[Congressional Record Volume 147, Number 114 (Wednesday, September 5, 2001)]
[Senate]
[Pages S9110-S9117]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              EXPORT ADMINISTRATION ACT OF 2001--Continued

  Mr. INHOFE. Mr. President, on the bill before the Senate, it is my 
understanding some people are trying to work out an agreement, but I 
rise in opposition to the Export Administration Act. A lot of people 
state the purpose of this bill is to protect the national security. We 
are kidding ourselves. The real objective of those who wrote this bill 
and who actively support it is to promote trade and transfers of the 
very dual-use high technologies which, in the wrong hands, pose a 
serious threat to national security. Their emphasis is such liberalized 
trade will be good for the economy, but we have to ask: At what price?
  This debate does not occur in a vacuum. We have the record of the 
last 8 years when we had an administration which deliberately ignored 
and undermined our Nation's cold war system of export controls designed 
to protect national security. Their attitude was that the cold war was 
over so there was no real threat out there. Why worry about technology 
transfers? Why worry about rogue state missile systems and weapons 
programs? This flies in the face of everything that is logical.
  We have had very serious problems in hearing things taking place in 
China. During the elections in Taiwan when there was a notion we might 
go in there and try to intervene, they were trying to intimidate the 
elections by firing missiles in the Taiwan Straits. Later on the second 
highest ranking Chinese military officer said: We are not concerned 
about America coming to the aid of Taipei because they would rather 
defend Los Angeles.
  Then we had the Defense Minister of China saying, war with America is 
inevitable, which he has repeated 3 times, once in the last 8 months. 
We have a serious problem out there and we have to recognize that.
  My fear is a lot of this technology is going to go to countries such 
as China, and specifically China.
  I will review the actions of the Clinton administration. The first 
thing they did in 1994, shortly after taking office, they ended COCOM, 
the Coordinating Committee on Multinational Export Controls. This was 
put together so we and our allies could all agree not to export high 
technology that could get in the hands of the wrong people. That system 
was set in place, and in 1994 the administration ended that.
  The administration, shortly after that in 1996, took control of the 
authority on export licenses out of the hands of the State Department 
and put it in the Commerce Department. Later they recognized it was 
wrong, the public recognized it, and after the Cox report they moved it 
back to the State Department.
  The granting of waivers for missile defense technologies--we all 
remember the significant problem we had when the administration signed 
a waiver to allow China to have the guidance technology produced by the 
Loral Corporation, owned by the Hughes Corporation, that allow the 
Chinese to have the guided-missile technology that gave them more 
control over where the missiles might go, even if one might be coming 
toward the United States. They allowed transfer of high-performance 
computers, which ended up helping improve Chinese military systems.
  The theft of our nuclear secrets, at that time we had 16 nuclear 
compromises. Eight were before the last administration; eight were 
during the Clinton administration. We discovered that of the eight 
before the Clinton administration, one went back as far as the Carter 
administration, which was discovered by this country when a walk-in 
informant came to a CIA office with the documentation that China had 
that information from those other compromises from the previous 
administration. Yet it was covered up until the Cox report came out 4 
years later and we realized China had virtually everything.

[[Page S9111]]

  The main thing that concerns me is we have a threat out there today. 
We have been guilty of allowing our nuclear secrets to get into the 
hands of the wrong people. Until this is under control, I think it 
would be premature, in my opinion, to pass, to implement those changes 
recommended in the Export Administration Act under consideration today.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. 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. REID. Mr. President, we have been here now since 2:15. Senator 
Leahy spoke in morning business about Northern Ireland, which was very 
lucid and understandable. I appreciate his remarks. We had the Senator 
from Oklahoma, Mr. Inhofe, talk for 5 minutes or so about this bill 
directly and indirectly. We have a few people who oppose this 
legislation, but they literally are holding up not only what is going 
on in the Senate but what we need to do for this country.
  We have eight appropriations bills that need to be passed. We could 
be working on those. We have the education bill and some things we 
still need to finalize. We have conference reports. We have lots of 
things that need to be done. There is a hue and cry that we need to get 
to the Defense bill. We need to do Defense appropriations. We can't do 
that until we do the Defense authorization bill.
  I hope everyone understands that one of the alternatives available on 
this bill and any other bill is we can move to third reading. We could 
do that right now. We, of course, will not do that. I will confer with 
Senator Sarbanes. I hope Senator Enzi, who has been managing this bill 
for the last 2 days, will confer with the ranking member of the Banking 
Committee, Senator Gramm, to see if we can get permission to do that. 
We really want to move forward on this.
  I see the chairman of the committee here who has worked so diligently 
on this bill. I say to my friend from Maryland that we are getting 
requests now for morning business that are totally unrelated to this 
legislation. We have been here all this afternoon. We had some very 
good statements this morning on the bill. It is important that Members 
have an opportunity to speak on the bill. Here we are, doing nothing, 
with so many things left to do.
  I say to my friend from Maryland who is so ably managing this bill 
that I think we should be arriving at a point soon, if Members aren't 
willing to come over and talk about what they want or are not willing 
to offer amendments, we move to third reading. Certainly there is 
nothing in the order that would prevent that. Senator Daschle said he 
would not move to cloture under the agreement with Senator Thompson, 
and he will stick to that. But that doesn't mean we do nothing all day 
Wednesday, Thursday, and Friday.
  I know the Senator from Maryland is trying to work out a compromise. 
All I am saying is that I hope before we have an afternoon of morning 
business we decide whether or not we are going to be able to complete 
this legislation.
  Mr. SARBANES. Mr. President, first of all, I don't think we should go 
to morning business. I think we should stay on the bill even if there 
is a period of time when we are in a quorum call.
  Second, I say to my colleagues who are listening that if anyone has 
any statement they want to make, they had better get over and do it 
because we are working on an amendment which is sort of being cleared 
downtown. If we can get clearance on that and an accommodation, I hope 
we can then adopt that amendment, probably have some colloquy, do a 
managers' amendment, and go to the third reading of the bill and finish 
this bill. That would be our objective.

  So if we start moving that way, and people who have not been around 
and have not been engaged in the process then want to make a statement, 
or maybe all of a sudden appear from somewhere and offer an amendment, 
we are going to say: Where have you been? We have been biding our time 
and waiting and wanting to move ahead, and so forth and so on, and you 
were not here.
  But at the moment we need to get the clearance on this amendment we 
are working on. We think that is in the works. That is the best I can 
say to the majority whip on that score.
  The PRESIDING OFFICER (Mr. Carper). The Senator from Arizona.
  Mr. KYL. Mr. President, I concur in the admonition of the chairman 
and the manager on the Republican side that Members who have something 
to say should come down and speak because as we speak there are some 
discussions going on about some possible amendments that would move us 
much closer toward a time when the bill could be completed. In fact, 
some of us are meeting at 3:30 to try to resolve some issues that are 
pending right now. So I join in the comment made that people who wish 
to speak to the bill should do so as soon as possible.
  I will take this opportunity to highlight some of the issues, a 
couple of which might be the subject of a potential agreement that 
would be added to the bill and that might help to move it along to 
completion.
  As I said in my other remarks, there are some concerns about the way 
current agreements have been enforced or have not been enforced with 
respect to dual-technology items that have been sent to these 
countries. There is a provision in the bill that enables the United 
States to come down hard on a company which receives an item that is 
supposed to be used for commercial purposes--for research or university 
purposes, something such as that--and then in turn transfers that item 
to some kind of defense program that is unauthorized in the license.
  Just to use a purely hypothetical example, I said there might be some 
nuclear generation facility component which is sent to help build a 
nuclear generating plant, but the end user, instead of being that 
commercial reactor facility, sends it over to some defense plant, which 
then uses it in their nuclear program for weaponry. That would be a 
good example of an improper application of one of these dual-use items 
where the license had been granted for shipment for one purpose but it 
turns out to have been used for another.

  We have a postshipment verification requirement ordinarily. That 
means we have somebody who goes over and makes sure the item was used 
in the way and in the place they said it was going to be used. The 
problem is, in the past we have found those postverification shipment 
procedures are not followed all the time. Indeed, a lot of the time 
they are not followed, and there is not much the United States can do 
about it.
  I quoted the statistics earlier today--I am not sure I have them 
here--but the fact is, with respect to satellites, the United States 
has an agreement with China that was entered into in 1998 that provides 
some degree of postshipment verification that the satellite is being 
used where it is supposed to be used, and so on, but it turns out less 
than a fourth of the required verifications have been permitted. They 
have been delayed. There have been requests by the Chinese Government: 
Let us do the inspection rather than have you do it--this kind of 
thing.
  Clearly, if we are going to have a liberalization of our export 
control policy, and we are going to be granting more licenses to permit 
the shipment of dual-technology items which could be put to military 
use, and we are willing to say, look, if you will put it to commercial 
use, OK, but we don't want you to put it to military use, and we want 
to have somebody check that after the fact to make sure that is 
correct, if we are going to do that procedure, we have to make sure it 
works, and there has to be some penalty for those who violate it.
  The bill has a penalty if it is a company that violates the 
procedure, but there is no provision to deal with a country that 
violates it. So one of the proposals that is under active consideration 
right now as a possible amendment that could be agreed to would make a 
minor change, but it would have a major effect.
  In reference to the subsection on page 296 of the bill, the first 
seven lines in this case would read: If the country in which the end-
user is located refuses

[[Page S9112]]

to allow post-shipment verification of a controlled item, the 
Secretary--meaning the Secretary of Commerce--may deny a license for 
the export of any other controlled item until such post-shipment 
verification is allowed.
  It is very straightforward. It is not mandatory, so there is nothing 
that makes the Secretary of Commerce do this. But at least the 
Secretary would have an ability to say to a country, such as China, for 
example: Look, you have not allowed us to inspect the ultimate user of 
the last three items we sent you, so we are not going to approve any 
more licenses--at least of products A, B, and C--until you allow that. 
That might be one way to help get this provision of postshipment 
verification enforced.
  So that is one of the ideas we have. As I say, it is one that is 
being discussed right now. It is one on which possibly there could be 
some agreement. We hope so. If so, I think that will advance the time 
that we can get the bill resolved.
  Another question has to do with this matter of a product that is 
available in foreign markets. The concept of the proponents of the bill 
is if a product is available in a foreign market, then the cat is 
already out of the bag; we might as well let American companies compete 
for that business, too.
  I raised a lot of questions this morning about how that really works. 
But leaving that aside, at least one very modest addition which 
certainly would help somewhat would be to ensure that not only are the 
items comparable in the sense that if you can buy this particular kind 
of computer in country A, then why restrict American companies from 
selling the same kind of computer?--that what we would want to do is 
ensure that we are talking about computers of comparable quality, not 
just that they are sold for roughly the same price, not just that they 
have roughly the same capacity, but that they are truly of the same 
quality.

  The reason for that is most people would like to buy American 
products because of their quality. It is not enough to say you can buy 
a similar computer three other places in the world if you are not ready 
to establish that the computer you are talking about in those three 
other places is of comparable quality to the U.S. computer. It does not 
matter if it has the same capacity and if it costs roughly the same; if 
it is not as good, if it does not have the same quality, then it would 
not be a comparable item. We just want to make sure when we are talking 
about foreign availability we really mean the same basic kind of 
product is available in those foreign countries.
  To give you an illustration, you can buy two different cars that go 
just as fast. One goes just as fast as the other one. One has just as 
much acceleration as the other one. The air-conditioner is just as 
good. And it costs about the same amount of money. But what you might 
find if you read Consumer Reports is the first car will last you about 
20,000 miles and then it becomes a piece of junk, whereas the second 
car has much better quality. It has a 50,000-mile warranty. It has a 
great service record. The company will always take care of it if there 
is something wrong, and so on.
  That is just a hypothetical example. But I think if we are going to 
say we are going to permit the export of items as long as they are 
available anywhere else in the world, even though they are products we 
would just as soon not fall into the hands of the wrong countries, if 
we are going to go that way, we have to make sure we are at least 
talking about goods that have comparable quality. I think the addition 
of some language in that regard would be very useful.
  Another idea that has been discussed--and there are others who, 
frankly, would be better able to discuss this than I because it has 
been their idea--is to have some kind of commission, a blue ribbon 
commission that would evaluate the success of this new regime after it 
has been put into place.
  Nobody knows for sure how this is going to work. I think almost 
everybody would concede we are in unchartered territory, that the 
stakes are enormous, and that what we do not want to do is find out 5 
years down the road that something we put in place --locked into place 
in statutory form--is actually permitting the rogue countries of the 
world to acquire a lot of equipment or technology that we would rather 
not have fall into their hands simply because we were not careful 
enough in writing the legislation.

  I don't think most of us are smart enough to predict that far in the 
future exactly how we want do all of this. The notion has been that it 
would be good to have in place some kind of a blue ribbon commission 
which could be appointed in the not-too-distant future to examine how 
this is working and to make recommendations to the President and to the 
Congress on how to make improvements in that. We can talk about the 
details of how the commission is appointed and when it reports and all 
those kinds of things. This kind of idea is a good idea, and it would 
be useful to have that incorporated into the legislation as well.
  I believe there will be some kind of agreement on this. I think the 
parties are talking. Everybody recognizes the value, the utility of 
that.
  A fourth area I will mention is that in the past the Department of 
Commerce has added items and subtracted items to the so-called 
controlled commodity list. It has done so under its own rules and 
regulations which could in fact and maybe does involve some 
consultation with other departments of government. It is a little 
unclear exactly how the process works. In the past, the Department of 
Commerce has been the department in charge. I believe the list is some 
2,400 items controlled right now.
  Part of the theory of the legislation is that some of those items 
would be taken off the controlled list so that a party wishing to 
export them would not have to come to the U.S. Government and obtain a 
license for the export of that item. That is probably appropriate with 
respect to many of these controlled items. Still we have to be careful 
that we are not taking items off the list which could in fact be used 
by a hostile country against the interests of the United States.
  Given the fact that the Department of Commerce has as its mission 
trade promotion, it is not exactly evident that that department is in 
the best position to judge whether or not an item should stay on the 
list. Obviously, it at least ought to be talking to the intelligence 
community, the Defense Department, the State Department, the Department 
of Energy, and so on. We want to have at least some recognition of the 
fact that as this is going to be administered in the future, the 
Department of Commerce will, to an extent appropriate, call upon the 
advice and counsel of these other departments in seeking to make 
determinations with respect to what items are on that control list or 
not.
  It may be that this is a matter the administration needs to think 
about and figure out how they want to handle. For my own part, I have, 
as I have said before, the utmost confidence in this administration and 
Secretary Don Evans and the other people who would be making the 
decisions. As a matter of fact, my only beef with Don Evans, the 
Secretary of Commerce, is that he hired away my chief of staff when he 
was confirmed. We have a great relationship. I have total confidence in 
him and in the people in his department. I believe they will, in fact, 
call upon the expertise of other people in government who may be in a 
better position to judge with respect to a particular item.
  They will have a lot of cross pressures, too. They will have folks in 
industry pushing them to decontrol as much as possible because 
obviously it is more costly and more difficult to export an item if you 
have to go get a license for the export than if you don't have to worry 
about that.
  Given these cross pressures, we would at least like to get some kind 
of commitment from the administration that it is going to look at this 
and try to find a way to ensure that the other departments of 
government are brought into the process as appropriate.
  There may be some other things, as the administration has indicated 
to us, that should be the subject of a subsequent Executive order to 
implement the legislation. Obviously, we will be interested in working 
with the administration on what some of those items might be as well. 
Some of them might be able to correct some of the problems I identified 
this morning and that some others have as well. We will be expressing 
that to the administration again. I

[[Page S9113]]

am sure they will respond with an appropriate response.
  These are the kinds of items we are talking about now as possibly 
being resolved by some kind of amendment or series of amendments that 
could get us to a conclusion on this legislation. Since it is very 
evident from the standpoint of those of us who have concerns about it 
that in the end legislation is going to pass and we have no desire to 
delay or to stall it, we are not going to win very many amendments that 
we propose. Notwithstanding the fact we are very serious and concerned 
about it, there is no point in us taking up the Senate's time or 
persisting in a matter on which we are not likely to succeed, 
especially if, as has been conveyed to us, a few changes might be 
possible to be agreed to here fairly quickly, and then we could move on 
with the conclusion of the legislation.
  That is why I add my comments to those of the Senator from Maryland 
and suggest that if there are those who would like to come here to make 
an opening statement about the legislation or to express concerns or 
support for it or any particular amendment, this would be a good time 
to do so. I am hopeful that within the next several minutes we will be 
able to meet and we will be able to confer about some of the things I 
have talked about and perhaps come to some conclusion. I am sure it is 
the position of the managers that they would like to move fairly 
quickly after that, if we are able to do that. Therefore, it would be 
appropriate to discuss at this time any concerns or other items with 
respect to this bill people would like to take up.
  I had indicated this morning that I would just quickly detail sort of 
a list of potential amendments in case anybody is interested. These 
were proposals that were prepared before the legislation was taken up. 
I don't know how many people are still planning on offering any of 
these amendments. My own view is that if we are able to achieve 
consensus on the items I mentioned a moment ago, it will probably be 
doubtful that these amendments will be adopted. Therefore, people might 
want to consider dealing with the subjects in some other way. I will 
just run through them quickly.
  One of the problems has to do with deemed exports. Deemed exports are 
basically transfer of technology, of knowledge, rather than a 
particular product, but that can, of course, be just as important to a 
rogue nation in putting together some kind of weapons program or 
missile program as the export of a particular item. Some of us believe 
we should deal a little bit more specifically with the matter of deemed 
exports. Again, that matter might be at least handled for the time 
being through some communication with the administration, assurance 
that it intends to deal with the subject in some way.
  I talked about the matter of the controlled list and how other 
departments probably need to have a little more involvement in that 
than the legislation itself provides. The legislation itself provides 
no assurance that any other departments will be involved in the listing 
of items on the controlled list. We think it would be a good idea if 
there were some assurance that they would be included in the process.

  I mentioned the standard of finding for foreign availability. There 
are quite a few different ideas about how that might be strengthened. I 
mentioned the one about comparable quality. I hope we can do something 
on that.
  There is a question that we are not going to pursue here--at least I 
will not pursue--but it could be the subject of an amendment. It is 
important. I wish we could do something about it. It had to do with 
taking a little bit of extra time to deal with matters that are 
particularly complex. The Thompson amendment failed yesterday. There 
are other ideas about how to deal with that so that the Departments of 
Defense, State, and Energy, and any other agencies that are involved in 
a particular license would have enough time to review the license 
application beyond the limit of 30 days, which is currently provided 
for.
  The Thompson amendment provided an additional potentially 60 days. 
There are some other potential compromises that could be offered there. 
I doubt, since the Thompson amendment was defeated, that an amendment 
on this subject will be offered again.
  There is a question about the interagency dispute resolution process, 
and there have been some proposed changes that could come up as an 
amendment with respect thereto. This process requires any dispute over 
a license, application, or a commodity classification to be resolved by 
the various departments that should be involved and then to forward any 
disagreement up the chain of command. This is a recommendation of the 
Cox commission and frankly would strengthen the hand of individual 
departments in this interagency review process. I am not certain, but I 
believe the House bill addressed this in some fashion, and it may be 
that if the House holds to its position and we pass the bill before us 
today, that issue is going to have to be further visited. At least from 
my perspective, it would be a wise thing to do.
  There is another potential amendment relating to standardization of 
determination requirements. This is something others have brought up. 
This is not something that I would bring up. It has to do with the 
standard for waiving the foreign availability or mass market 
determinations. I did allude to this in my opening statement--the 
different standards of serious, significant, or merely a national 
threat. It may be wise to try to standardize those. Somebody else might 
bring that up.
  There could also be an amendment relating to a reporting requirement 
for key proliferators, requiring a report on certain items transferred 
to certain key proliferator countries. This is something that I think 
would be useful to the Congress as we continue to review how the act is 
working and, frankly, useful to a blue ribbon commission as well. It is 
not in the bill at this point. Somebody else may pursue that. Likewise, 
a license for key proliferators requiring that a license for certain 
items transferred to certain key proliferators be actually established 
in the legislation, rather than leaving it up to a question of what is 
on the control list.
  There is also a proposed amendment relating to congressional 
notification when changes are made in either the particular countries 
involved or the tiers--as you know, we have tier I, tier II, and tier 
III countries--or when violations of the Export Administration Act 
occur. I think, frankly, this would be a useful report, especially if 
we have a blue ribbon commission. They are going to want to collect 
this data anyway.
  Congress should be aware of the data. It is especially going to be 
important for countries that may continue to violate the postshipment 
verification procedures. I think it would be useful to have a 
congressional notification process. It is not in the bill now. I have 
not proposed that this be part of a managers' amendment. I wonder if 
people will consider that. Somebody may want to offer that amendment.
  There is also a different version of the blue ribbon commission which 
I understand might be proposed, and there may be other amendments.
  I think that is a list of at least several of the amendments that 
were being drafted for presentation a little later. Again, many might 
be obviated by the discussion I had before.
  There are a couple of other items that have to do with specific 
provisions of the bill, such as the 18-month limitation on the 
Presidential authority to grant a waiver from the foreign availability. 
That is too restrictive. I would eliminate that.
  There is another possibility in that same section for another change. 
This has to do with the fact that the President can't delegate his 
authority. You want the President making the ultimate determinations, 
but you want him making big determinations, not little ones. There are 
a lot of things in this bill that have to do with particular items that 
should not go up to the President. He could delegate that easily to one 
of his secretaries. I don't believe that will be a proposed amendment.
  I want to explain to my colleagues that notwithstanding the fact that 
an item or a concern may not be proposed here in the form of an 
amendment, that doesn't mean there are not additional concerns we have 
with the legislation that I hope eventually, between the House and 
Senate, will be addressed. Much of that was discussed in my opening 
comments.

[[Page S9114]]

  That is the list. I hope in the next few minutes we can try to 
resolve these remaining issues so we can move forward.
  Mr. SARBANES. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Ms. CANTWELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Ms. CANTWELL. Mr. President, I rise today in support of Senate bill 
S. 149, the Export Administration Act of 2001. I am very proud to be an 
original cosponsor of this bill. I thank the Senator from Wyoming for 
his tireless efforts in crafting legislation that I believe will move 
us forward in this area. I am thankful for the leadership of the 
distinguished chair and the ranking member of the Banking Committee, 
the Senator from Maryland, and the Senator from Texas, and others who 
have worked hard to successfully address the issue of export controls 
in a changing economy.

  U.S. competitiveness in the global economy will depend heavily on our 
ability to foster continued innovation in our technology sector and 
help domestic companies gain markets overseas.
  Mr. President, in my State, technology-based industries are the 
bulwark of the Washington State economy. They now account for the 
largest share of employment, business activity, and labor income of any 
sector in the State's economic base. Roughly 38 percent of all 
Washington State jobs are tied to the tech sector, and the State's 
286,000 tech workers earn wages that are 81 percent above the State 
average.
  This sector is gearing up to be a crucial engine for the future of 
the U.S. economy, and for Washington State in particular. However, to 
guide the continued development of this sector, we need to ensure the 
success of U.S. companies and their exports in the international 
marketplace. This legilsation streamlines the process by which 
companies gain approval to export their products to foreign markets. 
This is important because it is increasingly importer that in today's 
economy, a company that cannot compete globally will not succeed.
  Although the United States currently leads the world in technology, 
we are not the only technology suppliers and this lead is not 
guaranteed to last. We sacrifice our position as a global technology 
and economic leader when we limit U.S. companies' ability to sell their 
products abroad through a burdensome, unreasonable, and flawed export 
control system.
  Under the current system, companies lose out in the short term 
through restrictions on direct sales but also in the long term through 
loss of market share.
  The existing process for U.S. companies to acquire export licenses 
involves a complex application procedure and a Byzantine system of 
bureaucratic authority spread over four Federal agencies. Getting the 
license can take a very long time, which compromises the reliability of 
U.S. suppliers and makes it hard for manufacturers and customers to 
plan ahead.
  Mr. President, S. 149 will go a long way in streamlining the export 
control process and utlimately strengthening U.S. economic 
competitiveness by making three major changes:
  First, this bill provides a commonsense approach to the reality of 
the global economy by recognizing that if a certain technology is 
available on the mass market or made available for sale to multiple 
buyers, it simply does not make sense to restrict U.S. companies from 
these commercial opportunities.
  Second, this bill streamlines export control licensing by 
centralizing authority under one agency and streamlining the process. 
Let me be clear. It does not do anything to reduce the depth of the 
review process, nor compromise its effectiveness; it simply provides 
accountability and structure to ensure that decisions are made in a 
more timely efficient and transparent manner.
  Third, this bill removes the antiquated MTOPS standard for 
categorizing high-speed computers, and allows the President and his 
security team to develop a control system that is flexible and 
specifically tailored to keep pace with advances in technological 
capability.
  United States companies operate in a fiercely competitive 
environment, and we cannot afford to have outdated regulations make 
that competition even more difficult--especially if these regulations 
do not effectively meet their objectives.
  This is the fundamental flaw of the current control system. Although 
restrictions disadvantage American companies globally in the name of 
national security, in practice, they do not effectively enhance our 
security interests.
  I refer to the December GAO report which states:

       The current system of controlling the export of individual 
     machines is ineffective in limiting countries of concern from 
     obtaining high performance computing capabilities for 
     military applications.

  This is a crucial point. Especially as we have heard many of our 
distinguished colleagues in this Chamber characterize this bill as 
putting business or economic interests over national security 
interests.
  With all due respect to the opponents of this bill, this perceived 
conflict of economic versus security interests is fundamentally 
misguided. In fact, this bill helps support our economic interests 
while enhancing the President's ability to ensure our national 
security.
  And you need not take my word for it. I am joined by leaders of the 
intelligence community, the Secretary of State, the Secretary of 
Defense, the National Security Advisor, and President Bush who all 
agree that these changes will actually strengthen the President's 
national security authority. Instead of his having to rely on an 
antiquated system to control security the President will be granted 
direct authority to intervene in matters where he determines national 
security is at stake.
  This bill helps us focus on those export technologies that constitute 
true national security threats. And, make no mistake, this bill is not 
soft on those who break the law. For those firms and individuals who 
violate the established control laws, this bill authorizes 
substantially higher criminal and civil penalties that those included 
in the current system.
  We need to establish an export control regime that facilitates our 
Nation's status as a global economic and technology leader and provides 
a control system that allows the administration to focus on those 
exports that do constitute a specific security threat. We must come to 
realize that these are not competing goals but constitute intertwined 
objectives. This bill helps to achieve both, and I urge my colleagues 
to join me in supporting it.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill 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 (Mr. Corzine). Without objection, it is so 
ordered.
  Mr. KYL. Mr. President, I ask unanimous consent to have printed in 
the Record at this point a document entitled ``Talking Points on High 
Performance Computers,'' which describes some of the difficulties we 
have encountered in the transfer of high-technology computers to other 
countries, and which basically says we should be more careful about 
liberalizing export controls on these items.
  There being on objection, the material was ordered to be printed in 
the Record, as follows:

              Talking Points on High Performance Computers


                              introduction

       In 1997, in response to growing concerns that foreign 
     entities had illegally acquired U.S.-made high performance 
     computers for military purposes, Congress inserted language 
     into the FY 1998 Defense Authorization Act that was designed 
     to strengthen export controls on such computers.
       S. 149 would repeal the sections of that Act requiring 
     prior notification for exports of HPCs above the MTOP 
     threshold to Tier 3 countries (including China), post-
     shipment verifications for these HPCs, and Congressional 
     notification of an adjustment in MTOP threshold levels. It 
     also contains a provision to repeal the sections that 
     established MTOPS performance levels above which no computers 
     could be sold to certain countries without a license.

[[Page S9115]]

                    current export controls on hpcs

       In January 2001, President Clinton loosened export controls 
     on high performance computers for the sixth time. Under the 
     latest guidelines, computers with a processing speed of less 
     than 85,000 million theoretical operations per seconds 
     (MTOPS) no longer require a license for export to military 
     organizations in Tier 3 countries like China.
       The bar requiring firms to notify the Commerce Department 
     of an export was also raised to 85,000 MTOPS--establishing, 
     for the first time, licensing and advanced notification 
     thresholds at the same level. Consequently, the new rules 
     effectively eliminate routine prior U.S. government review of 
     any computer exports below the licensing threshold to Tier 3 
     countries.
       By contrast, in January 2000, computers with processing 
     speeds above 2,000 MTOPS required a license for export to 
     Tier 3 countries--over a 40-fold increase in a 1-year period.
       85,000 MTOPS computers are very powerful. As a comparison, 
     in 1997 some of the initial computers developed in the U.S. 
     under the Stockpile Stewardship Program's Accelerated 
     Strategic Computing Initiative (ASCI), called ASCI Red and 
     ASCI Red/1024, had processing speeds of 46,000 and 76,000 
     MTOPS respectively. These computers were used for 3D modeling 
     and shock physics simulation for nuclear weapons 
     applications.
       In March 2001, the General Accounting Office concluded that 
     President Clinton failed to adequately analyze ``military 
     significant uses for computers at the new thresholds and 
     assess the national security impact of such uses.''
       For example, in testimony to the Senate Governmental 
     Affairs Committee in March 2001, Susan Westin, Managing 
     Director of the International Affairs and Trade Division at 
     GAO, stated, ``The report does not note that applications for 
     3-dimensional modeling of armor and anti-armor and 3-
     dimensional modeling of submarines can be run on computers 
     at about 70,000 MTOPS.
       Furthermore, Ms. Westin noted that ``The President's report 
     does not state that computers rated up to 85,000 MTOPS could 
     operate all but four of the 194 militarily significant 
     applications identified in the 1998 Defense- and Commerce-
     sponsored study.'' (The study to which she referred was one 
     of two studies upon which the report's section on the 
     computer uses of military significance was largely based.)


             controllability of high performance computers

       Some cite computer ``clustering'' as making computer 
     controls ineffective. This involves linking several 
     processors together to create a parallel processing system 
     with greater capabilities than the individual processors.
       According to Susan Westin's testimony to the Senate 
     Governmental Affairs Committee in March, President Clinton 
     set the licensing control threshold of 85,000 MTOPS based on 
     the availability of clustering technologies projected to be 
     available by the end of 2001.
       However, as Ms. Westin noted in her testimony, ``DOD 
     officials, when asked, could not provide evidence to support 
     their conclusions that there is necessary technical expertise 
     in tier three countries [like China] to cluster to any 
     performance level.'' (Emphasis in original.)
       Additionally, as Andrew Grover, CEO of Intel, concluded 
     during his remarks to the Forum for Technology and Innovation 
     in March 1999, ``The physical technology, the hardware 
     technology implicit in building these large parallel 
     machines, is not the same as the physical technology used in 
     building commodity machines.''
       The report produced in 1999 by a 9-member bipartisan 
     commission chaired by Congressman Chris Cox in the House of 
     Representatives (the Cox Report) also addressed this issue 
     with regard to China's computing abilities, stating that 
     ``while the PRC might attempt to perform some HPC functions 
     by other means, these computer work-arounds remain difficult 
     and imperfect.''


                  why do hpc's need to be controlled?

       As stated by Gary Milhollin, Executive Director of the 
     Wisconsin project on Nuclear Arms Control, in an op-ed in the 
     Washington Post in March 2000,
       ``The truth is, high-performance computers aren't like most 
     other exports--they're more like weapons. They are essential 
     to develop the software and hardware that make things like 
     advanced military radar work. And one of the driving forces 
     behind the development of `supercomputers' has always been 
     the desire to design better nuclear weapons and the 
     missiles that deliver them . . . It is easier, safer, and 
     more economical to stop dangerous exports than to defend 
     against the weapons they produce.'' (Emphasis added.)
       The Cox report discussed in detail China's potential use of 
     high-performance computers for the design and testing of 
     ballistic missiles and advanced conventional weapons, the 
     design and manufacturing of chemical and biological weapons, 
     nuclear weapons development, warfare applications such as 
     computer network attack, intelligence collection and 
     analysis, and military command and control.
       The Cox Committee concluded that China is ``attempting to 
     achieve parity with U.S. systems and capabilities in its 
     military modernization efforts.'' As illustrated by Beijing's 
     recent military exercises, its rapid efforts to modernize its 
     military, and its continuing buildup of short-range missiles 
     aimed at Taiwan, China poses a real and growing threat to 
     U.S. national security.
       The United States should not ease restrictions on the 
     export of high performance computers that China can use to 
     further its weapons development programs. Unfortunately, this 
     is precisely what S. 149 would accomplish.


                          Notification Process

       The 1998 Defense Authorization Act requires exporters to 
     submit for review any proposed Tier 3 sale above the MTOPS 
     threshold. This review is conducted by the Secretaries 
     Commerce, Defense, State, and Energy, and the Director of the 
     Arms Control and Disarmament Agency.
       This requirement would be repealed by S. 149.
       In his testimony to the House Armed Services Committee in 
     October 1999, Gary Milhollin discussed the importance of the 
     notification process set forth in the 1998 Defense 
     Authorization Act, stating that it ``has worked 
     brilliantly.'' Furthermore, he concluded, ``It has stopped a 
     number of dangerous exports without imposing any significant 
     burden on American industry.''
       In his testimony, Mr. Milhollin sited a number of instances 
     where the process has been successful.
       For example, Digital Equipment Corporation (Now Compaq) 
     applied for permission to sell a supercomputer to the Harbin 
     Institute of Technology in China. According to Mr. 
     Milhollin's testimony, this institute ``is overseen by the 
     China Aerospace Corporation, China's principal missile and 
     rocket manufacturer,'' and it ``makes rocket castings and 
     other components for long-range missiles.''
       The application was denied as a result of objections from 
     the Arms Control and Disarmament Agency and the State 
     Department. Mr. Milhollin further notes that the sale would 
     have been worth only $348,000, in comparison to Compaq's 
     annual revenue of approximately $31 billion.
       Without the notification process, Digital would most likely 
     have indirectly aided China in its effort to make more long-
     range ballistic missiles. Do we want to risk such an outcome 
     in the future?


                       Post-Shipment Verification

       S. 149 would also repeal the section in the 1998 Defense 
     Authorization Act that requires post-shipment verifications 
     for high performance computers exported to Tier 3 countries, 
     like China.
       In June 1998, China agreed to allow post-shipment 
     verifications for all exports, including high-performance 
     computers. For the following reasons, the Cox Committee found 
     the terms of the agreement ``wholly inadequate'':
       1. China considers U.S. Commerce Department requests to 
     verify the end-use of a U.S. high performance computer to be 
     non-binding.
       2. China insists that one of its own ministries conduct an 
     end-use verification, if it agrees to one at all.
       3. China argues that U.S. Embassy and Consulate commercial 
     service personnel may not attend an end-use verification 
     unless invited by China.
       4. China argues that it is at China's discretion whether or 
     not to conduct any end-use verification.
       5. China will not permit an end-use verification at any 
     time after the first six months of the computer's arrival.
       According to the Bureau of Export Administration, out of 
     857 high-performance computers shipped to China, only 132 
     post-shipment verifications have been performed.
       According to the Cox Report,
       ``The illegal diversion of HPCs for the benefit of the PRC 
     military is facilitated by the lack of effective post-sale 
     verifications of the locations and purposes for which the 
     computers are being used. HPC diversion for PRC military use 
     is also facilitated by the steady relaxation of U.S. export 
     controls over sales of HPCs.''
       The Cox Report also states,
       ``.  .  . the United States has no effective way to verify 
     that high-performance computer purchases reportedly made for 
     commercial purposes are not diverted to military uses. The 
     Select Committee judges that the PRC has in fact used 
     high-performance computers to perform nuclear weapon 
     applications.''
       More recently, during a July 2001 hearing of the House 
     International Relations Committee, David Tarbell, Deputy 
     Undersecretary of Defense for Technology Security Policy, 
     stated, ``. . . the Chinese government has been unwilling to 
     establish a verification regime and an end use monitoring 
     regime that would get all of the security interests that 
     we're interested in to ensure that items that are shipped are 
     not diverted.'' (Emphasis added.)
       When pressed further by Chairman Hyde about whether the 
     post-shipment verification regime is a failure, Secretary 
     Tarbell replied, ``I'm not sure I would characterize it as a 
     complete failure, but it is close to . . . It is not 
     something I have a great deal of confidence in.'' (Emphasis 
     added.)
       The lack of an effective post-shipment verification regime 
     for dual-use exports eliminates any benefit to U.S. national 
     security of a licensing process. This bill would allow the 
     Commerce Department to grant licenses to countries that 
     refuse to allow post-shipment verification.


            China's Use of U.S. HPC's for Military Purposes

       The Cox report discussed China's use of high performance 
     computers for military applications, stating.

[[Page S9116]]

       ``. . . open source reporting and stated PRC military 
     modernization goals tend to support the belief that the PRC 
     could be using HPCs in the design, development, and operation 
     of missiles, anti-armor weapons, chemical and biological 
     weapons, and information warfare technologies.''
       Furthermore, specifically with regard to nuclear weapons 
     development and testing, the Cox report states, ``The Select 
     Committee judges that the PRC is almost certain to use U.S. 
     HPCs to perform nuclear weapons applications. Moreover the 
     PRC continues to seek HPCs and the related computer programs 
     for these applications.''
       According to an article in the Washington Times in June 
     2000, ``U.S. high-performance computers are being used at the 
     Chinese Academy of Engineering Physics, the main nuclear 
     weapons facility in Beijing.'' The Times reported that this 
     was the third time the Chinese government has been detected 
     diverting U.S.-origin computers to defense facilities.


                               conclusion

       S. 149 significantly weakens controls on the export of high 
     performance computers. The bill reverses the efforts of 
     Congress in 1997 to strengthen such controls.
       The foreign availability of high performance computers is 
     controllable. Computer ``clustering'' will not necessarily 
     provide China, or another country, with the capability that 
     would be achieved with a commodity machine purchased from the 
     United States.
       The notification process established in the 1998 Defense 
     Authorization Act has been effective in preventing some sales 
     of high performance computers that would most likely have 
     been diverted to military uses.
       A mandatory post-shipment verification regime is necessary 
     to ensure that U.S. high performance computers are being used 
     for commercial, not military, purposes.

  Mr. KYL. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SARBANES. 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. SARBANES. Mr. President, I want to report to our colleagues where 
I think we are. We had been hopeful that we would have agreement on a 
few amendments that had been discussed at some length--largely with 
Senator Kyl and Senator Thompson--and that those amendments could be 
agreed to and the managers' amendment would be agreed to, and then we 
would have been able to go on to final passage of the legislation this 
evening. I know a number of our colleagues are going to the White House 
for the state dinner with the President of the Republic of Mexico.
  Regrettably, there has been a hangup, I guess I will describe it as, 
at this point with respect to this blue ribbon commission amendment 
that we had discussed. An effort is still underway to try to work that 
out. We did reach agreement on two other amendments that I think are of 
some consequence, for which both Senator Kyl and Senator Thompson 
earlier in the debate sort of laid out a rationale. Senator Enzi and I 
joined together in trying to accommodate that concern.
  Apparently, it is believed that if we go overnight, that will provide 
some opportunity to work out the one remaining item.
  If Members choose an amendment on that, we will have to deal with the 
amendment on its terms in one way or another or Members may choose at 
that point not to offer the amendment. But that would be the situation 
we would find ourselves in, and then we would move to final passage.
  As best we can ascertain, there are not other amendments, and I 
certainly hope that is the case. That is the premise on which we are 
now proceeding. In light of that, I expect what we would do shortly is 
go over until the morning, and if the blue ribbon commission amendment 
has been worked out, that will be included in what would be passed. If 
not, we would pass the other two amendments that have been addressed 
and worked out, pass the managers' amendment, and go to third reading 
and final passage of the legislation.
  This is what we have been trying to work towards all day long, and I 
think we came close but not quite there. So that is the situation. I 
want to report that to all of my colleagues. I know a lot of time has 
been spent in a sense waiting while discussions were going on, but that 
is not new for this body. We actually had hopes we would be able to get 
the bill done today. I very much regret that is not the case.
  I discussed it with my colleagues on the other side. I do not think 
there are other amendments hanging out there, but if there are, we 
certainly want to be enlightened as to them. I am certainly not 
inviting them. We need to complete this legislation now.
  It is clear what the will of this body is with respect to this 
legislation, and I hope Members would get a chance to exercise that 
will and then we will be able to get on with the other extended agenda 
which confronts the Senate now as we move into the fall period.
  Mr. REID. Will the Senator yield for the purpose of asking a 
question?
  Mr. SARBANES. Certainly.
  Mr. REID. First of all, it is my understanding the Senator from 
Maryland and Senator Enzi, who both have managed this bill so well, are 
going to work with Senator Thompson and others, hopefully in the 
morning when we come in at 10:30, to have some kind of unanimous 
consent agreement at that time that would give us a final order to 
dispose of this bill. Is that true?
  Mr. SARBANES. We very much hope to achieve that. And if we could do 
that, I also hope it would not take a great deal of time to implement 
or carry out a unanimous consent agreement, then not only get the 
agreement but move from the agreement to where we do the final passage. 
Then this legislation is completed and the floor is clear for other 
matters which I know the leadership is anxious to consider.
  Mr. REID. I say to my friend before the Senator from Tennessee 
speaks, we are going to come in at 10:30 tomorrow and then the 
President of Mexico, as the Senator indicated, will be here in the 
morning. We will have a short time in the morning. I hope early in the 
morning the staffs could work with the principals to try to come up 
with a UC that we can propound before we listen to the President of 
Mexico. That would really work well.
  It is my understanding the Senator from Maryland, the Senator from 
Wyoming, and the Senator from Tennessee are going to work toward that 
end so we can move to the Commerce-State-Justice bill, which Senators 
Lott and Daschle are very anxious we finish this week.
  Mr. SARBANES. I yield to the Senator from Tennessee.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. Mr. President, the scenario that has been outlined is a 
probability. That is something for which we can strive. We have 
accomplished some things in this down time we have had today. We are 
talking about a couple of amendments, and we are talking about a couple 
of letters, all of which will need to be finally agreed upon among the 
parties. I do not think that would be any problem. I do not anticipate 
other amendments at this time, but I say to my colleagues who might be 
listening, if anyone has any amendments, they should come forth 
immediately and announce them. Otherwise, I would anticipate tomorrow 
morning we would know where we stand with regard to the blue ribbon 
commission issue and would tomorrow morning be able to enter into some 
sort of unanimous consent agreement.
  There being no further amendments other than our agreeing to the 
language of the letters and to the other amendments, we will be able to 
proceed on to final passage.
  Mr. REID. Will the Senator yield for a question?
  Mr. THOMPSON. I will be happy to.
  Mr. REID. I always feel a sense of almost guilt when the Chamber is 
empty all day long and there are not people offering amendments and 
discussing the legislation, but it is important to note to all of the 
Senators within the sound of my voice and anyone else who is watching, 
today has been a very productive day. There has been tremendous work 
done by numerous Senators--Senator Enzi, Senator Sarbanes, Senator 
Gramm, Senator Thompson, and Senator Kyl. We could go through the whole 
list of Senators who have been heavily involved in working on this bill 
today behind the scenes. There has been a lot of work.
  The fact that we have not been in the Chamber should not diminish the 
fact there has been a lot of progress on this legislation.
  Will the Senator from Tennessee agree with that statement?
  Mr. THOMPSON. I certainly will, and I express appreciation to the 
leadership

[[Page S9117]]

for allowing us to do this unfettered and unhassled because I know the 
Senator wants to finish and move on to other things. We have 
accomplished a couple of different things in the first day. We have had 
an opportunity to say our piece on our side to express our concern with 
some of the provisions. We have also had an opportunity to have a vote. 
It does not take a genius to count that vote.
  After the vote occurred, the proponents of this legislation, in a 
very reasonable fashion, suggested we get together and see if some of 
the concerns we expressed could not be addressed. That is what good 
debate and good interchange is all about: actually listening to each 
other and learning something from each other and trying to see whether 
or not we could address some issues.
  Those thoughts have been expressed in a way that had not been heard 
before. All of this happened, and that is a good thing. We are going to 
wind up with a better product than we otherwise would have. So, yes, I 
concur with the Senator. It is time to do what we can do and then move 
on.
  I add we still need to be diligent and make sure we agree on the 
language, as we have orally, and hopefully wrap this thing up tomorrow.
  Mr. SARBANES. Mr. President, we are going to strive very hard to get 
this unanimous consent agreement before we go to the joint meeting of 
the Congress, and then I hope we can come back and in fairly short 
order execute the unanimous consent request and move to final passage 
of this legislation by midday tomorrow, and then clear the Chamber for 
the leadership to take up other matters which I know are pressing on 
their agenda.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________