*Chapter 11
Contents*
*Chapter 11
Text*
RECOMMENDATIONS OF THE SELECT
COMMITTEE TRANSMITTED ON JANUARY 3, 1999 TO THE PRESIDENT
AND CONGRESS
## Nuclear Weapons
**1. Semi-Annual Report by the President on PRC
Espionage**
The Select Committee recommends that the President report to the
Speaker and Minority Leader of the House, and the Majority Leader and
Minority Leader of the Senate, no less frequently than every six months on
the steps, including preventive action, being taken by the Department of
Energy, the Department of Defense, the Federal Bureau of Investigation,
the Central Intelligence Agency, and all other relevant Executive
departments and agencies to respond to espionage by the People's Republic
of China (PRC) as typified by the theft of sophisticated U.S. nuclear
weapons design information, and the targeting by the PRC of U.S. nuclear
weapons codes and other national security information of strategic
concern.
**2. Urgent Priority to Department of Energy
Counterintelligence Program**
As a matter of urgent priority, the Select Committee believes the
Department of Energy must implement as quickly as possible and then
sustain an effective counterintelligence program.
To this end, the Select Committee recommends the following:
**3. Implementation and Adequacy of
PDD-61**
The appropriate congressional committees should review, as
expeditiously as possible, the steps that the Executive branch is taking
to implement Presidential Decision Directive 61 and determine whether the
Administration is devoting, and Congress is providing, sufficient
resources to such efforts and whether additional measures are required to
put an adequate counterintelligence program in place at the Department of
Energy at the earliest possible date.
**4. Comprehensive Damage
Assessment**
The appropriate Executive departments and agencies should conduct a
comprehensive damage assessment of the strategic implications of the
security breaches that have taken place at the National Laboratories since
the late 1970s (or earlier if relevant) to the present and report the
findings to the appropriate congressional committees.
**5. Legislation to Implement Urgent and Effective
Counterintelligence**
The appropriate congressional committees should report legislation, if
necessary, to facilitate accomplishment of the objectives set forth
above.
**6. Five-Agency Inspectors General Examination of
Scientific Exchange** Program Risks to National Security
The Select Committee recommends that the Secretaries of State, Defense,
and Energy, the Attorney General, and the Director of Central Intelligence
direct their respective Inspectors General and appropriate
counterintelligence officials to examine the risks to U.S. national
security of international scientific exchange programs between the United
States and the PRC that involve the National Laboratories. Such Executive
department and agency heads shall transmit the results of these
examinations, together with their views and recommendations, to the
Speaker and the Minority Leader of the House, the Majority and Minority
Leaders of the Senate, and appropriate congressional committees no later
than July 1, 1999.
**7. Congressional Examination of Whether
Department of Energy Should ** Maintain U.S. Nuclear Weapons
Responsibility
The Select Committee recommends that the appropriate congressional
committees consider whether the current arrangements for controlling U.S.
nuclear weapons development, testing, and maintenance within the
Department of Energy are adequate to protect such weapons and related
research and technology from theft and exploitation.
**8. Intelligence Community Failure to Comply with
National Security Act; Need for Congressional Oversight**
In light of the fact that the heads of Executive departments and
agencies of the intelligence community failed adequately to comply with
congressional notification requirements of the National Security Act with
respect to the theft of secrets from the National Laboratories, the Select
Committee urges Congress to insist again on strict adherence to such legal
obligations.
##
## International Actions
With respect to international actions by the United States, the Select
Committee recommends:
**9. Need for PRC Compliance with the Missile
Technology Control Regime**
The United States should insist that the PRC adhere fully to, and abide
by, the Missile Technology Control Regime and all applicable
guidelines.
**10. Need for U.S. Leadership to Enforce Missile
Technology Control Regime**
The United States must vigorously enforce, and seek multilateral
compliance with, the Missile Technology Control Regime.
**11. Need for U.S. Leadership to Establish
Binding International Proliferation Controls**
In light of the demise of the Coordinating Committee on Multilateral
Export Controls (COCOM) and the insufficiency of the Wassenaar Arrangement
on Export Controls for Conventional Arms and Dual-Use Goods and
Technologies, the United States should work, including in the context of
the scheduled 1999 review of the Wassenaar Arrangement, to establish new
binding international controls on technology transfers that threaten
international peace and U.S. national security.
**12. U. S. Action to Improve Multilateral
Tracking of Sensitive Technology Exports**
In light of the demise of COCOM and the insufficiency of the Wassenaar
Arrangement, the Select Committee recommends that the United States take
appropriate action, including in the context of the scheduled 1999 review
of the Wassenaar Arrangement, to improve the sharing of information by
nations that are major exporters of technology so that the United States
can track movements of technology and enforce technology control and
re-export requirements.
**13. U.S. Action to Stem Russian Weapons
Proliferation to PRC**
In light of the PRC's aggressive military technology acquisition
campaign and its record as a proliferator, the United States should work
to reduce the transfers of weapons systems and other militarily
significant technologies from Russia and other nations to the PRC. These
actions should include strengthening international measures, including
economic incentives, to encourage Russia to become a full partner in
stemming the proliferation of weapons.
**14. New Legal Requirements for Executive Branch
Reporting on Proliferation**
Appropriate congressional committees should report legislation
requiring the Secretary of State, the Director of Central Intelligence,
and the heads of other relevant Executive departments and agencies to
report in a timely fashion to appropriate congressional committees,
including the House Permanent Select Committee on Intelligence and the
Senate Select Committee on Intelligence, on technology transfers that
raise a proliferation concern and on the implementation of all the
foregoing recommendations for international actions by the United
States.
## Satellite Launches
**15. Implementation of the Strom Thurmond
National Defense Authorization Act for FY 1999**
The Select Committee expects that the Executive branch will
aggressively implement the Satellite Export Control Provisions of the
Strom Thurmond National Defense Authorization Act for FY 1999.
**16. State Department Should Have Sole Satellite
Licensing Authority**
To protect the national security, the congressional judgment that the
Department of State is the appropriate agency for licensing both exports
of satellites and any satellite launch failure investigations must be
faithfully and fully implemented.
**17. State Department Need for Adequate Personnel
and Resources for Satellite Export Licensing**
To protect the national interest in foreign commerce, the Department of
State must ensure, consistent with national security, that satellite
export licenses and notices to Congress are acted on in a timely fashion
and that exporters are informed about the progress of their applications
and have access to appropriate dispute resolution procedures. In order to
achieve the foregoing, the Executive branch and the Congress should ensure
that the Department of State has adequate personnel and resources devoted
to processing export license applications.
**18. Corrective Tax Legislation for Satellite
Exports**
To ensure that satellite manufacturers are not disadvantaged in such
collateral areas as tax credits by the transfer to the State Department of
responsibility to license satellite exports, the appropriate congressional
committees should report necessary legislation.
**19. Heightened Requirements for Defense
Department Monitoring of Foreign Launches**
The Department of Defense must give high priority to its obligations
under the Strom Thurmond National Defense Authorization Act, including
requirements for (i) recruiting, training, and maintaining a staff
dedicated to monitoring launches in foreign countries of U.S. satellites;
and (ii) establishing and monitoring technology control plans to prevent
any transfer of information that could be used by the PRC to improve its
missile launch capabilities.
**20. Defense Department, Not Satellite Firms,
Should Be Responsible for Security at Foreign Launches**
The Select Committee recommends that the appropriate congressional
committees report legislation providing that, in connection with foreign
launches of U.S. satellites, the Department of Defense shall contract for
security personnel who have undergone background checks to verify their
loyalty and reliability. The number of guards shall be sufficient to
maintain 24-hour security of the satellite and all related missile and
other sensitive technology. The satellite export licensee shall, as a
condition of licensure, be required to reimburse the Department of Defense
for all associated costs of such security.
**21. Need for Adequate and Permanent Force of
Well Trained Defense Department Monitors**
The Department of Defense shall ensure sufficient training for space
launch campaign monitors and the assignment of adequate numbers of
monitors to space launch campaigns. The Department of Defense also shall
ensure continuity of service by monitors for the entire space launch
campaign period, from satellite marketing to launch, and, if necessary,
completion of a launch failure analysis. In addition, the Department of
Defense shall adopt measures to make service as a monitor an attractive
career opportunity.
**22. Need for Full and Timely Reporting of
Technology Passed to PRC, and of Foreign Launch Security
Violations**
The Department of Defense monitors shall maintain logs of all
information authorized for transmission to the PRC, including copies of
any documents authorized for transmittal, and reports on launch-related
activities. Such information shall be transmitted on a current basis to
the Departments of Defense, State, and Commerce, and to the Central
Intelligence Agency. Such documents shall be retained for at least the
period of the statute of limitations for violations of the International
Traffic in Arms Regulations (ITAR). In addition, the Department of Defense
shall adopt clear written guidelines providing monitors the responsibility
and the ability to report serious security violations, problems, and
issues at the overseas launch site directly to the headquarters office of
the responsible Defense Department agency.
**23. Application of Export Control Laws to Space
Launch Insurers**
The Select Committee recommends that relevant Executive departments and
agencies ensure that the laws and regulations establishing and
implementing export controls are applied in full to communications among
satellite manufacturers, purchasers, and the insurance industry, including
communications after launch failures.
**24. Expansion of U.S. Launch Capacity in
National Security Interest**
In light of the impact on U.S. national security of insufficient
domestic, commercial space-launch capacity and competition, the Select
Committee recommends that appropriate congressional committees report
legislation to encourage and stimulate further the expansion of such
capacity and competition.
## High Performance Computers
The Select Committee supports the sale of computers to the PRC for
commercial but not military purposes. The Select Committee recommends that
the appropriate congressional committees report legislation that requires
the following:
**25. Legislation to Require Comprehensive Testing
of HPCs, Clustering, and Massive Parallel Processing in National Security
Applications**
The Select Committee recommends that appropriate congressional
committees report legislation directing the Department of Energy, in
consultation with the Department of Defense, to conduct a comprehensive
review of the national security implications of exporting high-performance
computers (HPCs) to the PRC. This review should include empirical testing
of the extent to which national security related operations can be
performed using clustered, massively-parallel processing or other
combinations of computers.
**26. Annual Threat Assessment of HPC Exports to
PRC**
The Select Committee recommends that appropriate congressional
committees report legislation directing the Intelligence Community to
conduct an annual comprehensive threat assessment of the national security
implications of the export to the PRC of HPCs and other computers that can
be clustered or combined through massively parallel processing.
**27. End Use Verification for PRC Use of
HPCs**
The Select Committee recommends that the appropriate congressional
committees report legislation that requires:
**ï¿½ **As a condition to U.S.
HPC export licensing, the establishment by the PRC of an open and
transparent system by September 30, 1999, which provides for effective
end-use verification for HPCs sold or to be sold to the PRC and, at a
minimum, provides for on-site inspection of the end-use and end-user of
such HPCs, without notice, by U.S. nationals designated by the U.S.
Government.
**ï¿½ **Failure to establish such
a system by that date should result in the U.S. Government's lowering
the performance level of HPCs that may be exported to the PRC, the
denial of export licenses for computers destined to the PRC, or other
appropriate measures.
**ï¿½ **An independent evaluation
of the feasibility of improving end-use verification for HPCs in the
PRC, and preventing the use of such HPCs for military
purposes.
**28. U.S. Leadership for Multinational HPC Export
Policies**
The Select Committee recommends that the appropriate congressional
committees report legislation that requires efforts by the Executive
branch to encourage other computer-manufacturing countries, especially
those countries that manufacture HPCs, to adopt similar policies toward
HPC exports to the PRC.
## Export Legislation and Other Technology
Controls
The Select Committee believes that it is in the national interest to
encourage commercial exports to the PRC, and to protect against the export
of militarily sensitive technologies. To this end:
**29. Reauthorization of Export Administration
Act**
The Select Committee recommends that the appropriate congressional
committees report legislation to reenact the Export Administration Act,
with particular attention to re-establishing the higher penalties for
violation of the Act that have been allowed to lapse since 1994.
**30. Prioritization of National Security Concerns
With Controlled Technologies; Continuous Updating**
Relevant Executive departments and agencies should establish a
mechanism to identify, on a continuing basis, those controlled
technologies and items that are of greatest national security concern.
**31. Executive Department Approvals for Exports
of Greatest National Security Concern**
With respect to those controlled technologies and items that are of
greatest national security concern, current licensing procedures should be
modified:
**ï¿½ **To provide longer review
periods when deemed necessary by any reviewing Executive department or
agency on national security grounds; and
**ï¿½ **To require a consensus by
all reviewing Executive departments and agencies for license approval,
subject to appeal procedures.
**32. Streamlined Licensing
Procedures**
With respect to controlled technologies and items that are not of
greatest national security concern, current licensing procedures should be
modified to streamline the process and provide greater transparency,
predictability, and certainty.
**33. Effect of Maintaining Looser National
Security Controls for Hong Kong Since Its Absorption by PRC on July 1,
1997**
The Select Committee recommends that appropriate congressional
committees report legislation requiring appropriate Executive departments
and agencies to conduct an initial study, followed by periodic reviews, of
the sufficiency of customs arrangements maintained by Hong Kong with
respect to the PRC and the appropriateness of continuing to treat the Hong
Kong S.A.R. differently from the PRC for U.S. export control purposes.
Such a study should consider, among other things, the implications of
unmonitored border crossings by vehicles of the People's Liberation
Army.
**34. Mandatory Notice of PRC or Other Foreign
Acquisition of U.S. National Security Industries**
The Select Committee recommends that appropriate congressional
committees report legislation amending the Defense Production Act of 1950
to require notice to the Committee on Foreign Investment in the United
States (CFIUS) by all U.S. companies that conduct national
security-related business of any planned merger, acquisition, or takeover
of the company by a foreign entity or by a U.S. entity controlled by a
foreign entity. The amendment also should require Executive departments
and agencies to notify CFIUS of their knowledge of any such merger,
acquisition, or takeover.
## Intelligence/Counterintelligence
Issues
**35. Comprehensive Counterintelligence Threat
Assessment of PRC Espionage**
Supplementing its recommendations with respect to security at the
National Laboratories, the Select Committee further recommends that
Executive departments and agencies with counterintelligence expertise
undertake a comprehensive counterintelligence threat assessment of PRC
espionage targeted against U.S. public and private entities.
**36. Legislation to Improve Sharing of Sensitive
Law Enforcement Information within the Executive Branch**
The Select Committee recommends that appropriate congressional
committees report legislation to authorize and direct the Department of
Justice to promptly share national security information, on a classified
basis, with appropriate Executive departments, agencies, and entities. To
achieve this objective, the Select Committee recommends the creation of an
appropriate interagency mechanism.
**37. Five-Agency Inspectors General Examination
of Countermeasures Against PRC Acquisition of Militarily Sensitive
Technology**
The Select Committee recommends that appropriate congressional
committees require the Secretaries of State, Defense, Commerce, and the
Treasury and the Director of Central Intelligence to direct their
respective Inspectors General to investigate the adequacy of current
export controls and counterintelligence measures to protect against the
acquisition by the PRC of militarily-sensitive U.S. technology, and to
report to Congress by July 1, 1999, regarding their findings and measures
being undertaken to address deficiencies in these areas.
**38. All-Source Intelligence Analysis of PRC
Plans for Technology Acquisition**
The Select Committee recommends that appropriate congressional
committees report legislation directing the Intelligence Community to
undertake and maintain a current, all-source analysis of PRC aims, goals,
and objectives with respect to the acquisition of foreign, and
particularly U.S., technologies, including, for example, PRC efforts to
exploit the open character of U.S. society by penetrating businesses,
academic and social institutions, and political practices. Such
legislation should include a requirement to report on the adequacy of
resources, encouragement, and priority status accorded all-source
intelligence collection and analysis by relevant Executive departments and
agencies concerning the PRC and PRC counterintelligence.
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