| Washington, D.C. – The House version of the National Defense Authorization Act would create confusion and uncertainty with respect to the control of sensitive defense and dual-use exports, according to senators who sent a letter(s) to Defense Authorization Conference Committee members. The text of both the letters follows. July 8, 2004 Honorable John Warner, Chairman Honorable Carl Levin, Ranking Member Senate Armed Services Committee 228 Senate Russell Office Building Washington, DC 20510 Dear Mr. Chairman, Ranking Member and Conferees: The House version of the National Defense Authorization Act (NDAA), H.R. 4200, includes a number of sections that would create confusion and uncertainty with respect to the control of sensitive defense and dual-use exports. These sections make changes to the Arms Export Control Act (AECA) and the Export Administration Act (EAA) and fall under the jurisdiction of multiple House and Senate committees, yet they have not been properly vetted through the House and Senate committee process. These provisions will not improve, enhance or strengthen our export control system. Instead, they will undercut our efforts to build higher fences around the items that truly threaten the national security and penalize our U.S. exporters and friendly international partners in the process. We would urge you to reject the inclusion of Sections 1401 through 1406 and 1214 from H.R. 4200 in the conference report of the 2005 NDAA. Without significant revisions, these provisions will create unnecessary bureaucratic red tape, slow the licensing process considerably, undermine efforts to strengthen cooperation between our European and other allies, and cloud the transparency of our export control system with respect to the licensing of dual-use and munitions items. The appropriate committees of jurisdiction need time to fully consider such drastic measures before passing them into law. Section 1401 would amend the AECA to include new definitions for "license," "agent," and "exporting agent." Although these definitions appear innocuous, we are concerned that defining a license as "a document bearing the word license issued by the United States Government agency" could result in a backlog of license approvals for purely logistical reasons. First, not all export documents use the word "license", which could delay license renewals, and, second, some items exported under general licenses may not require individual "paper" licenses, which could conceivably preclude the use of general licenses for the export of some items. Section 1402 would prohibit the President from issuing an exemption (by regulation or otherwise) from the licensing requirements established under the section for the export of all defense items "that is significant military equipment." This provision will not improve the ability of the U.S. to regulate the transfer of significant military equipment, but, rather, it will hurt the ability of the President to respond to an international crisis in a timely and targeted fashion. It is important that Congress work with the President to ensure that the United States can cooperate with our friends and allies when the need is greatest. Section 1403 would unnecessarily expand the licensing requirement for cooperative projects between the U.S. and friendly foreign countries. In addition to sending a clear message to our trading partners and international allies that cooperation is only necessary when the President declares an emergency, the section would also greatly increase the number of licenses required to engage in international cooperation, thereby defeating the purpose of entering into bilateral and multilateral agreements to improve and streamline the licensing process. Section 1404 would impose costly and unnecessary burdens on the Department of Defense (DOD). It would force the DOD to license thousands of items on the Militarily Critical Technologies List (MCTL), which is hundreds of pages long and has not been regularly reviewed, despite statutory requirements, since its establishment under the 1979 EAA. The 1979 EAA gave the Secretary of Defense the authority to develop a list of militarily critical technologies to be used in "guiding the determinations of any official exercising export licensing responsibilities under the Act." The MCTL was never meant to be a finite list of items requiring export licenses. It was developed as a supporting document that the Secretaries of Defense and Commerce could use to jointly determine what items from the MCTL should be integrated into the Commerce Control List (CCL). The CCL, not the MCTL, is the official list of dual-use items for which export licenses are required. Section 1404 would completely change the purpose of the MCTL and undermine the current working structure of the U.S. export control system. It would create a parallel export control regime under the sole jurisdiction of the DOD, based on an out of date list that is inconsistent with the control lists under the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). These control lists, which separately control distinct types of items and are updated regularly, frame our export control system and instruct our agencies and departments to work together through the interagency licensing process to make informed decisions about export control licensing. In contrast, Section 1404 would force individual items to be controlled simultaneously under multiple lists and will create confusion as to which department or agency is ultimately responsible for issuing an export control license. The MCTL is out of date. It lists thousands of the items that were once considered cutting-edge, but are now considered commonplace at best and obsolete at worst. For example, the MCTL currently includes references to computers over 1500 MTOPS or Million Theoretical Operations Per Second, and CAD technology research involving 1 micron feature sizes (most companies are now typically in the .065 micron range). While the Institute for Defense Analysis has recently recommended that the measurement for controlling computer exports be completely revamped and raised to the level of 400 GFLOPS or 400 billion (Giga) Floating-point Operations Per Second, the 1500 MTOPS figure is still listed on the MCTL, and would presumably come into affect at the time of the bill's passage. Section 1404 would not only expand the number of licenses required for outdated technologies, but it would also expand the number of licenses required for some destinations which now require no license at all (e.g., Canada) or many of which have no practical licensing requirements due to high license exception eligibility (e.g., Britain, Japan). That means the transfer of thousands of computing devices, including laptops and some hand held devices, would require licenses before taking these commonplace items overseas. The DOD would be solely responsible for this broad expansion of licensing decisions, forcing a massive shift in resource allocation within the DOD. Section 1404 would put in place a statute that wastes scarce DOD resources on cumbersome bureaucracy needed to process millions of new licenses for outdated items that do not threaten our national security. Moreover, it would force U.S. companies to invest new funds in expanded internal compliance programs for commonplace items – like laptops being transported via commercial airline flights – rather than investing in the research and development of new cutting-edge defense items. As such, we strongly believe Section 1404 is counterproductive and will endanger the long term health of our national defense. Any change to the U.S. export control system should be fully vetted with all of the committees of jurisdiction in both the House and Senate before including this provision in the conference report. Section 1405 would also expand the number of licenses required to be approved by the Department of Defense for the export of any dual use good or technology or defense article or service to any country that has "previously" exported dual-use to the Peoples' Republic of China (PRC) for military, police and internal security services, if such export would have been prohibited had it been made from the U.S. The language is drafted in a manner that creates confusion among industry leaders and government officials. We are concerned that, as drafted, the provision would require a license for every dual-use export to countries with which we have partnerships, such as Germany, if it were found to have approved the transfer of a single munitions list item to a PRC entity the U.S. defined as police or military. Section 1214, which was added by Representative Hostettler during the HASC markup, builds on Section 1405 and would create even more hostility among the international community, as it sanctions any foreign company that has transferred any item included on the U.S. Munitions List to the PRC regardless of its origin. Specifically, the provision puts in place a 5-year ban on DOD procurement contracts, and further, prohibits the issuance of waivers for the procurement ban. First, this amendment, like Title XIV, should be vetted with the appropriate committees of jurisdiction in both the House and Senate before being passed into law. Second, coupled with Section 1405, it eliminates the flexibility of the U.S. to work with foreign partners and would undoubtedly create animosity among our closest allies. Section 1406 requires a semi-annual report to Congress from the President on our international export control system. Although the language recognizes the importance of working with our friends and allies rather than against them, we believe this language fails to address a number of critical questions related to the participation of the U.S. in multilateral export control regimes. We have to work with our international partners if we hope to control the flow of dangerous items to terrorists and the countries that sponsor or harbor them. However, we believe this language needs to be fully discussed and improved in the appropriate committees of jurisdiction before being included in the conference report. The U.S. export control system is a complex network of statutes, regulations and administrative functions that fit together in a manner aimed at protecting America's homeland from dangerous countries and terrorists. Drastic changes to this system must be fully considered by the House and Senate Committees of jurisdiction before being buried in the Defense authorization conference report. This is especially true for the provisions that directly amend the AECA or the EAA, which has been expired since August 20, 2001. As such, would urge you to strike Sections 1401 through 1406 and Section 1214 from H.R. 4200. Thank you for your tireless efforts on these defense-related issues. If we can be of any assistance during conference negotiations on S. 2400 and H.R. 4200, please contact us immediately. Sincerely, Senators Enzi, Boxer and Sunun --------------- Honorable John Warner, Chairman Honorable Carl Levin, Ranking Member Senate Armed Services Committee 226 Senate Russell Office Building Washington, DC 20510 Dear Chairman Warner and Ranking Member Levin: The House Armed Services Committee (HASC) included a number of provisions in H.R. 4200, the National Defense Authorization Act (NDAA) that would make significant changes to the arms Export Control Act (AECA) and the Export Administration Act (EAA), which fall under the jurisdiction of the Senate Foreign Relations Committee and the Senate Banking Committee. They have not been subject to deliberation in any of the Senate Committees of jurisdiction or on the Senate floor. Because the Senate has not had the opportunity to consider the House provisions, we would urge you to reject the inclusion of Sections 1401 through 1406 and Section 1214 from H.R. 4200 in the conference report of the 2005 NDAA. Thank you for your tireless efforts on these defense-related issues. If we can be of any assistance during conference negotiations of S. 2400 and HR 4200, please contact us immediately. Sincerely, Senators Shelby, Sarbanes, Ensign, Allen, Hagel, Bunning, Sununu, Jeffords, Chafee, Crapo, Coleman, Roberts, Alexander, Boxer, Bennett, Schumer, Carper, Johnson, Dole, Leahy, Enzi, Clinton |
