H.Doc.108-8 AN ALTERNATIVE PLAN FOR LOCALITY PAY INCREASES ...

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108th Congress, 1st Session - - - - - - - - - - - - - House Document 108-7


 
 PERIODIC REPORT ON THE NATIONAL EMERGENCY CAUSED BY THE LAPSE OF THE 
                   EXPORT ADMINISTRATION ACT OF 1979

                               __________

                             COMMUNICATION

                                  from

                   THE PRESIDENT OF THE UNITED STATES

                              transmitting

A 6-MONTH REPORT ON THE NATIONAL EMERGENCY DECLARED BY EXECUTIVE ORDER 
   13222 OF AUGUST 17, 2001, TO DEAL WITH THE THREAT TO THE NATIONAL 
 SECURITY, FOREIGN POLICY, AND ECONOMY OF THE UNITED STATES CAUSED BY 
  THE LAPSE OF THE EXPORT ADMINISTRATION ACT OF 1979, PURSUANT TO 50 
                  U.S.C. 1641(c) AND 50 U.S.C. 1703(c)

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


January 7, 2003.--Referred to the Committee on International Relations 
                       and ordered to be printed
                                           The White House,
                                     Washington, November 26, 2002.
Hon. J. Dennis Hastert,
Speaker of the House of Representatives,
Washington, DC.
    Dear Mr. Speaker: As required by section 204(c) of the 
International Emergency Economic Powers Act (50 U.S.C. 1703(c)) 
and section 401(c) of the National Emergencies Act (50 U.S.C. 
1641(c)), I transmit herewith a 6-month report prepared by my 
Administration on the national emergency declared by Executive 
Order 13222 of August 17, 2001, to deal with the threat to the 
national security, foreign policy, and economy of the United 
States caused by the lapse of the Export Administration Act of 
1979.
            Sincerely,
                                                    George W. Bush.
 Periodic Report on the National Emergency Caused by the Lapse of the 
 Export Administration Act of 1979 for February 19, 2002 to August 19, 
                                  2002

    Since the issuance of Executive Order No. 13222, the 
Department of Commerce has continued to administer and enforce 
the system of export controls, including the antiboycott 
provisions, contained in the Export Administration Regulations 
(EAR). In administering these controls, the Department has 
acted under a policy of conforming actions under Executive 
Order 13222 to the provisions of the Export Administration Act 
(EAA), insofar as appropriate. This report to the Congress 
covers activities and expenditures for the 6-month period of 
February 19, 2002 to August 19, 2002.
    The expenses incurred by the Federal Government in the 6-
month period from February 19, 2002 to August 19, 2002, that 
are directly attributable to the exercise of authorities 
conferred by the declaration of a national emergency with 
respect to export controls, were largely centered in the 
Department of Commerce's Bureau of Industry and Security (BIS). 
Expenditures by the Department of Commerce for the reporting 
period are anticipated to be $32,958,000 most of which 
represents program operating costs, wage and salary costs for 
Federal personnel, and overhead expenses.
    There were several significant developments in the area of 
export controls during the reporting period:

                      A. MULTILATERAL DEVELOPMENTS

The Wassenaar Arrangement
    The Wassenaar Arrangement is a multilateral regime 
currently consisting of 33 member countries. Its purpose is to 
contribute to regional and international security and stability 
by promoting transparency and greater responsibility in 
international transfers of conventional arms and dual-use goods 
and technologies.
    In May 2002, the Wassenaar Arrangement General Working 
Group exchanged information regarding regions and projects of 
concern, dual-use goods and technologies, and the scope of 
dual-use notifications. Discussions also centered around 
combating terrorism, and U.S. proposals for expanded reporting 
of conventional arms transfers, strengthening dual-use 
notification procedures by establishing a denial consultation 
procedure, and adopting ``catch-all'' controls within the 
Wassenaar.
    In June 2002, the annual Licensing and Enforcement Officers 
Meeting was held to exchange information on national practices 
of licensing and enforcement procedures. Discussions included 
legal export of small arms/light weapons, arms brokering, 
control of intangible transfers of technology and software, 
national general licensing/licensing exception practices, and 
implementation aspects of International Import Certificates/
End-User Certificates.
    The United States also continues to participate in 
submissions of export data made by regime members. Wassenaar 
members make dual-use data submissions on a semi-annual basis 
in April and October, and a smaller class of specific data 
submissions as needed.
The Missile Technology Control Regime (MTCR)
    The MTCR is an informal multilateral nonproliferation 
regime of 33 countries that have agreed to coordinate their 
national export controls for the prevention of missile 
proliferation. Each member, under its own laws and practices, 
adheres to the export licensing policy reflected in the MTCR 
Guidelines for items found on the MTCR Equipment and Technology 
Annex.
    On April 22-24, 2002, an intersessional MTCR Technical 
Experts Meeting (TEM) was held in Vienna. This meeting focused 
on proposed changes to the MTCR Annex on inertial navigation 
systems, global navigation satellite systems, flight control 
servo valves, telemetry equipment, and missile range and 
payload definitions. The United States circulated several white 
papers for discussion.
The Nuclear Suppliers Group (NSG)
    With 40 member states, the NSG is a widely accepted, 
mature, and effective export control arrangement that 
contributes to the nonproliferation of nuclear weapons through 
implementation of guidelines for the control of nuclear and 
nuclear-related exports. Members pursue the aims of the NSG 
through voluntary adherence to the Guidelines, which are 
adopted by consensus, and through exchanges of information on 
developments of nuclear proliferation concern. The Guidelines 
assist member states in administering national nuclear export 
control programs, which are focused on nucelar material, 
equipment, and technology unique to the nuclear industry, and 
so-called nuclear dual-use items that have both nuclear and 
non-nuclear applications.
    The Czech Republic hosted the 2002 NSG Plenary and related 
meetings in Prague from May 13-17. On May 13, the first 
Licensing and Enforcement Experts Meeting (LEEM) was held as a 
trial run under the chairmanship of the United Kingdom, and 
under the aegis of the Information Exchange Meeting (IEM). LEEM 
participants made presentations on licensing and enforcement 
infrastructure and coordination, as well as case studies. NSG 
members agreed that the LEEM was successful and should become a 
regular part of the NSG Plenary week. The IEM was also very 
successful, with 18 presentations by nine Participating 
Governments on nuclear activities of concern, analyses of 
export denials, and technical briefings.
    The NSG Consultative Group (CG) met on May 14 and 15, and 
discussed U.S. counterterrorism proposals including amendments 
to the Guidelines and expanded information sharing. There was 
broad support in principle for addressing the issue of nuclear 
terrorism, although some delegations suggested a cautious 
approach on any amendments to the Guidelines. The CG 
recommended, and the Plenary agreed, to continue discussion of 
the anti-terrorism proposals.
    The NSG Plenary met on May 16 and 17. The Czech Republic 
acceded to the Chair of the NSG. Kazakhstan was welcomed as a 
newly admitted member. The U.S. Acting Outgoing NSG Chair 
reported on the activities and work of the NSG since May 2001, 
including outreach contacts with non-member governments. The 
Plenary authorized the new NSG Chair to continue outreach 
contacts with China, Egypt, India, Iran, and Pakistan, and 
initiate contacts with Malaysia, Mexico, Indonesia, and Israel. 
Many delegations expressed continued concern over differing 
interpretations within the NSG of the NSG Guidelines, 
particularly if such interpretations undermine the credibility 
of the NSG and the objectives of the Nuclear Non-Proliferation 
Treaty. This issue will continue to be discussed at future NSG 
meetings. The Plenary welcomed the offer of the Republic of 
Korea to host the 2003 Plenary in May 2003.
The Australia Group (AG)
    The AG is an informal multilateral export control regime 
that seeks to impede the proliferation of chemical and 
biological weapons through the harmonization of export 
controls, an exchange of information on global proliferation 
activities, and outreach to non-members. The 33 member 
countries meet annually and communicate intersessionally to 
review and refine the list of controlled chemicals, biological 
agents, and related equipment and technology.
    In April 2002, five U.S. proposals developed by the 
Department of Commerce that broaden AG export controls on 
commodities and technology useful in the production of 
chemical/biological weapons, were submitted for consideration 
at the intersessional AG Technical Experts Meeting (TEM). In 
May 2002, technical experts from five AG member-nations--
Germany, Japan, Switzerland, the United Kingdom, and the United 
States--reached common positions on technical issues proposed 
for review at the AG Plenary.
    At the AG Plenary held in June 2002, agreement was reached 
on export control additions on intangible technology transfers, 
biological technology, biological production equipment, and the 
addition of eight biological agents to the AG control list. 
Consensus was also reached to adopt licensing guidelines that 
include chemical-biological terrorism as an explicit focus of 
the regime, and on the universal licensing of exports of 
biological agents to non-AG members and AG members alike, with 
the exception of intra-European Union trade. These 
unprecedented measures were taken to collectively strengthen 
the regime, and broaden its nonproliferation focus.
    In July 2002, technical experts from France, Germany, 
Italy, Japan, the Netherlands, Switzerland, the United Kingdom 
and the United States reviewed technical proposals for possible 
consideration at the next AG Plenary schedule for June 2003 in 
London.
The Chemical Weapons Convention
    The Chemical Weapons Convention is an international arms 
control and nonproliferation treaty that bans chemical weapons 
and monitors the legitimate production, processing, 
consumption, export, and import of certain toxic chemicals and 
precursors that could contribute to the development of weapons 
of mass destruction. Certain export control provisions of the 
Convention are reflected in the EAR.
Firearms Convention
    The Inter-American Convention Against the Illicit 
Manufacturing of and Trafficking in Firearms, Ammunition, 
Explosives, and Other Related Materials (Firearms Convention) 
is a treaty that Organization of American States (OAS) member 
states signed to control the illicit trafficking of firearms. 
The Convention was signed in 1998 but awaits ratification by a 
number of OAS member states, including the United States. The 
Convention requires OAS member states to establish a program to 
issue authorizations for the import and export of firearms. 
Most of the Convention requirements relating to the export of 
firearms have been executed, however, those requirements 
pertaining to transit and explosives continue to be reviewed by 
an interagency working group.

             B. ENCRYPTION/HIGH PERFORMANCE COMPUTER POLICY

Encryption
    In June 2002, a rule was published in the Federal Register 
updating the U.S. encryption export policy. The rule amends the 
Export Administration Regulations to reflect changes that were 
made in the Wassenaar Arrangement List of dual-use items. As a 
result of the revisions made by this rule, mass market 
encryption commodities and software with symmetric key lengths 
exceeding 64 bits may be exported and reexported to most 
destinations without a license, following a 30-day review by 
the U.S. Department of Commerce. In addition, the rule expands 
License Exception Encryption Commodities and Software (ENC) 
eligibility to authorize exports and reexports of information 
security test, inspection, and production equipment controlled 
under Export Control Classification Number (ECCN) 5B002. 
Finally, the rule updates and clarifies the notification, 
review, licensing, and post-export reporting requirements that 
apply to certain encryption items.
High Performance Computer and Microprocessor Controls
    In March 2002, a rule was published in the Federal Register 
implementing the President's January 2002 decision to revise 
U.S. export controls on high performance computers (HPCs). 
There was a statutorily-required 60-day waiting period between 
the time of the President's announcement and the issuance of 
the implementing regulations. HPCs with a composite theoretical 
performance of up to 190,000 millions of theoretical operations 
per second (MTOPS) can now be exported to Computer Tier 3 
countries under License Exception Computers (CTP) without 
advance approval or notification. The rule also moves Latvia 
from Computer Tier 3 to Computer Tier 1 (effective May 2) and 
adds Australia, New Zealand, Norway, Switzerland, and Turkey to 
the list of countries eligible for exports and reexports of 
software and technology for the development, production, or use 
of HPCs under license exception.

             C. BILATERAL COOPERATION/TECHNICAL ASSISTANCE

    As part of the Administration's continuing effort to 
encourage other countries to strengthen their national export 
control systems, the Department of Commerce and other agencies 
conducted a wide range of export control cooperation 
discussions with a number of countries.
Republic of China (Taiwan)
    In July and August 2002, the United States Government--
acting through the American Institute in Taiwan--hosted 
consultations with visiting delegations from Taiwan. The July 
consultations were held to discuss recent changes in U.S. and 
Taiwan export controls, including effective dual-use export 
control licensing procedures and practices and included a 
discussion on the impact of the changes in Taiwanese investment 
and technology transfer policy towards China. The August 2002 
consultations involved in-depth discussions on the requirements 
of the Chemical Weapons Convention (CWC) and how these 
requirements relate to transfers of CWC scheduled chemicals to 
Taiwan.
Nonproliferation and Export Control International Cooperation Program
    During the reporting period, the Nonproliferation and 
Export Control International Cooperation Program (NEC) hosted, 
participated in, and/or coordinated 29 technical exchanges on 
export controls in conjunction with representatives from the 
Departments of Defense, Energy, State, and Treasury (U.S. 
Customs Service). The technical exchanges included the Sixth 
Regional Forum on Nonproliferation Export Control, held in 
Tashkent, Uzbekistan during April 2002 for eight participating 
Central Asian/Caucasus countries; a transshipment enforcement 
conference in May 2002 in Barcelona, Spain, featuring 
participation by ten Middle Eastern countries, fourteen EU 
countries and Turkey; and a Regional Nonproliferation Export 
Control Enforcement Workshop held in Bucharest, Romania in June 
2002 for eleven participating Central and Southeast European 

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