June 10, 1999
|Cox Report Recommendations||Export Administration Act of 1999|
|1. The U.S. should insist that the People's Republic of China adhere fully to, and abide by, the Missile Technology Controls Regime (MTCR) and all applicable guidelines. (Recommendation 9)||Support.
The International Arrangements section of the bill emphasizes the strengthening of multilateral export control regimes, including the Missile Technology Control Regime. Because the People's Republic of China is not a member of the MTCR, pressing China to adhere to its rules should be handled in the larger context of relations with China, rather than in this bill.
|2. The U.S. must vigorously enforce, and seek multilateral compliance with the MTCR. (Recommendation 10)||Support.
The bill incorporates a Multilateral Export Control Violations section similar to section 11A in the lapsed Export Administration Act, which provides for sanctions in response to known violations of a multilateral regime. This applies to specific entities or companies. Similar to the current country tiers for computers, the bill applies tiers for all national security controls. A country's lack of adherence can affect the tiering category in which it is placed.
|3. In light of the demise of the Coordinating Committee on Multilateral Export Controls (COCOM) and the insufficiency of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the U.S. should work, including in the context of the scheduled 1999 review of the Wassenaar Arrangement, to establish new binding international controls on technology transfers that threaten international peace and U.S. national security. (Recommendation 11)||Support.
This is a primary objective of the International Arrangements section of the bill. The bill establishes the negotiating objective of eliminating "national discretion" in Wassenaar to avoid a false sense of security. Eliminating national discretion may only be possible by reducing the list of controlled items. Also, since some of the member countries include countries of concern (Russia) and the list of target countries does not include China, it may be necessary to consider a new control regime.
|4. The Select Committee recommends that the U.S. take appropriate action to improve the sharing of information by nations that are major exporters of technology so that the U.S. can track movements of technology and enforce technology control and re-export requirements. (Recommendation 12)||Support.
Eliminating national discretion would help to increase the exchange of information among major exporters of technology since it would reduce the uncertainty associated with different countries' interpretations of the rules. A credible threat of downgrading a country's tiering may deter the reexport threat. The International Arrangements section encourages information sharing and requires progress reports to Congress, but it is difficult to legislate achievable milestones.
|5. The U.S should work to reduce the transfers of weapons systems and other militarily significant technologies from Russia and other nations to the PRC. (Recommendation 13)||Support.
See responses to items 1 and 3.
|6. Appropriate congressional committees should report legislation requiring the Secretary of State , Director of Central Intelligence, and the heads of other relevant Executive departments and agencies to report in a timely fashion to appropriate congressional committees, including the House Permanent Select Committee on Intelligence and the Senate Select Committee on Intelligence, on technology transfers that raise a proliferation concern and on the implementation of all the foregoing recommendations in this paragraph. (Recommendation 14)||Support.
A central theme of the bill is reporting and accountability. Any violations that represent a significant threat to national security will require immediate reporting. U.S. knowledge of dangerous re-exports by other countries is a new reporting requirement in the bill. This information will directly affect a country's tier status. Progress reporting on implementation of negotiating objectives is included in the bill.
|7. The Select Committee expects that the Executive Branch will aggressively implement the Satellite Export Control Provisions of the Strom Thurmond National Defense Authorization Act for FY 1999. (Recommendations 15, 16, 17, 18)||Support.
The bill leaves satellites under the jurisdiction of the Arms Export Control Act.
|8. The Select Committee recommends that appropriate congressional committees report legislation directing the Dept of Energy, in consultation with the DoD, to conduct a comprehensive review of the national security implications of exporting high-performance computers (HPCs) to China. (Recommendation 25)||Support.
The bill enhances resources available for enforcement of the Act, including post-shipment verifications (PSV) to ensure that high-performance computers exported to China are not diverted or used for purposes contrary to the U.S. national interests.
|9. The Select Committee supports the sale of computers to the People's Republic of China for commercial but not military purposes. Establishment by the PRC of an open and transparent system by September 30, 1999, which provides for on-site inspection of the end-use and end-user of such high performance computers, without notice, by U.S. nationals should be a condition of licensing. Failure to establish such a system by that date should result in ...lowering the performance level of high performance computers that may be exported to the PRC, denial of export licenses for computers destined to the PRC, or other appropriate measures. (Recommendation 27)||Support.
The bill will provide for an adverse response to any denial of requests to perform a PSV. If an end-user refuses to allow a PSV, the Secretary shall deny future exports of any controlled items to that end-user. The Secretary may also deny exports of any controlled item to an affiliate or other entity related to the end-user. If a country refuses to allow a PSV, the Secretary may deny all future exports of the same item to any end-user within the country until the PSV is allowed. Unlike current law, the bill will also allow the export enforcement officers to prioritize its PSVs.
|10. The Select Committee recommends... efforts by the Executive branch to encourage other computer-manufacturing countries, especially those countries that manufacture HPCs, to adopt similar policies toward HPC exports to the PRC. (Recommendation 28)||Support.
The International Arrangements section stresses increasing cooperation among the members of multilateral export control regimes. Coordination of export controls for high performance computers should be a priority.
|11. The Select Committee recommends that the appropriate congressional 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 lapse since 1994. (Recommendation 29)||Support.
The bill significantly increases the criminal fines and civil penalties. The bill strengthens enforcement by (1) making export violations a predicate offense for wiretaps, (2) adding a "Patriot Provision" to reward informants with 25 percent of all fines and penalties for export violations that they help to uncover, (3) authorizing a freight forwarders best practices program, and (4) authorizing more funds for increased post-shipment verifications.
|12. Relevant Executive departments and agencies should establish a mechanism to identify, on a continuing basis, those controlled technologies and items that are of greatest national security concern. (Recommendation 30)||Support.
The bill establishes a procedure for development and annual review of the national security control list, based on the collective risk assessment of prescribed factors, and requiring the concurrence of the Secretary of Defense.
|13. Provide longer review periods when deemed necessary by any reviewing Executive department or agency on national security grounds. (Recommendation 31)||Partially support.
The country tiering system is intended to identify those cases that will require greater scrutiny up front, but the time constraints remain constant for all applications. A license reviewing official has the option of denying the application if the risk is considered excessive. Also, exceptions to the time constraint exist for a variety of reasons, including requests for more information and pre-license checks.
|14. Require a consensus by all reviewing Executive departments and agencies for license approval, subject to appeal procedures. (Recommendation 31)||Partially Support. The bill does not endorse consensus, however, it demands documented explanations for any decision that is not unanimous, and allows for an appeal at all levels. This process will increase the transparency and accountability of export control licensing.|
|15. Current licensing procedures should be modified to streamline the process and provide greater transparency, predictability, and certainty. (Recommendation 32)||Support.
The country tiering approach is intended to provide differentiation between end user risk and product risk. This differentiation will allow the Administration to minimize the controls on items and users with lower risk and maximize the controls on items and users with higher risk. The differentiation will also increase the transparency of the system, providing the exporter more information about the prospects of a potential license application.