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Washington, D.C. - The U.S. Senate Banking Committee passed a bill 19-1 today that will, "eliminate trade barriers while focusing controls on items sensitive to national security," said bill sponsor U.S. Senator Mike Enzi, R-Wyo.

Enzi was especially pleased that the bill, S. 149, was strongly endorsed by the Bush Administration. Enzi, Banking Committee Chair Phil Gramm, R-Texas and other committee members worked over the past week with National Security Adviser Condoleezza Rice and others to incorporate a package of enhancements in the bill.

"The Secretary of State, Secretary of Defense, Secretary of Commerce, and I agree that these changes will strengthen the President's national security and foreign policy authorities to control dual-use exports in a balanced manner, which will permit U.S. companies to compete more effectively in the global market place. With these changes, S. 149 represents a positive step toward the reform of the U.S. export control system supported by the President," Rice wrote in a March 21 letter.

The changes included greater flexibility for the President to control sensitive items and elimination of an antiquated measurement system which controlled computer exports. The bill repeals a provision of the fiscal 1998 National Defense Authorization Act which required the President to use millions of theoretical operations per second as the measurement to control computer exports. This change would allow the Bush Administration to begin developing modern standards.

"We have a bill that is supported by Democrats. It is supported by Republicans and it has the backing of the President. I hope we can get this passed quickly on the Senate floor and sent over to the House for consideration there. This bill has been years in the making -more-

and current export control authority expires in a few months," said Enzi. "The EAA of 2001 takes into account the realities of today's global economy, incorporating the concept that some items are very difficult to control. It is essential that the EAA be reauthorized and reformed this year."

The Export Administration Act (EAA) of 2001 creates a framework for controlling dual use technology, or those items that can be used for both commercial and military purposes, while increasing trade opportunities. It would reauthorize and update the provisions of the current law which is set to expire in August of this year.

The EAA passed the Senate Banking Committee last year but was not addressed on the Senate floor due to a crowded agenda.



The White House
Washington, D.C.

March 21, 2001

Dear Mr. Chairman:

The Administration has carefully reviewed the current version of S. 149, the Export Administration Act of 2001, which provides authority for controlling exports of dual-use goods and technologies.

As a result of its review, the Administration has proposed a number of changes to S. 149. The Secretary of State, Secretary of Defense, Secretary of Commerce, and I agree that these changes will strengthen the President's national security and foreign policy authorities to control dual-use exports in a balanced manner, which will permit U.S. companies to compete more effectively in the global market place. With these changes, S. 149 represents a positive step toward the reform of the U.S. export control system supported by the President.

If the Committee incorporates these changes into S. 149, the Administration will support the bill.

We will continue to work with the Congress to ensure that our national security needs are incorporated into a rational export control regime.

Sincerely,

Condoleezza Rice
Assistant for the President for National Security Affairs

Explanation of Provisions of Managers' Amendment to S. 149
March 22, 2001

1. End User Controls [Section 201(c)]

Maintains the current regulatory "contribute" standard for imposing end-use or end-user controls on items that lend to the proliferation of weapons of mass destruction.

2. Enhanced Controls [Section 201(d)]

Provides the President with enhanced authority to impose national security controls on both exports and reexports of incorporated parts and components. Requires the President to report to the committees of jurisdiction on the exercise of the enhanced authority.

3. National Security Control List [Section 202(a)(3)]

Clarifies that the National Security Control List should be under review for the addition and removal of items on a continuing, rather than periodic, basis.

4. Country Tiers [Section 203(b)]

Grants the President increased flexibility in establishing a country tiering system by requiring not less than 3, rather than 5, tiers.

5. Reexports of Foreign-Made Items Incorporating U.S. Parts and Components [Section 204(b)]

Preserves current practice by providing authority to impose national security controls on certain reexports of items to countries that have been designated as supporting terrorism.

6. Presidential Set-Aside of Foreign Availability Determination [Section 212(a)(1)(A)]

Provides the President with increased authority to set aside foreign availability status determinations by establishing three, rather than two, grounds for such a set-aside. Specifies the grounds to which the set-aside expiration applies.

7. Presidential Set-Aside of Mass-Market Status Determination [Section 213(a)(1)(B)]

Clarifies that the President may set aside a mass-market determination in cases where U.S. controls have been imposed to fulfill international obligations.

8. Foreign Policy Export Controls [Section 301(c)]

Provides the President with authority to impose foreign policy controls on certain reexports of items to countries that have been designated as supporting terrorism.

9. Compliance with International Obligations [Section 309]

Clarifies that the President may impose foreign policy controls on items that are listed on the control list of a multilateral export control regime.

10. License Requirements for Countries Supporting International Terrorism [Section 310(a)]

Ensures that notwithstanding foreign availability or mass-market status determinations, foreign policy controls may be imposed on items to countries that have been designated as supporting terrorism.

11. Crime Control Instruments [Section 311]

Preserves authority contained in existing law (Section 6(n) of the Export Administration Act of 1979) to ensure that crime control and detection instruments and equipment may be exported only subject to an export license.

12. Exemption for Agricultural Commodities, Medicine, & Medical Supplies [Title IV]

Removes the title repealing current, and prohibiting future, foreign policy export controls on agricultural commodities, medicine, and medical supplies.

13. Interagency Dispute Resolution Process [Sec. 502(b)]

Codifies current practice by providing that any representative of an agency participating in the interagency dispute resolution process must by authorized by a Senate-confirmed official to escalate a license decision.

14. International Arrangements [Section 601(c)(10)]

Clarifies that the President, in pursuing multilateral export control regimes, should take steps to achieve harmonization not only of license approval procedures and practices but of license approval standards.

15. Penalties [Section 603]

Raises the intent standard for criminal violations from "knowingly" to "willfully." Reduces criminal penalties from $10 million to $5 million per violation, and civil penalties from $1 million to $500,000 per violation.

16. Multilateral Export Control Regime Violation Sanctions [Section 604]

Removes the section requiring imposition of sanctions against foreign persons who have committed certain violations of US or other countries' export control regulations.

17. Post-Shipment Verification [Section 607(f)(1)]

Ensures that post-shipment verification resources are targeted to exports that involve the greatest risk to national security by removing focus on high performance computers, which may or may not represent the greatest risk.

18. Patriot Award of Compensation [Section 607(h)]

Removes the subsection authorizing award of compensation for persons who furnish to federal government officials information concerning export control violations if that information leads to the recovery of fines or penalties.

19. Authorization [Section 607(q)]

The second degree amendment adopted to the manager's amendment terminates the authority granted by this Act on September 30, 2004, unless the President provides the Congress a detailed report on the implementation and operation of the Act, and provides to the Congress any legislative reform proposals or certifies that no legislative reforms are necessary.

20. Annual and Periodic Reports [Section 801(b)(6)]

Clarifies that the annual report submitted to Congress by the Secretary of Commerce includes a description of enforcement activities, violations, and sanctions imposed under the Export Administration Act of 2001.

21. Congressional Notification [Section 801(c)]

Removes the section directing the Secretary of Commerce to notify the committees of jurisdiction of significant violations of the Export Administration Act of 2001 that pose a direct and imminent threat to U.S. national security interests.

22. Technical and Conforming Amendments [Section 802(h)(2)]

Includes the U.S. Code citation for Section 39A(c) of the Arms Export Control Act.

23. Technical and Conforming Amendments [Section 802(i)]

Removes references to the Export Administration Act of 1979 or its provisions from the Forest Resources Conservation and Shortage Relief Act of 1990 and the Trade Sanctions Reform and Export Enhancement Act of 2000.

24. Civil Aircraft Equipment [Section 802(j)]

Preserves authority contained in existing law (Section 17(c) of the Export Administration Act of 1979) to ensure that standard, integral civil aircraft products remain subject to the Export Administration Act.

The Administration has suggested, and we have agreed to, report language on the Secretary's discretion to impose civil penalties commensurate with the offense. The Administration has committed to administratively address the important issues of deemed exports and commodity classification. Finally, the Administration has indicated support for Sen. Bennett's amendment to repeal the MTOPS standard. The amendment was adopted as a second-degree amendment to the manager's amendment.