I. NATIONAL SECURITY CONTROLS
A. General. The purpose of national security controls is to restrict the export of items that would contribute to the military potential of countries so as to prove detrimental to the national security of the U.S. or its allies; to stem the proliferation of weapons of mass destruction; to deter acts of international terrorism.
B. License Application Process
1. Secretary of Commerce, with concurrence of Secretary of Defense, determines items to be controlled and placed on National Security Control List. Factors to be considered: characteristic of item, threat to national security from diversion or misuse of item; controllability of the item.
2. Exporters file license applications with Department of Commerce. Commerce has nine days to review the application for accuracy and refer it to Defense, State, other agencies.
3. Within 25 days of referral, each department must provide a recommendation either to approve or deny the license. A failure to respond within 25 days is deemed consent with the Secretary of Commerce decision.
4. If agreement exists among the departments, Commerce notifies the exporter of the decision to approve or deny the license application.
- If the application is denied, the exporter is informed of the specific deficiencies in the application and is granted 20 days to cure these deficiencies.
5. If no agreement exists, the application is referred to the interagency dispute resolution process.
C. Interagency Dispute Resolution Process
1. Initial Level of Review: Chaired by Secretary of Commerce designee who has the authority to make a decision on the license application after considering the position of the other agencies. Appeal of the decision to the next level of review can be made by any agency representative attending the meeting.
2. Additional Level of Review: Decisions made by majority vote and appeal can be made to next level of review by any agency representative attending the meeting.
3. The entire appeals process must be completed or referred to the president within 90 days after the date the application was initially referred by Commerce.
D. Exceptions to Time Periods. The "clock can be stopped" only if:
1. the license applicant agrees to the delay;
2. additional information is required from the applicant;
3. a pre-license check of the end-user is deemed necessary, but only for a period not to exceed 60 days; or
4. assurances from the government of the destination country is necessary, but only if the Secretary of State makes the request within 10 days and the license is granted within 5 days of receiving the assurance;
E. Mass Market and Foreign Availability: Determinations and Set-Aside
1. The Secretary of Commerce shall determine whether an item meets the standard of mass market or foreign availability. When a determination is made, the item is removed from the Control List and no license is required for export, subject to the presidential set-aside authority.
2. An item has mass market status if it:
(a) is produced and available for sale in large volumes;
(b) is widely distributed through marketing channels;
(c) is conducive to shipping by generally accepted commercial means; and (d) may be used for its intended purpose without substantial and specialized service.
3. The president can set aside a mass market determination if he determines that: (a) decontrolling the item constitutes a serious threat to national security (b) and the export control would likely diminish that threat.
The president must review the decision every six months and publish the determination in the Federal Register.
4. An item has foreign availability status if it is:
(a) available from sources outside the U.S.
(b) at a price that is not excessive compared with the controlled item
(c) in a sufficient quantity that renders control ineffective.
5. The president can set aside a foreign availability determination if he finds that (a) the absence of control would prove detrimental to national security and (b) there is a high probability that the foreign availability status will be eliminated through multilateral negotiations.
6. The foreign availability set-aside terminates when:
(a) the president fails to initiate negotiations;
(b) the negotiations end without agreement; or
(c) agreement to eliminate the foreign source is not reached within 18 months.
II. FOREIGN POLICY CONTROLS
A. General. The purpose of foreign policy export controls is to promote U.S. foreign policy objectives; promote international peace, stability and respect for human rights; to deter and punish acts of international terrorism.
B. Process of Imposing Foreign Policy Controls
1. In order to impose foreign policy controls the president must publish notice of his intent to do so in the Federal Register 45 days prior to imposition to allow for public comment; and consult with and report to the Senate Banking Committee and House International Relations Committee.
2. In his report, the president must state the specific objectives that the control seeks to achieve, standards for evaluating the effectiveness of the control and an assessment of whether the control is likely to achieve its objective.
3. The president may defer the above requirements for sixty days if the deferral is in the national interest of the United States.
4. Not later than February 1, 2002, and every two years thereafter, the president must review existing controls. All controls not specifically renewed by report to Congress will expire on March 31 of each review year. Exception: Any control targeted against a country designated as a country supporting international terrorism (currently includes Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria.)
III. AGRICULTURE EXEMPTION
A. Exemption from Future Controls. No future controls shall be imposed on the export of agricultural commodities, medicine, and medical supplies for foreign policy purposes.
B. Existing Controls Terminated. All current exports controls mandated by law shall terminate upon the date of enactment, unless specifically reimposed by law.
C. Scope. Applies to agricultural commodities (food, fiber, or livestock), medicine and medical supplies.
D. Exceptions. The provisions of this title do not apply to those agricultural commodities, medicine and medical supplies controlled for national security reasons under Title II and those controls imposed on countries against which an embargo is in effect under the Trading with the Enemy Act (currently Cuba and North Korea).
IV. PENALTIES AND ENFORCEMENT
A. Criminal Penalties.
1. Individuals who knowingly violate or attempt to violate the Act can be fined up to the greater of 10 times the value of the export or $1 million and imprisoned for up to 10 years. Can be increased to life imprisonment for multiple violations or aggravated circumstances.
2. Corporations can be fined up to the greater of 10 times the value of the export or $10 million.
B. Civil Penalties. The Secretary can impose fines up to $1 million for each violation of the Act and deny export privileges.
C. Post Shipment Verifications (PSV). Targeted against exports involving the greatest risk to national security, including high performance computers, replacing the mandatory PSV requirement for computers exceeding 2000 MTOPs under the National Defense Authorization Act of Fiscal Year 1998.
1. End-User Denial: If an end-user refuses to allow a PSV, the Secretary shall deny future exports of 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.
2. Country Denial: 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.
D. Patriot Provision. A person providing information concerning a violation of the Act leading to the recovery of a criminal or civil penalty can be awarded up to 25% of the penalty recovered.
E. Enhanced Resources. Authorizes $4.5 million and 10 new investigators to conduct end-user verifications; $3.5 million and 20 new employees to implement a best practices program for freight forwarders; and $5 million for computer upgrade.
F. Temporary Denial Orders. The Secretary may temporarily deny a person's export privileges in any case which there is a reasonable cause to believe that a person is or is about to engage in a violation of the Act.
G. Wiretap. The use of a wiretap is authorized for enforcement purposes.
V. ADDITIONAL PROVISIONS
A. Combating International Terrorism. Notwithstanding any other provision of the Act, a license is required to export a controlled item to a country found to be repeatedly providing support for international terrorism. The Secretary must inform Congress when such a license is granted.
B. Strengthening Multilateral Regimes. The Secretary shall apply sanctions to a foreign person found to be in violation of export controls pursuant to a multilateral regime.
C. Missile Proliferation Control Violations. The President shall sanction persons who knowingly exports items prohibited by the Missile Technology Control Regime.
D. Chemical and Biological Weapons Proliferation Sanctions. The President shall sanction foreign persons who, through the export of an item subject to the jurisdiction of the U.S., contribute to the efforts of certain countries to produce, stockpile, or acquire chemical or biological weapons.