[House Report 105-582]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-582
_______________________________________________________________________


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

   June 16, 1998.--Referred to the House calendar and ordered to be 
                                printed

_______________________________________________________________________


   Mr. Solomon, from the Committee on Rules, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                       [To accompany H. Res. 463]

    The Committee on Rules, to whom was referred the resolution 
(H. Res. 463) To establish the Select Committee on U.S. 
National Security and Military/Commercial Concerns With the 
People's Republic of China, having considered the same, report 
favorably thereon with an amendment and recommend that the 
resolution as amended be agreed to.
  The amendment is as follows:
  Strike all after the resolving clause and insert the 
following:

SECTION 1. ESTABLISHMENT.

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

SEC. 2. JURISDICTION.

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

SEC. 3. COMPOSITION; VACANCIES.

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

SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

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

SEC. 5. CLASSIFIED INFORMATION.

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

SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

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

SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

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

SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

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

SEC. 9. INFORMATION GATHERING.

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

SEC. 10. TAX RETURNS.

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

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

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

SEC. 12. COOPERATION OF OTHER ENTITIES.

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

SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

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

SEC. 14. ADMINISTRATIVE MATTERS.

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

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

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

SEC. 16. DISPOSITION OF RECORDS.

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

                       purpose of the resolution

    The purpose of H. Res. 463 is to establish the Select 
Committee on U.S. National Security and Military/Commercial 
Concerns With the People's Republic of China.

                       summary of the resolution

    H. Res. 463 creates a select committee in the House to 
investigate U.S. National Security and Military/Commercial 
Concerns With the People's Republic of China and delineates the 
scope of the inquiry. The resolution allows the Speaker to 
appoint 9 or fewer Members of the Select Committee, and states 
that service on the Select Committee shall not count against 
the Member committee assignment limits contained in clause 
6(b)(2) of House rule X.
    The resolution allows a \1/3\ quorum requirement for all 
business except reporting a matter, and provides the option for 
the Select Committee to designate a quorum of not less than 2 
Members for hearings to take testimony and receive evidence. 
The resolution requires the Select Committee to adopt its own 
written rules, and makes the Select Committee a standing 
committee for all applicable House rules.
    H. Res. 463 contains provisions providing for the 
protection of classified information including non-disclosure 
agreements with a referral to the Committee on Standards of 
Official Conduct in the case of a violation. It allows the 
Select Committee to vote to submit classified information to 
the House Permanent Select Committee on Intelligence for its 
consideration pursuant to House rule XLVIII, the House 
Intelligence Committee rule.
    The resolution authorizes the chairman to issue subpoenas 
in consultation with the ranking member. It provides the 
chairman of the Select Committee the ability to order a 
deposition by a single Member or staff of the Select Committee. 
It also provides for certain international evidence-gathering 
techniques.
    The resolution additionally authorizes the Select Committee 
to inspect and receive tax information for tax years 1988 
through 1998, pursuant to current authority contained in the 
Tax Code for the House Ways and Means Committee, the Senate 
Finance Committee, and the Joint Committee on Taxation.
    The resolution also allows the Select Committee to respond 
to any judicial process and make applications to court, upon 
consultation with the Speaker and consistent with Rule L, 
procedure for response to subpoenas.
    Finally, the resolution authorizes not more than $2.5 
million for the expenses of the Select Committee.

                        committee consideration

    H. Res. 463 was introduced by Rules Chairman Solomon on 
June 9, 1998 and referred to the Committee on Rules.
    On Tuesday, June 16, the Committee held a General 
Accounting Office briefing on the subject of export controls 
related to commercial communications satellites. Presenters 
were Katherine Schinasi, Associate Director for Defense 
Acquisitions, National Security and International Affairs 
Division; and David Trimble, Senior Evaluator, National 
Security and International Affairs Division.
    On Tuesday, June 16, the Committee held a hearing H. Res. 
463 and received testimony from: Hon. Christopher Cox, 
Chairman-designate of the Select Committee on U.S. National 
Security and Military/Commercial Concerns With the People's 
Republic of China; Hon. Norman Dicks, Ranking Minority Member-
designate of the Select Committee; Hon. William Thomas, 
Chairman, Committee on House Oversight; James Woolsey, former 
Director of Central Intelligence; and Richard Allen, former 
National Security Advisor to President Reagan; Dr. Paul 
Freedenberg, International Trade Consultant, Baker & Botts; 
Joel Johnson, Vice-President, Aerospace Industries Association 
of America, Inc.; John Pike, Director of the Space Policy 
Project, Federation of American Scientists.
    On Tuesday, June 16, the Committee held a mark-up of the 
resolution. During the mark-up, an amendment to the amendment 
in the nature of a substitute was agreed to by voice vote and 
subsequently the amendment in the nature of a substitute was 
agreed to by voice vote. The Committee then favorably reported 
H. Res. 463, as amended, by voice vote with a quorum present.

                  background developments on the issue

    Since the late 1980s, United States companies have been 
using Chinese launch services for satellites. This situation 
arose after the Challenger disaster of 1986, which created 
concerns over U.S. launch capabilities. Subsequent to the 
Tiananmen Square massacre in June 1989, the United States 
imposed a variety of sanctions on China in the Foreign 
Relations Act for Fiscal Year 1990 and 1991 (P.L. 101-246). In 
addition to other sanctions, this law included a suspension on 
the export of satellites. In 1991, President Bush imposed 
further sanctions on China, including a bar on satellite 
exports, due to a determination that China had transferred M-11 
missile technology to Pakistan.
    Since that time, thirteen waivers of the sanctions have 
been issued (three by President Bush and ten by President 
Clinton) covering twenty satellite launch projects in China 
(nine under President Bush and eleven under President Clinton). 
In February 1996, a Chinese launch carrying a Loral company 
satellite failed, destroying the satellite. In April 1996, 
Loral and Hughes, Inc. led a commission to study the cause of 
the launch failure.
    On April 4, 1998, the New York Times reported that a 
federal grand jury was investigating whether, during the 
investigation of the 1996 launch failure, Loral and Hughes 
provided any information to the Chinese without State 
Department approval which may have advanced Chinese ballistic 
missile capabilities. On April 13, the New York Times reported 
further than in May 1997, the Pentagon issued a classified 
report which concluded that Loral and Hughes had provided 
information that ``significantly improved'' China's missile 
capabilities.
    On February 18, 1998, while the Justice Department 
investigation of Loral was ongoing, President Clinton issued 
another waiver for Loral to export a satellite to China. 
According to the April 4 New York Times article, some 
administration officials claimed that the February waiver 
undermined the investigation, since this proposed export 
involved the transfer of the same kind of expertise that 
prompted the Justice Department to investigate in the first 
place. In fact, the Justice Department made these very concerns 
known to the White House prior to the February 1998 waiver.
    According to a June 1, 1998 New York Times article, the 
State Department also advised the White House, prior to the 
waiver, that Loral's actions in 1996 appeared to be 
``criminal'' and ``knowing,'' and that U.S. law might prohibit 
satellite exports to China in any event due to China's recent 
transfers of missile technology to Iran. The June 1 article 
also reports that the administration was well aware of the 
Defense Department's concerns over possibly aiding China's 
missile program, citing a February 12 memorandum to the 
President from National Security Advisor Samuel Berger. Also 
according to the June 1 article, and again citing internal 
White House and State Department memoranda, the National 
Security Advisor and the President were made well aware of the 
fact that Loral supposedly stood to lose the contract and $20 
million if the waiver were not granted by January 20, 1998. 
Although the waiver was not issued until a month after the 
supposed deadline, the launch project is still on schedule for 
November and Loral has not incurred any penalties from the 
Chinese.
    Press accounts have indicated that the CEO of Loral, 
Bernard Schwartz, is a close personal friend of the President's 
and was the largest single donor to the Democratic Party in 
1996. Additional press accounts have asserted that a Chinese 
military officer, Lt. Col. Liu Chao-Ying, funneled nearly 
$300,000 to Democratic party fund-raiser Johnny Chung, while 
Chung was in turn funneling tens of thousands of dollars to the 
Democratic party during the 1996 election cycle. Liu Chao-Ying 
is a vice-president of China Aerospace Corporation, a company 
that is integrally involved in China's satellite launching 
program. Liu Chao-Ying was previously an executive with China 
Great Wall Industry Corporation and China Precision Machinery 
Import Export Corporation, the manufacturers and sellers of M-
11 missile components to Pakistan.
    During this period, several other related developments have 
aroused concern or raised questions regarding the 
Administration's export policies, especially toward China. On 
March 14, 1996, President Clinton decided to transfer ultimate 
control of satellite exports from the State Department to the 
Commerce Department, which is bureaucratically disposed to 
favoring looser export restrictions in order to aid U.S. 
business. A General Accounting Office official testified before 
the Senate Intelligence Committee on June 10, 1998, that the 
decision has diminished the ability of the Defense Department 
to block satellite exports, as DOD was routinely deferred to by 
State, but now must garner a majority of agencies to agree to 
block an export. It has been reported in the media that then-
Secretary of State Warren Christopher issued a memorandum 
opposing this policy change in October 1995.
    Other press accounts have indicated that at the same time, 
the Administration also transferred control of so-called ``hot 
section'' technology to the Commerce Department. Hot section 
technology enhances the performance of fighter aircraft, and 
according to former Reagan administration official Steve Bryen 
(who was the first head of the Defense Technology Security 
Administration, the Pentagon agency in charge of export 
reviews), is so sensitive that it previously had not even been 
shared with close U.S. allies.
    Press accounts have also reported that the Clinton 
Administration plans to abolish the Defense Technology Security 
Administration and transfer its responsibilities to an 
acquisitions department that is seen as more amenable to looser 
export controls. In testimony before the Rules Committee, 
former Director of Central Intelligence in the Clinton 
Administration James Woolsey said ``The Defense Technology 
Security Administration has been the most effective watchdog 
[over] technology transfer in the government but has been 
effectively cut back and banished from the Pentagon.''
    The Clinton Administration has also loosened controls on 
the export of supercomputers, which can be used to enhance the 
capability and reliability of nuclear weapons. In testimony 
before Congress last year, Commerce Department official William 
Reinsch acknowledged that forty-seven supercomputers had been 
sold to China, and that the U.S. government was unsure of their 
whereabouts.
    The administration has also proposed to trade a blanket 
waiver of all Tiananmen Square sanctions and the speeding up of 
missile technology exports to China for an agreement by China 
to join the Missile Technology Control Regime (MTCR), which 
bars exports of certain missile technologies to non-members. 
The proposal was rejected by the Chinese, who have frequently 
violated the parameters of the MTCR.
    All of these developments and reports give rise to a number 
of unanswered questions that will be the object of the Select 
Committee's focus:
    Did the transfer of technology, information, advice, goods 
or services contribute to the enhancement of the accuracy, 
reliability, or capability of nuclear armed intercontinental 
ballistic missiles or other weapons of the People's Republic of 
China? Or did such transfers contribute to the enhancement of 
the intelligence capabilities of the PRC?
    Did such transfers contribute to the manufacture of weapons 
of mass destruction, missiles or other weapons or armaments by 
the PRC?
    What effect, if any, did such transfers or enhancements 
have on regional security and the national security of the 
United States?
    What was the conduct of the executive branch of the U.S. 
government with respect to such transfers or enhancements, and 
what was the effect of that conduct on the national security of 
the United States?
    What was the conduct of defense contractors, weapons 
manufacturers, satellite manufacturers and other private or 
government-owned commercial firms with respect to such 
transfers or enhancements?
    Was United States law, including statutes, regulations or 
executive orders, enforced with respect to such transfers or 
enhancements?
    Was there any effort by the government of the PRC or any 
other person or entity to influence any of the above matters 
through political contributions, commercial arrangements or 
bribery, influence peddling or other illegal activity?
    What was the decision-making process within the executive 
branch of the U.S. government with respect to any of the above 
matters?
    Was there any effort to conceal or withhold information or 
documents relevant to any of the above matters or to obstruct 
justice or to obstruct the work of the Select Committee or any 
other committee of the House of Representatives in connection 
with those matters?
    In sum, the Select Committee is being created to ascertain 
what happened, how did it happen, and what impact it has had on 
U.S. national security and interests. The Rules Committee 
concurs with the assessment made by Woolsey in his testimony 
that ``[I can think of] no subject [that] more clearly would 
require a careful and thorough investigation by a select 
committee of the Congress, and I could think of few that would 
even be in the same league.''

                 background and need for the resolution

    The standing rules of the House provide authority for the 
committees of the House to conduct investigations and inquiries 
relating to their general oversight jurisdiction. Provisions 
governing the investigative procedures for House committees can 
be found in House rule XI, which establishes quorum 
requirements, contains guidelines for the conduct of hearings, 
authorizes committees to sit and act if the House has recessed 
or adjourned, grants authority to committees for the collegial 
issuance of subpoenas, and allows committees some flexibility 
in promulgating their own rules to govern such proceedings.
    For the most part, these existing provisions of House rules 
have proven adequate and effective in ensuring that the 
legitimate oversight function of House committees may be 
pursued. However, at various times in recent history, the House 
has chosen to supplement its standing rules by granting 
additional authorities to existing committees, or by creating 
select committees, subcommittees, or task forces, for the 
conduct of a specific inquiry. In those instances, the House 
has determined that the gravity and special characteristics of 
the issues and policies under review dictated the need for 
establishment of a special entity and for expanded procedures 
beyond those provided in House rules. Particularly in cases 
where crucial questions have been raised about U.S. national 
security and adherence to the laws and regulations intended to 
safeguard national security, the House has, in several 
instances, opted to empower a special panel to conduct a 
focused review.
    The Committee on Rules believes that the allegations raised 
in this case warrant the creation of a select committee in the 
House for several reasons: the issue is one of a threat to U.S. 
national security and the investigation cannot be efficiently 
conducted in the current standing committee system. The scope, 
methods, duration, and costs are clearly spelled out in the 
resolution creating the Select Committee.
    The Select Committee proposed by H. Res. 463 deals with an 
extremely significant and major issue. The Select Committee, as 
outlined in the jurisdiction section of the resolution and in 
the background section above, will examine profound issues of 
U.S. national security. The issues and questions raised by this 
matter affect the peace and security of American citizens, and 
are, in the judgment of the Rules Committee, of grave 
importance.
    The House has, on several occasions in the recent past, 
opted to create a special panel to investigate matters relating 
to major foreign policy or national security issues. In the 
cases involving covert arms transactions to Iran and diversion 
of funds to the Nicaraguan Contras, the so-called ``October 
Surprise'' inquiry into allegations relating to American 
hostages in Iran, and the investigation of the so-called 
``green light'' policy involving arms transfers from Iran to 
Croatia and Bosnia, the House has determined that the need for 
a focused and timely accounting to the American people 
justified establishment of a select committee, task force or 
select subcommittee.
    On prior occasions, there has been bipartisan support for 
developing a special oversight mechanism to provide answers 
when serious national security questions regarding specific 
policies and circumstances have been raised. There has been 
similar bipartisan commentary in Congress and in our public 
debate asserting the need for such a mechanism in the current 
case involving technology transfers to China.
    The Rules Committee believes that the important national 
security and foreign policy questions raised in the case that 
is now before the House are comparable in significance and 
scope to those of past inquiries involving select panels. 
Currently, there are potentially eight standing or select 
committees of the House with jurisdictional claims over pieces 
of this inquiry, a situation of jurisdictional overlap which 
could lead to confusion, duplication or delay inbringing this 
investigation to a conclusion. It is clear that the broad range of 
national security and foreign policy topics that arise in this instance 
can best be studied, considered, analyzed, and assessed by a single 
panel, whose sole focus is to conduct this inquiry and report its 
findings to the House and to the American people.
    The American people want answers to the questions of how 
U.S. policy in this area has been determined and managed, and 
how decisions relating to technology transfers with China have 
impacted upon U.S. national security. The Rules Committee 
believes the House has an obligation to respond to those 
questions as expeditiously and thoroughly as possible. Creation 
of a select committee is the best means to accomplish that end.
    In addition to creating this Select Committee, the Rules 
Committee believes it should be empowered with certain tools 
currently not envisioned by the standing rules of the House.
    The issues before the Select Committee created by H. Res. 
463 are among the most serious and difficult of oversight 
matters--chiefly the safeguarding of U.S. national security--
and therefore the Rules Committee has provided the Select 
Committee with single member or staff deposition authority and 
international evidence gathering authorities.
    In addition, based on a careful review of the issues to be 
addressed in this inquiry, the Rules Committee has researched 
prior precedents and has provided the Select Committee with 
several additional authorities and guidelines.
    The Rules Committee recognizes the likelihood that 
significant portions of the Select Committee's work will deal 
with sensitive and classified national security information. As 
a result, the Rules Committee has incorporated into H. Res. 463 
provisions of House rules (specifically rule XLVIII) governing 
the conduct of the House Permanent Select Committee on 
Intelligence (HPSCI) and provisions of the HPSCI rules, to 
ensure that the gravity of protecting sensitive material is 
understood by the House, the members of the Select Committee, 
its staff, and all witnesses or other individuals with whom the 
Select Committee works.
    In H. Res. 463, the Rules Committee is attempting to ensure 
that the Select Committee has sufficient authorities to conduct 
and conclude a thorough inquiry, while remaining within the 
bounds of precedent and House practice. The Rules Committee has 
examined prior House resolutions of this nature closely.
    In prior cases, as in this instance, the Rules Committee 
and the House have taken special care to ensure that the 
resolutions granting committees additional investigative 
authorities have been specifically tailored for the particular 
investigation at hand and have been drafted to conform to the 
standing rules of the House.
    H. Res. 463 tracks closely the language employed in H. Res. 
12 (the 100th Congress), which established the Select Committee 
to Investigate Covert Arms Transactions with Iran, and which 
offers the most recent precedent for the creation of a select 
committee for a specific inquiry. In addition, the Rules 
Committee notes that similar language was employed in the 102nd 
Congress, for the establishment of the Task Force to 
Investigate Allegations Concerning the Holding of Americans as 
Hostages by Iran (H. Res. 258, regarding the so-called 
``October Surprise'' allegations). In the 104th Congress, the 
House agreed to H. Res. 416, a resolution Establishing a Select 
Subcommittee of the Committee on International Relations to 
Investigate the United States role in Iranian Arms Transfers to 
Croatia and Bosnia (the so-called ``Green Light'' 
investigation), which employs authorities similar to H. Res. 
463.
    The Rules Committee recognizes that the charter of the 
Select Committee is ambitious and will require extraordinary 
effort on the part of the members and staff involved. Likewise, 
the Rules Committee expects that the Administration will 
cooperate fully with this important inquiry. The Select 
Committee, like all House Committees, will be bound by the time 
constraints inherent in the schedule for the 105th Congress, 
and therefore will have to organize rapidly. H. Res. 463 was 
drafted in close consultation with the House Oversight 
Committee. In addition, the resolution offers flexibility for 
the chairman of the Select Committee, in consultation with the 
ranking minority member, to employ the necessary staff to get 
the job of the Select Committee done.
    In each instance in which the Rules Committee has provided 
such special authorities, the Committee has continually 
underscored its view that the standing rules of the House 
remain a sound basis for most congressional inquiries and are 
not in need of general revision. H. Res. 463 is brought forward 
for the consideration of the House in the same spirit.

             section-by-section analysis of the resolution

    Section 1 creates the Select Committee on U.S. National 
Security and Military/Commercial Concerns With the People's 
Republic of China (hereafter referred to as the ``Select 
Committee'') in the House of Representatives for the remainder 
of the 105th Congress. This section authorizes the Select 
Committee to sit and act within the United States or in any 
other country whether the House is in session, has recessed, or 
has adjourned.
    Section 2 sets forth the jurisdiction of the inquiry to be 
conducted by the Select Committee. The resolution does not 
confer any legislative jurisdiction to the Select Committee.
    This section also requires the Select Committee to report 
its findings to the House as it considers appropriate. It 
further permits such a report to be made under the provisions 
of House rule XXIX, relating to secret session of the House.
    Section 3 sets the size of the Select Committee at 9 or 
fewer Members of the House to be appointed by the Speaker. It 
further provides that service on the Select Committee shall not 
count against the Member committee assignment limits contained 
in clause 6(b)(2) of House rule X, which limit Members to 
service on two standing committees and 4 subcommittees.
    Section 4 establishes a quorum requirement of \1/3\ of the 
Members of the SelectCommittee for the transaction of business 
other than reporting a matter. It further provides that the Select 
Committee may designate a lesser number but not less than two as a 
quorum for the purpose of holding hearings to take testimony and 
receive evidence.
    This section applies the rules of the House applicable to 
standing committees to the Select Committee where not 
inconsistent with the resolution. It also requires the Select 
Committee to adopt written rules to govern its proceedings and 
which shall not be inconsistent with this resolution or the 
rules of the House. The Rules Committee encourages the Select 
Committee to develop rules governing the conduct of depositions 
and other committee procedures.
    Section 5 prohibits employees of the Select Committee or 
persons engaged by contract to perform services for the Select 
Committee from gaining access to any classified information 
unless that person has agreed in writing and under oath to be 
bound by the rules of the House including the Committee on 
Standards of Official Conduct; and has received an appropriate 
security clearance as determined by the Select Committee in 
consultation with the Director of Central Intelligence.
    Section 6 states that the Select Committee shall formulate 
and carry out rules to prevent the disclosure of information 
which unduly infringes upon the privacy or violates the 
constitutional rights of persons.
    Section 7 relates to the procedures for handling classified 
information. Subsections (a) and (b) give the Select Committee 
the ability to vote to disclose publicly any classified 
information, which has been submitted by the executive branch 
or requested by the executive branch to be kept secret. Such 
information shall then be submitted to the House Permanent 
Select Committee on Intelligence, which may then employ the 
procedures contained in clause 7(b) of House rule XLVIII, to 
vote to disclose publicly information and make a recommendation 
in that regard to the House.
    This process would only be utilized in those instances 
where the Select Committee finds that there is public interest 
in the disclosure of otherwise classified information, but 
which the Administration refuses to declassify. Currently, the 
only committee of the House that has recourse to this procedure 
is the Permanent Select Committee on Intelligence (HPSCI). In 
order to maintain the relationship between the House and the 
Intelligence Community, which is vital to the conduct of 
meaningful oversight of U.S. intelligence activities and the 
protection of sources and methods, it is necessary to refer any 
adversarial declassification issues to the HPSCI for further 
proceedings consistent with clause 7 of rule XLVIII. In this 
way, the HPSCI will be allowed to weigh in on any decision to 
force the Administration to disclose information and make an 
independent determination of the risk to sources or methods if 
the information is declassified.
    Subsections (c), (d), and (e) relate to the treatment of 
classified information by the Select Committee, and closely 
resemble provisions contained in House rule XLVIII for the 
Permanent Select Committee on Intelligence.
    Section 8 provides that committees of the House having 
custody of records, data, charts, and files on subjects in the 
Select Committee's jurisdiction shall furnish such information 
to the Select Committee. The Committee acknowledges that 
memoranda, notes, indexes, analysis, or staff work product are 
not committee records.
    The issues raised in this inquiry fall within the 
jurisdiction of several standing and permanent select 
committees of the House, several of which have already begun 
pursuing related inquiries and gathering relevant material. The 
Rules Committee believes that this resolution provides for 
appropriate and properly managed cooperation between the Select 
Committee and the relevant House committees. The Rules 
Committee notes that this provision is consistent with previous 
resolutions creating select committees or task forces and is 
consistent with House practice.
    Section 9 grants the Select Committee the authority to 
require by subpoena the testimony of a witness, at a hearing or 
in a deposition, or the furnishing of information.
    This section further authorizes the chairman of the Select 
Committee, upon consultation with the ranking minority member, 
to authorize and issue subpoenas.
    It also authorizes the chairman, upon consultation with the 
ranking minority member, to order the taking of depositions, 
interrogatories, or affidavits under oath by a single Member or 
majority and minority staff of the Select Committee.
    This section also authorizes the chairman of the Select 
Committee, upon consultation with the ranking minority member, 
to order the taking of depositions and other testimony under 
oath anywhere outside the United States and make application 
for letters rogatory and request, through appropriate channels, 
other means of international assistance.
    Given the breadth and complexity of some of the 
investigations undertaken by the House in recent years, members 
have recognized the value of allowing the chairman of a 
committee, in consultation with the ranking member, to 
authorize a single member or designated staff to take 
depositions. The constraints on members' time, as well as the 
reality that depositions in some of these cases can often take 
hours or even days to complete, make this enhanced flexibility 
important to the timely and thorough completion of an 
investigation.
    Additionally, the international aspects of certain 
inquiries have at times created the need for committees to seek 
testimony and other information beyond the borders of the 
United States. For this reason, the House has on several 
occasions granted international evidence gathering authorities, 
including the ability to take depositions and other testimony 
anywhere outside the United States, to make application for 
issuance of letters rogatory, and to request, through 
appropriate channels, other means of international assistance.
    The Committee on Rules is aware that letters of request are 
quite properly honored on the basis of international comity 
between governments or courts and understands that cooperation 
and assistance from the Department of State and foreign 
governments will be critical to securing evidence and testimony 
overseas. The Committee on Rules strongly encourages the 
executive branch to assist the Select Committee in this regard.
    In its report accompanying H. Res. 167 (House Report 105-
139), a resolution providing special investigative authorities 
for the Committee on Government Reform and Oversight, the Rules 
Committee traced the recent legislative history for this type 
of action by the House and incorporated a detailed appendix 
outlining 11 cases in which the House had provided similar 
special authorities for single member or staff deposition 
authority and international evidence gathering, dating back to 
the 93rd Congress (see pages 27-32 of that report).
    Finally, this section considers information obtained under 
its authority as taken by the Select Committee in the District 
of Columbia as well as the location actually taken and 
considers such information as taken in executive session. The 
Committee on Rules intends that such information, taken in 
executive session, should not be released or used in public 
sessions without the consent of the select committee, as 
provided in clause 2(k)(7) of House rule XI.
    Section 10 authorizes the Select Committee to inspect and 
receive tax information for tax years 1988 through 1998. The 
Committee believes that the Select Committee needs this 
authority to obtain a full and comprehensive understanding of 
this matter. The Committee on Rules intends that the Select 
Committee exercise caution and due diligence in ensuring that 
such information is handled in the most judicious and 
appropriate manner. The Committee further notes that the U.S. 
Tax Code contains criminal penalties for unauthorized 
disclosure of this information. The Rules Committee intends 
that the authority granted by Section 10 extends to the Select 
Committee acting collegially.
    Section 11 allows the Select Committee to provide other 
committees and Members of the House access to information 
consistent with clause 7(c)(2) of House rule XLVIII, relating 
to the House Permanent Select Committee on Intelligence. The 
Rules Committee notes that the Committee on Standards of 
Official Conduct may investigate pursuant to its authority 
contained in the standing rules of the House.
    Section 12 provides that the Select Committee may request 
that other standing committees pursue matters within the Select 
Committee's jurisdiction, and states that the chairman, upon 
consultation with the ranking minority member, may request 
information and assistance from the Executive Branch.
    Section 13 authorizes the Select Committee the ability to 
respond to judicial or other process, and to make applications 
to court, upon consultation with the Speaker and consistent 
with House rule L, procedures for response to subpoenas.
    The Rules Committee envisions that this authority will 
supplement the existing provisions in House rules which provide 
for the House Counsel to take such action on behalf of the 
House.
    Section 14 allows the chairman, upon consultation with the 
ranking minority member, to hire staff for the Select 
Committee, It further deems detailees from the executive branch 
as staff of the Select Committee, upon request of the chairman 
of the Select Committee and upon consultation with the ranking 
minority member.
    This section authorizes not more than $2.5 million for 
expenses of the Select Committee to be paid out of applicable 
accounts of the House upon vouchers signed by the chairman and 
approved in the manner directed by the Committee on House 
Oversight.
    Section 15 deems the Select Committee a committee of the 
House for all purposes of the rules of the House and all 
purposes of law.
    Section 16 provides for the proper disposition of records 
of the Select Committee at the conclusion of its existence.

                 congressional budget office estimates

    Clause 2(l)(3)(C) of rule XI requires each committee to 
include a cost estimate prepared by the Director of the 
Congressional Budget Office, pursuant to section 403 of the 
Congressional Budget Act of 1974, if the cost estimate is 
timely submitted. No cost estimate was received from the 
Congressional Budget Office.

                           oversight findings

    Clause 2(l)(3)(A) of rule XI requires each committee report 
to contain oversight findings and recommendations required 
pursuant to clause 2(b)(1) of rule X. The Committee has no 
oversight findings.

 oversight findings and recommendations of the Committee on Government 
                          Reform and Oversight

    Clause 2(l)(3)(D) of rule XI requires each committee report 
to contain a summary of the oversight findings and 
recommendations made by the Government Reform and Oversight 
Committee pursuant to clause 4(c)(2) of rule X, whenever such 
findings have been timely submitted. The Committee on Rules has 
received no such findings or recommendations from the Committee 
on Government Reform and Oversight.

                       views of committee members

    Clause 2(l)(5) of rule XI requires each committee to afford 
a two day opportunity for members of the committee to file 
additional, minority, or dissenting views and to include the 
views in its report. Although this requirement does not apply 
to the Committee, the Committee always makes the maximum effort 
to provide its members with such an opportunity. The following 
views were submitted:

                             MINORITY VIEWS

    Numerous allegations have appeared in the press recently 
that licensing the launch of U.S. commercial satellites by 
China resulted in a transfer of technology that threatens U.S. 
security and that campaign contributions played a role in the 
issuance of such licensing. We agree that these allegations are 
serious and should be adequately investigated. However, we are 
not convinced that a select committee should be the response. 
If we find that the House has the ability through its normal 
committee structure to carry out any investigation necessary, a 
select committee seems wasteful and duplicative. In fact, at 
least four of the committees with jurisdiction in this matter 
are presently conducting their own investigations.
    In drafting a resolution to establish the Select Committee, 
the Majority chose the Iran-Contra Select Committee as a model 
for this Select Committee. This particular model bestows 
extraordinary powers on the Chairman of the Select Committee. 
We are hopeful that the manner in which the Select Committee 
conducts its business will also follow the Iran-Contra model. 
The Iran-Contra Committee under the bipartisan leadership of 
Chairman Lee Hamilton and Ranking Republican Richard Cheney, 
along with their Senate counterparts Senators Daniel Inouye and 
Warren Rudman, made decisions jointly on all matters of 
procedural issues. In fact, Representative Hamilton stated in a 
letter to Representative Henry Waxman, dated June 16, 1997, 
that ``I do not recall a single instance in which the majority 
acted unilaterally.'' It is our belief that if a committee does 
not conduct itself in a professional, fair, and bipartisan 
manner, then its findings, no matter how earth-shattering, are 
tainted and damaged. It is for that reason that we hope that 
this committee will conduct its proceedings in the most serious 
bipartisan manner.
    Even though we approach the establishment of the Select 
Committee with the hope that fair-mindedness will prevail, we 
find it difficult to support establishing the Select Committee 
without assurances that the minority will be included on an 
equal footing in the decision making process. The Rules 
Committee report states that the resolution has been ``drafted 
to conform with the standing rules of the House.'' This is not 
a fair statement. The resolution grants extraordinary authority 
to the chairman of the Select Committee which, in fact, weakens 
the rights of the minority and of witnesses. Our fears of abuse 
of this power are not groundless. One need look no further than 
the recent campaign finance investigations conducted by the 
Committee on Government Reform and Oversight. Chairman Burton's 
conduct during that investigation demonstrated the dangers of 
granting such unilateral powers with no limitations. Chairman 
Burton gave the members of the Government Reform and Oversight 
Committee, as well as the Rules Committee, assurances that he 
would not abuse the unilateral authorities granted by the 
Committee and by the House. In spite of these assurances, the 
Burton investigation is filled with examples of abuses of the 
extraordinary grant given him. As the Burton investigation has 
proven, the investigation has proven, the process only works if 
the chairman does not abuse his power and seeks to include the 
minority.
    Throughout the hearing and mark-up process we were 
constantly told by the majority, including the designated 
chairman of the Select Committee, Representative Cox, that 
every effort would be made to guarantee the rights of the 
minority in the investigative process and to include the 
minority in all aspects of the investigation. We hope the 
chairman and ranking minority member will have a good working 
relationship. It is our responsibility, as the Committee on 
Rules, to make sure the rules of the Select Committee are fair. 
However, our concern, based on experience in this Congress, is 
that these rules will permit abuses by the majority party, if 
that party chooses that route. We have many reservations about 
this process and will explain below why we remain uneasy with 
the resolution.
    There are a number of unilateral authorities granted to the 
chairman of the Select Committee by this resolution that cause 
us concern. The most important concerns are the provisions of 
section 9(b) of the resolution which grant the chairman, ``upon 
consultation with the ranking minority member,'' the authority 
to authorize and issue subpoenas. This unilateral subpoena 
authority is problematic in that merely requiring the chairman 
to consult with the ranking minority member before authorizing 
or issuing subpoenas does not require the chairman to include 
the minority in the investigative process. At the Government 
Reform and Oversight Committee, Chairman Burton unilaterally 
issued over 1000 information requests, including subpoenas, 
depositions, and document requests with neither a vote of the 
committee nor the concurrence of the ranking minority member. 
Our hopes are that this kind of abuse of power does not occur 
in the Select Committee.
    The resolution also allows the chairman, after consulting 
with the ranking minority member, to take depositions anywhere 
in the world and authorizes a variety of mechanisms to obtain 
international assistance in gathering information. This 
authority has been granted in other major congressional 
investigations, and we do not necessarily object to its 
inclusion in this resolution. We would add a note of caution, 
however. The most recent example of the use of this authority 
was by the Government Reform Committee. As stated earlier, that 
investigation has been marked by partisanship, harassment of 
witnesses, misrepresentation and misleading statements, 
information leaks by staff, and disregard for the right of the 
minority to participate in this process. This does not instill 
confidence that international working relationships can be 
achieved. The ability to gain access to and information from 
foreign sources depends almost totally upon the willingness of 
the host country to allow it. This requires comity and clarity. 
We urge the Committee to engage in the kind of cooperative, 
bipartisan working arrangements which have enabled other 
congressional investigations to succeed.
    Section 10 of the resolution grants the Select Committee 
the authority to receive and examine any tax return related to 
individuals and entities named by the Select Committee as 
possible participants, beneficiaries, or intermediaries in the 
transactionsunder investigation. Virtually unfettered access to 
the tax records of individuals and others is a very risky venture and 
must be pursued with the utmost responsibility and respect for the 
privacy of those individuals. We urge the Select Committee to use the 
greatest of care in exercising this authority. We support the inclusion 
of language in the report that directs the Select Committee to vote to 
obtain these records.
    Section 11 of the resolution grants the chairman the 
authority to impose a ``gag rule'' on individuals associated 
with the investigation, including witnesses and their 
attorneys. The numerous abuses of witnesses before the 
Government Reform Committee are well documented. It is 
extremely perilous to allow staff, in a closed session, to have 
virtually unlimited questioning of a witness with little or no 
rights given to the individual being deposed. There is ample 
opportunity for staff to intimidate and harass witnesses. These 
interrogatory sessions are not trials or courts of law and do 
not afford the same protections. If individuals giving 
depositions are deprived of the protections that are generally 
available to those giving statements under oath and are treated 
unfairly, these individuals, along with their counsels, would 
be prevented by these ``gag rules'' from coming forward to 
report such abuses or other inappropriate actions taken by the 
Select Committee or its staff. This is a troubling provision, 
and we urge the Select Committee to use this power in only the 
most judicious fashion.
    Section 12 of the resolution states that ``the Select 
Committee may submit to any standing committee specific matters 
within its jurisdiction and may request that such committees 
pursue such matters further.'' This language is not clear in 
its intent. We believe that any jurisdictional referral by the 
Select Committee of its recommendations should be based on the 
jurisdiction of the standing committees as stated in the Rules 
of the House. The jurisdiction of the Select Committee is a 
temporary grant of authority by the House and should not 
prejudice the jurisdictions of the standing committees. 
Therefore in the interest of the precedents of the House, 
referrals should be based on the jurisdictions of the standing 
committees.
    Section 14 authorizes $2.5 million for the Select Committee 
to conduct an investigation which will last no longer than 6 
months. There are only three standing committees of the House 
that are expected to spend more over the next 6 months. At this 
rate of spending, this will become the most expensive select 
committee in the history of the House. Our hope is that this 
will not be a waste of taxpayers' money to duplicate much of 
the investigation already being carried on by other committees 
of the House.
    It is our hope that as the Select Committee develops and 
adopts its rules, it will do so in a manner that protects 
minority rights. We urge the Select Committee to include in its 
rules provisions to provide for concurrence and advance notice 
to the minority when issuing subpoenas, scheduling witness 
interviews, and authorizing travel of staff inside and outside 
the U.S. to conduct those interviews. Also, we believe that any 
database which the Select Committee may develop itself or any 
databases which it may receive from other standing committees 
under section 8 of this resolution be shared with the minority.
    We clearly recognize and fully support the right of 
Congress through its committee structure to conduct 
investigations and we recognize there are serious issues to be 
investigated. We are including with these views: an article by 
current National Security Advisor Samuel R. Berger which 
appeared in the Wall Street Journal on June 3, 1998; an article 
by Secretary of Commerce William M. Daley which appeared in the 
New York Times on June 5, 1998; an article by former National 
Security Advisor Brent Scowcroft and Arnold Kanter of the Forum 
for International Policy which appeared in the Washington Times 
on June 5, 1998; an article by former Secretary of State Warren 
Christopher which appeared in the Los Angeles Times on June 7, 
1998; and a document created by the National Security Council 
with input and clearance from the Department of State, 
Department of Defense, Department of Commerce, and the Arms 
Control and Disarmament Agency. We believe that these articles 
and document which address the core issues will clear up some 
of the confusion surrounding allegations reported in the press.
    In conclusion, we have reservations about the resolution 
and we believe that the Select Committee may be redundant in 
light of other ongoing investigations. In fact, the 
investigation could be properly carried out by an existing 
committee, most likely the Intelligence Committee which has at 
its disposal all the necessary powers and expertise to conduct 
this investigation. But if the majority insists on having a 
select committee, we hope that its investigations will be done 
in the fairest, most bipartisan manner possible. Anything less 
will cast doubt on the integrity of the investigation.
    Finally, there is a real danger that this type of 
resolution is now becoming a routine tool to circumvent the 
traditional committee process. It should be used rarely, only 
when warranted by extraordinary circumstances. The regular 
hearing route coupled with informal staff interviews should 
always be the preferred means for conducting investigations, as 
it is for the other standing committees of the House. We should 
not be in the habit of making this type of resolution a routine 
occurrence.

                                   Joe Moakley.
                                   Tony P. Hall.
                                   Martin Frost.
                                   Louise M. Slaughter.

              [From the Wall Street Journal, June 3, 1998]

           Launching Satellites in China Is Good for the U.S.

                         (By Samuel R. Berger)

    If you watched the Winter Olympics on television, there's a 
good chance the images of figure skating or downhill racing 
came to you from Japan via an American-made satellite that was 
launched by a Chinese rocket. That's a reflection of U.S. 
leadership in satellite technology--the demand for American 
satellites exceeds our domestic launch capacity. As a result, 
the government licenses U.S. companies to have their satellites 
launched abroad, allowing people on every continent--through 
television, telephones, pagers and other electronic means--to 
share ideas, information and images.
    In a reaction to reports misleading linking Democratic 
Party campaign fundraising to Clinton administration decisions 
affecting our national security, members of Congress voted 
recently to ban U.S. companies from using Chinese rockets to 
launch satellites into orbit. If enacted into law, this 
legislation would harm our national interest.
    A ban would endanger American leadership in the global 
satellite business. More importantly, it would do great harm to 
our relationship with China--a relationship that is vital to 
our security interests in Asia and around the world, as vividly 
illustrated by events in the past few weeks: nuclear testing by 
India and Pakistan, political change in Indonesia and financial 
challenge throughout Asia. In each of these areas, China has 
the potential to promote or to undermine U.S. national 
interests. Given the stakes, it is time the facts catch up with 
the emotions.
    In 1988, President Reagan approved the export of U.S. 
satellites for launch by Chinese rockets, a policy that has 
enjoyed broad bipartisan support ever since. It serves 
important national interests: creating incentives for China to 
help us stop the spread of missile technology, improving 
American competitiveness in the global satellite business and 
helping broadcast Western ideas and values into China.
    Since 1989, approval of license applications for commercial 
satellite launches on Chinese rockets has required a 
presidential wavier of the sanctions imposed following the 
Tiananmen Square massacre. The Bush administration issued 
waivers for nine satellite programs in three years. The Clinton 
administration has issued waivers for 11 programs over five 
years. Each was carefully scrutinized by the Department of 
Defense, the State Department and the Arms Control and 
Disarmament Agency. And each was reported to Congress.
    The satellites exported to China for launch are not used 
for military purposes, not do they result in the transfer of 
missile technology. All are subject to strict controls and 
safeguards developed by the Department of Defense to prevent 
the transfer of technology that would improve China's missile 
capabilities.
    In 1992, President Bush granted the Loral Corp. permission 
to launch a satellite on a Chinese rocket. The launch took 
place in February 1996, but the rocket exploded and destroyed 
the satellite. Loral allegedly worked with the Chinese to 
review why the explosion occurred and to prevent it from 
happening again. The Justice Department is investigating 
whether in that review--not in the launch--technology or know-
how may have been provided improperly to the Chinese.
    When President Clinton granted Loral a waiver in February 
1998 for another launch, he did not ``overrule'' or ``ignore'' 
Justice Department views. The State Department's recommendation 
for that waiver noted that the 1996 incident was under 
investigation. The White House took the added, prudent step of 
asking the Justice Department of its view on the request, even 
though it normally has no role in the licensing or waiver 
process. The Justice Department raised concerns about the 
impact of the waiver on a potential prosecution if the facts 
lead in that direction. These objections were not related to 
national security concerns about the 198 waiver and associated 
licenses.
    The Justice Department's concern was factored into the 
president's decision to grant a waiver, which also took into 
account four supporting factors. The State Department 
determined that the waiver would be in the national interest 
and would in no way compromise U.S. national security, and the 
Defense Department and the Arms Control and Disarmament Agency 
concurred in that judgment. The licensing request was for a 
commercial satellite, not for the kind of activity (launch-
failure analysis) for which Loral was being investigated. The 
State Department has a longstanding practice of not 
presumptively barring applicants under investigation--as 
opposed to prosecution--from receiving a license. And if the 
investigation ripened into a prosecution, the license could be 
revoked and other serious penalties imposed.
    Mr. Clinton's decision in March 1996 to give the Commerce 
Department the lead in licensing commercial satellites did not 
relax our controls over the export of satellites, nor did it 
allow the transfer of sensitive technology. Under the approach 
adopted, the Defense and State departments and the Arms Control 
and Disarmament Agency still review all proposed commercial 
satellite licenses to ensure that they are consistent with U.S. 
national security. If any agency disagrees with a proposed 
license, it can block the license and put the issue into a 
dispute resolution process that can ultimately rise to the 
president.
    The decision to transfer lead responsibility to the 
Commerce Department followed an intensive six-month review, 
which led to an inclusive process that protected national 
security and was approved by both the State and Defense 
departments. It was part of a broader, bipartisan effort, and 
supported by the Reagan and Bush administrations, both to 
streamline the process for licensing essentially commercial 
products and to make the process more transparent to exporters.
    The shift of jurisdiction also was supported by majorities 
in both houses of Congress. Beginning in 1990, both houses 
repeatedly passed bills specifically mandating the shift of 
commercial satellite licensing to Commerce, one of which was 
pending at the time of the president's decision. Mr. Clinton's 
decision followed the intent of that legislation while adding 
national security safeguards--such as a strengthened role for 
Defense and State--that were not included in the legislative 
proposals.
    In every waiver case the decision-making process flows from 
the bottom up--a request for a license is made by the company 
to the relevant government agency (State or Commerce), which 
then solicits the views of other relevant agencies on the 
pending license application, Once these agencies agree that the 
license application may be granted, a recommendation for a 
waiver ``in the national interest'' is made to the president. 
Each waiver approved by President Clinton was based on a 
recommendation from the State Department or the Commerce 
Department. And each license under these waivers had the 
concurrences of the Department of Defense and the Department of 
State. At no time did campaign contributions have any effect on 
U.S. policy or national security.
    The record speaks for itself: The policy initiated by 
President Reagan and continued by Presidents Bush and Clinton 
is good for our country. We should focus on the facts--and on 
our national interest.
                                ------                                  



                [From The New York Times, June 5, 1998]

                        Commerce Can Do the Job

                         (By William M. Daley)

    The Senate Intelligence Committee began its hearings this 
week on the American satellites launched by Chinese rockets. 
Among the issues are whether our export control laws were 
violated and whether private companies committed illegal acts 
in the aftermath of the 1996 Loral rocket launch in China. 
Those specific charges should be investigated thoroughly, and 
if there was any wrongdoing it should be punished.
    But it is simply untrue to suggest that the 1996 transfer 
of jurisdiction over communications satellites to the Commerce 
Department from the State Department jeopardized national 
security. In fact, that transfer completed a process begun by 
President George Bush in 1990 and encouraged by Congress. In 
1990 and 1992, Congress passed legislation that would have 
transferred this jurisdiction, but the bills failed to become 
law because of other controversial provisions.
    The transfer brought the United States into line with the 
licensing approach used by every other satellite producer in 
the world. Every satellite license the Commerce Department 
approved has had the unanimous approval of the reviewing 
agencies--the State and Defense Departments as well as the Arms 
Control and Disarmament Agency--and has been subject to the 
same level of technology safeguards as satellites licensed at 
the State Department. It has been made clear to exporters that 
under the license they could not transfer any rocket technology 
to a foreign country. Any such transfer still requires a 
license from the State Department.
    Beginning in 1990, the Bush Administration reviewed items 
on the Munitions List, which required a State Department export 
license, to see if they should be moved to the Commodity 
Control List, which required a Commerce Department license. In 
President Bush's words, he wanted to make ``export license 
decisions more predictable and timely.''
    The differences between the two are procedural. The 
Commerce Department must meet firmer deadlines for decisions on 
``dual use'' items (those with commercial as well as military 
applications) and must include all relevant Federal agencies.
    Yes, economic considerations play a role. Exports bring in 
billions of dollars and account for millions of American jobs, 
and the strength of our technology industries is critical to 
national security.
    But contrary to what some have asserted, the Commerce 
Department's method of licensing is every bit as thorough and 
careful as that used by the State Department to regulate 
munitions. Satellite exports are governed by an executive order 
issued by President Clinton in December 1995, which gives these 
agencies the right to participate in the decision on any 
license application.
    If there is disagreement, then cases move quickly to a 
committee of senior officials from these departments and 
agencies, which votes on the application. If the Pentagon, say, 
is unhappy with the outcome, it can take the case to the 
President--although such an appeal has never happened. Today, 
reviews of dual use licenses are more thorough and more careful 
than at any time in the past.
    The broader issue is how our Government should regulate 
exports of high-technology goods. The most important issue is, 
as it should be, our national security.
    But imposing the tightest possible restrictions on high-
tech exports is not necessarily the best way to protect our 
security. In fact, our current policy--developed under the 
Reagan and Bush Administrations--recognizes that we must 
consider various factors in controlling high-technology 
exports.
    The United States has a monopoly over very few 
technologies. Therefore, rigid export controls would not 
protect national security in a growing number of situations 
because the same products can be obtained readily from foreign 
sources.
    Indeed, such controls would harm American security. Our 
high-tech companies would become less competitive globally, 
making them less able to produce the innovative products that 
our military and private businesses depend on. And to avoid 
export controls, some companies would undoutedly move their 
research and manufacturing outside of the United States.
    Take high-performance computers. These machines are 
essential to a modern military, but the Pentagon and American 
businesses do not buy enough of them to maintain a thriving 
domestic industry.
    Without exports, the industry would be crippled, and in the 
long term, it would be unable to plow profits back into 
developing the next generation of even more powerful computers.
    In short, we must consider the full ramifications of our 
decisions--including the costs of ill-reasoned controls that 
damage our technology base without protecting national 
security.
                                ------                                


               [From the Washington Times, June 5, 1998]

                   What Technology Went Where and Why

                 (By Brent Scowcroft and Arnold Kanter)

    The last few weeks have seen an avalanche of melodramatic 
charges about American ``technology transfers'' to China and 
claims that these actions have enhanced the capabilities of 
nuclear missiles aimed at the United States. In combination 
with confusing--and confused--media reporting and inept 
responses by the Clinton administration, these accusations 
threaten both to do needless damage to important U.S. national 
security interests and to impede the investigation of serious 
allegations of wrongdoing.
    A great deal hangs in the balance. The consequences, if 
these allegations are proven, would be substantial. But the 
costs of accusations which turn out to be ill-founded--if not 
reckless--also can be great. Nowhere is this more clear than in 
the case of our relations with China. Not only is the character 
of our strategic relationship with China of fundamental 
importance to U.S. national security, but that relationship 
also is at an unusually critical and formative stage both 
bilaterally and with respect to larger issues ranging from 
North Korea to South Asia.
    The investigative congressional committees that are being 
established will have the responsibility for sorting out this 
complicated affair. Meanwhile, however, the protagonists in 
this controversy need to cool the rhetoric, get some basic 
facts straight and identify the real issues before more harm is 
done to U.S. security, political and economic interests.
    Much of the confusion arises from the fact that four 
different issues are being lumped together:
    U.S. government waivers to permit American commercial 
satellites to be launched on Chinese space boosters.
    The unauthorized transfer to China of technical information 
by two U.S. satellite manufacturers, Loral and Hughes.
    Large campaign contributions to the Democratic Party by 
Loral's chairman, Bernard Schwartz.
    Alleged contributions to the Democratic Party by Chinese 
citizens withties both to the Chinese military and the Chinese 
company that launches American commercial satellites.
    Satellite waivers. The current controversy has its roots in 
the 1986 Challenger disaster. There was serious concern that 
the loss of U.S. launch capability that resulted from the 
ensuing moratorium on shuttle flights would jeopardize 
America's pre-eminence in space. The Reagan administration 
responded by adopting a policy that opened the way for U.S. 
commercial satellites to be launched on Chinese space boosters 
on a case-by-case basis. The sanctions imposed by the Bush 
administration following the Tiananmen Square massacre in June 
1989 blocked satellite launches by the Chinese but included a 
provision for case-by-case presidential waivers.
    Last February, the State and Defense Departments 
recommended, and President Clinton approved, such a waiver to 
allow a commercial communications satellite built by Loral to 
be launched into orbit by a Chinese booster. This was the 
eighth waiver--covering eleven launches--approved by the 
Clinton administration. Previously, the Bush administration 
approved three waivers covering the launch of nine satellites.
    The satellites in question are civilian, not military. More 
important, ``no technology transfer'' is permitted in 
connection with these satellite launches, which are the space-
age equivalent of having Federal Express deliver a package 
across the country. On the contrary, there are strict 
safeguards designed to confine Chinese access to the most basic 
information about the U.S. payload these rockets carry--for 
example, size, weight and other mating data needed to ensure 
that the satellite will fit on top of the rocket and can be 
boosted into the correct orbit. (The waivers in question relate 
to the application of Tiananmen sanctions--which are designed 
to punish the Chinese for human rights abuses--not the 
safeguards against technology transfer.)
    In principle, these safeguards mean that the Chinese learn 
no more about the ``package'' they are launching than FedEx 
knows about the package it is shipping, and that no information 
is provided which would improve the capabilities of their 
civilian space boosters, much less their nuclear-armed 
missiles. The March 1996 transfer of responsibility for 
licensing commercial satellite exports from the State 
Department to the Commerce Department likewise should not have 
had any effect on the strictness or application of the 
safeguards because a separate State Department license 
typically is still required to permit the Chinese to launch 
U.S. satellites, and the Defense Department continues to review 
all proposed waivers to ensure they are in the national 
security interest of the U.S.
    Assistance to the Chinese Rocket Program. The Justice 
Department is investigating the unauthorized transfer of 
information to China by Loral and Hughes in connection with a 
1996 review of the explosion of a Long March rocket launching a 
U.S. satellite. Because of the virtual identity between these 
Chinese ``space boosters'' and military missiles, assistance to 
the former could lead to improvements in the latter.
    Experts from Loral, Hughes and other companies became 
involved in this review at the insistence of the international 
insurance industry, which refused to insure more Long March 
launches until an ``outside'' team reviewed the Chinese 
analysis of, and remedies for, the malfunctions their rockets 
had been experiencing. Ironically, the Chinese initially 
resisted this proposal, andallowed the international team of 
experts to conduct their review only when they became convinced that 
these insurance problems would jeopardize their commercial space launch 
business.
    According to news reports, a Pentagon agency has determine 
that the information which Loral and Hughes transferred to the 
Chinese caused ``harm'' to U.S. national security, but the 
nature and extent of whatever harm was done is not yet clear. 
The congressional investigating committees will try to get the 
answers to that question. What does seem clear at this point is 
that the Chinese government never requested information or 
other assistance from our government to improve the space 
boosters they use to launch satellites. What is even more clear 
is that in 1996 the U.S. government did not provide, or approve 
Loral and Hughes providing, information which would improve 
Chinese space launch or missile capabilities.
    Indeed, Loral and Hughes are under investigation for 
unauthorized transfers of information. The Justice Department's 
reservations about the February 1998 satellite waiver stemmed 
not from the waiver itself, but from a concern about how it 
might affect a jury's psychology should Justice decide to 
prosecute these two satellite manufacturers for what they may 
have done in connection with their review of the 1996 Long 
March rocket failure.
    Loral Campaign Contributions. According to news reports, 
Mr. Schwartz--Loral's chairman and CEO--is the largest single 
contributor to the Democratic Party. Loral also was the 
beneficiary of the waiver which President Clinton approved in 
February. In addition, Loral successfully sought (along with 
other U.S. satellite manufacturers) presidential approval for 
the transfer of authority over the licensing process from the 
State Department to the Commerce Department. Many have 
suggested a relationship between the Schwartz campaign 
contributions and these Clinton decisions.
    The question not only is legitimate, but goes to the heart 
of the larger issue of the impact of campaign fundraising and 
contributions on the American political process. But even if 
suspicions prove correct, the fact remains that no ``technology 
transfer'' is authorized when Loral (or any other American) 
satellites are launched by Chinese rockets. Moreover, there is 
no current indication that any of the laws, policies and other 
safeguards against such technology transfers were relaxed as a 
result of campaign contributions. The issue of whether campaign 
contributions influenced president decisions in this case is of 
profound seriousness and should be pursued by the congressional 
investigative committees, but appears at this point to be 
essentially unrelated to the issue of technology transfer to 
China.
    Chinese Campaign Contributions. Democratic fundraiser 
Johnny Chung reportedly has told investigators that he served 
as a conduit for political contributions from the Chinese 
government. Specifically, he claims that Liu Chaoying, who is 
an officer in the Chinese army and an executive in the Chinese 
company which (among its many business enterprises) launches 
satellites, gave him money with instructions to donate a 
portion of those funds to the Democratic Party.
    If substantiated, these assertions could have serious 
implications. That said, it also should be noted that, provided 
the safeguards described above do their job, even if a quid pro 
quo were sought and given, a satellite waiver might work to the 
commercial advantage of Liu's company, but would not 
havecontributed to China's military capabilities.
    In sum, several of the issues being raised in the current 
controversy are real and serious. Others, particularly those 
related to charges that satellite launch waivers somehow 
enhanced Chinese missile capabilities, may be based on 
fundamentally mistaken premises. Key to making that 
determination is an assessment of the practical effectiveness 
of the safeguards policies and practices that apply to these 
satellite launches.
    If careful analysis determines that these safeguards have 
substantially achieved their objectives, then the imposition of 
blanket prohibitions on satellite launches by China would 
largely miss the point. On the one hand, it would not deal with 
concerns about how campaign contributions--from Americans, to 
say nothing of Chinese--might influence government decisions in 
ways which produce commercial advantage. On the other hand, it 
could prove to be worse than redundant with the safeguards 
already in place, because it would both place American industry 
at a competitive disadvantage and do needless damage to our 
critically important relationship with China.
    One fact, however, already is abundantly clear. A great 
deal is at stake in the answers to the questions being raised 
in the current controversy. It therefore is essential that we 
get it right--that all of the charges be thoroughly 
investigated, that penalties be levied where appropriate, and 
that remedial actions be taken where required. But we should 
let the congressional committees do their jobs before a rush to 
judgment that may harm rather than advance our interests.
    Brent Scowcroft, president of the Forum for International 
Policy, was national security advisor under Presidents Ford and 
Bush. Arnold Kanter, a senior fellow at the Forum for 
International Policy, served as under secretary of state for 
Political Affairs from 1991 to 1993.
                                ------                                


               [From the Los Angeles Times, June 8, 1998]

                Satellite Exports: Nobody Was Overruled

                        (By Warren Christopher)

    In March 1996, President Clinton announced a decision to 
transfer responsibility from the State Department to the 
Commerce Department for licensing the export of commercial 
satellites. My role in that decision has become the subject of 
extensive media discussion, much of it confusing and 
misleading. Hence, I think it is important to look at the 
facts.
    In October 1995, I was presented with the question of 
whether to agree to eliminate completely State Department 
licensing authority over commercial satellites by transferring 
it to the Commerce Department or, as had been recommended by an 
interagency committee, to retain State's licensing role over a 
category of commercial satellites employing more advanced 
technologies. I chose the latter option.
    Whether State or Commerce should have licensing 
jurisdiction over commercial satellites is an issue that goes 
back to the Reagan and Bush administrations. Competing views on 
the matter rest on the differences between the missions and 
export regulatory regimes of each department.
    Under the authority provided in the Arms Export Control 
Act, State has export licensing authority for items that are 
designed, developed or modified for military applications. 
Under the Export Administration Act, Commerce licenses most 
dual-use items--items with both commercial and military uses.
    The objective of the two systems differ. The Arms Export 
Control Act gives State the authority to use regulatory export 
controls primarily to protect U.S. national security. Under the 
Export Administration Act, on the other hand, Commerce weighs 
economic and trade interests along with national security and 
foreign policy concerns.
    The Commerce Department objected to my conclusion that 
certain satellites should remain under State Department 
licensing jurisdiction and sought presidential review. The 
National Security Council then began--as it should have--a 
comprehensive interagency review aimed at developing a 
resolution. At the end of this process, I was satisfied that 
State would continue to play a significant role in commercial 
satellite licensing decisions and would have an opportunity to 
raise national security concerns to the highest level, 
notwithstanding that it would not be the licensing authority. 
My conclusion was based upon the recommendation was based upon 
the recommendation of Lynn Davis, the highly regarded 
undersecretary of State for arms control and international 
security affairs, and senior Defense officials.
    As the situation now stands, the Commerce Department cannot 
act unilaterally on an application to export a commercial 
communications satellite. Instead, every such export 
application requires evaluation for national security concerns 
by the State and Defense departments and by the Arms Control 
and Disarmament Agency. If any of these reviewing authorities 
objects to a commercial satellite export proposed by Commerce, 
it can initiate a process that ultimately will bring 
conflicting views to the president.
    When President Clinton decided to move the licensing 
authority to the Commerce Department, he did so with agreement 
by the interested parties, including the State Department. No 
one was overruled. The president's decision represented a 
melding of national security and business interests, a result 
advocated by the Bush administration as well as by American 
manufacturers involved in the satellite business.
                                ------                                


  The Facts About the Administration's Commercial Satellite Licensing 
                                 Policy

    The globalization of the commercial satellite industry is a 
positive and powerful development at the dawn of a new century. 
Satellites launched from the United States, Europe, Russia and 
China allow people everywhere--through television, telephones, 
paging and many other electronic means--to share ideas, 
information and aspirations. They are powerful multipliers of 
free speech and thought. The United States is the world leader 
in satellite technology. But we lack the launch capacity to 
meet the demand for our satellites. And other nations can 
launch them more inexpensively. In 1988, President Reagan 
approved the export of U.S. satellites for launch by Chinese 
rockets--a policy that has enjoyed broad bipartisan support. 
Since 1989, approval of license applications for commercial 
satellite launches on Chinese rockets has required a 
Presidential waiver of the Tiananmen Square sanctions. The Bush 
Administration issued three waivers in three years for nine 
satellites. The Clinton Administration has issued ten waivers 
over five years for eleven satellite programs. Each of these 
waivers was scrutinized to ensure consistency with our 
nonproliferation goals and each was reported to Congress.
    The benefits of licensing commercial satellite launches by 
China are clear. This program enhances American competitiveness 
by increasing our launch capacity and lowering the cost of 
launches while bringing tremendous benefits to consumers 
(greater cell phone, pager and satellite television capacity.) 
It furthers our efforts to stop the transfer of missile 
technology to third countries by providing incentives for China 
to observe non-proliferation norms. It can beam objective 
sources of information and democratic values into China--some 
of the very satellites China sends into space send back CNN and 
other western television programming. And more broadly, it 
serves our policy of engagement with China, which is expanding 
our cooperation in areas important to the national interest 
(such as stability in Asia; preventing the spread of weapons of 
mass destruction; combating international crime and drug 
trafficking; protecting the environment; promoting trade and 
creating jobs) while giving us opportunities to deal 
forthrightly with our differences (such as human rights.)
    Misleading news reports and misinformation now surround the 
policy of licensing the launch of U.S. commercial satellites on 
Chinese rockets. To set the record straight, here are the 
facts:

                         the licensing program

1. Allegation: Licensing the launch of U.S. commercial satellites by 
        China results in a transfer of technology that threatens U.S. 
        security

    The Facts: None of the satellite licenses or waivers 
authorizes the transfer of sensitive missile technology to 
China. All are for commercial satellites, the licenses are 
subject to careful inter-agency scrutiny by the Department of 
Defense, the Department of State, the Arms Control and 
Disarmament Agency (ACDA) and the Department of Commerce and 
are subject to strict controls and safeguards. The current 
safeguards include a detailed plan for shipping the satellite, 
a detailed operational security plan for the satellite while in 
China awaiting launch, and approved procedures for the 
supervised mating of the satellite to the launch vehicle. In 
addition, the plan includes Defense Department monitoring of 
technical meetings between the U.S. company and Chinese launch 
officials, and of the launch itself. The conditions imposed on 
companies that use Chinese rockets for satellite launches 
require that there be no improvement in China's missile 
capabilities.

2. Allegation: U.S. policy regarding the export of satellites to China 
        has put U.S. cities at risk from Chinese ICBMs

    The Facts: China's Inter Continental Ballistic Missiles 
(ICBMs) have had the range and accuracy to reach U.S. cities 
since they were first deployed in the early 1980s. Thus, this 
capability existed before President Reagan approved the first 
exports of satellites to China in 1988.

                           the loral license

3. Allegation: The waiver granted to Loral subsequent to the start of a 
        Justice Department investigation into whether Loral illegally 
        transferred technology to China was granted over the opposition 
        of Justice and compromised U.S. national security

    The Facts: The Clinton Administration did not ``overrule'' 
or ``ignore'' Justice Department views, nor has granting the 
license compromised U.S. national security.
    In 1992, President Bush granted a waiver which permitted 
the Loral Corporation to launch a commercial communications 
satellite on a Chinese rocket. The launch took place in 
February 1996, but the rocket exploded and destroyed the 
satellite. Loral and another U.S. company allegedly worked with 
the Chinese to determine why the explosion occurred and how to 
prevent such accidents in the future. Any analysis of a launch 
failure would have to be separately authorized by State and is 
not authorized in State or Commerce licenses for the launch of 
commercial communications satellites. The Justice Department is 
investigating whether, in any such review technology or know-
how may have been illegally given to the Chinese.
    When the State Department recommended a waiver for another 
Loral satellite in 1998, it noted that an investigation of 
Loral was under way. The White House therefore took the added 
step of asking Justice for its views on the request. The 
Justice Department raised concerns about the potential impact 
of the waiver on its ability to persuade a jury to convict 
Loral in the event that the incident warrants prosecution.
    The Justice Department views were weighed carefully by the 
President against factors which supported a waiver: (i) the 
State Department recommended that the waiver would be in the 
national interest, and State and the Department of Defense 
found that the license referenced in the waiver contained the 
safeguards necessary to protect the national security; (ii) the 
licensing request was for a commercial satellite export, not 
for the kind of activity (launch-failure analysis) for which 
Loral was being investigated; (iii) the State Department has a 
long-standing practice of considering license applications on a 
case-by-case basis in accordance with normal procedures for 
individuals who may be subject to criminal investigations but 
have not been indicted; and (iv) if an investigation leads to 
indictment license revocation and other serious penalties may 
be imposed. In balancing all these factors, the President 
decided to approve the waiver.
    This is how decisions in government are made--balancing the 
views of all relevant agencies and then making a broader 
judgment based on overall national interests. The process was 
transparent and open. Agencies responsible for our national 
security reviewed and supported the request, the White House 
took the additional step of asking Justice for its views and 
agency considerations were reflected in a memorandum for the 
President.

                    transfer from state to commerce

4. Allegation: The State Department opposed the 1996 transfer of 
        licensing jurisdiction for commercial satellites to the 
        Commerce Department

    The Facts: President Clinton's decision to transfer 
licensing jurisdiction over commercial satellites to Commerce 
came at the end of a 6-month process. It ultimately enjoyed the 
consensus of Commerce, State and Defense because it provided 
for continued State licensing of technical data and assistance 
related to launch vehicles, and because of additional 
procedural protections added to the Commerce licensing process.
    Under the approach adopted in 1996, Defense, State, Energy 
and ACDA review all proposed commercial satellite exports to 
ensure that they are consistent with U.S. national security. If 
any of these agencies disagrees with a proposed export, it can 
block the license and put the issue into a dispute resolution 
process that can ultimately rise to the President.
    The decision to transfer jurisdiction was part of a 
broader, bipartisan effort supported by the Reagan and Bush 
Administrations to move primary authority for licensing 
essentially commercial items to Commerce in order both to 
streamline the process and make it more transparent to 
exporters, and where such transfers could be made in a manner 
fully consistent with national security interests. Commerce 
applies stricter deadlines that are better suited for 
commercial products.
    The shift of jurisdiction from State to Commerce was also 
supported by majorities in both Houses of Congress. Beginning 
in 1990, both Houses repeatedly passed bills specifically 
mandating the shift of jurisdiction over commercial satellites 
to Commerce (although none of those bills became law.) Indeed, 
the President's decision in 1996 was directly responsive to 
legislative language that would have transferred jurisdiction. 
The President followed the intent of such legislation, while 
adding national security safeguards--such as a strengthened 
role for Defense and State--that were not included in the 
legislative proposals.
    Prior to and independent of the shifting of commercial 
satellite jurisdiction to Commerce, the President in December 
1995 issued an Executive Order expanding the right of the 
Departments of State, Defense, Energy and ACDA to review all 
dual-use export license applications, including commercial 
satellites. Previously, these agencies reviewed only certain 
dual-use applications. The President took this action to ensure 
that all relevant agencies would have the opportunity to review 
all license applications for their national security and 
foreign policy implications.
    It is also worth noting that in the case of the 1998 Loral 
waiver, as in the case of most commercial satellite exports to 
China, a separate State Department license was still required 
because the exporter proposed to transfer technology controlled 
by State regarding the integration of the satellite to the 
rocket.
    It is well know that the State Department initially opposed 
the transfer of jurisdiction to the Commerce Department. 
Congress has been briefed on this issue, and the General 
Accounting Office report on the subject refers to State's 
initial objections.
    However, subsequent to the initial decision by the State 
Department, a number of measures were developed to deal with 
the concerns identified by the Defense and State Departments 
regarding the jurisdictional transfer. These additional 
measures, approved by the President, formed a basis of 
subsequent concurrence by the State Department for the transfer 
of jurisdiction to the Commerce Department for commercial 
communications satellites.
    These measures include:
          suspending rules normally available to the Commerce 
        Department which require approval of U.S. licenses 
        based on a similar technology available from other 
        exporting countries (``foreign availability'');
          requiring that any satellite with U.S. contents be 
        subject to jurisdiction, even if the U.S. content is 
        extremely small (the ``de minimis requirement'') and;
          adding a new control at the Commerce Department which 
        would allow the denial of applications for national 
        security and foreign policy reasons to any foreign 
        destination.
    These new controls were notified to Congress and published 
by the State Department at the time of the transfer of 
jurisdiction of licensing functions in 1996. When State briefed 
Congress about the transfer in jurisdiction, it explained its 
view that the new controls made it possible for State to 
support the jurisdiction change.

5. Allegation: The 1996 transfer of licensing jurisdiction from State 
        to Commerce created a national security sieve because the 
        Commerce Department has inadequate safeguards to prevent the 
        diversion of dual-use technology

    The Facts: The President's decision in March, 1996 to give 
the Commerce Department jurisdiction over commercial satellite 
exports did not decontrol or weaken the export of satellites 
nor allow the transfer of sensitive satellite technology to 
anyone.
    The Department of Defense, the State Department, Energy and 
ACDA review proposed exports to ensure they are consistent with 
U.S. national security and foreign policy interests. The same 
strict safeguards are now required for Commerce-licensed 
commercial satellites as were required for satellites licensed 
by the State Department. The safeguards include a detailed plan 
for shipping the satellite, a detailed operational security 
plan for the satellite while in China awaiting launch, and 
approved procedures for the supervised mating of the satellite 
to the launch vehicle. In addition, the plan includes Defense 
Department monitoring of technical meetings between the U.S. 
company and Chinese launch officials, and of the launch itself. 
The conditions imposed on companies that use Chinese rockets 
for satellites launches require that there be no improvement in 
China's missile capabilities.
    As previously noted, the President's decision was the 
culmination of a long inter-agency process in which national 
security concerns of all agencies were addressed, leading to 
their concurrence in the final decision. The impetus for the 
jurisdiction change dated to the Bush Administration and was 
reflected in repeated votes by Congress to mandate such a 
change. President Clinton's decision effectuated the change 
only after procedures were agreed upon to ensure consistency 
with national security interests.

                         CAMPAIGn CONTRIBUTIONS

6 Allegation: Loral's campaign contributions influenced the President's 
        decision to grant it export waivers, including the waiver 
        subsequent to the start of the Justice Department 
        investigation, and also influenced the President's decision to 
        transfer licensing jurisdiction from State to Commerce

    The Facts: No campaign contributions affected decision-
making on U.S. foreign policy or national security.
    The policy of licensing U.S. commercial satellites to be 
launched by Chinese rockets is bipartisan and pre-dates the 
Clinton Administration. It was instituted by President Reagan 
and further implemented by the Bush Administration. The Bush 
Administration approved three waivers over three years for nine 
U.S. satellites to be launched from China, the Clinton 
administration has approved ten waivers over five years 
covering eleven satellite programs.
    Each waiver approved by President Clinton was based on a 
recommendation from the State Department or the Commerce 
Department. Each license under these waivers was approved after 
careful interagency review that including State, Defense and 
ACDA. The decision-making process flows from the bottom up--a 
request for a license is made by the company to the relevant 
government agency (State or Commerce), which then solicits the 
views of the other relevant agencies on the pending license 
application. Once the interagency review process is completed 
and the license is ready for approval, a recommendation is made 
to the White House concerning whether a waiver of Tiananmen 
sanctions is in the ``national interest.''
    Similarly, as detailed above, the decision to transfer 
jurisdiction over commercial satellites from State to Commerce 
was the product of an intensive six month inter-agency review 
process and was preceded by similar efforts in the Bush 
Administration and in Congress. During the decision-making 
process, the satellite industry strongly supported the change 
in jurisdiction, as it had done for a number of years.
    There is absolutely no connection between any campaign 
contributions and U.S. policy. There is no evidence of such a 
nexus, nor has it been alleged on the basis of any facts. It 
simply did not occur.

7. Allegation: Intra-government e-mails and memoranda regarding the 
        1998 Loral licensing request convey a sense of urgency that was 
        based on Loral's pleas for a quick decision and suggest 
        political pressure.

    The Facts: Loral's interest in prompt action on its 1998 
licensing request had no effect on the substance of the 
Administration's licensing process or any effect on national 
security.
    American companies that need U.S. government approvals for 
business transactions should be able to expect an expeditious 
response, especially if they are operating under a specific 
deadline. They are not entitled to a positive response, but to 
a timely one.
    In the case of the 1998 Loral request, the Administration 
was aware of a deadline with important commercial implications 
and so tried to be responsive. But the decision whether or not 
to grant the waiver was based on the judgments of the agencies 
involved in reviewing the license and recommending the waiver. 
In fact, the Administration's decision occurred after the 
commercial deadlines identified by the company had passed, as 
government officials continued to gather the information needed 
to make an informed, judicious decision.

    A History of Bipartisan Support for Commercial Satellite Waivers

    1. Granting Waivers for U.S. Commercial Satellite Launches 
On Chinese Rockets Has Been Found To Be ``In The National 
Interest'' 20 Times By President's Reagan, Bush and Clinton.
    President Reagan: On September 9, 1988, President Reagan 
approved a plan to allow the export of U.S. made communications 
satellites to China for launching on Chinese rockets. Reagan's 
State Department spokesman Charles Redman noted that the plan 
would ``protect legitimate U.S. national security interests . . 
.'' [Washington Post, 9/10/98]
    President Bush: President Bush, on 3 separate occasions 
over 4 years, granted waivers to allow the export of a total of 
9 separate commercial satellites for launch on Chinese rockets. 
On each of those occasions the President specifically reported 
to Congress that the waivers were ``in the national interest.'' 
[Public Papers of the President's, 1989 (Book II, p. 1721); 
1991 (Book I, p. 446); 1992 (Book II, p. 1546)]
    President Clinton: President Clinton, over 6 years, has 
granted waivers to allow the export of a total of 11 separate 
commercial satellites for launch on Chinese rockets. Each and 
every time, the President has notified the Congress that the 
waivers were ``in the national interest.''
    As well as
    Colin Powell (1988): In an October 20, 1988 letter to then 
House Foreign Affairs Committee Chairman Dante Fascell, then 
National Security Adviser Colin Powell wrote: ``Legislation may 
be offered to prohibit or delay issuance of licenses 
authorizing the export of U.S. satellites . . . for launch on 
Chinese vehicles. This would be a serious mistake. . . . I 
request your assistance in forestalling any last minute actions 
in Congress that could jeopardize the important commercial and 
national security interests we are seeking to advance in our 
approach.'' [House Foreign Affairs Cmte. Hearing on Proposed 
Sale and Launch of United States Satellites on Chinese 
Missiles, 9/28/88 (p. 100-101)]
    Frank Carlucci (1988): Also in an October 20, 1988 letter 
to Chairman Fascell, Reagan Defense Secretary Frank Carlucci 
wrote: ``I remain concerned that another attempt may be made to 
block the export of these satellites. . . . Your support for 
this important national security issue can make a difference. I 
strongly urge you to support the administration's initiative to 
license these satellites to the Chinese.'' [House Foreign 
Affairs Cmte. Hearing on Proposed Sale and Launch of United 
States Satellites on Chinese Missiles, 9/28/88 (p. 122-123)]
    Gov. Pete Wilson (1993): In a November 16, 1993 letter to 
Secretary of State Warren Christopher, Wilson wrote: ``I urge 
you to use your waiver authority under the law to allow the 
satellite sales to the PRC to proceed. These sales are 
important to the California economy and in themselves are no 
threat to further missile proliferation.''
    Reps. Rohrabacher, Thomas, Gallegly, Dreier, et al (1993): 
In an October 27, 1993 letter to Secretary of State Warren 
Christopher, 30 members of Congress--including 16 Republicans--
wrote that while they supported ``the objective of controlling 
missile proliferation'' they were concerned that sanctions did 
not ``allow communications satellites to be launched from 
China''--specifically satellites owned by Hughes Aircraft 
Company. The letter concludes: ``We believe that national 
policy objectives can be met without placing sanctions on 
communications satellites, and we ask you to direct that these 
satellites be excluded from any list of sanctionable items.'' 
The letter was signed by 30 Representatives (16 Republicans and 
14 Democrats) including Reps. Dana Rohrabacher, William Thomas, 
Elton Gallegly, David Dreier. [Letter to Warren Christopher, 
10/27/93]
    2. Transfer Of Authority To Grant Waivers From The State 
Department To The Commerce Department Was A Policy Decision 
Supported By Both Democrats And Republicans.
    President Bush (1992): In a September 25, 1992 ``Message to 
Congress,'' President Bush noted ``the transfer from the State 
Department to the Commerce Department of licensing 
jurisdiction'' over certain civil aircraft equipment and added 
that ``this transfer of items formerly included in the State 
Department's United States Munitions List (USML) to the 
[Commerce Control List] CCL is ongoing.'' President Bush also 
predicted that: ``In the future, certain commercial 
telecommunications satellites, imaging technologies, and 
navigational technologies will be removed from the USML and 
added to the CCL.'' [Public Papers of the President's, 1992 
(Book II, p. 1651; emphasis added)]
    Frm. Congressman Roth (1993-1996): Former Rep. Toby Roth 
(R-WI) served as the ranking member and Chairman (1995-96) of 
the House Foreign Affairs Committee's Subcommittee on Economic 
Policy, Trade and Environment. Roth was an adamant proponent of 
shifting jurisdiction for commercial satellite exports from the 
State Department to the Commerce Department. Roth sponsored a 
1995 bill (HR. 316) which--in its original form--included 
language stating that ``the export of commercial communications 
satellites . . . may be regulated only by the Secretary of 
Commerce.'' Roth also co-authored a July 18, 1994 New York 
Times op-ed with Rep. Gejdensen which was critical of 
``prohibit[ing] American companies from selling communications 
satellites to China . . .'' [HR 361, 104th Congress, 1/11/95 
(version 1)]
    Congressman Gallegly (1994): On May 17, 1994, Rep. Elton 
Gallegly (R-CA) signed up as a cosponsor on HR 4276 sponsored 
by Rep. Jane Harman. The legislation function was ``to amend 
the Arms Export Control Act and Export Administration Act of 
1979 to require that the export of certain commercial 
communications satellites and associated equipment be regulated 
solely by the Secretary of Commerce . . .'' Introducing her 
bill on April 21, 1994, Harman noted the bill ``completes a 
process that was initiated by the Bush Administration by 
shifting jurisdiction over these licenses from the State 
Department to the Commerce Department.'' Other cosponsors were 
Democratic Rep. Berman (CA); Beilenson (CA) and Edwards (CA). 
[Bill Tracking Report HR. 4276, 103rd Congress (Lexis/Nexis); 
Congressional Record, 4/21/94 (emphasis added)]
    Congressman Gilman, Roth, Burton, Rohrabacher, et al: In 
1994, the House Foreign Affairs Committee (May 18th) and its 
Subcommittee on Economic Policy, Trade, and Environment (March 
10th) both passed by voice vote Legislation stating that) ``the 
export of commercial communications satellites . . . may be 
regulated only by the Secretary of Commerce.'' Members of the 
Subcommittee at the time of the March 10, 1994 voice vote 
included: Reps. Toby Roth, Dana Rohrabacher, Don Manzullo, Doug 
Bereuter, Jan Myers, and Cass Ballenger. And, in addition to 
those listed above, the members of the full committee at the 
time of May 18, 1994 voice vote included: Reps. Ben Gilman, Dan 
Burton, James Leach, Elton Gallegly, Chris Smith and eight 
other Republications. [103rd Congress, House Rep. 103-531, 5/
25/94]
    3. Both President Bush And President Clinton Granted 
Waivers For Chinese Launch Of Loral Made Commercial Satellites. 
National Security Was The Controlling Factor In Both Decisions.
    President Bush: In a letter informing Congress of his 
decision to grant a waiver to Loral for its Intelsat VIIA 
project, Bush wrote that ``it is in the national interest of 
the United States to waive the restrictions'' on exporting to 
China. [``Message to the Congress on trade with China,'' Public 
Papers of the Presidents: George Bush, Book II, p. 1546]
    President Clinton: On February 6, 1996 and February 18, 
1998, President Clinton also told Congress that ``it is in the 
national interest of the United States to waive'' restrictions 
on exporting to China for Loral's Mubuhay and Chinasat 8 
projects. [``Message to Congress on Satellite Exports to 
China,'' Public Paper of the Presidents: Bill Clinton, Book I, 
p. 177; Congressional Record, 2/24/98, p. H573]
    Note: The satellite launched as a result of President 
Bush's 1992 waiver exploded at launch in 1996--leading to the 
controversial ``industry review'' and subsequent Justice 
Department investigation.

                                
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