Statement of Administration Policy: H.R. 3937 - Omnibus Export Administration Act (EAA) of 1994

(House)
(Gejdenson (D) Connecticut)

The Administration supports House passage of H.R. 3937, but would reserve support on final enactment pending the disposition of several provisions in H.R. 3937.

It is essential that this legislation provide the Administration with the authorities and flexibility to address a complex and evolving mix of proliferation, security, and foreign policy goals. The Administration's principal concerns with H.R. 3937 include those addressed below:

IEEPA Authorities. Section 117(h) of H.R. 3937 would severely limit the President's export control authorities under the International Emergency Economic Powers Act (IEEPA). The President's ability to respond in a timely, comprehensive, and effective manner to an international emergency would be jeopardized.

Regulation of Proliferation Activities. H.R. 3937 fails to continue longstanding authority under section 15(b) of the EAA to regulate financing, transporting, and other servicing of exports. In order to continue to regulate such conduct and maintain the existing Enhanced Proliferation Control Initiative (EPCI) regulations, which govern a broader range of proliferation activities unrelated to exports, the Administration would be forced to rely on IEEPA authorities. In addition, H.R. 3937 does not include authority necessary to regulate conduct stipulated by international treaty or agreement.

Anti-Terrorism. The Administration is committed to strong measures to dissuade nations from supporting international terrorism. However, export control policies need to be flexible to consider the degree and types of support provided by nations and the effect on U.S. interests.

Streamlining the Export Licensing Process. The bill's review mechanisms and deadlines for licensing decisions are unrealistic and inflexible. The Administration urges consideration of its proposal, which will permit responsible reviews by relevant agencies within a short, but reasonable, time-frame. In addition, the requirements to establish an electronic database of all intelligence information regarding controlled end-users and to publish a list of end-users are unnecessary given existing reporting mechanisms. The requirements are also inconsistent with the need to compartmentalize classified information.

Multilateral Export Control Regimes. Several provisions of H.R. 3937 would unduly limit the President's flexibility to respond to changing circumstances and to negotiate effectively in the international arena. These provisions essentially would require license free zones and public reporting on the effectiveness, of regimes, which would undermine U.S. efforts to strengthen the regimes. <

Sectoral Specific Provisions and Indexing. H.R. 3937 would mandate decontrol of specific commodities, including certain encryption, software, telecommunications equipment, and computers. Such controls are more appropriately addressed in regulation. Unrestricted exports of encryption-products would significantly harm U.S. efforts to combat international terrorism, drug trafficking/ and other major threats to U.S. interests.

Commodity Jurisdiction. H.R. 3937 would unnecessarily change the process for determining whether an item is subject to export controls administered by the Department of Commerce or the Department of State. Notwithstanding the amended process, section 117 would: (1) immediately move items controlled as munitions to the dual-use list, items such as developmental aircraft, certain satellites, and civil use encryption software; and (2) severely limit the time available for other decisions on jurisdictional matters.

Unilateral/Emergency Controls. H.R. 3937 would require satisfaction of certain criteria for extending unilateral controls and subjects such extension to a congressional joint resolution of disapproval. The potential for a joint resolution of disapproval may dissuade a country from changing its behavior. The criteria in the Administration's bill would establish more discipline in the implementation and maintenance of unilateral controls.

Foreign Availability/Unfair Impact. The Administration's proposal provides broader grounds for exporter relief and a more effective process for controlled items that are determined to be available to controlled countries from non-U.S. sources. Section 105(i) requires the United States to seek in the multilateral regimes the imposition of import and other sanctions against foreign persons that are sources of foreign availability. This is an inappropriate use of import restrictions.

Missile and Chemical and Biological Weapons (CBW) Sanctions. H.R. 3937 omits important elements of the Administration's proposal, which would maximize the effectiveness of sanctions as a tool of U.S. nonproliferation policy and minimize the burden on U.S. exporters. These elements include: sanctioning a broader range of CBW activity, creating incentives to join the regimes and avoiding divisive action within regimes, protecting criminal investigations and sources and methods, and waiving sanctions if important to U.S. interests. In addition, H.R. 3937 unfairly singles out certain non-market economies and mandates sanctions against U.S. persons, which is unnecessary (given the enforcement section of the bill) and problematic to implement.

Judicial Review. Judicial review of licensing and classification determinations, as well as extension of judicial, review to Presidential actions (e.g., sanction determinations), is an unwarranted intrusion into Executive branch decisionmaking. Judicial review of Presidential discretion in the area of foreign affairs and national security raises special concerns. The Administration generally does not have an objection to judicial review of administrative action that is not subject to an agency's discretion.

Assisting Nuclear Proliferation Through Financing. Section 224 of H.R. 3937 is identical to a provision included in the Foreign Relations Authorization Act, FYs 1994 and 1995 (P.L. 103-236). In signing this Act, the President noted constitutional and practical problems with this provision. Accordingly, the Administration will provide language to correct these problems.

Nuclear Dual-Use Controls. H.R. 3937 would supersede section 309(c) of the Nuclear Nonproliferation Act, which provides special coverage for sensitive nuclear items. The existing statute should be maintained.

Alaskan North Slope (ANS) Oil Export Prohibition. The Administration is reviewing current law, which prohibits the export of ANS oil, and may propose changes in it later this year. To date, however, the Administration has not endorsed any changes in the present policy.

During further congressional action, the Administration will work with Congress to resolve these and other EAA issues.

Pay-As-You-Go Scoring

H.R. 3937 would affect receipts and direct spending; therefore, it is subject to the pay-as-you-go (PAYGO) requirement of the Omnibus Budget Reconciliation Act (OBRA) of 1990. OMB's preliminary scoring estimate is that the PAYGO effect, of this bill is zero. Final scoring of this legislation may deviate from this estimate.