[Congressional Record (Bound Edition), Volume 146 (2000), Part 13]
[House]
[Pages 18549-18560]
[From the U.S. Government Publishing Office, www.gpo.gov]



CONFERENCE REPORT ON H.R. 4919, DEFENSE AND SECURITY ASSISTANCE ACT OF 
                                  2000

  Mr. GOODLING submitted the following conference report and statement 
on the bill (H.R. 4919) to amend the Foreign Assistance Act of 1961 and 
the Arms Export Control Act to make improvements to certain defense and 
security assistance provisions under those acts, to authorize the 
transfer of naval vessels to certain foreign countries, and for other 
purposes:

                  Conference Report (H. Rept. 106-868)

       The committee of conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     4919), to amend the Foreign Assistance Act of 1961 and the 
     Arms Export Control Act to make improvements to certain 
     defense and security assistance provisions under those Acts, 
     to authorize the transfer of naval vessels to certain foreign 
     countries, and for other purposes, having met, after full and 
     free conference, have agreed to recommend and do recommend to 
     their respective Houses as follows:
       That the House recede from its disagreement to the 
     amendment of the Senate and agree to the same with an 
     amendment as follows:
       In lieu of the matter proposed to be inserted by the Senate 
     amendment, insert the following:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Security 
     Assistance Act of 2000''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definition.

                TITLE I--MILITARY AND RELATED ASSISTANCE

      Subtitle A--Foreign Military Sales and Financing Authorities

Sec. 101. Authorization of appropriations.
Sec. 102. Requirements relating to country exemptions for licensing of 
              defense items for export to foreign countries.

   Subtitle B--Stockpiling of Defense Articles for Foreign Countries

Sec. 111. Additions to United States war reserve stockpiles for allies.
Sec. 112. Transfer of certain obsolete or surplus defense articles in 
              the war reserve stockpiles for allies to Israel.

                      Subtitle C--Other Assistance

Sec. 121. Defense drawdown special authorities.
Sec. 122. Increased authority for the transport of excess defense 
              articles.

        TITLE II--INTERNATIONAL MILITARY EDUCATION AND TRAINING

Sec. 201. Authorization of appropriations.
Sec. 202. Additional requirements.

       TITLE III--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

Sec. 301. Nonproliferation and export control assistance.
Sec. 302. Nonproliferation and export control training in the United 
              States.
Sec. 303. Science and technology centers.
Sec. 304. Trial transit program.
Sec. 305. Exception to authority to conduct inspections under the 
              Chemical Weapons Convention Implementation Act of 1998.

                   TITLE IV--ANTITERRORISM ASSISTANCE

Sec. 401. Authorization of appropriations.

            TITLE V--INTEGRATED SECURITY ASSISTANCE PLANNING

  Subtitle A--Establishment of a National Security Assistance Strategy

Sec. 501. National Security Assistance Strategy.

             Subtitle B--Allocations for Certain Countries

Sec. 511. Security assistance for new NATO members.
Sec. 512. Increased training assistance for Greece and Turkey.
Sec. 513. Assistance for Israel.
Sec. 514. Assistance for Egypt.
Sec. 515. Security assistance for certain countries.
Sec. 516. Border security and territorial independence.

                  TITLE VI--TRANSFERS OF NAVAL VESSELS

Sec. 601. Authority to transfer naval vessels to certain foreign 
              countries.
Sec. 602. Inapplicability of aggregate annual limitation on value of 
              transferred excess defense articles.
Sec. 603. Costs of transfers.
Sec. 604. Conditions relating to combined lease-sale transfers.
Sec. 605. Funding of certain costs of transfers.
Sec. 606. Repair and refurbishment in United States shipyards.
Sec. 607. Sense of Congress regarding transfer of naval vessels on a 
              grant basis.
Sec. 608. Expiration of authority.

                  TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. Utilization of defense articles and defense services.
Sec. 702. Annual military assistance report.
Sec. 703. Report on government-to-government arms sales end-use 
              monitoring program.
Sec. 704. MTCR report transmittals.
Sec. 705. Stinger missiles in the Persian Gulf region.
Sec. 706. Sense of Congress regarding excess defense articles.
Sec. 707. Excess defense articles for Mongolia.
Sec. 708. Space cooperation with Russian persons.
Sec. 709. Sense of Congress relating to military equipment for the 
              Philippines.
Sec. 710. Waiver of certain costs.

     SEC. 2. DEFINITION.

       In this Act, the term ``appropriate committees of 
     Congress'' means the Committee on Foreign Relations of the 
     Senate and the Committee on International Relations of the 
     House of Representatives.
                TITLE I--MILITARY AND RELATED ASSISTANCE
      Subtitle A--Foreign Military Sales and Financing Authorities

     SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated for grant 
     assistance under section 23 of the Arms Export Control Act 
     (22 U.S.C. 2763) and for the subsidy cost, as defined in 
     section 502(5) of the Federal Credit Reform Act of 1990, of 
     direct loans under such section $3,550,000,000 for fiscal 
     year 2001 and $3,627,000,000 for fiscal year 2002.

     SEC. 102. REQUIREMENTS RELATING TO COUNTRY EXEMPTIONS FOR 
                   LICENSING OF DEFENSE ITEMS FOR EXPORT TO 
                   FOREIGN COUNTRIES.

       (a) Requirements of Exemption.--Section 38 of the Arms 
     Export Control Act (22 U.S.C. 2778) is amended by adding at 
     the end the following:

[[Page 18550]]

       ``(j) Requirements Relating to Country Exemptions for 
     Licensing of Defense Items for Export to Foreign Countries.--
       ``(1) Requirement for bilateral agreement.--
       ``(A) In general.--The President may utilize the regulatory 
     or other authority pursuant to this Act to exempt a foreign 
     country from the licensing requirements of this Act with 
     respect to exports of defense items only if the United States 
     Government has concluded a binding bilateral agreement with 
     the foreign country. Such agreement shall--
       ``(i) meet the requirements set forth in paragraph (2); and
       ``(ii) be implemented by the United States and the foreign 
     country in a manner that is legally-binding under their 
     domestic laws.
       ``(B) Exception.--The requirement to conclude a bilateral 
     agreement in accordance with subparagraph (A) shall not apply 
     with respect to an exemption for Canada from the licensing 
     requirements of this Act for the export of defense items.
       ``(2) Requirements of bilateral agreement.--A bilateral 
     agreement referred to paragraph (1)--
       ``(A) shall, at a minimum, require the foreign country, as 
     necessary, to revise its policies and practices, and 
     promulgate or enact necessary modifications to its laws and 
     regulations to establish an export control regime that is at 
     least comparable to United States law, regulation, and policy 
     requiring--
       ``(i) conditions on the handling of all United States-
     origin defense items exported to the foreign country, 
     including prior written United States Government approval for 
     any reexports to third countries;
       ``(ii) end-use and retransfer control commitments, 
     including securing binding end-use and retransfer control 
     commitments from all end-users, including such documentation 
     as is needed in order to ensure compliance and enforcement, 
     with respect to such United States-origin defense items;
       ``(iii) establishment of a procedure comparable to a 
     `watchlist' (if such a watchlist does not exist) and full 
     cooperation with United States Government law enforcement 
     agencies to allow for sharing of export and import 
     documentation and background information on foreign 
     businesses and individuals employed by or otherwise connected 
     to those businesses; and
       ``(iv) establishment of a list of controlled defense items 
     to ensure coverage of those items to be exported under the 
     exemption; and
       ``(B) should, at a minimum, require the foreign country, as 
     necessary, to revise its policies and practices, and 
     promulgate or enact necessary modifications to its laws and 
     regulations to establish an export control regime that is at 
     least comparable to United States law, regulation, and policy 
     regarding--
       ``(i) controls on the export of tangible or intangible 
     technology, including via fax, phone, and electronic media;
       ``(ii) appropriate controls on unclassified information 
     relating to defense items exported to foreign nationals;
       ``(iii) controls on international arms trafficking and 
     brokering;
       ``(iv) cooperation with United States Government agencies, 
     including intelligence agencies, to combat efforts by third 
     countries to acquire defense items, the export of which to 
     such countries would not be authorized pursuant to the export 
     control regimes of the foreign country and the United States; 
     and
       ``(v) violations of export control laws, and penalties for 
     such violations.
       ``(3) Advance certification.--Not less than 30 days before 
     authorizing an exemption for a foreign country from the 
     licensing requirements of this Act for the export of defense 
     items, the President shall transmit to the Committee on 
     International Relations of the House of Representatives and 
     the Committee on Foreign Relations of the Senate a 
     certification that--
       ``(A) the United States has entered into a bilateral 
     agreement with that foreign country satisfying all 
     requirements set forth in paragraph (2);
       ``(B) the foreign country has promulgated or enacted all 
     necessary modifications to its laws and regulations to comply 
     with its obligations under the bilateral agreement with the 
     United States; and
       ``(C) the appropriate congressional committees will 
     continue to receive notifications pursuant to the 
     authorities, procedures, and practices of section 36 of this 
     Act for defense exports to a foreign country to which that 
     section would apply and without regard to any form of defense 
     export licensing exemption otherwise available for that 
     country.
       ``(4) Definitions.--In this section:
       ``(A) Defense items.--The term `defense items' means 
     defense articles, defense services, and related technical 
     data.
       ``(B) Appropriate congressional committees.--The term 
     `appropriate congressional committees' means--
       ``(i) the Committee on International Relations and the 
     Committee on Appropriations of the House of Representatives; 
     and
       ``(ii) the Committee on Foreign Relations and the Committee 
     on Appropriations of the Senate.''.
       (b) Notification of Exemption.--Section 38(f) of the Arms 
     Export Control Act (22 U.S.C. 2778(f)) is amended--
       (1) by inserting ``(1)'' after ``(f)''; and
       (2) by adding at the end the following:
       ``(2) The President may not authorize an exemption for a 
     foreign country from the licensing requirements of this Act 
     for the export of defense items under subsection (j) or any 
     other provision of this Act until 30 days after the date on 
     which the President has transmitted to the Committee on 
     International Relations of the House of Representatives and 
     the Committee on Foreign Relations of the Senate a 
     notification that includes--
       ``(A) a description of the scope of the exemption, 
     including a detailed summary of the defense articles, defense 
     services, and related technical data covered by the 
     exemption; and
       ``(B) a determination by the Attorney General that the 
     bilateral agreement concluded under subsection (j) requires 
     the compilation and maintenance of sufficient documentation 
     relating to the export of United States defense articles, 
     defense services, and related technical data to facilitate 
     law enforcement efforts to detect, prevent, and prosecute 
     criminal violations of any provision of this Act, including 
     the efforts on the part of countries and factions engaged in 
     international terrorism to illicitly acquire sophisticated 
     United States defense items.
       ``(3) Paragraph (2) shall not apply with respect to an 
     exemption for Canada from the licensing requirements of this 
     Act for the export of defense items.''.
       (c) Exports of Commercial Communications Satellites.--
       (1) Amendment of the arms export control act.--Section 
     36(c)(2) of the Arms Export Control Act (22 U.S.C. 
     2776(c)(2)) is amended--
       (A) by striking ``and'' at the end of subparagraph (A);
       (B) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (C) by inserting after subparagraph (A) the following:
       ``(B) in the case of a license for an export of a 
     commercial communications satellite for launch from, and by 
     nationals of, the Russian Federation, Ukraine, or Kazakhstan, 
     shall not be issued until at least 15 calendar days after the 
     Congress receives such certification, and shall not be issued 
     then if the Congress, within that 15-day period, enacts a 
     joint resolution prohibiting the proposed export; and''.
       (2) Sense of congress.--It is the sense of Congress that 
     the appropriate committees of Congress and the appropriate 
     agencies of the United States Government should review the 
     commodity jurisdiction of United States commercial 
     communications satellites.
       (d) Sense of Congress on Submission to the Senate of 
     Certain Agreements as Treaties.--It is the sense of Congress 
     that, prior to amending the International Traffic in Arms 
     Regulations, the Secretary of State should consult with the 
     appropriate committees of Congress for the purpose of 
     determining whether certain agreements regarding defense 
     trade with the United Kingdom and Australia should be 
     submitted to the Senate as treaties.
   Subtitle B--Stockpiling of Defense Articles for Foreign Countries

     SEC. 111. ADDITIONS TO UNITED STATES WAR RESERVE STOCKPILES 
                   FOR ALLIES.

       Section 514(b)(2) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2321h(b)(2)) is amended to read as follows:
       ``(2)(A) The value of such additions to stockpiles of 
     defense articles in foreign countries shall not exceed 
     $50,000,000 for fiscal year 2001.
       ``(B) Of the amount specified in subparagraph (A), not more 
     than $50,000,000 may be made available for stockpiles in the 
     Republic of Korea.''.

     SEC. 112. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE 
                   ARTICLES IN THE WAR RESERVE STOCKPILES FOR 
                   ALLIES TO ISRAEL.

       (a) Transfers to Israel.--
       (1) Authority.--Notwithstanding section 514 of the Foreign 
     Assistance Act of 1961 (22 U.S.C. 2321h), the President is 
     authorized to transfer to Israel, in return for concessions 
     to be negotiated by the Secretary of Defense, with the 
     concurrence of the Secretary of State, any or all of the 
     items described in paragraph (2).
       (2) Items covered.--The items referred to in paragraph (1) 
     are munitions, equipment, and material such as armor, 
     artillery, automatic weapons ammunition, and missiles that--
       (A) are obsolete or surplus items;
       (B) are in the inventory of the Department of Defense;
       (C) are intended for use as reserve stocks for Israel; and
       (D) as of the date of the enactment of this Act, are 
     located in a stockpile in Israel.
       (b) Concessions.--The value of concessions negotiated 
     pursuant to subsection (a) shall be at least equal to the 
     fair market value of the items transferred. The concessions 
     may include cash compensation, services, waiver of charges 
     otherwise payable by the United States, and other items of 
     value.
       (c) Advance Notification of Transfer.--Not less than 30 
     days before making a transfer under the authority of this 
     section, the President shall transmit to the Committee on 
     Foreign Relations of the Senate and the Committee on 
     International Relations of the House of Representatives a 
     notification of the proposed transfer. The notification shall 
     identify the items to be transferred and the concessions to 
     be received.
       (d) Expiration of Authority.--No transfer may be made under 
     the authority of this section 3 years after the date of the 
     enactment of this Act.
                      Subtitle C--Other Assistance

     SEC. 121. DEFENSE DRAWDOWN SPECIAL AUTHORITIES.

       (a) Emergency Drawdown.--Section 506(a)(2)(B) of the 
     Foreign Assistance Act of

[[Page 18551]]

     1961 (22 U.S.C. 2318(a)(2)(B)) is amended by striking 
     ``$150,000,000'' and inserting ``$200,000,000''.
       (b) Additional Drawdown.--Section 506(a)(2)(A)(i) of such 
     Act (22 U.S.C. 2318(a)(2)(A)(i)) is amended--
       (1) by striking ``or'' at the end of subclause (II); and
       (2) by striking subclause (III) and inserting the 
     following:

       ``(III) chapter 8 of part II (relating to antiterrorism 
     assistance);
       ``(IV) chapter 9 of part II (relating to nonproliferation 
     assistance); or
       ``(V) the Migration and Refugee Assistance Act of 1962; 
     or''.

     SEC. 122. INCREASED AUTHORITY FOR THE TRANSPORT OF EXCESS 
                   DEFENSE ARTICLES.

       Section 516(e)(2)(C) of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2321j(e)(2)(C)) is amended by striking ``25,000'' 
     and inserting ``50,000''.
        TITLE II--INTERNATIONAL MILITARY EDUCATION AND TRAINING

     SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated to the President 
     $55,000,000 for fiscal year 2001 and $65,000,000 for fiscal 
     year 2002 to carry out chapter 5 of part II of the Foreign 
     Assistance Act of 1961 (22 U.S.C. 2347 et seq.).

     SEC. 202. ADDITIONAL REQUIREMENTS.

       Chapter 5 of part II of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2347 et seq.) is amended by adding at the end the 
     following new sections:

     ``SEC. 547. CONSULTATION REQUIREMENT.

       ``The selection of foreign personnel for training under 
     this chapter shall be made in consultation with the United 
     States defense attache to the relevant country.

     ``SEC. 548. RECORDS REGARDING FOREIGN PARTICIPANTS.

       ``In order to contribute most effectively to the 
     development of military professionalism in foreign countries, 
     the Secretary of Defense shall develop and maintain a 
     database containing records on each foreign military or 
     defense ministry civilian participant in education and 
     training activities conducted under this chapter after 
     December 31, 2000. This record shall include the type of 
     instruction received, the dates of such instruction, whether 
     such instruction was completed successfully, and, to the 
     extent practicable, a record of the person's subsequent 
     military or defense ministry career and current position and 
     location.''.
       TITLE III--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

     SEC. 301. NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE.

       Part II of the Foreign Assistance Act of 1961 (22 U.S.C. 
     2301 et seq.) is amended by adding at the end the following 
     new chapter:

      ``CHAPTER 9--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

     ``SEC. 581. PURPOSES.

       ``The purposes of assistance under this chapter are to halt 
     the proliferation of nuclear, chemical, and biological 
     weapons, and conventional weaponry, through support of 
     activities designed--
       ``(1) to enhance the nonproliferation and export control 
     capabilities of friendly countries by providing training and 
     equipment to detect, deter, monitor, interdict, and counter 
     proliferation;
       ``(2) to strengthen the bilateral ties of the United States 
     with friendly governments by offering concrete assistance in 
     this area of vital national security interest;
       ``(3) to accomplish the activities and objectives set forth 
     in sections 503 and 504 of the FREEDOM Support Act (22 U.S.C. 
     5853, 5854), without regard to the limitation of those 
     sections to the independent states of the former Soviet 
     Union; and
       ``(4) to promote multilateral activities, including 
     cooperation with international organizations, relating to 
     nonproliferation.

     ``SEC. 582. AUTHORIZATION OF ASSISTANCE.

       ``Notwithstanding any other provision of law (other than 
     section 502B or section 620A of this Act), the President is 
     authorized to furnish, on such terms and conditions as the 
     President may determine, assistance in order to carry out the 
     purposes of this chapter. Such assistance may include 
     training services and the provision of funds, equipment, and 
     other commodities related to the detection, deterrence, 
     monitoring, interdiction, and prevention or countering of 
     proliferation, the establishment of effective 
     nonproliferation laws and regulations, and the apprehension 
     of those individuals involved in acts of proliferation of 
     such weapons.

     ``SEC. 583. TRANSIT INTERDICTION.

       ``(a) Allocation of Funds.--In providing assistance under 
     this chapter, the President should ensure that not less than 
     one-quarter of the total of such assistance is expended for 
     the purpose of enhancing the capabilities of friendly 
     countries to detect and interdict proliferation-related 
     shipments of cargo that originate from, and are destined for, 
     other countries.
       ``(b) Priority to Certain Countries.--Priority shall be 
     given in the apportionment of the assistance described under 
     subsection (a) to any friendly country that has been 
     determined by the Secretary of State to be a country 
     frequently transited by proliferation-related shipments of 
     cargo.

     ``SEC. 584. LIMITATIONS.

       ``The limitations contained in section 573 (a) and (d) of 
     this Act shall apply to this chapter.

     ``SEC. 585. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) Authorization of Appropriations.--There are 
     authorized to be appropriated to the President to carry out 
     this chapter $129,000,000 for fiscal year 2001 and 
     $142,000,000 for fiscal year 2002.
       ``(b) Availability of Funds.--Funds made available under 
     subsection (a) may be used notwithstanding any other 
     provision of law (other than section 502B or 620A) and shall 
     remain available until expended.''.
       ``(c) Treatment of Fiscal Year 2001 Appropriations.--
     Amounts made available by the Foreign Operations, Export 
     Financing, and Related Programs Appropriations Act, 2001, 
     under `Nonproliferation, Antiterrorism, Demining, and Related 
     Programs' and `Assistance for the Independent States of the 
     Former Soviet Union' accounts for the activities described in 
     subsection (d) shall be considered to be made available 
     pursuant to this chapter.
       ``(d) Covered Activities.--The activities referred to in 
     subsection (c) are--
       ``(1) assistance under the Nonproliferation and Disarmament 
     Fund;
       ``(2) assistance for science and technology centers in the 
     independent states of the former Soviet Union;
       ``(3) export control assistance; and
       ``(4) export control and border assistance under chapter 11 
     of part I of the Foreign Assistance Act of 1961 (22 U.S.C. 
     2295 et seq.) or the FREEDOM Support Act (22 U.S.C. 5801 et 
     seq.).''.

     SEC. 302. NONPROLIFERATION AND EXPORT CONTROL TRAINING IN THE 
                   UNITED STATES.

       Of the amounts made available for fiscal years 2001 and 
     2002 under chapter 9 of part II of the Foreign Assistance Act 
     of 1961, as added by section 301, $2,000,000 is authorized to 
     be available each such fiscal year for the purpose of 
     training and education of personnel from friendly countries 
     in the United States.

     SEC. 303. SCIENCE AND TECHNOLOGY CENTERS.

       (a) Availability of Funds.--Of the amounts made available 
     for the fiscal years 2001 and 2002 under chapter 9 of part II 
     of the Foreign Assistance Act of 1961, as added by section 
     301, $59,000,000 for fiscal year 2001 and $65,000,000 for 
     fiscal year 2002 are authorized to be available for science 
     and technology centers in the independent states of the 
     former Soviet Union.
       (b) Sense of Congress.--It is the sense of Congress, taking 
     into account section 1132 of H. R. 3427 of the One Hundred 
     and Sixth Congress (as enacted by section 1000(a)(7) of 
     Public Law 106-113), that the practice of auditing entities 
     receiving funds authorized under this section should be 
     significantly expanded and that the burden of supplying 
     auditors should be spread equitably within the United States 
     Government.

     SEC. 304. TRIAL TRANSIT PROGRAM.

       (a) Allocation of Funds.--Of the amount made available for 
     fiscal year 2001 under chapter 9 of the Foreign Assistance 
     Act of 1961, as added by section 301, $5,000,000 is 
     authorized to be available to establish a static cargo x-ray 
     facility in Malta, if the Secretary of State first certifies 
     to the appropriate committees of Congress that the Government 
     of Malta has provided adequate assurances that such a 
     facility will be utilized in connection with random cargo 
     inspections by Maltese customs officials of container traffic 
     transiting through the Malta Freeport.
       (b) Requirement of Written Assessment.--In the event that a 
     facility is established in Malta pursuant to subsection (a), 
     the Secretary of State shall submit a written assessment to 
     the appropriate committees of Congress not later than 270 
     days after such a facility commences operation detailing--
       (1) statistics on utilization of the facility by Malta;
       (2) the contribution made by the facility to United States 
     nonproliferation and export control objectives; and
       (3) the feasibility of establishing comparable facilities 
     in other countries identified by the Secretary of State 
     pursuant to section 583 of the Foreign Assistance Act of 
     1961, as added by section 301.
       (c) Treatment of Assistance.--Assistance under this section 
     shall be considered as assistance under section 583(a) of the 
     Foreign Assistance Act of 1961 (relating to transit 
     interdiction), as added by section 301.

     SEC. 305. EXCEPTION TO AUTHORITY TO CONDUCT INSPECTIONS UNDER 
                   THE CHEMICAL WEAPONS CONVENTION IMPLEMENTATION 
                   ACT OF 1998.

       Section 303 of the Chemical Weapons Convention 
     Implementation Act of 1998 (22 U.S.C. 6723) is amended by 
     adding at the end the following new subsection:
       ``(c) Exception.--The requirement under subsection 
     (b)(2)(A) shall not apply to inspections of United States 
     chemical weapons destruction facilities (as used within the 
     meaning of part IV(C)(13) of the Verification Annex to the 
     Convention).''.
                   TITLE IV--ANTITERRORISM ASSISTANCE

     SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

       Section 574(a) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2349aa-4(a)) is amended by striking ``$9,840,000'' and 
     all that follows through the period and inserting the 
     following: ``$72,000,000 for fiscal year 2001 and $73,000,000 
     for fiscal year 2002.''.
            TITLE V--INTEGRATED SECURITY ASSISTANCE PLANNING
  Subtitle A--Establishment of a National Security Assistance Strategy

     SEC. 501. NATIONAL SECURITY ASSISTANCE STRATEGY.

       (a) Multiyear Plan.--Not later than 180 days after the date 
     of enactment of this Act,

[[Page 18552]]

     and annually thereafter at the time of submission of the 
     congressional presentation materials of the foreign 
     operations appropriations budget request, the Secretary of 
     State should submit to the appropriate committees of Congress 
     a plan setting forth a National Security Assistance Strategy 
     for the United States.
       (b) Elements of the Strategy.--The National Security 
     Assistance Strategy should--
       (1) set forth a multi-year plan for security assistance 
     programs;
       (2) be consistent with the National Security Strategy of 
     the United States;
       (3) be coordinated with the Secretary of Defense and the 
     Chairman of the Joint Chiefs of Staff;
       (4) be prepared, in consultation with other agencies, as 
     appropriate;
       (5) identify overarching security assistance objectives, 
     including identification of the role that specific security 
     assistance programs will play in achieving such objectives;
       (6) identify a primary security assistance objective, as 
     well as specific secondary objectives, for individual 
     countries;
       (7) identify, on a country-by-country basis, how specific 
     resources will be allocated to accomplish both primary and 
     secondary objectives;
       (8) discuss how specific types of assistance, such as 
     foreign military financing and international military 
     education and training, will be combined at the country level 
     to achieve United States objectives; and
       (9) detail, with respect to each of the paragraphs (1) 
     through (8), how specific types of assistance provided 
     pursuant to the Arms Export Control Act and the Foreign 
     Assistance Act of 1961 are coordinated with United States 
     assistance programs managed by the Department of Defense and 
     other agencies.
       (c) Covered Assistance.--The National Security Assistance 
     Strategy should cover assistance provided under--
       (1) section 23 of the Arms Export Control Act (22 U.S.C. 
     2763);
       (2) chapter 5 of part II of the Foreign Assistance Act of 
     1961 (22 U.S.C. 2347 et seq.); and
       (3) section 516 of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2321i).
             Subtitle B--Allocations for Certain Countries

     SEC. 511. SECURITY ASSISTANCE FOR NEW NATO MEMBERS.

       (a) Foreign Military Financing.--Of the amounts made 
     available for the fiscal years 2001 and 2002 under section 23 
     of the Arms Export Control Act (22 U.S.C. 2763), $30,300,000 
     for fiscal year 2001 and $35,000,000 for fiscal year 2002 are 
     authorized to be available on a grant basis for all of the 
     following countries: the Czech Republic, Hungary, and Poland.
       (b) Military Education and Training.--Of the amounts made 
     available for the fiscal years 2001 and 2002 to carry out 
     chapter 5 of part II of the Foreign Assistance Act of 1961 
     (22 U.S.C. 2347 et seq.), $5,100,000 for fiscal year 2001 and 
     $7,000,000 for fiscal year 2002 are authorized to be 
     available for all of the following countries: the Czech 
     Republic, Hungary, and Poland.
       (c) Select Priorities.--In providing assistance under this 
     section, the President shall give priority to supporting 
     activities that are consistent with the objectives set forth 
     in the following conditions of the Senate resolution of 
     ratification for the Protocols to the North Atlantic Treaty 
     of 1949 on the Accession of Poland, Hungary, and the Czech 
     Republic:
       (1) Condition (1)(A)(v), (vi), and (vii), relating to 
     common threats, the core mission of NATO, and the capacity to 
     respond to common threats.
       (2) Condition (1)(B), relating to the fundamental 
     importance of collective defense.
       (3) Condition (1)(C), relating to defense planning, command 
     structures, and force goals.
       (4) Conditions (4)(B)(i) and (4)(B)(ii), relating to 
     intelligence matters.

     SEC. 512. INCREASED TRAINING ASSISTANCE FOR GREECE AND 
                   TURKEY.

       (a) In General.--Of the amounts made available for the 
     fiscal years 2001 and 2002 to carry out chapter 5 of part II 
     of the Foreign Assistance Act of 1961 (22 U.S.C. 2347 et 
     seq.)--
       (1) $1,000,000 for fiscal year 2001 and $1,000,000 for 
     fiscal year 2002 are authorized to be available for Greece; 
     and
       (2) $2,500,000 for fiscal year 2001 and $2,500,000 for 
     fiscal year 2002 are authorized to be available for Turkey.
       (b) Use for Professional Military Education.--Of the 
     amounts available under paragraphs (1) and (2) of subsection 
     (a) for fiscal year 2002, $500,000 of each such amount should 
     be available for purposes of professional military education.
       (c) Use for Joint Training.--It is the sense of Congress 
     that, to the maximum extent practicable, amounts available 
     under subsection (a) that are used in accordance with 
     subsection (b) should be used for joint training of Greek and 
     Turkish officers.

     SEC. 513. ASSISTANCE FOR ISRAEL.

       (a) Definitions.--In this section:
       (1) ESF assistance.--The term ``ESF assistance'' means 
     assistance under chapter 4 of part II of the Foreign 
     Assistance Act of 1961 (22 U.S.C. 2346 et seq.), relating to 
     the economic support fund.
       (2) Foreign military financing program.--The term ``Foreign 
     Military Financing Program'' means the program authorized by 
     section 23 of the Arms Export Control Act (22 U.S.C. 2763).
       (b) ESF Assistance.--
       (1) In general.--Of the amounts made available for each of 
     the fiscal years 2001 and 2002 for ESF assistance, the amount 
     specified in paragraph (2) for each such fiscal year is 
     authorized to be made available for Israel.
       (2) Computation of amount.--Subject to subsection (d), the 
     amount referred to in paragraph (1) is equal to--
       (A) the amount made available for ESF assistance for Israel 
     for the preceding fiscal year, minus
       (B) $120,000,000.
       (c) FMF Program.--
       (1) In general.--Of the amount made available for each of 
     the fiscal years 2001 and 2002 for assistance under the 
     Foreign Military Financing Program, the amount specified in 
     paragraph (2) for each such fiscal year is authorized to be 
     made available for Israel.
       (2) Computation of amount.--Subject to subsection (d), the 
     amount referred to in paragraph (1) is equal to--
       (A) the amount made available for assistance under the 
     Foreign Military Financing Program for Israel for the 
     preceding fiscal year, plus
       (B) $60,000,000.
       (3) Disbursement of funds.--Funds authorized to be 
     available for Israel under paragraph (1) for fiscal year 2001 
     shall be disbursed not later than 30 days after the date of 
     enactment of an Act making appropriations for foreign 
     operations, export financing, and related programs for fiscal 
     year 2001, or October 31, 2000, whichever date is later.
       (4) Availability of funds for advanced weapons systems.--To 
     the extent the Government of Israel requests that funds be 
     used for such purposes, grants made available for Israel out 
     of funds authorized to be available under paragraph (1) for 
     Israel for fiscal year 2001 shall, as agreed by Israel and 
     the United States, be available for advanced weapons systems, 
     of which not less than $520,000,000 shall be available for 
     the procurement in Israel of defense articles and defense 
     services, including research and development.
       (d) Exclusion of Rescissions and Supplemental 
     Appropriations.--For purposes of this section, the 
     computation of amounts made available for a fiscal year shall 
     not take into account any amount rescinded by an Act or any 
     amount appropriated by an Act making supplemental 
     appropriations for a fiscal year.

     SEC. 514. ASSISTANCE FOR EGYPT.

       (a) Definitions.--In this section:
       (1) ESF assistance.--The term ``ESF assistance'' means 
     assistance under chapter 4 of part II of the Foreign 
     Assistance Act of 1961 (22 U.S.C. 2346 et seq.), relating to 
     the economic support fund.
       (2) Foreign military financing program.--The term ``Foreign 
     Military Financing Program'' means the program authorized by 
     section 23 of the Arms Export Control Act (22 U.S.C. 2763).
       (b) ESF Assistance.--
       (1) In general.--Of the amounts made available for each of 
     the fiscal years 2001 and 2002 for ESF assistance, the amount 
     specified in paragraph (2) for each such fiscal year is 
     authorized to be made available for Egypt.
       (2) Computation of amount.--Subject to subsection (d), the 
     amount referred to in paragraph (1) is equal to--
       (A) the amount made available for ESF assistance for Egypt 
     during the preceding fiscal year, minus
       (B) $40,000,000.
       (c) FMF Program.--Of the amount made available for each of 
     the fiscal years 2001 and 2002 for assistance under the 
     Foreign Military Financing Program, $1,300,000,000 is 
     authorized to be made available for Egypt.
       (d) Exclusion of Rescissions and Supplemental 
     Appropriations.--For purposes of this section, the 
     computation of amounts made available for a fiscal year shall 
     not take into account any amount rescinded by an Act or any 
     amount appropriated by an Act making supplemental 
     appropriations for a fiscal year.
       (e) Disbursement of Funds.--Funds estimated to be outlayed 
     for Egypt under subsection (c) during fiscal year 2001 shall 
     be disbursed to an interest-bearing account for Egypt in the 
     Federal Reserve Bank of New York within 30 days of the date 
     of enactment of this Act, or by October 31, 2000, whichever 
     is later, provided that--
       (1) withdrawal of funds from such account shall be made 
     only on authenticated instructions from the Defense Finance 
     and Accounting Service of the Department of Defense;
       (2) in the event such account is closed, the balance of the 
     account shall be transferred promptly to the appropriations 
     account for the Foreign Military Financing Program; and
       (3) none of the interest accrued by such account should be 
     obligated unless the Committee on Appropriations and the 
     Committee on Foreign Relations of the Senate and the 
     Committee on Appropriations and the Committee on 
     International Relations of the House of Representatives are 
     notified.

     SEC. 515. SECURITY ASSISTANCE FOR CERTAIN COUNTRIES.

       (a) Foreign Military Financing.--Of the amounts made 
     available for the fiscal years 2001 and 2002 under section 23 
     of the Arms Export Control Act (22 U.S.C. 2763)--
       (1) $18,200,000 for fiscal year 2001 and $20,500,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for all of the following countries: Estonia, Latvia, 
     and Lithuania;
       (2) $2,000,000 for fiscal year 2001 and $5,000,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for the Philippines;
       (3) $4,500,000 for fiscal year 2001 and $5,000,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Georgia;
       (4) $3,000,000 for fiscal year 2001 and $3,500,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Malta;

[[Page 18553]]

       (5) $3,500,000 for fiscal year 2001 and $4,000,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Slovenia;
       (6) $8,400,000 for fiscal year 2001 and $8,500,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Slovakia;
       (7) $11,000,000 for fiscal year 2001 and $11,100,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Romania;
       (8) $8,500,000 for fiscal year 2001 and $8,600,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Bulgaria; and
       (9) $100,000,000 for fiscal year 2001 and $105,000,000 for 
     fiscal year 2002 are authorized to be available on a grant 
     basis for Jordan.
       (b) IMET.--Of the amounts made available for the fiscal 
     years 2001 and 2002 to carry out chapter 5 of part II of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2347 et seq.)--
       (1) $2,300,000 for fiscal year 2001 and $4,000,000 for 
     fiscal year 2002 are authorized to be available for all of 
     the following countries: Estonia, Latvia, and Lithuania;
       (2) $1,400,000 for fiscal year 2001 and $1,500,000 for 
     fiscal year 2002 are authorized to be available for the 
     Philippines;
       (3) $475,000 for fiscal year 2001 and $1,000,000 for fiscal 
     year 2002 are authorized to be available for Georgia;
       (4) $200,000 for fiscal year 2001 and $1,000,000 for fiscal 
     year 2002 are authorized to be available for Malta;
       (5) $700,000 for fiscal year 2001 and $1,000,000 for fiscal 
     year 2002 are authorized to be available for Slovenia;
       (6) $700,000 for fiscal year 2001 and $1,000,000 for fiscal 
     year 2002 are authorized to be available for Slovakia;
       (7) $1,300,000 for fiscal year 2001 and $1,500,000 for 
     fiscal year 2002 are authorized to be available for Romania; 
     and
       (8) $1,100,000 for fiscal year 2001 and $1,200,000 for 
     fiscal year 2002 are authorized to be available for Bulgaria.

     SEC. 516. BORDER SECURITY AND TERRITORIAL INDEPENDENCE.

       (a) GUUAM Countries and Armenia.--For the purpose of 
     carrying out section 499C of the Foreign Assistance Act of 
     1961 and assisting GUUAM countries and Armenia to strengthen 
     national control of their borders and to promote the 
     independence and territorial sovereignty of such countries, 
     the following amounts are authorized to be made available for 
     fiscal years 2001 and 2002:
       (1) $5,000,000 for fiscal year 2001 and $20,000,000 for 
     fiscal year 2002 are of the amounts made available under 
     section 23 of the Arms Export Control Act (22 U.S.C. 2763).
       (2) $2,000,000 for fiscal year 2001 and $10,000,000 for 
     fiscal year 2002 of the amounts made available under chapter 
     9 of part II of the Foreign Assistance Act of 1961, as added 
     by section 301.
       (3) $500,000 for fiscal year 2001 and $5,000,000 for fiscal 
     year 2002 of the amounts made available to carry out chapter 
     5 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 
     2347 et seq.).
       (4) $1,000,000 for fiscal year 2001 and $2,000,000 for 
     fiscal year 2002 of the amounts made available to carry out 
     chapter 8 of part II of the Foreign Assistance Act.
       (b) GUUAM Countries Defined.--In this section, the term 
     ``GUUAM countries'' means the group of countries that signed 
     a protocol on quadrilateral cooperation on November 25, 1997, 
     together with Uzbekistan.
                  TITLE VI--TRANSFERS OF NAVAL VESSELS

     SEC. 601. AUTHORITY TO TRANSFER NAVAL VESSELS TO CERTAIN 
                   FOREIGN COUNTRIES.

       (a) Brazil.--The President is authorized to transfer to the 
     Government of Brazil two ``THOMASTON'' class dock landing 
     ships ALAMO (LSD 33) and HERMITAGE (LSD 34), and four 
     ``GARCIA'' class frigates BRADLEY (FF 1041), DAVIDSON (FF 
     1045), SAMPLE (FF 1048) and ALBERT DAVID (FF 1050). Such 
     transfers shall be on a grant basis under section 516 of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2321j).
       (b) Chile.--The President is authorized to transfer to the 
     Government of the Chile two ``OLIVER HAZARD PERRY'' class 
     guided missile frigates WADSWORTH (FFG 9), and ESTOCIN (FFG 
     15). Such transfers shall be on a combined lease-sale basis 
     under sections 61 and 21 of the Arms Export Control Act (22 
     U.S.C. 2796, 2761).
       (c) Greece.--The President is authorized to transfer to the 
     Government of Greece two ``KNOX'' class frigates VREELAND (FF 
     1068), and TRIPPE (FF 1075). Such transfers shall be on a 
     grant basis under section 516 of the Foreign Assistance Act 
     of 1961 (22 U.S.C. 2321j).
       (d) Turkey.--The President is authorized to transfer to the 
     Government of Turkey two ``OLIVER HAZARD PERRY'' class guided 
     missile frigates JOHN A. MOORE (FFG 19), and FLATLEY (FFG 
     21). Such transfers shall be on a combined lease-sale basis 
     under sections 61 and 21 of the Arms Export Control Act (22 
     U.S.C. 2796, 2761). The authority granted by this subsection 
     is in addition to that granted under section 1018(a)(9) of 
     Public Law 106-65.

     SEC. 602. INAPPLICABILITY OF AGGREGATE ANNUAL LIMITATION ON 
                   VALUE OF TRANSFERRED EXCESS DEFENSE ARTICLES.

       The value of naval vessels authorized under section 601 to 
     be transferred on a grant basis under section 516 of the 
     Foreign Assistance Act of 1961 (22 U.S.C. 2321j) shall not be 
     included in the aggregate annual value of transferred excess 
     defense articles which is subject to the aggregate annual 
     limitation set forth in section 516(g) of the Foreign 
     Assistance Act of 1961 (22 U.S.C. 2321j(g)).

     SEC. 603. COSTS OF TRANSFERS.

       Any expense of the United States in connection with a 
     transfer authorized by this title shall be charged to the 
     recipient.

     SEC. 604. CONDITIONS RELATING TO COMBINED LEASE-SALE 
                   TRANSFERS.

       A transfer of a vessel on a combined lease-sale basis 
     authorized by section 601 shall be made in accordance with 
     the following requirements:
       (1) The President may initially transfer the vessel by 
     lease, with lease payments suspended for the term of the 
     lease, if the country entering into the lease for the vessel 
     simultaneously enters into a foreign military sales agreement 
     for the transfer of title to the vessel.
       (2) The President may not deliver to the purchasing country 
     title to the vessel until the purchase price of the vessel 
     under such a foreign military sales agreement is paid in 
     full.
       (3) Upon payment of the purchase price in full under such a 
     sales agreement and delivery of title to the recipient 
     country, the President shall terminate the lease.
       (4) If the purchasing country fails to make full payment of 
     the purchase price in accordance with the sales agreement by 
     the date required under the sales agreement--
       (A) the sales agreement shall be immediately terminated;
       (B) the suspension of lease payments under the lease shall 
     be vacated; and
       (C) the United States shall be entitled to retain all funds 
     received on or before the date of the termination under the 
     sales agreement, up to the amount of the lease payments due 
     and payable under the lease and all other costs required by 
     the lease to be paid to that date.
       (5) If a sales agreement is terminated pursuant to 
     paragraph (4), the United States shall not be required to pay 
     any interest to the recipient country on any amount paid to 
     the United States by the recipient country under the sales 
     agreement and not retained by the United States under the 
     lease.

     SEC. 605. FUNDING OF CERTAIN COSTS OF TRANSFERS.

       There are authorized to be appropriated to the Defense 
     Vessels Transfer Program Account such funds as may be 
     necessary to cover the costs (as defined in section 502 of 
     the Congressional Budget Act of 1974 (2 U.S.C. 661a)) of the 
     lease-sale transfers authorized by section 601. Funds 
     authorized to be appropriated under the preceding sentence 
     for the purpose described in that sentence may not be 
     available for any other purpose.

     SEC. 606. REPAIR AND REFURBISHMENT IN UNITED STATES 
                   SHIPYARDS.

       To the maximum extent practicable, the President shall 
     require, as a condition of the transfer of a vessel under 
     section 601, that the country to which the vessel is 
     transferred will have such repair or refurbishment of the 
     vessel as is needed, before the vessel joins the naval forces 
     of that country, performed at a shipyard located in the 
     United States, including a United States Navy shipyard.

     SEC. 607. SENSE OF CONGRESS REGARDING TRANSFER OF NAVAL 
                   VESSELS ON A GRANT BASIS.

       It is the sense of Congress that naval vessels authorized 
     under section 601 to be transferred to foreign countries on a 
     grant basis under section 516 of the Foreign Assistance Act 
     of 1961 (22 U.S.C. 2321j) should be so transferred only if 
     the United States receives appropriate benefits from such 
     countries for transferring the vessel on a grant basis.

     SEC. 608. EXPIRATION OF AUTHORITY.

       The authority granted by section 601 shall expire two years 
     after the date of enactment of this Act.
                  TITLE VII--MISCELLANEOUS PROVISIONS

     SEC. 701. UTILIZATION OF DEFENSE ARTICLES AND DEFENSE 
                   SERVICES.

       Section 502 of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2302) is amended in the first sentence by inserting 
     ``(including for antiterrorism and nonproliferation 
     purposes)'' after ``internal security''.

     SEC. 702. ANNUAL MILITARY ASSISTANCE REPORT.

       Section 655(b)(3) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2415(b)(3)) is amended by inserting before the period 
     at the end the following: ``and, if so, a specification of 
     those defense articles that were exported during the fiscal 
     year covered by the report''.

     SEC. 703. REPORT ON GOVERNMENT-TO-GOVERNMENT ARMS SALES END-
                   USE MONITORING PROGRAM.

       Not later than 180 days after the date of the enactment of 
     this Act, the President shall prepare and transmit to the 
     appropriate committees of Congress a report that contains a 
     summary of the status of the efforts of the Defense Security 
     Cooperation Agency to implement the End-Use Monitoring 
     Enhancement Plan relating to government-to-government 
     transfers of defense articles, defense services, and related 
     technologies.

     SEC. 704. MTCR REPORT TRANSMITTALS.

       For purposes of section 71(d) of the Arms Export Control 
     Act (22 U.S.C. 2797(d)), the requirement that reports under 
     that section shall be transmitted to the Congress shall be 
     considered to be a requirement that such reports shall be 
     transmitted to the Committee on International Relations of 
     the House of Representatives and the Committee on Foreign 
     Relations and the Committee on Banking, Housing and Urban 
     Affairs of the Senate.

[[Page 18554]]



     SEC. 705. STINGER MISSILES IN THE PERSIAN GULF REGION.

       (a) Prohibition.--Notwithstanding any other provision of 
     law and except as provided in subsection (b), the United 
     States may not sell or otherwise make available under the 
     Arms Export Control Act or chapter 2 of part II of the 
     Foreign Assistance Act of 1961 any Stinger ground-to-air 
     missiles to any country bordering the Persian Gulf.
       (b) Additional Transfers Authorized.--In addition to other 
     defense articles authorized to be transferred by section 581 
     of the Foreign Operations, Export Financing, and Related 
     Programs Appropriation Act, 1990, the United States may sell 
     or make available, under the Arms Export Control Act or 
     chapter 2 of part II of the Foreign Assistance Act of 1961, 
     Stinger ground-to-air missiles to any country bordering the 
     Persian Gulf in order to replace, on a one-for-one basis, 
     Stinger missiles previously furnished to such country if the 
     Stinger missiles to be replaced are nearing the scheduled 
     expiration of their shelf-life.

     SEC. 706. SENSE OF CONGRESS REGARDING EXCESS DEFENSE 
                   ARTICLES.

       It is the sense of Congress that the President should make 
     expanded use of the authority provided under section 21(a) of 
     the Arms Export Control Act to sell excess defense articles 
     by utilizing the flexibility afforded by section 47 of such 
     Act to ascertain the ``market value'' of excess defense 
     articles.

     SEC. 707. EXCESS DEFENSE ARTICLES FOR MONGOLIA.

       (a) Uses for Which Funds Are Available.--Notwithstanding 
     section 516(e) of the Foreign Assistance Act of 1961 (22 
     U.S.C. 2321j(e)), during the fiscal years 2001 and 2002, 
     funds available to the Department of Defense may be expended 
     for crating, packing, handling, and transportation of excess 
     defense articles transferred under the authority of section 
     516 of that Act to Mongolia.
       (b) Content of Congressional Notification.--Each 
     notification required to be submitted under section 516(f) of 
     the Foreign Assistance Act of 1961 (22 U.S.C. 2321j(f)) with 
     respect to a proposed transfer of a defense article described 
     in subsection (a) shall include an estimate of the amount of 
     funds to be expended under subsection (a) with respect to 
     that transfer.

     SEC. 708. SPACE COOPERATION WITH RUSSIAN PERSONS.

       (a) Annual Certification.--
       (1) Requirement.--The President shall submit each year to 
     the appropriate committees of Congress, with respect to each 
     Russian person described in paragraph (2), a certification 
     that the reports required to be submitted to Congress during 
     the preceding calendar year under section 2 of the Iran 
     Nonproliferation Act of 2000 (Public Law 106-178) do not 
     identify that person on account of a transfer to Iran of 
     goods, services, or technology described in section 
     2(a)(1)(B) of such Act.
       (2) Applicability.--The certification requirement under 
     paragraph (1) applies with respect to each Russian person 
     that, as of the date of the certification, is a party to an 
     agreement relating to commercial cooperation on MTCR 
     equipment or technology with a United States person pursuant 
     to an arms export license that was issued at any time since 
     January 1, 2000.
       (3) Exemption.--No activity or transfer which specifically 
     has been the subject of a Presidential determination pursuant 
     to section 5(a) (1), (2), or (3) of the Iran Nonproliferation 
     Act of 2000 (Public Law 106-178) shall cause a Russian person 
     to be considered as having been identified in the reports 
     submitted during the preceding calendar year under section 2 
     of that act for the purposes of the certification required 
     under paragraph (1).
       (4) Commencement and termination of requirement.--
       (A) Times for submission.--The President shall submit--
       (i) the first certification under paragraph (1) not later 
     than 60 days after the date of the enactment of this Act; and
       (ii) each annual certification thereafter on the 
     anniversary of the first submission.
       (B) Termination of requirement.--No certification is 
     required under paragraph (1) after termination of cooperation 
     under the specific license, or five years after the date on 
     which the first certification is submitted, whichever is the 
     earlier date.
       (b) Termination of Existing Licenses.--If, at any time 
     after the issuance of a license under section 36(c) of the 
     Arms Export Control Act relating to the use, development, or 
     co-production of commercial rocket engine technology with a 
     foreign person, the President determines that the foreign 
     person has engaged in any action described in section 
     73(a)(1) of the Arms Export Control Act (22 U.S.C. 
     2797b(a)(1)) since the date the license was issued, the 
     President may terminate the license.
       (c) Report on Export Licensing of MTCR Items under 
     $50,000,000.--Section 71(d) of the Arms Export Control Act 
     (22 U.S.C. 2797(d)) is amended by striking ``Within 15 days'' 
     and all that follows through ``MTCR Annex,'' and inserting 
     ``Within 15 days after the issuance of a license (including 
     any brokering license) for the export of items valued at less 
     than $50,000,000 that are controlled under this Act pursuant 
     to United States obligations under the Missile Technology 
     Control Regime and are goods or services that are intended to 
     support the design, utilization, development, or production 
     of a space launch vehicle system listed in Category I of the 
     MTCR Annex,''.
       (d) Definitions.--In this section:
       (1) Foreign person.--The term ``foreign person'' has the 
     meaning given the term in section 74(7) of the Arms Export 
     Control Act (22 U.S.C. 2797c(7)).
       (2) MTCR equipment or technology.--The term ``MTCR 
     equipment or technology'' has the meaning given the term in 
     section 74(5) of the Arms Export Control Act (22 U.S.C. 
     2797c(5)).
       (3) Person.--The term ``person'' has the meaning given the 
     term in section 74(8) of the Arms Export Control Act (22 
     U.S.C. 2797c(8)).
       (4) United states person.--The term ``United States 
     person'' has the meaning given the term in section 74(6) of 
     the Arms Export Control Act (22 U.S.C. 2797c(6).

     SEC. 709. SENSE OF CONGRESS RELATING TO MILITARY EQUIPMENT 
                   FOR THE PHILIPPINES.

       (a) In General.--It is the sense of Congress that the 
     United States Government should work with the Government of 
     the Philippines to enable that Government to procure military 
     equipment that can be used to upgrade the capabilities and to 
     improve the quality of life of the armed forces of the 
     Philippines.
       (b) Military Equipment.--Military equipment described in 
     subsection (a) should include--
       (1) naval vessels, including amphibious landing crafts, for 
     patrol, search-and-rescue, and transport;
       (2) F-5 aircraft and other aircraft that can assist with 
     reconnaissance, search-and-rescue, and resupply;
       (3) attack, transport, and search-and-rescue helicopters; 
     and
       (4) vehicles and other personnel equipment.

     SEC. 710. WAIVER OF CERTAIN COSTS.

       Notwithstanding any other provision of law, the President 
     may waive the requirement to impose an appropriate charge for 
     a proportionate amount of any nonrecurring costs of research, 
     development, and production under section 21(e)(1)(B) of the 
     Arms Export Control Act (22 U.S.C. 2761(e)(1)(B)) for the 
     November 1999 sale of 5 UH-60L helicopters to the Republic of 
     Colombia in support of counternarcotics activities.
       And the Senate agree to the same.

     Benjamin A. Gilman,
     Bill Goodling,
     Sam Gejdenson,
                                Managers on the Part of the House.

     Jesse Helms,
     Richard G. Lugar,
     Chuck Hagel,
     Joe Biden,
     Paul S. Sarbanes,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill (H.R. 4919) to amend the 
     Foreign Assistance Act of 1961 and the Arms Export Control 
     Act to make improvements to certain defense and security 
     assistance provisions under those Acts, to authorize the 
     transfer of naval vessels to certain foreign countries, and 
     for other purposes, submit the following joint statement to 
     the House and the Senate in explanation of the effect of the 
     action agreed upon by the managers and recommended in the 
     accompanying conference report:

                    SECURITY ASSISTANCE ACT OF 2000

       The conferees note that, during the past 10 years, the pool 
     of money available for security assistance to United States 
     allies and partners has decreased dramatically. At the same 
     time, the number of countries with which the United States 
     needs to engage, whether to combat proliferation or terrorism 
     or to bolster regional security, has steadily increased. For 
     instance, three countries of the former Warsaw Pact are now 
     NATO members and receive both Foreign Military Financing and 
     International Military Education and Training from the United 
     States. Other countries which were once part of the Soviet 
     Union itself are now free and independent, and enjoy 
     important security relationships with the United States. An 
     even larger number of countries, now free from the Soviet 
     orbit, are also free to pursue closer military relationships 
     with the United States. Thus, for instance, this bill makes 
     Mongolia eligible for Department of Defense expenditures 
     relating to excess defense articles for the first time in 
     history.
       The conferees are concerned that a steadily increasing 
     number of countries are pursuing a relationship with the 
     United States which is funded by a steadily decreasing amount 
     of money. Additionally, 98 percent of the Foreign Military 
     Financing (FMF) account is currently committed to just three 
     countries as a result of various peace accord commitments. 
     Even if the President's budget request is fully funded, only 
     $18,200,000 in FMF would actually be available for the United 
     States to build security ties to the rest of the world. This 
     legislation seeks to arrest and reverse this decline. Section 
     101 authorizes an increase in FY 2001 of $12,000,000 in grant 
     Foreign Military Financing over the President's budget 
     request, and in FY 2002, with an increase of $89,000,000, 
     will bring the total amount of truly ``discretionary'' FMF 
     spending to $272,200,000. Even so, this will not return 
     security assistance to 1990 spending levels.
       Similarly, Section 201 fully funds the President's request 
     for the International

[[Page 18555]]

     Military Education and Training program by authorizing 
     $55,000,000 in FY 2001 and provides a $10,000,000 increase 
     for FY 2002.
       Section 301, which establishes a new chapter in the Foreign 
     Assistance Act, consolidates all nonproliferation funding, 
     except for assistance to the International Atomic Energy 
     Agency, under a single funding line. In so doing, it will 
     protect nonproliferation assistance from numerous foreign aid 
     restrictions that govern the current appropriations process.
       This legislation fully funds the President's request and 
     authorizes funding for one additional, Congressionally-
     mandated nonproliferation and export control initiative in 
     Malta. It also funds the International Science and Technology 
     Centers (ISTC) program at maximum capacity. Moreover, this 
     legislation will strengthen the hand of the newly-created 
     Nonproliferation Bureau of the Department of State in shaping 
     a coherent U.S.nonproliferation and export control policy. 
     Likewise, the President's antiterrorism funding request is 
     fully authorized, and the conferees have applied additional 
     resources to ensure that the fledgling Terrorist Interdiction 
     Program is funded in fiscal year 2001 at the same level as in 
     fiscal year 2000.
       In total, this bill authorizes $38,806,000,000 in security 
     assistance funding for fiscal year 2001. This is an increase 
     of $30,800,000 over the President's budget request for fiscal 
     year 2001. It further authorizes $3,907,000,000 for fiscal 
     year 2002.

                Title I--Military and Related Assistance

       Subtitle A--Foreign Military Sales and Financing Authority


                    Authorization of Appropriations

       Section 101 of the conference agreement, which has been 
     modified from the Senate proposal, authorizes $3,550,000,000 
     for fiscal year 2001, and $3,627,000,000 for fiscal year 
     2002, for the Foreign Military Financing (FMF) Program. The 
     administration request for fiscal year 2001 for FMF (grants 
     and loans) is $3,538,200,000. The actual level of FMF funding 
     for fiscal year 2000 is $3,420,000,000.


 Requirements Relating to Country Exemptions for Licensing of Defense 
                 Items for Export to Foreign Countries

       Section 102 of the conference agreement, which has been 
     modified from the House proposal, codifies in statute 
     requirements relating to country exemptions for licensing of 
     defense items for export to foreign countries.
       On May 24, 2000, the Administration unveiled a major 
     initiative--the Defense Trade Security Initiative--to improve 
     transatlantic cooperation in the area of defense trade. The 
     initiative was a package of seventeen separate proposals 
     geared toward promoting U.S. defense exports of NATO 
     countries, Japan and Australia. The Committees on Foreign 
     Relations and International Relations, which were not 
     consulted in a timely fashion on the Defense Trade Security 
     Initiative, nevertheless welcome most of the proposed changes 
     to the International Traffic in Arms Regulations (ITAR).
       The overall objective of DTSI is to improve transatlantic 
     cooperation in defense trade, particularly as that may aid us 
     in strengthening NATO, supporting the Defense Capabilities 
     Initiative (DCI), improving the interoperability of our 
     forces and contributing to the health and productivity of 
     defense industries on both sides of the Atlantic.
       Most of the seventeen separate proposals deal with 
     reforming the U.S. defense export control licensing process. 
     They are noncontroversial. They include proposals to 
     establish new procedures for U.S. industry to secure export 
     license for arms sales to NATO countries and other friendly 
     countries and the establishment of a robust common database. 
     Indeed, several of the initiatives mirror recommendations 
     made by the two committees at various times.
       Under Article 1, Section 8, of the United States 
     Constitution, the Congress possesses sole constitutional 
     authority to ``regulate Commerce with foreign Nations.'' The 
     President may only engage in such an exercise to the extent 
     he has been authorized to do so by the Congress. Most of the 
     seventeen DTSI measures, which clearly relate to the 
     regulation of commerce, have been implicitly authorized in 
     advance by Congress. The Arms Export Control Act (AECA) 
     requires the President to administer export controls for 
     certain commodities and also contains a measure of 
     flexibility, allowing the President to alter export control 
     requirements through regulatory changes. Indeed, numerous 
     regulatory modifications have been made using this authority. 
     Thus the constitutionality of a regulatory change to 
     implement many of the proposed initiatives is well 
     established.
       The conferees remain concerned, however, with certain other 
     of the proposals. The most important--and controversial--
     initiative is entitled `Extension of International Traffic in 
     Arms Regulations (ITAR) Exemption to Qualified Countries'. 
     Pursuant to this initiative, the Administration is prepared 
     to establish new ITAR licensing exemptions for unclassified 
     defense items to qualified companies in foreign countries 
     with whom the United States signs a bilateral agreement and 
     that adopt and demonstrate export controls that are 
     comparable in effectiveness to those of the United States.
       For several years, the United States has, under Section 
     38(b)(2) of the AECA, permitted unlicensed trade in defense 
     articles and defense services with Canada. This practice, 
     popularly called the ``Canada exemption,'' has been supported 
     by Congress in light of the unique defense trade relationship 
     between the United States and Canada. In a June 28, 2000, 
     letter to Chairman Helms, the Secretary of Defense stated his 
     intent ``to negotiate a Canada-style exemption to the ITAR 
     with the U[nited] K[ingdom] and Australia.'' On March 16, 
     2000, in a letter to the Secretary of State, the Chairmen of 
     the Senate Committee on Foreign Relations and the House 
     Committee on International Relations--the two Congressional 
     Committees with sole jurisdiction over the AECA and 
     regulation of defense trade--expressed concern about 
     expanding the Canadian exemption. The Canada exemption is a 
     unique one, based on an intertwined defense industrial base, 
     a close law enforcement relationship, and geographical 
     considerations. These same considerations do not apply to 
     either the United Kingdom or Australia (to say nothing of 
     other countries), despite the close military, intelligence, 
     and law enforcement relationships that the U.S. government 
     has with the governments in London and Canberra. For 
     instance, defense commodities being shipped between the 
     United States and Canada are far less susceptible to 
     diversion than items shipped longer distances on cargo 
     vessels which must make multiple port calls before arriving 
     in the final port of destination. Moreover, unlike the case 
     in Canada, many major U.K. defense companies are now jointly 
     partnered with other European firms.
       For these reasons and others, the Secretary of State and 
     the Attorney General raised serious questions about how a 
     Canada-like exemption would affect U.S. export controls and 
     law enforcement efforts. Their concerns turned, in short, on 
     the fact that elimination of a licensing requirement for 
     various weapons and defense commodities would remove an 
     important law enforcement capability for the United States, 
     placing heightened reliance upon the United Kingdom and 
     Australia to stop diversions of U.S. equipment and to provide 
     the type of evidence needed to prosecute violations of the 
     AECA.
       In his June 28, 2000 letter, the Secretary of Defense 
     assured the Committee on Foreign Relations that the licensing 
     exemption for certain countries would need to be accomplished 
     through ``legally binding agreements to ensure their export 
     control and technology security regimes are congruent to our 
     own. In exchange for these ironclad arrangements, we are 
     prepared to offer an exemption to the ITAR similar to that 
     long-provided to Canada.''
       The conferees are pleased to note this emphasis on 
     extending a broad ITAR exemption in a legally-binding 
     agreement and, accordingly, are equally pleased to codify the 
     requirement in statute. As the Department of State noted in 
     connection with the START Treaty: ``An undertaking or 
     commitment that is understood to be legally binding carries 
     with it both the obligation to comply with the undertaking 
     and the right of each Party to enforce the obligation under 
     international law.'' This right of enforcement is of singular 
     importance in this case, because noncompliance with the 
     undertaking presumably could result in the diversion of 
     United States weaponry or technology.
       Essential to the initiative to provide license-free trade 
     to various countries is the operation of domestic export 
     control laws in such countries. Accordingly, the underlying 
     rationale governing Section 102 is that the United States 
     should not provide the benefit of an exemption from licensing 
     of U.S. defense exports unless a foreign country agrees to 
     apply, in a legally-binding fashion and in accordance with a 
     bilateral agreement with the United States, the full range of 
     United States export control and laws, regulations, and 
     policies appropriate to the sensitivity of defense items 
     exported to a foreign country under the exemption.
       In that regard, the section requires that in order to 
     provide an exemption from licensing of defense exports to a 
     foreign country, the United States must negotiate a legally 
     binding bilateral agreement including specific requirements. 
     The President must then certify that the bilateral agreement 
     meets those specific requirements and, importantly, that the 
     foreign country has promulgated or enacted all necessary 
     modifications to its laws and regulations to comply with its 
     obligations under the bilateral agreement before implementing 
     the exemption.
       The specific requirements include but are not limited to 
     securing end-use and retransfer commitments from all end-
     users, controls on reexports to foreign countries including a 
     requirement for prior written U.S. government approval for 
     such reexports, and the establishment of a list of controlled 
     defense items that will include those items covered by the 
     exemption, which are required to be notified to the Congress 
     under subsection (b) of this section.
       The conferees expect to exercise close oversight of any 
     agreements reached with foreign nations that provide for 
     unlicensed trade in defense articles and defense services. 
     The conferees reserve judgment on whether any agreements 
     contemplated with

[[Page 18556]]

     the United Kingdom or Australia in this area should be 
     undertaken in executive agreements, or as treaties, subject 
     to advice and consent of the Senate. The conferees expect, as 
     stated in subsection (d), that the Secretary of State will 
     consult with the two Committees as to whether the DTSI 
     licensing exemption for various countries should be codified 
     as a treaty. Were the Secretary of State to conclude 
     bilateral treaties with the United Kingdom and Australia to 
     achieve the objectives set forth under the DTSI initiative, 
     the Senate conferees would support the earliest possible 
     consideration of such important measures. Alternatively, the 
     Congress has the option of amending Section 38(b)(2) of the 
     AECA to limit the President's flexibility to approve 
     unlicensed trade--with Canada or any other nation.
       Finally, the conferees address in subsection (c) the issue 
     of exports of commercial communication satellites. Without 
     prejudice to the outcome of a review, the conferees believe 
     that both Congress and the Executive Branch should re-
     evaluate the issue of the correct and appropriate commodity 
     jurisdiction for export control of U.S. commercial 
     communication satellites.

   Subtitle B--Stockpiling of Defense Articles for Foreign Countries


      additions to united states war reserve stockpiles for allies

       Section 111 was proposed by the House. Pursuant to Section 
     514 of the Foreign Assistance Act of 1961, as amended, the 
     Department of Defense can make additions to the War Reserve 
     Stockpiles for Allies stockpiles only as periodically 
     provided for in legislation. For fiscal year 2000, the 
     President requested authority to make additions to stockpiles 
     in South Korea ($40,000,000) and Thailand ($20,000,000). The 
     conferees provided this authority under Section 1231 of the 
     ``Admiral James W. Nance and Meg Donovan Foreign Relations 
     Authorization Act, Fiscal Years 2000 and 2001'' (P.L. 106-
     113). For fiscal year 2001 the Department of Defense has 
     asked for an additional $50,000,000 authorization for the 
     Korean program. Section 111 provides this authority for 
     fiscal year 2001.


  transfer of certain obsolete or surplus defense articles in the war 
                reserve stockpiles for allies to israel

       Section 112 has been modified from the House proposal. 
     Periodically the Department of Defense requests authorization 
     to transfer defense articles out of War Reserve Stockpiles to 
     the host country in question. The defense articles are to be 
     sold to the host nation, or to be transferred in exchange for 
     other non-monetary concessions. The Committee provided 
     similar authority to make such transfers to South Korea and 
     Thailand pursuant to Section 1232 of the ``Admiral James W. 
     Nance and Meg Donovan Foreign Relations Authorization Act, 
     Fiscal Years 2000 and 2001'' (P.L. 106-113).

                      Subtitle C--Other Assistance


                  defense drawdown special authorities

       Section 121, which has been modified from the Senate 
     proposal, increases the special drawdown authorities of 
     defense articles and services from defense stocks, and for 
     military education and training, to assist foreign countries 
     from $150 million to $200 million.
       Current law grants the President the authority to draw down 
     from existing stocks within the Department of Defense to 
     assist in emergencies or when he determines it is in the 
     national interest. This section expands the authority by 
     making nonproliferation and antiterrorism activities eligible 
     for the special drawdown authorities relating to defense 
     articles and services, and to military education and 
     training, to assist foreign countries. The increase in 
     financial authority is meant to allow for incorporation of 
     nonproliferation and antiterrorism objectives without 
     sacrificing the President's flexibility to respond to 
     unforeseen emergencies and foreign policy objectives relating 
     to combating international narcotics, international disaster 
     assistance, and migration and refugee assistance.


    increased authority for the transport of excess defense articles

       Section 122, proposed by the Senate, raises the space 
     available weight limitation that is imposed on the 
     transportation of excess defense articles (EDA) from 25,000 
     pounds to 50,000 pounds. Currently, a variety of limitations 
     are imposed on the use of Department of Defense funds to 
     transfer excess defense articles to foreign nations and 
     international organizations. Moreover, even when such an 
     expenditure is authorized, free transportation of EDA may 
     only be provided on a space available basis if it is in the 
     U.S. national interest to do so, the recipient nation is a 
     developing nation which receives less than $10,000,000 in FMF 
     and IMET, and the weight of the items to be transferred does 
     not exceed 25,000 pounds.
       In limiting the weight of defense articles to no more than 
     25,000 pounds, current law will preclude the transportation 
     of a large number of United States Coast Guard ``self-
     righting'' patrol craft which have recently been declared 
     excess but which weigh approximately 33,000 pounds. Over the 
     next four years, more than 50 of these vessels will be 
     eligible for transfer to foreign nations under the EDA 
     program. However, the current weight limitation will preclude 
     shipment of the vessels on a space available basis to foreign 
     countries. This, in turn, will increase the cost of transfer 
     of the defense article to would-be recipients, and likely 
     would cause many nations to decline U.S. offers of these 
     vessels. As a result, the Untied States Coast Guard could 
     incur unnecessary expenses due to delays in finding foreign 
     recipients of the craft, and possibly be forced to 
     demilitarize vessels for whom a foreign customer could not be 
     secured. Raising the weight limit to 50,000 pounds will 
     obviate this problem.

        Title II--International Military Education and Training


                    Authorization of Appropriations

       Section 201, which has been modified from the Senate 
     proposal, authorizes $55,000,000 for fiscal year 2001 and 
     $65,000,000 for fiscal year 2002 to carry out international 
     military education and training (IMET) of military and 
     related civilian personnel of foreign countries. The 
     administration request for fiscal year 2001 for IMET is 
     $55,000,000. The actual level of IMET funding for fiscal year 
     2000 is $50,000,000. IMET is provided on a grant basis to 
     students from allied and friendly nations, and is designed to 
     expose foreign students to the U.S. professional military 
     establishment and the American way of life, including the 
     U.S. regard for democratic values, respect for individual and 
     human rights and belief in the rule of law. Section 201 
     authorizes funding of the IMET program in 2002 at its maximum 
     capacity. Funding beyond this level cannot be absorbed due to 
     limitations in number of courses and classes.


 ADDITIONAL REQUIREMENTS RELATING TO INTERNATIONAL MILITARY EDUCATION 
                              AND TRAINING

       Section 202, proposed by the Senate, amends Chapter 5 of 
     part II of the Foreign Assistance Act of 1961, relating to 
     International Military Education and Training (IMET), by 
     adding two new requirements. First, selection of foreign 
     personnel for the IMET program will be done in consultation 
     with United States defense attaches, who are uniquely 
     positioned to recommend candidates. The conferees are 
     concerned to note that defense attaches are, on occasion, 
     excluded from this process. By mandating consultation, the 
     conferees intend to secure the complete involvement of 
     defense attaches in nominating individuals for the IMET 
     program. Naturally, selection of foreign personnel, and 
     overall management of the IMET program remain the 
     responsibility of the Department of State.
       Section 202 also requires that the Secretary of Defense 
     develop and maintain a database containing records on each 
     foreign military or defense ministry civilian participant in 
     education and training activities conducted under this 
     chapter after December 31, 2000. This record shall include 
     the type of instruction received, the dates of such 
     instruction, whether it was completed successfully, and, to 
     the extent practicable, a record of the person's subsequent 
     military or defense ministry career and current position and 
     location. The conferees expect that the record of a person's 
     subsequent career will include positions held, reports of 
     exceptional successes or failures in those positions, and any 
     credible reports of involvement in criminal activity or human 
     rights abuses. The conferees believe that such a database 
     will improve the effectiveness of foreign military education 
     and training activities by enabling the Department of Defense 
     to better determine: what follow up training may be most 
     appropriate for previously trained personnel; which courses 
     are most effective in improving the performance of foreign 
     military personnel; and where personnel are located in 
     foreign defense establishments who, by virtue of their prior 
     training, are most likely to understand U.S. modes of 
     operation and share U.S. standards of military 
     professionalism. This section does not require, however, that 
     the Department of Defense institute dramatic new collection 
     programs to gather information for the database.

       Title III--Nonproliferation and Export Control Assistance


             Nonproliferation and Export control Assistance

       Section 301 has been modified from the Senate proposal. 
     Every major category of U.S. foreign assistance, except for 
     nonproliferation and export control assistance, is governed 
     under multiple sections, or entire chapters, of the Foreign 
     Assistance Act of 1961 (FAA). The FAA contains chapters 
     authorizing international narcotics control, military 
     assistance, peacekeeping operations, antiterrorism 
     assistance, IMET, development assistance, and funding for 
     international organizations, to name a few. Although the 
     President has declared a state of national emergency to 
     combat the proliferation of weapons of mass destruction and 
     associated delivery systems, the FAA does not contain a 
     specific chapter to authorize and direct such a clearly 
     important form of U.S. foreign aid. Funding for the 
     nonproliferation and export control activities of the 
     Department of State derives from a variety of disparate 
     authorizations passed at various

[[Page 18557]]

     times. As a result, this category of funding does not enjoy 
     the same status as other types of foreign assistance.
       Appropriation of funds for nonproliferation and export 
     control activities is cobbled together annually by the 
     Appropriations Committee under a catch-all account that also 
     includes demining and contributions to certain international 
     organizations. Thus the Department of State is invariably 
     forced to make ``trade-offs'' between nonproliferation and 
     export control funding and funding for other activities. 
     Finally, other nonproliferation and export control funding is 
     contained within the amounts appropriated for the ``newly 
     independent'' states of the former Soviet Union, and is thus 
     subject to restrictions if the President cannot certify that 
     Russia is not proliferating technology to Iran (which he has, 
     to date, been unable to do).
       By adding a new chapter to Part II of the FAA, the 
     conferees intend U.S. nonproliferation and export control 
     assistance to be given equal stature with other authorized 
     activities. The conferees expect the Department of State, in 
     the future, to consolidate all of its nonproliferation 
     funding, except for funding for the International Atomic 
     Energy Agency (which is governed by a separate authorization 
     under the FAA), into a single, integrated request to be 
     authorized under Chapter 9 of the FAA. The conferees further 
     expect that the Nonproliferation Bureau of the Department of 
     State will be given authority over the use of funds 
     authorized by this chapter.
       The new chapter to the FAA incorporates existing 
     authorities under Sections 503 and 504 of the FREEDOM Support 
     Act (which are the principal extant authorities for 
     nonproliferation and export control activities). The new 
     sections 581 and 582 carry forward those authorities, but 
     also emphasize the need for programs to bolster the 
     indigenous capabilities of foreign countries to monitor and 
     interdict proliferation shipments. Section 583 directs the 
     President to ensure that sufficient funds are allocated to 
     the transit interdiction effort. To this end, the section 
     contains authority for the Secretary of State to establish a 
     list of countries that should be given priority in U.S. 
     transit interdiction funding. The conferees suggest that the 
     initial designation of the transit country list include those 
     countries mentioned in the fiscal year 1999 Congressional 
     presentation document as ``key global transit points'' (e.g., 
     the countries of Central Asia and the Caucasus, the Baltics, 
     Central and Eastern Europe, Singapore, Hong Kong, Taiwan, 
     Cyprus, Malta, Jordan, and the UAE).
       Section 584, which will be part of the new chapter of the 
     FAA, makes clear that two of the same limitations which apply 
     to antiterrorism assistance also apply to nonproliferation 
     and export control assistance. Section 584 permits the use of 
     unrelated accounts to furnish services and commodities 
     consistent with, and in furtherance of, Chapter 9 of the FAA. 
     However, it requires that the foreign nation receiving such 
     services or commodities pay in advance for the item or 
     service, and that the reimbursement be credited to the 
     account from which the service or commodity is furnished or 
     subsidized. Foreign Military Financing may not be used to 
     make such payments. Section 584 also makes clear that Chapter 
     9 does not apply to information exchange activities conducted 
     under other authorities of law.
       Section 585 authorizes $129,000,000 for fiscal year 2001, 
     and $142,000,000 for fiscal year 2002, for activities 
     conducted pursuant to Chapter 9 of the FAA. This amount 
     captures several activities currently appropriated within the 
     Nonproliferation, Anti-Terrorism, Deminining, and Related 
     Programs Account, and the FREEDOM Support Act Assistance for 
     the New Independent States (NIS) of the Former Soviet Union. 
     The covered programs, at the administration's requested 
     levels of funding for FY2001, are: $15,000,000 for the 
     Nonproliferation and Disarmament Fund; $14,000,000 for Export 
     Control Assistance; $45,000,000 for the Science Centers; and 
     $36,000,000 in NIS export control and border assistance 
     funding. The administration request for fiscal year 2001 thus 
     totals $110,000,000 for all Chapter 9 authorized activities. 
     The increase of $19,000,000 above the administration's 
     requested levels is intended to support two initiatives 
     contained in sections 303 and 304. Specifically, this 
     increase supports funding of the International Science and 
     Technology Centers at maximum capacity (which requires an 
     additional $14,000,000) and establishment of a static cargo 
     x-ray facility in Malta as the first of the transit 
     interdiction programs to be managed under the new authorities 
     of the FAA (a $5,000,000 program).


   Nonproliferation and Export Control Training in the United States

       Section 302, which has been modified from the Senate 
     proposal, authorizes the expenditure of $2,000,000 during 
     both fiscal years 2001 and 2002 in nonproliferation and 
     export control funding for the training and education of 
     personnel from friendly countries in the United States. The 
     Department of State already engages in a vigorous training 
     program, and funds numerous activities which are implemented 
     by Department of Commerce personnel. However, much of this 
     training is conducted overseas. The conferees urge the 
     Department of State to place emphasis on bringing a select 
     group of officials from friendly governments back to the 
     United States to engage in an intensive training program 
     which draws upon the expertise of all relevant U.S. 
     government agencies. This training should focus on those 
     nonproliferation and export control activities which would 
     most benefit from being conducted in the United States. 
     Finally, the conferees are concerned with declining travel 
     and training budgets of U.S. government agencies tasked with 
     combating proliferation. The conferees hope this trend will 
     be arrested, but urge the Department of State, in the 
     interim, to seek to offset the effects of this decline using 
     the funds authorized under this section.


                     Science and Technology Centers

       Section 303, which has been modified from the Senate 
     proposal, authorizes $59,000,000 for fiscal year 2001, and 
     $65,000,000 in fiscal year 2002, in nonproliferation and 
     export control funding for the Department of State's 
     international science and technology centers. The 
     administration request for fiscal year 2001 is $45,000,000. 
     The actual level of funding for fiscal year 2000 is 
     $59,000,000. The conferees expect that this not only will 
     fully fund all ongoing activities at these centers, but will 
     allow a significant expansion in the number of research 
     grants offered to Russian scientists formerly employed in the 
     development of missiles and chemical and biological warfare 
     programs.
       Section 303 also expresses the view of the conferees that 
     frequent audits should be conducted of entities receiving 
     ISTC funds. This will be necessary in light of the 
     administration's interest in expanding the role of the ISTC 
     to provide funds to redirect the expertise associated with 
     the Soviet Union's biological warfare program. U.S. 
     obligations under the Chemical and Biological Weapons 
     Conventions, as well as under domestic law (e.g., P.L. 106-
     113), prohibit the furnishing of assistance to offensive 
     biological warfare programs. It thus is essential that the 
     United States audit entities that receive assistance to 
     ensure that the United States is not contributing, albeit 
     unknowingly, to an offensive biological warfare program (or 
     to entities that are proliferating technology to rogue 
     states). Moreover, the obligation to conduct audits should be 
     spread equitably throughout the United States Government.


                         Trial Transit Program

       Section 304, proposed by the Senate, authorizes $5,000,000 
     in nonproliferation and export control funding to establish a 
     static cargo x-ray facility in Malta, provided that the 
     Government of Malta first gives satisfactory assurances that 
     Maltese customs officials will engage in random cargo 
     inspections of container traffic passing through the Malta 
     Freeport, and will utilize the x-ray facility to examine 
     random shipping containers.
       Malta is the ideal location for a trial transit 
     interdiction program. The country's location, along one of 
     the busiest trade routes in the world, has made it a crucial 
     shipping center. The Malta Freeport is ideally situated as a 
     redistribution point, linking trade between Europe, Africa, 
     the Middle East, and Asia. For instance, direct shipments 
     from the Black Sea to Malta take less than 15 days. From 
     various ports in Europe, Russia, and Asia, large cargo 
     vessels offload their containers into the Freeport. The 
     containers are then stored temporarily and are reloaded onto 
     smaller ``feeder'' vessels which service ports in North 
     Africa, including Libya. The Freeport went into operation in 
     April 1990. According to Maltese Freeport documents, that 
     year alone, 231 vessels offloaded 94,500 containers. Since 
     that time, the volume of activity at the port has steadily 
     increased. In 1996, the number of ships calling at the 
     Freeport reached 1,383. Nearly 600,000 containers transited 
     the facility that year. For 1999, according to a January 10, 
     2000 article in a Maltese daily newspaper, 1,464 container 
     ships utilized the Freeport. At this time, estimates of 
     container traffic are not available, but presumably the 
     number will exceed half a million.
       The steadily rising level of container traffic in the 
     Freeport is noteworthy. The volume can be expected to 
     increase if plans to further expand the port's services are 
     implemented, thereby making one of the world's largest 
     deepwater ports all the more robust. The Malta Freeport Act, 
     which establishes the Freeport as a legally separate entity 
     from Malta proper, creates specific proliferation concerns. 
     Currently the Freeport has its own Minister, and customs 
     functions have been conferred upon the Freeport Authority 
     which he oversees. Maltese Customs does not receive 
     information on transshipments, and may not operate in the 
     Freeport without permission. While the Freeport has never 
     refused such a request, the fundamental lack of transparency, 
     and the inability of Maltese customs to conduct random 
     inspections, means that effective export enforcement is 
     impossible at this time.
       The conferees are concerned with this situation since Malta 
     is undeniably being used as a transit point by various 
     entities engaged in weapons proliferation. For example, in 
     one instance of excellent cooperation between the Freeport 
     and Maltese Customs officials, a shipment of chemical warfare 
     precursor

[[Page 18558]]

     chemicals was seized. Similarly, the United Kingdom recently 
     uncovered a massive shipment of missile parts slated for air 
     delivery to Libya via Malta. While this latter incident did 
     not involve the Freeport, it nevertheless is further evidence 
     that various countries are seeking to use Malta as a transit 
     point for deliveries of dangerous commodities to North 
     Africa.
       The conferees note that Maltese-U.S. relations have 
     steadily improved over the past several years. The Government 
     of Malta has demonstrated a genuine commitment to 
     nonproliferation and bolstering its export control 
     capability. Therefore the conferees favor initiation of a 
     trial transit program with Malta, provided that the Maltese 
     Government takes the necessary steps to render this program 
     viable (namely, by opening the Freeport to periodic, random 
     inspections by Maltese Customs officials). The conferees hope 
     that this program, if successful, might serve as a model for 
     programs in other designated transit countries.


   exception to authority to conduct inspections under the chemical 
             weapons convention implementation act of 1998

       Section 305 was proposed by the Senate. The Chemical 
     Weapons Convention, which was approved by the Senate in 1997, 
     has an extensive inspection regime which allows potentially 
     intrusive inspections of chemical companies in the United 
     States. The Senate was concerned about the threat posed to 
     business proprietary information during the course of an 
     inspection. As a result, the Chemical Weapons Convention 
     Implementation Act of 1998 imposes a requirement that a 
     special agent of the Federal Bureau of Investigation (FBI) 
     accompany every inspection conducted in the United States.
       However, there is minimal benefit to the FBI's monitoring 
     of inspections at chemical destruction sites. Such 
     inspections pose little risk to national security or trade 
     secrets and--because of their lengthy duration--a constant 
     FBI presence would be expensive to maintain. This section 
     gives the FBI an exemption from the requirement to be present 
     at inspections of U.S. chemical destruction facilities.

                   Title IV--Antiterrorism Assistance


                    authorization of appropriations

       Section 401, which has been modified from the Senate 
     proposal, authorizes $72,000,000 for fiscal year 2001 and 
     $73,000,000 for fiscal year 2002 in antiterrorism assistance. 
     The administration request for anti-terrorism assistance for 
     fiscal year 2001 is $72,000,000 (including the request for 
     the Terrorist Interdiction Program (TIP)). The actual level 
     of funding for fiscal year 2000, including the TIP, is 
     $38,000,0000.

            Title V--Integrated Security Assistance Planning

  Subtitle A--Establishment of a National Security Assistance Strategy


                 national security assistance strategy

       Section 501, which has been modified from the Senate 
     proposal, strongly urges the annual preparation of a National 
     Security Assistance Strategy (NSAS) to be submitted in 
     connection with the annual foreign operations budget request. 
     The purpose of the NSAS is to establish a clear and coherent 
     multi-year plan, on a country by country basis, regarding 
     U.S. security assistance programs. The current process 
     utilized by the United States Government is entirely 
     insufficient and is run, on an ad hoc basis. Seldom is a 
     thoroughly researched, thoroughly justified proposal for 
     security assistance put forward to Congress. This, in turn, 
     has encouraged parallel Congressional initiatives and 
     earmarks which often are put forward with a comparable level 
     of foresight and planning. As a result, it seems that the 
     Political-Military Affairs Bureau of the Department of State 
     does not currently possess sufficient control over the 
     allocation of security assistance funds, despite its clear 
     mandate to manage these programs (except for nonproliferation 
     assistance).
       Currently there is no clearly articulated organizing 
     principle for U.S. military assistance. Nor is there a 
     coherent set of benchmarks, or measurements, against which 
     the success of individual programs with various countries can 
     be measured. As a result, military assistance funding 
     proposals are often vague and seemingly unjustified. For 
     instance, the most recent Congressional presentation 
     documents justify the provision of FMF for Southeast Europe 
     as ``contributing to regional stability in Southeast Europe 
     by promoting military reform.'' No further elaboration is 
     given. It is hardly surprising, in light of this sort of 
     justification, that the administration's security assistance 
     requests seldom are fully funded by Congress.
       The conferees urge the Department of State to transform 
     fundamentally the way that the United States conceptualizes 
     security assistance. Utilizing a model more akin to the 
     Department of Defense's planning process, the Department of 
     State is encouraged to pull together a comprehensive multi-
     year plan, which will evolve on an annual basis, setting 
     forth a specific programmatic objective for each country and 
     explaining how the requested funds will accomplish that 
     objective. Additional, secondary objectives should be added 
     as necessary. The conferees believe that the plan for each 
     country should be developed at the U.S. mission level, and 
     should be coordinated by the Department of State with all 
     relevant U.S. government agencies with a role in U.S. 
     security assistance programs. The bottom-up document that 
     results is then to be coordinated with the top-down policy 
     guidance set forth in the National Security Strategy of the 
     United States, and by the Secretary of State (in coordination 
     with the Secretary of Defense and the Chairman of the Joint 
     Chiefs of Staff, and in consultation with other relevant 
     agencies, including the intelligence community).
       The conferees expect the resultant document to be a 
     comprehensive National Security Assistance Strategy which 
     provides a robust, detailed justification for security 
     assistance funding that is requested. Rather than the current 
     process, which yields unclear and unmeasurable objectives for 
     U.S. security assistance programs, it is expected that the 
     NSAS process will ensure that the type and amount of 
     assistance given a country is determined programmatically. 
     Progress can thus be measured by the administration and the 
     Congress. In turn, the conferees anticipate that such an 
     initiative, led by the Political-Military Affairs Bureau of 
     the Department of State, will substantially improve 
     Congressional understanding of the administration's 
     initiatives and bolster Congressional support for the 
     President's military assistance request.

             Subtitle B--Allocations for Certain Countries


                security assistance for new nato members

       Section 511, which has been modified from the Senate 
     proposal, authorizes $30,300,000 for fiscal year 2001 and 
     $35,000,000 for fiscal year 2002 in grant Foreign Military 
     Financing for the Czech Republic, Hungary, and Poland. 
     Section 511 also authorizes $5,100,000 for fiscal year 2001 
     and $7,000,000 for fiscal year 2002 in IMET funding for these 
     three new NATO members. The administration request for fiscal 
     year 2001 for these three countries is $30,300,000 in grant 
     FMF and $5,100,000 in IMET funding. The actual level of grant 
     FMF funding for the three for fiscal year 2000 is 
     $22,000,000. The actual level for IMET funding for fiscal 
     year 2000 is $4,570,000.
       Section 511 also directs the President to give priority to 
     supporting the objectives set forth by the Senate in its 
     resolution of ratification for the protocols adding the three 
     new NATO members. Specifically, the conferees expect the 
     administration to ensure that FMF and IMET funding is used to 
     support the ability of Poland, Hungary, and the Czech 
     Republic to fulfill their collective defense requirements 
     under Article V of the Washington Treaty. The conferees also 
     expect the administration to use the additional funds 
     provided to expand U.S. efforts to improve the ability of 
     these countries to protect themselves from hostile foreign 
     intelligence services.


          increased training assistance for greece and turkey

       Section 512, which has been modified from the Senate 
     proposal, authorizes $1,000,000 in IMET funding for Greece 
     and $2,500,000 in IMET funding for Turkey for each of the 
     fiscal years 2001 and 2002. The administration request for 
     IMET for fiscal year 2001 is $25,000 for Greece and 
     $1,600,000 for Turkey. The actual level of IMET funding for 
     Greece for fiscal year 2000 is $25,000. For Turkey, the 
     actual level of IMET funding for fiscal year 2000 is 
     $1,500,000.
       The conferees are encouraged by numerous indications of a 
     warming in Greek-Turkish relations. This improvement has 
     manifested itself in several ways, ranging from Greek 
     agreement to Turkish candidacy for membership in the European 
     Union to the large number of bilateral agreements that have 
     recently been signed during reciprocal visits of foreign 
     ministers (including agreements on transportation, tourism, 
     cultural heritage, and customs issues). In the interest of 
     bolstering this process the conferees authorize a substantial 
     increase in funds for International Military Education and 
     Training (IMET). It is the conferees' expectation that the 
     administration will use these additional funds to support the 
     process of rapprochement between Greece and Turkey. 
     Specifically, the conferees urge the administration to ensure 
     that $1,000,000 of the additional resources, evenly divided 
     between the two countries, is used for joint professional 
     military education of Greek and Turkish officers. The 
     conferees note that this type of training will build personal 
     relationships between the militaries of these two important 
     NATO allies, and will reinforce the process that is already 
     underway.


                         assistance for israel

       Section 513, which has been modified from the Senate 
     proposal, sets into place the formula for a phase-out of 
     annual U.S. Economic Support Funds to Israel. Operating from 
     a baseline of $1.2 billion ESF per annum, beginning in FY 
     1999, the United States and Israel agreed to a plan whereby 
     Israel's annual economic assistance would be reduced in equal 
     increments of 10 percent (equivalent to $120,000,000 per 
     annum), resulting in the ultimate elimination of ESF for 
     Israel. In order to ensure Israel's continued security in the 
     face of the loss of annual economic support, Israel 
     requested--and the United States agreed to--an annual 
     increase

[[Page 18559]]

     in Foreign Military Finance equal to half the reduced ESF 
     amount (or $60,000,000). Section 513 authorizes this process 
     for both fiscal years 2001 and 2002, and will result in an 
     aggregate reduction in authorized foreign assistance of 
     $120,000,000. Specifically, this section authorizes 
     $1,980,000,000 for fiscal year 2001 and $2,040,000,000 for 
     fiscal year 2002 in FMF. The administration's request for 
     fiscal year 2001 is $1,980,000,000.
       The authorization provided by the section is without 
     prejudice to any rescissions or supplemental appropriations 
     which might be required. The conferees intend for this 
     formula for the reduction of Israel's ESF be in place through 
     fiscal year 2008, and intend to authorize accordingly in 
     future Acts.
       In addition, this section directs that FMF funds for Israel 
     for fiscal year 2001 be disbursed not later than 30 days 
     after enactment of this Act or on October 31, 2000, whichever 
     is later. To the extent that Israel makes a request, FMF 
     funds shall, as agreed by Israel and the United States, be 
     available for advanced weapons systems. Additionally, not 
     less than $520,000,000 can be used for procurement in Israel 
     of defense articles and defense services, including research 
     and development. The conferees expect that Israel's annual 
     aid package will be provided under the usual terms, including 
     early disbursal of both ESF and FMF, offshore procurement, 
     and that the aid will be provided in the form of a grant.
       The conferees will view favorably additional requests for 
     authority required in the event of a peace agreement in the 
     Middle East.


                          assistance for egypt

       Section 514, which has been modified from the Senate 
     proposal, provides a similar formula for Egypt as that 
     applied under Section 513. In providing an authorization for 
     ESF to Egypt for fiscal years 2001 and 2002, Section 514 sets 
     in place the phase-out of Economic Support Funds for Egypt at 
     a rate of $40,000,000 per year. This section, which also 
     contains a two-year authorization for FMF, will result in an 
     aggregate reduction of $80,000,000 in ESF. The authorization 
     provided by the section is without prejudice to any 
     rescissions or supplemental appropriations which might be 
     required.
       Further, the section directs that FMF estimated to be 
     outlayed during fiscal year 2001 shall be disbursed to an 
     interest bearing account for Egypt in the Federal Reserve 
     Bank of New York. However, withdrawal of funds from the 
     account can be made only on authenticated instructions from 
     the Defense Finance and Accounting Service and, in the event 
     that the interest bearing account is closed, the balance of 
     the account is to be transferred promptly to the 
     appropriations account for Foreign Military Financing. The 
     conferees urge that before any of the interest accrued by the 
     account is obligated, the Committees on Appropriations and 
     Foreign Relations of the Senate, and the Committees on 
     Appropriations and International Relations of the House, be 
     notified.


                security assistance for certain counties

       Section 515, which has been modified from the Senate 
     proposal, provides individual authorizations for fiscal years 
     2001 and 2002 of grant FMF and IMET funding for various 
     countries.


              border security and territorial independence

       Section 516, which has been modified from the Senate 
     proposal, provides an integrated authorization of security 
     assistance funds for the GUUAM countries (e.g., Georgia, 
     Ukraine, Uzbekistan, Azerbaijan, and Moldova) and Armenia. 
     Specifically, for fiscal year 2001, Section 516 authorizes a 
     package of $5,000,000 in grant FMF, $2,000,000 in 
     nonproliferation and export control assistance, $500,000 in 
     IMET funding, and $1,000,000 in antiterrorism assistance. For 
     fiscal year 2002, that package is: $20,000,000 in grant FMF, 
     $10,000,000 in nonproliferation and export control 
     assistance, $5,000,000 in IMET funding, and $2,000,000 in 
     antiterrorism assistance. These funds must be expended in 
     accordance with the individual requirements of their 
     respective accounts. Thus, for instance, the grant FMF may 
     only be utilized for activities authorized in connection with 
     the FMF program. Likewise, nonproliferation and export 
     control funds must be spent on the objectives set forth under 
     Chapter 9 of the Foreign Assistance Act of 1961. Similar 
     restrictions apply to the other authorized forms of security 
     assistance. Thus, as assistance to Azerbaijan under this 
     section is still subject to section 907 of the FREEDOM 
     Support Act, such assistance may be provided only for 
     antiterrorism or nonproliferation and export control 
     purposes.
       The funds authorized under Section 516 must be spent for 
     the purpose of assisting the GUUAM countries and Armenia in 
     strengthening control of their borders, and for the purpose 
     of promoting the independence and territorial sovereignty of 
     these countries. These funds also are specifically 
     authorized, pursuant to Section 499C of the Foreign 
     Assistance Act of 1961, for the purpose of enhancing the 
     abilities of the national border guards, coast guard, and 
     customs officials of the GUUAM countries and Armenia to 
     secure their borders against narcotics trafficking, 
     proliferation, and transnational organized crime. The 
     conferees intend that funds authorized by this section be 
     used in Uzbekistan solely for nonproliferation purposes. 
     Finally, it bears emphasizing that the conferees strongly 
     support the cooperation on political, security, and economic 
     matters promoted and facilitated through the GUUAM group. The 
     United States should promote these endeavors as part of its 
     strategy to help these states consolidate their independence 
     and strengthen their sovereignty, to help resolve and prevent 
     conflicts in their respective regions, and to promote 
     democracy and human rights. In addition, the conferees 
     strongly support political, security, and economic 
     cooperation between the United States and Armenia.
       Finally, the conferees note the successes of the Department 
     of Defense's two international counterproliferation 
     programs--the DOD/FBI Counterproliferation Program and the 
     DOD/Customs Counterproliferation Program. With minimal 
     funding, and through excellent management, these programs are 
     contributing to efforts to halt the spread of dangerous 
     technology across the borders of the former Soviet Union, 
     Eastern and Central Europe, and the Baltic states. The 
     conferees hope that the Department of Defense will continue 
     to support these programs and recommend that the Department 
     of State coordinate closely with the Department of Defense on 
     proliferation matters.

                  Title VI--Transfers of Naval Vessels


    authority to transfer naval vessels to certain foreign countries

       Section 601 of the conference agreement, similar in the 
     House and Senate proposals, provides authority to the 
     President to transfer twelve naval vessels to Brazil, Chile, 
     Greece, and Turkey. These naval vessels either displace in 
     excess of 3,000 tons, or are less than 20 years of age. 
     Therefore statutory approval for the transfers is required 
     under 10 U.S.C. 7307(a). The two PERRY class frigates 
     proposed for transfer to Turkey under lease/sale authority 
     were approved by Congress to be transferred to Turkey by sale 
     in the fiscal year 2000 shop transfer legislation. Because of 
     Turkish financial uncertainties caused by recent natural 
     disasters, however, this proposal, which is in addition to 
     the sale authority previously granted, is needed to give 
     Turkey some flexibility in determining the most appropriate 
     means to acquire the ships. Two KNOX class frigates are 
     proposed in this section to be transferred to Greece on a 
     grant basis.


inapplicability of aggregate annual limitation on value of transferred 
                        excess defense articles

       Section 602 of the conference agreement, similar in the 
     House and Senate proposals, ensures that the value of naval 
     vessels authorized for transfer by grant by this Act will not 
     be included in determining the aggregate value of transferred 
     excess defense articles.


                           Costs of Transfers

       Section 603 of the conference agreement, identical in the 
     House and Senate proposals, provides that all costs are to be 
     borne by the foreign recipients, including fleet turnover 
     costs, maintenance, repairs, and training.


          conditions relating to combined lease-sale transfers

       Section 604 of the conference agreement, identical in the 
     House and Senate proposals, authorizes the transfer of high 
     value ships on a combined lease-sale basis under Section 61 
     and 21 of the Arms Export Control Act (22 U.S.C. 2796 and 
     2761 respectively).


                 funding of certain costs of transfers

       Section 605 of the conference agreement, identical in the 
     House and Senate proposals, provides authorization for the 
     appropriation of funds that may be necessary for the costs of 
     the combined lease-sale transfers in order to satisfy the 
     requirements of 2 U.S.C. 661c. These funds are authorized to 
     be appropriated into the Defense Vessels Transfer Program 
     Account, which was established in the fiscal year 1999 
     transfer legislation.


          Repair and Refurbishment in United States Shipyards

       Section 606 of the conference agreement, proposed by the 
     House, requires the President, to the maximum extent 
     practicable, to ensure that repair and refurbishment of naval 
     vessels authorized for transfer under this title is performed 
     in U.S. shipyards, including U.S. Navy shipyards.


 Sense of Congress Regarding Transfer of Naval Vessels on a Grant Basis

       Section 607 of the conference agreement, proposed by the 
     House, expresses the sense of Congress that naval vessels 
     authorized for transfer to foreign countries on a grant basis 
     under section 516 of the Foreign Assistance Act should be 
     transferred only if the U.S. receives appropriate benefits 
     from such countries.


                        Expiration of Authority

       Section 608 of the conference agreement, identical in the 
     House and Senate proposals, provides that the transfers 
     authorized by this Act must be executed within two years of 
     the date of enactment. This allows a reasonable opportunity 
     for agreement on terms and for execution of the transfer.

                  Title VII--Miscellaneous Provisions


              Utilization of Defense Articles and Services

       Section 701, proposed by the Senate, amends Section 502 of 
     the Foreign Assistance

[[Page 18560]]

     Act of 1961 to make clear that defense articles and services 
     may be furnished by the United States to foreign nations for 
     antiterrorism or nonproliferation purposes (in addition to 
     other currently authorized purposes).


                   Annual Military Assistance Report

       Section 702 of the conference agreement, proposed by the 
     House, requires the State Department to include information 
     in the annual military assistance report required by section 
     655 of the Foreign Assistance Act which identifies the 
     quantity of exports of weapons furnished on a direct 
     commercial sales basis. The so-called ``655 report'' provides 
     a timely and comprehensive account of U.S. arms transfers. 
     This provision will close a long-standing gap by ensuring 
     that the State Department provides information not only on 
     the quantity of approved licenses for Direct Commercial Sales 
     (DCS) but also on the quantity of actual deliveries of 
     weapons exported pursuant to the DCS authority during the 
     fiscal year covered by the report, specifying, if necessary, 
     whether such deliveries were licensed in preceding fiscal 
     year.


   Report on Government-to-Government Arms Sales End-Use Monitoring 
                                Program

       Section 703 of the conference agreement, proposed by the 
     House, requires the President to submit a report on the 
     status of efforts by the Defense Security Cooperation Agency 
     (DSCA) to implement its plan to enhance end-use monitoring on 
     government-to-government arms transfers to foreign countries.
       The conferees direct the State Department to provide DSCA 
     complete copies of all end-use violation and prior consent 
     reports required under section 3 of the Arms Export Control 
     Act.


                        MTCR Report Transmittal

       Section 704 includes the Senate Committee on Banking in an 
     infrequent report required under the Arms Export Control Act.


              Stinger Missiles in the Persian Gulf Region

       Section 705, proposed by the Senate, permits the 
     replacement, on a one-for-one basis, of Stinger missiles 
     possessed by Bahrain and Saudi Arabia that are nearing the 
     scheduled expiration of their shelf-life.


          Sense of Congress Regarding Excess Defense Articles

       Section 706, proposed by the Senate, calls on the President 
     to sell more defense articles, rather than merely give them 
     away, using the authority provided under Section 21 of the 
     Arms Export Control Act. It urges the President to use the 
     flexibility afforded by Section 47 of that Act to determine 
     that ``market value'' of Excess Defense Articles and to sell 
     such items at a price that can be negotiated. When the 
     Department of Defense uses too rigid a definition of ``market 
     value,'' and that price cannot be commanded, the item is 
     instead transferred on a ``grant'' basis pursuant to Section 
     516 of the Foreign Assistance Act of 1961, thereby forgoing 
     revenues. This section encourages the Department of Defense 
     to ascertain the ``market value'' on the basis of local 
     market conditions rather than solely on the basis of a 
     generic formula applied by the Department of Defense for 
     accounting purposes.


                  Excess Defense Articles for Mongolia

       Section 707 of the Conference agreement, which has been 
     modified from the House proposal, provides authority to 
     furnish grant excess defense articles (EDA) and services to 
     Mongolia for fiscal years 2001 and 2002. Unfortunately, given 
     the weak nature of its national economy, which has led to 
     difficulty in funding its military budget, Mongolia cannot 
     afford the cost of packing, crating, handling, and 
     transportation of EDA, even if the EDA itself is provided at 
     no cost. Section 707 provides the Department of Defense with 
     the authority to absorb the cost of transporting EDA to 
     Mongolia, thereby allowing the receipt of much needed 
     equipment. However, the Committee intends to continue the 
     practice of requiring from the Department of Defense a 
     detailed description of such costs in each proposed transfer. 
     Were such costs to grow beyond a reasonable level, the 
     Committee's continued support for such authorities would be 
     jeopardized.


                 Space Cooperation with Russian Persons

       Section 708 has been modified from the Senate proposal. 
     This section amends the Arms Export Control Act, provides for 
     increased reporting and certification to Congress, and 
     expands the ability of the President to regulate missile-
     related cooperation by providing him with the discretionary 
     authority to terminate contracts in the event that he 
     determines that a violation of the MTCR sanctions law 
     (Section 13(a)(1) of the Arms Export Control Act) has 
     occurred.
       Currently, Chapter 7 of the Arms Export Control Act imposes 
     mandatory sanctions on proliferating entities. However, those 
     sanctions apply only to prospective licenses and contracts. 
     The authority does not exist, within Chapter 7, to terminate 
     an existing license in the event that an individual has been 
     discovered to have proliferated missile technology subsequent 
     to the granting of the license. This deficiency became 
     apparent in discussions with the administration regarding the 
     proposed co-production arrangement between Lockheed Martin 
     and a Russian rocket-engine firm, NPO Energomash. Section 708 
     provides that missing authority to the President, should he 
     choose to utilize it. It is important to underscore that this 
     authority is completely discretionary.
       Section 708 also requires the President to make an annual 
     certification to the Committee that various Russian space and 
     missile entities doing business with the United States are 
     not identified in the report required pursuant to the Iran 
     Nonproliferation Act of 2000. These certifications must be 
     made annually for the first five years of a license between a 
     U.S. firm and a Russian entity (or for the life of the 
     license, if less than five years). However, there is no 
     penalty in the event that a certification cannot be made 
     (presumably because the person or entity has been listed in 
     the report). The MTCR sanctions law only operates in the 
     event that the President makes a formal determination that a 
     transfer, or a conspiracy to transfer, occurred. While the 
     certification required under Section 708 does not go beyond 
     the annual report that the President is required to submit to 
     Congress under the Iran Nonproliferation Act of 2000, it is 
     nevertheless useful because it will ensure that the 
     Department of State continues to focus on Russian entities 
     doing business with the United States. This provision is also 
     intended to encourage U.S. companies working with Russian 
     space entities to maintain pressure on their counterparts not 
     to proliferate technology to Iran.
       Finally, Section 708 rectifies an unintended reporting 
     loophole in the Arms Export Control Act that resulted from 
     amendments to integrate the Arms Control and Disarmament 
     Agency within the Department of State and a subsequent 
     decision by the Department of State on licensing technical 
     exchanges and brokering services under Section 36 of the 
     AECA. Specifically, for MTCR-related transfers governed under 
     Section 36(b) and (c) which fall below the Congressional 
     notification threshold, the administration currently must 
     nevertheless submit a report to the Committee explaining the 
     consistency of such a transfer with U.S. MTCR policy. 
     However, MTCR-related licenses covered by Section 36(d) which 
     fall below the notification threshold are not captured fully 
     by this reporting requirement. Section 708 rectifies this 
     problem.


 seense of Congress Relating to Military Equipment for the Philippines

       Section 709 of the conference agreement, proposed by the 
     House, expresses the sense of the Congress that the U.S. 
     should work with the Government of the Philippines to enable 
     them to procure certain military equipment to upgrade the 
     capabilities and improve the quality of life of the armed 
     forces of the Philippines.


                        Waiver of Certain Costs

       Section 710 of the conference agreement, proposed by the 
     House, waives the requirement to collect certain nonrecurring 
     charges associated with the government-to-government sale of 
     5 UH-60L helicopters to Colombia in November of 1999.

     Benjamin A. Gilman,
     Bill Goodling,
     Sam Gejdenson,
                                Managers on the Part of the House.

     Jesse Helms,
     Richard G. Lugar,
     Chuck Hagel,
     Joe Biden,
     Paul S. Sarbanes,
     Managers on the Part of the Senate.

                          ____________________