Chairman Stump, Congressman Skelton, and Members of the Committee: 

Thank you for the opportunity to provide the views of the Department of State on the Export Administration Act (EAA). 

As you know, since the EAA of 1979 lapsed, our dual-use export control system has been governed by a patchwork of temporary legislative extensions and executive orders issued under emergency authorities.  The lack of a new law has hindered the U.S. Government's ability to meet the challenges of maintaining an effective dual-use export control system in the face of rapid technological advances and increasing industrial globalization.  The clearest example of this is the inadequate penalties for export control violations contained in the 1979 law.  We welcome the commitment you have expressed to take up this important issue quickly and give it the attention it deserves. 

My testimony today will focus on State Department priorities for the EAA.  Export controls are first and foremost a national security and foreign policy tool. Dual-use items, by the very name we give them, clearly have both legitimate commercial purposes and at the same time are crucial to the establishment and maintenance of weapons of mass destruction (WMD), missile, and advanced conventional weapons programs.  In attempting to create a better system, we must remember that our main goal is to prevent the proliferation of sensitive technology and capabilities that could threaten the U.S. and our allies now and in the future, and to bolster U.S. foreign policy. At the same time, we must be mindful of the burden that such controls place on U.S. industry, and therefore focus our efforts on those items, end-uses, and end-users that present a substantial risk.

Over the last decade, there have been numerous attempts to enact a new EAA.  The State Department has been involved at each step.  Although there have been many issues of contention in the various bills, the Department's objectives in enacting a new EAA have consistently focused on four principles:

·       Strengthening the multilateral nonproliferation and export control regimes;

·       Authorizing unilateral U.S. controls when needed, such as those for anti-terrorism reasons;

·       Permitting controls based on the end-user and the end-use (especially as concerns WMD/missiles) as well as the item itself; and

·       Providing the President with tools and latitude to make critical national security decisions.

Before I go into further detail regarding these four objectives, I want to stress that while the State Department's goals on dual-use and munitions export controls have not changed following the events of September 11, they have taken on even greater urgency.  It is now more important than ever to pass a new EAA.  It is of equal importance that the new EAA not compromise the integrity of our strong munitions export controls system.  State supports the Senate bill, in part, because it does not affect the Arms Export Control Act, except in explicit conforming amendments.  

Multilateral Commitments

A major responsibility of the State Department in this process is to ensure that the United States fulfills the important political commitments we undertook as members of the multilateral nonproliferation and export control regimes.  The four regimes are the Nuclear Suppliers Group, the Missile Technology Control Regime, the Australia Group (for chemical and biological weapons-related items), and the Wassenaar Arrangement (conventional arms, and dual-use items useful for military purposes). 

Our objective in multilateral regimes is the same as for our national export control policy as a whole - to  balance economic considerations with the national security requirement to prevent the proliferation of dangerous technologies, particularly those related to weapons of mass destruction, missiles, and advanced conventional weapons.  Our partners in these multilateral regimes share this objective, even if all of them do not always agree with us on where the balance is. 

Above all, participation in the multilateral regimes is in the national security interest of the U.S.  The existing regimes are a product of strong U.S. leadership over many years.  Any legislation on export controls needs to provide this and future Administrations with the flexibility to abide by, strengthen, and negotiate new  multilateral regimes that promote U.S. interests.

That is why the Administration worked to include a provision that allows for continued controls on any item that is on a multilateral regime list notwithstanding any other provision in S.149.  This key provision allows the U.S. to maintain regime-based controls even where other provisions of the EAA, such as mass market or foreign availability, might call for decontrol.  As stated in S.149 and H.R. 2581 as introduced, if an item is on a multilateral regime control list, it will not be subject to automatic decontrol.

Unilateral Controls

Although we agree strongly that multilateral controls are preferable, the new EAA must allow us the flexibility to impose unilateral controls when necessary to achieve critical U.S. national security and foreign policy goals. For example, the U.S. needs the capability to control dangerous WMD/missile-related technologies that are not on the control lists of the multilateral regimes. Similarly, it is important that our export control system allow for controls on a range of technologies to end-users in countries that have been designated as state sponsors of terrorism, even if other countries are unwilling to undertake similar restrictions.

End-User and End-Use Controls

The U.S. Government has regulations to impose controls based on the end-user or the end-use, regardless of whether the item itself is controlled.  These "catch-all" controls, which are called for in the Nuclear Nonproliferation Act of 1978 and were extended to chemical, biological, and missile weapons as part of the Enhanced Proliferation Control Initiative of 1991, are extremely important to our effort to hinder WMD and missile proliferation.  They also allow the U.S. to abide by treaty obligations under the NPT, BWC and CWC not to assist anyone, in any way, in proscribed WMD activities.  If an exporter knows that an item will be used in such programs or is informed by the government that an export poses an unacceptable risk of use in or diversion to such programs, the exporter is obligated to obtain an export license.  The "catch-all" controls allow us to focus even greater scrutiny on proliferation activities.

We have undertaken initiatives, along with our regime partners, to encourage other countries to implement similar "catch-all" controls of their own.  Most regime-member countries have followed our example, and national "catch-all" controls have proven very important in stopping sensitive exports to proliferation programs.  Thus, it is important that the new EAA include specific language authorizing the continued use of such controls.  The Administration strongly prefers the language in the bill reported out of the Senate, which provides all the necessary legal authority to continue these critical controls without constraining the President's flexibility.

Presidential Authority

Finally, an essential principle has been that the President must have the ability to make any decision on export controls that he feels is in the national interest. Specifically, the Administration seeks an EAA that gives the President the authority to:

·       maintain controls on items listed by the multilateral export control regimes;

·       control items to countries designated as state sponsors of terrorism;

·       implement catch-all controls against entities and activities of proliferation concern;

·       maintain unilateral national security controls on an item despite foreign availability or mass market status;

·       impose and maintain unilateral foreign policy controls when necessary to achieve U.S. interests (including deferral of procedural requirements prior to imposition); and

·       impose enhanced controls on items he determines to be particularly sensitive notwithstanding other restrictions on national security controls.

One of the main reasons the Administration supports S.149 and much of H.R. 2581 as introduced is that they protect the President's latitude to make these critical decisions.  We will work closely with the House to ensure that the final bill does not tie the President's hands on export control decisions. 

Conclusion

The State Department appreciates the efforts of this Committee and others in the House to undertake a thorough review of this extremely complex subject and produce a new Export Administration Act.  Export controls play a critical role in protecting American security -- they are a cornerstone of our nonproliferation efforts.  How they are implemented is also crucial to the health and competitiveness of U.S. industry.  As the lines between military and civilian goods grow increasingly blurred, it is important that our export controls balance the need of American enterprises to compete overseas effectively with the need to protect present and emerging national security and foreign policy interests.  A new Export Administration Act must create the architecture to accomplish that goal.  The Administration feels that much of H.R. 2581 as introduced would achieve an appropriate balance between protecting U.S. national security and foreign policy interests while supporting U.S. economic leadership.  However, because of the North Korea provisions and because of many amendments added by HIRC, the Administration strongly opposes H.R. 2581 as reported by the House International Relations Committee.

The Department of State welcomes the opportunity to work with the Committee on this essential task.