draft of the Executive order has
yet to be provided for review. But more importantly, given the
significance of these matters, doesn't it make sense to make these
changes part of the law?
It doesn't make sense to control mass marketed items that can be
purchased at Radio Shack and carried out of the country. The problem
with this argument is that if items were controlled, they wouldn't be
available for purchase at Radio Shack. But beyond that, acquiring
widely available items illegally denies end-users the parts,
maintenance, and servicing agreements essential to their long-term
operation.
Since most licenses are approved anyway, requiring a licensing only
harms U.S. companies by slowing them down. The fact is, DoD and the
intelligence community benefit greatly from the opportunity to look at
and understand complex dual-use items before they are shipped abroad,
and the licensing data provides an important audit trail that is useful
for conducting cumulative effects analyses and other follow-ups.

This bill addresses all of the major findings and recommendations of
the Cox commission report. Upon closer examination, many of the Cox
commission's conclusions are not addressed, but are simply explained
away. For example, the Cox commission recommended that the government
conduct a comprehensive review of the national security implications of
exporting high-performance computers to the PRC, yet S. 149 does away
with that requirement. The Cox commission also recommended that current
licensing procedures be modified to provide longer review periods when
deemed necessary by any reviewing department or agency on national
security grounds, and require a consensus by all reviewing departments
and agencies for license approval. Unfortunately, S. 149 also fails to
fully adopt these proposals as well.
The Wassenaar arrangement is a weak multilateral regime that fails to
control many dual-use items to the advantage of our European partners.
It is true that Wassenaar is an inadequate agreement, but it is also
true that the U.S. government has contributed to its weakness by making
changes to our export control laws that seemed to undercut our
Wassenaar partners. But rather than pushing for greater decontrol, we
should follow up on President Bush's statement that we need a stronger
regime--closer to what we had under COCOM--to prevent the proliferation
of sensitive dual-use items to rogue states. It is unfortunate that the
United States is giving up its leadership role on this issue and
walking away from years of progress in the export control and
nonproliferation field.
Finally, some have argued that failure to pass S. 149 will result in
economic harm to our country and the loss of thousands of U.S. jobs.
These claims ignore the fact that, according to the Congressional
Research Service, controlled exports represented less than 3 percent of
total U.S. exports in 1998. And since over 80 percent of all licenses
are approved, only a few billion dollars in sales were lost due to
denied licenses--an extremely low percentage of the United States' $10
trillion GDP. These numbers also demonstrate that while exports are
being controlled--and mainly to embargoed countries or those at high
risk of diversion, such as China--American firms are not losing out to
foreign competition.
Industry simply does not want the U.S. government reviewing the
export of sensitive dual-use items, even if it is for national security
purposes. If current licensing procedures are cumbersome for business,
then the solution is to improve the efficiency and operations of the
export process, not decontrol sensitive items simply to avoid the
process altogether.
Despite all of these dubious arguments by the drafters and supporters
of this flawed bill, the core problem with S. 149 is its fundamental
refusal to recognize that sometimes the United States must go it alone
to make a point. The structure of S. 149 fails to take into account the
ability of the U.S. to lead other nations by demonstrating self-
restraint and a commitment to principle. It restricts the U.S. ability
to control exports unless other nations are already doing likewise, or
can be guaranteed to do the same in the near term.
I do not believe in the contrived arguments of those who say if you
can't beat them, join them. Industry reasons that if America cannot
stop rogue states from acquiring weapons of mass destruction, then why
should we be ceding market share to our competitors? They say that the
United States cannot stop dictators or communist governments from
denying their people certain basic rights and freedoms, so why not
conduct business as usual with them?
Well, that is not the American way. Americans do not support profit
at any price, especially if that price is our national security or our
moral dignity. The American people will not support the prospect of
fueling our economy by selling sensitive technologies to tyrants and
potential adversaries. This is what we witnessed in the eight years of
the Clinton-Gore administration, and it is time for this type of
nonsense to stop.
We don't need another eight years of intelligence reports that are
leaked to the press, outlining in great detail how the PRC is using
American technology to improve its armed forces; how Russian and
Communist Chinese entities are transferring American technology to
rogue states around the world; how American security, interests and
friends have been jeopardized; and how it is completely legal thanks to
the Export Administration Act of 2001.
Rather, the Senate should follow the wisdom and courage of the House
International Relations Committee. Under the fine leadership of
Chairman Henry Hyde and Tom Lantos, the HIRC was able to pass, with
overwhelming bipartisan support, numerous amendments--similar to the
ones my colleagues and I will offer this week--that put national
security back into this legislation.
While the United States does need a new Export Administration Act,
the bill should protect our national security, not jeopardize it at the
expense of marginal increases in trade. The bill should give every
government department a role commensurate with its expertise and
responsibilities. And the bill should send the right message to our
allies, friends and adversaries, that United States takes non-
proliferation issues seriously, and will continue to take the lead in
the efforts. We need a new EAA but not this one.
The PRESIDING OFFICER. The Senator from Arizona is recognized.
Mr. KYL. Madam President, I understand the Senator from Virginia
wishes to speak. He will be ready in about 5 or 6 minutes. In the
meantime, I thought I might respond, if it is in the schedule of the
ranking member and chairman, to a point that was the subject of a
colloquy with the Senator from Maryland and Senator Thompson. Is that
all right?
Mr. SARBANES. Certainly.
Mr. KYL. I noted that one of the subjects of discussion in the
colloquy between the Senator from Maryland and the Senator from
Tennessee had to do with the President's authority under this
legislation to waive certain provisions, important provisions, because
they deal with a question of whether or not an item that is on the
control list--so-called commerce control list--should be waived or
whether there should be a waiver of either the embedded product rule or
the foreign availability and mass market rule under sections 204 and
211 of the act.
The point was made by the Senator from Maryland that if there were a
problem with one of the dual-use items on the list, the President had
the authority to waive that. Therefore, those

[[Page S9053]]

of us who have concerns about the legislation need not be concerned.
The Senator from Wyoming made the further point that in this case we
didn't want to turn this matter over to the bureaucrats so we gave the
authority directly to the President.
I appreciate the sentiment behind those vows. There is a problem with
them however. That is, the President, with all of his other
responsibilities, can't possibly exercise this authority without the
help of the so-called bureaucrats, without the help of a staff.
I have in my hand just a partial list of the commerce control list
items. It specifically says at the top: This index is not an exhaustive
list of the controlled items.
I haven't bothered to count these. There are hundreds and hundreds of
items. I don't know how many pages. It is single spaced, and there must
be 60 or 80 items per page and probably 20, 30, 40 pages of an awful
lot of items that could be the subject of the export regulations that
are the subject of this bill. It would be impossible for the President
to be able to devote his attention to this list and intelligently deal
with it. In fact, it would be bad public policy for us to require that
the President be the only person permitted to exercise the authority.
Yet that is exactly what this proposed legislation does.
A provision of the section being discussed that was not quoted occurs
on page 184 of the printed version of S. 149. At the end of the section
on enhanced controls, it reads as follows:

The President may not delegate the authority provided for
in this subsection.

Well, usually we provide that the President may delegate
responsibility because, frankly, he has better things to do than be a
staffer going through all of these items with the background to know
whether or not some of them should be taken off the list or not. It is
simply unrealistic to expect any President, despite a President's
intelligence and willingness to get into the details, to be able to
exercise that authority with the limitation here. That is the primary
reason for our concern.
We appreciate the fact that the President has a waiver authority. But
in most cases the President's waiver authority can be realistically
administered and utilized. I think it is unrealistic to expect the
President to be able to do that in this case.
One of the possible amendments, I advise the Senator from Maryland, I
will present--if not I, another Member will--is an amendment to try to
solve this particular problem and conform this provision of the bill
more to the type of legislation that ordinarily accompanies a
Presidential waiver authority. We think that would improve the
administration of this act and make the waiver authority really
meaningful. I advise the Senator of that point. I intend to make a
statement that generally speaks to this issue of the Export Control
Administration reauthorization.
I also want to speak specifically to the amendment offered by the
Senator from Tennessee before we have a vote on that amendment. Given
the fact that there are a couple of other Senators prepared to make
remarks at this time, I am willing to stand back and let those Senators
make those remarks and then I will come and make mine later.
If there is anything I have just said that is subject to correction,
I would be happy to stand for any questioning with respect to my
comments, but perhaps we will have an opportunity to debate that at the
time I offer an amendment, unless there is a possibility we might work
that out between the proponents and opponents of the legislation in the
meantime.
The PRESIDING OFFICER. The Senator from Maryland.
Mr. SARBANES. Madam President, I say very briefly to my distinguished
colleague from Arizona, this is quite a broad sweeping power we are
providing to the executive branch. I think it is reasonable to expect
the decision will be made by the President. That does not mean the
President has to staff his own decision. It will obviously be staffed
for him. But the determination to provide the enhanced controls ought
to be a Presidential determination.
We do not expect that is going to be before him very often, but when
that sort of issue arises, it seems to us it is reasonable that the
President should make that judgment.
One of the difficulties we have been experiencing all along is the
way the export control regime gets bound up down the line and the
decisions never go to the top to be made in those instances in which
there are differences of opinion. In most instances, you have unanimity
below either for the license or against the license. That is over and
done with. But in those instances in which that is not the case and the
President is going to exercise his sweeping authority, we do not think
it is unreasonable to expect a determination to be the President's.
I am very frank to say, I do not know to whom you would otherwise
delegate it, since he represents the ultimate arbiter amongst the
departments and agencies, and I do not see any way you can give that
role to anybody else because anybody else would be out of one or
another, presumably out of one or another of the departments or
agencies. You are not, as it were, above it making this separate and
independent determination which the President will make.
The other point I want to note is that the President and his team
support this legislation, so they obviously do not see in it the kind
of extended practical problems which the Senator has--presumably they
do not see that in the bill; otherwise, they not only would not have
supported it, but they have been very strong in their support. It is
fair to say that their support is anything but pro forma. It is very
active and very vital, and they have gone over this legislation very
carefully over an extended period of time and reached the judgment they
are very much behind it. That is, of course, what they urged on the
Senate, including, of course, the receipt this morning--I do not know
if the Senator has yet had an opportunity to see it--a letter from
Secretary Powell, Secretary Rumsfeld, and Secretary Evans in very
strong support of the legislation.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. KYL. Madam President, I say to the Senator from Maryland, yes, I
have seen the letter. I agree with him the support is much more than
pro forma; it is sincere and thought-out support. I do not know how
many pages of this very complex legislation there are. There are
numerous areas that represent room for improvement, and support for any
legislation generally does not obviate the possibility of improvements
and compromises.
I hope, as this debate goes forward, we might consider the
possibility that in this particular area a mechanism be found to
provide for a waiver that is more realistic in its ability to be
practically used than to require the President, not delegated to anyone
else, as being the only person who could grant such a waiver.
We will talk more about that later. The Senator from Virginia is
here, and I do not want to impinge upon his time. Perhaps we can work
that out. If we cannot, perhaps we will need to offer an amendment.
I thank the Senator.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. ALLEN. Madam President, I am pleased to rise in support of S.
149, the Export Administration Act of 2001. Back on June 28, 2001, I
joined my colleagues of the Republican Senate high-tech task force,
Senators Allard, Bennett, Brownback, Burns, Grassley, Hatch, and
Hutchison, in sending a letter to majority leader Tom Daschle urging
him to bring S. 149 to the Senate floor as early as possible. I am
grateful to the majority leader for heeding our request and permitting
the Senate to consider this very important legislation.
I ask unanimous consent that the letter my colleagues and I sent to
Senator Daschle be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

High Tech Task Force, June 28, 2001.

Hon. Tom Daschle,
Senate Majority Leader, The Capitol, Washington, DC.
Dear Mr. Leader: As members of the Senate Republican High
Tech Task Force, we write to ask you to schedule floor
consideration of S. 149, the Export Administration Act of
2001 (``EAA''), as the next piece of business on the Senate
floor following conclusion of the pending health care bill.
Prompt consideration of this bipartisan bill would be a
welcome sign of your willingness to pursue a bipartisan
agenda.

[[Page S9054]]

As you know, Senators Gramm and Enzi have worked diligently
to craft the broadly-supported pending EAA bill which was
reported out of the Banking Committee by a 19-1 vote. The
Bush Administration also deserves great credit for weighing
in to support this critical piece of legislation. President
Bush himself last month stated publicly that he hopes the
Congress will send him the EAA bill for his signature.
The proposed EAA legislation represents a logical
improvement over the outdated EAA Act passed in 1979 and the
current patchwork of executive orders regulating export
controls issued under the International Emergency Economic
Powers Act. The bill dramatically enhances our national
security needs by increasing penalties, focusing attention on
truly sensitive items, and granting the President new
authority in cases involving national security and terrorism.
At the same time, the legislation will remove punitive
regulatory controls on mass market and foreign availability
technology products that have hindered the competitiveness of
our technology industries. Study after study have concluded
that the present system of export controls has the unenviable
distinction of harming private enterprise without enhancing
security.
At a time when our technology industries are seeing
declining sales, it is imperative that the Congress remove
unnecessary and ineffective barriers to exports that will
keep technology jobs in this country.
The current extension of the 1979 EAA Act will expire on
August 20, 2001. Given this bill's strong bipartisan support,
we believe it could be quickly considered and passed by the
full Senate, thereby minimizing the interruption of the
Senate schedule for other business. Therefore, we look
forward to your prompt scheduling of floor action on this
important legislation.
Sincerely,
Sam Brownback, George Allen, Chuck Grassley, Kay Bailey
Hutchison, Robert F. Bennett, Orrin Hatch, Conrad
Burns, Wayne Allard.

Mr. ALLEN. Madam President, I congratulate Senator Gramm, Senator
Enzi, and Senator Sarbanes who have worked diligently to craft this
broadly supported measure. President Bush and his team also deserve a
great deal of credit for weighing in, in support of this legislation.
This bill represents a logical improvement over the outdated Export
Administration Act that was passed in 1979 and the current patchwork of
Executive orders regulating export controls issued under the
International Emergency Economic Powers Act. S. 149 dramatically
enhances our national security needs by increasing penalties, by
focusing attention on truly sensitive items, and granting the President
new control authority in cases involving national security and
terrorists.
At the same time, this legislation will remove unnecessarily
burdensome punitive regulatory controls on mass market and readily
available foreign technology products that have hindered the
competitiveness of U.S. technology industries.
Many studies have concluded that the present system of export
controls has the unenviable distinction of harming American private
enterprise without enhancing our security. At a time when our
technology industries are seeing declining sales--and, indeed, the
technology sector of our economy is in a recession--it is imperative
that the Congress remove unnecessary and ineffective barriers to
exports and, by doing so, help keep technology jobs in our country.
Current U.S. policy on export controls is harming good paying jobs
for Americans, and it is time that Congress acts to remedy this
situation.
Existing export controls which aim to keep our computing power out of
the hands of potential U.S. adversaries do not work given the
technological and global realities of the 21st century. These policies
must be reformed. One may ask why. There are five main reasons. No. 1,
they are outdated; No. 2, they are ineffective; No. 3, they are
unrealistic; No. 4, they are potentially dangerous; and No. 5, these
current laws are bad economics.
Let me expand on that and actually cite some studies that point out
the inefficiencies and ineffectiveness of these current laws.
They are outdated: The current policy was formulated during the cold
war when we once had a very clear adversary, the U.S.S.R., and when
computers were the size of a dorm room.
Today's international makeup is much more vague. Our potential
adversaries or enemies are not as easily identified, and computers are
now the size of a large remote control. There are some computers, such
as Zybernaut's Mobile Assistant, which you can wear on your belt. They
weigh a couple of pounds at most.
The export controls we have now are ineffective. Access to high-
performance computing capability cannot be restricted. Almost anyone,
whether they are in Vienna or Venezuela or Virginia, can download
computing power off the Internet or link lower level computers together
to perform certain calculations.
These current laws are unrealistic. The United States cannot attempt
to control access to computer hardware or components when foreign
competitors are producing the same types of technology as domestic
firms.
In today's global economy, the United States no longer has a clear
monopoly on technological innovation. These rules are potentially
dangerous. By struggling to control access to computers and computer
hardware that is readily available worldwide, we are diverting
resources from policing the truly sensitive capabilities. All the
while, our military is way behind the curve when it comes to taking
advantage of the very technologies we are trying to restrict.
Finally, these current laws are just bad economics. As high-tech
industry suffers a dramatic downshift, we are limiting their access to
the fastest growing consumer markets in the world. In the new global
economy, being first to market is a critical advantage. Currently our
companies are not on a level playing field. This hurts their ability to
make inroads into millions of potential new customers, not to mention
reducing how much U.S. firms can spend on continued R&D, or research
and development, to maintain our competitive and innovative leadership.
I say to my colleagues in the Senate, the time is right to modernize
and reform export controls. Leading members of the Senate Banking
Committee have worked closely to develop a thoughtful, reasonable
approach to balancing U.S. national security and economic interests.
There is broad bipartisan support for reform, including among the
national security establishment.
President Bush and his national security advisers, including
Secretary of State Colin Powell, and Condoleezza Rice, Commerce
Secretary Don Evans, Defense Secretary Donald Rumsfeld, former
President Clinton, four former Secretaries of Defense, the Pentagon,
the Defense Science Board, and the General Accounting Office, Democrats
and Republicans alike, have all drawn the same conclusions: The current
system is broken.
For example, under the current law, the President is required to use
an outmoded standard called MTOPS, millions of theoretical operations
per second, to measure computer performance and set export control
thresholds based on country tiers.
A recent report on ``Computer Exports and National Security in the
Global Era'' issued by the Center for Strategic and International
Studies reflects the widespread consensus amongst those in the U.S.
defense and security communities that MTOPS-based computer hardware
controls are ``ineffective given the global diffusion of information
technology and rapid increases in performance.''
The report explains, for example, while various U.S. computer systems
are currently subject to controls based on their MTOPS ratings, the
equivalent computing power can be easily achieved by clustering several
widely available low-level systems.

A recent report from the Department of Defense itself also concludes,
``MTOPS has lost its effectiveness as a control measure due to rapid
technology advances.'' The General Accounting Office's report to the
Senate Armed Services Committee similarly concludes that the MTOPS
standard is outdated and invalid and the current export control system
for high-performance computers which focuses on controlling individual
machines is ineffective because it cannot prevent countries of concern
from linking or clustering many lower performance uncontrolled
computers to collectively perform at higher levels than current export
controls allow.
The Defense Science Board echoes this same analysis, warning that
``clinging to a failing policy of export controls has undesirable
consequences beyond self-delusion.''

[[Page S9055]]

Finally, a multilateral export control study recently released by the
security-minded Harry Stimson Center reflects the overall consensus
view that:

[T]he system of controlling the export of militarily
sensitive goods is increasingly at odds with the world
characterized by rapid technological innovation, the
globalization of business and the internationalization of the
industrial base, including that of defense companies.
Although efforts have been made to adapt Cold War processes
and regulations to changed circumstances, the current
approach to controlling militarily relevant trade has failed
to keep pace with changing international conditions and often
falls short of adequately protecting U.S. national security
interests.

In effect, the Center for Strategic and International Studies, the
Department of Defense, the General Accounting Office, and the Defense
Science Board all agree that while the most advanced stand-alone high-
performance computers may be controllable, high-performance computing
is not. Thus, by struggling to control the uncontrollable, the Federal
Government is diverting our attention away from the export of truly
sensitive technologies. By keeping ineffective export controls in
place, the Federal Government is restricting U.S. industry's access to
the fastest growing consumer markets around the world without achieving
any significant national security advantage. In the process, the
Federal Government is creating an unlevel playing field for U.S.
companies and stifling future research and development efforts upon
which U.S. technological and military supremacy demands and depends.
For the U.S. computer industry to maintain its preeminence in
innovation and business, we must promote policies that encourage
investment in R&D, not hinder it. S. 149 represents a solid stride
toward an export control system that effectively balances our Nation's
economic and national security interests.
As it relates to computer exports, this bill removes the MTOPS
regulatory straitjacket and empowers the President, the Secretary of
Commerce, and the Secretary of Defense to review the national security
control lists and determine both what computers should be controlled
and how they may be controlled. The bill does not alter the way in
which computer exports are currently controlled under existing
regulations. Rather, it simply gives the President, the Secretary of
Commerce, and the Secretary of Defense the flexibility to reassess the
effectiveness of these controls in the future, taking into account all
relevant risk assessment factors, including the factors affecting an
item's controllability, such as foreign availability and mass market
status, as well as other relevant factors such as, in the case of
computers, whether the capability or performance provided by the item
can be effectively restricted.

Passage of S. 149 does not in any way equal decontrol of computer
hardware sales. Many levels of restrictions will still exist to protect
U.S. national security interests if the EAA becomes law, such as rogue
country embargoes. Those rogue country embargoes will remain in place,
and user restrictions will allow the Government to prevent specific
sale of computer technology to certain organizations or individuals,
and protections over highly specialized military hardware and software
applications will still exist.
The success of export control efforts depends on vigorous enforcement
of the law, with meaningful punishment of violators. For many potential
violators, the monetary penalties associated with the current Export
Administration Act pose no compelling deterrent. The Weapons of Mass
Destruction Commission noted that under current law, ``an export
control violator could view the risk and burden of penalty for a
violation as low enough to merely be a cost of doing business, to be
balanced against the revenue received from an illegal transaction.''
The Cox committee recommended that particular attention be given to
reestablishing higher penalties for export control violations. Toward
that end, S. 149 significantly enhances criminal and civil penalties
for export control violations.
Section 503 of the bill imposes a criminal fine of up to 10 times the
value of the exports or $1 million for each violation, whichever is
greater, for willfully violating or willfully conspiring to violate the
provisions of S. 149 or any regulation issued under it.
In addition, individuals may be imprisoned for a period of up to 10
years, and companies can be fined up to 10 times the value of the
export, or $5 million, whichever is greater, for each violation.
Additionally, the Secretary of Commerce may impose on a violator, in
addition to or in lieu of the criminal penalties, a maximum civil fine
of $500,000 for each export control violation. This bill gives the
Secretary of Commerce the discretion he or she needs to take into
account the aggravating and mitigating factors that may be present in
any given case.

Finally, the Government will be able to focus its resources on those
critical technologies it must protect, rather than wasting time and
money on the futile exercise of attempting to control access to
commodity computing power and technology.
I say to Members of the Senate, Senators Enzi, Gramm, and Sarbanes
have worked diligently in crafting an outstanding bill. The passage of
S. 149 is important to the future of national security and economic
interests of the people of the United States of America. I thank
Members for their efforts and urge support of S. 149.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Madam President, I held in August, in Reno, NV, a high-tech
townhall meeting. I have held a number in Nevada. Although we do not
manufacture a lot of computers and computer equipment in Nevada, we
have a high-tech industry. There is no issue more important to them
than passing this legislation. If it is important to people in the
high-tech industry in Nevada, it is also important in the high-tech
industry around the country. I have had numerous calls over the last
year and a half from companies around America indicating the importance
of this legislation. It is high time we did something about this.
I applaud and commend Senators Sarbanes and Gramm, the chairman and
ranking member of the committee of jurisdiction, for their advocacy for
the last many months on this issue. Of course, members of the
committee, Senators Enzi and Johnson, have worked extremely hard and
have done exemplary work in helping move the legislation.
I strongly support passage of S. 149. This bill is a product of many
years of hard work. A number of people have worked on this. I worked
with my friend, Senator Bennett of Utah, on the appropriations level
making sure, especially last year, we had some legislation impacting on
this. This bill represents a well-crafted, appropriate balance between
a more modern, effective export control system and the U.S. national
security interests.
I talked about this high-tech meeting held in Reno at the University
of Nevada. It was a hearing to determine what is going on in Nevada and
around the country with the high-tech industry. It is very clear at
this time in the history of the United States there is hemorrhaging
taking place. There are many examples. We have a high-tech company on
the front page of the Reno paper today trying to maintain their listing
with NASDAQ. One year ago their stock was about $35 a share; it is now
at 40 cents a share. There are many other examples of this. This is a
high-tech company mentioned on the front page of the Gazette Journal
today. There are companies such as this all over America.

We as a country need to maintain our competitive edge. If this
legislation does not pass, this equipment will be manufactured
someplace else using non-Americans and it will be the same product. We
need to do it here. That is what this is about. You can talk about what
percentage moves through and how little it matters. It is something we
need to do. Many business coalitions, including the Computer Systems
Policy Project, the Business Roundtable, the American Electronics
Association, the Electronics Industry Association, the Association of
Manufacturing Technology, and the Computer Coalition of Responsible
Exports are supportive of S. 149. Among the members are Apple, AT&T,
Boeing, Compaq, Dell, Hewlett-Packard, IBM, Intel, SGI, Sun
Microsystems, Unisys, and United Technology. These are extremely
important businesses in America. They

[[Page S9056]]

are important employers in America. They are important on a worldwide
scene. That they are joining with us in maintaining how important it is
to pass this legislation says a lot.
I throw a bouquet to the Bush administration for having three of
their top Cabinet officers write a letter saying how important this
legislation is. It is important. We heard from the Secretary of State,
the Secretary of Defense, and the Secretary of Commerce indicating this
legislation is critically important. This is bipartisan legislation.
Having worked this floor the past couple years or more, I have never
seen a piece of legislation with so much support held up by so few
people. Everybody wants this to pass. But in the Senate, it is
difficult to get this to the point where it will pass. And it will
pass. It will. It is hard to find someone who does not believe the
current system of export controls in the United States is broken and
needs to be fixed. We cannot continue with what we now have.
We have four former Secretaries of Defense who support this
legislation. The Pentagon supports this legislation. The Defense
Science Board and General Accounting Office, Democrats and Republicans
alike, have drawn the same conclusion: Existing export controls aimed
to keep computing power out of the hands of U.S. adversaries has not
worked and must be reformed.
Why? No. 1, what we have is outdated. Everyone knows how rapidly the
computer industry is changing. In the Clark County Courthouse in Las
Vegas, NV, one floor was dedicated to taking care of the computer needs
of Clark County. That same work can be done in a very small office now,
not one whole floor. We had to have the temperature controlled to a
certain degree; no longer is that necessary. In fact, I bet we can do
on my laptop most everything that could be done on the vast floor 25
years ago.
This is important. The present law is outdated. The current policy
was formulated during the cold war. The cold war is over, when we had
one obvious adversary, when computers were the size of a dorm room, and
some the size of dormitories. Today's international makeup is much more
vague. Potential enemies are not as easily identified, and computers
are now the size of a remote control for a television set.
Another reason we must change this law is the present law is
ineffective. Access to high-performance computing capability cannot be
restricted. Anyone, whether Indonesia or Indiana, can download
computing power off the Internet or link lower level computers together
to form certain calculations. You do not have to have a degree from
Harvard in computer science to do that. High school kids can do it.
Probably my grandchildren in the sixth grade can do a lot of this. Why
does the law need to be changed?
The current law is unrealistic. The United States cannot attempt to
control access to computer hardware components when foreign competitors
are producing the same types of technology as domestic firms. In
today's global economy, the United States no longer has a clear
monopoly in technology innovations. We must change because the present
law provides potential dangers. By struggling to control access to
computers and computer hardware that is readily available worldwide, we
revert resources from the true areas we need to police. All the while,
our military is way behind the curve when it comes to taking advantage
of the very technologies we are trying to restrict.

Finally, it is just bad economics to keep the present law in force.
As the high-tech industry suffers a dramatic downshift, we are limiting
their access to the fastest growing consumer markets in the world. In
the new global economy, being first to market is a critical advantage.
Currently our companies are not on a level playing field. The computer
made in France can get there much quicker than a computer made in the
United States. This hurts our companies' ability to make inroads with
millions of potential new customers, not to mention how much U.S. firms
can spend on continued R&D, research and development, to maintain our
competitive and innovative leadership.
The current law requires the President to use an outmoded metric,
MTOPS, which stands for millions of theoretical operations per second--
MTOPS. The current law requires the President to use MTOPS to measure
computer performance and set computer thresholds based on country
tiers. What does this mean?
A recent report on ``Computer Exports and National Security in the
Global Era'' issued by the Center for Strategic and International
Studies, CSIS, reflects the widespread consensus among those in the
U.S. defense and security community that MTOPS-based computer hardware
controls are ``ineffective given the global diffusion of information
technology and rapid increases in performance.'' The report continues
and explains that while various U.S. computer systems are currently
subject to controls based on their MTOPS rating, the equivalent
computing power can be easily achieved by clustering several widely
available low-level systems: Radio Shack.
The conclusion of the CSIS report could not be more clear. No. 1,
MTOPS are a useless measure of performance; No. 2, MTOPS cannot
currently measure performance of current microprocessors or sources of
supercomputering like clustering; and third, this makes MTOPS-based
hardware controls irrelevant. The best choice is to eliminate MTOPS.
This study is only the most recent of a host of export reports to
identify the system governing computer exports is broken. A recent
report from the Department of Defense concludes, for example, that:

MTOPS has lost its effectiveness as a control measure . . .
due to rapid technology advances.

On this point, the Department of Defense has emphasized that:

Controls that are ineffective due to market and technology
realities do not benefit national security. In fact, they can
harm national security by giving a false sense of protection;
by diverting people and other finite export controls
resources from areas in which they can be effective; and by
unnecessarily impeding the U.S. computer industry's ability
to compete in global markets.

Those who oppose this legislation are living in a dream world, a
world of more than two decades ago. In reality, there is every reason
to pass this legislation. Four Secretaries of Defense, I repeat,
current Cabinet officers, scientists all over the world--scientists in
the United States--America's burgeoning high-tech industry, without
question or qualification, support this legislation.
The General Accounting Office's report to the Senate Armed Services
Committee similarly concluded, with the CSIS report, that the MTOPS
standard is ``outdated and invalid'' and:

The current export control system for high performance
computers, which focuses on controlling individual machines,
is ineffective because it cannot prevent countries of concern
from linking or clustering many lower performance
uncontrolled computers to collectively perform at a higher
level than current export controls allow.

Finally, in this regard the Defense Science Board echoes this same
analysis, warning that ``clinging to a failing policy of export
controls has undesirable consequences beyond self-delusion.''
We could go on literally all afternoon, reading from reports and
studies, scientific analysis that says the present system is worthless,
it is broken; all it does is hurt our economy. It doesn't do anything
to protect our security. In effect, the Department of Defense, the
General Accounting Office, the Defense Science Board, the Center for
Strategic International Studies, and a multitude of other entities and
organizations all agree that while the most advanced stand-alone high-
performance computers may be controllable, high-performance computing
is not.
By struggling to control the uncontrollable, we are diverting our
attention from the export of truly sensitive capabilities. By keeping
ineffective export controls in place, we are unnecessarily restricting
U.S. industry's access to consumer markets around the world. In the
process, we create an unlevel playing field for U.S. companies and we
stifle future R&D efforts on which U.S. technological and military
supremacy depends.
What does this all mean? Should we throw away any attempt to control
technology and ``sell, sell, sell''? Of course not. We must develop a
new,

[[Page S9057]]

more effective system that better balances our economic priorities with
national security interests. S.149 represents a critical step forward
toward this very worthwhile goal. As it relates to computer exports,
the bill removes the MTOPS straitjacket and empowers the President of
the United States, his Secretary of Commerce, and his Secretary of
Defense to review the National Security Control List and determine both
what computers should be controlled and how they may be controlled.

This bill does not eliminate controls. It just sets up a modern
standard of controlling what we are going to do with exporting
computers. This bill does not--and I think we need to be very clear on
this point--alter the way in which computer exports are currently
controlled under existing regulations. Rather, it simply gives the
President, the Secretary of Commerce, and the Secretary of Defense the
flexibility to reassess the effectiveness of these controls in the
future, taking into account all relevant risk assessment factors,
including the factors affecting an item's controllability, such as
foreign availability, mass market status, as well as other relevant
factors such as, in the case of computers, whether the capability of
performance provided by that item can be effectively restricted.
The chairman of the Banking Committee, Senator Sarbanes, I think has
done an excellent job explaining this today. We have a lot of very
talented people in the Senate. But as far as your basic intelligence
and someone who understands what goes on around here, there is no one I
have more confidence in than the Senator from Maryland. He is a Rhodes
scholar in more than name only. He is somebody who is truly very
intelligent. And when he said today--I talked to him before he came to
the floor, and then I heard him say it on on the floor--he read this
bill from cover to cover, that says a lot. This is a heavy piece of
legislation. This is a bill that would take a long afternoon of reading
if it could be done. It is about 350 pages long. If you wanted to have
somebody who knew the bill better than he--and I don't know who that
would be--to give him a test on it, either essay or multiple choice, he
would pass it with a great score.
He has certainly stated on several occasions today, this bill is
going to improve the security of this country and allow our commercial
interests to be more competitive. I think it is important we keep that
in mind. Two considerations: Our security is going to be maintained,
and we are going to be able to be commercially more effective than we
have been. We are going to continue leading the world in selling these
computers that our scientists have developed.
The bill we are considering takes all challenges into account and
will allow, I repeat, the United States to move forward and formulate
an export control policy that recognizes the technological, trade, and
political realities of the 21st century. In so doing, this bill will
effectively promote U.S. economic and national security interests, a
goal we should all agree is important.
It is not as if computer companies will be able to sell willy-nilly
to anyone who comes calling in search of, for example, a submarine
detection system. This legislation applies several levels of
restrictions to protect our national security interests, including, but
not limited to, total embargoes on shipping products to rogue nations
such as Iran and Iraq at the present time; end-user restrictions that
identify specifically who in certain countries the United States can
and cannot sell to; and, finally, controls over the most critical
technologies, highly specialized, military-designed software and
hardware applications.
That is pretty strong.
By focusing our resources in these areas, instead of wasting our time
and money on trying to control commercial computing power, the
government will be able to better keep the most critical applications
out of the wrong hands.
I want to stress to my colleagues that the need for export control
reform is widely supported.
To quote an esteemed member of our country's National Security
community, former National Security Advisor Brent Scowcroft, ``It's a
whole new world. And I think it's past time we respond to that world.
The genesis of invention and innovation used to be the military-
industrial complex but the government doesn't control technology the
way it used to.''
The bill we are considering takes all of these challenges into
account and will allow the United States to move forward and formulate
an export control policy that recognizes the technological, trade and
political realities of the 21st century.
I say again that the Department of Defense, the General Accounting
Office, the Defense Science Board and the Center for Strategic and
International Studies have all concluded that MTOPS is an ``outdated
and invalid'' metric and that the current system is ineffective. Repeal
of the National Defense Authorizing Act language would give the
President the flexibility to develop a more modern and effective
system.
This is a good bill for Nevada. It is a good bill for the country. It
is a good bill for the world. I urge my colleagues to follow the lead
of the managers of this bill, the Senator from Maryland and the Senator
from Wyoming, and move forward. Defeat the amendments that will be
offered by just a small number of Members. Defeat them overwhelmingly.
This is important legislation. We need to send a message to the world
that we mean business in maintaining our superiority in the production
of computers.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Mr. President, I rise in opposition to the amendment to S.
149 proposed by the Senator from Tennessee. This amendment contains
substantial changes that will not only upset the delicate balance of
control between agencies established in S. 149, but it will create a
burdensome licensing, classification and regulatory process and further
fuel the turf battles between agencies.
This amendment would allow a reviewing agency to stop the clock
during the licensing application process ``due to the complexity of the
analysis'' or ``because of the potential impact on the national
security or foreign policy interests of the United States.'' Simply
put, it would unnecessarily delay licensing decisions and, ultimately,
reduce the competitiveness of U.S. exports.
This amendment is unneeded at best and harmful to national security
and the economy at worst. The danger of this amendment lies in that it
would enable a single agency to delay the approval of a license for up
to 60 days due to the ``complexity of the analysis.'' Used effectively
as a delay tactic, a reviewing agency could bury an application in the
``complex analysis required'' bin and walk away for 2 months. The
natural bureaucratic tendency to avoid risk would cause unprocessed
license applications to languish for days weeks or even months without
any action. This extended delay would not only greatly increase the
overall processing time, but it could bring the entire process to a
grinding halt and destroy an exporters ability to meet market demand
quickly and efficiently. Furthermore, at this point, the exporter is in
limbo, as she or he neither has the approval needed to move forward or
the denial needed to make improvements.
One exception would allow for 60 days, but there are two exceptions
in here. So it can be read that an agency would get 120 days by
utilizing the two exceptions one right after the other.
Although proponents argue that this amendment would ensure ample time
for the Department of Defense, the Department of State or other
reviewing agencies to conduct their investigations, it is, in reality,
a solution in search of a problem. Never has there been a case where
the Departments of State and Defense have not had enough time to
adequately review a license application. In fact, Fiscal Year 2000 data
from the Department of Commerce indicates that the average time for the
review of a license by the Department of Defense was only 13 days. The
Department of Energy averaged 22 days, while the State Department
averaged 9 days. All three agencies demonstrated that the 30 days
currently permitted to review a license is more than adequate.
Exporters lose their customers when faced with uncertainty about
delivery times. This amendment could place all export licenses in
virtual limbo for five

[[Page S9058]]

months--surely enough time for competitors to easily step in and fill
our exporters orders.
Moreover, any agency that might conceivably require more time to
review an application is fully protected under S. 149. First, an agency
may exercise any of the carefully thought-out exceptions listed in
Section 401(g). For example, under Sec. 401(g)(1), the applicant might
be willing to provide additional time in order to have a better chance
at approval. Second, an agency is always free to return a
recommendation of disapproval, thereby kicking the application into the
interagency dispute resolution process. Third, once within the
interagency process, an agency can escalate a decision to a higher
level.
Second, the amendment undoes the discipline of the entire system. A
key recommendation of the various commissions that have studied our
export control system is to increase discipline in the export control
system. Without strict deadlines, discipline disappears. And without
discipline, the system is unworkable. An undisciplined system is the
same as no system at all. The consequences for both our national
security and economic interests would be severe.
It was mentioned in the arguments in favor that the Cox commission
had taken a look at this and proponents argue that the longer review
periods were provided for by the Cox commission.
The Banking Committee extensively reviewed the recommendations of the
Cox committee, and indeed adopted virtually all of their dual-use-
related suggestions. Recommendation 31 of the Cox committee did suggest
longer review periods for national security purposes. However, the Cox
committee made that recommendation only with regard to items that are
of the greatest national security concern. For other items, the Cox
committee strongly recommended streamlining the process and providing
greater transparency, predictability, and certainty.
S. 149 does not classify items as of ``greatest national security
concern'' or ``lesser national security concern.'' Instead, it sets up
a risk-based system that allows the administration to make such
determinations within the bill's guidelines. Based on past experience
and demonstrated agency data, both the administration and the bill
sponsors believe that S. 149's system--by setting mandatory time
periods with the existing ``stop the clock'' exceptions--is the most
effective framework for operating export controls.
In conclusion, this amendment, although it is portrayed as simple and
common-sense, undoes the key element of discipline of S. 149. It would
result in a application system bogged down by bureaucracy and politics,
a system in which delays are the rule rather than the exception. It is
not simple or technical, but would undo the careful balance of the
bill. I urge its rejection.
I thank the President. I yield the floor.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mr. GRAMM. Mr. President, I apologize to my colleagues for being
late; I was busy on a matter important to my State. I wanted to come
over today both to oppose the amendment that is before us and to speak
on behalf of the bill itself. Let me do those in reverse order.
First of all, our colleagues can be proud of the fact that the bill
before us today is truly bipartisan, and I want to congratulate Senator
Sarbanes for his leadership on this bill, both as chairman of the
Banking Committee now and as ranking member when the bill was
originally written. I also want to thank Senator Johnson and Senator
Enzi for their leadership on this bill.
This bill tries to deal with an inherent conflict that we face as a
nation. On the one hand, we want to be the greatest technological giant
in the world. We want to dominate the world in producing everything
that embodies new technology because the country that controls that
technology ultimately dominates the world economically. It has the
highest wages, and the brightest future. So, we have not only a goal
but a passion to see that when new tools are produced, when new
technology is implemented in the marketplace, that it is American
technology, implemented by Americans.

We are the most technologically and scientifically friendly society
in history, which is one of the reasons we are the greatest country in
the history of the world. This bill is very much about that, but it is
also about our other objective, which is to try to see, to the maximum
extent we can, that new technology does not get into the hands of those
who would use it to harm America or her interests and to engage in
terrorist activities around the world. And that is the inherent
conflict between these two goals.
What this bill is trying to do is to find a way to deal with this
inherent conflict. I personally believe, after having now spent some
2\1/2\ years working on this bill, that we have come to a good
solution. We have come as close as you can come to reconciling these
differences. Let me try to explain how.
I know some of our colleagues are concerned that we have gone too far
in trying to promote American sales of technologically advanced
products. I believe, upon close scrutiny of this bill, objective
observers will conclude that charge is not true. This bill tries to
recognize something that we do not like to admit but that everybody has
to admit is true: if a technology is generally available, if you can go
to Radio Shack and buy something, if it is mass marketed all over the
world--it may have defense implications; it may be something you would
want to prevent a terrorist or terrorist state from getting--but if
something is mass marketed, then would-be terrorists can go to Radio
Shack and buy it. Would-be terrorist nations could get access to
something that is mass marketed.
One of the great strengths of the bill is that we introduce a new
concept into American law--the concept of mass marketing. What we say
is, if a technology is available on a mass market basis, if you can buy
it all over the world, it is too late to protect it. So we propose
building a higher wall around a smaller number of items. That is the
logic of this bill. It is a very simple logic.
The second component of the bill recognizes that it is very difficult
to prove somebody knowingly sold or transferred technology that is
protected. And since it is very difficult to prove that--very difficult
to catch bad actors--we want the penalties to be extraordinarily stiff.
Penalties in current law are so small as to be irrelevant to a modern
corporate entity.
Our penalties, which can run into the tens and hundreds of millions
of dollars, can, for repeat offenses and a pattern of behavior, result
in imprisonment or life imprisonment or penalties that affect anybody's
behavior.
So we build a higher wall around a smaller number of items. We
recognize it is certainly true that you can go into any Radio Shack and
buy a computer that is more powerful than the most powerful computer
that existed in the world when I was a college professor.
I remember running multiple regressions which people now run on
calculators. I had these punchcards that had all this data--more
precious than life, almost. You would tote big boxes of these
punchcards over to the computer center at 4:30 in the morning. They had
an entire building that had an analog computer--an entire building. And
it had so little storage capacity that my little multiple regression
took the entire memory of the entire computer. And this whole building
was devoted to running this computer. Now any college student taking
college statistics can perform the same transaction on a modern
calculator.

Obviously modern technology can be put to defense use. But the point
is, if our purpose is just to feel good, then we could do a lot of
different things. But in writing this bill, we want to have a
meaningful impact in the law. So for technologies that are readily
available, that can be purchased anywhere, we decided to take them off
the list of restricted export items.
We have put together a system where the security agencies have the
strongest voice they have ever had in the process. We have put together
a procedure whereby an agency that has doubt can buck the decision up
to a higher level, if they can get approval by a Senate-confirmed
person in their department.
We make it easier to say no. We give the President an all-
encompassing power: if the President of the United States, having
reviewed all the data,

[[Page S9059]]

concludes that the sale of an item represents a national security
threat, no matter whether it is mass marketed or anything else, then
the President can intervene and say no. Now, the President himself has
to do it. This cannot be delegated to somebody else, removing the
President's responsibility to answer whether it is wise or promotes the
public interest. That is the basic structure of this bill.
This bill is strongly supported by the administration. It is
supported by the Defense Department. It embodies the recommendations
from the Cox Commission, whose key recommendation was that Congress
quit trying to do things that only make it look as if it is concerned
about national security, and instead focus on national security. We
have done that.
Some of our colleagues have concerns. I am hopeful, perhaps as early
as in the morning, that I will get a chance to sit down with them to
see whether, even at this late date, we might work something out that
could give them greater confidence in what we are doing. But
regardless, we have a good bill. It is a bill the country needs, and it
is important.
Let me add, my trusty staff has just passed me a note reminding me
that we made no less than 59 changes in trying to deal with the
concerns some of our colleagues raised in the last Congress. It is not
as if the chairman of the Banking Committee, Senator Sarbanes, and I
have been deaf in terms of listening to their concerns. We have
listened to them, and we have responded. We have made 59 changes in the
bill and worked with the previous administration. And when the new
administration came, we gave the bill to them, and they made suggested
changes which we made. So, I think we have tried to work with
everybody. But the point is, we are not through working. If we can
improve the bill, we want to do it.
Let me address a central point, though. I think it is important that
people understand the logic of the bill. I then want to talk very
briefly about the Thompson amendment.
Ultimately, you have to ask yourself a question: Is America's
security enhanced by our being the dominant economic power in the world
that generates the great bulk of modern technology and that implements
it first? Or could we promote our national security by freezing things
as they are, by stopping the production and the export and the
utilization of technology that might in the future have national
security ramifications?
Some people still seem to have this vision of the Cold War--that Ivan
is at the gate, that technology is coming out of defense research
establishments and into the American private sector, and then into the
world private sector, and it is then absorbed by would-be adversaries.
The plain truth is, that concept of the world is no longer valid.
Most of the modern technology is coming from the private sector. In a
sense, we are back to where we were in World War I, where one of the
things we tried to do was take modern technology and implement it for
military use. Then, as we developed what Eisenhower called the military
industrial complex and redeveloped basically this university defense
industry consortium, it was the engine for new technology.
But today technology comes from the private sector, from
international companies. If we don't let them implement the technology
and put it to work and produce products here, they will produce them
elsewhere. The net result is that we will have less control than we do
now.
Ultimately, the security of America is based on our ability to
produce new technology, not on the technology that exists today. It is
based on the technology we are going to generate in the future and that
we are going to implement before anyone else. The only way we can keep
that system intact is by allowing American industry to use modern
technology.

Amendment No. 1481

Mr. GRAMM. The Thompson amendment on its face looks desirable. But in
reality, it assaults a system that we have put into place that forces a
decision. Let's say I am Texas Instruments, and I want to export a
technology. I have to file an application. Now, if I can prove that the
technology is mass marketed that it is readily available or if we find
that the technology is going to be mass marketed in the future, then
all of those factors can come into play in making the export decision.
But if at any point in the process an official believes there is a
national security concern, then all he has to do is say no.
The only thing that any one person on the whole panel representing
all of these national security agencies--the Department of Defense, the
Department of State, the Department of Commerce--has to do to stop the
process is to utter the magic word ``no.'' And when they say no, the
process is stopped, and the decision can be appealed to the next
highest level--ultimately, to the President himself. But there is no
lack of ability to stop a sensitive product from being exported.
What I am concerned about--I have no question in my mind whatsoever
of the good intent of this amendment--is that if we make it easy to not
say ``no'' but just say ``let's wait,'' if we make it easy for someone
to avoid making a decision, no politician and nobody governed by
politicians will ever make a hard decision as long as there is any
viable alternative. That is a chiseled-in-stone law of public behavior.
And if we make it possible for people to delay because it is complex or
because they say it has the potential of having national security
interest, then what is going to happen? The whole process is going to
get tied up. This bill, which tries to achieve a delicate balance
between jobs and security, will end up being destroyed.

I want my colleagues to know, in asking them to vote against this
amendment, that any representative of any agency who is serving on the
review panel has a right to stop the process by saying no. What they
don't have the right to do is to say: Well, let's think about this for
6 months, or let's wait for a year while some foreign competitor is
developing the same technology. They have to say yes or no, but they
can say no.
Secondly, I remind my colleagues that in part in response to concerns
that were raised by Senator Thompson and others, we put a Presidential
waiver in the bill where the President. Even if the review process says
yes, even if under the law the export is exempt from the review, if the
President finds that the product poses a national security concern,
then the President has the right to intervene.
Some people are going to say: Well, you made it so the President
can't use it because how can the President do all these things? But we
already know that the President doesn't do all these things. The
practical implication of this waiver is that when a process is stopped
that has otherwise been approved or that would otherwise be exempt, the
decision is not going to be made by a deputy assistant secretary in the
Commerce Department or an unknown person in the Defense Department. The
person who will have to answer to the public for the decision is the
President.
What does that do? It guarantees that the agency representatives are
not going to make this decision to circumvent the process for a light
or transient reason. But if the President believes, based on the best
advice he is given, that the product should not be exported, then the
decision is made and it is not exported.
I do believe we have put together a good system of checks and
balances. The Thompson amendment makes it too easy to bail out of the
system. An agency representative can always say no if he objects, but
what he cannot do is cause delay after delay. That is what we are
trying to deal with here, and I hope my colleagues will vote no on the
Thompson amendment.
Let me repeat, since I see that our distinguished colleague has come
to the Chamber, I am hopeful we can get together, perhaps in the
morning, with those who still have concerns about the bill to see if
there is anything we can do to deal with those concerns. I know some
suggestion has been made that we might have a blue ribbon panel to
evaluate the entire process. I haven't talked to Chairman Sarbanes in
any detail about that. But I think that is something we would be
willing to look at as an addition to what we are doing.
What we want to do is pass a good bill that I believe America needs.
I yield the floor.
The PRESIDING OFFICER. The Senator from Maryland.

[[Page S9060]]

Mr. SARBANES. Mr. President, I take this opportunity while Senator
Gramm is still with us on the floor to depart from the debate on S. 149
for a moment and say a few words about my very able and distinguished
colleague who announced earlier this afternoon that he will not be
seeking re-election next year in 2002. I think that comes as a surprise
to many of us. We heard the stories, but no one ever assumed they would
amount to anything. All of a sudden, they have.
I just want to say a few words about our working relationship and
also, of course, to wish Senator Gramm the very best. I know that this
decision was influenced by his desire, in a sense, to begin a new
career and by some family considerations. Of course, I respect those.
Obviously his presence here in the Senate--a very strong presence, I
might observe--will be missed post-2002 or post-January 3, 2003.
Just as we are co-managing this reauthorization of the Export
Administration Act today, I think we have accomplished a great deal
working together in our respective roles on the Senate Banking,
Housing, and Urban Affairs Committee.
Senator Gramm was Chairman of the Committee from January 1999 to June
2001. I have to say that virtually every major piece of legislation
that came out of our Committee came out either unanimously or very
close to it with one exception. We had a big dust-up, as it were, over
the financial services modernization bill, essentially over the CRA
provisions.
We subsequently worked it out with the Administration and the bill
finally passed on the Senate floor in November of 1999 by a vote of 90-
8. In the end, we found our way through and reached an understanding
and an accommodation.
I want to acknowledge Senator Gramm for his leadership during his
chairmanship on the following bills: the Competitive Market Supervision
Act, the International Monetary Stability Act, the Manufactured Housing
Improvement Act, and the Public Utility Holding Company Act. In the
area of housing and urban affairs, we have passed into law elderly
housing legislation; reforms to the rural housing program; and reforms
to the Native American housing program. This year we passed Market-to-
Market reform and reauthorization legislation through the Committee.
The President also signed into law the Iran-Libya Sanctions Extension
Act on August 3, 2001. I think the Committee has had a very good track
record under his leadership in the last Congress and at the beginning
of this Congress.
I also want to acknowledge that without Senator Gramm's active
leadership on the Export Administration Act, we actually would not be
on the floor today. I also look forward to working closely with him on
the reauthorization of the Export-Import Bank and the Defense
Production Act.
I have to say we are going to miss Senator Gramm. I think that is
obvious. I want to say that despite what the President wanted to report
about our working relationship, I think we have had a very positive and
constructive relationship. It happens that we differ from time to time
on an issue--but what is this place about if it doesn't allow room for
those sorts of differences? Yet as I indicated, in virtually every
instance we were able to accommodate those differences, work through
them in a rational fashion, and reach good decisions on behalf of the
public.
I know of the determination and commitment with which Senator Gramm
has represented the people of Texas as one of their two U.S. Senators
in this body. I know of his own very strong commitment to a peaceful
and prosperous America, and his keen interest in economic policy. We
have had a lot of very good discussions in the Committee on that very
subject. I didn't want the occasion of his announcement just a little
earlier this afternoon to pass without taking the floor and making a
few comments. I look forward to continuing to work very closely and
cooperatively with Senator Gramm over the balance of this year and all
of next year. I hope we can continue to cooperate together and do good
things for the country. I say this to my colleague with all respect and
affection.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Mr. President, let me first say that I appreciate Senator
Sarbanes' remarks. When your mama says something nice about you, people
expect it. I do think Senator Sarbanes is correct, and I don't think I
will do him any harm in Maryland by saying that he and I differ on a
lot of subjects. In fact, it might well help him politically by saying
that. But when we ended up running the Banking Committee--Senator
Sarbanes as a Democrat and me as a Republican--everybody assumed that
people who differed on as many issues as we differed on would never get
anything done. I appreciate very much his kind comments, and I
appreciate his pointing out the plain truth, which is that we have
gotten a near record amount done. We have achieved that by recognizing
that under our system you get things done by working with people
instead of running over people. I have been chairman and Senator
Sarbanes has been chairman, and I assume he will be chairman for the
remainder of my time, but you never know. Maybe Senator Reid will have
a change of heart and decide to come join us. Who knows?
In any case, I am very proud of our record, and I am very proud to
have Senator Sarbanes' friendship. Thank you.
The PRESIDING OFFICER. The Senator from Nevada is recognized.
Mr. REID. Mr. President, if I may take a minute, I have been
fortunate in the last 3 years or so to spend most of my time here on
the floor. Every time Senator Gramm of Texas comes to the floor I
always anticipate a good experience. I may not agree with what he is
saying, but nobody is more in tune with the subject matter and more
entertaining than Senator Gramm.
I have not served on committees with Senator Gramm. He served in the
House, as I did, and we have served in the Senate together. We have
never worked on committees together, as you do a lot of times, where
you really get to know people. But I have gotten to know Phil Gramm by
virtue of the fact that I have such great respect for what he says. I,
like Senator Sarbanes, don't agree all the time with what he says, but
I have to tell you I have great appreciation for the way Senator Gramm
says it and the fact that he is a man of conviction. He talks about
what he believes is the way it should be.
He is a person who got an education not in an easy fashion. Senator
Gramm may not want a lot of people to know, but I have heard him saying
this, so I am not speaking out of school. He had some learning
disabilities. Yet he turned out to be one of the finest scholars Texas
had and one of the finest scholars the Senate has ever had. He is a
Ph.D., a professor.
I am going to enjoy very much the next 18 months with Senator Gramm,
as I have the prior 19 years or so I have spent in Washington with him.
But there will never be another Phil Gramm. He is one of a kind. He has
really dedicated his life to public service, for which I have no doubt
the State of Texas is a better place.
Phil Gramm is virtually unbeatable in Texas. It is bad news for the
people of the State of Texas that he is leaving. The good news for us
in Washington is that he is leaving and we are going to have an
opportunity to take the Senate seat. We could never do that with
Senator Gramm here. We know it is an uphill battle he left there.
I wish words could connote the warm feeling that I have for Phil
Gramm. I just think the world of him. I like him a lot. He is a fine
person, and I hope his family is proud of him and also the people of
Texas, as they should be.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. THOMPSON. Mr. President, I suppose I am going to have to say
something nice about Senator Gramm. In all honesty, I have a tremendous
amount of admiration for Senator Gramm, and it was with great sadness
that I learned a short time ago he decided not to run again. Regardless
of what anybody else does here, I think this institution needs a Phil
Gramm. The institution is going to have to come up with another one
now, it looks like. But the institution has been better for his having
been here.
I know of no one who has more intellectual honesty and who is more
fearless in the pursuit of the things in which he believes. More often
than not,

[[Page S9061]]

they are the things in which I believe. But that is almost beside the
point. I want to express publicly to him my tremendous admiration for
him and for the service he has rendered the State of Texas and our
country.
I will yield to anyone else at any time who wants to speak to this
subject. But if not, I will continue on with the business at hand. I
believe Senator Enzi wants to speak.
The PRESIDING OFFICER. The Senator from Wyoming is recognized.
Mr. ENZI. Mr. President, it is with a lot of regret and sadness that
I learned of this decision this afternoon. I came to the Senate just
4\1/2\ years ago, which would be about the equivalent of the college
degree.
During that time, I have gotten to study under Phil Gramm. There have
been a lot of times that I really thought I ought to be paying him
tuition. It has been a tremendous educational process. If we could just
get him to be a little more outspoken.
I do recall he said when he retires he is going to retire to a town
in the United States that does not have a single traffic light. I
assume there are still some of those in Texas. If there are not,
Wyoming would welcome the Senator with open arms. We would love to have
him there and, of course, we are looking forward to the game against
his alma mater, Texas A&M, the team the Senator follows day in and day
out, and we are looking forward to a good contest.
I thank the Senator for all of the instruction that he has given, for
the education he has provided for America. I have appreciated the
stands he has taken and the ferocity with which he has taken them.
Thanks again for the education.
Mr. GRAMM. Thank you, Mike.
Mr. REID. Mr. President, I ask unanimous consent that the Senate vote
in relation to the Thompson amendment No. 1481 at 5:15 p.m. today, with
no second-degree amendments in order to the Thompson amendment; that
prior to the vote there be 4 minutes for debate equally divided in the
usual form, with no other intervening action or debate.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. THOMPSON. So we will vote at 5:15 on this amendment that we are
discussing right now.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, I will address the issue concerning the
amendment I have submitted having to do with the amount of time
agencies would have to consider a license application. This amendment
provides additional exceptions from acquired time periods for
processing license applications if the reviewing agency requires more
time due to the complexity of the analysis or if the reviewing agency
requires additional time based on the potential impact of the export on
national security or foreign policy interests of the United States. It
limits any additional time to not more than 60 days.
In other words, what this amendment does--first of all, as it is
currently drafted, it gives an agency 30 days to look over this license
application and to come to a decision as to whether or not it wants to
go along with it or try to oppose it. If the agency is not heard from
within 30 days, then it is deemed the agency waives its rights and the
agency approves it.
What this amendment does is it takes a particular set of
circumstances where there are national security implications; in other
words, the Department of Defense takes a look at something and says:
Perhaps this is a very complex application, and it very well may have
national security implications. We simply cannot get this done in 30
days. We need additional time.
As to the Cox Commission, I hope my friends who are sponsoring this
legislation will not choose the Cox Commission as authority when it
chooses and ignore the Cox Commission when it makes recommendations
that oppose it because the Cox Commission concluded in its
determination that there were undue time pressures brought to bear on
these agencies sometimes. We needed to get the merchandise out the door
when these agencies were trying to make these national security
determinations, so they came up with recommendations that are
consistent with what we are talking about here.
The amendment was accepted unanimously by voice vote in the House
International Relations Committee markup of the Export Administration
Act. The Cox Commission recommended this: With respect to those
controlled technologies and items that are of greatest national
security concern, current licensing procedures should be modified to
provide longer review periods when deemed necessary by the reviewing
executive department or agency on national security grounds.
I have heard it said this is when there is great national security
concern.
As I indicated, the Cox committee recommended additional time be
given under appropriate circumstances, and these are appropriate
circumstances. Opponents of this amendment say these are just
circumstances where there is substantial national security concern.
I ask my colleagues, how do we know whether or not there is a
substantial national security concern if the agencies that are
determining that do not have sufficient time enough to investigate it?
Are we going to decide if the Department of Defense believes it needs
additional time and believes there may be national security concerns?
Are we going to cut them off prematurely because they cannot make out a
prima facie case at that point?
Should they not, as the agency dealing with this and having the
expertise, be given, in a matter of national security--as we are trying
to get the merchandise out the door, let us remember what we are
talking about--national security. Do we not let the Department of
Defense have a little additional time to make sure we are not sending
something dangerous to somebody dangerous?
I do not fully appreciate the talk of the balance between jobs and
security. We are not dealing with a jobs bill. We are dealing with a
bill that is designed to protect national security. We are not
balancing off how much money somebody could make. Three percent of our
total exports are exports to these controlled companies, so we are
talking about most all of them are approved. We are talking about a
fraction of 3 percent.
They have a very effective lobby and they have been doing their job
well, but let us not lose sight of the smallness of the exports we are
talking about in terms of the total economic picture. Even if it were
large, I would think the same way about it. If we want to talk about a
balance or a tradeoff, are we not willing to trade off a fraction of 3
percent over against, say, the Department of Defense when it has a
national security concern, having an additional 60 days to take a look
at it? Are we that eager to get the merchandise out the door when we
are being told on a regular basis these rogue nations are developing
this additional technology; that they are developing weapons of mass
destruction; that China and Russia are supplying them with technology
that will assist them in their weapons of mass destruction; that China,
which will greatly benefit from this bill, is taking our technology and
using it for military purposes; when our commissions and agencies are
telling us in their reports, whether it be Rumsfeld, Deutch, or our own
intelligence agencies that report on a biannual basis, that these
threats are growing and that they are using American technology; when
we hear things like Saddam Hussein has been furnished by a Chinese
company with technology that will assist him in his fiber optic cable
network that will actually assist him in shooting down American
airplanes--we have caught him twice at it now--and it is being supplied
by a company that has a relationship with a company in the United
States?
I hope if one of our boys gets shot down over there it is not
determined it is with American technology. It is not farfetched. I am
not claiming I can suggest anything that would forever prohibit that,
but we can surely give the Department of Defense an extra 60 days if it
believes it has a national security concern.
We have gotten past, I suppose, the debate on things such as foreign
availability. We are going to have somebody down in the bowels of the
Department of Commerce determine all that needs to be deregulated and
it is out the door; anything they say is foreign

[[Page S9062]]

available. Mass marketing: Somebody within the bowels of the Department
of Commerce decides it is mass marketed so all of that goes out the
door. Embeded components: If something is regulated and considered to
be sensitive because it can be used potentially for military purposes,
it is regulated, you have to have a license. But if somebody puts it in
a bigger component, you do not have to have a license for it or the
bigger component if the bigger component is worth more than 75 percent
of the total value of what is being shipped. It makes no sense at all.
It makes no national security sense. It might make economic sense for
some folks. But all that is by the board. We passed that. We will do
that and tell the President, catch him if you can, fixing it so the
President can't delegate any of this. The President has to make the
determination that he wants to come in with oversight action that will
go against this entire regulatory process when we have thousands of
these applications a year. We are not going to be able to do anything
with that. The train left the station. I can count votes.

Apparently, we have decided in this Nation to turn a blind eye to the
proliferation activities in this world, to the fact that we are now
subject to being hit from some of the smaller rogue nations, countries
that are starving their own people to death, putting their money into
missile and nuclear capability, to now hit us, our allies, or our
troops in the field, and we are opening the door wider to send stuff to
countries that are supplying the rogue nations. We have apparently made
that decision.
For goodness' sake, can't we give the Department of Defense a little
more time when they are asking us to hold up a little bit and make sure
we are not hurting our country? Do we have to draw the line at an
additional 60 days for that kind of consideration? If we can't do this,
we might as well fold up our tent and do anything that exporters want
to do. I don't see why we ought to have an export process anymore. It
clearly will not be designed to protect this country, which was its
original design.
I hope history does not prove this is an even more unwise decision
than I fear it might be. The cold war certainly is over, and it has
left a country that is more vulnerable than ever to our own technology.
Most of it we are not dealing with today. We are not dealing with
nontechnology matters. We are dealing with limited items in a very
narrow regulatory process. We approve 98 percent of them anyway, even
in the regulatory process. The average time it takes is 40 days. We
can't stop and take a deep breath long enough to make sure we are not
hurting our country, when it takes 40 days on average to get this done?
And the overwhelming majority are already approved.
We need to reauthorize the Export Administration Act. We need to
tighten it up, instead of loosening it. But that will not happen. It
will be loosened. I ask, can't we at least consider the agencies
involved, as the Cox commission suggested?
It has been said if there is a national security concern, they can
raise it later in the review process. If the Department of Defense has
not had time to adequately investigate the matter, it is already in the
interagency review process and they will not have the information on
which to base an objection. Do we want to force the process along so
fast we ensure the Department of Defense or the affected agency does
not have sufficient time to make an objection, had they known the full
extent of the nature of the export and perhaps the end user and how it
would be used and the potential uses for it?
We may have to go down this road, but we don't have to get in the
jetstream. We don't have to do it with blinders. I suggest this is a
minimalist amendment that we would want to pass to benefit the process
and to show the world we are not so intent on trade and money that we
will not even take modest measures to make sure we are not making a
mistake with regard to something important to our country.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. While the parties have been speaking, and we have been in
contact with the White House to see how difficult the time schedule in
the S. 149 bill would be to meet, I have been told there is no problem
meeting those time schedules, that the agencies can do that, the
agencies have done that; that the records show they have been able to
meet those time deadlines, and the administration is opposed to this
amendment.
This amendment allows the reviewing agency to stop the clock during
the licensing application process. One of our difficulties in arriving
at a bill has been to eliminate turf battles. The agencies are working
very cooperatively, but there is the potential of who will be in charge
of what and how long the delay and who can cause them, which changes
the balance between the agencies. This bill has that balance between
agencies.
The agencies agree--and there will be a letter on everyone's desk--
that they have the capability of operating 60 days under this bill.
This bill does not just give 60 days. It could give 120 days the way it
is written, which in addition to the 30 is 150 days for a process that
has been workable in less than 30 days by each of the three main
agencies that have been reviewing the bill.
Under this amendment, a single agency could further delay the
approval of the license based on the complexity of analysis and then
potentially use the other excuse to delay it another 60 days. The bill
already provides for several different ways to stop the clock on any
bill. The license applicant and the Secretary of Commerce mutually
agree more time is necessary to process the application, or if more
time is needed to verify and identify the reliability of an end user,
or if additional time is necessary to secure government to government
assurances regarding item end use, or if more time is required for
multilateral review if applicable or if additional time is needed to
allow for congressional notification, if that is required, if more time
is necessary to permit consultation with foreign governments, then, of
course, we have the essential provisions of the bill. First, an agency
could exercise any of these thought-out exceptions that are very
carefully defined in the bill. The two provisions in this amendment are
not carefully defined. So they give a very broad, general, bureaucratic
approach that allows people to pigeon hole a bill and walk away from it
for at least 60 to 120 days. They could use the carefully thought-out
defined provisions in section 401(g).
Second, any of the agencies are free to return a recommendation of
disapproval. That kicks the application into the interagency dispute
resolution process which would give additional time for the review.
Third, once within the interagency process, the agency can escalate a
decision to the higher level.
In practicality, after you and I have watched the process, Mr.
President, and seen how it works, it also works if the agency calls and
says we can give you a disapproval right now unless you can provide
additional time or information. That same process is an effective way
of stopping the clock, provided the application doesn't have to go back
to ground zero when it comes back in again. That is a mechanism that
has been used.
This amendment unravels the discipline of the system that has been
set out. With its capability of escalating clear up to the President,
there is a recognition that this can take a lot more time. That is how
the time element was addressed under the recommendations we had from
the different commissions.
A key recommendation of the various commissions that study our export
system is to increase the discipline in the export system. Without
deadlines, discipline disappears. Without discipline, the system is
unworkable. An undisciplined system is the same as no system at all.
The consequences for both our national security and economic interests
would be severe.
My colleague mentioned the Cox report. The Cox report was done before
S. 149 was done, or even S. 1712 was done. We reviewed those
recommendations. Recommendation No. 31 did suggest longer review
periods for national security purposes. The Cox Commission made that
recommendation only with items that are of the greatest national
security concern. For other items, the Cox Commission strongly
recommended streamlining the process and providing greater
transparency,

[[Page S9063]]

predictability, and certainty. We did that, plus building into the
system this system of referrals, that easier process of resolving
interagency disputes or interagency concerns, the ability to escalate
in the process. So that got built into the system at the same time,
which answers some of those concerns.
S. 149 does not classify items as being ``of greatest national
security concern'' or ``of lesser national security concern.'' It sets
up a risk-based system that allows the administration to make such
determinations within the bill's guidelines. Based on past experience
and demonstrated agency data, both the administration and the bill's
sponsors believe that S. 149's system, by setting mandatory time
periods with the existing ``stop the clock'' exceptions, is the most
effective framework for operating export controls. For that reason, the
bill does not include that particular and specific aspect of the Cox
Commission recommendation.
This amendment, although it is portrayed as simple and common sense,
undoes the key element of the discipline in S. 149. It would result in
an application system bogged down by bureaucracy and politics, a system
in which delays are the rule rather than the exception. It is not a
simple or technical change but would undo the careful balance of the
bill.
I have mentioned what can be a tendency. What we tried to do with the
bill was escalate the decisions up to the higher levels of government
rather than have the decisions made at the bureaucratic level. We have
tried to eliminate possibilities that, rather than make a decision,
people would pigeonhole things. This is one of those opportunities to
pigeonhole things for 60 to 120 days, with an undefined but good-
sounding concern.
I do urge rejection of this amendment and ask colleagues on behalf of
the administration to join me in that rejection.
Mr. REID. I suggest the absence of quorum.
The PRESIDING OFFICER (Mr. Johnson). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. KYL. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. KYL. Mr. President, I had indicated earlier that I wanted to
speak in favor of the Thompson amendment. I do that at this time.
It has been explained by the Senator from Tennessee. The point is,
there are some matters that would be very complicated, very complex.
Everyone acknowledges that. It may be that a 30-day time for review in
that circumstance would be inadequate.
All this amendment does is to say that the department, in that case,
could ask for an additional period of time, up to 60 days, to review
and be able to make its recommendation for export license under the
legislation.
This was the recommendation of the Cox committee report in 1999, when
it indicated that the existing 30-day limit for departmental license
review may be inadequate for complex requests that could have a lasting
national security impact. And since the legislation before us allows
only for extensions on a limited basis, and we think that it would be
appropriate, for, for example, the Defense Department, should it deem
it necessary to have a little more time, that that at least be written
into the bill as a possibility. That is what Senator Thompson has
sought to accomplish through his amendment. It seems to me to be
eminently reasonable. Therefore, I urge my colleagues to support this
very reasonable amendment.
The primary argument I have heard about it relates to a political
matter; that is, that the White House supports the legislation. We have
been advised that the White House supports the legislation without
change. I want to comment on that a moment.
My friends on the Democratic side of the aisle, the Senator from
Maryland, for example, in response to something I said earlier, wanted
to be sure I was aware of the administration's support. Indeed, I was.
I would like to make this offer to any of my Democratic colleagues. I
will support this legislation based upon the fact that the
administration supports it if my Democratic colleagues will commit to
me today that they will do the same for legislation that the
administration supports.
In other words, if I can get a letter from the Secretary of Defense
or the Secretary of Commerce or the Secretary of State on a matter that
will come before the Senate in the future, since they regard the
administration so highly with respect to the EAA and suggest that is
the reason why this legislation should be adopted without change, then
it seems to me, unless they are picking and choosing which opinion of
the administration they regard so highly, they should also regard
highly other opinions of the administration and be equally willing to
support those positions.
I am sure that as Senators we all like to pick and choose the things
on which we agree or don't agree with any administration. I am a
Republican. I happen to have a disagreement with the administration now
and then--not very often; in fact, very seldom. On this matter I do
have some disagreement.
I think it is not a sufficient argument in and of itself to say that
because the administration supports something, therefore we should vote
for it and then turn around on a subsequent matter which the
administration strongly supports and vote against them. I suspect that
my Democratic friends more often than not will find themselves in that
position in the future.

Mr. SARBANES. Will the Senator yield?
Mr. KYL. I am delighted to yield to the Senator from Maryland.
Mr. SARBANES. Earlier in the day when I first spoke on this bill, I
don't think the Senator was in the Chamber. I was very careful to make
the point that I supported this bill on the basis of my own judgment
about its contents. I then went on to add the point that the
administration was supportive of this bill, and obviously one finds
some comfort in that since much of what is in the bill involves the
executive branch making it work. So particularly on a bill such as
this, if they were against it, that would give one pause for thought.
I simply say to my colleague, it is a very interesting challenge he
puts forward. Without anticipating that he would make such a challenge,
I was very careful in my opening statement to make the point that my
support for the bill was based on my own judgment about its provisions
having worked through it very carefully. Over and above that judgment,
I also, of course, alluded to the fact that the administration was very
supportive of it.
Mr. KYL. Mr. President, I very much appreciate that comment from the
Senator from Maryland because that is the basis on which we should
approach this legislation--our own evaluation. I know that because of
the Senator's work on this issue. Prior to the strong expressions from
the administration, the Senator from Maryland was very supportive of
the legislation. I know that he is very truthful in what he just said.
I appreciate that. That is the position each of us should take with
respect to legislation regardless of which administration is in power
at the time and whether or not that administration supports the
legislation.
My point is that it is not a sufficient argument that we should
reject all the amendments because the administration supports the bill.
We should debate each on the merits. And on the merits of this
amendment, I see no real opposition. If because these matters of
national security are so important to the United States and there is
such a background of violations, particularly in this area of dual-use
technology, of countries acquiring things and then selling them to
somebody else or providing them in some other way to another country to
proliferate weapons of mass destruction inimical to the interests of
the United States, because we have such a history of that, so many
examples of it, we should be bending over backward to ensure that we
have proper control over the export of these dual-use technologies. And
we should not simply be opening it up to essentially free license, and
if an agency isn't able to complete its review within a 30-day period,
the clock runs out and you are deemed to have supported the export of
this particular item.

That is putting it exactly backward because matters of national
security should be our highest test. The rule should be exactly the
opposite. If you can't complete the review in 30 days, then you should
get a little more time

[[Page S9064]]

to complete the review, not to be told: Sorry, the clock ran out; if
you could not get it done in 30 days, no matter how complicated, no
matter how important the national security interest, the export is
allowed.
That is the problem with taking an approach that if the
administration supports the bill, it can't be changed in any respect.
There are some things about this bill that should be changed.
Representatives of the administration have made it clear to the Senator
from Tennessee and myself and others that they recognize there will
have to be implementation of this legislation by executive order. Some
of the concerns we have expressed, they assured us, would be dealt with
in this executive order in some way or other. I have absolute
confidence in the administration with respect to that. Obviously, they
have not issued any executive order yet. It would be premature to do
so.
But failing to understand what specific things might be addressed, we
think it is important to try to fix those problems now, and one of the
problems deals with this question of possibly needing a little more
time. I just ask my colleague, what could be lost, what could be wrong
with having a department--let's say the Department of Defense, if it
says it needs more time--get a little more time? This is too serious to
put an arbitrary 30-day clock on and say: Sorry, time is up, national
security be damned; the 30 days ran out, and the export is allowed to
go forward. This is the problem with this strict provision in the law
with no ability to move out of it.
That is why the Thompson amendment makes sense. That is why I hope my
colleagues support the Thompson amendment. It is specifically
recommended by the Cox Commission report. I believe--and I ask my
colleague from Tennessee if my recollection is correct--the House of
Representatives has already incorporated this recommendation of the Cox
committee report in its legislation. I am not certain. I ask the
Senator from Tennessee for his understanding of that.
Mr. THOMPSON. Yes. The House committee reported this out with
unanimous consent.
Mr. KYL. Mr. President, that includes the provision of the Senator's
amendment in it; is that correct?
Mr. THOMPSON. I believe it is essentially the same.
Mr. KYL. Very similar thereto. There you have it. It seems to me we
are already making changes to the legislation. We should not be so
hidebound to every specific jot and tittle in a bill which is now 327
pages long, very complicated, that we can't make a few changes in this
legislation.
I urge my colleagues to consider exactly what Senator Thompson is
proposing. It is simple and straightforward. It seems to me that for us
to just say, no, there is going to be no extra time, no matter how
complex the issue or how strongly the Department of Defense may want
it, they are not going to get any more time, is not wise public
policymaking. I urge my colleagues to support the Thompson amendment.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. What was the unanimous consent with regard to the
provision of time right before the vote?
The PRESIDING OFFICER. Four minutes evenly divided prior to the vote.
Mr. THOMPSON. All right. That was my understanding, 2 minutes per
side.
The PRESIDING OFFICER. The Senator is correct.
The Senator from Maryland is recognized.
Mr. SARBANES. Mr. President, I want to take advantage of these few
minutes to address a couple of the points the Senator from Arizona
raised.
First of all, in fiscal year 2000, the data indicates that the
average time for the review of a license by the Department of Defense
was 13 days. The Department of Energy averaged 22 days. The State
Department averaged 9 days. The 30-day time period that is in the bill
is identical to the current practice under the Executive order. The
amendment would add an additional 60 days in each of two separate
circumstances.
Of course, one of the things we were trying to do here was to set up
a process whereby applicants could get a definitive decision within a
defined timeframe. Now there are provisions in the bill to stop the
running of a clock, a couple of which directly go to the end user issue
which the Senator from Arizona raised, as requiring further time to
ascertain the end user issue.
There are these exceptions that stop the clock, as it were, on the
time period. That involves the identity and reliability of the end user
in one instance and additional time to secure the government-to-
government assurances regarding end item use. So the very concern that
the Senator raised is actually addressed in the legislation in terms of
stopping the clock and providing extra time.
I think it is important to underscore that one of the things we were
trying to provide to the exporters, which we think is important, was
that they could get an answer within a defined period of time. Often
they are more concerned in some instances in getting an answer. They
need to know, yes or no. They are often competing in an environment in
which they have to find out whether they can move forward or not. A
department having difficulty with the application can simply say: We
think it should be denied. Of course, if they say that, you can then
start the interagency appeal process working. But of course that
extends over a sustained period of time.
So we think the framework that is in the legislation really
adequately addresses these concerns. It does represent a balance, and,
as I indicated earlier, we are giving quite extensive powers to the
executive branch in here.
One of the things the business community was concerned to get was a
framework with some discipline in it into which they could get an
answer. If you are left hanging, you don't know what to do.
So given the provisions for stopping the clock that are in there, we
think to add another 60 days on top of this period would extend the
process to such an extent that the exporters really could not function
in the real world.
Now if the time period was taking a lot longer to get agency
response, we could be sensitive to that argument. But that is not the
case. In any event, the very people who are concerned with making this
work, upon whom the burden would fall, have indicated that they find
the time periods that are in the bill quite acceptable and, in fact,
are in opposition to the proposed amendment. They are the very ones who
would have to make the process work. So I think that is also an
important consideration to take into account.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. THOMPSON. Mr. President, this amendment does nothing to lessen
the certainty for the exporters. Under the old law, it is 30 days the
agencies have. Under the new law, it will be 30 days. The only
difference is that in the case of potential national security, an
agency would have additional time. The agency doesn't have to take that
time. If the average time for these licenses, as the Senator described,
was 13 days, it certainly doesn't sound like that bureaucratic mess we
heard described earlier.
The PRESIDING OFFICER. I remind the Senator that we are now under
controlled time.
Mr. THOMPSON. I will use my 2 minutes. It doesn't sound like that
bureaucratic mess we had earlier. These 14-day cases are streamlined
where there is no controversy. We are trying to deal with a situation
where national security might be involved. You don't know whether or
not you want to object, if you are an agency, until you get into it.
I have heard it referred to again that the agencies apparently do not
want this, and it may be politically incorrect for me to say this, but
it is quite obvious the administration has passed the word they want
this bill passed without amendments, even to the point where they do
not want agencies to be given the opportunity to ask for another 60
days, even in a matter of national security. I think that is extremely
unfortunate.
It is surprising to me, but apparently that is the case. However, it
does not make it right.

[[Page S9065]]

I ask my colleagues, in light of the proliferation concerns that this
country has, in light of the developing technology, the fact that it is
being proliferated around the world and posing a danger to us, that
certainly in this export licensing process we can afford to give our
agencies, such as the Department of Defense, a little additional time
if they have a national security concern.
It is not going to put anybody out of business, and it is not going
to hurt the overall export process. And what if it does if we are
saving something from being exported that otherwise should not be? It
is a very simple matter to dispose of, but it is a very important
matter to get right.
I yield the floor.
Mr. GRAMM. Mr. President, I yield myself 2 minutes.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Mr. President, I have no question about the sincerity of
Senator Thompson's amendment. He has worked with us on this bill, and
against us to some extent. We have made 59 changes in the bill to
accommodate Senator Thompson and people who share his concerns, but let
me explain to my colleagues why this amendment is not good.
We have established a system that for the first time is giving the
security agencies a voice in this process. We have changed the system
so one member of the panel, from any one agency, can vote no, and the
process at that point is denied and it has to be appealed to a higher
level.
It is not like the old system, where the person from the Department
of Defense could express concern but they could be overridden. Under
the current system, you just have to have one person say no and the
process either ends or it is bumped up to the next level.
Finally, we give the President a new national security power that
says no matter what the circumstances are, no matter whether a product
is mass marketed or not, no matter whether a terrorist group or a
terrorist nation or a would-be adversary could get the product from any
other source, if the President believes it threatens national security,
it is stopped.
What this amendment would do would basically terminate the
effectiveness to the system by saying that at any point anybody
believes there is complexity in the analysis or there is a potential
impact on national security or foreign policy interest, they could
indefinitely delay. What we want is a decision. Remember, the reviewing
officers can vote no, but we want them to vote yes or no. That is what
the process is about.
I urge my colleagues to defeat this amendment.
I move to table the amendment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The question is on agreeing to the motion.
The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. REID. I announce that the Senator from Vermont (Mr. Jeffords),
the Senator from Massachusetts (Mr. Kennedy), the Senator from
Washington (Mrs. Murray), and the Senator from New Jersey (Mr.
Torricelli) are necessarily absent.
Mr. NICKLES. I announce that the Senator from Pennsylvania (Mr.
Santorum), the Senator from New Hampshire (Mr. Gregg), and the Senator
from Alaska (Mr. Murkowski) are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas, 74, nays 19, as follows:

[Rollcall Vote No. 274 Leg.]

YEAS--74

Akaka
Allard
Allen
Baucus
Bayh
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bunning
Burns
Byrd
Campbell
Cantwell
Carnahan
Carper
Chafee
Cleland
Clinton
Collins
Conrad
Corzine
Craig
Crapo
Daschle
Dayton
Dodd
Domenici
Dorgan
Durbin
Edwards
Ensign
Enzi
Feinstein
Fitzgerald
Graham
Gramm
Hagel
Harkin
Hatch
Hollings
Hutchison
Inouye
Johnson
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
Lott
Lugar
McConnell
Mikulski
Miller
Nelson (FL)
Nelson (NE)
Nickles
Reed
Reid
Roberts
Rockefeller
Sarbanes
Schumer
Smith (OR)
Stabenow
Stevens
Thomas
Wellstone
Wyden

NAYS--19

Cochran
DeWine
Feingold
Frist
Grassley
Helms
Hutchinson
Inhofe
Kyl
McCain
Sessions
Shelby
Smith (NH)
Snowe
Specter
Thompson
Thurmond
Voinovich
Warner

NOT VOTING--7

Gregg
Jeffords
Kennedy
Murkowski
Murray
Santorum
Torricelli
The motion was agreed to.
Mr. SARBANES. Mr. President, I move to reconsider the vote.
Mr. ENZI. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. SARBANES. Mr. President, we are prepared to continue debate on
this measure.
Mr. President, that is the last vote today. If there are Members who
wish to speak on the bill--earlier I thought there were and I am now
not certain--we would be prepared to stay on in order to get that done
and thereby help to clear the deck so we can move ahead tomorrow with
respect to other amendments and towards final passage of this
legislation. I have no one at the moment indicating any desire to
speak.

____________________