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February 28, 2000, Monday

TYPE: COMMITTEE HEARING

LENGTH: 12130 words

COMMITTEE: SENATE ARMED SERVICES COMMITTEE

HEADLINE: U.S. SENATOR JOHN WARNER (R-VA) HOLDS HEARING ON GLOBALIZATION AND EXPORT CONTROLS

LOCATION: WASHINGTON, D.C.

BODY:
U.S. SENATE ARMED SERVICES COMMITTEE HOLDS A HEARING ON

GLOBALIZATION AND EXPORT CONTROLS


FEBRUARY 28, 2000


SPEAKERS: U.S. SENATOR JOHN WARNER (R-VA), CHAIRMAN

U.S. SENATOR STROM THURMOND (R-SC)

U.S. SENATOR JOHN MCCAIN (R-AZ)

U.S. SENATOR JAMES M. INHOFE (R-OK)

U.S. SENATOR RICK SANTORUM (R-PA)

U.S. SENATOR OLYMPIA J. SNOWE (R-ME)

U.S. SENATOR PAT ROBERTS (R-KS)

U.S. SENATOR WAYNE ALLARD (R-CO)

U.S. SENATOR TIM HUTCHINSON (R-AR)

U.S. SENATOR JEFF SESSIONS (R-AL)

U.S. SENATOR ROBERT C. SMITH (R-NH)

U.S. SENATOR CARL LEVIN (D-MI),

RANKING MEMBER

U.S. SENATOR EDWARD M. KENNEDY (D-MA)

U.S. SENATOR JEFF BINGAMAN (D-NM)

U.S. SENATOR ROBERT C. BYRD (D-WV)

U.S. SENATOR CHARLES S. ROBB (D-VA)

U.S. SENATOR JOSEPH I. LIEBERMAN (D-CT)

U.S. SENATOR MAX CLELAND (D-GA)

U.S. SENATOR MARY LANDRIEU (D-LA)

U.S. SENATOR JACK REED (D-RI)


U.S. SENATOR MIKE ENZI (R-WY)


JOHN J. HAMRE, DEPUTY SECRETARY OF DEFENSE


DAVID OLIVER, PRINCIPAL DEPUTY UNDERSECRETARY of

DEFENSE (ACQUISITION AND TECHNOLOGY)


JAMES BODNER, PRINCIPAL DEPUTY UNDERSECRETARY

OF DEFENSE (POLICY)


DONALD MANCUSO, ACTING INSPECTOR GENERAL,

DEPARTMENT OF DEFENSE


HAROLD J. JOHNSON, ASSOCIATE DIRECTOR, INTERNATIONAL

RELATIONS AND TRADE ISSUES, NATIONAL

SECURITY AND INTERNATIONAL AFFAIRS DIVISION,

U.S. GENERAL ACCOUNTING OFFICE


JOHN W. DOUGLASS, PRESIDENT, AEROSPACE INDUSTRIES

ASSOCIATION



*

WARNER: Good afternoon. At the express request of our friend and colleague, Senator Enzi, and that of Senator Johnson, we scheduled this special hearing. We had to wait until the conclusion of a series of subcommittee hearings of our committee. But we managed.
Now I want to approach this thing several ways. First to tell you that I personally am committed to try and do everything I can, in a responsible way, to get this act onto the floor and hopefully -- and shape the die. And I would presume a majority of this committee can accept it. And I think if we can set a course, the other committees will follow.


So I'm going to give a brief statement this afternoon and get right to it and then we'll hear our witnesses.


So Senator Bingaman, if you'll bear with me a minute.


Now basically, as we all know -- and everybody in this room has got a good understanding of the situation -- there are two basic systems of export controls: one for munitions controlled by the State Department and one for the dual-use products controlled by the Commerce. And today, we're directing our attention to the Commerce systems, due to the likelihood that the Senate may, hopefully, turn to this bill very shortly.


And I welcome our two colleagues.


In the future, Congress must examine the process governing these military items controlled by State under the Arms Control Export Act, and we'll look at that in the future.


Now during the height of the Cold War with the Communist world, this country had a carefully formulated and carefully crafted export control process. There was a consensus, both here at home and with our allies, that we needed to protect our nation's technology. We must never allow it to be used against us.


Now if you'll allow me for a minute, I have a necktie on which I wore today for several reasons. It belonged to Ronald Reagan. He had it made. And he gave it to one member of his Cabinet who gave it to me two weeks ago. And it's very interesting. It says: "Democracy is not a spectator sport." And that's what we're doing here today. We're trying to preserve the democracy. And I think this is a simple but straightforward message.


Since the fall of the Berlin Wall, we have all witnessed the slow demise of the Cold War consensus on export controls. And I make three observations. First, we have seen a dramatic liberalization, primarily through executive orders of successive presidents -- this is not a political issue -- of the export controls.


Second, because of the decline in defense research and development, technology innovation is more and more advancing in the commercial sector, thereby giving them, I think, reasonable right to think that they can then put it into the full market worldwide.


And finally, as a result of both of these developments, we're witnessing a global spread of advanced tech that was once solely in the military of the U.S. and its prime defense contractors and subcontractors.


After COCOM was terminated in '94, the administration substantially relaxed controls on dual-use technologies across the board. The net effect is that today we are only controlling about 6 percent of what we controlled during the heights of the Cold War. If you dispute that, please give me your own estimates.


This chairman, and hopefully this committee, desire to see the Export Administration Act reauthorized, but only if it contains provisions we believe, in our fair and objective analysis, provisions that we believe are necessary to adequately protect our national security. Once there's agreement among the relevant committees, I think this bill should go forward.


Simply put, we think we've gotten a little out of balance. The Export Administration Act, as currently drafted, tips the balance even further towards meeting the commercial needs versus national security needs. There is a predominant emphasis in this bill on export control, in our judgment, as now drafted. No disrespect to our distinguished colleagues.

Now we've got to make an honest assessment of that and see what we can do to bring it back in balance. Because I think the bill now gives the Commerce Department the predominant role. I believe that this must be brought back into balance with enhanced -- I use the word enhanced for the moment -- authorities and discretion in the Department of Defense. As now drawn, the bill also unnecessarily limits the president's discretion to control items, in his judgment, for national security.


Along with other committee chairman who also share my concerns about national security, I've been working with my colleagues on the Banking Committee to try to address these concerns. I hope that we'll be able to work out our differences.


Now, first we need to protect military sensitive technologies such as encryption, hot-section engine technology and future technologies now being developed from falling into the hands of a potential adversary. We need to enhance the role of the secretary of defense and the intelligence community in the export control process, given the limited amount of items we are now controlling, and provide it for a realistic national security waiver for the president.


And lastly, the need to ensure that national security impacts of any proposed de-control are well understood, well articulated before de-controls are allowed to proceed.


Our committee also needs to look at the impact on national security of export de-control and the global diffusion of technology. We need to assess the degree of technology proliferation that is occurring and the risks that our adversaries will use this technology to gain some type of asymmetric advantage over our forces. Global tech proliferation could put at risk our military superiority, particularly those of our forward deployed elements.


Future historians may look back on the rapid de-control and leakage of Western technology as the biggest national security lapse of the post Cold War period.


I also want to ensure that unnecessary restraints on the ability of the private sector to compete in the global marketplace are removed. It is in our interest that the U.S. businesses are able to maintain their commercial and technological edge over the foreign competitors. However, when hard decisions must be made, national security must always be the paramount consideration.


I thank you for your attention.


Senator.


UNKNOWN: Thank you, Mr. Chairman. Thank you very much. I welcome the witnesses.


And I would like to have a slightly different focus. And I'll perhaps get into it with some questions. I'm concerned about the impact of the current regime for reviewing these exports, the impact of that on the aerospace and satellite industry in our country and whether or not we are unreasonably restricting their ability to compete in international markets.

That's a concern that I've had. I wrote a letter to you in October urging that we look at this issue. And I commend you for having the hearing, Mr. Chairman. And I look forward to hearing the testimony. Thanks.


WARNER: Thank you very much, Senator.


Senator Enzi, once again I want to advise those who may not be aware of the fact how hard you have worked on this. We've had meetings in the majority leader's office, you've addressed our caucus, you've seen my personally a number of times.


And I presume, Senator Johnson, you've done as much on your side.


So we all owe you a debt of gratitude, together with the chairman and ranking member of the Banking Committee.


So, you're on your own, Senator. Good luck.


(LAUGHTER)


ENZI: Thank you very much, Mr. Chairman. And I do particularly appreciate the large amount of time that you've given me to address policy considerations, procedure considerations and also this ongoing process of getting clarification so that we can arrive at a good bill. And I now appreciate the opportunity to testify before this panel regarding the importance of reauthorizing the Export Administration Act.


Let me begin by detailing the recognized need for reauthorizing the statute. I quote: "The Select Committee recommends that the appropriate committees report legislation to reenact the Export Administration Act, with particular attention to reestablishing the higher penalties for violation of the act that have been allowed to elapse since 1994." That's the Cox Committee on technology transfer to China in May of 1999.


Another quote: "The dual-use licensing process would be best served through reenactment of the Export Administration Act." That's by the joint inspectors general interagency review of the export licensing process for dual-use commodities and munitions in June of 1999.


Another quote: "Congress should enact and the president should sign an new Export Administration Act reflecting the post COCOM export control regime and containing substantially greater penalties than now apply to export control violations." That's the commission to assess the organization of the federal government to combat the proliferation of weapons of mass destruction. That was July of 1999.


These three reviews of the technology transfer and export controls were unanimous in their statements that an important requirement for an effective export control program is the effective underlying legislation. You'll be interested to know that while these reviews were being conducted, the Banking Committee undertook its own effort to review the current export control system.

We believed when we started -- and it was subsequently confirmed by all three of these reports -- that as responsible Americans, we could no longer stand by and accept an export control system cobbled together by executive orders and piecemeal legislation. After almost a year's work and seven hearings where numerous government, industry and nongovernmental witnesses agreed the EAA needed to be reauthorized, we saw the wisdom of the words in these three reports and chose to be the ones to answer the call.


In September of 1999, the Banking Committee unanimously reported out of committee S. 1712, the Export Administration Act of 1999. A good deal of the credit of the 20 to nothing vote in favor of the passage goes to the ranking member of my subcommittee, Senator Johnson, and his staff, who attended numerous meetings and helped involve everyone from both sides of the aisle.


Senator Gramm (ph) and Senator Sarbanes were involved and they added emphasis to it. And it was helpful and essential on the Banking Committee to have the participation of members who also served on this committee, the Armed Services Committee, from the Foreign Relations Committee and also the Select Committee on Intelligence. Senators Santorum and Allard of this committee and Senator Shelby are specifically to be thanked for their diligence and wording that clarified and improved national security in the bill. It took dedication and a great deal of time to break the barrier of the 11 previous failures for this bill to even get out of committee.


This bill establishes a process by which the United States can maintain higher fences around the most significant items while lowering fences on those items which are available from foreign competitors or which are effectively uncontrollable. We feel that for the first time in 10 years the Department of Commerce will be held fully accountable for its licensing decisions and be required to use established criteria and risk assessments to reach its decisions to license or de-control U.S. goods and technology.


In addition, while the Department of Commerce is authorized to administer the export control process, we believe the interests of national security will be strengthened by requiring the Department of Defense to concur with items placed on the national security control list. We also agree that Defense should concur with items removed from the list and items the president determines to be significant, that they should be specially protected.


The Armed Services Committee was in the forefront of establishing high performance...


WARNER: Senator, do you characterize that concurrence like a veto?


ENZI: A little different than a veto.


WARNER: I mean, well, that's -- I think this is an important point and you may wish to cover it in your own time, how you -- but that's getting to the heart of this.

ENZI: Yes. After working with all of the different groups, I think we came up with a process that is effective and equivalent to but not exactly a veto. And I think that both Department of Defense, Commerce and the intelligence community have agreed ...


(CROSSTALK)


WARNER: That's a great phrase, equivalent to but not exactly.


ENZI: Yes.


WARNER: You didn't practice law either, did you?


ENZI: No, I didn't. I'm an old shoe salesman.


I'll come back to that but -- the Armed Services Committee was in the forefront of establishing high-performance computer controls in the National Defense Authorization Act of 1998. However, with some hindsight, it appears improvements are needed in that process established in the NDAA.


For example, notice to Congress is required where there is a proposal to raise the minimum power level for exports to tier-3 countries. But no similar requirement if Commerce wishes to raise upper level eligibility for export under the notification procedures. This has resulted in a situation where exports of very high performance computers -- as high as 20 million -- 20,000 million theoretical operations per second, or MTOPS, may today be exported to China and Russia under a mere notification requirement rather than full interagency review of a license.


The General Accounting Office faulted the administration for using the currently undefined terms "widely available" and "uncontrollable" in their July 1999 report to Congress on the first proposed change to the NDAA computer controls.


And I would mention that Senator Cochran and I were the ones who requested this GAO analysis.


S. 1712 defines these terms. It establishes criteria to be used to make these determinations. The bill's criteria set forth the standard by which Congress may judge the adequacy and accuracy of proposed changes for any technology, not just computers, in the future.


The emphasis placed on post-shipment verifications in the NDAA of 1998 was an excellent idea. Post-shipment verification should be an important tool in our overall export compliance and enforcement efforts and should be extended to all significant technologies and transactions which present a risk of diversion to an unacceptable end use or end user. And S. 1712 expands and prioritizes the post- shipment verifications and provides additional resources for Commerce to conduct these checks.


While we do increase the penalties substantially to the point where penalties do get the attention of the exporters, strong enforcement is only half the equation. Strong controls on most important technologies plus vigorous enforcement make for an effective export control program.



ENZI: Our position of world leadership in stemming the transfer of weapons of mass destruction is compromised by our failure to enact national legislation to authorize our export control program. The 1999 Joint Offices of Inspectors General report to the Senate on government affairs pointed out, and I quote, "As the United States encourages other countries, such as those in Eastern Europe and Southeast Asia, to implement export controls, it must set the example by sending a clear, unambiguous message that it's committed to export control.


However, it's been 10 years since the expiration of the Export Administration Act and in our opinion this could send the wrong signal to these countries, as well as our allies, that the United States is not truly committed to export controls," end quote -- once again, a strong endorsement for quickly reenacting an Export Administration Act.


Lastly, but certainly not least, it's already evident from several judicial challenges that our current export control regime is vulnerable to a decision by the courts declaring the exercise of export controls under the International Economic Emergency Powers Act, IEEPA, presidential order, unconstitutional, and that would be a national tragedy. S. 1712 would put our export control system on firm statutory ground.


We have a very limited opportunity to take meaningful action on renewing an improved system of export controls. If we don't take advantage of this window of opportunity right now, we will not be able to do so for the remainder of this year. We also probably can't debate it the next year with probable administration reorganization. Inaction by the Senate leaves a severely flawed system in place that can be easily manipulated by everyone involved.


We've been told on numerous occasions how important export controls are to protect our military's technological edge and to protect the security of our nation. We cannot afford to shirk this enormous responsibility for another minute. This issue is too important to our future. The Senate must step up to the plate now by considering and passing the Export Administration Act.


I thank you for the opportunity to testify.


I would make special note of your committee's contribution to improving this bill. Our staffs have been meeting, even with some meetings during the weekend, to understand and improve the bill. Our staffs spent innumerable hours together in serious discussion about the bill's balance between national security and business interests. I believe the final product that's voted on in the Senate will reflect the cooperation of our committees and will strengthen our export control process. It has to improve it beyond where it currently is. And in every single category we think there has been an improvement.


WARNER: Well, I thank you very much, Senator.


Senator Johnson, just before you start, I wonder if I could just make reference to the following, and that is that we have worked together, and indeed we worked into this weekend. Now, as Secretary Hamre will momentarily testify before the committee, I'm told by my staff, who have done a wonderful job, both majority and minority, on this, that there is language now crafted. We think maybe it's a little short. But have you seen that language?


ENZI: I have seen the language. Yes, I have.


WARNER: And when did you get a look at it?


ENZI: I saw it on Friday.


WARNER: Yes.


ENZI: I saw two more revisions on Saturday, but we still like the Friday revision better.


WARNER: Yes.


ENZI: And today we still like the Friday revision better. I've seen all of the different proposals.


WARNER: You have?


ENZI: Yes.


WARNER: I just want to make sure that we're all operating from a common base of knowledge, because there should be no secrets on it.


Well, the language will roll out shortly when Secretary Hamre takes the stand.


Senator Johnson, thank you for your hard work on this.


JOHNSON: Well, thank you, Mr. Chairman. And I'm pleased to have an opportunity to appear before your committee and with my good colleague Senator Bingaman here today, along with my good friend and colleague Senator Enzi. We've worked closely on export control issues for over a year now and I'm hopeful that we are in fact nearing consideration of this important issue by the full Senate. As you know, there are several different classifications of exports and this committee has jurisdiction over most of these items, with the exception of dual-use technology governed by the Export Administration Act, this trade governed by the EAA which falls under the Banking Committee's purview.


As you know, there have been numerous attempts to reauthorize the EAA in the years since it expired in 1990. It is unfortunate that this legislation has gone unauthorized for most of this decade and has become reliant then on presidential executive orders and waivers as a framework for this important trade.


I'm grateful that our efforts have this year brought us thus far. Reauthorization becomes even more critical as legal challenges to the continued reliance on the expired EAA through emergency powers winds its way through the courts. After 10 years of congressional inaction, I am fearful that one of these challenges will ultimately succeed, leaving us with a chaotic situation over sensitive dual-use technology trade.


I want to especially thank Chairman Enzi for his extraordinary work on the issue. Without his hands-on leadership, I am confident that we would not be here at this point today.


S. 1712 is a testament to Mike's hard work and the work of his staff. The widespread support the bill enjoys derives from the chairman's common sense approach to issues, and I have enjoyed working with him on this legislation on a personal basis.


I also want to note the important roles played by Banking Committee Chairman Gramm and Ranking Member Sarbanes. We have had constructive participation across the board and that bipartisan cooperation has brought us to this point. That spirit contributed to a unanimous 20-0 vote in support of S. 1712 in the Banking Committee.


We had a simple goal when we embarked on this effort, and that was to reduce or eliminate controls on items that do not have security implications and tighten controls on those fewer items that do raise security concerns. While almost everyone can agree on these principles, it has, of course, been much more difficult to draft the language to actually implement those goals.


We worked very closely with concerned senators, the national security establishment, the administration and the impacted industries. I believe that we have addressed the major concerns of each entity. We increased the penalties, making violators of export control laws pay a real price. We made the foreign availability and mass market standards a true measure of what items could, in fact, be accessed regardless of U.S. sanctions and provided for those items to be decontrolled.


S. 1712 strengthens our national security, in my view. For the first time, the Department of Defense will have unilateral appeals rights if it disagrees with an approved export. Penalties move from $10,000 per violation up to $1 million per violation.


At one of our eight hearings on this bill, we heard from Representatives Cox and Dicks on the Cox report relative to exports to the People's Republic of China. We directly incorporate 15 of the Cox report recommendations in our bill to enhance national security. I might add that reauthorization of the EAA is one of the specific recommendations from the Cox report.


America benefits when our businesses prosper and exporting technology has long been an American success story. The technology field will lead our economy into the next century. However, new technologies could prove dangerous in the wrong hands and our national security depends in part on limiting access to those few but important technologies. That is the balance that we seek to strike and I believe that S. 1712 moves a long ways in that direction.


I want to thank you, Mr. Chairman, for inviting me here today to address these important issues. I look forward to discussing with you other critical matters involving military policy issues, and working with you and your staff to reach a point where hopefully in an expeditious fashion we will, in fact, have this bill to the floor of the full Senate.


I concur with Chairman Enzi that our failure to arrive at that point will jeopardize creating a proper framework for dual technology trade for the coming year and possibly even the year beyond that.


So there is, I think, a very real urgency that we arrive at the point where we can, in fact, move this to the Senate floor and hopefully in a fashion that will secure overwhelming and bipartisan support at that time.


Thank you, Mr. Chairman.


WARNER: I thank you, Senator. We thank both our colleagues.


Senator Enzi, you wish to be...


ENZI: Mr. Chairman...


WARNER: Won't you both join us right here on the dais.


ENZI: Well, Mr. Chairman, I didn't adequately answer your question, and it's a most important one that you asked.


WARNER: All right.


ENZI: One of the concerns by all of the security agencies has been having an adequate voice in the operating committee process. And I even went down to the Department of Commerce, sat through some of the discussions that were -- some of the process so that I can understand exactly how it worked and did find it lacking.


And the change that we have made is that the person who sits on the committee from the Department of Defense or, when applicable, the Department of Energy, or in concurrence with intelligence can express a concern and move it up to another level of appeal.


Just one person, not a majority vote, just one person can move it on up to another level, and that's with -- the prior process, in order for anybody to move any decision to another level, required the person sitting on the operating committee to talk to a person, sometimes a couple of levels above him, and get him to understand the process well enough that he could write out the explanation of why they wanted to appeal it.

It was a very cumbersome process; it, quite frankly, wasn't used. And the person who knows the most about it is the person who is sitting on that committee. So we've made it possible for that person to express a lack of concurrence and file the proper papers himself, at that moment, with recorded minutes of the meeting, to move it up to the next level. And eventually a decision, if there isn't concurrence -- that means everybody agree -- it would go clear to the president.


So we think we've taken care of that in a manner that will allow the concerns to be expeditiously handled but so that every concern is addressed.


WARNER: Senator Bingaman, do you have any questions of our colleagues.


BINGAMAN: Mr. Chairman, I had a few -- I had a few questions. I think maybe they'll just as well be addressed to Mr. Hamre, though, so I'll defer and do that.


WARNER: Thank you very much.


Gentlemen, we invite you to join us here to participate.


JOHNSON: Mr. Chairman, I am very appreciative of the offer. I have a scheduling conflict, unfortunately, that is going to prevent me from staying. My personal staff is going to stay through this hearing. And again, I'm very appreciative of the timeliness of your conducting this hearing and I look forward to Mr. Hamre's testimony.


WARNER: Well, we're glad to do that, Senator. And I will say that should we not reach some closure here today on the fundamental issues, it may be necessary, in consultation with Senator Levin, Senator Bingaman, to have another hearing on an emergency basis, and I'm prepared to do that, night or day, doesn't make any difference to me, we're going to drive until we are able to get sufficient factual knowledge and record before my colleagues on this committee to make an informed decision and go forward.


Thank you.


JOHNSON: I appreciate that.


WARNER: Now we have the Honorable John J. Hamre, deputy secretary of defense. Most importantly, former senior staff member of the Armed Services Committee.


Now, Dr. Hamre, welcome to your old stomping ground.


HAMRE: Mr. Chairman, may I ask Jim Bodner...


WARNER: You can flank right and left...


HAMRE: ... and Dave Oliver...


WARNER: ... bring squads up.

HAMRE: Neither one of them can throw their voice more than five feet, and so I'm not sure what I'm going to say if the questions get tough.


WARNER: Well, that's good.


HAMRE: So I think it'd be better if I asked them to join me.


And may I begin, frankly, on a personal note to say how it's a bittersweet moment to be back here because it's probably the last time I have a chance to appear before this committee, Mr. Chairman. I can't tell you how gratified I am that I had an opportunity in my life to be able to work here. It gave me a chance to see the real greatest of the American experiment, which is to see democracy that works every single day with remarkable people that are willing to serve their country, not just the members, of course, that sit at the table, but the remarkable staff that's willing to work for you as well. And I'll always consider it a deep honor and a privilege to have been a part of this committee and to come now before you. And I thank you very much, sir, for the honor.


WARNER: Well, Doctor, I appreciate those sentiments on behalf of myself and all members of the committee. Just marvelous to see persons who have had the opportunity on this committee, be they staff or U.S. senators, to move on to the Department of Defense. And there it was, a senator and a senior staffer running the department.


HAMRE: Yes, it's kind of scary.


WARNER: Well, I think it's a great American story and it gives a lot of incentive to all these horse holders sitting around her.


(LAUGHTER)


I think they visualize, each of them, as deputy secretaries themselves as some point in the near future.


HAMRE: Yes, it's a remarkable country and it -- what makes it remarkable is it gives opportunities for people like me every day, and I thank you for...


WARNER: Now, would you introduce your colleagues and then I'll defer to my distinguished ranking member.


HAMRE: Sitting to my right is David Oliver, the Honorable David Oliver. He is the principal deputy undersecretary for acquisition and technology. And James Bodner, who is a familiar friend to this committee. He, of course, worked for Senator Cohen, Secretary Cohen...


WARNER: That's right.


HAMRE: ... for years on the committee. He is the principal deputy undersecretary for policy.


WARNER: We welcome the distinguished and honorable gentlemen, particularly Jim. Glad to see you back again.


Now, Senator Levin.


LEVIN: I have no opening statement, just to, number one, thank you, Mr. Chairman, for calling these hearings. It's an extraordinarily important subject. And it's really very timely that you are convening these hearings. We have a lot of need both to protect our security and our safety, but we also have a need to do it efficiently and make sure that our economy is not put at a discriminatory position for little gain in our security, and that's the balance that we try to draw. We want our private sector to thrive; we don't want to do so at the expense of our security. We can do both and we can better in both directions.


I also just want to add my sentiments to yours, Mr. Chairman, about John Hamre. This may or may not be his last appearance...


WARNER: I don't think it'll be his last, you know it and I know it.


(LAUGHTER)


We'll bring him as an expert witness pretty soon.


LEVIN: I only want to say this once, I don't want to keep telling him how great he is. If I knew this was his last appearance, then I would tell him how much we're going to miss him, but since I don't know it's his last appearance, I won't say that.


HAMRE: Fair enough. Fair enough. Thank you, sir.


WARNER: Thank you very much, Senator Levin.


Dr. Hamre?


HAMRE: Sir, I'm probably like you, the senators, I haven't read my testimony yet either. And I don't -- so I'm not going to -- you know, it was a beautifully written statement, I just didn't write it, the staff did, of course.


WARNER: Well, we'll accept it.


HAMRE: And if...


WARNER: I did write most of mine, but with a few of the clauses filled in.


(LAUGHTER)


LEVIN: I want to know how he knows it's so beautiful if he hasn't read it.


HAMRE: Oh, it always is, I mean. But -- so I have jotted down a few...


WARNER: Without objection, your statement in its entirety is made a part of today's record.


HAMRE: And I will depend on these two gents to speak more directly about the give and take that we've had with Senator Enzi. And I would like to personally thank Senator Enzi for his enormous cooperation with the department during the last three, four months as we've been working through this. He has never once refused to meet with us when we've had a concern, he's sought us out for our views, and it's been a tremendous dialogue. And I think we're very, very close on this bill.


If I may step back just to speak in a larger context about how we look at this...


WARNER: Yes. Let me just say for myself and I think others, a lot of well intentioned people are working to achieve a common result. Commerce Department has its interest, Defense its, the president's on top of all. This is not a political issue. And we're trying to arrive at a consensus.


You say we're very near. Near to which post? Near Commerce's view or DOD's views or Senator Enzi's, Senator Johnson's views or...


HAMRE: Sir, my sense is that we have a consensus with the Commerce Department...


WARNER: Among what parties?


HAMRE: I think the Commerce Department and the Defense Department are fairly close and I think have an agreement on how it could work. I think we probably still have some little disputes with Senator Enzi's staff, which I think we can work out. And I'm not exactly sure the dimension of that, Mr. Bodner can speak to that. If you'd like to get into that right away we could...


WARNER: I just want to know how close are we?


HAMRE: A gnat's eyebrow, I believe.


BODNER: On the particular issue that Senator Enzi raised about special security enhancement for significant technologies, things like hot engine sections and also the encryption that you mentioned, Mr. Chairman, I think that we in Commerce have to closure on a particular approach, particular provision that might be added to the bill. I think it's a little bit different than the place where the Senate Banking Committee staff is at the moment, but that's only we have not had enough time to talk it through, and I think with some more time we can work this through and I think that there are other interested parties...


WARNER: Well, time is key because the majority leader is anxious to move on this bill.


As I said, Senator Levin, you and I, I'm sure, would reconvene this committee on very short notice to receive such consensus as you can provide in writing whenever you're ready to do it.


BODNER: Well, as I say, I think that the Department of Commerce and the Department of Defense have a common view on this.


WARNER: All right.


HAMRE: So I think we can meet very closely. We'll work right after this hearing and we'll see if we can reach conclusion on it, sir.


WARNER: All right.


HAMRE: Sir, if I might just step back to say, we very much think that the export control regime that currently is in force needs to be changed. We think it's no longer helping national security and in some cases it's absolutely counterproductive.


All export controls really are designed to do two things: To keep important technology out of the hands of bad guys and to help facilitate the movement of American technology into the hands of allies.


Unfortunately, our current system is, I think, starting to fail badly on both counts. And I think part of that's driven by what's happening with technology in American manufacturing today. And let's just take an example, the example of the Global Star satellite system.


Now, this is an American satellite system that we're jointly launching with the French. The payload is actually and the components of the payload are built in France. The attitude-controlled propulsion system and solar arrays are built in Germany. The batteries are manufactured in the United States. The bus is built and assembled in Italy. The ground segment equipment is manufactured in the United States. The hand sets are manufactured in Thailand, in the United States, in Sweden. And we call this an American telephone system, OK.


That's what -- that's how complicated it's now become. And yet we have an export control system that still is oriented around the manufacturing methods and techniques of the 1970s, when things were done entirely in one country and you could control exports going out.


When we make it so hard now to export technology and components, it's driving a wedge between us and our allies in very unfortunate ways. DASA (ph), the large German aerospace company, has actually issued instructions to their engineers to design U.S. components out of their hardware because they can't wait on the licensing process, it's taking too long.


That's a very bad development for alliance interoperability. That's going to set us back as allies. We complain that we have a hard time fighting on the battlefield with our counterparts, and yet when we don't make it easy for them to utilize American technology, we make it very much harder for this alliance to fight together.


And so it's -- the current system is now making it harder, not easier, to protect American security in a larger sense because interoperability is now getting further and further, wider, from our grasp. That's the first thing.


HAMRE: The second thing is, I personally don't believe that the current system adequately protects security. It really isn't doing it's job.


The centerpiece of our whole system is that you need to get a license to export something. Well, bad guys don't apply for licenses. They try to hide in a process to get technology. They still want our technology. They're still trying to get American components. But they don't apply for licenses to get it. You know, they're trying to hide in the shadows of the system.


So we need to rethink, in light of the way technology is evolving, the manufacturing processes are evolving, and the way the bad guys are behaving, and design a new system that really works much more efficiently in this era. And I think that Senator Enzi's bill gets us far along the way to doing that.


We need to spend a lot less time controlling technology that's not critical for national security, and spend a lot more of resources on the technology that is critical to our security. That's one of the reasons why we thinks it's very important that there be national security friendly provisions that are included in the Enzi bill. And as I say, we're very far along in being able to incorporate that.


We also think that we need to change the way we think about the industrial base, the American industrial base. Right now we allow fairly open exchange between the United States and Canada, and that's because we have really an integrated North American industrial base. And Canada observes a larger perimeter for the export of military technology outside of its borders, respecting our concerns about exports.


We think we ought to extend this sort of provision to other countries that share our view and have export control systems. And they observe them, they monitor them, they work with them very carefully, and they work with us carefully.


About a month ago, Secretary Cohen signed a statement of principles or a declaration of principles with the United Kingdom that would take us along the road where we could start to honor those sorts of perimeters, security perimeters, for each other so that we would guard important and critical military technology, but then allow a much freer trade between our two countries. We think that's a much more improved form of security -- industrial and technology security for the future. It recognizes the nature, the evolving nature, of the manufacturing process that's now becoming global and international.

And finally, we need to have a system where we work much more closely with law enforcement and intelligence agencies to find the bad guys that are trying to get at American technology, not just rely on licensing processes being the way to turn them up by accident. It's only the dumb bad guy that applies for a license. You know, we've got to find the smart bad guys that are out there that are trying to hide and are not going through a licensing process. And that requires much stronger collaboration between us and law enforcement to be able to do that.


So our sense is that the current system is now not working efficiently and is in some cases counterproductive and does need to be changed. And we think that Senator Enzi's bill, with the changes that we would advocate, is going to be a good, strong improvement.


We think we also need to extend this in a much deeper way to the way we control technology. Now some of this goes into the control of the so-called munitions list items, the items that are governed by the Arms Export Control Act, not the Export Administration Act. But these things have to be considered in tandem.


And we need a new architecture for industrial and technology security for the future.


I'm so grateful that this committee is holding the hearing. This is an important dimension to national security, which normally isn't studied very carefully. And it's a tribute to you that you're taking the time to look at it, and we thank you for that, sir.


WARNER: How soon is that new architecture to be evolved, and is it your successor? Is it being worked in your office now?


HAMRE: It's being worked right now, and I think the elements are really in place. I think we're starting to get them out there. They would -- in some cases, it can be done administratively and some cases it takes new procedures. We've been doing a lot of them internal to the Department of Defense.


WARNER: Would some take legislation?


HAMRE: It may, it may in the long run.


WARNER: You'll take the initiative...


HAMRE: Yes, sir.


WARNER: ... or we or...


(CROSSTALK)


HAMRE: No, I think we would like to give you some proposals and some ideas. And we're very far along to be able to do that.


But I would say that Senator Enzi's bill, this bill, takes a major step forward in helping to streamline the process as it is.

But I also have to tell you, we do have to protect important national security equities. And part of the reason we're insisting on the so-called carve-out is so that the Department of Defense does have a basis to say this is an important technology. We have to monitor this more carefully.


And I think we've reached an agreement on how to handle that.


WARNER: Well, let me see if I can summarize where we are, maybe just dispense with 20 questions I've got here just with one. And that is, you've got, somewhere in your possession, a carve-out draft -- is that correct? -- that represents the composite...


HAMRE: Yes.


WARNER: ... of a consensus between the departments of Commerce and the Department of DOD -- is that correct?


BODNER: That's correct, sir.


WARNER: Is that available to us now?


BODNER: I believe that I can go back to the Department of Commerce and we can officially transmit it to you, yes.


WARNER: You're not prepared to do it at this time?


(CROSSTALK)


BODNER: I believe we've had a dialogue with your staff...


WARNER: Beg your pardon?


BODNER: I believe we've had a dialogue with your staff, and your staff is familiar with the language. It has not been officially transferred to the committee, but I think with an administration position in place now, I think we can do that.


WARNER: So we have it, but it's not official -- is that it?


BODNER: I think that's a correct description.


WARNER: Is that correct?


STAFF: (OFF-MIKE)


WARNER: All right, that seems to be a concurrence here on the staff. So we have it, but it's not official. And you'll put the official imprimatur on today or tomorrow. Is that correct?


Now, you want to have some time to further refine a provision or two with Senator Enzi's staff. Is that correct?


BODNER: Absolutely, sir. I would say that from the Department of Defense's view, there are two very significant issues: One of them has to do with this carve-out, if you call it that, the other has to do with commodity classification.


In addition to that, there are some lesser tier items. And I know that there was a manager's amendment that was being assembled. And of course, I think the entire administration would like the opportunity to review that manager's amendment in its original form so that we can have an opportunity to comment on it.


But those two are the most critical: the commodity classification and the carve-out.


WARNER: OK, well, let me see if I can get this thing procedurally. You've got to go back with Commerce and get the official stamp. Then you go to negotiate further with Senators Enzi and Johnson, or do you do the negotiation and then go get the seal of approval.


BODNER: The administration position is a position of the administration. And so we would bring it forward as the administration.


WARNER: Then sit down with Senator Enzi and Johnson, and then be prepared to address the four committees of the Senate that are -- well, three are concerned...


BODNER: Yes, sir, I think we can do that.


WARNER: ... myself, Foreign Relations and Intelligence. I think no Government Ops also. So there are four. I think I got the procedure clear in mind. So then we can assume -- let's say procedure -- when should this committee reconvene, if we feel it's necessary?


BODNER: Well, I think that before it would be fruitful to reconvene, that Senator Enzi have a chance to review the administration...


WARNER: Well, he works 24 hours a day, I can guarantee that.


BODNER: ... and that the administration have an opportunity to review Senator Enzi's manager amendment. I think those...


(CROSSTALK)


WARNER: OK. It's got to go back and forth a little bit. Maybe -- all right...


HAMRE: We can do this overnight.


WARNER: All right, overnight, this is helpful. Because I want to make sure we can -- give a report to the other committees and Senator Lott.


Now, Senator Levin, do you want to weigh in on this? I'm just trying to deal with the procedural things.


LEVIN: Yes -- now this is a very important way and it's a way to short-cut I think some things, which could actually derail us or slow us down.


While you're passing that along, would you make sure our staffs see the most recent drafts, because the last draft our staff saw on this side was January. So there may be a more recent draft, but make sure the staffs here are involved as well.


I'm a little confused on the manager's amendment. Does that apply both to the carve-out and the commodity classification issues? Or just the later?


BODNER: Sir, I'd have to refer to Senator Enzi. It's his manager's amendment.


ENZI: Yes. We're doing this under a little different procedure. On any bill that I've seen debated on the floor, the manager's amendment has been put together during the debate. But on this one, because of the emphasis on national security and our desire to be a part of making sure there's adequate national security, we put a manager's amendment together. And I personally delivered that to the chairman of the committees that were involved on Friday.


WARNER: And I presume you have a copy -- am I not correct, Senator Levin...


(CROSSTALK)


WARNER: Wait a minute, hold everything. We're at a disjoint now. You say you presented it and I'm told we do not have it.


STAFF: We do have it, but Senator Levin doesn't have it yet.


WARNER: Oh, OK, why not?


STAFF: Because Senator Lott is...


WARNER: OK.


(LAUGHTER)


(CROSSTALK)


WARNER: I'm sorry, Senator.


LEVIN: No, that's OK. It's -- we understand that once in a while it can happen.


Well, then, just to be -- let me say, then, to Senator Enzi that we would appreciate having a copy of that on this side as well, because it apparently was shared with the majority but not with -- that's OK. I just would...


(CROSSTALK)


LEVIN: It's not your...


(CROSSTALK)

LEVIN: Not your responsibility.


(CROSSTALK)


LEVIN: No, no, that's OK. I'm sure Senator Warner will see to it that that's done.


My question, though, still is open. I'm a little uncertain on this. You made reference to the manager's amendment. I want to make sure -- is it the intention that the manager's amendment include all of these subjects, including the carve-out and the commodity classification? Are they all part of a -- both part of manager's amendment?


ENZI: My intent was to look at the list of things given by all of the committees that are involved and to talk about what ones were possible and what ones were not possible. And the ones that were possible are in a manager's amendment. That left three outstanding items that weren't in the amendment, because we were trying to get the people in Commerce and the Department of Defense to talk some more about those issues and got hung up for a while in the National Security Council and we had some illnesses, and Secretary Hamre and Secretary Reich both got sick. It must have been an electronic bug.


(LAUGHTER)


LEVIN: It wasn't because of what was in this draft, I assume.


HAMRE: I think we were sick of each other I think.


ENZI: We don't it's a new EAA flu.


There's some things that we've been working to resolve. One of those is the classification process. And classification advances has to be part of the entire classification process.


We have not agreed to that amendment because the classification process is not the control list. The control list is what we make sure that there is -- that licenses have to be provided for. And we made sure that the Department of Defense and the other security agencies are part of making that list, and (OFF-MIKE).


And they have control of all what's on there. What a classification is, is when a person has a new product, they make a request to see if it's something that has to have (OFF-MIKE). Under the current procedure, Defense knows about that, because they have to make a determination about whether that's on the munitions license or not.


And so they have an opportunity to object on any classification. But we're not trying to stop the process, the classification process. We're trying to make sure that we have complete control of some of the control lists. So we've had some discrepancy there on how much additional we want to bog the system down and discourage people, the bad guys, from making a request on whether anything needs an export license or not.

LEVIN: My understanding is that the DOD IG, however, has said that despite an interagency memorandum that the Defense Department would be notified of classification decisions, that in fact they have not been.


ENZI: That's right. Some 17,000 items I think they had...


LEVIN: With rare exception.


ENZI: This provides for notification, but it doesn't provide for the same difficult concurrent system that the controllers had, because we want to get things classified and into the process.


WARNER: Secretary Hamre, do you have a reaction to that?


HAMRE: Well, only in a very general sense, which is to say that I'm typical DOD: I want a veto but I don't want the veto exercised by a GS-12. And I think, unfortunately, the way the system has tended to work in the past is it's gotten exorcised at far too low a level and not at sufficiently high levels to say this really is a crucial national security issue.


And so one of the things I'd like to look at is to see do we have adequate procedural safeguards inside this within an administrative process if it isn't statutorily guaranteed. And that's what I don't know. I'm going to have to check with Jim.


Jim, did you...


(CROSSTALK)


BODNER: If I could just add a word.


Currently the way the system works, as Senator Enzi said, if a company wants to know whether an item is subject to export controls, it can either come to the Department of Commerce or the Department of State. If it comes to the Department of State, the procedures as embodied in a presidential directive requires State to go to the Commerce Department and the Defense Department, share the information with us, and we have full transparency before a decision is made as to whether an item is subject to controls. That's on the State Department's side, and State is very cooperative with us.


On the Commerce Department's side, the Commerce Department makes its own independent assessment as to whether an item is subject to controls. If it believes it is not, the Department of Defense never knows that. And so items then are -- proceed without any knowledge of the Department of Defense. If it believes it is subject to the munition list controls, then we are informed. We think that a process which is open and transparent, similar to that which now works with the State Department, could apply here. We're willing to work under very tight time lines. We could turn things around within 10 days. We're willing to make that commitment.


LEVIN: And you don't need approval process; you just need notice so that you could disapprove at a certain level.

HAMRE: We could raise it to the appropriate level, right.


BODNER: I would tell you that my staff has concerns that with the language as it's currently drafted in 1712, the notification that we got from Commerce might come after the fact.


WARNER: I note that there were 18,000 issues of which only twelve ever got to DOD. Somebody handed me this piece of paper. Is that correct?



BODNER: I can't confirm the specific numbers, but the order of magnitude, I think that's right.


WARNER: If I may, colleagues, return to the proceedings for a minute.


Could you provide us with the draft of the unofficial carve-out language now so that we can look at it together with Senator Levin in anticipation that you will formally send it up maybe by day's end? Could we do that now...


BODNER: OK. In fact I think...


(CROSSTALK)


WARNER: ... to keep this process rolling?


BODNER: I think your staff has in hand...


(CROSSTALK)


HAMRE: Yes, we'll see you get the most current.


(CROSSTALK)


WARNER: ... moving.


You can put in the custody of one of your individuals.


Senator Bingaman, you've been very patient here, and then I'll return to...


BINGAMAN: Mr. Chairman, let me ask about a different aspect of this. I rely on Dr. Hamre's encyclopedic knowledge of the entire government to question him about this subject. Because my understanding is that as a result of a bill we passed here in '98 -- I believe it was '98 -- I think it was a revision of the Arms Export Control Act. And you mentioned the fact that munitions -- the munitions list falls under that, and that we should really deal with these things -- I think you said these things have to be considered in tandem. That's what I'm trying to do here in my question.


My information is that satellites and related components are presently governed by that act and fall under this munitions list and are subject to review in the State Department. The way it now works, Commerce refers them to State. Is that right?

HAMRE: Yes. I mean, this was -- and actually I think the Congress directed that they be moved back to the State Department for administration.


BINGAMAN: I'm also advised that the State Department is woefully understaffed and that there are major delays that are being experienced in getting these license applications reviewed and passed upon in the State Department, and that the end result is that many of our aerospace and satellite companies find that they're at a competitive disadvantage in being able to sell in the international market and compete in the international market.


Now that's not in any way being addressed by anything that we've talked about so far. And I know we have a tendency here to put things in one category or another, and we can only either walk or chew gum; we can't do both.


But I guess I'd ask you: What can be done within the administration to deal with this very real problem that I understand is affecting many of our businesses?


And let me just flush that question out by saying that I'm also informed that there is a review going on. This interagency group that I think has been referred to here -- chaired by the National Security Council, including Commerce, State and Defense -- will review 16.


This is a press release from the Bureau of Export Administration in the Department of Commerce, and it says: This interagency group will review 16 categories of items on the Commerce control list that contain, quote, "space-qualified," end quote, items to determine whether those should go over to State as well.


And obviously there is apprehension -- at least I'm picking up that there's apprehension on the part of the some of these companies that have had problems getting their applications reviewed on a timely basis and passed upon because this new list of 16 includes some fairly major items. It includes photovoltaic arrays -- some of which are made in my state -- it includes telecommunications equipment, which is not a small part of our U.S. industry; it includes solid-state detectors, imaging sensors, optical systems parts, optical control equipment, laser radar. And all of that may be subjected to this same kind of problem area that we seem to have in the administration in getting these things done.


Do you have any idea how we can get that part fixed, as long as we're trying to deal with the problem of export controls?


HAMRE: You can't really see this, but this -- you see this great big spike here. That is a spike for DOD's review of export licenses on satellite stuff. Satellites was part of it, but it was our whole package. This spike was the -- the number of items that were more than 60 days old. And it got up to 650 items, you know, this last spring. Now we've got it down so it's 22 items now.


We have really been pouring the coals on in DOD to try to get fast turnaround. And our processing time now averages 23 days.

So we've done a great turnaround in trying to get faster approval of license applications.


But there is a problem here.


BINGAMAN: But that's DOD you're talking about now.


HAMRE: This is DOD. Now the Department of -- the reason I wanted to start by saying that is the Department of State gets a black eye a lot about not processing licenses. But what they do is they refer them to us, and they say: What do you guys think about it? And so a lot of the problems that State was having were caused by us earlier on. Now we've cleaned up our act I think a great deal.


State does not have many people that work these licenses. I think they have something like 14 people that are reviewing these 25,000 applications. And so those folks are pretty busy.


I'd also argue, they probably can't render a lot of direct review of license applications when it's coming through that fast.


But I'd also argue, I don't think the solution is just to buy more people to look at licenses. I think we really need to look at why do we have to have so many licenses for non-important technology items. I think we ought to require licenses for truly important stuff and not have as many licenses required for unimportant things.


BINGAMAN: I guess my question -- my follow-up question, and then I'll quit here because I know that Chairman wants to get on to the next panel, but what can be done in the few remaining legislative days of this Congress to accomplish some of what you're talking about? Is there a need for us to try to legislate something? I know it's almost impossible; this Arms Export Control Act is under the Foreign Relations Committee.


HAMRE: Let me give an example. About 30 percent of all of the export licenses end up going to three countries: Canada, Australia and the United Kingdom. These are countries that we have very compatible interests with. We exercise strong oversight and control of exports. If we could extend the ITAR waiver that we have with Canada to the United Kingdom and to Australia, we would be able to move dramatically streamlined the license approval process when it comes to 30 percent of all the license applications that are going through the department.


Now that's an opportunity that we should I think seriously look at. We at DOD feel we ought to seriously look at that.


There's disagreement, I should say, in the administration over that. But I think it's something that we actually ought to look at. And that could happen soon.


BINGAMAN: Let me just refer -- there's a Newsweek article that I'll give you a copy of regarding a satellite contract that was lost by one of our major companies, Orbital Sciences. The contract was with a company in Canada. To compound the problem, the Canadian company was a subsidiary of Orbital and they lost the contract to a foreign firm I believe because of inability to get a license application.


HAMRE: In this case I do know a fair amount about this case, and that actually was not really about a license application. That had to deal with some cost problems that Canadian Radar Sat II program was having. They were needing to find a substantially -- they had to find ways to get the costs out dramatically from their program. They thought this was an avenue for doing it.


I don't think that particular case was about problems of getting export licenses. But I could find you five more that are problems with export licenses.


See, your point is right.


BINGAMAN: Well, thank you very much.


Mr. Chairman, I've delayed us too long here. Thank you...


WARNER: Haven't delayed at all, Senator.


BINGAMAN: We'll follow up on this.


(CROSSTALK)


LEVIN: On that last point, could I just ask one question?


WARNER: Yes, and then I want to go to the procedural problem that I see before the committee.


LEVIN: That is an important question.


Do you have statistics on how long it takes to have these licenses approved or disapproved or acted upon under the new system than under the old system? Have you seen any statistics or do you have any?


HAMRE: We have statistics on how it currently -- we don't have a new system per se. We have streamlined approaches we've taken internal to DOD, and we could get you that data.


LEVIN: Right. (Inaudible) double with the new satellite approach, the shift -- the shift over to State.


HAMRE: Oh, when they went over to...


LEVIN: Yes.


HAMRE: I think we have that data.


Do you know if we do, Jim?


BODNER: We have internal DOD data on our processing times. But with regard to the overall times, that would be something the State Department would maintain.

LEVIN: You don't have a comparison of how long it takes them now compared to how long it did take them before it was transferred back?


BODNER: We don't maintain the State Department data.


WARNER: That's the provision I put in last year -- wasn't it Senator -- I think -- my recollection.


(LAUGHTER)


LEVIN: I don't know. All I know it's taking awfully long and a lot of legitimate frustration out here with this process.


WARNER: This is where I see the situation at the moment, procedurally.


Number one, this committee, at the moment, all that we've asked for a sequential review. We do not have it as yet. It may come or it may now.


There are at least three other committees that have expressed concerns.


Now, the crux of this whole issue is in this carve-out language, which our distinguished panel of administration witnesses have represented that they're almost at closure, if not, with Commerce. The moment that closure is obtained, the official imprimatur can be put on the document, which we now have, and it can be discussed publicly. But at the moment, in fairness to the administration, which is sharing on a cooperative basis, we will refrain from talking about the specifics of the carve-out document.


So it seems to me that we've reached that juncture in this hearing with this panel -- and then I'll address a procedural question to the next -- where we've got to await the carve-out document approved by the administration, forwarded to the Congress, at which time my colleague and Senator Johnson presumably will have their views on it.


So we're making some progress.


And it seems to me -- I'm going to ask of the next panel a question on the assumption -- and I assure you, we'll have a second hearing -- would it not be better to have the carve-out document in the public domain so that your constituencies can have an opportunity to review it and listen to their views before we go on. That seems to me -- I want to be productive and expeditious.


Could I just on your hand ask the next panel their views on that?


If you'd stand up, identify yourself?


MANCUSO: Donald Mancuso, the...


WARNER: Beg pardon, yes?


MANCUSO: Don Mancuso with the Defense IG's office.


Yes, Mr. Chairman, that would suit us just fine. Our comments are actually limited to the draft as currently written. We've not been privy to any recent communication with Commerce. It may well be saving of the committee's time to put off our...


(CROSSTALK)


WARNER: And your time. You can better testify if you have it before you and have had a chance to study it -- isn't that correct? So your testimony would be of greater value to the Senate and this particular committee if you've had an opportunity to examine the carve-out document.


MANCUSO: I would certainly agree, Mr. Chairman.


WARNER: Thank you.


DOUGLAS: Mr. Chairman, I'm John Douglas. I'm the president of the Aerospace industries Association, more or less representing industry here today.


We support Senator Enzi's bill as we have seen it up to this point. We have not seen any of these amendments that you've been discussing this afternoon, and of course we could have a much more informed view if we've had a chance to see them, sir.


WARNER: Well, I would think so.


JOHNSON: Yes, I'm Harold Johnson with the General Accounting Office. Of course we have not...


WARNER: So you would be able to better testify if you had an opportunity to study the document.


JOHNSON: Yes, indeed.


WARNER: Well, I think that's unanimous, Senator.


LEVIN: It makes a lot more sense, I agree. Rather than our debating yesterday's document, I'd rather be debating today's or tomorrow's document or not debating it all, but popping the champagne corks or whatever you do...


(CROSSTALK)


WARNER: ... testimony, then the carve-out comes, they shoot it all down...


(CROSSTALK)


LEVIN: Doesn't that make sense, Mike?


ENZI: From a practical standpoint, yes. From a standpoint of whether we're going to have any control over exports, no. If we don't start debating this fairly shortly, there won't be time to do this.

What we're down to are some things that the members need to make decisions on.


(CROSSTALK)


ENZI: I'm not sure you would agree with it.


(LAUGHTER)


You know, it's something we need to talk about the fine shades that we're working on at this point. We're almost down to the pronunciation of words, so...


LEVIN: You ought to get their draft and then get together after we have their draft.


WARNER: Fine. I think we've reached the position and you concur that this matter can be better addressed once you can put into public domain the current policy decision by the two departments.


BODNER: Sir, could I add another comment?



WARNER: Yes.


BODNER: As you're aware, I believe, in addition to the carve-out provision, there are other provisions that we've been in discussion with Senator Enzi, Department of Commerce and your staff on: the commodity classification that we've discussed, the question of time lines for review, also the question of set-asides by the president of determinations of foreign availability and mass market availability, and then also what's called a catch-all provision related to weapons of mass destruction.


In addition, I would just like to highlight that I know there was concern on the part of the IG, potentially others, that the secretary of defense have adequate role in the process of review.


I would just note that the process by which the administration right now drafts regulations is one in which we think the Department of Defense, the secretary of defense, does have adequate review. I don't want to use the veto word because it has negative connotations, but SecDef concurrence is required before a regulation can be promulgated. And we think that that's a good system. We'd like to see it stay in place. So that may be part of the discussion over the legislation as well.


And then finally of course, the manager's amendment that Senator Enzi may have. We don't know what's in it, and obviously we may have comments upon it.


WARNER: Well, now, wait a minute.


ENZI: Wait a minute.


WARNER: Yes, go ahead and flick your mike and give us the answer.


ENZI: You haven't had the manager's amendment?


BODNER: No, sir. I believe that Commerce was provided a summary document -- or least we were told that there was a summary document circulated. But the Department of Defense, to my knowledge, at least as of about noon today, was not aware of having seen the manager's amendment.


ENZI: Well, it's my understanding you had the exact wording as of Friday. So, we'll have to track down what the difficulty is there.


WARNER: Well, can you remedy that?


UNKNOWN: Sure.


WARNER: And see that they get a copy of the manager's amendment forthwith. All right, I think we're making some progress.


Yes?


BODNER: Just an overall comment just so that there's no misunderstanding: I think the Department of Defense view is that the Export Administration Act renewal legislation can serve the national security interest and we're very supportive of that. We just need to do the tweaking to make sure it does so in the optimal fashion.


WARNER: Well, we've used gnats eyelash, tweaking, everything -- come on, men, we've got to this -- ladies and gentlemen -- solved.


BODNER: Yes, sir.


WARNER: Then we'll just stand in recess 'til the call of the chair. Thank you.


END


NOTES:
Unknown - Indicates speaker unknown.
Inaudible - Could not make out what was being said. 
off mike - Indicates could not make out what was being said.

PERSON:  JOHN W WARNER (94%); STROM THURMOND (72%); JAMES M INHOFE (57%); JOHN MCCAIN (57%); OLYMPIA J SNOWE (56%); PAT ROBERTS (56%); TIM HUTCHINSON (55%); A WAYNE ALLARD (55%); JEFF SESSIONS (55%); CARL M LEVIN (54%); ROBERT C SMITH (54%); ROBERT C BYRD (53%); EDWARD M KENNEDY (53%); JEFF BINGAMAN (53%); CHARLES S ROBB (52%); JACK REED (51%); MARY LANDRIEU (51%); 

LOAD-DATE: March 3, 2000