[Congressional Record (Bound Edition), Volume 146 (2000), Part 11]
[Senate]
[Pages 15966-15969]
[From the U.S. Government Publishing Office, www.gpo.gov]



             A BIPARTISAN RESPONSE TO CHINESE PROLIFERATION

  Mr. THOMPSON. Mr. President, today I want to talk about one of the 
most serious issues facing the United States--the proliferation of 
weapons of mass destruction and the means to deliver them. I also want 
to talk about the legislation that Senator Torricelli and I have 
introduced--the China Nonproliferation Act--to address this growing 
threat.
  The world is a more dangerous place today because key supplier 
countries like the People's Republic of China [PRC] continue to 
proliferate weapons of mass destruction to rogue states like North 
Korea, Iran, and Libya.
  China has sold nuclear components and missiles to Pakistan, missile 
parts to Libya, cruise missiles to Iran, and shared a wide variety of 
sensitive technologies with North Korea.
  Russia has provided nuclear weapons assistance to Iran, and missile 
technologies to North Korea.
  North Korea has provided missile technologies to a variety of 
countries in the Middle East and Africa, and openly acknowledges these 
sales are one of its main sources of hard currency.
  Many of these technologies are being used by rogue states to develop 
weapons of mass destruction and the means to deliver them--capabilities 
which are prompting many policymakers and defense experts in this 
country to call for the immediate deployment of a multi-tiered national 
missile defense system.
  Two years ago,a bipartisan commission headed by former defense 
secretary Don Rumsfeld challenged the administration by concluding that 
rogue states like North Korea and Iran could develop an ICBM within 5 
years of deciding to do so. In fact, the Commission reported that:

       China also poses a threat to the U.S. as a significant 
     proliferator of ballistic missiles, weapons of mass 
     destruction and enabling technologies. It has carried out 
     extensive transfers to Iran's solid-fueled ballistic missile 
     program. It has supplied Pakistan with a design for a nuclear 
     weapon and additional nuclear weapons assistance. . . . The 
     behavior thus far of Russia and China makes it appear 
     unlikely . . . that either government will soon effectively 
     reduce its country's sizable transfers of critical 
     technologies, experts, or expertise to the emerging missile 
     powers.

  Shortly thereafter, North Korea surprised our intelligence agencies 
by successfully launching a three-stage rocket--the Taepo Dong I--over 
Japan, demonstrating the technological know-how to hit the United 
States with a small warhead, and essentially confirming the Rumsfeld 
Commission's assertions.
  In July 1999, the Deutch Commission, which was organized to assess 
the federal government's ability to address WMD proliferation, 
concluded that:

       The U.S. Government is not effectively organized to combat 
     proliferation, despite the fact that ``Weapons of mass 
     destruction pose a grave threat to U.S. citizens and military 
     forces, to our allies, and to our vital interests in many 
     regions of the world.'' The report also confirmed that China 
     ``is both a source and transfer agent for passing knowledge, 
     technology, sub-systems, and entire systems to dangerous 
     state and sub-national actors.

  Last September the intelligence community released a new National 
Intelligence Estimate of the ballistic missile threat. This report 
asserted that ``during the next 15 years the United States most likely 
will face ICBM threats from Russia, China and North Korea, probably 
from Iran, and possibly from Iraq.'' North Korea could convert its 
Taepo Dong-1 space launch vehicle to deliver a light payload--
sufficient for a biological or chemical--to the United States. And 
Iran's missile program is not far behind. In short, some rogue states 
may have ICBMs much sooner than previously thought, and those missiles 
will be more sophisticated and dangerous than previously estimated.
  An unclassified CIA report provided to Congress earlier this year 
said that from January to June of last year ``firms in China provided 
missile-related items, raw materials, and/or assistance to several 
countries of proliferation concern,'' including Iran, North Korea, and 
Pakistan.
  The report also said that China has provided extensive support to 
Pakistan's nuclear and missile programs in the past, and that ``some 
ballistic missile assistance continues.''
  Additionally, ``North Korea obtained raw materials for its ballistic 
missile programs from various foreign sources, especially from firms in 
China.''; and
  ``Russia and China continued to supply a considerable amount and a 
wide variety of ballistic missile-related goods and technology to 
Iran.''
  Iran has ``manufactured and stockpiled chemical weapons, including 
blister, blood, and choking agents and the bombs and artillery shells 
for delivering them.'' The report adds that, during the first half of 
1999, Iran sought production technology, expertise, and chemicals that 
could be used for chemical warfare ``from entities in Russia and 
China.''
  ``Throughout the first half of 1999, North Korea continued to export 
ballistic missile-related equipment and missile components, materials 
and technical expertise to countries in the Middle East and Africa.'' 
In February of this year, U.S. intelligence officials indirectly 
confirmed press reports that North Korea has delivered to Iran 12 
engines that would be critical to Iran's efforts to build extended-
range Shahab missiles.
  The next report is due out any day now, and it isn't much different, 
I am told.
  In a hearing before the Governmental Affairs subcommittee on 
International Security, Proliferation, and Federal Services earlier 
this year, Robert Walpole, National Intelligence Officer for Strategic 
and Nuclear Programs, testified that the threats to our Nation's 
security are real and increasing. He added that the major factors 
fueling this threat are continued proliferation and ``increased trade 
and cooperation among countries that have been recipients of missile 
technologies.'' Many of the rogue states and other countries seeking 
these weapons of prestige, coercive diplomacy, and deterrence are 
working hard to develop an indigenous capability--which requires the 
acquisition of ``dual use'' items from the industrialized countries of 
the West.
  The public press accounts are equally troubling:
  New reports since 1997 have detailed how Russian entities have 
provided Iran's missile programs with speciality steels and alloys, 
tungsten coated graphite, wind tunnel testing facilities, gyroscopes 
and other guidance technology, rocket engine and fuel technology, laser 
equipment, machine tools, and maintenance manuals.
  North Korea has provided missile technologies and assistance to Iran 
and Libya, and is supposedly building a missile factory in Sudan for 
Iraq.
  All of these events lead to one bottom line: That dangers to the 
United States exist and are increasing; that the unfettered sale of 
``dual-use'' and military-related technologies are abetting those 
threats; and that the problem is being fueled by a few key suppliers 
like China.
  Let me give a brief summary of the revised China Nonproliferation 
Act.

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The U.S. walks a delicate tightrope as it balances national security 
and trade with China. Free trade and open markets are essential, but 
the federal government's first responsibility is the protection of our 
national security. That's why Senator Torricelli and I have introduced 
the China Nonproliferation Act, which requires an annual review of 
proliferation, establishes clear standards, reasonable penalties, 
adequate presidential waivers, congressional oversight, and much-needed 
transparency.
  The goal of this bill is to address the proliferation of key 
suppliers like China, while minimizing any negative impact on United 
States businesses or workers. We received a number of comments on the 
original draft of this bill, and we have made substantial changes in 
order to address concerns raised by the administration and others. I'd 
like to take a moment now to set the record straight on what our bill 
does and does not do.
  The administration raised four concerns regarding the original draft 
of our bill, all of which have been addressed in the revisions.
  First, in response to the concern that the bill singled out China, we 
have broadened the bill to apply to all key suppliers of weapons of 
mass destruction as identified by the Director of Central Intelligence. 
Rather than singling out certain suppliers, this bill applies equally 
to all countries based on their proliferation activities. Those 
determined to be key suppliers by the DCI will be subject to the act. 
This mechanism allows countries to be added or dropped from the list 
based on their behavior.
  Second, in response to the concern that the original bill failed to 
provide adequate flexibility for the President, we have made the 
sanctions against supplier countries under the act discretionary, as 
opposed to the mandatory sanctions contained in the original bill.
  Third, in response to a concern that individual companies could face 
mandatory sanctions based on insufficient evidence, we have raised the 
evidentiary standard for imposing mandatory sanctions on companies 
identified as proliferators to give the President complete discretion 
in making a determination as to whether a company has engaged in 
proliferation activities.
  Finally, in response to a concern that the original bill captured 
legal transactions and legitimate efforts by countries to pursue their 
own defense needs, we have changed the language to make clear that only 
actions that contribute to proliferation of weapons of mass destruction 
will trigger penalties under the act.
  Furthermore, the revised bill addresses additional concerns raised by 
the U.S. business community that U.S. firms and workers could be 
adversely impacted.
  The bill now contains a blanket provision that protects the 
agricultural community from any adverse impact.
  In addition, the bill's penalties apply only to companies of key 
supplier countries, not to U.S. companies and workers.
  We have also made changes to the congressional review procedure to 
ensure that Congress exercises adequate oversight without overburdening 
the Congress. We have raised the bar with regard to the initiation of 
expedited congressional review procedures. We did this by requiring at 
least one-fifth of the Member of either House to sign onto a joint 
resolution. We have also exempted the President's exercise of national 
security waiver authority from this congressional review process.
  In short, the key features of our bill are now consistent with 
current law and similar to the Iran Nonproliferation Act of 2000, which 
passed the Senate 98-0 in February. These two laws are structured in 
much the same way, with the difference being that our bill addresses 
the supplier of the weapons, and the Iran Act addressed a user. Under 
both bills, the President is required to supply a report, based on 
``credible information,'' on foreign entities transferring WMD and 
missile items. The activities covered in these reports are the same, 
except that the Iran Act covers transfers of these items into Iran and 
this bill covers transfers of these items out of key supplier 
countries--the international equivalent of going after the drug dealers 
to get to the root of a pervasive drug problem. Under both the Iran Act 
and our legislation, the President is authorized, but not required, to 
impose sanctions against countries violating the act. The principal 
difference between our bill and the Iran Act is that our bill requires 
sanctions against the individual, company, or government entity, 
identified as a proliferator, whereas the Iran Act made these sanctions 
discretionary; however, our bill requires a Presidential determination 
that the proliferation activities have occurred prior to triggering 
these sanctions, leaving the President with substantial discretion.
  In response to the critics, we are confident that these changes will 
still fulfill our goal of halting proliferation from key suppliers like 
China and sending the right message abroad, while removing any 
unintended consequences. But despite our efforts, opponents of the bill 
continue to contend that current nonproliferation laws are sufficient 
and effective, that Chinese proliferation is under control, and that 
sanctions never work. They add that diplomacy and ``engagement'' will 
bring the world's key suppliers around. I ask these critics, where is 
your evidence?
  All we need to do is look at the evidence to realize that existing 
legislation has clearly not been effective, because we continue to 
receive alarming reports of China's proliferation activities. In a 
report issued in July of 1998, the Rumsfeld Commission called China a 
``significant proliferator of ballistic missiles, weapons of mass 
destruction and enabling technologies.'' Recent reports indicate that 
Chinese proliferation behavior has worsened over the past year, and 
North Korean activities remain intolerable, demonstrating the 
inadequacy of our nonproliferation laws.
  In the last several weeks, on the eve of the Senate's consideration 
of PNTR for China, and after the House had already voted, it was 
revealed that China was assisting Libyan experts with that country's 
missile program, illegally diverting United States supercomputers for 
use in the PRC's nuclear weapons program, and helping build a second M-
11 missile plant in Pakistan. And just last week, Iran successfully 
test-fired its Shahab-3 missile, which is capable of striking Israel, 
American troops in Saudi Arabia, or American bases located within the 
borders of our NATO ally, Turkey. This missile was developed and built 
with significant assistance by the PRC.
  The classified reports of Chinese proliferation are even more 
disturbing.
  And all we need to do is look at the events of recent weeks to see 
that diplomacy alone will not resolve the serious threat to our 
national security posed by proliferation. In the last few weeks, three 
senior United States delegations traveled to Beijing to discuss these 
issues. Each was sent back to Washington empty-handed, under the 
explicit threat that if the United States continues to assist Taiwan 
with its defensive needs or proceed with our own National Missile 
Defense, the PRC will continue to proliferate offensive weapons and 
technologies to whomever it pleases.
  Opponents also argue that we don't need more laws--current laws are 
sufficient and effective. If this is the case, then why is China's 
proliferation problem not improving? Moreover, why was it okay to pass 
the Iran Nonproliferation Act of 2000, by a vote of 98-0, less than 6 
months ago, and it's not okay to do so now? That legislation was 
designed to address a serious problem: The development of a credible 
nuclear weapons and missile program thanks to the direct assistance of 
the Russians, Chinese, and North Koreans. Weren't there enough laws on 
the books then also? Or does the potential to make a buck off the 
Chinese make it all different?
  Our bill recognizes the value of a multilateral approach to the 
problem and encourages the President to pursue a multilateral solution. 
But at the same time, we must act. Over the years, when the United 
States has been serious about implementing measures

[[Page 15968]]

to signal our displeasure with a foreign government's action, these 
measures have had an effect. For example, United States economic 
pressure in the late 1980s and early 1990s led to China's accession to 
the Nuclear Nonproliferation Treaty in 1992. In June 1991, the Bush 
administration applied sanctions against the PRC for missile technology 
transfers to Pakistan. These measures led to China's commitment five 
months later to abide by the Missile Technology Control Regime [MTCR]. 
In August 1993, the Clinton administration imposed sanctions on the PRC 
for the sale of M-11 missile equipment to Pakistan in violation of the 
MTCR. Over a year later, Beijing backed down by agreeing not to export 
``ground to ground'' missiles if sanctions were lifted, which occurred 
in November 1994.
  Critics of our legislation also say that the problem is not with the 
laws, it is with the President's willingness--or unwillingness--to 
enforce them. On this point I would certainly agree. In the case of 
Chinese proliferation, the Clinton administration has too often put 
``good relations'' and commerce before national security. Time and time 
again this administration has jumped through hoops to whitewash or make 
the problems with China go away. The President himself acknowledged 
that he has avoided complying with current laws. In April 1998, while 
speaking to a group of visitors, he complained about legislation that 
forces his administration to penalize other nations for behavior that 
falls short of our expectations. He went on to say that this creates 
pressure for the administration to ``fudge the facts.'' I have no 
trouble believing this is true. A prime example is when the 
intelligence community discovered a shipment of Chinese M-11 missile 
canisters on a dock in Pakistan. The President failed to take action. 
His justification? He couldn't prove that there are missiles actually 
in the canisters. This of course only emboldened the PRC, as evidenced 
by their recent substantial assistance to the Pakistani missile 
program.
  The Clinton administration has never made nonproliferation a policy 
priority. We've never acted aggressively in the face of these 
violations, and have never treated nonproliferation as a serious agenda 
item in our official dealings with the PRC.
  It is not surprising, then, that the White House does not want to see 
any legislation considered by the Congress which might reflect 
negatively on its stewardship of the proliferation problem. But that is 
precisely why this legislation is needed. This legislation attempts to 
enhance congressional oversight by requiring reports from the President 
on proliferation activities and his response to those activities, and 
by creating expedited procedures for the Congress to consider a joint 
resolution of disapproval of the President's actions where that is 
warranted.
  Opponents argue that the congressional review procedures in our bill 
are also unwarranted and infringe on the rights of the President. 
However, Congress has a responsibility here. We do not have the luxury 
of sitting back and avoiding a matter that involves our national 
security when we see that things are going in the wrong direction. Our 
goal is not to tie up the Senate with annual votes on China's 
proliferation activities, but it is to provide a procedure for Congress 
to exercise its oversight role when the President has truly failed to 
respond to these threats. In response to concerns raised by other 
Members that the original review procedure would allow individual 
Senators to disrupt the business of the Senate, we have raised the 
standard to initiate the expedited procedures to one-fifth of the 
Members of either House, more than that required to initiate a cloture 
petition in the Senate. And regardless of how the Senate votes, the 
President can still veto the measure. All this provision does is ensure 
that Congress' legitimate role in foreign policy is preserved, that we 
are made aware of the proliferation activities of key suppliers 
countries and what actions the President is taking to deal with this 
threat, and Members have the means to fulfill our constitutional duties 
to ensure that America's security is safeguarded.
  Other critics of my bill have argued that we need to hold hearings 
and subject the bill to committee review. Over the past four years, the 
Governmental Affairs Committee alone has held 15 hearings on 
proliferation. Over 30 hearings have been held by my committee, the 
Armed Services Committee, and the Foreign Relations Committee. 
Furthermore, this legislation has the full support of the chairman of 
the committee of jurisdiction, the Foreign Relations Committee. The 
issue of proliferation has received a full hearing and it is time to 
act. In the past, the Senate has not hesitated to act in an expedited 
fashion where a serious threat to U.S. interests was involved.
  I find it ironic that some of those members who so eagerly call for 
hearings are the same ones that voted last year for the Food and 
Medicine for the World Act--a sanctions relief bill which was offered 
to the Agriculture Appropriations bill without prior hearings, and was 
voted for by 70 Members of this body. This bill significantly affected 
our relations with several states, most notably Cuba and the other 
state sponsors of terrorism. This bill would have changed U.S. policy 
that had been in place for decades, through several administrations, 
and tightly bound the President's ability to initiate sanctions against 
a country. Moreover, the bill required congressional approval to 
implement sanctions, and did so through the same expedited procedures 
found in our original bill. Again, I ask what is different here?
  Some have even raised the argument that the transparency provision in 
our bill is bad and will do great harm to our capital markets. Why is 
that transparency fine everywhere but in this bill. Whether it be 
within the government, campaign finance reform, you name, it, 
transparency is fine. But not when we want to let U.S. investors know 
when a foreign company that they have invested in, or are considering 
investing in, has been reported by the intelligence community as a 
proliferator of weapons of mass destruction and the means to deliver 
them. Is it so bad to let American investors know that their hard-
earned dollars might be providing the capital to support a weapons 
proliferation program for North Korea or Libya that might one day 
threaten their hometown? We warn Americans that cigarette smoking might 
be hazardous to their health, that cholesterol might cause heart 
failure, and that driving without a seat belt on could result in 
serious injuries in an accident, but we're unwilling to tell them that 
their pension fund might be helping China ship chemical weapons to 
Iran? Do we think Americans aren't smart enough to make responsible 
decisions, or are we actually afraid that they might do just that?
  This is not some stretch of the imagination. A few months ago, 
PetroChina attempted to raise $10 billion through an IPO to finance its 
operations in Sudan, a country that has been listed as a state-sponsor 
of terrorism. While this case raised the level of public attention on 
this issue, the problem started before PetroChina. The California 
Public Employees' Retirement System (or Calpers) has invested millions 
of dollars of employee pension funds in companies with close ties to 
the Chinese government and the Chinese People's Liberation Army. 
Calpers has invested in four companies linked to the Chinese military 
or Chinese espionage: Cosco Pacific, China Resources Enterprise, Citic 
Pacific, and Citic Ka Wah Bank. According to the Wall Street Journal, 
American workers own $430 billion worth of foreign equities through 
pension funds.
  Congressionally mandated commissions studying the issue of 
proliferation have concluded both that the Chinese government is using 
the United States capital markets to fund its proliferation activities 
and that the United States needs to address this issue as part of a 
solution to proliferation. The Deutch Commission study of the threat 
posed by proliferation stated that ``the Commission is concerned that 
known proliferators may be raising funds in the U.S. capital markets'' 
and concluded, ``It is clear that the United States is not making 
optimal use of its economic leverage in combating proliferators . . . 
Access to U.S. capital markets . . . [is] among the

[[Page 15969]]

wide range of economic levers that could be used as carrots or sticks 
as part of an overall strategy to combat proliferation. Given the 
increasing tendency to turn to economic sanctions rather than military 
action in response to proliferation activity, it is essential that we 
begin to treat this economic warfare with the same level of 
sophistication and planning we devote to military options.''
  The Cox Commission review of United States national security concerns 
with China also concluded that ``increasingly, the PRC is using United 
States capital markets as a source of central government funding for 
military and commercial development and as a means of cloaking 
technology acquisition by its front companies.'' The committee also 
concluded that most American investors don't know that they are 
contributing to the proliferation threat saying, ``Because there is 
currently no national security-based review of entities seeking to gain 
access to our capital markets, investors are unlikely to know that they 
may be assisting in the proliferation of weapons of mass destruction by 
providing funds to known proliferators.''
  It is clear that China has been using United States capital to fiance 
its military and proliferation activities, and it seems that this 
activity will only increase in the future. At least 10 Chinese 
companies are currently listed on United States stock exchanges, and 
the PetroChina initial public offering was a test case designed to pave 
the way for additional offerings. China Unicom, the second largest 
telecommunications operator in China, was recently listed on the New 
York Stock Exchange, and has already raised approximately $5 billion in 
its initial public offering, and total proceeds of the IPO are expected 
to exceed $6.3 billion.
  These problems have gone unaddressed for too long. That is why we 
have included a provision regarding capital market transparency in the 
China Nonproliferation Act. However, even in light of all of the above, 
the capital market response is optional. It is merely one of several 
responses available to the president if a foreign company is determined 
to be a persistent proliferator.
  In conclusion, let me end by reiterating that our bill is not an 
attempt to derail the vote on permanent normal trade relations [PNTR] 
for China. I have long been a strong supporter of free trade. That is 
why we have asked for a vote separate from, but in the context of, the 
China-PNTR debate all along. We want Members to vote based on their 
conscience and the right solution to this serious national security 
issue, not based on parliamentary concerns or on how such a vote might 
affect the pending trade bill.
  But it is essential to address this issue now. At a time of 
monumental change in our relationship with Beijing--when China is 
asking to become a member in good standing of the global trading 
community--is it asking too much for a fellow permanent member of the 
U.N. Security Council to obey international rules and norms with regard 
to the proliferation of weapons of mass destruction?
  The United States cannot continue this charade of confronting Chinese 
proliferation by establishing more commissions, holding more hearings, 
passing more ineffective legislation, or seeking more empty promises 
from Beijing. We are confident that our bipartisan approach to this 
serious threat addresses the problem in a firm, responsible, and 
balanced manner. The United States must send the right message abroad, 
and as strong proponents of free trade, we believe that requires 
engaging and trading, while establishing a framework for appropriate 
United States response to China's actions that threaten this country.
  We cannot take one approach without the other--not when our national 
security is at stake.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Wyoming.
  Mr. THOMAS. Mr. President, it is my understanding we go in recess at 
12:30.
  The PRESIDING OFFICER. The Senator is correct.

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