[Senate Executive Report 111-5]
[From the U.S. Government Publishing Office]
111th Congress Exec. Rept.
SENATE
2d Session 111-5
======================================================================
DEFENSE TRADE COOPERATION TREATIES WITH THE UNITED KINGDOM AND
AUSTRALIA
_______
September 24, 2010.--Ordered to be printed
_______
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany Treaty Docs. 110-7 and 110-10]
The Committee on Foreign Relations, to which was referred
the Treaty between the Government of the United States of
America and the Government of the United Kingdom of Great
Britain and Northern Ireland Concerning Defense Trade
Cooperation, done at Washington and London on June 21 and 26,
2007 (Treaty Doc. 110-7, the ``U.S.-UK Treaty'') and the Treaty
between the Government of the United States of America and the
Government of Australia Concerning Defense Trade Cooperation,
done at Sydney, September 5, 2007 (Treaty Doc. 110-10, the
``U.S.-Australia Treaty''), having considered the same, reports
favorably thereon with conditions, understandings, and
declarations as indicated in the resolutions of advice and
consent for each treaty, and recommends that the Senate give
its advice and consent to ratification thereof, as set forth in
this report and the accompanying resolutions of advice and
consent.
CONTENTS
Page
I. Purpose..........................................................2
II. Background.......................................................2
III. Discussion.......................................................4
IV. Committee Action................................................15
V. Committee Recommendations.......................................16
VI. Section-by-Section Analysis of Resolution of Advice and Consent to
Ratification of the U.S.-UK Defense Trade Cooperation Treaty....17
VII. Section-by-Section Analysis of Resolution of Advice and Consent to
Ratification of the U.S.-Australia Defense Trade Cooperation
Treaty..........................................................23
VIII.Text of Resolutions of Advice and Consent to Ratification.......28
IX. Letter From Senators Levin and Warner...........................43
X. Hearing on the Defense Trade Cooperation Treaties, December 10,
2009............................................................47
I. Purpose
The purpose of these two treaties, along with an
Implementing Arrangement to each treaty, both of which were
also provided to the Senate, is to promote defense cooperation
between the United States and its treaty partners by creating,
for certain joint operations, programs and projects involving
the United States and certain treaty partner governmental and
agreed non-governmental entities, an exemption from certain
provisions of the Arms Export Control Act (22 U.S.C. 2751 et
seq.; hereinafter, ``AECA'') for agreed classified and
unclassified exports of defense articles and defense services.
In his Letter of Transmittal of the U.S.-UK Treaty to the
Senate, President George W. Bush stated that the treaty would
``allow for greater cooperation between the United States and
the United Kingdom, enhancing the operational capabilities and
interoperability of the armed forces of both countries.''
In an article-by-article analysis of the U.S.-UK Treaty
prepared by the Department of State which was submitted to the
Senate as part of the Letter of Transmittal of that treaty to
the Senate, the State Department added that:
it is in the mutual security and defense interests of
the United States and the United Kingdom to improve the
interoperability of their armed forces by facilitating
the movement of defense articles in support of certain
mutually agreed activities, while maintaining and
ensuring proper safeguards against unauthorized release
of the defense technology involved.
The Letter of Transmittal and article-by-article analysis
for the U.S.-Australia Treaty included similar language.
II. Background
The United Kingdom and Australia are exceptionally close
allies of the United States, with ties of history, culture, and
national security interests that have led each country's armed
forces to fight side by side with those of the United States in
many conflicts over the last century. The economic and
technological ties between the United States and these proposed
treaty partners are also exceptionally close, and this extends
to cooperative programs or projects to develop defense
capabilities for use by both countries. When the United States,
a treaty partner, and relevant defense contractors and
suppliers are engaged in such a program or project, the need to
process export license requests for the back-and-forth flow of
components, supplies and technology can slow the pace of
cooperation and impede the exchange of ideas and solutions to
problems. Given that virtually all of the several thousand
requests for arms export licenses to these two countries
annually are granted, the defense establishments of the United
States and its proposed treaty partners have long argued that a
streamlined arms export process would be in the U.S. national
interest.
Section 38(a) of the AECA authorizes the President to
control the import and export of defense articles and services,
and to provide foreign policy guidance to persons of the United
States involved in the export and import of such articles and
services. Further, the AECA authorizes the President to
establish a United States Munitions List (hereinafter,
``USML''), which shall include those items that the President
designates as defense articles and defense services. The
President is further authorized to promulgate regulations for
the import and export of such articles and services. The
statutory authority to promulgate regulations with respect to
exports was delegated to the Secretary of State by Executive
Order 11958, as amended. The Secretary of State has implemented
that authority through the International Traffic in Arms
Regulations (22 Code of Federal Regulations, Subchapter M,
Parts 120-130; hereinafter, ``ITAR''). Pursuant to the ITAR,
any person wanting to export a defense article or service
included on the USML, unless the export qualifies for certain
exemptions established within the ITAR, must obtain the
approval of the State Department's Directorate of Defense Trade
Controls, which administers the export control authority that
has been delegated to the Secretary of State.
Under section 36(c) of the AECA, for a direct commercial
sale from a U.S. private company over a certain threshold of
value to the United Kingdom or Australia, Congress must be
formally notified 15 calendar days before the executive branch
may issue a license for such an export. Commercially licensed
arms sales cases involving defense articles that are firearms
controlled under Category I of the USML and valued at $1
million or more must also be formally notified to Congress for
review 15 days prior to the license for export being approved.
After having been notified, Congress has an opportunity enact a
joint resolution blocking the executive branch from issuing the
proposed license for export. Recognizing the difficulty that
the Senate's rules of procedure present in passing such
legislation in time to block issuance of the license, the AECA
establishes expedited procedures for Senate consideration of a
joint resolution to block the license.
Pursuant to section 3 of the AECA, nations and private
entities acquiring defense articles and defense services from
the United States must agree that they will secure approval
from the United States before transferring or reselling any
defense articles or defense services to any third-party or
nation. To this end, the ITAR requires that, with certain
limited exceptions, the Directorate of Defense Trade Controls
must provide written approval to the ultimate end user of any
exported defense article before that end user can resell,
transfer, transship, or otherwise dispose of the defense
article. With certain exceptions, section 3(d) of the AECA
requires the President to notify Congress 15 days prior to
approving transfers to the United Kingdom or Australia above
thresholds of value similar to those established for the
original sale.
In the Letter of Submittal from the Secretary of State to
the President for the U.S.-UK Treaty, then-Secretary of State
Condoleezza Rice wrote:
For several years, the United States and the United
Kingdom have sought to negotiate a legally binding
agreement that would provide a mutually agreeable
exemption for exports to the United Kingdom of defense
articles controlled pursuant to the Arms Export Control
Act (AECA) from some requirements, such as the
licensing requirements, of Section 38 of the AECA and
its implementing regulations, the International Traffic
in Arms Regulations.
The Security Assistance Act of 2000 (Public Law 106-280)
amended section 38 of the AECA to explicitly authorize the
President to exempt a foreign country from the licensing
requirements established under the AECA with respect to exports
of defense items. The new subsection 38(j) of the AECA that
P.L. 106-280 added required that to make use of this authority,
the President must conclude a binding bilateral agreement with
the foreign country that requires the foreign country, inter
alia,--
to establish an export control regime that is at least
comparable to United States law, regulation and policy
requiring--
(i) conditions on the handling of all United
States-origin defense items exported to the
foreign country, including prior written United
States Government approval for any reexports to
third countries; [and]
(ii) end-use and retransfer control
commitments, including securing binding end-use
and retransfer control commitments from all
end-users. with respect to such United States-
origin defense items.
In 2003, the United States reached agreements with the
United Kingdom and Australia to exempt certain unclassified
exports of defense articles and defense services from export
license requirements in the ITAR. Neither agreement met the
standard set by subsection 38(j) of the AECA, however. The
United Kingdom is inhibited both constitutionally and by virtue
of its membership in the European Union from giving blanket
assurances regarding reexports to third countries, and
Australian law is not readily adapted to limits on the transfer
of defense articles or defense services to companies within the
country. The executive branch therefore sought legislation to
permit the exemption agreements to enter into force. Such
legislation was included as section 1059A in the Senate-passed
version of the Ronald W. Reagan National Defense Authorization
Act for Fiscal Year 2005, but that provision was not included
in the conference-reported version of the bill and did not
become law.
It was in the context of this legislative frustration that,
in 2007, the executive branch adopted a new approach for
liberalizing defense trade with the United Kingdom and
Australia. Instead of relying strictly upon the export control
regimes of the United Kingdom and Australia, those countries
would agree also to treat defense articles and defense services
exported from the United States as classified information, so
as to bring these defense articles and defense services under
each country's information security laws and regulations. These
bilateral agreements would take the form of treaties, moreover,
which were deemed to be self-executing and would require action
in the United States only by the Senate. While the treaties
contained the basic framework of the proposed defense trade
regime, many of the details of the regime were addressed in
``Implementing Arrangements'' separate from the treaties for
which the executive branch opted not to seek the Senate's
advice and consent.
III. Discussion
A detailed paragraph-by-paragraph analysis of the Treaties
may be found in the Letters of Submittal from the Secretary of
State to the President, which is reprinted in full in Treaty
Document 110-7 and 110-10. A summary of key provisions is set
forth below.
Definitions
Article 1 of each treaty contains definitions of terms. The
U.S.-Australia Treaty defines the word ``Scope'' (such
capitalized words being terms of art in the treaties), which
was omitted from the U.S.-UK Treaty, so the committee
recommends that the resolution of advice and consent to the
U.S.-UK Treaty include an understanding that defines Scope as
in the U.S.-Australia Treaty.
The definition of ``Territory of the United Kingdom'' in
the U.S.-UK Treaty includes not only England, Wales, Scotland
and Northern Ireland, but also ``any territory for whose
international relations the United Kingdom is responsible in
respect to which Her Majesty's Government gives notice to the
United States Government that such territory shall be included
within this definition for the purposes of this Treaty.'' The
inclusion of such a territory in the Territory of the United
Kingdom, or of an entity in such a territory in the ``United
Kingdom Community'' (see below), for the purposes of the U.S.-
UK Treaty could be problematic, given that responsibility for
such a territory's international relations might not include
complete control over that territory's classified information
or arms export control regimes. Some British territories have
been known as tax havens or as hubs for money laundering, and
the committee sought assurances that there was no intent to
include such territories in the U.S.-UK Treaty. The Department
of State assured the committee, in an answer for the record,
that: ``The Official Secrets Act extends to any act done by any
person in these territories as if it were done in the UK.''
(The committee's questions for the record and the executive
branch's answers are appended to this Report.) The committee
notes, moreover, that although the United States Government
would not be able to object to including such territories in
the U.S.-UK Treaty, it would be able to deny membership in the
United Kingdom Community to any entity that prompted concern.
In light of these concerns, the committee recommends that
the resolution of advice and consent to ratification of the
U.S.-UK Treaty include a condition requiring prompt
notification to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the House of
Representatives of any addition of territories (or of
discussions regarding such additions) to the Territory of the
United Kingdom and consultation with the committees ``before
approving any addition to the United Kingdom Community of a
non-governmental entity or facility outside the territory of
England, Scotland, Wales, or Northern Ireland.''
Approved Communities
Each treaty and its implementing arrangement provide for
the establishment of an ``Approved Community'' of government
entities, companies, and individuals in the treaty partner
country and the United States that will be given clearance to
work on projects and operations that involve license-free
equipment and technology transfers between the two countries.
Any U.S. company or other U.S. entity otherwise eligible to
export U.S. defense articles and services can make use of the
treaties. Treaty partner government facilities and government
personnel, agreed companies and individuals qualifying for
inclusion in the Approved Community will not be required to
obtain an export license from the U.S. State Department for
most defense articles or items of defense technology on the
USML. The members of the Approved Community of each treaty
partner are not required to use the procedures established by
the treaty, but should they choose not to do so, they must use
(and abide by) the existing U.S. defense export licensing or
sales procedures.
The implementing arrangements set out criteria for
determining how private entities in each treaty partner country
will qualify to become part of the treaty's Approved Community.
While treaty partner entities are required to be accredited by
that country to handle classified information, the criteria
treat other matters--such as foreign ownership, control, and
influence; previous convictions for violations of U.S. or
treaty partner export laws; or other national security risks--
as factors to be taken into consideration, rather than as
absolute requirements.
The U.S. Government is empowered by Article 4, paragraph 2
of each treaty, however, to request the removal of any non-
governmental treaty partner persons or entities included in the
Approved Community, and such a request must be honored if the
United States does not rescind the request after consultations
with the treaty partner. This raises the question of when the
United States will avail itself of that privilege. The
committee recommends that each resolution of advice and consent
to ratification contain a requirement that the United States
invoke this provision if sanctions are in effect against a
member of the treaty partner's Approved Community under either
section 73(a)(2)(B) of the AECA (relating to illegal transfers
of missile equipment or technology) or section 81 of the AECA
(relating to contributions to a country's chemical or
biological weapons programs). The committee further recommends
that each resolution of advice and consent include requirements
for notification and consultation with the Foreign Relations
and Foreign Affairs Committees before the United States agrees
to the initial or continued inclusion in a treaty partner's
Approved Community of a nongovernmental entity if the
Department of State is aware that the entity, or any one or
more of its relevant senior officers or officials, has been
convicted of violating a statute cited in paragraph 38(g)(1) of
the AECA or is, or would be if that person were a United States
person, (a) ineligible to contract with any agency of the U.S.
Government; (b) ineligible to receive a license or other form
of authorization to export from any agency of the U.S.
Government; or (c) ineligible to receive a license or any form
of authorization to import defense articles or defense services
from any agency of the U.S. Government.
Article 5 of each treaty provides that the United States
Community will consist, in part, of ``[n]ongovernmental United
States entities registered with the United States Government
and eligible to export Defense Articles under United States law
and regulation.'' The committee was particularly concerned to
ensure that the United States will not simply assume that all
entities registered with the government are in fact eligible to
export. The committee recommends that the resolutions of advice
and consent to ratification of the treaties contain a
requirement that regulations: (a) limit a person from being a
member of the United States Community, pursuant to Article 5(2)
of each treaty, if that person is generally ineligible to
export pursuant to section 120.1(c) of the ITAR; and (b)
require any nongovernmental entity that ceases to be included
in the United States Community to comply with instructions from
authorized United States Government officials and to open its
records of transactions under the treaty to inspection by
United States Government and, as appropriate, authorized treaty
partner officials pursuant to Article 12 of each treaty. The
committee recommends further that the resolutions require the
President to certify that appropriate mechanisms have been
established to identify, in connection with the process for
determining whether a nongovernmental entity is in the United
States Community pursuant to Article 5(2) of each treaty,
persons who meet the criteria in section 38(g)(1) of the AECA
(22 U.S.C. 2778(g)(1)); and the committee recommends that the
implementing legislation include a provision making clear that
the identification of persons who are indicted for, or
convicted of, violations of the statutes listed in section
38(g)(1) of the AECA may be conducted regarding persons who
export defense items under the treaties, even if such persons
never seek an export license.
Treaty Scope Limited to Specific Activities
In addition to limiting license-free trade under the treaty
to certain entities, the treaties only permit license-free
trade that relates to certain activities. Defense articles and
services will be able to be exported to a treaty partner's
Approved Community, and exchanged within it, without U.S.
export or re-transfer approvals, so as long as the exports are
in support of:
Combined military or counterterrorism operations;
Agreed research, development, production and support
programs or security and defense projects;
Treaty partner government-only end-uses; or
U.S. Government-only end-uses.
The United States and the proposed treaty partners have not
finalized the lists of combined military or counter-terrorism
operations that will be within the Scope of the treaty (Article
3(1)(a)), cooperative security and defense research,
development, production, and support programs that will be
within the Scope (Article 3(1)(b)), and which security and
defense projects where the UK Government is the end-user will
be within the Scope (Article 3(1)(c)). Lists of the
unclassified operations, programs and projects will be
published, so that U.S. arms exporters will be able to
determine what proposed exports might be within the scope of
each treaty.
Defense Articles and Services Exempted from the Treaty
In addition to limiting the treaties' scope to specific
purposes, the treaties permit each party to exclude certain
defense articles and defense services (including technical
data) from license-free export and re-transfer pursuant to the
treaties. Even if transactions involve members of an Approved
Community and fall under the list of approved projects, export
of such defense articles and defense services would have to be
done in accordance with existing U.S. export law and
regulations.
The executive branch has stated that it will exempt from
each treaty's coverage certain defense items related to U.S.
nonproliferation obligations:
Defense Articles listed in the Missile Technology Control
Regime (MTCR) Annex (i.e., complete rocket systems,
including ballistic missile systems, space launch
vehicles, and sounding rockets, or complete unmanned
aerial vehicle systems capable of delivering at least a
500 kilogram payload to a range of 300 kilometers, and
associated production facilities, software, or
technology for these systems; and Rocket stages, re-
entry vehicles and equipment, solid or liquid
propellant motors, guidance sets, thrust vector control
systems, and associated production facilities, software
and technology);
Defense Articles listed in the Chemical Weapons Convention
(CWC) Annex on Chemicals, the Convention on Biological
and Toxin Weapons, and the Australia Group (AG) Common
Control Lists (CCL); and
USML Category XVI Defense Articles specific to design and
testing of nuclear weapons.
Other defense articles and defense services that the United
States will exempt from the Scope of each treaty
include USML items that the treaty partner does not
control, as well as such technologies as:
Reduced observables and counter-low observables;
Electronic and optical countermeasures and counter-
countermeasures;
Certain anti-tamper measures;
Defense articles specific to satellites, satellite
payloads, and their specifically designed or modified
components; and
Defense articles specific to Man Portable Air
Defense Systems (MANPADs).
The committee believes that the nonproliferation exemptions
from the Scope of the treaties are of particular importance, as
they ensure that the treaties will not undermine U.S.
compliance with agreements that are vital pillars of the
international nonproliferation regime. In the committee's view,
these exemptions should be governed by law, so that they cannot
be rescinded without prior congressional authorization. The
implementing legislation proposed by the committee contains a
provision that would achieve this end. The committee also
recommends that the implementing legislation require that the
United States exempt from the Scope of the U.S.-UK Treaty those
defense items that are on the USML, but are not controlled by
the United Kingdom.
The committee understands the logic of allowing each Party
to add items to, or subtract items from, the lists of items
exempt from the Scope of each treaty. The technologies in
question are extremely sensitive, however, and a decision to
delete a technology from the list of items exempt from the
Scope of a treaty could be profoundly important. The committee
recommends, therefore, that each resolution of advice and
consent to ratification include a condition requiring 30 days'
prior notice to the Foreign Relations and Foreign Affairs
Committees of such an action.
Safeguarding U.S. Defense Items Exported under the Treaties
The treaties and their implementing arrangements safeguard
against unauthorized transfers by prohibiting defense articles
and defense services exported to the Approved Community in a
treaty partner country from being re-exported or transferred
outside of the Approved Community without the approval of both
the U.S. and treaty partner governments. Rather than rely
solely upon its export control laws, each treaty partner would
classify all otherwise unclassified defense articles and
defense services exported pursuant to the treaties, upon
entering that country, as RESTRICTED-USML goods/information, a
level of classification that is slightly below the U.S. level
of CONFIDENTIAL. Both facilities and personnel receiving U.S.
exports under this treaty will have to be vetted and cleared by
both the treaty partner and U.S. governments to receive
RESTRICTED goods or technology.
In the United Kingdom, for example, enforcement of these
provisions will be the administrative responsibility of the
Ministry of Defence, backed up by the authority of the British
Official Secrets Act. All requests for Re-exports or Re-
transfers will be reviewed by the Ministry of Defence. (Under
the treaties and implementing arrangements, a ``Re-transfer''
is a transfer of a covered item from a member of the Approved
Community to a non-member of the Approved Community within the
territory of the treaty partner. A ``Re-export'' is the
movement of a covered item by a member of the Approved
Community to a location outside of the territory of the treaty
partner or the United States.) Since all the defense articles
provided under the treaty are classified, the Ministry of
Defence will not provide permission for a Re-export or Re-
transfer without obtaining U.S. Government authorization.
Certain exceptions to the Re-export or Re-transfer restrictions
are possible, but only if agreed to by the two governments and
set out in the implementing arrangements. This can permit, for
example, Re-export of items that are being used in support of
the United Kingdom's Armed Forces overseas. Importantly, by
classifying items exported under the treaty, the United Kingdom
can bar Re-exports to the rest of the European Union unless the
U.S. Government approves, without violating its obligations as
a member of the European Union.
The treaties and their implementing arrangements further
establish important requirements to aid enforcement of
compliance. Each party to the treaties shall have the right to
conduct end-use monitoring of exports or transfers conducted
under it. A detailed process for recording the movement of
defense articles under the provisions of the treaties is
established, with Approved Community members required to retain
such records (but not to transmit them to either government)
for five years. And treaty partners will be required to obtain
a signed statement from each non-governmental entity or
facility in their Approved Community acknowledging some ten
specific standards that it will be required to meet regarding
U.S. defense articles and defense services received under the
treaty. This requirement will serve both to inform Approved
Community members of their obligations and to provide a written
indication of their acceptance of such obligations, which may
be used in any enforcement action.
Each party to the treaties will be obliged to investigate
any suspected violations, inform the other party of the result
of the investigations, and cooperate in enforcement efforts as
appropriate. The committee recommends that the resolution of
advice and consent to each treaty include an understanding, to
be included in the instrument of ratification, that the words
``as appropriate'' in each implementing arrangement do not
detract in any way from the treaty obligation to investigate
suspected and reported violations and to inform the United
States of the results of such investigations.
The parties to each treaty are to consult at least once a
year on the co-operative aspects of export controls, and to
review the operation of the treaty. Any disputes arising out
of, or in connection with, the treaty are to be resolved on a
bilateral basis between the parties and will not be referred to
any court, tribunal, or third party.
Enforcement of Compliance with Treaty Obligations
The first line of defense in arms export control is the
export licensing process, in which exporters register with the
Department of State and then the Department (and, as
appropriate, other departments or agencies) will review
proposed exports; the second line of defense is the export
process, in which the Department of Homeland Security (DHS)
reviews exporters' documentation for arms exports. In both
cases, agencies check names against data bases of ineligible
persons. The treaties will eliminate the licensing process for
qualifying exports, but DHS will still review shipping
documentation to determine whether exports that are asserted to
be license-free under the treaties are, in fact, in order. The
committee took pains to ensure that DHS would have the needed
personnel and information technology to process such exports
effectively. The committee recommends that each resolution of
advice and consent to ratification contain a requirement that
the President certify that: (a) appropriate mechanisms have
been established to verify that nongovernmental entities in the
United States that export defense articles or defense services
pursuant to the treaties are eligible to export them under
United States law and regulation as required by Article 5(2) of
the treaties; and (b) DHS personnel at U.S. ports have prompt
access to a State Department database containing registered
exporters, freight forwarders and consignees, and watch lists
regarding U.S. companies, and are prepared to prevent attempts
to export pursuant to the treaties by U.S. persons who are not
eligible to export defense articles and defense services under
U.S. law or regulation, even if such person has registered with
the U.S. Government.
Much of the committee's examination of these treaties
focused on the question of whether, without accompanying
legislation, the executive branch would be able to effectively
enforce compliance with the treaties. Violations of arms export
controls are a fact of life, and it is reasonable to expect
that there will be cases in which companies misuse the license
exemptions provided by these treaties. Because the treaties
supersede elements of the AECA, it was not at all clear whether
section 38(a) of the AECA, on which the executive branch relies
for authority to issue regulations, section 38(c), which
provides for criminal penalties for violations, and section
38(e), which provides for civil penalties, could be used in an
enforcement action against an entity that had proceeded under
one of the treaties instead of under the AECA. The executive
branch argued initially that no authority other than that
provided by the treaties themselves was required to issue
regulations that would provide for such penalties. Later it
adopted the view that the treaties would create a ``safe
harbor'' from the AECA, that section 38(a) of the AECA could
still be used (along with the treaties themselves) as authority
to issue regulations, and that sections 38(c) and 38(e) would
therefore remain applicable to persons who made use of the
treaties but engaged in activities that violated the treaties
and therefore brought their conduct back under the AECA. The
executive branch provided several drafts of implementing
regulations as it sought to meet concerns raised by the
committee and by the Department of Justice, while avoiding the
need for implementing legislation. At length, however, the
executive branch agreed to support implementing legislation.
The committee believes that the proposed legislation
accompanying these treaties, by changing the law to accommodate
these treaties and to provide for criminal and civil penalties
for their violation, will remove any cause for question
regarding the authority of the executive branch to prosecute
violators of the treaties. It will also maintain certain AECA
provisions that would otherwise have been superseded by the
treaties, as noted elsewhere in this Report.
Self-execution and Interaction with Existing Law
Each treaty contains a statement in its preamble that says,
``Understanding that the provisions of this Treaty are self-
executing in the United States.'' The committee found this
statement to be problematic on several grounds. Such a
preambular declaration was unprecedented in U.S. treaties, and
it purported to determine an issue that has traditionally been
considered a subject for discussion, regarding each treaty,
between the executive branch and the Senate. As explained
above, moreover, it was substantively suspect in that it
purported to rule out the use of legislation to make clear the
federal government's authority to impose criminal or civil
penalties for violations of the treaties, their implementing
arrangements, and regulations issued to implement the treaties.
The executive branch eventually concluded that these treaties
are not self-executing and submitted the following answer for
the record: ``Notwithstanding the statement in the preamble of
these Treaties, the Treaties are not self-executing. They will
be implemented through legislation and regulations
thereunder.''
If the assertion of self-execution had been contained in
the body of these treaties, the committee would have
recommended that they be amended to delete that language. The
assertion is made only in each treaty's preamble, however, and
such language is not legally binding on the parties. It has not
been the Senate's practice to amend preambular language in
treaties, precisely because such language imposes no obligation
on the United States. The committee recommends instead,
therefore, that each resolution of advice and consent to
ratification contain the following declaration: ``This Treaty
is not self-executing in the United States, notwithstanding the
statement in the preamble to the contrary.'' This declaration
will make the Senate's position clear, in case there is any
doubt. It will not affect the rights or obligations of our
treaty partners.
The treaties will supersede elements of the AECA, however,
and not all of those impacts were intended when the treaties
were negotiated. Notably, there was no intent to override the
ban on incentive payments in section 39A of the AECA. The
committee recommends that the implementing legislation for
these treaties amend that section of the AECA to include
exports under the treaties.
The committee also recommends that the resolutions of
advice and consent to ratification of these treaties include an
understanding that conveys the interpretation of the United
States that the treaty does not exempt any person or entity
from any United States statutory and regulatory requirements,
including any requirements of licensing or authorization, other
than those included in the ITAR, as modified or amended. This
is required to make clear the intent of the Parties that the
treaties not supersede such other statutory or regulatory
provisions as the requirement (flowing, at least in part, from
section 38 of the AECA) for the Department of Justice's Bureau
of Alcohol, Tobacco and Firearms to approve certain permanent
imports of firearms for sale to private parties in the United
States.
Private Rights and Intellectual Property Rights
The committee's proposed resolutions of advice and consent
to ratification include a standard declaration that: ``This
Treaty does not confer private rights enforceable in United
States courts.'' With regard to intellectual property rights,
the proposed resolutions go on to state:
No liability will be incurred by or attributed to the
United States Government in connection with any
possible infringement of privately owned patent or
proprietary rights, either domestic or foreign, by
reason of the United States Government's permitting
Exports or Transfers or its approval of Re-exports or
Re-transfers under the Treaty.
The latter language is expected also to be promulgated in
amendments to section 126 of the ITAR. The committee recommends
its inclusion in the resolutions of advice and consent to
ratification so as to underscore that the Senate understands
and accepts that ratification of the treaties will not result
in the United States Government incurring any liability with
respect to the intellectual property rights of persons whose
rights may be infringed by the recipients of exports or
transfers under the treaties.
At the same time, the treaty drafters took pains to address
the issue of intellectual property rights under the treaties.
Article 10 of each treaty states:
(1) Nothing in this Treaty shall be construed as
granting, implying, diminishing, or otherwise affecting
rights to, or interest in, intellectual property or
other proprietary information of the Parties or of
persons or entities within the Approved Community
pursuant to this Treaty.
(2) Nothing in this Treaty shall affect any
provisions for the protection of intellectual property
and other proprietary information that may be agreed
between the Parties or the persons or entities referred
to in paragraph (1).
The Department of State's article-by-article analysis of
the treaties adds: ``Accordingly, such persons or entities may
agree between themselves on procedures to provide protections
to intellectual property or other proprietary information,
additional to the protections afforded to classified
information.''
In the committee's view, the treaties do not detract from
the intellectual property rights of persons or entities that
take necessary action to reinforce those rights when exporting
a defense item under the treaties or when selling it to the
United Kingdom or Australia under the Foreign Military Sales
program. If a formal contract contains provisions protecting
those rights (e.g., by barring the retransfer of a defense item
to a competing private company), the treaties will not
supersede that contract. Private entities should understand,
however, that absent such contractual protection, they may have
less visibility into the use or subsequent transfer of defense
items sold under the treaties or sold to the United Kingdom or
Australia under the Foreign Military Sales program. Companies
bear the responsibility of establishing their intellectual
property rights under such sales.
The committee recommends that the resolutions of advice and
consent to ratification of the treaties contain a provision
requiring the executive branch to analyze the implications of
the treaties for the protection of intellectual property rights
of United States persons, with particular attention to the
effect of Article 3, paragraph 3 of the treaties, which allows
the treaties to be applied to defense items that were exported
under the Foreign Military Sales program. It recommends further
than the President be required to report to Congress annually
on any concerns relating to infringement of intellectual
property rights that were raised to the President or an
executive branch department or agency by Approved Community
members, and developments regarding any concerns that were
raised in previous years.
The Role of Congress
As noted above, under the AECA, Congress has the power to
review proposed direct commercial sales valued over a certain
threshold. Under the treaties, the U.S. Government must approve
re-transfers and re-exports outside of the Approved
Communities; and the executive branch agreed to provide 15
days' prior notice of such approvals to Congress. But Congress
might lose the legal right to review such transfers and to take
action under expedited procedures to stop them before they are
approved. This is because section 3 of the AECA, which
establishes the role of Congress in the approval of re-exports,
applies to defense articles or defense services either (a) sold
or leased under the AECA, or (b) licensed or approved under
section 38 of the AECA. At least under some legal theories of
the effect of the treaties, such exports would not be under the
AECA and the re-export provisions of section 3 of the AECA
would therefore not apply to such defense items. The committee
recommends that the implementing legislation for these treaties
address this concern by specifically applying section
3(d)(3)(A) of the AECA to exports under the treaties. The
committee recommends further that the implementing legislation
include a provision mandating the prior notice that the
executive branch had proposed regarding exports under the
treaties that would otherwise fall within the purview of
section 36 of the AECA.
A similar concern arises regarding the requirements for the
executive branch to report to Congress on cases of
discrimination against Americans on the basis of race,
religion, national origin or sex in arms export activities
(section 5(c) of the AECA) and on arms exports that might occur
in the forthcoming year (section 25 of the AECA). The committee
recommends that the implementing legislation for these treaties
amend those sections to include exports pursuant to the
treaties.
Amendments and Implementing Arrangements
Article 19 of each treaty states: ``This Treaty may be
amended by written agreement of the Parties.'' Any such
amendment would need to be submitted to the Senate for advice
and consent to ratification under Article II, Section 2, Clause
2 of the Constitution of the United State."
A more difficult question relates to the Implementing
Arrangements that are authorized in Article 14 of each treaty.
Paragraph 1 of Article 14 provides, in part: ``The Implementing
Arrangements may be amended or supplemented as mutually
determined by the Parties.'' The executive branch did not
submit the Implementing Arrangements to the Senate for its
advice and consent. Rather, the executive branch provided the
texts of the Implementing Arrangements to the Senate for its
information only. Because changes to the Implementing
Arrangements could have significant impacts on the nature and
scope of the treaty regime, the committee believes that it
would be inappropriate for such changes to be made without
Congressional approval.
The committee recommends, therefore, that the implementing
legislation for the treaties include a requirement that any
amendment to either of the Implementing Arrangements for these
treaties, other than an amendment that addresses an
administrative or technical matter, may enter into effect only
if the Congress adopts, and there is enacted, legislation
approving the entry into effect of that amendment for the
United States. The legislation that the committee proposes
includes an illustrative list of provisions, any amendment to
which would not be considered administrative or technical.
The committee further recommends that the implementing
legislation include a requirement for notice to the Foreign
Relations and Foreign Affairs Committees 15 days prior to the
entry into effect of any amendment to one of the Implementing
Arrangements that does not require legislative approval. The
legislation recommended by the committee would permit the
President to waive this requirement, and instead notify the
committees within five days after an amendment came into
effect, if the President determines and certifies to the
committees that this is important to maintain the viability and
effectiveness of the treaty.
Duration and Withdrawal
The treaties are each of unlimited duration. Each party has
the right to withdraw from the treaty, however, after providing
six months' notice and consulting with the other party, if it
believes that its national interests have been jeopardized.
IV. Committee Action
The U.S.-UK Treaty was signed on June 21 and 26, 2007, and
was received in the Senate and referred to the Committee on
Foreign Relations on September 20, 2007. The U.S.-Australia
Treaty was signed on September 5, 2007, and was received in the
Senate on December 3, 2007.
The committee held a public hearing on the treaties on May
21, 2008. Then-Senator Biden chaired the hearing. Testimony was
received from the Honorable John C. Rood, Acting Under
Secretary of State for Arms Control and International Security.
On July 3, 2008, Senators Biden and Lugar also submitted in
writing questions for the record to the Honorable Michael B.
Mukasey, Attorney General of the United States, and the
Honorable Michael Chertoff, Secretary of Homeland Security.
In connection with the May 2008 hearing, the committee also
received letters from the Honorable George W. Bush, President
of the United States; the Right Honorable Gordon Brown, Prime
Minister of the United Kingdom of Great Britain and Northern
Ireland; the Honorable Dennis Richardson, Ambassador of
Australia to the United States of America, accompanied by a
letter from the Honorable Kevin Rudd, Prime Minister of
Australia, to the Honorable Harry Reid, Majority Leader of the
United States Senate; the Right Honorable Baroness Ann Taylor
of Bolton, Minister of State for Defence Equipment and Support,
United Kingdom of Great Britain and Northern Ireland; the
Aerospace Industries Association; Robert J. Stevens, Chairman,
President, and Chief Executive Officer of the Lockheed Martin
Corporation; Ron Rittenmeyer, Chairman, President, and Chief
Executive Officer, EDS; and Daryl G. Kimball, Executive
Director, Arms Control Association, Dr. Ivan Oelrich, Vice
President of Strategic Security, Federation of American
Scientists, and Arthur Shulman, General Counsel, Wisconsin
Project on Nuclear Arms Control, accompanied by a statement for
the record by Matt Schroeder, Federation of American
Scientists, Arthur Shulman and Matthew Godsey, Wisconsin
Project on Nuclear Arms Control, and Jeff Abramson, Arms
Control Association. The full record of the May 2008 hearing,
including the answers to questions for the record as originally
submitted and the letters submitted to the committee in
connection with the hearing, is provided in S. Hrg. 110-651.
On August 27, 2008, Senators Biden and Lugar received a
letter from Senator Carl Levin, Chairman of the Committee on
Armed Services, and Senator John Warner expressing their strong
support for the treaties. That letter is appended to this
report.
On December 10, 2009, the committee held another public
hearing on the treaty. Senator Kerry chaired the hearing.
Testimony was received from the Honorable Andrew Shapiro,
Assistant Secretary of State for Political-Military Affairs,
and the Honorable James A. Baker, Associate Deputy Attorney
General. Their statements for the record, the transcript of
that hearing, and responses to questions for the record,
including revisions by the State Department to certain
responses submitted in connection with the May 2008 hearing,
are appended to this report.
On December 17, 2009, Senator Lugar submitted questions for
the record to the Honorable John Merton, Assistant Secretary of
Homeland Security for Immigration and Customs Enforcement, and
Mr. Jayson P. Ahern, Acting Commissioner for Customs and Border
Protection. Those letters and their responses are also appended
to this report.
On September 21, 2010, the committee considered the
treaties and ordered them favorably reported by a voice vote,
with a quorum present and without objection. The committee
recommended a resolution of advice and consent to ratification
for each treaty.
V. Committee Recommendations
The committee believes these treaties can make an important
contribution to improving defense trade cooperation with the
United Kingdom and Australia, and accordingly recommends that
the Senate act promptly to give them its advice and consent.
The committee recommends a resolution of advice and consent to
the U.S.-UK Treaty that contains 9 conditions, 7
understandings, and 3 declarations. The committee recommends a
resolution of advice and consent to the U.S.-Australia Treaty
that contains 8 conditions, 6 understandings, and 3
declarations. The text of each recommended resolution is
printed below, followed by a section-by-section analysis.
The committee further recommends implementing legislation
for the two treaties. The report to accompany that legislation,
S.3581, as amended, is a separate document from this Report.
In light of the purpose of these treaties to facilitate
defense cooperation with two close U.S. allies, the United
Kingdom and Australia, the committee regrets that approval of
the treaties has required nearly three years from the date of
their submission by the President. The committee values greatly
the United States' strong partnership with the United Kingdom
and Australia and the important contributions these countries
have made to our shared security interests. The committee's
delay in approving these treaties does not reflect any doubt on
the committee's part about the value of maintaining and
strengthening these important relationships.
Aspects of these treaties raised significant issues
regarding the Senate's role in the treaty making process. Both
treaties included a highly unusual preambular provision
purporting to specify how their provisions would be
implemented, enforced, and incorporated into U.S. law,
prejudging decisions which the Senate has traditionally had a
co-equal role with the executive branch in making. The treaties
also allocated significant aspects of the treaty regime to
``Implementing Arrangements'' separate from the treaties which
were not submitted for the Senate's advice and consent. The
executive branch initially took the position that, once the
treaties entered into force, these Implementing Arrangements
could be amended--including in ways that would alter
fundamental aspects of the treaty's regime--without the
Senate's consent. Much of the committee's review of the
treaties was devoted to considering these issues, and to
crafting the provisions of the implementing legislation and
resolutions of advice and consent necessary to resolve them
appropriately.
The committee notes that regular executive branch
consultation with the Senate during the process of negotiating
treaties is essential to the effective exercise of the treaty
power shared by the two branches. Had the executive branch
consulted with the Senate during the course of the negotiation
of these treaties, many of the issues that delayed their
approval by the committee could have been anticipated and
avoided.
VI. Section-by-Section Analysis of Resolution of Advice and Consent to
Ratification of the U.S.-UK Defense Trade Cooperation Treaty
Condition (1). United States preparation for treaty implementation.
The committee recommends that the Senate condition its
advice and consent to ratification on a requirement that the
President take several steps prior to entry into force of the
treaty.
At least 15 days prior to entry into force, the President
must submit a report to Congress that: (1) describes steps
taken to ensure that the executive branch and United States
industry are prepared to comply with treaty requirements; (2)
analyzes the implications of the treaty for the protection of
intellectual property rights of United States persons; (3)
explains what steps the United States Government is taking and
will take to combat improper illegal intangible exports under
the treaty; and (4) sets forth the issues to be addressed in
the Management Plan called for by Section 12(3)(f) of the
Implementing Arrangement and the procedures that are expected
to be adopted in that Plan.
Prior to entry into force, the President must certify that
changes to the ITAR have been published in the Federal Register
pursuant to the AECA and that such changes would: (1) make
clear the legal obligation for any person involved in an
Export, Re-Export, Transfer, or Re-Transfer under the treaty
(as those terms are defined in the treaty) to comply with all
requirements in the revised ITAR; (2) make clear the legal
obligation for Approved Community members to comply with United
States Government instructions and requirements regarding U.S.
Defense Articles (as the term is defined in the treaty) added
to the list of exempt Defense Articles pursuant to Article 3(2)
of the treaty; limit a person from being a member of the U.S.
Community pursuant to Article 5(2) of the treaty, if that
person is generally ineligible to export pursuant to 22 CFR,
section 120.1(c); and (4) require any nongovernmental entity
that ceases to be included in the United States Community to
comply with instructions from authorized United States
Government officials and to open its records of transactions
under the treaty to inspection by United States Government, and
as appropriate, authorized United Kingdom Government officials
pursuant to Article 12 of the treaty.
Prior to entry into force, the President must also certify
the following:
(1) that appropriate mechanisms have been established
to identify, in connection with the process for
determining whether a nongovernmental entity is in the
United States Community pursuant to Article 5(2) of the
treaty, persons who meet the criteria in section
38(g)(1) of the AECA (22 U.S.C. 2778(g)(1)). Section
38(g)(1) of the AECA imposes an obligation on the
President to develop appropriate mechanisms to
identify, in connection with the export licensing
process under Section 38, persons who are the subject
of an indictment, or have been convicted of a violation
of, certain enumerated statutes;
(2) that appropriate mechanisms have been established
to verify that nongovernmental entities in the United
States that Export pursuant to the treaty are eligible
to export Defense Articles under United States law and
regulation as required by Article 5(2) of the treaty;
(3) that the Department of Homeland Security
personnel at U.S. ports: (a) have prompt access to a
State Department database containing registered
exporters, freight forwarders and consignees, and watch
lists regarding U.S. companies; and (b) are prepared to
prevent attempts to export pursuant to the treaty by
United States persons who are not eligible to export
Defense Articles under United States law or regulation;
(4) that the Secretary of Defense has promulgated
appropriate changes to the National Industrial Security
Program Operating Manual and to Regulation DoD 5200.1-
R, ``Information Security Program,'' and has issued
guidance to industry regarding marking and other treaty
compliance requirements; and
(5) that a capability has been established to conduct
post-shipment verification, end-use/end-user monitoring
and related security audits for Exports under the
treaty. This specific certification must also be
accompanied by a report setting forth the legal
authority, staffing and budget provided for such
capability and additional executive branch or
congressional action recommended to ensure effective
implementation.
Condition 2. Treaty partner preparation for implementation.
Prior to entry into force of the treaty, the President must
certify to Congress that the Government of the United Kingdom
has promulgated all necessary regulatory changes, including:
changes to export control regulations, changes to the United
Kingdom Security Policy Framework and related security
regulations for Government and United Kingdom Industry; and
changes to the MOD classified Material Release Procedure.
Condition 3. Joint operations, programs, and projects.
The Secretary of State shall keep the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives informed of the lists of combined
military and counter-terrorism operations, cooperative security
and defense research, development, production, and support
programs, and specific security and defense projects--i.e., the
programs that define the scope of the treaty pursuant to
Article 3(1). The Committee on Foreign Affairs is included
because it, like the Committee on Foreign Relations, has
jurisdiction over the AECA.
Condition 4. Exempted defense articles.
Condition 4(A) provides that the President may remove a
Defense Article from the list Defense Articles exempt from the
Scope of the treaty, if such removal is not barred by United
States law, 30 days after the President informs the Committee
on Foreign Relations of the Senate and the Committee on Foreign
Affairs of the House of Representatives of such proposed
removal. The 30-day notice period will give the committees time
to discuss the proposed removal with the executive branch.
Under Condition 4(B), when a Defense Article is added to
the list of Defense Articles exempt from the Scope of the
treaty, the Secretary of State must provide a copy of the
Federal Register Notice delineating the policies and procedures
that will govern the control of such Defense Article, as well
as an explanation of the reasons for adopting those policies
and procedures, to the Committee on Foreign Relations and the
Committee on Foreign Affairs within 5 days of the issuance of
such Notice.
Condition 5. Changes to the definition of the territory of the United
Kingdom.
Article 1(8) of the treaty allows the UK Government to add
certain territories to the definition of ``Territory of the
United Kingdom'' (i.e., beyond the usual ``England and Wales,
Scotland and Northern Ireland''), an option that is not found
in the parallel treaty with Australia. Some British territories
have histories as havens where arms brokers might engage in
questionable practices (e.g., the Isle of Man, or the Turks and
Caicos Islands), and there could be questions regarding the UK
Government's ability to enforce export control and classified
information laws in some of its territories. Condition (5)(A)
therefore requires that the Secretary of State inform the
Committee on Foreign Relations of the Senate and the Committee
on Foreign Affairs of the House of Representatives within 15
days of either the initiation of consultations with the United
Kingdom concerning the inclusion of any additional territory in
the definition of ``Territory of the United Kingdom'' or the
receipt through diplomatic channels of notice that a territory
or group of territories has been added to the definition.
Under Condition 5(B), the Secretary of State must consult
with the Committee on Foreign Relations and the Committee on
Foreign Affairs before approving any addition to the United
Kingdom Community of a non-governmental entity or facility
outside the territory of England, Scotland, Wales, or Northern
Ireland. Thus, if the UK ``Territory'' is enlarged, the
committees will still be able to weigh in regarding persons in
the added territory who might be proposed for membership in the
Approved Community. All this is merely precautionary; the
committee has no indication at this time that the UK Government
intends to use the option to change the definition that Article
1(8) affords.
Condition 6. Approved Community membership.
Under Condition 6(A), if sanctions are in effect against a
person in the United Kingdom Community pursuant to section
73(a)(2)(B) or section 81 of the AECA (22 U.S.C. 2797b(a)(2)(B)
or 2798), the United States is required to raise the matter
with the United Kingdom pursuant to Article 4(2) of the treaty
and Section 7(9) of the Implementing Arrangement. These
provisions relate to removal of an entity from the United
Kingdom Approved Community when the requesting Party (either
the United States or the United Kingdom) considers such removal
to be in its national interests.
Condition 6(B) requires the Secretary of State to inform
the Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of Representatives at
least five days before the United States Government agrees to
the initial inclusion in the United Kingdom Community of a
nongovernmental United Kingdom entity, if the Department of
State is aware that the entity, or any of its relevant senior
officers or officials (1) has been convicted of violating a
statute enumerated in section 38(g)(1) of the AECA; or (2) is,
or would be if that person were a United States person: (a)
ineligible to contract with any agency of the U.S. Government;
(b) ineligible to receive a license or other authorization to
export from any agency of the U.S. Government; or (c)
ineligible to receive a license or other authorization to
import defense articles or defense services from any agency of
the U.S. Government. The United States has the power to reject
such a person as a member of the Approved Community, and prior
notice will give the committees an opportunity to weigh in if
the UK Government proposes to add such a person or if the State
Department proposes to grant an exception to an otherwise
ineligible person.
If the United States Government agrees to the continued
inclusion in the United Kingdom Community of a nongovernmental
United Kingdom entity, when the Department of State is aware
that the entity, or any one or more of its relevant senior
officers or officials, raises one or more of the concerns
referred to in paragraph 6(B), the Secretary of State must
inform and consult with the Committee on Foreign Relations and
the Committee on Foreign Affairs not later than 5 days after
such agreement.
Condition 7. Transition policies and procedures.
Article 3(3) of the treaty allows the UK Government to
acquire Defense Articles from the U.S. Government through the
Foreign Military Sales (FMS) program and then convert them to
treaty-covered status. The means by which this would be done
have not yet been determined, however, so this condition
requires the President to report to the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives on these new policies at least 15
days before they are adopted.
Similarly, the treaty and Implementing Arrangements allow
for entities in an Approved Community to move from the
requirements of United States Government defense export
licenses or other authorizations issued under the ITAR to the
processes established under the treaty. Fifteen days before
formally establishing the procedures for members of the United
Kingdom Community to transition to processes established under
the treaty, the President must provide a report on such
procedures to the Committee on Foreign Relations and the
Committee on Foreign Affairs.
Condition 8. Congressional oversight.
To ensure Congress has the information necessary to fulfill
its oversight responsibilities, the Secretary of State must
inform the Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of Representatives
promptly of any report, consistent with Section 11(4)(b)(vi) of
the Implementing Arrangement, of a material violation of treaty
requirements or procedures by a member of the Approved
Community. Further, the Department of State must brief both
committees regularly regarding issues raised in the Management
Board called for in Section 12(3) of the Implementing
Arrangement, and the resolution of such issues.
Condition 9. Annual report.
The President must submit a report to Congress by March 31,
2011, and annually thereafter, which covers all treaty
activities during the previous calendar year.
Understanding 1. Meaning of the phrase ``identified in.''
The treaty makes occasional reference to matters
``identified in'' the Implementing Arrangement, where in fact
the Implementing Arrangement merely says that the Management
Plan will specify these matters. Understanding (1) is intended
to make clear that the Senate was aware of, and did not object
to, that disconnect.
Understanding 2. Meaning of the word ``Scope.''
This definition was included in the U.S.-Australia Treaty,
but not in the U.S.-UK Treaty (apparently by accident).
Understanding 3. Cooperative programs with exempt and non-exempt
defense articles.
This understanding makes clear the view of the United
States that if a cooperative program is mutually determined,
consistent with Section 2(2)(e) of the Implementing
Arrangement, to be within the Scope of the treaty pursuant to
Article 3(1)(b) of the treaty despite involving Defense
Articles that are exempt from the Scope of the treaty pursuant
to Article 3(2) of the treaty, the exempt Defense Articles
shall remain exempt from the Scope of the treaty and the treaty
shall apply only to non-exempt Defense Articles required for
the program.
Understanding 4. Investigations and reports of alleged violations.
This understanding makes clear that Article 10(3)(f) does
not detract in any way from the obligation in Article 13(3) of
the treaty for each Party to ``promptly investigate all
suspected violations and reports of alleged violations of the
procedures established pursuant to this treaty,'' and to
``promptly inform the other Party of the results of such
investigations.''
Understanding 5. Exempt defense articles.
This understanding makes clear that if one Party to the
treaty exempts a type of Defense Articles from the scope of the
treaty pursuant to Article 3(2) of the treaty, then Defense
Articles of that type will be treated as exempt by both Parties
to the treaty.
Understanding 6. Intermediate consignees.
This understanding makes clear that any intermediate
consignee of an Export from the United States under the treaty
must be a member of the Approved Community or otherwise
approved by the United States Government. Accordingly, third-
country persons will not normally be responsible for
transporting Exports under the treaty.
Understanding 7. Scope of treaty exemption
This understanding conveys the interpretation of the United
States that the treaty does not exempt any person or entity
from any United States statutory and regulatory requirements,
including any requirements of licensing or authorization, other
than those included in the ITAR, as modified or amended. The
United States interprets the term ``license or other written
authorization'' in Article 2 and the term ``licenses or other
authorizations'' in Article 6(1), as these terms apply to the
United States, and the term ``prior written authorization by
the United States Government'' in Article 7, to refer only to
such licenses, licensing requirements, and other authorizations
as are required or issued by the United States pursuant to the
ITAR, as modified or amended; and the United States interprets
the reference to ``the applicable licensing requirements and
the implementing regulations of the United States Arms Export
Control Act'' in Article 13(1) to refer only to the applicable
licensing requirements under the ITAR, as modified or amended.
Among other things, the treaty does not modify or amend the
authorities related to the permanent import of defense articles
and services set out in Article 38(a)(1) of the AECA (22 U.S.C.
2778(a)(1)).
Declaration 1. Self-execution.
This declaration states that the treaty is not self-
executing in the United States, notwithstanding the statement
in the preamble to the contrary. The declaration represents the
shared understanding of the committee and the executive branch.
(The executive branch conveyed its position on this matter in a
response to a question for the record submitted on September
20, 2010.) The treaty will be implemented in the United States
through legislation and regulations thereunder.
The committee notes that the inclusion in a treaty of a
statement on the purported self-executing nature of the treaty
is highly unusual--perhaps unprecedented--and is contrary to
the longstanding practice that such matters are determined
through the shared understanding of the Senate and the
executive branch. The committee strongly discourages the
executive branch from including such provisions in future
treaties.
Declaration 2. Private rights.
This declaration makes clear that the treaty does not
confer private rights enforceable in United States courts.
Declaration 3. Intellectual property rights.
This declaration makes clear that no liability will be
incurred by or attributed to the United States Government in
connection with any possible infringement of privately owned
patent or proprietary rights, either domestic or foreign, by
reason of the United States Government's permitting Exports or
Transfers or its approval of Re-exports or Re-transfers under
the treaty.
VII. Section-by-Section Analysis of Resolution of Advice and Consent to
Ratification of the U.S.-Australia Defense Trade Cooperation Treaty
Condition (1). United States preparation for treaty implementation.
The committee recommends that the Senate condition its
advice and consent to ratification on a requirement that the
President take several steps prior to entry into force of the
treaty.
At least 15 days prior to entry into force, the President
must submit a report to Congress that: (1) describes steps
taken to ensure that the executive branch and United States
industry are prepared to comply with treaty requirements; (2)
analyzes the implications of the treaty for the protection of
intellectual property rights of United States persons; (3)
explains what steps the United States Government is taking and
will take to combat improper illegal intangible exports under
the treaty; and (4) sets forth the issues to be addressed in
the Management Plan called for by Section 12(3)(f) of the
Implementing Arrangement and the procedures that are expected
to be adopted in that Plan.
Prior to entry into force, the President must certify that
changes to the ITAR have been published in the Federal Register
pursuant to the AECA and that such changes would: (1) make
clear the legal obligation for any person involved in an
Export, Re-Export, Transfer, or Re-Transfer under the treaty
(as those terms are defined in the treaty) to comply with all
requirements in the revised ITAR; (2) make clear the legal
obligation for Approved Community members to comply with United
States Government instructions and requirements regarding U.S.
Defense Articles (as the term is defined in the treaty) added
to the list of exempt Defense Articles pursuant to Article 3(2)
of the treaty; limit a person from being a member of the U.S.
Community pursuant to Article 5(2) of the treaty, if that
person is generally ineligible to export pursuant to 22 CFR,
section 120.1(c); and (4) require any nongovernmental entity
that ceases to be included in the United States Community to
comply with instructions from authorized United States
Government officials and to open its records of transactions
under the treaty to inspection by United States Government and,
as appropriate, authorized Australian Government, officials
pursuant to Article 12 of the treaty.
Prior to entry into force, the President must also certify
the following:
(1) that appropriate mechanisms have been established
to identify, in connection with the process for
determining whether a nongovernmental entity is in the
United States Community pursuant to Article 5(2) of the
treaty, persons who meet the criteria in section
38(g)(1) of the AECA (22 U.S.C. 2778(g)(1)). Section
38(g)(1) of the AECA imposes an obligation on the
President to develop appropriate mechanisms to
identify, in connection with the export licensing
process under Section 38, persons who are the subject
of an indictment, or have been convicted of a violation
of, certain enumerated statutes;
(2) that appropriate mechanisms have been established
to verify that nongovernmental entities in the United
States that Export pursuant to the treaty are eligible
to export Defense Articles under United States law and
regulation as required by Article 5(2) of the treaty;
(3) that the Department of Homeland Security
personnel at U.S. ports: (a) have prompt access to a
State Department database containing registered
exporters, freight forwarders and consignees, and watch
lists regarding U.S. companies; and (b) are prepared to
prevent attempts to export pursuant to the treaty by
United States persons who are not eligible to export
Defense Articles under United States law or regulation;
(4) that the Secretary of Defense has promulgated
appropriate changes to the National Industrial Security
Program Operating Manual and to Regulation DoD 5200.1-
R, ``Information Security Program,'' and has issued
guidance to industry regarding marking and other treaty
compliance requirements; and
(5) that a capability has been established to conduct
post-shipment verification, end-use/end-user monitoring
and related security audits for Exports under the
treaty. This specific certification must also be
accompanied by a report setting forth the legal
authority, staffing and budget provided for such
capability and additional executive branch or
congressional action recommended to ensure effective
implementation.
Condition 2. Treaty partner preparation for implementation.
Prior to entry into force of the treaty, the President must
certify to Congress that the Government of Australia has
enacted legislation to strengthen its controls over defense and
dual-use goods, including controls over intangible transfers of
controlled technology and brokering of controlled goods,
technology, and services, and that the Government of Australia
has promulgated regulatory changes required to satisfactorily
implement the treaty regime.
Condition 3. Joint operations, programs, and projects.
The Secretary of State shall keep the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives informed of the lists of combined
military and counter-terrorism operations, cooperative security
and defense research, development, production, and support
programs, and specific security and defense projects--i.e., the
programs that define the scope of the treaty pursuant to
Article 3(1). The Committee on Foreign Affairs is included
because it, like the Committee on Foreign Relations, has
jurisdiction over the AECA.
Condition 4. Exempted defense articles.
Condition 4(A) provides that the President may remove a
Defense Article from the list Defense Articles exempt from the
Scope of the treaty, if such removal is not barred by United
States law, 30 days after the President informs the Committee
on Foreign Relations of the Senate and the Committee on Foreign
Affairs of the House of Representatives of such proposed
removal. The 30-day notice period will give the committees time
to discuss the proposed removal with the executive branch.
Under Condition 4(B), when a Defense Article is added to
the list of Defense Articles exempt from the Scope of the
treaty, the Secretary of State must provide a copy of the
Federal Register Notice delineating the policies and procedures
that will govern the control of such Defense Article, as well
as an explanation of the reasons for adopting those policies
and procedures, to the Committee on Foreign Relations and the
Committee on Foreign Affairs within 5 days of the issuance of
such Notice.
Condition 5. Approved Community membership.
Under Condition 6(A), if sanctions are in effect against a
person in the Australian Community pursuant to section
73(a)(2)(B) or section 81 of the AECA (22 U.S.C. 2797b(a)(2)(B)
or 2798), the United States is required to raise the matter
with Australia pursuant to Article 4(2) of the treaty and
Section 6(9) of the Implementing Arrangement. These provisions
relate to removal of an entity from the Australian Approved
Community when the requesting Party (either the United States
or Australia) considers such removal to be in its national
interests.
Condition 6(B) requires the Secretary of State to inform
the Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of Representatives at
least five days before the United States Government agrees to
the initial inclusion in the Australian Community of a
nongovernmental Australian entity, if the Department of State
is aware that the entity, or any of its relevant senior
officers or officials (1) has been convicted of violating a
statute enumerated in section 38(g)(1) of the AECA; or (2) is,
or would be if that person were a United States person: (a)
ineligible to contract with any agency of the U.S. Government;
(b) ineligible to receive a license or other authorization to
export from any agency of the U.S. Government; or (c)
ineligible to receive a license or other authorization to
import defense articles or defense services from any agency of
the U.S. Government. The United States has the power to reject
such a person as a member of the Approved Community, and prior
notice will give the committees an opportunity to weigh in if
the Australian Government proposes to add such a person or if
the State Department proposes to grant an exception to an
otherwise ineligible person.
If the United States Government agrees to the continued
inclusion in the Australian Community of a nongovernmental
Australian entity, when the Department of State is aware that
the entity, or any one or more of its relevant senior officers
or officials, raises one or more of the concerns referred to in
paragraph 6(B), the Secretary of State must inform and consult
with the Committee on Foreign Relations and the Committee on
Foreign Affairs not later than 5 days after such agreement.
Condition 6. Transition policies and procedures.
Article 3(3) of the treaty allows the Australian Government
to acquire Defense Articles from the U.S. Government through
the Foreign Military Sales (FMS) program and then convert them
to treaty-covered status. The means by which this would be done
have not yet been determined, however, so this condition
requires the President to report to the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives on these new policies at least 15
days before they are adopted.
Similarly, the treaty and Implementing Arrangements allow
for entities in an Approved Community to move from the
requirements of United States Government defense export
licenses or other authorizations issued under the ITAR to the
processes established under the treaty. Fifteen days before
formally establishing the procedures for members of the
Australian Community to transition to processes established
under the treaty, the President must provide a report on such
procedures to the Committee on Foreign Relations and the
Committee on Foreign Affairs.
Condition 7. Congressional oversight.
To ensure Congress has the information necessary to fulfill
its oversight responsibilities, the Secretary of State must
inform the Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of Representatives
promptly of any report, consistent with Section 11(6)(f) of the
Implementing Arrangement, of a material violation of treaty
requirements or procedures by a member of the Approved
Community. Further, the Department of State must brief both
committees regularly regarding issues raised in the Management
Board called for in Section 12(3) of the Implementing
Arrangement, and the resolution of such issues.
Condition 8. Annual report.
The President must submit a report to Congress by March 31,
2011, and annually thereafter, which covers all treaty
activities during the previous calendar year.
Understanding 1. Meaning of the phrase ``identified in.''
The treaty makes occasional reference to matters
``identified in'' the Implementing Arrangement, where in fact
the Implementing Arrangement merely says that the Management
Plan will specify these matters. Understanding (1) is intended
to make clear that the Senate was aware of, and did not object
to, that disconnect.
Understanding 2. Cooperative programs with exempt and non-exempt
defense articles.
This understanding makes clear the view of the United
States that if a cooperative program is mutually determined,
consistent with Section 2(2)(e) of the Implementing
Arrangement, to be within the Scope of the treaty pursuant to
Article 3(1)(b) of the treaty despite involving Defense
Articles that are exempt from the Scope of the treaty pursuant
to Article 3(2) of the treaty, the exempt Defense Articles
shall remain exempt from the Scope of the treaty and the treaty
shall apply only to non-exempt Defense Articles required for
the program.
Understanding 3. Investigations and reports of alleged violations.
This understanding makes clear that Article 10(3)(f) of the
Implementing Arrangement does not detract in any way from the
obligation in Article 13(3) of the treaty for each Party to
``promptly investigate all suspected violations and reports of
alleged violations of the procedures established pursuant to
this treaty,'' and to ``promptly inform the other Party of the
results of such investigations.''
Understanding 4. Exempt defense articles.
This understanding makes clear that if one Party to the
treaty exempts a type of Defense Articles from the scope of the
treaty pursuant to Article 3(2) of the treaty, then Defense
Articles of that type will be treated as exempt by both Parties
to the treaty.
Understanding 5. Intermediate consignees.
This understanding makes clear that any intermediate
consignee of an Export from the United States under the treaty
must be a member of the Approved Community or otherwise
approved by the United States Government. Accordingly, third-
country persons will not normally be responsible for
transporting Exports under the treaty.
Understanding 6. Scope of treaty exemption
This understanding conveys the interpretation of the United
States that the treaty does not exempt any person or entity
from any United States statutory and regulatory requirements,
including any requirements of licensing or authorization, other
than those included in the ITAR, as modified or amended. The
United States interprets the term ``license or other written
authorization'' in Article 2 and the term ``licenses or other
authorizations'' in Article 6(1), as these terms apply to the
United States, and the term ``prior written authorization by
the United States Government'' in Article 7, to refer only to
such licenses, licensing requirements, and other authorizations
as are required or issued by the United States pursuant to the
ITAR, as modified or amended; and the United States interprets
the reference to ``the applicable licensing requirements and
the implementing regulations of the United States Arms Export
Control Act'' in Article 13(1) to refer only to the applicable
licensing requirements under the ITAR, as modified or amended.
Among other things, the treaty does not modify or amend the
authorities related to the permanent import of defense articles
and services set out in Article 38(a)(1) of the AECA (22 U.S.C.
2778).
Declaration 1. Self-execution.
This declaration states that the treaty is not self-
executing in the United States, notwithstanding the statement
in the preamble to the contrary. The declaration represents the
shared understanding of the committee and the executive branch.
(The executive branch conveyed its position on this matter in a
response to a question for the record submitted on September
20, 2010.) The treaty will be implemented in the United States
through legislation and regulations thereunder.
The committee notes that the inclusion in a treaty of a
statement on the purported self-executing nature of the treaty
is highly unusual--perhaps unprecedented--and is contrary to
the longstanding practice that such matters are determined
through the shared understanding of the Senate and the
executive branch. The committee strongly discourages the
executive branch from including such provisions in future
treaties.
Declaration 2. Private rights.
This declaration makes clear that the treaty does not
confer private rights enforceable in United States courts.
Declaration 3. Intellectual property rights.
This declaration makes clear that no liability will be
incurred by or attributed to the United States Government in
connection with any possible infringement of privately owned
patent or proprietary rights, either domestic or foreign, by
reason of the United States Government's permitting Exports or
Transfers or its approval of Re-exports or Re-transfers under
the treaty.
VIII. Text of Resolutions of Advice and
Consent to Ratification
THE U.S.-UK DEFENSE TRADE COOPERATION TREATY
Resolved (two-thirds of the Senators present concurring
therein),
SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO CONDITIONS,
UNDERSTANDINGS AND DECLARATIONS.
The Senate advises and consents to the ratification of the
Treaty with the United Kingdom Concerning Defense Trade
Cooperation (as defined in section 5 of this resolution),
subject to the conditions in section 2, the understandings in
section 3 and the declarations in section 4.
SECTION 2. CONDITIONS.
The Senate's advice and consent to the ratification of the
Treaty with the United Kingdom Concerning Defense Trade
Cooperation is subject to the following conditions, which shall
be binding upon the President:
(1) United States Preparation for Treaty Implementation.
(A) At least 15 days before any exchange of notes pursuant
to Article 20 of the Treaty, the President shall submit to the
Congress a report--
(i) describing steps taken to ensure that the
Executive branch and United States industry are
prepared to comply with Treaty requirements;
(ii) analyzing the implications of the Treaty, and
especially of Article 3(3) of the Treaty, for the
protection of intellectual property rights of United
States persons;
(iii) explaining what steps the United States
Government is taking and will take to combat improper
or illegal intangible exports (i.e., exports as defined
in part 120.17(a)(4) of title 22, Code of Federal
Regulations) under the Treaty; and
(iv) setting forth the issues to be addressed in the
Management Plan called for by Section 12(3)(f) of the
Implementing Arrangement and the procedures that are
expected to be adopted in that Plan.
(B) Before any exchange of notes pursuant to Article 20 of
the Treaty, the President shall submit to the Congress a
certification that changes to the International Traffic in Arms
Regulations (parts 120-130 of title 22, Code of Federal
Regulations) have been published in the Federal Register
pursuant to the Arms Export Control Act, as appropriate, that
would, upon entry into force of the Treaty,--
(i) make clear the legal obligation for any person
involved in an Export, Re-export, Transfer, or Re-
transfer under the Treaty to comply with all
requirements in the revised International Traffic in
Arms Regulations, including by taking all reasonable
steps to ensure the accuracy of information received
from a member of the Approved Community that is party
to an Export, Re-export, Transfer, or Re-transfer under
the Treaty;
(ii) make clear the legal obligation for Approved
Community members to comply with United States
Government instructions and requirements regarding
United States Defense Articles added to the list of
exempt Defense Articles pursuant to Article 3(2) of the
Treaty;
(iii) limit a person from being a member of the
United States Community, pursuant to Article 5(2) of
the Treaty, if that person is generally ineligible to
export pursuant to section 120.1(c) of title 22, Code
of Federal Regulations; and
(iv) require any nongovernmental entity that ceases
to be included in the United States Community to comply
with instructions from authorized United States
Government officials and to open its records of
transactions under the Treaty to inspection by United
States Government and, as appropriate, authorized
United Kingdom Government officials pursuant to Article
12 of the Treaty.
(C) Before any exchange of notes pursuant to Article 20 of
the Treaty, the President shall submit to the Congress--
(i) a certification that appropriate mechanisms have
been established to identify, in connection with the
process for determining whether a nongovernmental
entity is in the United States Community pursuant to
Article 5(2) of the Treaty, persons who meet the
criteria in section 38(g)(1) of the Arms Export Control
Act (22 U.S.C. 2778(g)(1));
(ii) a certification that appropriate mechanisms have
been established to verify that nongovernmental
entities in the United States that Export pursuant to
the Treaty are eligible to export Defense Articles
under United States law and regulation as required by
Article 5(2) of the Treaty;
(iii) a certification that United States Department
of Homeland Security personnel at United States ports--
(a) have prompt access to a State Department
database containing registered exporters,
freight forwarders and consignees, and watch
lists regarding United States companies; and
(b) are prepared to prevent attempts to
export pursuant to the Treaty by United States
persons who are not eligible to export Defense
Articles under United States law or regulation,
even if such person has registered with the
United States Government;
(iv) a certification that the Secretary of Defense
has promulgated appropriate changes to the National
Industrial Security Program Operating Manual and to
Regulation DoD 5200.1-R, ``Information Security
Program,'' and has issued guidance to industry
regarding marking and other Treaty compliance
requirements; and
(v) a certification that a capability has been
established to conduct post-shipment verification, end-
use/end-user monitoring and related security audits for
Exports under the Treaty, accompanied by a report
setting forth the legal authority, staffing and budget
provided for this capability and any further Executive
branch or congressional action recommended to ensure
its effective implementation.
(2) Treaty Partner Preparation for Treaty Implementation.
Before any exchange of notes pursuant to Article 20 of the
Treaty, the President shall certify to Congress that the
Government of the United Kingdom has promulgated all necessary
regulatory changes, including:
(A) changes to export control regulations, setting
forth a Treaty-specific Open General Export License
(OGEL);
(B) changes to the United Kingdom Security Policy
Framework and related security regulations for
Government and United Kingdom Industry; and
(C) changes to the MOD Classified Material Release
Procedure (F680), to take account of Treaty Re-exports
and Re-transfers.
(3) Joint Operations, Programs and Projects.
The Secretary of State shall keep the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives informed of the lists of combined
military and counter-terrorism operations developed pursuant to
Article 3(1)(a) of the Treaty; cooperative security and defense
research, development, production, and support programs
developed pursuant to Article 3(1)(b) of the Treaty; and
specific security and defense projects developed pursuant to
article 3(1)(c) of the Treaty.
(4) Exempted Defense Articles.
(A) The President may remove a Defense Article from
the list of Defense Articles exempt from the Scope of
the Treaty, if such removal is not barred by United
States law, 30 days after the President informs the
Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of
Representatives of such proposed removal.
(B) When a Defense Article is added to the list of
Defense Articles exempt from the Scope of the Treaty,
the Secretary of State shall provide a copy of the
Federal Register Notice delineating the policies and
procedures that will govern the control of such Defense
Article, consistent with Section 4(7) of the
Implementing Arrangement, as well as an explanation of
the reasons for adopting those policies and procedures,
to the Committee on Foreign Relations of the Senate and
the Committee on Foreign Affairs of the House of
Representatives within five days of the issuance of
such Notice.
(5) Changes to the Definition of the Territory of the
United Kingdom.
(A) The Secretary of State shall inform the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives within
15 days of the initiation of consultations with the
United Kingdom concerning the inclusion of any
additional territory or territories in the definition
of ``Territory of the United Kingdom'' for the purposes
of Article 1(8) of the Treaty, and shall inform the
Committees within 15 days of receipt through diplomatic
channels of notice that a territory or group of
territories has been added to the definition of
``Territory of the United Kingdom'' for the purposes of
Article 1(8) of the Treaty.
(B) The Secretary of State shall consult with the
Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of
Representatives before approving any addition to the
United Kingdom Community of a non-governmental entity
or facility outside the territory of England, Scotland,
Wales, or Northern Ireland.
(6) Approved Community Membership.
(A) If sanctions are in effect against a person in
the United Kingdom Community pursuant to section
73(a)(2)(B) or section 81 of the Arms Export Control
Act (22 U.S.C. 2797b(a)(2)(B) or 2798), the United
States shall raise the matter pursuant to Article 4(2)
of the Treaty and Section 7(9) of the Implementing
Arrangement.
(B) The Secretary of State shall inform the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives not
later than 5 days before the U.S. Government agrees to
the initial inclusion in the United Kingdom Community
of a nongovernmental United Kingdom entity, if the
Department of State is aware that the entity, or any
one or more of its relevant senior officers or
officials:
(i) Has been convicted of violating a statute
cited in paragraph 38(g)(1) of the Arms Export
Control Act (22 U.S.C. 2778(g)(1)); or
(ii) is, or would be if that person were a
United States person,
(a) ineligible to contract with any
agency of the U.S. Government;
(b) ineligible to receive a license
or other form of authorization to
export from any agency of the U.S.
Government; or
(c) ineligible to receive a license
or any form of authorization to import
defense articles or defense services
from any agency of the U.S. Government.
(C) The Secretary of State shall inform and consult
with the Committee on Foreign Relations of the Senate
and the Committee on Foreign Affairs of the House of
Representatives not later than 5 days after the United
States Government agrees to the continued inclusion in
the United Kingdom Community of a nongovernmental
United Kingdom entity, if the Department is aware that
the entity, or any one or more of its relevant senior
officers or officials, raises one or more of the
concerns referred to in paragraph (B).
(7) Transition Policies and Procedures.
(A) No fewer than 15 days before formally
establishing the procedures called for in Section 5(5)
of the Implementing Arrangement, the President shall
provide to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the
House of Representatives a report concerning the
policies and procedures developed to govern the
transition to the application of the Treaty, pursuant
to Article 3(3) of the Treaty, of Defense Articles
acquired and delivered under the Foreign Military Sales
program.
(B) No fewer than 15 days before formally
establishing the procedures called for in Section 8(2)
of the Implementing Arrangement, the President shall
provide to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the
House of Representatives a report concerning the
policies and procedures developed to govern the members
of the United Kingdom Community wishing to transition
to the processes established under the Treaty, pursuant
to Article 14(2) of the Treaty, from the requirements
of a United States Government export license or other
authorization.
(8) Congressional Oversight.
(A) The Secretary of State shall inform the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives
promptly of any report, consistent with Section
11(4)(b)(vi) of the Implementing Arrangement, of a
material violation of Treaty requirements or procedures
by a member of the Approved Community.
(B) The Department of State shall brief the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives
regularly regarding issues raised in the Management
Board called for in Section 12(3) of the Implementing
Arrangement, and the resolution of such issues.
(9) Annual Report.
Not later than March 31, 2011, and annually thereafter, the
President shall submit to Congress a report, which shall cover
all Treaty activities during the previous calendar year. This
report shall include:
(A) a summary of the amount of Exports under the
Treaty and of Defense Articles transitioned into the
Treaty, with an analysis of how the Treaty is being
used;
(B) a list of all political contributions, gifts,
commissions and fees paid, or offered or agreed to be
paid, by any person in connection with Exports of
Defense Articles under the Treaty in order to solicit,
promote, or otherwise to secure the conclusion of such
sales;
(C) any action to remove from the United Kingdom
Community a nongovernmental entity or facility
previously engaged in activities under the Treaty,
other than due to routine name or address changes or
mergers and acquisitions;
(D) any concerns relating to infringement of
intellectual property rights that were raised to the
President or an Executive branch Department or Agency
by Approved Community members, and developments
regarding any concerns that were raised in previous
years;
(E) a description of any relevant investigation and
each prosecution pursued with respect to activities
under the Treaty, the results of such investigations or
prosecutions and of such investigations and
prosecutions that continued over from previous years,
and any shortfalls in obtaining prompt notification
pursuant to Article 13(3) of the Treaty or in
cooperation between the Parties pursuant to Article
13(3) and (4) of the Treaty;
(F) a description of any post-shipment verification,
end-user/end-use monitoring, or other security activity
related to Treaty implementation conducted during the
year, the purposes of such activity and the results
achieved; and
(G) any Office of Inspector General activity bearing
upon Treaty implementation conducted during the year,
any resultant findings or recommendations, and any
actions taken in response to current or past findings
or recommendations.
SECTION 3. UNDERSTANDINGS.
The Senate's advice and consent to the ratification of the
Treaty with the United Kingdom Concerning Defense Trade
Cooperation is subject to the following understandings, which
shall be included in the instrument of ratification:
(1) Meaning of the Phrase ``Identified in.''
It is the understanding of the United States that the
phrase ``identified in'' in the Treaty shall be interpreted as
meaning ``identified pursuant to.''
(2) Meaning of the Word ``Scope.''
It is the understanding of the United States that the word
``Scope'' in the Treaty shall be interpreted as meaning ``the
Treaty's coverage as identified in Article 3.''
(3) Cooperative Programs With Exempt and Non-Exempt Defense
Articles.
It is the understanding of the United States that if a
cooperative program is mutually determined, consistent with
Section 2(2)(e) of the Implementing Arrangement, to be within
the Scope of the Treaty pursuant to Article 3(1)(b) of the
Treaty despite involving Defense Articles that are exempt from
the Scope of the Treaty pursuant to Article 3(2) of the Treaty,
the exempt Defense Articles shall remain exempt from the Scope
of the Treaty and the Treaty shall apply only to non-exempt
Defense Articles required for the program.
(4) Investigations and Reports of Alleged Violations.
It is the understanding of the United States that the words
``as appropriate'' in Section 10(3)(f) of the Implementing
Arrangement do not detract in any way from the obligation in
Article 13(3) of the Treaty, that ``Each Party shall promptly
investigate all suspected violations and reports of alleged
violations of the procedures established pursuant to this
Treaty, and shall promptly inform the other Party of the
results of such investigations.''
(5) Exempt Defense Articles.
It is the understanding of the United States that if one
Party to the Treaty exempts a type of Defense Articles from the
scope of the Treaty pursuant to Article 3(2) of the Treaty,
then Defense Articles of that type will be treated as exempt by
both Parties to the Treaty.
(6) Intermediate Consignees.
It is the understanding of the United States that any
intermediate consignee of an Export from the United States
under the Treaty must be a member of the Approved Community or
otherwise approved by the United States Government.
(7) Scope of Treaty Exemption.
The United States interprets the Treaty not to exempt any
person or entity from any United States statutory and
regulatory requirements, including any requirements of
licensing or authorization, other than those included in the
International Traffic in Arms Regulations, as modified or
amended. Accordingly, the United States interprets the term
'license or other written authorization' in Article 2 and the
term `licenses or other authorizations' in Article 6(1), as
these terms apply to the United States, and the term 'prior
written authorization by the United States Government' in
Article 7, to refer only to such licenses, licensing
requirements, and other authorizations as are required or
issued by the United States pursuant to the International
Traffic in Arms Regulations, as modified or amended; and the
United States interprets the reference to 'the applicable
licensing requirements and the implementing regulations of the
United States Arms Export Control Act' in Article 13(1) to
refer only to the applicable licensing requirements under the
International Traffic in Arms Regulations, as modified or
amended.
SECTION 4. DECLARATIONS.
The Senate's advice and consent to the ratification of the
Treaty with the United Kingdom Concerning Defense Trade
Cooperation is subject to the following declarations:
(1) Self-execution.
This Treaty is not self-executing in the United States,
notwithstanding the statement in the preamble to the contrary.
(2) Private Rights.
This Treaty does not confer private rights enforceable in
United States courts.
(3) Intellectual Property Rights.
No liability will be incurred by or attributed to the
United States Government in connection with any possible
infringement of privately owned patent or proprietary rights,
either domestic or foreign, by reason of the United States
Government's permitting Exports or Transfers or its approval of
Re-exports or Re-transfers under the Treaty.
SECTION 5. DEFINITIONS.
As used in this resolution:
(1) The terms ``Treaty with the United Kingdom Concerning
Defense Trade Cooperation'' and ``Treaty'' mean the Treaty
between the Government of the United States of America and the
Government of the United Kingdom of Great Britain and Northern
Ireland Concerning Defense Trade Cooperation, done at
Washington and London on June 21 and 26, 2007.
(2) The terms ``Implementing Arrangement Pursuant to the
Treaty'' and ``Implementing Arrangement'' mean the Implementing
Arrangement Pursuant to the Treaty between the Government of
the United States of America and the Government of the United
Kingdom of Great Britain and Northern Ireland Concerning
Defense Trade Cooperation, which was signed in Washington on
February 14, 2008.
(3) The terms ``Defense Articles,'' ``Export,'' ``Re-
export,'' ``Re-transfer,'' ``Transfer,'' ``Approved
Community,'' ``United States Community,'' ``United Kingdom
Community,'' and ``Territory of the United Kingdom'' have the
meanings given to them in Article 1 of the Treaty.
(4) The terms ``Management Board'' and ``Management Plan''
have the meanings given to them in Section 1 of the
Implementing Arrangement.
(5) The terms ``person'' and ``foreign person'' have the
meaning given to them by section 38(g)(9) of the Arms Export
Control Act (22 U.S.C. 2778(g)(9)). The term ``U.S. person''
has the meaning given to it by part 120.15 of title 22, Code of
Federal Regulations.
----------
THE U.S.-AUSTRALIA DEFENSE TRADE COOPERATION TREATY
Resolved (two-thirds of the Senators present concurring
therein),
SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO CONDITIONS,
UNDERSTANDINGS AND DECLARATIONS.
The Senate advises and consents to the ratification of the
Treaty with Australia Concerning Defense Trade Cooperation (as
defined in section 5 of this resolution), subject to the
conditions in section 2, the understandings in section 3 and
the declarations in section 4.
SECTION 2. CONDITIONS.
The Senate's advice and consent to the ratification of the
Treaty with Australia Concerning Defense Trade Cooperation is
subject to the following conditions, which shall be binding
upon the President:
(1) United States Preparation for Treaty Implementation.
(A) At least 15 days before any exchange of notes
pursuant to Article 20 of the Treaty, the President
shall submit to the Congress a report--
(i) describing steps taken to ensure that the
Executive branch and United States industry are
prepared to comply with Treaty requirements;
(ii) analyzing the implications of the
Treaty, and especially of Article 3(3) of the
Treaty, for the protection of intellectual
property rights of United States persons;
(iii) explaining what steps the United States
Government is taking and will take to combat
improper or illegal intangible exports (i.e.,
exports as defined in part 120.17(a)(4) of
title 22, Code of Federal Regulations) under
the Treaty; and
(iv) setting forth the issues to be addressed
in the Management Plan called for by Section
12(3)(f) of the Implementing Arrangement and
the procedures that are expected to be adopted
in that Plan.
(B) Before any exchange of notes pursuant to Article
20 of the Treaty, the President shall submit to the
Congress a certification that changes to the
International Traffic in Arms Regulations (parts 120-
130 of title 22, Code of Federal Regulations) have been
published in the Federal Register pursuant to the Arms
Export Control Act, as appropriate, that would, upon
entry into force of the Treaty,--
(i) make clear the legal obligation for any
person involved in an Export, Re-export,
Transfer, or Re-transfer under the Treaty to
comply with all requirements in the revised
International Traffic in Arms Regulations,
including by taking all reasonable steps to
ensure the accuracy of information received
from a member of the Approved Community that is
party to an Export, Re-export, Transfer, or Re-
transfer under the Treaty;
(ii) make clear the legal obligation for
Approved Community members to comply with
United States Government instructions and
requirements regarding United States Defense
Articles added to the list of exempt Defense
Articles pursuant to Article 3(2) of the
Treaty;
(iii) limit a person from being a member of
the United States Community, pursuant to
Article 5(2) of the Treaty, if that person is
generally ineligible to export pursuant to
section 120.1(c) of title 22, Code of Federal
Regulations; and
(iv) require any nongovernmental entity that
ceases to be included in the United States
Community to comply with instructions from
authorized United States Government officials
and to open its records of transactions under
the Treaty to inspection by United States
Government and, as appropriate, authorized
Australian Government officials pursuant to
Article 12 of the Treaty.
(C) Before any exchange of notes pursuant to Article
20 of the Treaty, the President shall submit to the
Congress--
(i) a certification that appropriate
mechanisms have been established to identify,
in connection with the process for determining
whether a nongovernmental entity is in the
United States Community pursuant to Article
5(2) of the Treaty, persons who meet the
criteria in section 38(g)(1) of the Arms Export
Control Act (22 U.S.C. 2778(g)(1));
(ii) a certification that appropriate
mechanisms have been established to verify that
nongovernmental entities in the United States
that Export pursuant to the Treaty are eligible
to export Defense Articles under United States
law and regulation as required by Article 5(2)
of the Treaty;
(iii) a certification that United States
Department of Homeland Security personnel at
United States ports--
(a) have prompt access to a State
Department database containing
registered exporters, freight
forwarders and consignees, and watch
lists regarding United States
companies; and
(b) are prepared to prevent attempts
to export pursuant to the Treaty by
United States persons who are not
eligible to export Defense Articles
under United States law or regulation,
even if such person has registered with
the United States Government;
(iv) a certification that the Secretary of
Defense has promulgated appropriate changes to
the National Industrial Security Program
Operating Manual and to Regulation DoD 5200.1-
R, ``Information Security Program,'' and has
issued guidance to industry regarding marking
and other Treaty compliance requirements; and
(v) a certification that a capability has
been established to conduct post-shipment
verification, end-use/end-user monitoring and
related security audits for Exports under the
Treaty, accompanied by a report setting forth
the legal authority, staffing and budget
provided for this capability and any further
Executive branch or congressional action
recommended to ensure its effective
implementation.
(2) Treaty Partner Preparation for Treaty Implementation.
Before any exchange of notes pursuant to Article 20 of the
Treaty, the President shall certify to Congress that the
Government of Australia has--
(A) enacted legislation to strengthen generally its
controls over defense and dual-use goods, including
controls over intangible transfers of controlled
technology and brokering of controlled goods,
technology, and services, and setting forth:
(i) the criteria for entry into the
Australian Community and the conditions
Australian Community members must abide by to
maintain membership, including personnel,
information and facilities security
requirements;
(ii) the record-keeping and notification and
reporting requirements under the Treaty;
(iii) the handling, marking and
classification requirements for United States
and Australian Defense Articles Exported or
Transferred under the Treaty;
(iv) the requirements for Exports and
Transfers of United States Defense Articles
outside the Approved Community or to a third
country;
(v) the rules for handling United States
Defense Articles that are added to or removed
from the list of items exempted from Treaty
application;
(vi) the rules for transitioning into and out
of the Australian Community;
(vii) auditing, monitoring and investigative
powers for Commonwealth officials and powers to
allow Commonwealth officials to perform post-
shipment verifications and end-use/end-user
monitoring; and
(viii) offenses and penalties, and
administrative requirements, necessary for the
enforcement of the Treaty and its Implementing
Arrangement; and
(B) promulgated regulatory changes setting forth:
(i) the criteria for entry into the
Australian Community, and terms for maintaining
Australian Community membership;
(ii) the criteria for individuals to become
authorized to access United States Defense
Articles received pursuant to the Treaty;
(iii) benefits stemming from Australian
Community membership, including a framework for
license-free trade with the United States in
classified or controlled items falling within
the scope of the Treaty;
(iv) the conditions Australian Community
members must abide by to maintain membership,
including:
(a) record-keeping and notification
requirements;
(b) marking and classification
requirements for defense articles
Exported or Transferred under the
Treaty;
(c) requirements for the Re-transfer
to non-Approved Community members and
Re-export to a third country of defense
articles; and
(d) maintaining security standards
and measures articulated in Defense
protective security policy to protect
defense articles pursuant to the
Treaty;
(v) provisions to enforce the procedures
established pursuant to the Treaty, including
auditing and monitoring powers for Australian
Department of Defence officials and powers to
allow Department of Defence officials to
perform post-shipment verifications and end-
use/end-user monitoring;
(vi) offenses and penalties, including
administrative and criminal penalties and
suspension and termination from the Australian
Community, to enforce the provisions of the
Treaty; and
(vii) requirements and standards for
transition into or out of the Australian
Community and Treaty framework.
(3) Joint Operations, Programs and Projects.
The Secretary of State shall keep the Committee on Foreign
Relations of the Senate and the Committee on Foreign Affairs of
the House of Representatives informed of the lists of combined
military and counter-terrorism operations developed pursuant to
Article 3(1)(a) of the Treaty; cooperative security and defense
research, development, production, and support programs
developed pursuant to Article 3(1)(b) of the Treaty; and
specific security and defense projects developed pursuant to
article 3(1)(c) of the Treaty.
(4) Exempted Defense Articles.
(A) The President may remove a Defense Article from
the list of Defense Articles exempt from the Scope of
the Treaty, if such removal is not barred by United
States law, 30 days after the President informs the
Committee on Foreign Relations of the Senate and the
Committee on Foreign Affairs of the House of
Representatives of such proposed removal.
(B) When a Defense Article is added to the list of
Defense Articles exempt from the Scope of the Treaty,
the Secretary of State shall provide a copy of the
Federal Register Notice delineating the policies and
procedures that will govern the control of such Defense
Article, consistent with Section 4(7) of the
Implementing Arrangement, as well as an explanation of
the reasons for adopting those policies and procedures,
to the Committee on Foreign Relations of the Senate and
the Committee on Foreign Affairs of the House of
Representatives within five days of the issuance of
such Notice.
(5) Approved Community Membership.
(A) If sanctions are in effect against a person in
the Australian Community pursuant to section
73(a)(2)(B) or section 81 of the Arms Export Control
Act (22 U.S.C. 2797b(a)(2)(B) or 2798), the United
States shall raise the matter pursuant to Article 4(2)
of the Treaty and Section 6(9) of the Implementing
Arrangement.
(B) The Secretary of State shall inform the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives not
later than 5 days before the U.S. Government agrees to
the initial inclusion in the Australian Community of a
nongovernmental Australian entity, if the Department of
State is aware that the entity, or any one or more of
its relevant senior officers or officials:
(i) Has been convicted of violating a statute
cited in paragraph 38(g)(1) of the Arms Export
Control Act (22 U.S.C. 2778(g)(1)); or
(ii) is, or would be if that person were a
United States person,
(a) ineligible to contract with any
agency of the U.S. Government;
(b) ineligible to receive a license
or other form of authorization to
export from any agency of the U.S.
Government; or
(c) ineligible to receive a license
or any form of authorization to import
defense articles or defense services
from any agency of the U.S. Government.
(C) The Secretary of State shall inform and consult
with the Committee on Foreign Relations of the Senate
and the Committee on Foreign Affairs of the House of
Representatives not later than 5 days after the United
States Government agrees to the continued inclusion in
the Australian Community of a nongovernmental
Australian entity, if the Department is aware that the
entity, or any one or more of its relevant senior
officers or officials, raises one or more of the
concerns referred to in paragraph (B).
(6) Transition Policies and Procedures.
(A) No fewer than 15 days before formally
establishing the procedures called for in Section 5(5)
of the Implementing Arrangement, the President shall
provide to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the
House of Representatives a report concerning the
policies and procedures developed to govern the
transition to the application of the Treaty, pursuant
to Article 3(3) of the Treaty, of Defense Articles
acquired and delivered under the Foreign Military Sales
program.
(B) No fewer than 15 days before formally
establishing the procedures called for in Section 7(2)
of the Implementing Arrangement, the President shall
provide to the Committee on Foreign Relations of the
Senate and the Committee on Foreign Affairs of the
House of Representatives a report concerning the
policies and procedures developed to govern the members
of the Australian Community wishing to transition to
the processes established under the Treaty, pursuant to
Article 14(2) of the Treaty, from the requirements of a
United States Government export license or other
authorization.
(7) Congressional Oversight.
(A) The Secretary of State shall inform the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives
promptly of any report, consistent with Section
11(6)(f) of the Implementing Arrangement, of a material
violation of Treaty requirements or procedures by a
member of the Approved Community.
(B) The Department of State shall brief the Committee
on Foreign Relations of the Senate and the Committee on
Foreign Affairs of the House of Representatives
regularly regarding issues raised in the Management
Board called for in Section 12(3) of the Implementing
Arrangement, and the resolution of such issues.
(8) Annual Report.
Not later than March 31, 2011, and annually thereafter, the
President shall submit to Congress a report, which shall cover
all Treaty activities during the previous calendar year. This
report shall include:
(A) a summary of the amount of Exports under the
Treaty and of Defense Articles transitioned into the
Treaty, with an analysis of how the Treaty is being
used;
(B) a list of all political contributions, gifts,
commissions and fees paid, or offered or agreed to be
paid, by any person in connection with Exports of
Defense Articles under the Treaty in order to solicit,
promote, or otherwise to secure the conclusion of such
sales;
(C) any action to remove from the Australian
Community a nongovernmental entity or facility
previously engaged in activities under the Treaty,
other than due to routine name or address changes or
mergers and acquisitions;
(D) any concerns relating to infringement of
intellectual property rights that were raised to the
President or an Executive branch Department or Agency
by Approved Community members, and developments
regarding any concerns that were raised in previous
years;
(E) a description of any relevant investigation and
each prosecution pursued with respect to activities
under the Treaty, the results of such investigations or
prosecutions and of such investigations and
prosecutions that continued over from previous years,
and any shortfalls in obtaining prompt notification
pursuant to Article 13(3) of the Treaty or in
cooperation between the Parties pursuant to Article
13(3) and (4) of the Treaty;
(F) a description of any post-shipment verification,
end-user/end-use monitoring, or other security activity
related to Treaty implementation conducted during the
year, the purposes of such activity and the results
achieved; and
(G) any Office of Inspector General activity bearing
upon Treaty implementation conducted during the year,
any resultant findings or recommendations, and any
actions taken in response to current or past findings
or recommendations.
SECTION 3. UNDERSTANDINGS.
The Senate's advice and consent to the ratification of the
Treaty with Australia Concerning Defense Trade Cooperation is
subject to the following understandings, which shall be
included in the instrument of ratification:
(1) Meaning of the Phrase ``Identified In.''
It is the understanding of the United States that the
phrase ``identified in'' in the Treaty shall be interpreted as
meaning ``identified pursuant to.''
(2) Cooperative Programs With Exempt and Non-Exempt Defense
Articles.
It is the understanding of the United States that if a
cooperative program is mutually determined, consistent with
Section 2(2)(e) of the Implementing Arrangement, to be within
the Scope of the Treaty pursuant to Article 3(1)(b) of the
Treaty despite involving Defense Articles that are exempt from
the Scope of the Treaty pursuant to Article 3(2) of the Treaty,
the exempt Defense Articles shall remain exempt from the Scope
of the Treaty and the Treaty shall apply only to non-exempt
Defense Articles required for the program.
(3) Investigations and Reports of Alleged Violations.
It is the understanding of the United States that the words
``as appropriate'' in Section 10(3)(f) of the Implementing
Arrangement do not detract in any way from the obligation in
Article 13(3) of the Treaty, that ``Each Party shall promptly
investigate all suspected violations and reports of alleged
violations of the procedures established pursuant to this
Treaty, and shall promptly inform the other Party of the
results of such investigations.''
(4) Exempt Defense Articles.
It is the understanding of the United States that if one
Party to the Treaty exempts a type of Defense Articles from the
scope of the Treaty pursuant to Article 3(2) of the Treaty,
then Defense Articles of that type will be treated as exempt by
both Parties to the Treaty.
(5) Intermediate Consignees.
It is the understanding of the United States that any
intermediate consignee of an Export from the United States
under the Treaty must be a member of the Approved Community or
otherwise approved by the United States Government.
(6) Scope of Treaty Exemption.
The United States interprets the Treaty not to exempt any
person or entity from any United States statutory and
regulatory requirements, including any requirements of
licensing or authorization, other than those included in the
International Traffic in Arms Regulations, as modified or
amended. Accordingly, the United States interprets the term
`license or other written authorization' in Article 2 and the
term `licenses or other authorizations' in Article 6(1), as
these terms apply to the United States, and the term `prior
written authorization by the United States Government' in
Article 7, to refer only to such licenses, licensing
requirements, and other authorizations as are required or
issued by the United States pursuant to the International
Traffic in Arms Regulations, as modified or amended; and the
United States interprets the reference to `the applicable
licensing requirements and the implementing regulations of the
United States Arms Export Control Act' in Article 13(1) to
refer only to the applicable licensing requirements under the
International Traffic in Arms Regulations, as modified or
amended.
SECTION 4. DECLARATIONS.
The Senate's advice and consent to the ratification of the
Treaty with Australia Concerning Defense Trade Cooperation is
subject to the following declarations:
(1) Self-execution.
This Treaty is not self-executing in the United States,
notwithstanding the statement in the preamble to the contrary.
(2) Private Rights.
This Treaty does not confer private rights enforceable in
United States courts.
(3) Intellectual Property Rights.
No liability will be incurred by or attributed to the
United States Government in connection with any possible
infringement of privately owned patent or proprietary rights,
either domestic or foreign, by reason of the United States
Government's permitting Exports or Transfers or its approval of
Re-exports or Re-transfers under the Treaty.
SECTION 5. DEFINITIONS.
As used in this resolution:
(1) The terms ``Treaty with Australia Concerning Defense
Trade Cooperation'' and ``Treaty'' mean the Treaty between the
Government of the United States of America and the Government
of Australia Concerning Defense Trade Cooperation, done at
Sydney, September 5, 2007.
(2) The terms ``Implementing Arrangement Pursuant to the
Treaty'' and ``Implementing Arrangement'' mean the Implementing
Arrangement Pursuant to the Treaty between the Government of
the United States of America and the Government of Australia
Concerning Defense Trade Cooperation, which was signed in
Washington on March 14, 2008.
(3) The terms ``Defense Articles,'' ``Export,'' ``Re-
export,'' ``Re-transfer,'' ``Transfer,'' ``Approved
Community,'' ``United States Community,'' ``Australian
Community,'' and ``Scope'' have the meanings given to them in
Article 1 of the Treaty.
(4) The terms ``Management Board'' and ``Management Plan''
have the meanings given to them in Section 1 of the
Implementing Arrangement.
(5) The terms ``person'' and ``foreign person'' have the
meaning given to them by section 38(g)(9) of the Arms Export
Control Act (22 U.S.C. 2778(g)(9)). The term ``U.S. person''
has the meaning given to it by part 120.15 of title 22, Code of
Federal Regulations.
IX. Letter From Senators Levin and Warner
X. Hearing on the Defense Trade Cooperation Treaties, December 10, 2009
TREATIES
----------
THURSDAY, DECEMBER 10, 2009
U.S. Senate,
Committee on Foreign Relations,
Washington, DC.
The committee met, pursuant to notice, at 10:04 a.m., in
room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry
(chairman of the committee) presiding.
Present: Senators Kerry, Feingold, Shaheen, Kaufman, and
Lugar.
OPENING STATEMENT OF HON. JOHN KERRY,
U.S. SENATOR FROM MASSACHUSETTS
The Chairman. The hearing will come to order. Thank you all
for being here. I apologize for a slightly late start.
Today, obviously, we meet to consider treaties with two of
our closest allies, the United Kingdom and Australia. These are
treaties that would change how our country controls arms
exports and shares military technology. The committee actually
first took testimony on these treaties in May of last year, so
this is the second hearing that we are devoting to this, and
there's a reason for that.
The commercial exports of U.S. defense articles and know-
how currently require a license from the State Department, as
do later retransfers to a third party or country. If an export
or retransfer is above a certain value, the Department has to
inform Congress prior to issuing a license. During the time
that this has been in effect, Congress has never enacted a
resolution to block a proposed sale. But our authority to do so
gives Congress a voice in the transactions with significant
implications for our national security.
America maintains arms export controls so that we can keep
our weapons and technology from falling into the wrong hands to
the best of our ability to do so. We do not want American
weapons to contribute to human rights abuses, fuel
destabilizing regional conflicts, or be used against us or our
allies. And we reject any arms deal that violates our
international obligations.
Our arms control export system imposes administrative
burdens and delays that have wound up hindering legitimate
trade and defense cooperation. And this has been a major issue
with our friends, and particularly in this case with Great
Britain and Australia. It is particularly hindering in the case
of cooperation required for joint weapons development programs.
And sometimes, frankly, it makes sense to try to streamline the
process.
We have done this under existing law for many arms exports
to Canada, a close ally whose export controls largely mirror
our own. It is hard to make an argument that either the United
Kingdom or Australia don't rise to the same level of friendship
and the same relationship with the United States as Canada.
We have important joint defense projects with both
Australia and Great Britain--the United Kingdom--and the
overwhelming majority of all arms export license requests
involving them are approved. Our countries' forces obviously
serve and die together in Afghanistan and elsewhere.
Australia and the United Kingdom's laws, however, differ
from ours. And neither country, for different reasons, can
guarantee an iron-clad control under its export control law
over retransfers of U.S. defense articles or technology to
third or fourth parties.
The United Kingdom's European Union treaty obligations, for
example, prevent it from meeting the requirements of United
States law for an exemption like Canada's. Therefore, the
treaties before us seek to incorporate a new approach to get
rid of these hurdles between us, streamline this operation and
behave the way good friends ought to behave.
For arms exports relating to an approved set of joint
projects or operations, these treaties allow all but the most
sensitive U.S. arms and know-how to be exported without a case-
by-case State Department approval.
Within the United Kingdom and Australia, only government
entities and jointly approved--jointly approved--private
companies and facilities will have access to weapons and know-
how. And the United Kingdom or Australia will treat exports and
transfers under the treaty not just as defense articles or
defense services, but also as classified information.
This means that British or Australian users will need a
security clearance and they will be bound by security standards
applied to classified information. If the United States export
is improperly handled or diverted, those found to have done so
will face prosecution under United Kingdom or Australian
national security laws, as well as export control laws.
The treaties leave a number of blanks that need to be
filled in, so our committee has pressed the Executive to
provide that additional information. At last year's hearing,
the State Department was able to promise that draft regulations
would be provided; then the Department of Justice warned that
the committee needed to evaluate the initial State Department
draft for the possibility that it might imperil prosecutions of
individuals or companies who violate the treaties' terms. And
so that's the process we've been engaged in.
In the intervening year, some significant progress has been
made. The State Department produced draft regulations that
reassured the Justice Department, which then told the committee
that implementing legislation would not be needed to enable
them to pursue court action against violators.
On the basis of this progress, we are now holding today's
hearing; and I intend to move forward in drafting and passing a
resolution of advice and consent to ratification.
Now, nobody in any treaty like this can predict with
certainty exactly how every step of the actual work in practice
is going to unfold. But I am convinced that the political and
national defense benefits of advancing these treaties outweighs
any risks.
We will have some work to do after the Senate acts with
respect to authorities and protections concerning arms export
established by existing law. And we can remedy, I believe,
those things as we do go forward, and I think people are
comfortable with that notion. But I see no need to hold up the
treaties' entry into force while we do those ongoing tweaks, if
you will. We should move ahead and trust that the benefits of
this relationship with both the United Kingdom and Australia
far outweigh any of these rather marginal questions that, I
think, exist.
I'm pleased to welcome today Andrew Shapiro, the Assistant
Secretary of State for Political-Military Affairs. He's well
known to many of us, here, from his years as, then-Senator
Clinton's national defense aide.
And Associate Deputy Attorney General James Baker is a
career Justice Department official, and well-known for his
exemplary service as head of the Office of Intelligence Policy
and Review.
And gentlemen, we welcome both of you here, and look
forward to your testimonies.
Before that, I recognize Senator Lugar.
STATEMENT OF HON. RICHARD G. LUGAR,
U.S. SENATOR FROM INDIANA
Senator Lugar. Well, thank you very much, Mr. Chairman.
Today, as you pointed out, we consider pending defense
trade treaties with the United Kingdom and Australia. And I
join you in welcoming our witnesses, Mr. Andrew Shapiro,
Assistant Secretary of State for Political-Military Affairs,
and Mr. James Baker, Associate Deputy Attorney General.
This, as you also pointed out, is the committee's second
hearing on these treaties. During our first hearing in May
2008, I noted that I supported the goal of these treaties and
believed that, if carefully implemented, they could enhance our
national security. During 2008, however, the Bush
administration did not resolve many questions about the
treaties' implementation and enforcement. Also unresolved were
questions about how the treaties would affect congressional
oversight and the Senate's role in the treaty-making process.
In 2003, the Bush administration requested waivers to
provisions in the Arms Export Control Act for bilateral
agreements with the United Kingdom and Australia. Those
bilateral agreements would have created lists of individuals in
the United Kingdom and Australia who qualified to receive
unlicensed exports from the United States of what the Bush
administration called ``low-sensitivity, unclassified defense
items.''
Then, in 2007, the Bush administration negotiated and
submitted the treaties that we are discussing today. The
treaties loosen restrictions more than the 2003 bilateral
agreements. They create a set of new compliance procedures,
permit exports of both classified and unclassified items, and
apply to both commercial arms sales and to government sales
under the Foreign Military Sales Program.
They also rely on ``implementing arrangements'' that are
not being submitted for advice and consent, even though these
arrangements govern the operation of the treaties.
Among the major issues considered at the hearing in 2008
were proposed amendments to the International Traffic in Arms
Regulations to implement the treaties in the United States.
President Bush promised in his letter transmitting the treaties
to the Senate to provide these amendments to us. The final
draft regulations, however, did not arrive in the Senate until
September 2008.
Unfortunately, neither the implementing arrangements, nor
the regulations clarified how enforcement would work. The State
Department subsequently stated that the treaties would create a
``safe harbor'' for defense trade. The executive branch
insisted it had created a strong system for ensuring
enforcement and compliance by relying on classification laws in
the United Kingdom and Australia. But it is not clear how
enforcement will occur in the United States under a safe
harbor.
We look forward to learning from our witnesses today how
this safe harbor will work and how it will ensure enforcement
in the United States.
A purpose of these treaties is to eliminate export licenses
for defense articles being sold to the United Kingdom and
Australia. The treaties specify that groups in the United
States, the United Kingdom, and Australia may export and
receive unlicensed defense articles if they are a part of the
``Approved Community.'' The license-free regime applies to
classified defense exports and sensitive defense technologies.
Some sensitive defense articles and information would still
require licenses; however, the lists of such items may change
with time.
The Foreign Relations Committee needs to understand how the
administration will enforce against abuses of the treaties. If
a person in the United States Approved Community makes a
license-free export, but then diverts the export to
unauthorized recipients, what recourse will the United States
law enforcement authorities have? What authorities and
resources are needed to effectively investigate and prosecute
such conduct?
We also must understand fully how the treaties affect
Congress' ability to oversee arms exports. By exempting exports
from the Arms Export Control Act, the treaties eliminate
advance notification to Congress of exports or retransfers of
defense articles exported to the United Kingdom and Australia.
Another important point in need of clarification is the
procedure required to make significant changes in the treaty
regimes after they are approved. Under most treaties approved
by the Senate, such changes may only be made by treaty
amendments submitted to the Senate for approval. If changes can
be made to these defense trade treaties through other means,
the Senate may well have concerns.
In the case of these treaties, vital details are contained
in the so-called ``implementing arrangements'' rather than in
the texts of the treaties. These implementing arrangements
address the treaties' scope and effect, including categories of
items that may be exported without licenses, persons and
entities in each country receiving license-free exports, rules
on retransfers of items under the treaties, and arrangements
for cooperation in enforcement.
The executive branch did not submit these ``implementing
arrangements'' to the Senate for its advice and consent. This
suggests that changes might be made to critical treaty
components without Senate approval. The administration needs to
explain in detail its intent in excluding these ``implementing
arrangements'' from advice and consent.
Likewise, the Obama administration should inform the
committee, and the entire Congress, whether it intends to
negotiate similar treaties with additional countries. The Bush
administration stated it would not seek additional defense
trade treaties.
I look forward to addressing these important questions and
issues with today's witnesses. And once again, we are very
pleased you gentlemen are with us.
Thank you, Mr. Chairman.
The Chairman. Thank you, Senator Lugar. And I appreciate
the series of questions that you raise, all of which are
important. And we look forward to having good dialogue on it.
Secretary Shapiro, if you would lead off, and Deputy
General, if you'd follow? Thanks.
STATEMENT OF ANDREW SHAPIRO, ASSISTANT SECRETARY OF STATE FOR
POLITICAL-MILITARY AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC
Mr. Shapiro. Mr. Chairman, Senator Lugar, thank you for
holding this hearing and for the opportunity to testify before
the committee on the bilateral defense trade cooperation
treaties between the United States and the United Kingdom, and
the United States and Australia. The administration strongly
supports ratification of these two treaties.
Mr. Chairman, I will deliver a brief oral statement, but
also ask that the committee enter my written statement into the
record.
The Chairman. Without objection, it will be.
Mr. Shapiro. First, I would like to thank the members of
the committee and the committee staff for their diligent work
on this initiative. Our interaction on these treaties has been
invaluable. The insights and questions provided by the
committee and its staff have helped to guide this
administration's review of the treaties and informed the
detailed regulations that the State Department will publish if
the treaties are ratified.
This administration has conducted an exhaustive review of
the treaties and their effect on our national security and
foreign policy interests. I have met with officials from the
United Kingdom and Australia to discuss the treaties and their
importance to our bilateral relationships. We have worked
closely with the Department of Defense to evaluate the
treaties' ability to enhance interoperability with these
important partners, while maintaining our national security
interests.
We have also worked with the Department of Justice and the
Department of Homeland Security to ensure that the provisions
of the treaties can be implemented and enforced under current
U.S. law. Today, I affirm to you that the President and his
administration fully support the treaties and believe they
would establish a stable framework for enhancing our strategic
relationships with these two key allies.
When we speak about the details of these two treaties, it
can be easy to lose sight of the exceedingly important role
that they are designed to play. I would like to share one
example with you.
When U.S. and coalition forces are attacked, an IED
explodes, or a suicide bomber murders civilians, conducting a
forensic investigation of the scene is essential. The
information gained by such an investigation helps determine the
sources of insurgent arms, ammunition, and explosives; it
supports efforts to stem the flow of arms to insurgents. And it
helps us to identify ways in which we can better protect our
forces in combat.
Our military has highlighted the fact that there is an
urgent need to improve current capabilities in this key area.
The treaties would enhance U.S. industry's ability to engage in
technical discussions on this subject with United Kingdom and
Australian companies. Such companies could provide solutions to
technological challenges, reduce costs, and accelerate delivery
of expeditionary forensic capabilities to coalition forces.
Without the treaties, the ability of engineers and other
scientists to even discuss the export controlled technology
associated with expeditionary forensic capabilities are subject
to many more bureaucratic processes and proceed much less
seamlessly than they would with the treaty regime in place. I
assure you that the benefits, such as more efficient delivery
of key capabilities to our servicemembers would not be gained
at the expense of our responsibility to protect U.S. defense
technologies.
Under the treaty regime, the United States and its treaty
partners would be able to prosecute cases under their national
laws that involve transactions that do not satisfy the
requirements and obligations that the parties would establish
to implement the treaties.
Along with these gains, the treaties would also recognize
and support the longstanding special relationship that the
United States, the United Kingdom, and Australia share. We have
long worked together to develop advanced strategic
technologies; technologies that have provided the advantage to
help win two World Wars, protected lives, and advanced our
countries' interests in numerous conflicts.
United States/United Kingdom and United States/Australian
cooperation on radar, initially developed and employed by the
U.K. in the 1930s continues to this day. More recently, U.K.-
developed counter-IED technology has been used by all three
nations to better protect against this deadly threat.
These treaties come at a time when the United States,
United Kingdom, and Australian forces are once again working
together on the battlefield to protect our collective security.
Ensuring that our forces can get the best technology in the
most expeditious manner possible, and that they possess
critical interoperability is essential to our success, not only
today's campaigns, but also in future efforts to address shared
security challenges.
The treaties would also foster an even more competitive
defense marketplace with these allies, and would create an
environment that would help support the U.S. defense industrial
base, and the jobs that it provides to Americans.
The Defense Trade Cooperation treaties with the United
Kingdom and Australia support United States foreign policy and
national security interests. They would fortify our bilateral
relations with important partners, support our joint operations
overseas, and foster the expeditious development of
technologies that are critical to current and future security
efforts. They would accomplish this while allowing us to
continue to protect critical U.S. defense technologies.
On behalf of the administration, I encourage the Senate to
provide its advice and consent to ratification of these
treaties.
[The prepared statement of Mr. Shapiro follows:]
Prepared Statement of Assistant Secretary Andrew Shapiro, Bureau of
Political-Military Affairs, Department of State, Washington, DC
Mr. Chairman, thank you for holding this hearing and for the
opportunity to testify before the committee on the two bilateral
defense trade cooperation treaties between the United States and the
United Kingdom (Treaty Document 110-7), and the United States and
Australia (Treaty Document 110-10). The ratification of these Treaties
is strongly supported by this administration.
First, I would like to take this opportunity to thank the members
of the committee and the committee staff for their diligent work on
this initiative. Our interaction with the committee on these Treaties
has been invaluable. The insights and questions provided by the
committee have helped to guide this administration's review of the
Treaties and informed the detailed draft regulations that the State
Department will publish once the Treaties are ratified.
This administration has conducted an exhaustive review of the
Treaties and their effect on United States national security and
foreign policy interests. I have met officials from the United Kingdom
and Australia to discuss the Treaties and their importance to our
bilateral relationships. We have worked closely with representatives
from the Department of Defense to evaluate the Treaties' ability to
enhance interoperability with these important partners, while
maintaining our national security interests. We have also worked with
the Department of Justice and the Department of Homeland Security in
order to ensure that the provisions of the Treaties can be implemented
and enforced under current U.S. law. Today, I affirm to you that the
President and his administration fully support the Treaties and believe
they will establish a stable framework through which we can enhance our
strategic relationship and battlefield readiness with these two key
allies in the future.
When we speak about the details of these Treaties and the framework
that they establish, it is easy to lose sight of the exceedingly
important role that these Treaties are designed to play. I would like
to share a few examples with you.
When United States and coalition forces are attacked, an IED
explodes, or a suicide bomber murders civilians, conducting a forensic
investigation of the scene is essential. The information gained by such
an investigation helps determine the sources of insurgent arms,
ammunition, and explosives; it greatly supports the gathering and
analysis of intelligence, which helps us stem the flow of arms to
insurgents. It allows us to identify ways in which we can better
protect our forces in combat and it allows us to identify the dead and
to prosecute the guilty. Our military has highlighted the fact that
there is an urgent need to improve current capabilities in this key
area. The Office of the Under Secretary of Defense for Acquisition,
Technology and Logistics has stated that the Treaties, if ratified,
could facilitate United States, United Kingdom, or Australian research
and development that is needed to meet this urgent need. The Department
of Defense has already awarded a number of contracts in this area, and
the Treaties would enhance United States industry's ability to engage
in technical discussions on this subject with United Kingdom and
Australian companies. Such companies could provide solutions to
technological challenges, reduce costs, and accelerate delivery of
expeditionary forensic capabilities to coalition forces. Without the
Treaties, the ability of engineers and other scientists to just discuss
the export controlled technology associated with expeditionary forensic
capabilities could be subject to many more bureaucratic processes and
proceed much less seamlessly than with the Treaty exemption regime in
place. In this case, the Treaties could be used to help meet this
urgent need more effectively and even more quickly.
Another urgent requirement is the need to field nonlethal
capabilities for counterpiracy and maritime counterterrorism. The
Department of Defense is actively pursuing development and acquisition
of a range of nonlethal technologies and equipment in this area. The
Department of Defense would like to work with U.K. and Australian naval
authorities and acquisition organizations through cooperative programs
and international contractor teaming. As with cooperation on forensics
discussed above, the Treaties' streamlined export control arrangements
would allow U.K. and Australian companies to work more seamlessly with
U.S. firms to meet this urgent requirement. Furthermore, the United
States and its key allies would gain more timely and flexible access to
Australian and U.K. firms, which could develop more time-responsive,
affordable solutions.
Real world technologies that are needed urgently today to save
lives could be developed more quickly using the system that the
Treaties, if ratified, would create.
The Treaties also recognize and support the longstanding special
relationship that the United States, the United Kingdom, and Australia
share. Since World War I, the United States and the United Kingdom have
worked together to develop advanced strategic technologies;
technologies that provided the advantage to help us win two World Wars,
protect lives, and advance our countries' interests in numerous
conflicts. The alliance between the United States and Australia was
also forged on the battlefields of World War II, and as Australia's
industrial base began to flourish, our economic and strategic
relationship grew.
We have a long history of scientific and technological cooperation
from which our nations have benefited. The combination of the British
Merlin engine with the American-developed P-51 airframe resulted in the
best fighter aircraft of World War II. United States-United Kingdom and
United States-Australian cooperation in radar--initially developed and
employed by the U.K. in the 1930s--continues to this day. U.K.-
developed counterimprovised explosive device (IED) technology has been
used by all three nations to improve systems that protect against this
deadly threat in Iraq and Afghanistan.
These examples of cooperation in defense development, production,
and support among the United States, Australia, and the United Kingdom
illustrate the breadth and depth of the industrial dimension of our
alliances. The Treaties, if ratified, will help the United States and
these key allies develop and field the next generation technology that
is needed to save lives and protect our countries' security and foreign
policy interests. The Treaties would accomplish this by streamlining
the processes by which certain controlled items are transferred between
the United States and the United Kingdom or Australia. Specifically,
the Treaties will provide the President with the authority to
promulgate regulations that will allow, without prior written
authorization, the export or transfer of certain defense articles and
defense services controlled pursuant to the International Traffic in
Arms Regulations (ITAR) between the United States and the United
Kingdom or between the United States and Australia, when in support of:
1. Combined military and counterterrorism operations;
2. Cooperative security and defense research, development,
production, and support programs;
3. Mutually agreed security and defense projects where the
end-user is the Government of the United Kingdom or the
Government of Australia; or
4. U.S. Government end-use.
The U.S. Government will maintain its authority over which foreign
end-users may have access to ITAR-controlled items under the Treaties
by mutually agreeing with the Government of the United Kingdom, and
with the Government of Australia, on an ``Approved Community'' of
private sector entities that may receive defense articles and defense
services under the Treaties. Further, not all ITAR-controlled items
will be eligible for export under the Treaties. We have identified such
ineligible items in a proposed ``Exemption List,'' which was carefully
developed with the Department of Defense, and provided to the
committee.
Both the United Kingdom and Australia have agreed to protect
defense items exported from the United States under the Treaties using
their national laws and regulations. These laws and regulations govern
exports of controlled goods and technologies and safeguard classified
information and material. This is an extremely important Treaty
benefit; that is, the United Kingdom and Australia have agreed to
classify as ``Restricted'' otherwise unclassified ITAR-controlled
defense articles exported from the United States pursuant to the
Treaty. This subjects all handling, exports and reexports to the
respective classified information laws and regulations. Under these
legal authorities, the United Kingdom and Australia will require prior
United States approval, in addition to their own governments' approval,
for the reexport or retransfer of such items outside the Approved
Community. In addition, we have agreed with the United Kingdom and
Australia on detailed compliance and enforcement measures, to be
imposed on members of each Community. These measures were negotiated by
United States Government representatives from the Departments of State,
Justice, Homeland Security, and Defense. These details, and others
related to the implementation of the Treaties, are contained in the
``Implementing Arrangements'' called for in both Treaties.
Both the United States and its treaty partners will be able to
prosecute cases involving exports, reexports and transfers that do not
satisfy the specific requirements and obligations that the parties will
establish to implement the Treaties.
We have determined that, if ratified, the Treaties would be
implemented in the United States through federal regulations. First,
the Department would promulgate regulations that would create an
exemption from the requirement of a license under the Arms Export
Control Act for particular, specified exports to the United Kingdom and
Australia. Such regulations would require an exporter to meet certain
conditions in order to take advantage of the exemptions contemplated by
the treaties. New regulations would also independently prohibit certain
exports that do not satisfy the conditions that must be met in order to
come within the Treaty-based safe harbor. The latter regulations would
be enforceable criminally pursuant to section 38(c) of the act and
administratively pursuant to section 38(e) of the act. With this
approach, we are confident that the Treaties and the United States
underlying export-control framework can be robustly enforced. We very
much appreciate the discussions that we had with the committee on this
matter.
Beyond the specifics of how the regime established by the Treaties
will function, it is important to understand how they would
significantly advance many aspects of our bilateral relationships with
the United Kingdom and Australia and support Unites States foreign
policy and national security interests.
The United States, United Kingdom, and Australia have strong
economic ties. Perhaps reflective of our shared cultures, customs, and
language, the United States is the largest supplier of foreign direct
investment in the United Kingdom and Australia. Likewise, the United
Kingdom is the largest investor in the United States, while Australia
is the eighth largest. In the defense sector, there are several large
joint ventures between the firms of our nations, and many of these
firms own subsidiaries in the United States, United Kingdom and
Australia. United States, Australian and United Kingdom companies often
work together on joint development projects. These partnerships help to
leverage financial and technological resources between our nations.
They have resulted in the development of technologies that are used to
enhance the security of our nations and protect life.
The institutionalized reforms in these Treaties will create
opportunities for more efficient exchanges between our defense firms
and those of the United Kingdom and Australia, many of which specialize
in development, production, and support of critical equipment needed to
fight and win current and future conflicts.
The Treaties will create an even more competitive defense
marketplace with these allies. In order to successfully confront future
conflicts and security challenges, it is important to maintain critical
industrial and engineering capabilities in the United States. In order
to accomplish this, United States companies must have opportunities to
compete and the ability to compete effectively. United States industry
depends upon exports to maintain its proficiency and financial health.
These Treaties would create an environment that would support the U.S.
defense industrial base and the jobs that it provides to Americans.
These Treaties come at a time when United States, United Kingdom,
and Australian forces are once again working together on the
battlefield to protect our collective security. Ensuring that our
forces can get the best technology possible in the most expeditious
manner possible and that they possess the critical capability of
interoperability is essential to our success, not only in today's
campaigns, but also in future conflicts. Our nations will continue to
rely upon each other in the future as we continue to fight violent
extremism and address other shared security challenges.
United States, Australian, and United Kingdom forces deployed in
current and future operations must continue to be able to rely upon the
equipment produced by our three nations' defense establishments to
fight and win against our collective adversaries. Past experience tells
us that the United States, the United Kingdom, and Australia will
continue to train and operate together as partners. A streamlined
export control environment under the Treaties with these key allies
would enhance opportunities for future development of defense
technology. Greater agility in development, and economies of scale in
production and support, will result in more timely delivery of much-
needed capabilities to our forces while reducing costs. This in turn
will yield increased battlefield effectiveness, as all three nations'
forces will be outfitted with common, interoperable, and supportable
force protection, weapons, intelligence, surveillance, and
reconnaissance, logistics, and command, control, and communications
systems.
We must recognize the economic and strategic importance of
facilitating legitimate and secure trade between our nations. The
Treaties help to accomplish this objective.
I assure you that these benefits are not gained at the expense of
our responsibility to protect U.S. defense technologies. As I noted
before, we have excluded the most sensitive defense articles from
Treaty eligibility. In both countries, only security-cleared entities
and staff with a need to know may have access to items exported under
the Treaties. Furthermore, Approved Community members will continue to
have detailed recordkeeping requirements and would be subject to
auditing, monitoring, and verification measures to ensure compliance
and to aid in the investigation of potential violations.
The Defense Trade Cooperation Treaties with the United Kingdom and
Australia support U.S. foreign policy and national security interests.
They fortify our bilateral relations with important partners; they
support our joint operations overseas, and they will foster the
expeditious development of technologies that are critical to current
and future military, counterterrorism, and security efforts. They
accomplish this while allowing us to continue to protect critical U.S.
defense technologies. On behalf of the administration, I encourage the
Senate to provide its advice and consent to ratification of these
Treaties.
The Chairman. Thank you very much.
STATEMENT OF JAMES BAKER, ASSOCIATE DEPUTY ATTORNEY GENERAL,
DEPARTMENT OF JUSTICE, WASHINGTON, DC
Mr. Baker. Mr. Chairman, Ranking Member Lugar, members of
the committee, thank you very much for inviting the Department
of Justice to testify at this hearing today on ratification of
the two treaties that are before you.
I'm pleased to discuss the Department's role in the fight
against the illegal exportation of sensitive technology, and
how the Department would enforce provisions of the two treaties
to try to prevent such diversion.
I've submitted a written statement to the committee and I
ask that it be make part of the record.
The Chairman. Without objection, it will be.
Mr. Baker. And I will focus only on a few points from my
statement in my oral remarks here today.
As the committee is aware, the Arms Export Control Act, or
AECA, governs international defense cooperation including the
sale and export of weapons, and is used to prevent foreign
powers and entities from acquiring weapons of mass destruction
and sensitive technologies.
The AECA authorizes the President to establish a munitions
list and to create a licensing regime to control the export of
defense articles and defense services. Through Executive order,
the President delegated this authority to the Secretary of
State who--through subordinate officers--issued the
International Traffic in Arms Regulations, or ITARs--setting up
a licensing regime and export regulations. Under the ITARs,
certain persons and entities must register with the Department
of State, and obtain a license prior to exporting defense
articles or providing defense services.
The treaties establish approved communities of governmental
agencies and private companies that may export or import
defense articles without such licenses. In brief, the treaties
allow approved private companies in the United Kingdom and
Australia to obtain certain defense articles and defense
services from the United States without otherwise required
export licenses from the Department of State.
The safe harbors that will be available under the
regulations promulgated pursuant to the treaties will also
permit members of an Approved Community to transfer defense
articles on the U.S. Munitions List to another Approved
Community member without having to obtain a license.
The Implementing Arrangements provide specifications
related to the implementation of the treaties, including how
items exported under the treaties will be protected and how
entities may become members of the Approved Community. These
provisions were negotiated following signature of the treaties.
The Implementing Arrangements also establish procedures for
the United States and United Kingdom, on the one hand, and the
United States and Australia, on the other, to share records and
conduct audits and investigations. The Implementing
Arrangements contemplate that, following ratification of the
treaties, the United States would promulgate regulations to
clarify the scope of the safe harbors and ensure that conduct
falling outside of the designated safe harbors will be subject
to the AECA's civil and criminal enforcement regime.
A transaction that fully complies with the safe harbor
established by regulations promulgated pursuant to the treaties
would not be subject to criminal or civil penalties under AECA.
Conversely, a transaction falling outside of the designated
safe harbors would remain fully subject to the civil and
criminal enforcement measures under the AECA. As the Department
has stated previously, no new authorizing legislation would be
required to prosecute such a violation.
Under Supreme Court precedent, because the treaties are
self-executing, they are ``equivalent to an act of the
legislature'' for purposes of Federal law. Upon ratification of
the treaties, therefore, the President would have the authority
to issue regulations pursuant to the treaties themselves to
create exemptions from the applicable licensing requirements of
the AECA and ITAR and establish the designated safe harbors
contemplated by the treaties.
In addition, the President would have the authority to
promulgate regulations under section 38(a)(1) of the AECA to
make conduct falling outside the designated safe harbors
subject to the enforcement regime of the AECA. These
regulations will establish conditions for persons exporting or
transferring pursuant to the treaties, and an export or
transfer that fails to satisfy those conditions would be
enforceable through both criminal and civil sanctions.
Mr. Chairman, that concludes my opening statement. Again, I
would like to thank the committee for the opportunity to appear
before you today to discuss the treaties and the enforcement of
our export laws. And I look forward to any questions that the
committee may have.
[The prepared statement of Mr. Baker follows:]
Prepared Statement of James A. Baker, Associate Deputy Attorney
General, Department of Justice, Washington, DC
Senator Kerry, Ranking Member Lugar, and members of the committee,
my name is James A. Baker, and I am an Associate Deputy Attorney
General, with responsibility for national security matters. Thank you
for inviting the Department of Justice (``the Department'') to testify
at this hearing on ratification of two treaties: (1) The Treaty Between
the Government of the United States of America and the Government of
the United Kingdom of Great Britain and Northern Ireland Concerning
Defense Trade Cooperation (June 21 and 26, 2007), S. Treaty Doc. 110-7
(``U.S.-UK Treaty''); and (2) the Treaty Between the Government of the
United States of America and the Government of Australia Concerning
Defense Trade Cooperation (Sept. 5, 2007), S. Treaty Doc. 110-10
(``U.S.-Australia Treaty'') (collectively, the ``Treaties''). I am
pleased to discuss the Department's role in the fight against illegal
export of sensitive technology and how the Department would enforce the
provisions of the two Treaties to try to prevent such diversion.
I would like to emphasize one point regarding the Treaties from the
Department's perspective. That is, the export regime established by the
Treaties can be created without the need for any implementing
legislation. The President has full authority under the Treaties and
existing law to create the regime, including the authority to prohibit
certain export activities. Indeed, with relatively minor regulatory
amendments, we will have sufficient legal authorities to prosecute
criminally, and to take administrative action against, persons and
companies who violate the requirements of the regime, including
diverting defense articles beyond participants in the regime.
the threat of illegal acquisition of restricted u.s. technology
With the United States producing the most advanced technology in
the world, it has become a primary target of illicit technology
acquisition schemes by foreign states, criminals, and terrorist groups.
The U.S. Government, defense sector, private companies and research
institutions are routinely targeted as sources of arms, technology, and
other materials. The items sought from America in these illegal schemes
are as diverse as missile technology, nuclear technology, night vision
systems, assault weapons, trade secrets, technical know-how, and
fighter jet parts.
Foreign governments are aggressive in illegally acquiring sensitive
U.S. technology. They have been observed directly targeting U.S. firms;
employing commercial firms in the United States and third countries to
acquire U.S. technology; and recruiting students, professors, and
scientists to engage in technology collection.
China and Iran pose particular export control concerns. The
majority of U.S. criminal export prosecutions in recent years have
involved restricted U.S. technology bound for these nations. In fiscal
year (``FY'') 2008, for example, roughly 43 percent of all defendants
charged in criminal export cases were charged with illegally exporting
restricted materials to Iran or China. In total, Iran ranked as the
leading destination for illegal exports of restricted technology in the
prosecutions brought in FY 2008, as well as those in FY 2007.
Illegal exports of U.S. goods bound for Iran have involved such
items as missile guidance systems, Improvised Explosive Device
(``IED'') components, military aircraft parts, night vision systems and
other materials. Illegal exports to China have involved rocket launch
data, Space Shuttle technology, missile technology, naval warship data,
Unmanned Aerial Vehicle or ``drone'' technology, thermal imaging
systems, military night vision systems and other materials.
The improper transfer of such goods poses direct threats to U.S.
allies, U.S. troops overseas, and to Americans at home. Such transfers
also undermine America's strategic, economic, and military position in
the world.
the national export enforcement initiative
Keeping U.S. weapons technology and other restricted materials from
falling into the wrong hands is a top counterintelligence priority of
the Department. Spearheaded by the National Security Division's
Counterespionage Section, the National Export Enforcement Initiative is
the Department's primary mechanism for achieving this objective by
combating illegal exports of restricted military and dual-use
technology from the United States. Led by a career prosecutor, the
initiative is designed to enhance prosecution of these crimes and to
deter illicit activity.
The cornerstone of the initiative has been the ongoing formation of
multiagency Counter-Proliferation Task Forces in U.S. attorneys'
offices around the country. Today, there are more than 20 Counter-
Proliferation Task Forces or working groups operating nationwide, some
straddling more than one judicial district, that include the Federal
Bureau of Investigation, the Department of Homeland Security's U.S.
Immigration and Customs Enforcement, the Department of Commerce's
Bureau of Industry and Security, the Pentagon's Defense Criminal
Investigative Service, Naval Criminal Investigative Service, and Air
Force Office of Special Investigations, and other agencies as well. The
task forces have built on prior interagency efforts used in districts
where officers from these and other agencies pool data and jointly
pursue cases. Under the leadership of U.S. attorneys, the task forces
foster coordination critical to the success of export control.
Because export control cases involve complex statutory and
regulatory schemes, sophisticated technology, international issues,
and, often classified information, training for prosecutors and agents
has been a critical focus of the initiative. To date, the initiative
has resulted in enhanced training for more than 1,000 agents and
prosecutors involved in criminal and foreign counterintelligence
investigations. The Department, along with other agencies, has also
created the Technology Protection Enforcement Group (``TPEG''), an
interagency headquarters-level working group, to enhance export control
coordination among law enforcement agencies and between law enforcement
agencies and the Intelligence Community.
With the creation of new task forces and the enhanced training and
coordination among agencies, the number of criminal export prosecutions
has grown nationwide. In its first full year of operations, during FY
2008, the National Export Enforcement Initiative resulted in criminal
charges against more than 145 defendants, compared to roughly 110
defendants charged in FY 2007. Charges brought in these cases include
violations of the Arms Export Control Act (``AECA''), the main export
control statute, but also the International Emergency Economic Powers
Act, the export control provision of the USA PATRIOT Improvement and
Reauthorization Act of 2005, the Trading with the Enemy Act, and other
statutes.
the export control regime and the treaties' safe harbors
The Arms Export Control Act governs international defense
cooperation, including the sale and export of weapons, and is used to
prevent foreign powers and entities from acquiring weapons of mass
destruction and sensitive technologies. The AECA authorizes the
President to establish a munitions list and to create a licensing
regime to control the export of defense articles and defense services.
Through Executive Order 11958, the President delegated this authority
to the Secretary of State who, through the office of the Deputy
Assistant Secretary for Defense Trade Controls and Managing Director of
Defense Trade Controls, Bureau of Political-Military Affairs, issued
the International Traffic in Arms Regulations (``ITAR'') setting up a
licensing regime and export regulations. Under the ITAR, persons
engaged in the business of manufacturing or exporting defense articles
and defense services must register with the Department of State and
obtain a license prior to exporting defense articles or providing
defense services.
The Treaties establish Approved Communities of governmental
agencies and private companies that may export or import defense
articles without such licenses. In brief, the Treaties allow approved
private companies in the U.K. and Australia to obtain certain defense
articles and defense services from the United States without the
otherwise required export license from the Department of State. The
safe harbors that will be available under regulations promulgated
pursuant to the Treaties will also permit members of an Approved
Community to transfer defense articles on the U.S. Munitions List to
another Approved Community member without having to obtain a license.
The Implementing Arrangements provide the specifications related to
the implementation of the Treaties, including how items exported under
the Treaties will be protected and how entities may become members of
the Approved Community. These provisions were negotiated following
signature of the Treaties. The Implementing Arrangements also establish
procedures for the United States and United Kingdom and United States
and Australia to share records and conduct audits and investigations.
The Implementing Arrangements contemplate that, following ratification
of the Treaties, the United States would promulgate regulations to
clarify the scope of the safe harbors and ensure that conduct falling
outside the designated safe harbors will be subject to the AECA's civil
and criminal enforcement regime.
enforcing the treaties
A transaction that fully complies with the safe harbor established
by regulations promulgated pursuant to the Treaties would not be
subject to criminal or civil penalties under AECA. Conversely, a
transaction falling outside the designated safe harbors would remain
fully subject to the civil and criminal enforcement measures under the
AECA. As the Department has stated previously, no new authorizing
legislation would be required to prosecute such a violation.
Because the Treaties are self-executing, they are ``equivalent to
an act of the legislature'' for purposes of federal law. Medellin v.
Texas, 128 S. Ct. 1346, 1356 (2008). Upon ratification of the Treaties,
therefore, the President would have the authority to issue regulations
pursuant to the Treaties themselves to create exemptions from the
applicable licensing requirements of the AECA and ITAR. These
regulations would thus establish the designated safe harbors
contemplated by the Treaties and establish requirements for
qualification for the safe harbor.
In addition, the President would have authority to promulgate
regulations under section 38(a)(1) of the AECA to make conduct falling
outside the designated safe harbors subject to the enforcement regime
of the AECA. These regulations would be promulgated pursuant to the
``broad statutory delegation'' in section 38 of the AECA to control the
import and the export of defense articles and defense services. B-West
Imports, Inc. v. United States, 75 F.3d 633, 636 (Fed. Cir. 1996). It
is the Department's understanding that these regulations will track
those to be promulgated under the Treaties and would thus establish
conditions for persons exporting or transferring pursuant to the
Treaties, and an export or transfer that fails to satisfy those
conditions would be enforceable through both criminal and civil
sanctions.
conclusion
Thank you for the opportunity to discuss the Department of
Justice's role in enforcing export controls and its relation to the
Treaties. I look forward to answering your questions.
The Chairman. Well, thank you very much, Mr. Baker, we
appreciate it.
Let me begin by going at this question of the ability to
deter and to prosecute violations.
Obviously, this has been a primary concern of the committee
as we've gone along here. We appreciate the work you've done
with our staff along the way to resolve any questions that
might exist.
But for the record, I just wanted to make it absolutely
clear, whether or not you are completely confident that these
treaties will not weaken efforts with regards to prosecution
and deterrence under the AECA.
Mr. Baker. Mr. Chairman, thank you.
The Department has concluded that the regulations that will
be issued following ratification of these treaties--if that's
what you decide--will be enforceable. The Department will be
able to enforce the ITAR regulations and the provisions of the
AECA, following ratification of these treaties.
The Chairman. Under the regime that's envisioned by them,
are you absolutely confident that if there were a diversion of
a weapon or a technology, sold to a company in the United
Kingdom or Australia, under the treaty, are you confident that
that violator could be prosecuted in United States courts?
Mr. Baker. Yes, Mr. Chairman. We are confident that if
someone--the same way as is done today--someone who illegally
diverts something on the munitions list, inappropriately,
illegally, can be brought to court in the United States and
prosecuted here.
The Chairman. In the letters transmitting the treaties to
the Senate the President promised to provide any proposed
amendments to the International Traffic in Arms Regulations.
The last draft of those amendments that was provided the
committee came in, as Senator Lugar referenced, I think in
September 2008. Have you made, or do you contemplate making,
Secretary Shapiro, any more changes to those draft regulations?
Mr. Shapiro. Thank you, Senator Kerry.
We, as the new administration, reviewed the treaties and
after consultation with the staff of the Foreign Relations
Committee and with the Justice Department, we've concluded that
there may be--not major changes that need to be made, but
changes that might need to be made. We don't anticipate these
to be significant, but----
The Chairman. When do you anticipate the text might be
forthcoming?
Mr. Shapiro. Our plan--we are eager to have these treaties
ratified, and our plan is to get them to you as soon as we can,
and we are working with the Justice Department toward that end.
The Chairman. Could you guarantee us, for instance, that we
could have those by mid-January?
Mr. Shapiro. I'm hesitant to guarantee without consulting
with my Justice Department colleague in advance, but I will
commit to make every effort to do that and certainly, if you
want them by mid-January, we want to satisfy that.
The Chairman. Can your Justice Department colleague perhaps
help us here?
Mr. Baker. We will make sure that--we will keep in mind
your proposed deadline, and do everything we can to try to meet
that, Senator. I'm also----
The Chairman. We reconvene on the 19th and this is overdue,
frankly, in my judgment. So, I'd like the committee staff to
have an opportunity, obviously, to be able to review those
regs, and then see where we go in those early days of next
year.
U.S. Customs officials at our borders and ports will be
responsible for checking the paperwork of anyone trying to use
the treaties to export a defense item. What is the status, in
your judgment, of the readiness of our outbound Customs
officials, in terms of personnel, training, equipment, to carry
out the responsibilities under these treaties?
Mr. Shapiro. Well, I obviously don't want to speak for the
Customs Department--Customs Service--but what I will say is, is
that we are committed to ensuring that the Customs Service has
all of the information that it needs to be able to track
exports.
And indeed, you know, under the--currently as its
contemplated--an exporter who wants to take advantage of the
treaty would have to identify that in their Customs paperwork,
they would have to identify that they were exporting to--who
they were exporting to in the United Kingdom, which would allow
confirmation of whether they're a member of the approved
community or not.
And we will continue to work with Customs if they require
any additional information to be able to track, just as they do
now, where they have information that exporters provide, it is
anticipated that exporters will have to provide that
information in order to take advantage of the treaty
provisions.
The Chairman. In October of this year, in response to a
question for the record from the committee, Mr. Baker, the
Department of Justice wrote, ``further or more detailed
information required in the shipper's export declarations and
export information filed in the automated export system could
assist in preventing abuse of the treaty exemption.'' And then
you added that, ``the requirement could be effected through
regulations.''
My question to you, Secretary Shapiro, is do you intend to
require that exporters under the treaties indicate the joint
operation, program or project for which the export is required,
pursuant to Article 3(1)?
Mr. Shapiro. Again, our goal is to work with the Customs
Service to ensure that they have the information that they need
to properly track exports under the treaty. It's something
we're willing to consider; I am not in a position now to say
that, definitively one way or the other, but we wanted--
certainly want to make sure that the Customs Service has the
information they need to properly track exports under the
treaty.
The Chairman. Well, do you have a concern, Mr. Baker--I
mean, is this something that you would like to see them do, is
this something that would help in terms of the enforcement
process?
Mr. Baker. I think we would certainly favor any efforts
that we could undertake--especially the ones we suggest here--
to try to gather more information before anything leaves the
United States. So, these were some----
The Chairman. That can be done by regulation?
Mr. Baker. We believe so, yes, Senator.
The Chairman. So, Mr. Shapiro, if they're suggesting that
might be helpful, it would seem to me that it might be helpful
to the ratification process if you were to include that in the
January tasks, so to speak.
Mr. Shapiro. Understood.
The Chairman. I think that'd be helpful.
Are you considering other information that an exporter
under the treaties might reasonably be required to provide as a
matter of just regulatory, administrative process?
Mr. Shapiro. As of now, again, we want the Customs Service
to be able to properly track exports under the treaty. We have
no specific information that we have currently decided to
include, but in that process of consultation with the Customs
Service and the Justice Department, there are things that we
can provide that would assist in that process, we want to work
with them to reach that goal.
The Chairman. Are there any ongoing or planned
negotiations--I think I heard you say this in the testimony,
but I think Senator Lugar raised the question--are there any
ongoing or planned negotiations with any other countries
regarding arms export control exemptions and licensing
requirements?
Mr. Shapiro. Senator Kerry, there are none. As you pointed
out, the relationship with the United Kingdom and Australia is
unique, and that's why we are pursuing the treaties with the
United Kingdom and Australia, but we have no plans to negotiate
with any other--defense trade cooperation treaties--with other
countries, and there are no ongoing negotiations.
The Chairman. At last year's hearing--after the hearing,
actually--Senators Biden and Lugar asked an extensive set of
questions for the hearing record. Have you had a chance to
review the State Department's answers to those questions?
Mr. Shapiro. Yes.
The Chairman. Do any of those answers need to be revised in
any way?
Mr. Shapiro. A very small number will need to be revised,
which we will plan to get over to you as soon as possible. Your
staff was particularly helpful in pointing out, in our
discussions, the need for possible revisions.
The Chairman. And those you'll try to get to us, also--
well, that has to be in, actually, before we close the record
here.
Mr. Shapiro. Yes.
The Chairman. Which would be, say--when we--I think a week
from now?
Mr. Shapiro. OK. We will make sure that we get them to you.
The Chairman. That'd be great.
Now, I've received several letters relating to these
treaties, submitted on behalf of the Aerospace Industry
Association, Boeing Company, Northrop Grumman, and the Arms
Control Association. I'd ask unanimous consent that they be
made part of the record of the hearing.
[No response.]
The Chairman. If there's no objection, they will be.
The Chairman. Let me, Secretary Shapiro, also just commend
the Department for the actions in pursuit of the Global Arms
Trade Treaty. As you know, that would set legally binding
minimum standards for weapons transfers and our export control
system is a superb system--one of the best in the world--and it
is very much in our interest, obviously, to try to bring the
exporting countries up to those standards. So, I'm pleased that
we're taking an active role in that, and I applaud that on your
behalf.
I might ask, as a matter of the record, also, would you
submit to us the--Mr. Baker, really, I think more to you, but
probably combined--we just want clarity in the record, with
respect to the precise legal theory for the implementation of
the treaties. As you know, one approach is the amending or
superseding of the provisions of the Arms Export Control Act
that are not consistent with the framework suggested by the
treaty.
And under the second approach there's the view that the
treaty is the equivalent of a legislative enactment that
addresses the same subject matter. And I think it would be
helpful to us to just have the clarity with respect to that as
we go forward, affecting the relationship between the treaties
and the AECA.
Mr. Baker. Certainly, Mr. Chairman. We'll go back through
the different letters that we've sent to the committee and look
at them again, and make sure that we can--we've provided you
with the clearest answer possible.
The Chairman. Terrific. Appreciate it very much.
Senator Lugar.
Senator Lugar. Thank you, Mr. Chairman.
Mr. Baker, with regard to regulations, first of all, in
your prepared statement you address regulations that would be
issued under the treaties and under the Arms Control Act to
enforce the treaties. First question: Have these regulations
been finalized? And, if not, when do you expect them to be
finalized?
Mr. Baker. No, Senator, they have not been finalized. These
are the same regulations that we're talking about here with
Secretary Shapiro, so we'll do everything we can to have those
to you by mid-January.
Senator Lugar. Mid-January?
Mr. Baker. Yes, sir.
Senator Lugar. Does the confidence of the Department of
Justice about its ability to enforce the treaties depend on the
final form these regulations take?
Mr. Baker. Senator, very much so. The regulations--
especially the changes to the ITAR regulations--will be
critical to our ability to enforce violations of the export
laws of the United States, so absolutely these regulations are
very important.
Senator Lugar. And will the administration provide these
regulations to this committee for its review prior to committee
action on the treaties? And if your answer is ``Yes,'' will
this be done in mid-January?
Mr. Baker. Yes, Senator.
Senator Lugar. That was a very important part of our
rationale for holding this hearing today, as you know.
Now, Mr. Baker, on the safe harbors issue, your testimony
refers to safe harbors in the Arms Control Act's enforcement
regime that would be established under the treaties. The term
``safe harbor'' isn't contained in the treaties or the
implementing arrangements. Your testimony indicates that the
executive branch would promulgate regulations to clarify the
scope of the safe harbors and to establish requirements to
qualify for them. Has the administration made final decisions
regarding the scope and qualifications requirements for these
safe harbors? And if so, have these been communicated to this
committee?
Mr. Baker. No, Senator, again these are the same
regulations we're talking about, and we need to get these
right, we need to finalize them so that it's absolutely clear
to everyone what is permitted and what's prohibited. So, these
are very important, and we're still working on them.
Senator Lugar. And that will be a part of this mid-January
submission?
Mr. Baker. Yes, sir.
Senator Lugar. Finally, given that these safe harbors are
not part of the treaties before the Senate, what role does the
administration envision the Senate would have in reviewing or
approving them?
Mr. Shapiro. I'll take this one. Which is, obviously we are
going to be submitting these regulations before the
consideration by the Senate of the advice and consent--for
advice and consent. So, the Senate will have an opportunity to
review before any potential vote on these treaties. And we are,
you know, committed to fully consulting with this committee and
the Senate on the nature of the safe harbors that this will
provide.
Senator Lugar. So, hypothetically, the committee might make
suggestions for changes, amendments, and what have you, at the
time of this submission?
Mr. Shapiro. Well, and I would just say, as I mentioned
previously, we don't anticipate that the regulations that we
will be submitting will have major changes from the ones that
were previously submitted. These are just as we have worked
with the Justice Department on sharpening the basis for
enforcement, we realize that there may need to be some changes,
but we don't anticipate that these changes will be major, and
so there--you have a sense based on what you have already, and
then you will have additional information when we provide the
revised regulations.
Senator Lugar. Secretary Shapiro, on April 29, Secretary
Clinton wrote to us about these treaties. She suggested that
she would oppose efforts by the Senate to establish oversight
requirements for treaty implementation, through either
legislation or resolutions of advice and consent.
She further suggested that such oversight requirements
``would frustrate the treaties' purpose.'' Secretary Clinton
proposed that the Senate's oversight interests be addressed by
a series of congressional notification procedures, which she
pledged the Department would implement as a matter of policy.
Now, Secretary Shapiro, what assurance would the Senate
have that oversight procedures implemented by this
administration as a matter of policy would be continued by
future administrations?
Mr. Shapiro. Well, I would say that it is in this--not only
this administration's interest, but any administration's
interest to have a close working relationship regarding the
oversight of these treaties, going forward. I would point out
that we, in the, we seek--we have a cooperative relationship
regarding arms sales which are not enshrined in law, but which
have developed through practice and procedures which numerous
administrations have followed, because it is important for the
working relationship between the executive branch and the
legislative branch. And so, we anticipate that that same
tradition would continue, because it would be in the interest
of working together with the executive branch and the
legislative branch.
Senator Lugar. Why would this administration oppose
appropriate legal requirements that would keep the Congress
informed about the implementation of the treaties?
Mr. Shapiro. Well, again, to go back to the Secretary's
letter, our goal is to have these treaties ratified as
expeditiously as possible, to ensure that the United States,
United Kingdom, and Australia are able to take full advantage
of the terms of the treaties. And we believe that, in her
letter she laid out a number of suggested consultation
mechanisms, and we believe that those suggested consultation
mechanisms would enable Congress to have the ability to provide
its input to the executive branch, without a need to actually
legislate them.
Senator Lugar. Well, without being tedious, I still would
ask how mandating a congressional role in overseeing the
treaties would frustrate their purpose. In other words, why
can't this be incorporated in the treaty, as opposed to the
question arising two administrations down the trail when those
folks come to us and we have a different idea about all of
this?
Mr. Shapiro. Again, I would go back to, you know, we have
various consultation mechanisms in the arms sales process which
are not enshrined in law, which--but which work--which do work.
I mean, we have an ongoing conversation on how to improve them,
and how to make them more efficient, but those were not
enshrined in law, but administrations have continued to follow
them from administration to administration.
So, we think that the consultations that Secretary Clinton
offered in her letter would be adequate to allow Congress to
offer its advice and input to the administration, without the
need for legislation. And we would anticipate that future
administrations would see the benefit of this, as well, as
administration after administration has seen it in the arms
sales context.
Senator Lugar. Well, obviously, one reason why this has
arisen again is that perhaps we should have confidence other
administrations would have. But there, at least, is a case to
be made for penning it down now while we're thinking about it.
Let me ask, given the oversight responsibilities of the
House of Representatives with respect to arms control, does the
Obama administration believe the House has an interest in the
proposed arrangements for implementing the treaties and has the
administration consulted with the House concerning these
arrangements?
Mr. Shapiro. As these were negotiated as treaties and under
the Constitution, the Senate has the responsibility to provide
advice and consent on treaties, our efforts have been focused
on the Senate, and toward what we need to satisfy the Senate's
concerns toward ratification. So, that has been the focus of
our efforts, thus far.
Senator Lugar. This is doubling back to the history of the
situation, but as we've pointed out, during a May 2008 hearing
with Bush administration officials they declined to submit the
implementing arrangements. Obviously, you're taking a different
stance by pledging to transmit the aforementioned package by
mid-January, so I'll not try to review the problem of conflict
between your interpretation and theirs. You've decided along
with us, perhaps, that this is best to proceed and we
appreciate that.
Let me just ask whether or not the administration believes
the Senate should have a role in approving future changes to be
made in the implementing arrangements as time goes by?
Furthermore, do you see the changes that might be constructive?
Mr. Shapiro. Well, as the Secretary pointed out in her
letter, she would commit that we would consult with the Senate
before any changes in--we would provide notification well in
advance of changes to the implementing arrangements.
Senator Lugar. What if we disagree with these changes down
the trail, and there's really no permanent record, at least as
a part of the treaty ratification now?
Mr. Shapiro. Well, I mean, I think that our administration
and future administrations would take the concerns of Congress
quite seriously. And that would be, you know, the purpose of a
notification, would be to offer an opportunity to receive those
comments from the committee and from the Senate.
Senator Lugar. Well, my time has concluded for the moment,
we may come back if we can, Mr. Chairman.
The Chairman. Absolutely.
Senator Lugar. But, I think this is still a point of
discussion. I understand your point of view, that changes might
be made. We might agree or disagree with them. I suppose, in
terms of congressional oversight, some would argue the
responsible course is to pen things down now, before we ratify,
so that we don't have a speculation as to future
administrations' agreements or disagreements that we know more
about the future.
I'll leave it at that for the moment, Mr. Chairman. And
you'll have to----
The Chairman. I'll come right back to you.
Senator Feingold.
Senator Feingold. Thank you, Mr. Chairman.
Thank you for being here to testify.
Our partnerships with Australia and the United Kingdom are,
of course, among our most important alliances, and I strongly
support efforts to expedite our arms exports to these key
partners in a manner that retains Congress' constitutional role
in overseeing our arms control regime. In the wake of the
terrorist attacks of September 11, it's more important than
ever that we strengthen our arms control regime.
The illicit arms trade aids terrorists and the states that
sponsor them. It also contributes to instability, including in
areas of particular concern to me as the chair of the
Subcommittee on African Affairs.
So, with these overriding concerns in mind I just have a
couple of questions.
Mr. Baker, the licensing regime creates an evidentiary
trail that the Justice Department uses to prosecute those who
attempt to divert weapons or munitions to criminal entities,
terrorist organizations, or state sponsors of terrorism, that's
right, isn't it?
Mr. Baker. Yes, sir.
Senator Feingold. And in what percentage of prosecutions
for violations of our arms export laws has the Department
relied upon evidence obtained from the licensing process?
Mr. Baker. Obtained from the licensing process? Senator, I
would expect that it's a high percentage, I could get you a
more accurate answer for the record if I could take that back
and go back and do some research on that, but I would--it's a
high percentage, in terms of the evidentiary trail.
Senator Feingold. Thanks for that answer, and I look
forward to the more specific follow-up.
Mr. Baker, we're entering uncharted legal territory by
substituting the proven licensing system with an, as of yet,
unproven system of vetting so-called ``approved communities.''
If unforeseen legal problems arise, will our only recourse be
to issue new regulations, and if a future administration is
unwilling to make such changes to the regulations, what remedy
would Congress have?
Mr. Shapiro. I mean, I would say on--that the--we
anticipate that these treaties will offer significant benefits.
Under the--and the Justice Department, in our consultation,
which Mr. Baker talked about is confident of its ability to
prosecute, and he can talk to that more fully. But, I would say
that it is our intent that these be enforceable. We want to
protect national security. And if there--we don't anticipate
that there would be problems, we don't think that we think that
we have worked out with the Justice Department a firm basis for
enforcement. But if we have missed something, we will want to
correct it, because we want to ensure that violations are able
to be prosecuted if there are violations of the treaty.
Senator Feingold. Mr. Baker, would you like to answer that?
Mr. Baker. Just to amplify, Senator, yes. I mean, one--as
you know, from your experience on the Judiciary Committee,
enforcing the criminal laws of the United States is a
multifaceted enterprise, and the first step of that is to make
sure that the statutes and regulations under which prosecutions
would be brought are as crystal clear as we can make them.
Should we encounter problems in the future, obviously, that's
something that we would fix. That would come out, I assume, in
judicial findings or difficulties we would have in bringing
charges, and so on and so forth.
So, I think we would be very supportive--indeed, urging--
that any changes that we saw that needed to be made to the
regulations would be done.
Senator Feingold. Mr. Baker, if defense articles or
services are retransferred to entities outside of the approved
communities, would a congressional resolution to block such
transfer enjoy the benefit of the expedited procedures provided
in the Arms Export Control Act?
Mr. Baker. So, Senator, to make sure that I understand--so
this would be a reexport from the United Kingdom or Australia
to another location?
Senator Feingold. To entities outside of the approved
communities.
Mr. Baker. Yes, I think----
Mr. Shapiro. I will say that, under the terms of the
treaty, a retransfer or reauthorization outside of the approved
community requires our--U.S.--approval. And so, and if they do
not--if they do not obtain U.S. approval, then that is a
violation of the law that can be prosecuted. So, we think that
there--that that provides ample means to ensure that there are
not improper retransfers or reauthorizations outside the
approved community.
Senator Feingold. Do you agree with that, Mr. Baker?
Mr. Baker. Yes, retransfers--I'm sorry--well, retransfers
or reexports without U.S. Government approval would be illegal,
under the AECA and the ITAR regulations as we would put them
forth after ratification.
Senator Feingold. I thank you both.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Lugar.
Senator Lugar. Mr. Baker, in the August 20, 2009, letter to
Attorney General Holder, Senator Kerry and I asked whether
there were any authorities that the Department of Justice
believes to be important or useful to effect the enforcement of
the treaties that would require an enactment of new
legislation.
Now, the Department answer indicated that, ``There are no
additional authorities necessarily for enforcement of these
treaties.'' Whether the additional authorities are necessary is
a different question than whether such authorities would be
useful, or would put the treaties enforcement on a sounder
basis.
At this point, what is the Department of Justice's position
on enforcement of the treaties being made more effective or
less vulnerable for a legal challenge to enact, when
appropriate, implementing legislation, rounding the enforcement
authorities for the treaties in the Arms Control Act itself?
Mr. Baker. Our current assessment, Senator, is that the
combination of the treaties, the AECA, and the ITAR regulations
would provide us with adequate tools to establish a criminal
violation of the--of those regulations and that framework. So,
our assessment is that because of the way the treaties are
drafted and their structure, that they are self-executing,
therefore no implementing legislation is required.
I can certainly take back as a question--if that's OK with
you, Senator, the question about whether additional legislation
would be necessary. Or would it be helpful, or would it add
something? Our assessment is that sitting here today, it's not
necessary, and that we can do what we need to do within the
existing structure.
Senator Lugar. Well, please take back the dual question
whether it's necessary or whether, in fact, it's desirable as a
point of good government and permanent implementation of this
idea.
Mr. Baker. Yes, I will. Thank you, Senator.
Senator Lugar. Now, Mr. Baker, or Secretary Shapiro, where
do these treaties fit into the review that on August 13 the
White House announced as a broad-based interagency process for
reviewing the overall U.S. export control system, which
includes defense trade processes? That's a broader concept, but
how do these treaties fit into that review?
Mr. Shapiro. As Senator Kerry pointed out, these treaties
are being negotiated with two close allies--the United Kingdom
and Australia--and provide a streamlined mechanism for defense
trade cooperation.
Our export trade review is looking at the system as a
whole. How do we--is it appropriate for a 21st century world,
and are there improvements that we can make that would better
protect our national security and update it for the 21st
century?
It is not anticipated that that export review would impact
the regime that we are establishing with the treaties, but that
is a much broader look at the defense trade process, in
general, not just the State Department, the Commerce
Department--it's an interagency process and is trying to,
again, make sure that we are protecting our national security
adequately in the 21st century.
Senator Lugar. Please discuss, just for a moment, whether
or not this review contemplates major changes in the way in
which the United States conducts defense trade with the United
Kingdom or Australia. Are these special cases or is there
anything more to be said about those two?
Mr. Shapiro. And again, the review has just gotten
underway, but in my participation in the review, it is not
designed to--it has not been discussed that it would change, in
any way, the defense trade regime that is being established
under these treaties. Again, it's a much broader view that it's
taking a look at a whole export control system that we
currently have, and particularly the licensing systems at both
the, you know, Department of Commerce and Department of State,
so--and this treaty regime creates a different structure for
that defense trade.
So, I would, again, we're early in the review, so I don't
have much more to say, but in the discussions that we've had,
indeed, people have pointed to the, you know, to these treaties
as, you know, something that we want to get ratified as a way
of improving our defense trade relationship between the United
States and United Kingdom and Australia, but it has not been
contemplated in the discussions thus far that the export trade
review will take a look at these treaties and make any changes
or modifications to these treaties.
Senator Lugar. Well, let me ask just one final question,
and this may be sort of an outrageous example of difficulty,
but let us take the situation in which a party in the United
States that is prepared to supply weapons or information or
whatever is required by the United Kingdom or Australia, but
this party--in addition to those two countries--makes some
exports to potential terrorist organizations in the world. It
could be under any number of covers, people supposedly as the
customers may seem, on the face of it, as legitimate customers
under the treaty, but the parties involved understand, really,
that there is a more liberal regime going on, here, and that
this may be the vehicle for making those kind of transfers.
Now, clearly, as you contemplate, the work both in State
and Justice, you believe you would have means of investigation
and prosecution in this country of parties, whoever they might
be who might contemplate such an activity. I'm just simply
curious, in the world in which we live, how rigorous this
investigation is, all the way through. How long it takes us to
discover that there is something amiss here before we begin
looking for the culprits who may, by this time, have fled our
shores altogether.
Mr. Shapiro. Well, I would point out that the treaty
contains certain protections that are designed to prevent that
type of conduct from happening. You have to be a member of the
approved community. We, in the United States, get to sign off
on who is a member of the United Kingdom or Australian approved
community. And we do that in consultation with our intelligence
agencies and the Department of Justice, to make sure that front
companies are not going to be members of the approved
community. So, that's a first line of defense.
Senator Lugar. Would Australian and United Kingdom
intelligence persons, or their equivalent of our investigative
folk, also be doing that? In other words, do we have the
benefit of whatever they know about particular customers?
Mr. Shapiro. Right. Well, remember that in both countries,
members--they can only have members of the approved community
who have intelligence security clearances. And in order to get
security clearances, they've been vetted.
So only those companies or persons who have security
clearances can be members of the approved community. So,
presumably, those intelligence agencies are vetting people to
ensure that they are not members of front companies, or
involved in transactions that we would not want.
So, the treaty provides a means to prevent that from
happening. In the event that somehow, some way, somebody got
through that process, then we have--then the--and we discover
that they have not--that they have tried to export under the
license improperly, we will have records through just the way
people with the license have to file with the Customs Service
certain information, people who are taking advantage of the
treaty will also be filing with the Customs Service certain
information, and they can check to ensure that the export is
going to the person who is listed on the paperwork that they
filed, and again that person should be a member of the approved
community.
Mr. Baker. Senator, yes, just briefly--the scenario that
you described, I think, is obviously illegal. It would be
obvious, I believe, under our laws as we would put them forward
in the regulations that that type of conduct would be
prohibited.
The challenge, then, becomes investigating it. Learning
about the offense in the first instance--and there's a variety
of ways that law enforcement agencies and agents learn about
offenses that I could go through here, but the next trick will
then be to gather the evidence and to interview the witnesses
who will be some--in the hypo that you described--some in the
United States and some abroad.
We will have to work closely with our allies in a
collaborative fashion to obtain that evidence, to get access to
those witnesses and to bring those people to justice. So, it's
a multifaceted response, again, to try to address the kind of
illegal activity that you've described in your hypothetical.
Senator Lugar. And, at least in your initial conversations
with our allies, they understand the predicament for all three
of us--Australia, United Kingdom, and the United States, that
there's a vetting procedure to begin with, those who are buying
and selling, but beyond that, an agreement for cooperation in
terms of collaborative investigation involving agencies
internationally.
Mr. Shapiro. Right. And that is included in the text of the
treaties that requires that violations have to be reported
immediately, and that there must be cooperation in any
investigations. So, this is an obligation that both countries
have undertaken.
Senator Lugar [presiding]. Thank you very much.
In the absence of the chairman, let me recognize you,
Senator Shaheen.
Senator Shaheen. Thank you very much, Senator Lugar, and I
apologize, I was at another hearing. But I wanted to be here
for two reasons.
First, to recognize Jim Baker who I had the good fortune to
work with at the Kennedy School. And my favorite story about
Jim is that he put on this sign for the students who were
coming into see him, ``Not `the' Jim Baker.'' [Laughter.]
So, we're delighted to have you here before the committee
today. Thank you very much.
But also wanted to be here because I wanted to make a point
that we heard yesterday at the European Affairs Subcommittee,
which I chair. And, obviously, I think, all of us want to be
able to support the ultimate objectives of these treaties,
these are our most critical allies, they're fighting shoulder
to shoulder with us in Afghanistan and a closer defense trade
relationship will help to reaffirm the important ties and
increase the ability of our forces to work on the ground, both
in Afghanistan and in other places in the future.
And I also appreciate the economic gains that would come
from a more efficient and streamlined exchange between our
defense firms and those of the United Kingdom and Australia and
that's a particular concern for us in New Hampshire where we
have a number of defense-related businesses who are very
interested in the outcome of what happens with these treaties.
I think BAE Systems is probably the biggest of those, who you
all would recognize, but also we have a number of their
suppliers and smaller businesses who are very concerned about
what will happen.
So, I want to offer my full support to the chairman and
ranking member, as we look at the best way to deal with moving
these treaties forward.
But, the issue that came up yesterday with respect to
concern in these treaties and others, is export control reform.
And I know, Senator Lugar, that you raised this in your
questions, but what we heard from some of the business
interests who were testifying, particularly small business, is
concern about the requirements that they need to comply with if
they're going to export.
And given the significance, I think, to our future economy,
we need to make sure that while we protect our security, we
also have regulations that help our businesses compete.
So, I wonder--I guess this question is really for you, Mr.
Shapiro, what--whether you're looking at ITAR regulations and
what potential there is to take a look at whether the current
regulations are still consistent with the new global economy
that we're in, or if it's--if some of the--they were designed
for the cold war, and whether we need to upgrade those?
Mr. Shapiro. Thank you, Senator Shaheen. And I remember,
during my confirmation hearing, you asked me about these
treaties, and I'm glad that we're able to have this hearing to
answer further questions about them.
As far as the export control reform effort, I think you hit
it right on the head, which is, we want to ensure that we have
an export control system that protects national security, but
also ensures that we have a system that makes sense in a 21st
century economy.
Now, we have gotten down in our review--it's still in the
earlier stages--we have not gotten down to the level of, this
regulation or that regulation needs to be changed. And indeed,
it's a very important part of this review, that we want to have
robust congressional consultation. And we want to know from the
congressional perspective what makes sense and what doesn't.
You're hearing from constituents, you've had--a number of
people on the Hill--have had expertise in this area, and we
want to be able to make sure that that is informing the
administration's export control reform effort.
So, the answer is ``Yes,'' we are taking that very
seriously, to ensure that we have an export control reform
effort that both protects national security but is also--has
mechanisms, efficient mechanisms--and we fully intend to
consult closely with Congress on this, going forward.
Senator Shaheen. And, do you have a timetable for when that
might start, and how long that might take?
Mr. Shapiro. Well, we've begun meeting, internal to the
administration. I think congressional consultations will begin
in earnest after the New Year, and how long it will take, you
know, I think there is an eagerness to get this done. Secretary
Gates has made clear that this is a priority of his. Under
Secretary Tauscher has expertise from her time in the House, so
we've got the right team in place to pursue this, but we want
to do it as quickly as makes sense. And, which will garner the
support, obviously, of Capitol Hill. So, I don't want to put a
timetable on it, but we recognize that this is a very real
issue to a lot of--to our national security, but also to a lot
of constituents. And so we want to get it right.
Senator Shaheen. OK. I appreciate that, and certainly
support that sentiment. I hope that there will be some sense of
urgency about the need to address this.
Thank you.
Thank you, Mr. Chairman.
The Chairman [presiding]. Well, thank you very much,
Senator Shaheen, I appreciate it. We appreciate your
stewardship of the European Affairs Subcommittee. And I know
you have a sense of how urgent this is.
This has really, kind of, dragged on and it's something
that we've got to resolve, one way or the other.
Now, Senator Lugar has asked important questions and I
would like just to incorporate the full committee in wanting to
have the answers appropriately. This is not adversarial. We
have one interest, which is to facilitate the process in a way
that keeps faith with our interests about arms exports.
And so, my hope is that you can really burn and churn, give
the answers Senator Lugar needs, that we need, to be reassured
about our direction, so the full Senate can give its advice and
consent in an intelligent and sensitive way to the interests
that are at stake, here.
If there are no--Senator Lugar, do you have any other
questions?
[No response.]
The Chairman. If not, we appreciate you coming up today, we
look forward to getting that information by mid-January, as I
say. I think that providing, you know, we're satisfied and we
have the ability to move forward, which I would hope we could,
we could do so expeditiously.
I know our friends in the United Kingdom and in Australia
are waiting to see how we proceed here, and obviously, I think
it's important to those relationships.
We stand adjourned.
[Whereupon, at 11:16 a.m., the hearing was adjourned.]
Additional Material and Questions and Answers Submitted for the Record
Letters Submitted for the Record by Senator John Kerry
Responses of Assistant Secretary of State Andrew Shapiro to Questions
Submitted by Senator Richard Lugar
Question. The Bush administration answered a series of questions
for the record in connection with this committee's May 21, 2008,
hearing on these treaties.
Do answers submitted in 2008 continue to accurately
represent the executive branch's current views and may the
committee rely on them as authoritative? If not, please
identify particular answers that no longer reflect the position
of the executive branch and provide the committee with
appropriate revised answers, including explanations as to the
need for each revision.
Answer. Based on a review of the questions for the record submitted
following the May 2008 hearing, revisions have been made to the
following questions: 5, 7, 44, 50, 53, 63, 72, and 79. Please see the
attached submission for the revisions and explanatory notes.
Question. In your written statement, you suggested that the
treaties could promote development of anti-IED capabilities and
counterpiracy and maritime counterterrorism capabilities important to
current military operations.
Does the Department believe that governmental programs of
the sort in your testimony are ineligible for license
exceptions under existing authorities available to the
Department of State and Defense under the Arms Export Control
Act (AECA)?
Answer. Exemptions available under existing authorities would
potentially permit a limited number of the transactions and other
activities involved in such programs to occur on a license-free basis.
However, these existing exemptions do not cover the range of activities
encompassed by such programs that exemptions under the treaties would
allow, nor do the limited exemptions that currently exist afford the
flexibility and enhanced ability for collaboration involving United
States, United Kingdom, and Australian industry that would be available
under the treaty regime.
Question. In response to a question for the record at the
committee's May 2008 hearing on the treaties, the Bush administration
stated that the median processing time for license applications for the
United Kingdom and Australia was ``7 days and 8 days respectively.''
Is this information still accurate? If not, please indicate
the current median processing time for such license
applications.
Please indicate how this license processing time poses
significant challenges for addressing urgent needs of the sort
described in your testimony.
Answer. The median processing time for the United Kingdom and
Australia continues to be 7 days and 8 days respectively in calendar
year 2009. Nonetheless, the export licensing process introduces the
potential for delay. The treaties are designed to mitigate delays that
can occur under the export licensing process.
In terms of delay, the treaties would accelerate the export of
defense articles and services and ensure that urgently needed goods and
services can be delivered in the most expeditious manner.
Although many export transactions can be anticipated by industry,
others are not. For those members of the approved community working on
a project covered under the treaties, the treaty regime will encourage
the free flow of discussions concerning controlled data, thereby
allowing scientists, engineers, sales associates and others to do their
job more efficiently and with less interruption. They would not have to
halt conversations regarding technical data covered by the treaties.
Today, if these conversations cross into areas unanticipated in the
original license applications, including discussing information about a
different model of a particular system not listed in the license
application, firms must stop the process and wait the period needed to
file for and receive approval from the government for this activity.
This stoppage can be particularly detrimental to the collaborative
process.
Furthermore, by removing the need to process thousands of licenses
approved for both countries (over 99 percent of which were approved)
the treaties will permit us to better focus on license applications to
countries and transactions that require individual review. This will
support our efforts to ensure that all licenses are processed in a
timely manner, especially those that are needed to support the
development of technology needed by U.S. and coalition forces.
The treaties, if ratified, would encourage the flow of information
and could eliminate days if not weeks of time currently spent filing
and waiting for a license before urgently needed equipment could be
shipped, data shared, or services provided. Facilitating the flow of
defense trade to these close allies enhances our mutual security,
signifies the close, special relationships we enjoy, facilitates
interoperability by permitting United Kingdom and Australian Armed
Forces to obtain U.S. equipment/technology with minimal to no delay,
removes barriers to defense trade that may cause foreign manufacturers
to design out U.S. content/technologies, and enables us to more closely
integrate our defense industries for the long term.
additional response of assistant secretary andrew shapiro to questions
submitted by senator lugar (september 20, 2010)
Question. What is the administration's position on whether the
Defense Trade Cooperation Treaties with the United Kingdom and
Australia are self-executing in the United States?
Answer. Notwithstanding the statement in the preamble of these
Treaties, the Treaties are not self-executing. They will be implemented
through legislation and regulations thereunder.
ATTACHMENT: REVISED 2008 QUESTIONS FOR THE RECORD
Questions for the Record Submitted to Acting Under Secretary of State
John Rood by Senator Joseph Biden, May 21, 2008 (revised January 26,
2010)
Question No. 5. Each treaty states in the preamble that ``the
provisions of this Treaty are self-executing in the United States.''
a. Was this language included at the request of the United States?
b. Why was it necessary to include this language?
c. What is the legal effect of including this language in the
preamble?
d. Does the inclusion of this language limit in any way the manner
in which these treaties can be implemented in the United States?
Answer. a. Yes.
With respect to b, c, and d, below, I am advised by the State
Department's Legal Adviser that:
b. It was not legally necessary to include this language in order
to make the treaties self-executing in the United States--this could
alternatively have been clarified through the record of the Senate's
advice and consent; however, at the time the treaties were negotiated,
it was considered desirable to leave no doubt as to the intended
effect.
c. It reflects a clear intent with respect to the domestic legal
effect of the treaties in the United States, including that the
treaties themselves provide sufficient authority to issue the
regulations necessary to fully implement them.
d. The Senate may, in consultation with the executive branch, take
steps in the Senate's resolution of advice and consent to each treaty
to address the manner in which these treaties are to be implemented.
Question No. 7. Under what legal authority will the Department of
State promulgate regulations for these treaties, given that the current
International Traffic in Arms Regulations (ITAR, 22 CFR 120-130) are
promulgated under the authority of section 38 of the Arms Export
Control Act, which presumably will be superseded by the treaties?
If no provision of law can be cited, what implications will
that have for enforcement actions against a company that fails
to abide by the new regulations?
Answer. Upon ratification of the treaties, the President would have
the authority to issue regulations pursuant to the treaties themselves
to create exemptions from the applicable licensing requirements of the
Arms Export Control Act and International Traffic in Arms Regulations.
These regulations would thus establish the designated safe harbors
contemplated by the treaties and establish requirements for
qualification for the safe harbor.
In addition, because the treaties would not supersede section 38(a)
of the Arms Export Control Act, as amended, the President would have
authority to promulgate regulations under section 38(a)(1) of the Arms
Export Control Act, as amended, to make conduct falling outside the
designated safe harbors subject to the enforcement regime of the Arms
Export Control Act.
Question No. 44. Article 5(2) of each treaty states the United
States Approved Community shall consist of nongovernmental entities
``registered with the United States Government and eligible to export
Defense Articles under United States law and regulation.''
a. On what basis is initial registration ever denied?
b. The International Traffic in Arms Regulations, at 22 CFR
122.1(c), notes that ``Registration does not confer any export rights
or privileges.'' Under current regulation and practice, is eligibility
to export established at the time of registration, or only when the
entity applies for its first license to export? If the latter, what
measures will be taken to establish a registered nongovernmental
entity's eligibility to export defense articles and, as a result, its
membership in the United States approved community, if that entity has
not yet applied for a license to export?
Answer. a. Neither initial nor renewal applications to register are
denied by the Department for anything but procedural reasons (e.g.,
errors on the application). The Arms Export Control Act requires that
companies in the defense arena (as defined by specific criteria) must
register with the Department and maintain this registration and does
not include a provision to deny a registration even for serious
criminal offenses. Even companies that have been debarred are still
required to maintain their registration as long as their defense
related activities meet the requirements for registration. In rare
cases, the Department will return a registration application based on
its analysis that the entity is not required to register under the
regulations or its activities are more appropriately and directly
regulated through another company that is or should be registered with
the Department.
b. Eligibility is a key element of the Arms Export Control Act
(AECA) and the International Traffic in Arms Regulations (ITAR).
Registration is the first step but an exporter must also be eligible as
defined in the ITAR. As provided in Article 5(2) of each treaty,
exporters under the treaties must meet the same requirements currently
followed for existing ITAR exemptions--they must be registered and
eligible.
Question No. 50. How will the U.S. Government ensure that the
freight forwarders and intermediate consignees involved in license-free
exports or transfers under the treaties are legitimate and reliable
entities?
Will freight forwarders and intermediate consignees have to
be members of the approved community? If so, what is the legal
authority under which the executive branch will establish this
or any other requirement relating to such persons, if section
38(g) of the Arms Export Control Act is not applicable to
exports or transfers under the treaties and given that neither
the treaties nor the implementing arrangements mention freight
forwarders or intermediate consignees?
Will it suffice to require that freight forwarders and
consignees be members of the approved community? Article 5(2)
requires that United States community members be ``registered
with the United States Government and eligible to export
defense articles under United States law and regulation,'' but
it is not clear to the committee whether an entity engaged only
in license-free exports or transfers would be investigated in
the manner that a registered exporter is investigated when it
first obtains an export license.
What are the possible advantages and disadvantages of
requiring that freight forwarders and consignees for exports
and transfers be certified Customs Brokers?
What are the possible advantages and disadvantages of
requiring that freight forwarders and consignees for exports
and transfers register with the Department of State? Does the
Directorate of Defense Trade Controls (DDTC) have sufficient
resources to run a registration and investigation program of
this sort?
Answer. In the United States, some freight forwarders are also
registered as exporters, subjecting them to the registration and
eligibility requirements established for inclusion in the approved
community. For those who are not, we are exploring an option to allow
the use of other freight forwarders/intermediate consignees engaged in
activities under the treaty who are in good standing with the
Department of Homeland Security's Bureau of Customs and Border
Protection (CBP) as licensed Customs Brokers. The advantage of this
approach is that licensed Customs Brokers are subject to background
investigation and must pass a comprehensive examination of U.S. customs
regulations administered by CBP. Another possible option would be to
require that freight forwarders/intermediate consignees handling
exports under the treaty register with DDTC. A registry of freight
forwarders/intermediate consignees would be different from current ITAR
registration requirements for manufacturers, exporters, and brokers,
but would be subject to the same vetting procedures used for
registration. The advantage of this approach is that it includes
screening against the Department's Watchlist and vetting by law
enforcement. While this would represent additional workload, we believe
it could be managed with existing resources or resources made available
by the decline in licensing workload associated with the treaties. The
State Department, in conjunction with CBP, has been exploring options
and will implement them in the International Traffic in Arms
Regulations.
The legal basis for placing requirements on the freight forwarders
and intermediate consignees comes from the treaties as well as section
38(a)(1) of the Arms Export Control Act, as amended.
Question No. 53. Under the terms of the treaties, what legal
authority is there for any Party to use freight forwarders or
intermediate consignees that are not members of the approved community
to handle exports or transfers?
May the initial export of a defense article be handled by an
entity not in the approved community, because it has not yet
been provided to a Treaty Partner? If so, will the U.S.
Government still have the legal authority to restrict the
choice of freight forwarders or intermediate consignees?
Once a defense item has been exported, must subsequent
transfers be handled only by approved community members,
because any transfer ``from the Approved Community'' must be
treated as a retransfer or a reexport pursuant to Article 1?
Answer. The requirements applicable to freight forwarders and
intermediate consignees will be specified in the regulations
promulgated pursuant to the Arms Export Control Act and the treaties.
These regulations will detail the ability of freight forwarders and
intermediate consignees to participate in treaty exports. The legal
basis for placing requirements on the freight forwarders and
intermediate consignees comes from the treaties as well as section
38(a)(1) of the Arms Export Control Act, as amended.
Question No. 63. Under Secretary Rood, in his testimony before the
committee on May 21, 2008, told the committee that it was the opinion
of the State Department's Office of the Legal Adviser that ``the Treaty
will change the legal reporting requirements under the Arms Export
Control Act,'' making it discretionary for the executive branch to
provide notification to Congress prior to providing United States
Government approval for a retransfer or reexport pursuant to Article
9(1) of both treaties.
a. Other than the treaties themselves, what provision of United
States law authorizes the President to consent (or withhold such
consent) to the retransfer or the reexport of defense articles exported
pursuant to the treaties?
b. If notification to Congress of proposed retransfers and
reexports will be discretionary, does the executive branch believe that
the provisions of section 3(d) of the Arms Export Control Act regarding
procedures for consideration of a resolution of disapproval will still
apply to these cases? Or will Congress have to change the law if it
wants to preserve its role in the review of arms transfers to third
parties?
c. What other provisions of U.S. law on the export or transfer of
defense articles would no longer apply if such defense articles are not
exported pursuant to section 38 of the Arms Export Control Act, such as
under an agreement meeting the conditions of section 38(j)? For
example, would sections 3(a), 3(c)(2), 3(f), 3(g), 4, 5, 6, 23, 24, 39,
39A, 40, 73 and 81 of the Arms Export Control Act still apply to
exports or transfers or, as appropriate, to the approval of reexports
or retransfers?
d. What is the effect of the treaties on the application of laws
governing the transfer of nuclear, chemical or biological materials,
equipment or technology? If such exports were not to be exempted from
the scope of the treaties pursuant to Article 3(2) and section 4 of the
implementing arrangements, or were later to be removed from the list of
defense articles exempt from the scope of the treaty, could items under
Categories XIV and XVI of the United States Munitions List be exported
under the treaties without an export license or other case-by-case
authorization?
e. What is the effect in United States law of the statement in
Article 3(3) of both treaties that, ``Once delivered pursuant to a
[Foreign Military Sales program] Letter of Offer and Acceptance, such
Defense Articles may be treated as if they were exported under this
treaty in accordance with procedures mutually determined in the
implementing arrangements''? Does that statement affect in any way the
requirements of section 3(d) of the Arms Export Control Act?
Answer. I am advised by the office of the State Department's Legal
Adviser of the following:
a. As a retransfer or reexport of defense articles exported
pursuant to the treaties is outside of the scope of the treaties'
licensing exemptions, retransfer or reexport authorization would be
provided in accordance with section 38 of the Arms Export Control Act,
as amended (AECA).
b. Section 3(d) of the AECA does not apply as a matter of law
because the original export was not pursuant to section 38 of the AECA.
c. As stated in the answer to Question 8, certain statutory
provisions, though not explicitly overridden by the treaties, are
rendered irrelevant for exports and transfers that fall within the
scope of the treaties because there will be no license application or
other approval pursuant to section 38 of the AECA to trigger the
provisions of the statute. With respect to the particular provisions
referenced in the question:
The requirement in section 3(a) to obtain authorization
prior to any retransfer to a person not an officer, employee or
agent of the particular government or to change the end-use of
a defense article or defense service would not apply to a
defense article or defense service for which the transfer or
the change in end-use is pursuant to the treaty;
The requirement in section 3(a)(2) to report to Congress
where a substantial violation of any agreement entered into
pursuant to the Arms Export Control Act, or any predecessor
act, may have occurred will continue to apply with respect to
defense articles and defense services provided pursuant to a
letter of offer and acceptance pursuant to the Foreign Military
Sales program;
The restriction in section 3(f) on the making of sales and
leases will continue to apply;
The requirement in section 3(g) relating to agreements
applicable to sales or leases would continue to apply to
letters of offer and acceptance pursuant to the Foreign
Military Sales program;
Defense articles and defense services will still only be
sold or leased for the purposes identified in section 4;
The requirements of section 5 will continue to require a
standard clause in U.S. Government contracts entered into for
the performance of any function under the Arms Export Control
Act. With respect to the reporting requirement contained in
section 5(c), while such requirement will continue to apply to
Foreign Military Sales, it will not apply to exports pursuant
to either treaty as such exports will not be a ``licensed
transaction under this Act'';
The requirements of section 6 will continue to apply to the
issuance of letters of offer and the extension of credits or
guarantees. Such requirements will not apply to exports under
either treaty as such exports may occur without the issuance of
an export license;
Section 23 will remain a potential authority for the
provision of defense articles and defense services to Australia
and the United Kingdom;
Guaranties may be provided pursuant to section 24;
Section 39 will continue to apply to sales made pursuant to
the Foreign Military Sales program. However, it will not apply
to exports under either treaty as such exports will not be
``licensed or approved under Section 38'';
Section 39A will continue to apply to sales made pursuant to
the Foreign Military Sales program. However, it will not apply
to exports under either treaty as such exports will not be
``licensed under this Act'';
Section 40 will continue to apply;
Section 73 will continue to apply; and
Section 81 will continue to apply.
d. The list of defense articles exempted from treaty coverage
includes ``Defense Articles listed in the Missile Technology Control
Regime (MTCR) Annex, the Chemical Weapons Convention (CWC) Annex on
Chemicals, the Convention on Biological and Toxin Weapons, and the
Australia Group (AG) Common Control Lists (CCL).'' The list of exempted
defense articles also includes ``USML Category XVI Defense Articles
specific to design and testing of nuclear weapons'' and Defense
Articles specific to naval nuclear propulsion. DOD is unlikely to
recommend, or agree to, a removal of either of these exemptions. Items
in Categories XIV and XVI of the United States Munitions List could
only be exported under the treaties without a license if they did not
include one of the listed exempted technologies and if they met all
other requirements of the treaties (e.g., approved community, approved
program or project, etc.).
e. If the treaty partner government transfers in accordance with
the treaties a defense article or defense service originally sold
pursuant to the FMS program, it is not required to request or obtain
USG authorization. Therefore, the notification requirements contained
in section 3(d) of the AECA would not apply.
Question No. 72. Article 12 states that ``Each Party shall require
that entities within its Community . . . maintain detailed records . .
. [and] shall ensure that such records . . . are made available upon
request to the other Party.'' Is it the view of the executive branch
that the treaties themselves, upon Senate advice and consent and
ratification by the President, give the executive branch legal
authority to require by regulation that United States persons maintain
detailed records and make such records available to foreign governments
in connection with the treaties? If so, please explain.
a. To what officials, in each Treaty Partner, would such records be
available on request?
b. Would such requests require the concurrence of the Treaty
Partner?
c. Section (3)(a) of the implementing arrangements states that the
sharing of records between Participants shall be ``subject to their
respective laws.'' What are the relevant provisions of law in the
United States and in each Treaty Partner, and how are they likely to
affect the maintenance and sharing of detailed records required by
Article 12?
Answer. The executive branch's legal authority derives from the
Arms Export Control Act, as well as the treaties. The sharing of such
records will be done in accordance with the procedures outlined in the
Implementing Arrangements, section 11(2), to support treaty operations
and enforcement efforts.
a. In Australia, such records would be available to government
officials in organizations including the Department of Defence (Defence
Export Control Office, Defence Legal and the Defence Security
Authority), Australian Customs Service and the Australia Federal
Police. In the United Kingdom, records would be available to government
officials in organizations including Department of Business,
Enterprise, and Regulatory Reform and Her Majesty's Revenue and Customs
as enforcing agencies and to the Ministry of Defence, which will
monitor compliance with the treaty.
b. Concurrence of the Treaty Partner would be required where a
request was made from one Treaty Partner of an entity in the
jurisdiction of the other, i.e., a U.S. request relating to a British
company and vice versa. Neither the United Kingdom, Australia, nor the
United States would be expected to seek concurrence where it is
checking records of entities in its own territory.
c. In the United States, the government's ability to obtain records
and documents would be subject to our domestic laws, most importantly
the fourth amendment to the U.S. Constitution. Australia's legislation
to give effect to the provisions of the treaty will require that
Australian community members make and maintain records in relation to
each activity done pursuant to the treaty. It is proposed that if a
member fails to make and maintain such records it should constitute an
offence. Various U.K. legislation must be considered when dealing with
a request of this kind, including the Data Protection Act, Freedom of
Information Act and the Official Secrets Act, as well as common law
duties of confidentiality. Given the type of records to be transferred,
it is not expected that there would be a problem in allowing the
transfer, especially as companies will have agreed to provide such
information as part of joining the approved community.
Question No. 79. If an export under the treaties is diverted to a
third party while on route to a Treaty Partner, what offenses will have
been committed under U.S. or Treaty Partner law? (Assume, for the
purposes of this question, that both the shipper and the putative end-
user were involved in the diversion and that wrongful acts were
committed in both countries.) Which Party to the treaty will have the
primary role regarding investigation and prosecution?
Answer. It will depend on the facts. The diversion to a third party
of an export from the United States might constitute conduct falling
outside the terms of the treaties, their Implementing Arrangements, and
the regulations promulgated pursuant to the treaties. As the amendments
to the International Traffic in Arms Regulations would require that the
foreign parties obtain U.S. Government authorization prior to any
retransfer or reexport, such conduct would constitute a violation of
the Arms Export Control Act and the International Traffic in Arms
Regulations. Such conduct may also violate new Australian legislation
that would be enacted to implement the provisions of the treaty. Such
conduct may also violate the U.K. Trade in Goods Control Order 2005,
which has effect when there has been an export control offense but the
goods have never touched U.K. soil, provided the act that led to them
being ``diverted'' was done either by a U.K. citizen anywhere in the
world or by a foreign national based in the United Kingdom. This U.K.
legislation has been widely drafted such that ``any act calculated to
promote'' would mean that what may appear a minor role in the act could
be caught under this order. The treaty partners would work together to
investigate the matter in a coordinated fashion. The Treaty Partners
would consult each other on possible prosecutions related to the
conduct and determine the most effective and efficient means of
criminal investigation and prosecution. The independent prosecuting
authorities in each nation would maintain discretion in any individual
case.
______
Responses of Associate Deputy Attorney General James A. Baker to
Questions Submitted by Senator Richard G. Lugar
Questions. Under the executive branch's proposed approach to
implementing these treaties, it would rely on the self-execution of the
treaties themselves to create an exception to the license requirements
contained in the Arms Export Control Act (AECA), and it would then rely
on the AECA to promulgate regulations making conduct falling outside
treaty-created safe harbors subject to the AECA's enforcement regime.
In so doing, the executive branch would appear to be relying, at root,
on a treaty as the basis for modifying the scope of the criminal and
civil liability regime provided for in the AECA.
No. 1. Has the Department of Justice's Office of Legal
Counsel reviewed whether it is consistent with the Constitution
to rely in this way on a treaty to alter the scope of a
criminal liability regime created by statute? If so, what has
the Office of Legal Counsel concluded on this question? If not,
please indicate why such a review by the Office of Legal
Counsel has not been conducted.
Answer. It is the view of the Department of Justice that the
exemptions to the enforcement regime of the Arms Export Control Act
that would be established by the United Kingdom and Australia treaties
and the regulations promulgated thereunder would be constitutionally
permissible. Although a treaty generally cannot itself establish a
Federal criminal offense, see, e.g., Hopson v. Krebs, 622 F.2d 1375,
1380 (9th Cir. 1980) (``Treaty regulations that penalize individuals
are generally considered to require domestic legislation before they
are given any effect''); The Over the Top, F.2d 838, 845 (D. Conn.
1925), we are not aware of any authority for the view that treaties may
not exempt certain actors from, or have the practical effect of
narrowing the scope of, criminal culpability under other Federal law.
The United Kingdom and Australia treaties, and the regulations to be
promulgated thereunder, would not prescribe any additional criminal
offenses; rather, they would merely exempt certain conduct, undertaken
in conformity with the treaties and the implementing regulations, from
the AECA's enforcement regime. Please also see the response to Question
8.
No. 2. Is the Department of Justice aware of any other
instances in which a self-executing treaty has provided the
basis for modifying the scope of a statutory regime providing
for criminal or civil penalties under U.S. law? Please identity
any such instances.
Answer. The United States has previously entered into treaties that
provide persons with immunity from civil suits and criminal sanctions
in particular circumstances. See, e.g., 1961 Vienna Convention on
Diplomatic Relations, art. 31(l), 23 U.S.T. 3227 (granting diplomatic
agents ``immunity from the criminal jurisdiction of the receiving
State,'' as well as immunity from ``civil and administrative
jurisdiction'' with certain exceptions); 1963 Vienna Convention on
Consular Relations, art. 43(l), 21 U.S.T. 77, 104 (granting consular
officials immunity from ``the jurisdiction of'' the host country's
judicial or administrative authorities for ``acts performed in the
exercise of consular functions''). Moreover, in Cook v. United States
(The Mazel Tov), 288 U.S. 102, 118-19 (1933), the Supreme Court held
that a ``self-executing'' treaty between the United States and Great
Britain ``superseded'' the authority that an earlier statute had
conferred upon the Coast Guard to board, search, and seize vessels
suspected of being engaged in the illegal smuggling of liquors into the
United States beyond our territorial waters.
Questions. In an August 20, 2009, letter to Attorney General
Holder, Senator Kerry and I asked whether there were any authorities
the Department of Justice believes to be important or useful to the
effective enforcement of these treaties that would require the
enactment of new legislation. The Department's answer indicated only
that ``there are no additional authorities necessary for enforcement of
these treaties.'' Whether additional authorities are ``necessary'' is a
different question than whether such authorities would be useful or
would put treaty enforcement on a sounder footing.
No. 3. Does the Department of Justice believe enforcement of
these treaties could be made more effective, or less vulnerable
to legal challenge, through the enactment of appropriate
implementing legislation grounding the enforcement authorities
for the treaties in the AECA?
Answer. As both the Department of Justice and the Department of
State previously have advised the committee, new legislation is not
needed to implement the treaties, or to penalize conduct that falls
outside the scope of the treaties and implementing regulations. The
AECA already contains sufficient authorities to penalize exports that
do not satisfy the conditions for exemption established by the treaties
and implementing regulations.
No. 4. In an enforcement proceeding, does the Department of
Justice believe that U.S. courts will attach as much weight to
regulations issued in the absence of a new implementing statute
as they would to a statute providing authorities for enforcing
the treaties?
Answer. Yes.
No. 5. From an enforcement perspective, what disadvantages,
if any, does the Department of Justice see to the enactment of
implementing legislation to provide authorities for enforcing
the treaties?
Answer. Although the Department does not foresee any disadvantages
from an enforcement perspective if Congress were to enact further
implementing legislation, we do not believe such legislation is
necessary.
Questions. If the Senate is to approve these treaties, it is
important that we have a high degree of confidence that the law
enforcement community will have the tools and resources it needs to
enforce against any abuses of the treaties.
No. 6. Can you assure the committee that the Department of
Justice's ability to enforce against such abuses will not be
diminished by the absence of amendments to the AECA to provide
the authorities for such enforcement actions?
Answer. With clear and precise implementing regulations issued by
the Department of State within the International Traffic in Arms
Regulations (``ITAR''), the absence of legislative amendments to the
Act would not diminish our ability to enforce the Act.
No. 7. Does the Department of Justice believe that the
treaties and regulations your testimony contemplates require
the compilation and maintenance of sufficient documentation
relating to the export of United States defense articles,
defense services, and related technical data to facilitate law
enforcement efforts to detect, prevent, and prosecute criminal
violations of any provision of the AECA, including the efforts
on the part of countries and entities engaged in international
terrorism to illicitly acquire United States defense items?
Answer. The regulations issued by the Department of State within
the ITAR to implement and effectuate the treaties include additional
and strong documentation requirements as well as the requirement for
foreign companies to comply with the document demands of law
enforcement agencies. Such conditions will contribute significantly to
our ability to investigate and prosecute diversion schemes and the
abuse of the treaties' exemption.
Question. In your testimony, you indicate that the executive branch
would intend to rely on section 38(a)(1) of the AECA to promulgate
regulations making conduct falling outside treaty-created safe harbors
subject to the AECA's enforcement regime. Other provisions of the AECA
operate to limit the President's ability to establish regulations
exempting foreign countries from the AECA's license requirements. For
example, section 38(j) of the AECA provides that the President may use
the AECA's regulatory authority to exempt a foreign country from the
AECA's licensing requirements only if specified conditions are met.
No. 8. Does the Department of Justice believe that the
requirements of section 38(j) of the AECA must be satisfied
before the executive branch may promulgate regulations under
section 38(a)(1) of the AECA to implement these treaties? If
not, why not?
Answer. No. Subsection 38(j) provides that the President may not
utilize the regulatory authority in paragraph 38(a)(1) ``to exempt a
foreign country from the licensing requirements of this chapter''
except pursuant to the terms of a ``binding bilateral agreement with
the foreign country'' as specified under that section. 22 U.S.C.
Sec. 2778(j)(1)(A); see also id. Sec. 2778(f)(2). The regulations
exempting certain parties acting pursuant to the United Kingdom and
Australia treaties from the AECA's licensing requirements, however,
would be promulgated pursuant to the self-executing treaties
themselves, not paragraph 38(a)(1). To the extent that the Secretary of
State promulgates regulations under paragraph 38(a)(1) of the AECA,
those regulations would not themselves exempt any parties from the
AECA's licensing requirements; rather, they would clarify that conduct
falling outside the treaties and their implementing regulations is
subject to the AECA's enforcement regime.
Questions. In your testimony you indicate that the content of the
regulations implementing these treaties would be critical to the
Department of Justice's ability to enforce against abuses of the
treaties.
No. 9. Do you agree that in order to ensure effective
prosecution, it will be crucial that any regulations
promulgated regarding permitted and prohibited activities in a
safe harbor created by the treaties must be precise and
complete regarding what actions constitute offenses under the
treaties, their implementing arrangements, and regulations
implementing the treaties in the United States?
Answer. Yes. Regulations promulgated under paragraph 38(a)(1) of
the AECA will ensure that conduct falling outside of the treaties'
exemptions, and conduct violating the prohibitions and conditions of
the ITAR, are subject to the AECA's civil and criminal enforcement
regime.
No. 10. If so, what elements does the Department of Justice
believe must be included in such regulations to satisfy such
requirements?
Answer. Such regulations will specify the precise scope and limits
of the treaties' exemptions, and the conditions that must be satisfied
in order to qualify for such exemptions. In addition, the regulations
will unambiguously prescribe prohibited conduct or conduct falling
outside the treaties' exemptions.
______
Responses of Assistant Secretary of Homeland Security John Morton,
Immigration and Customs Enforcement, and Acting Commissioner Jayson P.
Ahern, Customs and Border Protection, to Questions Submitted by Senator
Richard Lugar
Question No. 1. In 2003, then-Under Secretary for Border Security
and Transportation Security Asa Hutchinson stated with regard to
bilateral agreements for licensing exemptions with the United Kingdom
and Australia that ``Depending on the volume of license exempt cargo
moving through each [U.S.] port, these proposed ITAR country exemptions
could increase or significantly increase . . . workloads and require
additional inspectors'' for outbound Customs review of exports made
under the agreements.
In 2008, DHS stated in answers for the record submitted to this
committee that U.S. Customs and Border Protection (CBP) ``expects the
impact on inspections for [the treaties] to be minimal because the new
regulatory exemption may be handled similar to existing exemptions.''
It also stated that ``CBP does not plan on adding additional officers
at . . . ports'' as a result of implementation of the treaties in the
United States.
Do CBP's 2008 answers mean that no more scrutiny will be
applied to outbound review of exports made under the treaties
than would be applied to unlicensed exports under, for example,
the Canadian exemption?
Answer. CBP utilizes a number of techniques to screen and target
licensable export shipments. The existence of a license or license
exemption is not the sole criteria in determining the need for
additional screening requirements. Therefore, should the treaties be
ratified, exports made under the license exemptions for the treaties
would currently receive the same level of scrutiny as a licensed
shipment.
Question. No. 2. Will CBP or Immigration and Customs Enforcement
(ICE) modify any existing practice or seek any additional resources for
review of munitions exports to the United Kingdom and Australia, and do
CBP and ICE expect that DHS will provide updated guidance to CBP and
ICE regarding review of munitions exports to the United Kingdom and
Australia, once the treaties are in force?
Answer. The inspection of exports is the primary responsibility of
CBP. ICE is charged with the investigation of illegal exports. ICE will
continue to utilize its broad export authorities to investigate the
illegal export and diversion of munitions items. Based on the
implementing arrangements and proposed U.S. Government and foreign
government regulations, policy, and procedural changes for the Defense
Trade Cooperation Treaties with the United Kingdom and Australia, ICE
would be permitted to participate with the host government on end-use
verifications in order to ensure the prompt investigation by the host
government of alleged violations. The treaties have not yet been
ratified, so new regulations have not yet been issued.
Question. No. 3. What impact will the implementation of these
treaties have on ICE's Project Shield America?
Answer. Through ICE's industry outreach program, ``Project Shield
America'' (PSA), special agents conduct presentations for U.S.
manufacturers of arms and sensitive technology to educate them about
export laws and solicit their assistance in preventing illegal foreign
acquisition of their products. Since late 2001, ICE special agents have
conducted more than 17,000 industry outreach presentations, which have
resulted in tips that have led to successful ICE criminal
investigations around the world. Although ICE does not believe there
will be a significant impact on PSA, the implementation of the treaties
will necessitate the updating of materials and require additional
training for ICE special agents who conduct PSA outreach.
Question No. 4. In the absence of legislation grounding enforcement
authorities for the treaties in a statute, does ICE believe that the
treaties would pose any challenges for its investigation efforts in
export enforcement that would prevent or inhibit its ability to pursue
cases resulting in arrests, prosecutions, and convictions of offences
under the Export Administration Act, the Arms Export Control Act, the
Trading with the Enemy Act, the International Emergency Economics
Powers Act, or other related statutes?
Answer. No, legislative changes are not needed to implement the
treaties, as the absence of legislation will not pose any additional
challenges for its investigative efforts in export enforcement. ICE
continues to believe that strong implementing regulations are a vital
component to the success of these treaties.
As far as whether or not the current U.S. statutes are legally
sufficient to allow export enforcement investigations and prosecutions,
ICE defers to the statements made by James A. Baker, Associate Deputy
Attorney General, U.S. Department of Justice, before the Senate
Committee on Foreign Relations at a December 10, 2009, hearing on the
treaty between the United States, the United Kingdom of Great Britain,
and Northern Ireland concerning defense trade cooperation:
A transaction that fully complies with the safe harbor
established by regulations promulgated pursuant to the treaties
would not be subject to criminal or civil penalties under AECA
[the Arms Export Control Act]. Conversely, a transaction
falling outside the designated safe harbors would remain fully
subject to the civil and criminal enforcement measures under
the AECA. As the Department has stated previously, no new
authorizing legislation would be required to prosecute such a
violation.
Because the treaties are self-executing, they are
``equivalent to an act of the legislature'' for purposes of
Federal law. Medellin v. Texas, 128 S. Ct. 1346, 1356 (2008).
Upon ratification of the treaties, therefore, the President
would have the authority to issue regulations pursuant to the
treaties themselves to create exemptions from the applicable
licensing requirements of the AECA and ITAR [International
Traffic in Arms Regulations]. These regulations would thus
establish the designated safe harbors contemplated by the
treaties and establish requirements for qualification for the
safe harbor.
In addition, the President would have authority to promulgate
regulations under section 38(a)(1) of the AECA to make conduct
falling outside the designated safe harbors subject to the
enforcement regime of the AECA. These regulations would be
promulgated pursuant to the ``broad statutory delegation'' in
section 38 of the AECA to control the import and the export of
defense articles and defense services. B-West Imports, Inc. v.
United States, 75 F.3d 633, 636 (Fed. Cir. 1996). It is the
Department's understanding that these regulations will track
those to be promulgated under the treaties and would thus
establish conditions for persons exporting or transferring
pursuant to the treaties, and an export or transfer that fails
to satisfy those conditions would be enforceable through both
criminal and civil sanctions.
Question No. 5. Given that the scope of the treaties is larger than
the scope of the bilateral licensing exemption agreements, does CBP
believe that workloads on its inspectors would increase or
significantly increase?
Answer. CBP has statutory and regulatory authority to take
appropriate action, including the authority to investigate, detain or
seize any export or attempted export, of defense articles or technical
data contrary to the International Traffic in Arms Regulations (ITAR).
CBP has been coordinating with the Department of State, Directorate
of Defense Trade Controls to ensure the regulatory provisions
implementing the United Kingdom and Australia treaties can be
effectively and efficiently enforced for all export shipments.
Additionally, CBP coordinates with the Census Bureau to modify the
Automated Export System (AES) to address the conditions of the proposed
ITAR exemptions.
To identify shipments that do not meet the conditions established
by the ITAR to implement the treaties, CBP will use AES and the
Automated Targeting System (ATS) to identify shipments that have a
high-risk of being in violation of the ITAR. For those shipments
targeted CBP will inspect the commodities and review the associated
shipping documents. If violations are believed to exist, the shipments
will be detained by CBP and referred to the Directorate of Defense
Trade Controls to determine if there is a violation of the ITAR. Once
the determination is made, the shipment will be either released or in
the case of a violation the shipment will be seized by CBP.
Question. No. 6. In 2005, the U.S. Government and Accountability
Office (GAO) found that 256 CBP officers were assigned to cover all
outbound enforcement at 317 U.S. ports of exit and border crossings. In
2008, DHS stated in answers submitted to this committee that 256 CBP
officers were assigned to outbound enforcement, supported by 32
nonuniformed personnel. Have these numbers changed since 2008?
Answer. In March 2009 CBP reestablished the Outbound Enforcement
Division to focus on export and outbound enforcement issues. The office
includes program managers that work with the Department of State,
Directorate of Defense Trade Controls to address all export control
issues for all International Traffic in Arms Regulations controlled
commodities.
CBP has increased the number of personnel performing outbound
enforcement at the 317 U.S. ports of exit from approximately 256 in
2008 to over 350 in 2009. Local CBP ports of exit continue to manage
and address local outbound enforcement operations based on workload or
identified threat.
CBP is working with the local ports of exit to reestablish Outbound
Enforcement Teams in those ports where personnel are available and
there is sufficient export workload.
Question No. 7. Given that the scope of the treaties is larger than
the scope of the bilateral licensing exemption agreements, how can CBP
contend that no additional inspectors will be required to ensure that
the burdens mentioned in 2003 by then-Under Secretary Hutchinson do not
pose challenges to the investigative and enforcement missions of CBP
and ICE?
Answer. As explained in Question No. 5 (850863) CBP has statutory
and regulatory authority to take appropriate action, including the
authority to investigate, detain or seize any export or attempted
export, of defense articles or technical data contrary to the
International Traffic in Arms Regulations (ITAR).
The number of shipments under the proposed United Kingdom and
Australia ITAR license exemptions is expected to relate to a
corresponding decrease in the number of shipments under a license to
the same countries. Therefore, we do not anticipate an increase in
shipments that would necessitate an increase in the number of
inspectors that are needed.
______
Responses of Associate Deputy Attorney General James Baker to Questions
Submitted by Senator Russell Feingold
Question. Mr. Baker, during the hearing I asked whether, if defense
articles or services are retransferred to entities outside the approved
community, a congressional resolution to block such a transfer would
enjoy the benefit of the expedited procedures provided in the Arms
Export Control Act. You responded that such transfers would require
U.S. approval. I understand but that does not mean that it would
trigger the special procedures laid out in the Arms Export Control Act.
My reading is that the expedited review procedures of that Act would
not be triggered by a retransfer because such retransfer would be
governed by the terms of the treaty not the Act. Is that correct?
Answer. It is correct that the ``report-and-wait'' procedures set
forth in 22 U.S.C. Sec. 2753(d)(3) by their terms apply only to certain
defense articles and services the export of which has been ``licensed
or approved under'' section 38 of the AECA, and thus would not apply to
the retransfer of items exported pursuant to an exemption under the
treaties and their implementing regulations. Nevertheless, as the
Department of State indicated in its response to QFR No. 64 in 2008, it
``intends to notify Congress of any request to retransfer or reexport
to a person or entity outside of the particular approved community a
defense article or defense service where the value of such transaction
meets or exceeds the thresholds identified in section 3(d) of the
AECA.'' The Department of State has informed us that this remains an
accurate statement of its intention, i.e., that the Department of State
which has the authority under the treaties to withhold approval of such
retransfers (see Article 9 of the treaties)--would not provide such
approval in a case where Congress by joint resolution (i.e., enacted
legislation) prohibits such retransfer.
Question. Please list the information required pursuant to the Arms
Export Control Act and the information that will be required pursuant
to the regulations to be issued under the treaties.
Answer. The information generally required pursuant to the Act and
the ITAR depends upon the nature of the export license or approval
requested and is set forth at sections 123, 124, and 125 as well as
other portions of the ITAR. The information required with regard to
exports under the treaties will be listed at sections 126.16 and 126.17
of the proposed revised ITAR regulations. The Department of State
issues and administers those requirements.
Question. Please list the information derived from the license
application that was most commonly used to prosecute violators of the
Arms Export Control Act or International Traffic in Arms Regulations.
Answer. Our prosecution of AECA violations commonly involves
unlicensed diversion schemes. When applicable to an investigation,
information contained in a licensing application concerning the end-use
and end-user is generally of greatest interest to investigators.