Table Of Contentjo 3 S. HRG. 103-538
THE EXPORT ADMINISTRATION ACT OF 1994
Y 4. B 22/3: S. HRG. 103-538
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
INTERNATIONAL FINANCE AND MONETARY POLICY
OF THE
COMMITTEE ON
AND URBANAFFAIRS
BANKING, HOUSING,
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
ON
AMENDING THE EXPORT ADMINISTRATION ACT TO BRING EXISTING
CONTROLS MORE INTO LINE WITH TODAY'S POLITICAL AND ECO-
NOMIC REALITIES. THE FIRST AND MOST SIGNIFICANT REASON FOR
A NEW ACT WAS THE COLLAPSE OF THE SOVIET UNION AND THE
WARSAW PACT ALLIANCE. A SECOND MAJOR DEVELOPMENT IS THE
INCREASING PROLIFERATION OF WEAPONS OF MASS DESTRUCTION
AND THEIR MEANS OF DELIVERY BY THE NATIONS OF IRAQ AND
NORTH KOREA.
FEBRUARY 3 AND 24, 1994
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
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ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington.DC 20402
ISBN 0-16-044335-0
79-567O-94-1
3
JO S. HRG. 103-538
THE EXPORT ADMINISTRATION ACT OF 1994
Y 4. B 22/3: S. HRG. 103-538
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
INTERNATIONAL FINANCE AND MONETARY POLICY
OF THE
COMMITTEE ON
BANKING, HOUSING, AND URBANAFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
ON
AMENDING THE EXPORT ADMINISTRATION ACT TO BRING EXISTING
CONTROLS MORE INTO LINE WITH TODAY'S POLITICAL AND ECO-
NOMIC REALITIES. THE FffiST AND MOST SIGNIFICANT REASON FOR
A NEW ACT WAS THE COLLAPSE OF THE SOVIET UNION AND THE
WARSAW PACT ALLIANCE. A SECOND MAJOR DEVELOPMENT IS THE
INCREASING PROLIFERATION OF WEAPONS OF MASS DESTRUCTION
AND THEIR MEANS OF DELIVERY BY THE NATIONS OF IRAQ AND
NORTH KOREA.
FEBRUARY 3 AND 24, 1994
Printed for the use of the Committee on Banking, Housing, and Urban Affairs
JUL 2
1 ©54
U.S. GOVERNMENT PRINTING OFFICE
~ ^^^^Ag
79-567CC WASHINGTON 1994 '
: Bi
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice.Washington.DC 20402
ISBN 0-16-044335-0
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
DONALD W. RIEGLE, JR., Michigan, Chairman
PAUL S. SARBANES, Maryland ALFONSE M. D'AMATO, New York
CHRISTOPHERJ. DODD, Connecticut PHIL GRAMM, Texas
JIM SASSER, Tennessee CHRISTOPHER S. BOND, Missouri
RICHARD C. SHELBY, Alabama CONNIE MACK, Florida
JOHN F. KERRY, Massachusetts LAUCH FAIRCLOTH, North Carolina
RICHARD H. BRYAN, Nevada ROBERT F. BENNETT, Utah
BARBARA BOXER, California WILLIAM V. ROTH, Jr., Delaware
BEN NIGHTHORSE CAMPBELL, Colorado PETE V. DOMENICI, New Mexico
CAROL MOSELEY-BRAUN, Illinois
PATTY MURRAY, Washington
STEVEN B. HARRIS, StaffDirector and ChiefCounsel
HOWARD A. MENELL, Republican StaffDirector
Edward M. Malan, Editor
Subcommittee on International Finance and Monetary Policy
JIM SASSER, Tennessee, Chairman
PATTYMURRAY, Washington CONNIE MACK, Florida
PAUL S. SARBANES, Maryland PHIL GRAMM, Texas
JOHN F. KERRY, Massachusetts ROBERT F. BENNETT, Utah
BARBARA BOXER, California WILLIAM V. ROTH, JR., Delaware
BEN NIGHTHORSE CAMPBELL, Colorado CHRISTOPHER S. BOND, Missouri
CHUCK MARR, StaffDirector
PATRICK A. MULLOY, Senior Counsel/International Affairs Adviser
SAUL SINGER, Republican Professional StaffMember
PAMELA Ray-Strunk, Republican Professional StaffMember
(ID
CONTENTS
THURSDAY, FEBRUARY 3, 1994
Page
Openingstatement ofSenatorSasser 1
Opening statements, comments, orprepared statements of:
SenatorMurray 3
SenatorMack 15
Prepared statement 40
Senator Boxer 40
SenatorRiegle 41
Senator D'Amato 41
WITNESSES
Judd Gregg, U.S. Senator, New Hampshire 4
Prepared statement — 42
Christopher A. Padilla, district manager, Federal Government Affairs
AT&T; Chairman, Export Controls Working Group; on behalf of the Na-
tionalAssociationofManufacturers 7
Prepared statement 44
Multilateral orUnilateral? 46
When andhow to "Go ItAlone" 46
Fixingthe system 47
Clarity in regulations 47
Response to writtenquestionsof:
SenatorRiegle 80
SenatorSasser 80
Timothy—Dwyer, vice president/general manager, Intercontinental Oper-
ations Sun Microsystems, Inc.; on behalf ofthe Emergency Committee
forAmerican Trade 11
Prepared statement 48
Executive Summary 48
Introduction 49
Summary 49
Purpose ofcontrols 49
Clarification ofcontrol authority 50
Anticipatory list construction 50
Additional financial assistance to exporters 51
Conclusion 51
Response to writtenquestions of:
SenatorRiegle 82
SenatorSasser — 83
Derrel De Passe, vice president, Worldwide Government Relations Varian
Associates, Inc.; onbehalfoftheAmerican ElectronicsAssociation 13
Prepared statement 52
Summary 52
Continuing problems 52
Legislative recommendations 52
Specificbills 52
Testimony 53
Response to written questions of:
SenatorRiegle 87
SenatorSasser 88
(III)
IV
— Page
BoydJ. McKelvain, senior manager, International Trade Regulation General
Electric;onbehalfofthe National Foreign Trade Council 16
Prepared statement 58
Dr. Thomas H. Karas, SeniorAssociate, International Security and Commerce
Program, Office ofTechnologyAssessment 24
Prepared statement 61
Themes 62
Role ofmultilateral controls 62
Role ofeconomic costs ofcontrols in regulatory policies and decisions 64
Response to written questions of:
SenatorRiegle 102
SenatorSasser 106
Dr. Paul Freedenberg, Former Under Secretary of Commerce; International
Trade Consultant, Baker& Botts 27
Prepared statement 67
The paceofcomputingtechnology andcontrollability 67
Parallelcomputing 69
Possible framework for new EAA 70
Unilateral controls 71
Indexation 72
The OfficeofForeignAvailability 72
Inter-Agency process 72
Dispute resolution 73
Conclusion 73
Response to written questionsof:
SenatorRiegle Ill
SenatorSasser 113
Henry D. Sokolski, National Institute forPublicPolicy Fellow 30
Prepared statement 73
Overview 73
The proliferation threats we face 74
How export controls can mitigate these threats 76
What changesto U.S. exportcontrols doesthis recommend 77
Whatourpolicy shouldbetoward CoCom's successor 78
Response to writtenquestionsof:
SenatorRiegle 114
SenatorSasser 115
Dr. Gerald L. Epstein, Director, Assessment of the Proliferation of Weapons
ofMass Destruction, International Security and Commerce Program, Office
ofTechnologyAssessment 35
Response to written questions ofSenatorSasser 106
Additional Material Supplied for the Record
Emergency Committee for American Trade, "Underlying Concepts for United
States Export Control Reforms" 118
Council on Competitiveness news release 119
The Washington Quarterly, "Nonapocalyptic Proliferation: A New Strategic
Threat?" 121
President's Export Council, Subcommittee on Export Administration, letter
toRonald Brown, Secretary ofCommerce 134
THURSDAY, FEBRUARY 24, 1994
Opening statement ofSenatorSasser 141
Openingstatements, comments, or prepared statements of:
SenatorMack 142
SenatorMurray 143
SenatorKerry 144
SenatorSarbanes 149
Senator D'Amato 150
SenatorRiegle 172
V
Page
WITNESSES
Barry E. Carter, Acting Under Secretary for Export Administration, Bureau
ofExportAdministration, DepartmentofCommerce, Washington, DC 145
Prepared statement 172
Introduction 172
Objectives 173
Encourage more effective multilateral regimes 173
Economic security andunilateral controls 173
Improveour abilityto prevent nonproliferation 174
Simplify and streamlinethe export control system 174
Transparency andindustry rights ofpetition 175
Sanctionsharmonization 176
Strengthenenforcement 176
Otherissues 176
Future ofCoCom 177
Response to writtenquestions of:
SenatorRiegle 190
SenatorSasser 193
SenatorMurray 195
Dr. Lynn E. Davis, Under Secretary for International Security Affairs, De-
partmentofState, Washington, DC 151
Prepared statement 177
ClintonAdministration nonproliferation strategy 178
Multilateral nonproliferation regimes 178
Multilateral regimeto replace CoCom 178
Liberalization ofcontrols and the new EAA 179
Disciplines on unilateral controls 180
Conclusion 181
Response to written questionsof:
SenatorRiegle 201
SenatorSasser 203
SenatorMurray 205
Frank G. Wisner, Under Secretary for Policy, Department of Defense, Wash-
ington, DC 154
Prepared statement 181
Response to writtenquestionsof:
SenatorRiegle 210
SenatorMurray 210
Norman A. Wulf, Acting Assistant Director, Bureau of Nonproliferation and
Regional Arms Control, U.S. Arms Control and Disarmament Agency,
Washington, DC 155
Prepared statement 184
ACDA: Nonproliferation andexport controls 185
ACDA'srole in export controls 185
Response to written questions of:
SenatorRiegle 213
SenatorMurray 215
John G. Keliher, Director, Office ofNon-Proliferation and National Security,
DepartmentofEnergy, Washington, DC 157
Prepared statement 187
THE EXPORT ADMINISTRATION ACT OF
1994
THURSDAY, FEBRUARY 3, 1994
U.S. Senate, Committee on Banking, Housing, and
Urban Affairs, Subcommittee on International
Finance and Monetary Policy,
Washington, DC.
The Subcommittee met at 10:05 a.m., in room 538 ofthe Dirksen
Senate Office Building, Senator Jim Sasser (Chairman of the Sub-
committee) presiding.
OPENING STATEMENT OF SENATOR JIM SASSER
Senator Sasser. The Subcommittee will come to order.
This morning the Subcommittee on International Finance and
Monetary Policy will be conducting a hearing on the Export Admin-
istration Act.
Now the Export Administration Act has not been significantly
changed since it was amended by the Omnibus Trade and Competi-
tiveness Act of 1988.
In both 1990 and 1992, under the very able leadership ofSenator
Sarbanes, the Committee and the Full Senate passed on a biparti-
san basis a bill to amend the Export Administration Act. Unfortu-
nately neither the bill that came out of Committee nor passed the
Senate became law.
Late last year the President, recognizing that change was long
overdue, took bold steps to bring existing controls more into line
with today's political and economic realities.
It is now time to change the underlying statute. I think there is
general consensus on that subject.
Following last year's simple 15-month extension, the Export Ad-
ministration Act expires on June 30, 1994. The Subcommittee in-
tends to have a new Export Administration Act on the books at
that time.
The new Act must reflect dramatic world developments which
have fundamentally altered the export control environment. The
first and most significant, obviously, was the collapse of the Soviet
Union and the Warsaw Pact Alliance. That collapse is now obvious,
I think, to all.
Since the late 1940's, when President Truman spoke of an Iron
Curtain descending over Eastern Europe which marked the early
days of the Cold War, the thrust of U.S. export control policy has
principally been to keep critical technologies out of the hands of
Communist
governments.
Now, whereas before the Soviet Union was CoCom's principal
target, we have the ironic situation that it now appears that the
(l)
major successor country to the Soviet Union, Russia, will likely be
a member ofCoCom's successor regime.
A
second major development is not about diminished threat, but
it is about an increased threat. That is, the increasing proliferation
ofweapons ofmass destruction and their means of and we
delivery,
only have to read ofwhat is happening in North Korea to nave that
reinforced in our minds.
Other events have alerted the world ofthis growing danger. Two
of the most troubling have been the evidence of Iraq's program to
build nuclear weapons and, as I said earlier, the nuclear weapons'
progrmam that we believe is well underway and perhaps nearing fru-
ition North Korea.
So a revised Export Administration Act must fit with these post-
Cold War realities. A new Export Administration Act must also fit
today's technological context. That context is quite different from
when the law's predecessor was originally put on the books back
in 1949.
The United States at that time was in what many thought were
the "salad days." We had a monopoly on many critical technologies.
Today the production of very sophisticated technology is diffuse
across the world. It has, indeed, been globalized, and that is a vast
difference from 1949.
Product life cycles were once measured in years, and they are
now measured in months. Ifyou do not believe it, just look at last
year's personal computer.
For many years the U.S. Defense Department drove technological
advance. We eschew the idea of an industrial policy here in the
United States, but we have pursued one for almost half a century.
It was organized and run by the Department ofDefense. It perhaps
was not the most cost-efficient operation in the world, but it did
produce the world's highest quality and most effective weapons.
Well, today commercial technologies are on the cutting edge. In-
creasingly the Defense Department, rather than taking the lead,
will be piggybacking on the commercial sector. While the whole
context has changed dramatically, I think our goals have not. For
both economic and national security reasons, what is most impor-
tant to us is that the United States maintain a lead and stay
ahead.
The Export Administration Act and Export Control Policy, in
general, must further the goal of world leadership and not hinder
that goal. So our Subcommittee hearings this morning are intended
to help the Full Committee in its efforts to amend the Export Ad-
ministration Act.
Next week on Wednesday, February 9, 1994, the Administration
EAA
will present its proposal.
Before moving on to our first witness this morning, we will hear
from the distinguished Senator from New Hampshire, Judd Gregg,
and we welcome him here this morning.
The Subcommittee will next receive testimony from a distin-
guished panel of industry representatives. Finally, we will hear
from a panel of former Executive Branch officials with particular
expertise in this area, and from the Office of Technology Assess-
ment which has done an important study on the proliferation
threat.
