Cryptome DVDs. Donate $25 for two DVDs of the Cryptome collection of 47,000 files from June 1996 to January 2009 (~6.9 GB). Click Paypal or mail check/MO made out to John Young, 251 West 89th Street, New York, NY 10024. The collection includes all files of cryptome.org, cryptome.info, jya.com, cartome.org, eyeball-series.org and iraq-kill-maim.org, and 23,100 (updated) pages of counter-intelligence dossiers declassified by the US Army Information and Security Command, dating from 1945 to 1985.The DVDs will be sent anywhere worldwide without extra cost.

4 March 1999
Source:

USIS Washington File
_________________________________

03 March 1999

COMMERCE DEPT.'S REINSCH ON EXPORT CONTROL LEGISLATION

(Long lapse in law hurts enforcement, he says)  (2730)

Washington -- Under Secretary of Commerce William Reinsch says
short-term extension of the Cold War-era Export Administration Act
(EAA), which lapsed nearly five years ago, would be better than
continuing to operate export controls without direct congressional
authorization, but not much better.

Reinsch made the statements in March 3 testimony for a U.S. House of
Representatives International Relations subcommittee.

EAA reauthorization has posed trouble for Congress for a decade.
Divided by business and security interests, Congress managed only to
pass a few short-term extensions of the 1979 act through August 1994,
when it finally lapsed.

Since then the Clinton administration has kept export controls in
force under another law, the International Emergency Economic Powers
Act (IEEPA), but Reinsch said doing so faces growing legal and
practical challenges, including penalties for violations that are too
low.

The administration proposed a revised EAA in 1994, and the House
considered its own proposal in 1996, but no bill passed Congress.
Reinsch said that while administration officials had specific
objections to the House bill, they could support most of it.

"Our preference is that you take up reauthorization of an EAA that
would build on the consensus already achieved," Reinsch said.

Because of the difficulty expected to surround such a bill again,
however, he said, the administration would consider extension of the
1979 EAA to deal with short-term problems, especially in enforcement.

Even so, he said, the 1979 EAA deals with Cold War concerns, not those
of the 1990s. And the 1979 penalties, eroded by 20 years of inflation,
are too low to act as deterrents, he said.

EAA extension "is not a substitute for full reauthorization," Reinsch
said, "but it will better enable us to do our business more
effectively while Congress is deliberating."

Following are acronyms used in the text:

-- MTOPS: millions of theoretical operations per second

-- COCOM: Coordinating Committee for Multilateral Export Controls

Following is the text of Reinsch's testimony as submitted for the
subcommittee's record:

(begin text)

Testimony of William A. Reinsch
Under Secretary for Export Administration
Department of Commerce

Before the House International Relations Committee
Subcommittee on International Economic Policy and Trade
On Reauthorization of the Export Administration Act

March 3, 1999

Thank you, Madam Chairman, for the opportunity to testify on
reauthorization of the Export Administration Act. The Administration
has not had an opportunity to review this issue with you since May
1997, and many developments have taken place in the intervening time
which should be considered, so I appreciate the opportunity to be here
at the beginning of the session. The Administration is still working
on formulating the details of its position on the legislation, and I
look forward to working with you to achieve a goal I believe we both
share -- the long overdue reauthorization of an EAA that will protect
our national security in an era of economic globalization that has
arrived in the wake of the Cold War's end.

Since the EAA's August 1994 expiration, we have maintained export
controls through a combination of emergency statutory authority,
executive orders, and regulations. Enacting a revised EAA will help
exporters by bringing the law up to date with current global
realities, minimize the possibility of legal challenges under current
emergency authority, enhance U.S. credibility in international fora,
and curtail the piecemeal export control legislation that is difficult
for industry to understand and comply with.

Today, I would like to first describe why a new EAA is preferable to
operating under emergency authority. I will then discuss the
significant features of the Administration's proposed bill and H.R.
361, which the House passed in 1996.

The Need for a Revised Export Administration Act

Operating under the emergency authority of IEEPA means functioning
under certain legal constraints and leaving important aspects of our
control system at risk of legal challenge. In addition, it can
undercut our credibility as leader of the world's efforts to stem the
proliferation of weapons of mass destruction.

While I do not want to overstate the case, because we have thus far
not faced these complications, and we will continue to pursue our
export control policies despite them, at a minimum they are likely to
consume increasing amounts of time and energy that could be better
used to administer and enforce the export control system more
effectively.

Legal Limits

In some significant areas, we have less authority under IEEPA than
under the EAA of 1979. Foremost among these are the penalty
authorities which are substantially lower, both criminal and civil,
than those for violations that occur under the EAA of 1979. However,
even the EAA penalties are too low, having been eroded over the past
20 years by inflation. The Administration's bill as well as H.R. 361
both significantly increased these penalties.

We rely on the deterrent effect of stiff penalties. The longer we are
under IEEPA, or even the EAA of 1979, the more the deterrent erodes.

Another limitation of IEEPA concerns the police powers (e.g., the
authority to make arrests, execute search warrants, and carry
firearms) of our enforcement agents. Those powers lapsed with the EAA
of 1979. Our agents must now obtain Special Deputy U.S. Marshal status
in order to exercise these authorities and function as law enforcement
officers. While this complication can be overcome, doing so consumes
limited resources that would be better used on enforcement. Both the
Administration's proposed EAA and H.R. 361 continued these powers.

Finally, the longer the EAA lapse continues, the more likely we will
be faced with challenges to our authority. For example, IEEPA does not
have an explicit confidentiality provision like that in section 12(c)
of the EAA of 1979 or similar provisions in the Administration's
proposal and H.R. 361. As a result, the Departments ability to protect
from public disclosure information concerning export license
applications, the export licenses themselves, and related export
enforcement information is likely to come under increasing attack on
several fronts. Similarly, the absence of specific antiboycott
references in IEEPA has led some respondents in antiboycott cases to
argue -- thus far unsuccessfully -- that BXA has no authority to
implement and enforce the antiboycott provisions of the EAA and Export
Administration Regulations.

On a practical note, we are also finding that the Congressional
requirement to conduct post-shipment visits on every computer over
2,000 MTOPS exported to fifty countries is rapidly becoming a major
burden. It forces us to divert enforcement resources to visit
computers that do not need to be seen with the result that we have
fewer resources left to focus on real enforcement problems. Unlike the
computer export notification provision in the same law, the visit
provision cannot be adjusted by the President to take into account
advancing levels of technology, so we must seek relief from the
Congress on this issue.

Policy Ramifications

The lapse of authority also has policy ramifications. Although we have
made great progress in eliminating unnecessary controls while
enhancing our ability to control sensitive exports, exporters have the
right to expect these reforms to be certain and permanent. For
example, while we are implementing the President's 1995 executive
order making the licensing process more disciplined and transparent, a
statutory foundation for that process would send an important message
to exporters that these reforms will not be rolled back, and they will
have the certainty they need to plan their export transactions.

In addition, failure to enact a new EAA that reflects the changed
world situation sends the wrong message to our allies and regime
partners, whom we have been urging to strengthen their export control
laws. We have also been working with the former Soviet Union and
Warsaw Pact countries to encourage them to strengthen their export
control laws, but our credibility is diminished by our own lack of a
statute.

Renewal of the EAA of 1979

Some of these same issues also militate against a simple renewal of
the expired EAA. For example, as I noted earlier, the penalties have
been substantially eroded by inflation. In addition, the EAA of 1979
is a Cold War statute that simply does not reflect current
geo-political realities. Its basic national security control
authorities are predicated on the existence of a single bipolar
adversary and a multilateral regime, COCOM, that ended nearly five
years ago. A renewal of the EAA of 1979 is not much better than
operating under IEEPA.

Significant Features Needed in a Revised Export Administration Act

The Administration's Proposal

In February 1994, the Administration proposed a revised EAA. Granted
many things have changed since then, but our overall goal was, and
remains, to refocus the law on the security threat the United States
will face in the next century -- the proliferation of weapons of mass
destruction in a more complicated era than we faced during the Cold
War -- while taking into account the growing dependence of our own
military on strong high technology companies here at home developing
state of the art products and, in turn, those companies' need to
export to maintain their cutting edge.

To meet that goal, the Administration's proposal emphasized the
following principles: 1) establish a clear preference for export
controls exercised in conjunction with the multilateral
nonproliferation regimes; 2) increase focus on our own economic
security by greater discipline on unilateral controls; 3) simplify and
streamline the licensing system; 4) strengthen enforcement, and 5)
provide exporters with expanded rights to petition for relief from
ineffective controls without impinging on the Administration's
ultimate authority to make judgments that protect our national
security.

Consequently, the Administration's proposal differed in several
significant ways from the EAA of 1979. The control authorities
reflected the trend towards international cooperation on
nonproliferation through multilateral export control regimes instead
of reliance on the Cold War distinction between COCOM-based national
security controls and other foreign policy concerns. The criteria
governing the imposition or extension of unilateral controls were made
clearer. The licensing process was shortened and simplified.
Enforcement was strengthened through increased penalties, greater
authority for undercover operations, and revisions to forfeiture and
temporary denial order authority. The unfair impact provision provided
exporters with expanded rights to petition for relief from ineffective
controls.

H.R. 361 - The Omnibus Export Administration Act of 1996

H.R. 361 was largely similar to the Administration's proposal,
including updates in control authority to address current security
threats, increased discipline on unilateral controls, and enhanced
enforcement authorities. H.R. 361 also contained provisions consistent
with Administration licensing process reforms.

H.R. 361's structure reflected the new challenges resulting from the
end of the Cold War. As proposed by the Administration's bill, the
basic control authorities were multilateral and unilateral instead of
the national security and foreign policy authorities of the EAA of
1979. H.R. 361's new structure explicitly recognized the preference
for compliance with international regimes that the U.S. either is a
member of (the Wassenaar Arrangement, the Missile Technology Control
Regime, the Australia Group, the Nuclear Suppliers' Group, and the
Zangger Committee) or may help create or join in the future. We viewed
H.R. 361's clear preference and explicit guidelines for multilateral
controls as essential for achieving our nonproliferation goals without
disadvantaging U.S. exporters.

Another significant positive feature of H.R. 361 was its increased
discipline on unilateral controls. The determinations required by H.R.
361 for the imposition, extension, or expansion of unilateral controls
required a more precise analysis of the anticipated and actual
effectiveness of unilateral controls. This more precise analysis would
have ensured that our economic security was not adversely affected by
controls which did not significantly advance national security,
foreign policy, or nonproliferation objectives. The Administration
will likely want to suggest some changes to these provisions to ensure
that unilateral export controls are available when they are in the
overall national interest, consistent with the position we have taken
on sanctions reform, but in general we agree with the need to exercise
discipline in the application of such controls.

H.R. 361 also supported Administration reforms of the licensing and
commodity jurisdiction processes. Its standards for license processing
were consistent with the 1995 executive order, which provided for a
transparent, time-limited review process that permitted all pertinent
agencies to review any license application and raise issues all the
way to the President if they desired. This "default to decision"
approach has replaced the black hole into which licenses often fell,
improving the system's responsiveness to exporters while also
providing broader inter-agency review of license applications that
enhances our ability to meet our national security, foreign policy,
and nonproliferation goals.

One other area where H.R. 361 made significant improvements is
enforcement by substantially increasing criminal and civil penalties
and providing greater operational enforcement authority for undercover
operations and forfeitures. These enhancements are particularly
important in the current environment, with more diffuse threats,
elaborate procurement networks, and suspect end users more difficult
to identify.

Provisions of Concern

We did have concerns, however, about H.R. 361's terrorism, unfair
impact, antiboycott private right of action, and judicial review
provisions, which I will outline. We also believe that certain
provisions raised constitutional issues.

The Administration shares the Congress' concern about terrorism, and
we have taken a very hard line against terrorist states. However, H.R.
361's terrorism provision would have significantly reduced the
Administration's flexibility to regulate exports to countries on the
terrorist list to reflect unique or changed circumstances. Under it,
for example, the Administration would lack the necessary flexibility
to supply U.S. government (diplomatic, military, or humanitarian)
operations, multilateral peacekeeping and humanitarian missions,
International Atomic Energy Agency inspections, and activities of U.S.
or third country nationals unaffiliated with the terrorism-list
government.

The Administration opposed H.R. 361's unfair impact provision to
clarify exporters' rights to petition for relief from burdensome and
ineffective export control requirements. The provision limited U.S.
exporters' statutory right to petition for relief by failing to
include ineffective controls and competitive disadvantage as grounds
for such petitions. Unlike the Administrations bill, H.R. 361 also
exempted some other provisions from the unfair impact process entirely
and failed to explicitly allow unfair impact petitions based on
anticipated market conditions.

H.R. 361 authorized private actions for antiboycott violations. These
actions could compromise enforcement of the antiboycott provisions of
the EAA. Allowing suits for actual and punitive damages, whether or
not a violation has been found through government enforcement action,
could jeopardize the record of successful enforcement of the
antiboycott law through inconsistent judicial interpretations,
diversion of government resources, and private settlements that deny
access to evidence.

We also believe that H.R. 361's judicial review provision needed to be
clarified to ensure it would not inadvertently allow inappropriate
judicial review of U.S. foreign and national security policies.

Finally, certain provisions of H.R. 361 raised constitutional concerns
regarding the President's authority to conduct diplomatic relations
and to act on advice from members of his cabinet.

The Administration is undertaking a review of its bill as well as H.R.
361, and we will report to Congress any proposed modifications or
changes we might have.

Conclusion

We believe an EAA that allows us to fully and effectively address our
security concerns while maintaining a transparent and efficient system
for U.S. exporters is essential. As I have discussed, the
Administration and the House, in H.R. 361, agreed on most of the
important changes to bring the law up to date in light of current
economic and proliferation realities. Our preference is that you take
up reauthorization of an EAA that would build on the consensus already
achieved.

I can understand, however, given the Committee's heavy agenda of other
matters, that you may find it difficult to devote the time and
attention needed to produce such a bill, which has not been without
controversy in the past to say the least. Under those circumstances,
we would be prepared to discuss with the Committee an extension of the
expired EAA to remedy some of the short term problems I discussed,
particularly in the enforcement area. That is not a substitute for
full reauthorization, but it will better enable us to do our business
more effectively while Congress is deliberating.

(end text)