Veto Shmeeto: Bush Should Sign The New Export Administration Act

Introduction

Recent press reports have indicated that the State Department has recommended that President Bush veto H.R. 4653, a bill to reauthorize the Export Administration Act (EAA) which expired on 30 September 1990. This legislation was passed by voice vote in the waning days of the 101st Congress after lengthy — and frequently contentious — action by the House-Senate conference committee.

Unless the President acts in the near future to sign this legislation, it will die through a "pocket veto." The Center for Security Policy has monitored the progress of this legislation carefully and believes that, despite several problematic sections, it should become the law of the land.

The Conferees Largely Repudiate Rep. Gejdenson’s Approach

The House-passed version of the bill largely reflected ill-considered positions recommended by Rep. Sam Gejdenson (D-CT), chairman of the International Economic Policy and Trade Subcommittee of the House Foreign Affairs Committee. The serious deficiencies of the Gejdenson bill have been critiqued in several Center papers (see in particular, House Proposal to Rewrite Export Control Laws: ‘The Soviet Military Relief Act of 1990’ (No. 90-39, 24 April 1990)). The common denominator in these provisions was a reckless and willful dismantling of the U.S. technology security apparatus and direction to the executive branch to further weaken the multilateral export control regime, known as COCOM.

Fortunately, the final bill now on the President’s desk substantially reflects the Senate view which placed greater attention on the need to curtail the proliferation of technologies of mass destruction. Of the 46 conferenceable items dealing with export controls, the House receded outright to the Senate in 21 cases, while the Senate receded only on two. The remaining items involved compromises, most of which ultimately reflected Senate positions.

Welcome Improvements to the Existing Technology Security Process

Some of the many, laudable provisions in the Conference Report are:

• An Enhanced Role for the Defense Department in Export Controls — The conferees granted new authority to the Department of Defense to enable its specialists to review licenses for the export of U.S. dual-use technology to (1) a country of concern regarding missile proliferation; (2) a country of concern regarding chemical and biological weapons proliferation; and (3) Iraq, Iran, Libya, Syria, and any country on the terrorist list.

 

This provision would greatly reduce the chances that countries like Iraq will be able in the future to do what Baghdad has so successfully done in recent years — acquire an array of lethal capabilities through liberal access to sensitive Western dual-use technologies.

 

• Improved Interagency Coordination — Under this legislation, should either the Secretary of Defense or State disagree with a Commerce Department determination to approve an export in the three cases above, the President shall resolve the dispute. In such cases, the Secretary of Commerce must provide the President with DoD or State’s views. Further, all export license documentation relating to any Commerce export license approvals in these three cases must be provided to DoD and State if requested to supply such materials.

 

The cumulative effect of these several elements would be to provide significant protection against the Commerce Department’s present tendency to circumvent or otherwise to sandbag other agencies in its determination to promote virtually any export to virtually any end-user.

 

• Missile Technology — Export licenses will be required, and — according to the conferees, should in general be denied — for goods or technology destined for a project or facility for the design, development, or manufacture of a missile in a country if such country is not a member of the Missile Technology Control Regime (MTCR), i.e., the United States, the United Kingdom, Germany, France, Italy, Canada, and Japan. All export license applications for items controlled on the MTCR Annex shall be referred to DoD. Export or import privileges will be suspended for persons knowingly trading or facilitating the sale of proscribed missile technologies.

 

Given the burgeoning number of nations bent on acquiring ballistic missile technologies, this title of H.R. 4653 is long overdue. It is a direct response to recent incidents where such technology was transferred — or narrowly prevented from being shipped — to Iraq.

 

• Penalties — Doubling of maximum penalties for U.S. persons engaged in the illegal transfer of high-technology from 5 to 10 years in prison and from $1 million to $2 million in fines.

 

Given the billions of dollars in additional defense costs illegal technology transfers can cost the U.S. taxpayer, even the stiffer penalties imposed by this legislation seem tame. The trend is in the right direction, however, and should serve as a powerful example to other nations, like Germany that continue to impose trivial penalties on even egregious traffickers in strategic technologies.

 

• Telecommunications — The conferees agreed to provide fiber optic telecommunications only to certain East European countries, and not to the Soviet Union.

 

This provision is one of the most dramatic — and welcome — rejections of the Gejdenson bill to come out of the conference committee. It largely tracks with President Bush’s correct decision to deny an export license for a fiber optic system proposed by US West that would greatly have enhanced the robustness, efficiency and security of Soviet military communications. It represents an important setback to some of the most irresponsible advocates of export decontrol in the Congress and in the business community.

 

• The People’s Republic of China — The conferees took a number of measures to bar further liberalizing of export controls for the PRC. No satellites of U.S. origin intended for launch from a Chinese launch vehicle may be exported to the PRC — unless the USTR certifies that the PRC is in full compliance with the U.S.-China Memorandum of Agreement on international trade in commercial launch services.

 

This language is intended to provide teeth to the Bush Administration’s ostensible — but unenforced — commitment to permit such launches only if the PRC offered its launch services at fair market value. In the first instance, it is impossible to ascertain what are the real costs of launches in the Chinese command economy. In the second instance, there is no chance the Chinese will actually price their product so as to permit more competent American firms to compete. Consequently, this provision is a vitally needed safeguard against the sabotaging of the nascent U.S. commercial space launch industry.

 

• Cuba — The conferees closed existing loopholes which have permitted U.S. companies to circumvent the embargo on American exports to Cuba by doing so via third countries.

 

An astonishing list of U.S. firms have been systematically undermining the embargo through such loopholes. In so doing, they have been providing life-support to Fidel Castro’s collapsing communist economy and thereby prolonging the suffering of the Cuban people. By preventing such transactions in the future, this legislation should hasten the end of that repressive and dangerous regime.

Significant Deficiencies

Although there are many real improvements to U.S. technology security interests contained in this legislation, there are several provisions which are grounds for concern and which should be amended once the bill becomes law.

• Responsibility for the List of Controlled Items — The composition of the list of dual-use technologies controlled for national security purposes is made the exclusive responsibility of the Secretary of Commerce. He is only obliged to consult with the Secretary of Defense — rather than being required to obtain the latter’s concurrence.

 

Evidence of the shoddiness of thought that went into sustaining this element of the House bill can be found in an apparent drafting error which stipulates that the "sunset" of the then-current control list and the delegation of authority to the Secretary of Commerce to compose a new list of controlled items will take place on 30 September 1992. The bill stipulates, however, that all amendments to the Export Administration Act, however, expire on June 1992.

The Center strongly believes that, since Congress wisely decided in this bill to enhance DoD authority in reviewing export licenses, it should immediately reconsider the wisdom of delegating the composition of the control list to a Department chief whose main responsibility is to promote exports.

 

• Lithuania — Despite an overwhelming vote in the full House (390 to 24 in favor) to deny the Soviet Union high-technology liberalization until it had both ceased economic coercion against Lithuania and had entered into good faith negotiations for independence with that country, conferees substituted a non-binding "sense of the Congress" language.

 

This cynical flouting of the will of the House is all the more striking insofar as, to date, negotiations between Moscow and Vilnius have not occurred and elements of economic coercion remain in place, as well as the ever-present threat of tougher sanctions this winter should Mikhail Gorbachev wish to impose them pursuant to his new powers of presidential decree.

 

• License-Free COCOM. By the end of next year, the U.S. government may only require export licenses for COCOM destinations by the unanimous consent of COCOM members.

 

This provision is, on the face of it, absurd. In the event a newly-invented U.S. technology’s transfer overseas is judged to pose serious strategic or proliferation concerns — before the executive branch could deny such transfers to other COCOM members — it would be required to obtain their consent.

If past experience is any guide, Germany (whose record on technology diversions and susceptibility to penetration by the KGB and other security services was appalling even before the integration of the Stasi-riddled eastern portion of the country) is likely to one of several nations who would strongly resist additional controls. In any event, it is difficult to imagine how the United States could avoid compromising the very technology it wants to protect as it proceeds with the briefings that would inevitably be required to obtain COCOM’s consent.

 

• Computers — Under this legislation, no security safeguards will be required for the export of supercomputers with a performance capability of 25% or less of the average of the two most powerful supercomputers currently available commercially, as long as the country destination is a signatory to the Treaty on the Non-Proliferation of Nuclear Weapons and a member in good standing. H.R. 4653 also directs the Secretary of State to obtain COCOM concurrence to eliminate all export licensing requirements for computers which currently fall below the China Green Line.

 

These provisions are inconsistent with the spirit and in some cases even the letter of other provisions of the bill. They reflect the shortsightedness of Rep. Gejdenson on these points and the avarice of some in the U.S. computer industry. While a few companies may make a modest profit on such sales, if such dismantling of the present controls is allowed to stand, the real beneficiaries will be those whose programs to acquire nuclear, ballistic missile and other sophisticated weaponry requires advance computing capabilities not presently eligible for transfer. The real losers will ultimately be citizens of this and other countries likely, in due course, to become the targets for such weapons.

Why Does State Want to Retain Latitude to Transfer Poison Gas-Related Technologies?

In many of the areas covered by the new legislation, the Congress has rendered its judgment that insufficient priority has been given by State Department officials to the need to stem the proliferation of weapons of mass destruction, particularly by offending companies overseas. As a consequence, H.R. 4653 provides an important new impetus to non-proliferation efforts involving chemical and biological weapons — weapons of the kind that, due to past undiscipline in this area, currently pose serious operational difficulties and hazards for U.S. forces in the Persian Gulf.

The chemical and biological weapons provision requires the following:

Sanctions Against Foreign Persons: The President must impose two sanctions on foreign persons that have "knowingly and materially contributed…to the efforts by any foreign government…to use, develop, produce, stockpile, or otherwise acquire chemical or biological weapons." For a period of one year after a presidential determination of wrongdoing, that foreign person (or company) would be (1) ineligible to receive U.S. government contracts and (2) barred from the U.S. import market.

The State Department has recommended a veto of this legislation on the grounds that it would unduly constrain U.S. options in the event such technologies are transferred in the future. In a letter to the chief proponent of the provision, Senator Jesse Helms (R-NC), Secretary Baker finds that the provision "does not give the President sufficient flexibility to impose or waive sanctions based on a consideration of the nation’s security interest" and "does not provide adequate Presidential discretion."

There are, however, numerous important exceptions provided for waiving these two sanctions. For example, as long as the government of the foreign company in question metes "appropriate penalties" on the firm, sanctions are not mandated. In the rare case where nofurther exceptions so that the following items would be exempted from an import and U.S. government contract ban. These include: (a) U.S. procurement of defense articles or services under contract, or sole source supplier penalties are applied by the foreign government against the offending company or individual, the legislation provides s, or items essential to the national security under defense coproduction agreements; (b) goods or services covered by contracts; (c) spare parts, component parts, servicing and maintenance; (d) information and technology; or (e) medical or other humanitarian items.

Sanctions Against Foreign Governments: A second section in the chemical and biological weapons provision concerns the use of such weapons by foreign governments. If the President actually certifies that a foreign government has used chemical or biological weapons in contravention of international law or against its own nationals, the President must apply at least six of the following menu of sanctions: (1) no foreign aid; (2) no arms sales; (3) no arms financing; (4) no multilateral development bank loans; (5) no U.S. government loans or guarantees; (6) no U.S. private bank loans; (7) no U.S. exports of high-technology; (8) no U.S. exports of goods and technology; (9) restrictions on imports into the U.S. market; (10) downgrading of U.S. diplomatic relations; (11) no U.S. landing rights.

The President must impose a 7th sanction from this list if the U.S. government fails to obtain assurances that the violator government in question (1) is no longer using chemical or biological weapons; (2) won’t use them in the future; and (3) is willing to allow on-site inspections by international observers.

Here again, there are certain exceptions provided for by the statute, including transactions or sales covered by contracts.

Removal of sanctions: There are three options for terminating these sanctions: (1) The President can remove the sanctions after one year if he certifies that the above three conditions have been met, as well as a 4th condition that the government is making restitution to those affected by the use of chemical and biological weapons; (2) A national security waiver can be applied after one year; and (3) The President can drop the sanctions at any time if he certifies that there has been a fundamental change in the leadership and policies of the government of that country.

Congress Wants This Legislation Signed Into Law

On 27 October 1990, 79 senators signed a letter to the President urging him to examine closely the broad discretionary authority provided in the bill and to sign the legislation. In the letter, the signatories argued that,

• The only use of discretion broader than this would be to let a company selling chemical weapons or a country that uses chemical weapons against its people escape any punishment. We reject the idea that there could ever be a diplomatic gain sufficient to justify a waiver in these circumstances…[We] believe a veto on these narrow grounds would be a repudiation of our shared commitment to eliminate chemical weapons. (Emphasis added.)

   

The Senate members further stated that it is their intention to enact tough sanctions in the 102nd Congress should the President exercise a direct or pocket veto of the bill.

Conclusions

It is difficult to imagine under present circumstances in the Persian Gulf that President Bush would wish to veto this legislation on the grounds suggested by Secretary Baker. Were he to do so, the President would risk sending the wrong message to governments — such as Iraq — contemplating the use of chemical or biological weapons and to companies tempted to assist help countries interested in acquiring such weapons to do so.

Now more than ever, it is imperative that domestic and overseas suppliers and foreign governments, especially Germany, be put on notice that appropriate penalties will be applied to those wittingly involved in supplying poison gas to the likes of Saddam Hussein. After all, as reported in the New York Times on 30 October 1990, a former senior West German intelligence official, Hans Josef Horchem has revealed that Iraq is running a network of approximately 10 front companies around the world for the express purpose of acquiring arms and weapons-related Western technology. The chemical and biological weapons provision provides ample leeway for the President while ensuring that priority attention will be given to this emerging threat.

While some in government argue that many of the provisions called for in H.R. 4653 could be implemented by executive action, the Bush Administration’s tendency to give greater priority to promoting U.S. exports than to preserving U.S. technological security does not inspire great confidence in White House follow-through in this area. Interestingly, at this very moment, the Administration — at the behest of National Security Advisor Brent Scowcroft — is engaged in its own, draconian and reckless paring back of the controlled technologies list.

On balance, the bill currently before the President provides for significant improvements over current export control practices. In many key areas, checks and balances that were sorely lacking would be created to ensure that greater weight is given to national security considerations in U.S. export licensing decisions.

In any event, given that Congress is likely to review carefully and critically the Commerce Department’s misjudgments involving U.S. sales to Iraq, the Department would be well-advised to obtain the formal concurrence of the Secretary of Defense on all technology security issues — whether required to do so by law or not. This is particularly true of decisions involving the composition of the Core List.