Doug Bereuter

Mr. BEREUTER

Mr. BEREUTER. Mr. Chairman, this Member rises today, as a co-sponsor in support of H.R. 2888, ``The Sales Incentive Compensation Act.'' This bill would amend the 1938 Fair Labor Standards Act by providing an exemption from overtime and minimum wage laws for certain types of employees. These employees are defined in this bill as those who work within or inside an employer's establishment and are engaged in selling to non-retail customers by using forms of electronic commerce such as the telephone, fax, and/or the computer. Under the current Fair Labor and Standards Act, there is a provision which allows an exemption from the overtime and minimum wage requirements for certain retail sales' employees. This exemption does not currently apply to wholesale establishments. The original intent behind this distinctive treatment between wholesalers and retailers was due to the nature of the retail field. In 1938, when the Fair Labor Standards Act was passed, retail business consisted of employees involved in sales outside the place of business. Employees involved in sales physically went to the consumer for a transaction. Since 1938, American society and the world for that matter have undergone a technological transformation. Various forms of electronic communication have altered the manner in which business is conducted. Whether it is faxes, telemarketing, E-mail or other types of electronic commerce, a bulk of sales transactions are now performed from the office. Electronic communication has reduced the distinction of duties between those involved in wholesale and retail sales transactions. This Member supports H.R. 2888 because it provides consistency for small businesses. It is a common principle of governing that people or businesses that are similarly situated should be treated in a similar manner. Due to the electronic transformation that has transpired over the last forty years, retailers and ``inside sales'' employee wholesalers are similarly situated and as a result should be treated consistently. H.R. 2888 would grant this consistent treatment by allowing for an overtime and minimum wage exemption for those ``inside sales'' employees whether they are involved in retail, service, or wholesale establishments. This Member would ask his colleagues to support H.R. 2888.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, as many of my colleagues are aware, there has been a concerted effort on many fronts to close the U.S. Army School of the Americas (SOA). The opponents of the school have often used distorted or false information that only serves one purpose--to mislead the American public. Opponents of the U.S. Army School of the Americas are correct to point out that several of the school's graduates have been implicated in crimes, corruption, and human rights violations. Press reports have accurately noted that former Panamanian dictator Manuel Noriega was a former student, as was one of the Salvadoran officers responsible for the 1989 assassination of six Jesuit priests. However, my colleagues should be aware that more than 60,000 young Latin American officers have graduated from the SOA since its creation in 1946, the vast majority of whom have served their nations honorably and responsibly. Graduates of the SOA are personally responsible for the return of democracy in Latin American nations such as Bolivia and Argentina. Also, many of the school's graduates have lost their lives while combating the Narco-guerrillas and drug lords in Colombia and Peru. These counterdrug operations are of vital interest to the safety and security of our Nation as the efforts of these brave Latin American soldiers are aimed at reducing the flow of drugs into the United States of America. This Member feels it would be a disservice to brand all the school's graduates as criminals because of the misdeeds of a very few. The School of the Americas was established to heighten the professionalism of military establishments throughout Latin America. While the early focus of the institution during the Cold War was on combating Soviet-backed insurgencies, in recent years the school's emphasis has primarily shifted towards counterdrug operations to combat drug trafficking. The SOA curriculum also provides training in medical assistance, humanitarian and civil assistance, demining operations, peacekeeping operations, and most importantly human rights training. One very positive result of the recent exposure of the school has been a much greater emphasis on human rights. They now expose every student at the school to a rigorous formal and informal training program on basic human rights. Specific classes and case studies are used to enhance the training and to make U.S. concerns unambiguously clear. The roles and rights of civilians, clergy, human rights observers, and U.N. personnel are integrated into the training program. While the SOA has subsequently increased its emphasis on human rights, this Member believes that there is a basic value in encouraging young Latin-American military officers to study and train in the United States. An institution such as the SOA, which annually hosts 1,300 students from almost 20 countries, provides a level of professional training that is not otherwise available. Moreover, exposure to the U.S. lifestyle, values, and ideals offers important lessons for the future military leaders of Latin America. There have been many false allegations in the past regarding the School of the Americas, such as the alleged existence of SOA torture manuals. This Member can assure my colleagues that there are no such manuals. This Member has contacted the Department of the Army, and the Department confirmed that such manuals do not exist. The SOA does not in any way engage in or endorse such heinous activities. Regarding the allegations that the SOA trains death squads and assassins, this Member can assure my colleagues that this is not true. The SOA is run by Officers of the United States Army that must operate the school in accordance with the governing regulations of the U.S. Army, the Department of Defense, and U.S. Public Law. Therefore, this Member can readily assure my colleagues that the SOA is not operating a training camp for death squads and assassins. The curriculum of the SOA is based on U.S. Military doctrine and practices, and uses the same materials from courses presented to U.S. military personnel. It is really outrageous that some people would tell such lies and sad that any Americans would believe such lies. In April, a member of my staff traveled to Ft. Benning, Georgia, with a staff delegation from the House Committee on National Security on a fact finding tour of the SOA. The staff delegation received a briefing on the entire curriculum currently being taught at the school. My staff member, with the aid of a translator, was able to engage in dialogue with a group of Latin American enlisted soldiers and asked questions about the type of training they were receiving from the SOA. The soldiers were from various countries such as El Salvador, Ecuador, Peru, Argentina, Columbia, Venezuela, and Mexico. My staff member noted that all of the soldiers were proud to have been chosen to represent their respective countries at the SOA. Many of these soldiers will return to their home and train other soldiers that could not attend the SOA in the proper application of U.S. military doctrine, human rights, and democracy. In addition, my staff member observed no improprieties in the training being given to students during the staff delegation visit. In fact, the School of the Americas readily welcomes both its proponents and opponents to visit the school to gain a better understanding of the type of programs being taught at the school. While, this Member cannot guarantee that no graduate of the SOA will ever abuse human rights or undermine civilian government. What this Member, can guarantee is that every effort will continue to be made to fully indoctrinate the students on respect for human rights and democracy at the U.S. Army School of the Americas. The training at this school undoubtedly does far, far more good to encourage appropriate human rights practices than any possible harm that could come from even a perversion of such an educational program some student might practice. This Member feels that it is really time for the congressional and religious opponents of the SOA to abandon this misguided attack on the SOA that misleads so many well-intentioned Americans who write their Senators and Congressmen.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. BEREUTER. Mr. Speaker, I rise in strong support of H. Con. Res. 270 and thank the gentleman from New York for yielding me this time. As everyone in this body knows, the Congress has long played a critical role in the Taiwan relationship. Together with the other body, we have worked with the various Presidential administrations over the years to ensure adequate U.S. arms sales to Taiwan to meet Taiwan's defense needs without provoking an arms race with the PRC or other countries in the region, and this body is, after all, the actual author of the Taiwan Relations Act. It remains the law of the land. Taiwan and the U.S. now share numerous fundamental values both economically and politically. Last February Taiwan and the United States concluded a market access agreement which provides immediate market access for U.S. agriculture products in Taiwan, for example, as a way of loosening restrictions on U.S. telecommunications firms operating in Taiwan as well. This is important because really it paves the way for Taiwan's membership in the WTO. Politically Taiwan is now a vibrant democracy characterized by free elections, a free press and dynamic political campaigns. Taiwan's political metamorphosis over the last decade has been fundamentally impressive and serves as a model for peaceful democratic change in the region and beyond. H. Con. Res. 270, which was introduced by the distinguished gentleman from New York (Mr. Solomon) sends a clear message of Congress' deep respect and affinity for the people of Taiwan as well as a firm commitment to seeking a peaceful resolution regarding Taiwan's future. While it is true only the Chinese on both sides of the strait can determine their future, the United States must continue to play a role in ensuring the peace and stability of the region. Mr. Speaker, this Member would commend the gentleman from New York for introducing H. Con. Res. 270 at this important point in U.S.- Chinese-Taiwanese relations. Mr. Speaker, I think it is particularly important that the Congress act on this legislation before the upcoming summit, and I urge adoption of H. Con. Res. 270.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, I rise in strong support of H.Res. 404 and congratulate the distinguished gentleman from New York (Mr. Gilman), the chairman of the Committee on International Relations, for introducing it today. I am pleased to be one of the bill's original cosponsors. In the past 100 years, the Philippines at various times has served, and now serves, as a democratic counterpart, ally, trading partner, and friend to the United States. The Philippines is a republic basically patterned after our own democratic system and it continues to reshape and perfect its government in order to better uphold the ideals of democracy. Since July 4, 1946, named Filipino-American Friendship Day in the Philippines, the U.S.-Philippines relationship has been largely characterized by cooperation. H.Res. 404 notes these cooperative efforts by citing our united forces in World War II and our efforts to promote peace and stability in the Asian-Pacific region. Though U.S. forces have not had a physical presence in the Philippines since 1991, the U.S. and the Philippines remain united by the 1951 Mutual Defense Treaty. This bond may be further strengthened by a newly negotiated Visiting Forces Agreement which is scheduled to go before the Philippines Senate for ratification later this year. Despite the ongoing financial crisis in Asia, the Philippines has also become an increasingly valuable trading partner for the United States. The Philippines has demonstrated commitment to undertake economic reform, and this Member expects the new President-elect, Joseph Estrada, to continue to nurture this economic growth. H.Res. 404 is timely legislation as its introduction coincides with the festive preparations now underway in the Philippines in anticipation of its centennial celebration of independence from Spain. It is altogether appropriate for this body to congratulate the Philippines on the centennial of its independence and applaud his accomplishments of the past 100 years. The Philippines has clearly become a positive role model for its Asian neighbors. Mr. Speaker, I congratulate the gentleman from New York (Mr. Gilman) on sponsoring this legislation and I urge all Members to support and approve H.Res. 404.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, I demand a recorded vote.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, this Member rises in reluctant support of the conference report for S. 1150, the Agricultural Research Bill. This Member is voting for the conference report because of the urgent need for crop insurance and the importance of agricultural research. However, this Member is strongly opposed to the provision in the bill that reinstates food stamp benefits for legal immigrants. Two years ago, we finally passed major legislation that ended welfare as we knew it. The Personal Responsibility and Work Opportunity Act of 1996 contained a provision that barred most legal immigrants from the Food Stamp program, and we need to remember that immigrants are sponsored by American citizens who have agreed to take financial responsibility for their needs during the naturalization process. Too many sponsors have failed in their responsibility. This Member is strongly opposed to the reinstatement of food stamps for legal immigrants that was added to the bill during conference. However, the need to approve crop insurance funding has reached a critical point. Funding is necessary so that our nation's farmers have in place a safety net to protect them against the natural disasters which are a constant threat. Allowing crops insurance coverage to lapse would make too many producers vulnerable to the uncertainties cause by weather. The farm bill enacted in 1996 creates more freedom and opportunities for farmers, but it is important for crop insurance to remain in place as a viable option. It is also critically important to reauthorize the agricultural research program. Funding for research offers a long-term and far- sighted approach to supporting producers and improving our nation's food supply. Clearly, the success of agriculture in the future depends on the research we support now. This Member is voting for the conference report because of the importance of crop insurance and agricultural research.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, H.R. 695, the Security and Freedom Through Encryption (SAFE) Act is unnecessary legislation and should not be passed. Past service on the House Permanent Select Committee on Intelligence has provided this Member with considerable evidence of the harmful effects this legislation, in its current form, would have on our national security and law enforcement efforts. In addition, H.R. 695 would prohibit the Administration and specifically, the Bureau of Export Administration, from striking the proper balance between national security and commercial interests in the licensing of strong encryption. The legislation needs to be amended, dramatically, if it comes to the House Floor. But most importantly, it is not necessary. In the House International Relations Committee, this Member co- authored and supported an amendment to H.R. 695 which would have given the President of the United States a national security waiver to the mandated and complete relaxation of export controls of encryption products under H.R. 695. Unfortunately, our amendment was defeated on a 13-22 vote in the House International Relations Committee and H.R. 695 was passed over my opposition. This issue has been intensely lobbied by the software and electronics business sector and others. On the other hand, this Member also does not support competing legislation to H.R. 695, which would impose domestic controls on the use of encryption in the United States. This very complicated and important national issue has been unnecessarily polarized by the software industry and by the law enforcement community. In fact, the software industry's uncompromising position on H.R. 695 has actually prompted the law enforcement community to push for this more rigorous domestic legislation and a stalemate has been created. This Member believes that the disinformation that has been provided by a few groups or persons on both sides of this national debate has not led to an environment where a legislative compromise is easily achieved. For example, the software industry currently downplays the fact that many U.S. software manufacturers and hardware exporters are exporting relatively robust encryption after obtaining license approvals from the Department of Commerce. Moreover, U.S. financial institutions have general exceptions to the export controls on encryption for their own purposes. These two important points reveal that the solution to this issue for U.S. software exporters is not the legislative process, but a change in the administrative regulations. Simply put, current law does not prohibit the Administration from relaxing these export controls and, therefore, a change in law is not necessary.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, as Chairman of the House International Relations Subcommittee on Asia and the Pacific, this Member urges his colleagues to pay careful attention to the crisis in Indonesia. It is far too large, and far too important a nation to dismiss in a cavalier fashion. This Member would take a moment to address the ongoing crisis in Indonesia and to explore what the United States and the international community can do to help stabilize that nation's economy and to help promote its nascent democratization. Virtually all of Asia seems to be in turmoil these days, and Indonesia is no exception. Following months of economic turmoil and decline, unsatisfactory elections where the old regime sought an artificial vote of confidence, and weeks of student protest, President Suharto resigned after 32 years of autocratic rule. He leaves behind a nation on the edge of chaos. Although we must give Suharto due credit for leading his country through several decades of strong economic growth and development, this narrow economic success took place in the absence of the development of sound social and political institutions. The media was stifled, as were other forms of political and social expression. The tragic neglect of these institutions and basic human rights by President Suharto may overshadow his economic achievements; only history will tell. Ironically however, President Suharto's neglect of political reform while promoting economic reform has perhaps done more to debunk the myth of Asian values and expose the Asian miracle than any other single action. Most importantly, however, Suharto's neglect of political reform has caused much human suffering and tragedy. Indonesia's recent past has been marked with violence and bloodshed. Over 500 people died in the riots that left much of Jakarta's Chinatown in ruins. Some estimates have the death toll much higher. Many elites fled the country along with the large expatriate community, taking their capital with them. The current situation in Indonesia is at the same time both complex and fragile. The public euphoria that accompanied Suharto's resignation is already being replaced by the sobering reality that Indonesia is entering a dangerous period. Suharto--who led his nation through a period of dynamic growth under an autocratic system--has left behind a political vacuum. The various social and political forces kept impotent under the Suharto regime must now forge a new identity and find a way to reassert themselves without causing a splintering of Indonesian society. Proliferation of ethnic or religious-based parties that would pull the country apart at precisely the time when unity is most fragile is a risk that Indonesia cannot afford to ignore. The Indonesian military is widely recognized as one of the linchpins of society. With some glaring and regrettable exceptions, it thus far has exercised restraint. (The same cannot be said of the police, who were more brutal during the demonstrations.) Commander-in-Chief Wiranto seems to have served as a force for change, refusing to take Suharto's side last week when the result could have been widespread bloodshed. This Member would like to believe that this restraint is at least, in part, attributable to the salutary effect of years of military-to- military contacts through IMET, E-IMET and other U.S. programs that attempt to raise the level of professionalism of foreign military elites while simultaneously offering human rights training. Whatever the cause, the military will be under enormous pressure as a new government sorts itself out. Clearly, the economic situation in Indonesia is dire. And most unfortunately, indications are that the situation will get worse before it gets better. It is difficult for us to imagine how desperate conditions are. Credible economists estimate that Indonesia will suffer negative economic growth of between 20-25 percent in 1998. It is hard to over-emphasize the degree of hardship that Indonesia's people have faced in the past months, since the beginning of the Asian financial crisis last summer. Yet, despite the hopeful signs on the political front, Indonesia's economic crisis seems far from over. The economic challenges faced by Indonesia's new government would be daunting under the best of circumstances. But these are anything but the best of circumstances. The questions now to be addressed include: What steps must Indonesia take to pull its economy out of its nose-dive and restore investor confidence? What are the prospects for Indonesia's future? What political reforms are necessary, and what are possible in the near term and the long term? What institutional factors must first be addressed? And most importantly, what are the implications of Indonesia's current economic and political crisis on U.S. national interests? These questions about Indonesia's economic and political future raise serious questions for U.S. policy toward Indonesia. For example, as the largest shareholder in the IMF, World Bank, and one of the largest in the Asian Development Bank, we must decide when these institutions should resume their financial assistance to the country and under what conditions. In making these decisions we will appropriately have to decide how long a Habibie caretaker government should last and when elections can reasonably be held. As a final note, this Member strongly believes this is the time that the United States should focus on the issue of East Timor. For over two decades, East Timor has been a stumbling bloc to Indonesia's relations with the United States and with the European Union. There is a long and complicated history to this troubled corner of Asia, but suffice it to say that the West has never recognized the legality of the Indonesian incorporation of East Timor. It would seem to me that there is an opportunity to put aside the old inflexible positions that the various sides have taken in the past, and to look for new ways to move toward a mutually acceptable solution. Is there any role the United States might play in fostering such a renewed dialogue? Mr. Speaker, it is clear that Indonesia needs America's help and that of the international community. Our actions must be bold, but not rash. We must be thoughtful, but not timid. Certainly, we must take care to preserve and strengthen the delicate unity which has managed to hold Indonesia together, but we must not allow a new government to fall back into the bad practices that doomed the Suharto regime.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, this Member rises today to submit the Third Quarterly Report of the Speaker's Task Force on the Hong Kong Transition. It has been nearly one year since Hong Kong reverted to Chinese sovereignty on July 1, 1997. Prior to that historic event, and at your request, Mr. Speaker, this Member formed the House Task Force on Hong Kong's Transition. In addition to myself as Chairman, the Task Force is bipartisanly balanced and includes Representative Howard Berman (D-CA), Representative Sherrod Brown (D-OH,), Represenative Eni Faleomavaega (D-AS), Representative Alcee Hastings (D-FL), Representative Jay Kim (R-CA), Representative Donald Manzullo R-IL) and Representative Matt Salmon (R-AZ). Mr. Speaker, as you requested, the Task Force expects to travel to Hong Kong, and other relevant destinations at least every six months for the foreseeable future to examine how the reversion has affected Hong Kong. The first such visit took place in December, 1997. The second is tentatively scheduled for early July of this year--one year after reversion. To day, the task force has prepared three quarterly reports accessing how the reversion has affected Hong Kong. The third report, which I submit today, covers the alternating quarter--January through March, 1998--in which there was no actual visit to Hong Kong by the Task Force. Despite a number of concerns in the areas of freedom of expression, the independence of the judiciary, the development of democratic institutions and the protection of intellectual property rights, we continue to describe the situation as ``so far so good.'' Mr. Speaker, this Member submits the Task Force report to be printed in the Congressional Record. The Speaker's Task Force on the Hong Kong Transition Third Report (Presented by the Hon. Doug Bereuter, Chairman) The following is the third quarterly report of the Task Force on the Hong Kong Transition. If follows the first report dated October 1, 1997, and the second report dated February 25, 1998. This report focuses on events and developments relevant to United States interests in Hong Kong between January 1, 1998 and March 31, 1998--the third quarter following Hong Kong's reversion to China. (This is the alternating quarter in which there was no actual visit to Hong Kong by the Task Force since the mandate given to the Task Force by the Speaker is to visit Hong Kong only every six months. Therefore, the finding of this report are based upon indirect sources.) Beijing Commitments The Hong Kong Special Administrative Region (HKSAR) has now been under Chinese sovereignty for over nine months. Concerned observes both inside and outside Hong Kong continue to scrutinize the decisions and behavior of Chinese and Hong Kong authorities for evidence that China is maintaining its commitment to the ``one-country, two systems'' formula spelled out in the Joint Declaration of 1984 which allows Hong Kong full autonomy in matters other than foreign policy and defense. As a dynamic regional financial and economic center, Hong Kong's continued autonomy is viewed as vital to the continuing economic health of the entire region. The people of Hong Kong continue to maintain a high degree of confidence in the Hong Kong government. Confidence in Chief Executive C.H. Tung ebbed somewhat in January, as the effects of the Asian financial crisis rippled into Hong Kong and the public voiced its dissatisfaction with the government's handling of the ``avian flu'' problem. By late February, however, opinion polls showed a bounce back. Tung's overall approval rating rose to 63 percent--a four percent increase over the late-January figure. The polls also continue to show strong popular support for the ``democratic'' political parties, which are expected to do well in the May election in the seats open to universal suffrage. Following Hong Kong's reversion to Chinese rule, we find that Chinese authorities continue to refrain from direct involvement in Hong Kong affairs. To date, there is no evidence of explicit Chinese interference in Hong Kong affairs. Our First Quarterly Report on Hong Kong described the situation in this regard as ``so far, so good.'' The Second Quarterly Report echoed this judgment, with a slightly stronger caveat that the areas of concern--freedom of expression, rule of law, and protection of intellectual property rights, among others--warranted closer attention. In this report, we reaffirm or continue this assessment. We see no clear threat to Hong Kong's autonomy. Chinese officials, both in Beijing and Hong Kong, scrupulously refrain from interference--at least in public. For example, five members of China's world-class swim team were unable to wangle their way into Hong Kong for an important meet after they neglected to apply for visas in time. Separately, the small People's Liberation Army garrison also continues to maintain a low-profile. However, several relatively isolated decisions and statements by Hong Kong officials, described below, have heightened anxieties concerning the apparent spread of a new concept of ``political correctness.'' There is a small but growing concern that some Hong Kong authorities are giving undue consideration to Beijing's possible reaction before making decisions affecting Chinese interests in Hong Kong. Rule of Law Concerns--Freedom of Expression International confidence in Hong Kong is based on the commitment of the Hong Kong authorities to the rule of law which it inherited from the British. An integral part of this is the ``check'' on abuse of authority provided by the free expression of opinion. We find that political protesters and demonstrators continue to carry out their activities without restraint. One minor exception during the first three months of 1998 occurred during the January visit to Hong Kong of Chinese President Jiang Zemin. Hong Kong police kept anti- Jiang demonstrators at a considerable distance from the Chinese leader, thus drawing criticism for pandering to Chinese sensitivities. In response, Hong Kong authorities argued that it was important to demonstrate to the Chinese that they were capable of providing adequate security, lest the Chinese feel compelled to provide their own. Hong Kong has traditionally enjoyed a free and vibrant press. The Hong Kong media continues to operate freely. There are no taboo subjects. Newspapers that appear to tread lightly on issues of concern to China or Hong Kong authorities one day may harshly criticize them the next. There have been no reports of interference with the press by Chinese officials based in Hong Kong, nor by Hong Kong authorities. Nonetheless, self-censorship is widely perceived to exist. A February 1998 survey conducted by the Social Science Research Center of the University of Hong Kong showed that about 43 percent of those interviewed thought the media practiced self-censorship (down from 50.3 percent in December 1997), while 54 percent praised the media for fully exercising freedom of speech (slightly down from 57.5 percent in December). Self-censorship is a subtle and insidious influence which is difficult to document and impossible to quantify. Official interference in or guidance of the media is a separate and more disturbing matter. The specter of official interference arose on March 4 when Hong Kong media magnate, Xu Simin, while in Beijing as a delegate to the Chinese People's Political Consultative Conference meeting, criticized the Hong Kong government-funded Radio-Television Hong Kong (RTHK) for airing shows critical of Hong Kong policies. Rather than refute Xu's remarks, Hong Kong Chief Executive Tung Chee-hwa, also on March 4 remarked that ``while freedom of speech is important, it is also important for government policies to be positively presented.'' Tung's statement sent shudders through many concerned observers in Hong Kong. However, Hong Kong Chief Secretary Anson Chan, who heads Hong Kong's bureaucracy, immediately expressed ``deep regret'' at Xu's remarks, which she branded as ``improper.'' Tung subsequently reassured the public, saying on March 6, ``Of course RTHK has editorial independence. The government and I welcome criticism from the news media, and I think the news media has played a very important role in monitoring the activities of the government.'' We hope that Chief Secretary Chan's defense of RTHK prevails. [In a statement clearly intended to reassure the Hong Kong public, Chinese President Jiang Zemin followed with remarks to the effect that discussion of Hong Kong- related issues should take place in Hong Kong, not Beijing.] Rule of Law Concerns--Independence of the Judiciary A fair and independent judiciary is another critical element of international confidence in Hong Kong's commitment to the rule of law and to its ability to maintain a high degree of autonomy. In general, the Hong Kong judiciary continues to operate independently and without taint of political influence. Judges continue to rule against the new HKSAR government. For example, in a highly publicized case, the courts ruled that the Hong Kong law denying right of abode to illegitimate children of Hong Kong resident fathers (but not mothers) violated Article 24 of the Basic Law, which grants rights of abode without reference to legitimacy or the sex of either parent. Within the past three months, however, several incidents have focused attention on the possibility that Hong Kong's highly regarded legal institutions may be vulnerable to Chinese influence. In one case, the government's top legal officer decided not to prosecute a newspaper publisher who was politically well-connected to the mainland, despite the fact that three of the publisher's deputies were charged with fraud and that the publisher herself had been named in a report by Hong Kong's anti-corruption commission. Separately, the Hong Kong government decided not to prosecute the New China News Agency, or Xinhua, for violating Hong Kong's privacy statute, when it failed to respond by the legal deadline to a request under Hong Kong's privacy law by a politician for a copy of Xinhua's file on her. Xinhua subsequently asserted that it had no information on the politician, a claim that left most observers incredulous, in view of the intelligence- gathering role widely attributed to Xinhua. Chief Executive Tung justified the government's decision not to prosecute Xinhua by saying that Xinhua's actions were only a ``technical breach'' of the statute. [Note: In early April, the Beijing-appointed Provisional Legislature, in one of its last acts before being dissolved, passed a law which classified Xinhua as a body of the ``state'' and thus exempt from certain Hong Kong laws. The implications of this action will be discussed in the Fourth Quarterly Report.] The Development of Democratic Institutions Hong Kong authorities and political parties continue their preparations for the May 24 election of a new Legislative Council (LegCo). The May elections will be carried out under a new law established under the HKSAR. The new law is controversial because it dismantles key provisions of the electoral reforms put into place by former Governor Patten in 1995. For example, it maintains the original formula of twenty LegCo members to be directly elected by popular vote, thirty to be elected by ``functional constituencies'' (initiated by the British in 1985), and ten to be chosen by a special Election Committee. However, the ``functional constituent'' electorate is reduced from approximately 2.7 million votes under the 1995 British reforms to about 180,000 voters. A voter registration campaign to expand the electorate for the 20 seats subject to popular vote was rather disappointing. A door-to-door campaign resulted in 264,000 new voters, but roughly 30 percent of those eligible declined to register. The disappointing response has been attributed to several factors. The complexity of the election system has discouraged many potential voters. Others are simply unfamiliar with or distrust elections. Still others are cynical about their ability to affect the eventual outcome. While others--reflecting Hong Kong's notorious preoccupation with making money--are simply not interested. Despite the widespread dissatisfaction among the political parties with the new election law, none has advocated boycotting the election. Economic and Commercial Developments The United States has significant economic interests in Hong Kong. Hong Kong is the home of over 50,000 U.S. citizens. Over 1,100 resident American firms employ 250,000 Hong Kong workers, or 10 percent of the workforce. The financial crisis which has buffeted Southeast and East Asia starting in mid-1997 has not left Hong Kong unscathed. Nonetheless, Hong Kong's economy continues to grow, albeit at a slower rate than before. By the end of March 1998, deposits in banking institutions has increased, as has the ratio between the Hong Kong dollar and foreign currency deposits, suggesting that confidence in Hong Kong's dollar and banking system continues to recover unabated. The Hang Seng index remained relatively stable through the first quarter, while inching slowly upward. And, in a further show of confidence in the Hong Kong economy, new residential mortgage loans began to edge back up in January, in both number and value, and positively surged in March. Nonetheless, most economic indicators have not returned to their pre-Asian financial crisis levels. Most analysts believe Hong Kong's gross domestic product will grow by only two percent in 1998, compared to the 3.5 percent predicted by the government--and the 5.0 percent and 5.2 percent it grew in 1996 and 1997, respectively. Another trend that bears watching is Hong Kong's growing role as a channel for foreign capital to China. The Chinese companies listed on Hong Kong's stock exchange, which now account for roughly nine percent of Hong Kong's market capitalization, seldom meet international corporate-governance standards. This growing segment of the Hong Kong capital market is expected by some to double in the next ten years. The lack of transparency of these Chinese companies is likely to add further volatility to the market. Jeffrey Lam, Chairman of the Hong Kong Exporters' Association, stated that Hong Kong's manufacturing industry still maintains competitive advantages over Asian countries despite those countries' currency depreciations. The financial turmoil has not changed the volume of orders coming to Hong Kong. Despite this good news, however, the unemployment rate for the period December 1997-February 1998, rose to 2.9 percent, the highest in the last 18 months. The total number of unemployed reached 85,000, with the retail trade, hotel, property, construction and garments sectors the hardest hit. The government is considering setting up a retraining program for those laid off. Tourism, which has traditionally depended to a large extent on the growing Southeast Asian middle- and upper classes, has also suffered from the regional financial crisis. Furthermore, if China should succumb to the temptation to devalue its currency, as some skeptics have darkly predicted, Hong Kong would find it very difficult to maintain its current Hong Kong dollar-U.S. dollar peg. Intellectual Property Rights and other Concerns The most serious U.S.-Hong Kong bilateral trade issue is the continued wide availability of pirated movie, audio and software compact discs and pirated trademark goods. This situation led the U.S. Trade Representative to place Hong Kong on the Special 301 Watchlist in April 1996. One disturbing development in the past year has been a change in the nature of intellectual property rights (IPR) violations in Hong Kong. While retail sales of pirated goods were the primary problem in the past, in recent months, the manufacturing of pirated compact discs has become a significant problem. (Some people speculate that this development is a result of greater IPR enforcement in mainland China.) Hong Kong officials have reiterated their commitment to combating piracy. In addition to stepping up Custom's raids on retail outlets, on March 25, 1998, they passed a new copyright law which, among other things, gives enforcement officials greater ability to control illicit production. [Note: Despite these efforts, the IPS situation in Hong Kong remained sufficiently troublesome to warrant its designation on May 1, 1998 by USTR on the Special 301 Watch List for the third year in a row.] The Hong Kong government continues to cooperate fully with U.S. agencies in combating drug trafficking. We note, however, that many of the same favorable factors that make Hong Kong one of Asia's most important financial centers also make it attractive to criminals who wish to conceal the source of their funds through money laundering. Consequently, it is important that the Hong Kong government work with the international community to improve its laws and enforcement in this vital area. We are pleased to observe that during the first quarter of 1998 we continued to have full cooperation in the area of export control, and no new incidents were reported. The U.S. Commerce Department continued to conduct pre-license and post-shipment checks. And in January, 1998, U.S. and Hong Kong export control officials strengthened their already strong interaction by beginning a new series of consultations on licensing, enforcement and the exchange of information. The latter will include the U.S. sharing information relevant to Hong Kong's new ``brokerage legislation,'' which was passed just prior to reversion. This new legislation will allow Hong Kong's authorities to prosecute people based in Hong Kong who are engaged in proliferation activities outside of Hong Kong. We also note that serious concerns have been raised in some quarters about the adequacy of Hong Kong's export control regime and its ability to prevent the transfer of sensitive technology to unintended destinations. [Note: See Congressional Record, May 20, 1998, p. H3559.] Macao Macao, a small Portuguese colony with a population of one- half million, will revert to Chinese rule at midnight on December 20, 1999. Like Hong Kong, it will become a Special Administration Region with a ``one-country, two systems'' formula. But Macao faces very different transition issues. In the political arena, Macao will not face the contentious debate that Hong Kong went through over its legislative body. In contrast to Hong Kong's legislative body, the Macao Legislative Assembly elected in 1996 will remain in place on a ``through train'' beyond the December 1999 reversion. But in other areas, there are causes for concern. The Portuguese colonial authorities have not trained and groomed local Macanese to replace Portuguese personnel in many key civil service positions. It also appears that a much smaller proportion of foreigners will remain in Macao, compared to the case in Hong Kong. One would hope that the Portuguese authorities will move with greater speed and resolve to put in place a strong professional local bureaucracy and judiciary, without which Macao cannot be expected to provide the functions required as the territory moves into the 21st century. U.S. interests in Macao are by no means as large as those in Hong Kong, but they are nonetheless important. The largest bilateral problem is unquestionably Macao's role as a manufacturing center for pirated goods. The production of pirated compact discs is a particularly significant problem. According to knowledgeable sources, in 1997 estimates there were between 80-100 compact disc production lines producing up to 100 million compact discs and movies per year. Although the Macao government maintains that it is committed to tackling the problem, it has been unsuccessful in combating the pirating problem for a variety of reasons. For example, it lacks adequate legislation, enforcement mechanisms and manpower. It was said that the government is drafting legislation for the creation of a full customs service that would take on the anti-piracy function of the economic services department and the maritime police. It is in America's interests that Macanese authorities move forward forcefully. Separately, we note a continuing serious problem with the transshipment of textiles through Macao. An even more troubling factor affecting bilateral relations, and, indeed, Macao's entire development, is the disturbing influence of organized crime. Macao-based triad societies, which once contained themselves primarily to the colony's lucrative legal gambling industry, have taken on a more public and more violent persona. Several well-publicized street shootings have driven away some of Macao's important tourist clientele. The triads, now in cooperation with crime elements from across the border in China, are believed to be deeply involved in the production of pirated compact discs and other illegal smuggling activities, including the transhipment of drugs and money laundering. Macanese authorities recognize the danger these groups pose to Macao's society and economy and have worked to combat them. The triads have responded with retaliatory attacks against police and other public officials. We applaud the authorities' efforts to combat organized crime. The territory is unlikely to be able to effectively address many of the problems it now faces until it has successfully rooted out this scourge. Conclusion ``So far, so good'' continues to be the view of the Hong Kong Transition Task Force. As we noted above, the Asian financial crisis will have a still-to-be determined impact on Hong Kong's economy. As we have also noted, there are continuing concerns within the Special Administrative Region itself, particularly in the areas of freedom of expression, the independence of the judiciary, the development of democratic institutions and the protection of intellectual property rights. Given the complexity of the reversion in Hong Kong, this is, of course, important, but it should not be surprising. Nonetheless, this transition period in Hong Kong warrants the continued scrutiny of the international community and the Congress.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, this Member is greatly disturbed by recent revelations that substantial sums of Chinese money found its way into the coffers of the Democratic National Committee. It is clear that campaign operative Johnny Chung collected hundreds of thousands of dollars from individuals and organizations with direct links to the top echelons of the People's Liberation Army. Such activity confirms our worst fears, and is a threat to this nation's collective soul. This Member urges his colleagues to rise above politics and address this problem in the serious manner that the situation demands. Mr. Speaker, this Member would insert into the record an editorial from the Omaha World-Herald of May 16, 1998, entitled ``Johnny Chung's Shocking Tale Puts Focus Back on Donations.'' This entire body should reflect on the sober lesson expressed in this editorial. [Omaha World-Herald] Johnny Chung's Shocking Tale Puts Focus Back on Donations The get-it-any-way-you-can ethic of Democratic National Committee fund raising for the Clinton-Gore re-election campaign has come into more focus. Johnny Chung has reportedly told federal investigators that he channeled money from the government of communist China to the DNC. This should be a shock to America. It would be if the Clintonites had not apparently been successful in convincing the people that they should be interested more in the Dow Jones Average and federally subsidized day care than in old stories about unproven scandals. Chung pleaded guilty in March to campaign-related bank and tax fraud and is cooperating with investigators. Most of the $100,000 he provided the DNC in the summer of 1996 came from the Chinese military, Chung said. His contact was Liu Chao-ying. She was a lieutenant colonel and a vice president in charge of international trading for China Aerospace International Holdings Ltd. Liu's father was China's top military commander and a Communist Party leader. American companies were prohibited from doing business with China Aerospace in 1991 and 1993 because the company had illegally sold missiles to Pakistan. The Justice Department reportedly has documents to verify the relationship described by Chung, who arranged for Liu to be photographed with President Clinton when she was in the United States. Chung was able to get Liu and another Chinese national into an exclusive Clinton fund-raiser in July 1996 after sending the DNC a check for $45,000. That same month, Chung set up a California corporation for Liu and himself. This allegedly was a vehicle through which donations could flow from China to the DNC. Liu's aerospace company benefited from U.S. policies in 1996 that allowed American civilian communication satellites to be launched by Chinese rockets--despite China's sale of missiles to Iran and nuclear equipment to Pakistan that year and its perennial threats against Taiwan. The Chinese military also benefited in that it buys missiles from companies like China Aerospace and relies on the health of the industry. Chung's attorney and officials of the Clinton administration and the DNC deny that Chung-related donations had any effect on U.S. policy toward China. But even if there was no policy quid pro quo, federal law bans campaign contributions from foreign sources. DNC and White House spokesmen say that there was no way to know the origins of Chung's donations and that suspicious donations were returned. Yes, they were returned--after exposure in the press and intense public pressure. And what of the documented concerns of White House staffers that Chung was a ``hustler'' bringing disreputable characters into the inner circle of the presidency? Why was he allowed into the White House 49 times? Why were he and his guests allowed to attend exclusive fund raisers? Disclosures of the activities of Chung make the efforts of House Democrats to shut down the House portion of the investigation even more alarming. If the House investigation collapses, as it appears about to, the public is left with the Justice Department to investigate the matter. The Justice Department is headed by Attorney General Janet Reno, whose refusal to recommend an independent counsel to investigate these matters has become a national disgrace.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, this Member highly commends this May 19, 1998, Omaha World-Herald editorial on the Virginia Military Institute to his colleagues. The Virginia Military Institute is to be complimented for the successful integration of female cadets into an institution that had been a traditional male bastion until the rending of a 1996 U.S. Supreme Court ruling. The Virginia Military Institute has been successful because of its sincere effort to promote co- educational programs that would foster the positive acceptance and inclusion of women into the institution, and for these reasons are again to be commended. VMI Makes the Right Moves Virginia Military Institute, like The Citadel, had a long and proud tradition of educating men and providing military training and discipline. Both Virginia state colleges fought against federal rules requiring them to admit women if they wanted to continue getting public funding. Both schools fought the order in court. The U.S. Supreme Court decided against VMI in 1996, as it had against The Citadel in 1995. The ruling was not popular. VMI alumni considered buying the college and making it into a private institution rather than go co-ed. But when the ruling was issued and officials studied the situation, they decided to take the honorable path. They not only admitted women to the institute; they accommodated them. The women who went to the college last fall were held to the same physical and mental standards as male students. They were yelled at, given push-ups and forced marches, shorn of their hair and sent through obstacle courses, all the while carrying a full college course load. No quarter given. That is as it should be. Standards are standards. But VMI was not grudging in its acceptance of co-education. It actively recruited qualified women, winding up with 30 in a class with 430 men. It held seminars on avoiding sexual harassment--required seminars for cadets, faculty and staff. It hired a female assistant commandant and a female admissions officer. It asked the nation's military academies, which went co-ed 22 years ago, for advice. It brought in female upperclassmen from military programs in Vermont and Texas to act as big sisters for female freshmen. Seven of the women who enrolled in September quit before finishing. But none cited sexual harassment or unfairness as a reason for leaving. Considering that 74 male freshmen left, too, the difference was not striking. VMI deserves credit, not only for doing the right thing, but also for doing it the right way.

Mr. BEREUTER

Mr. BEREUTER. Mr. Chairman, I yield myself such time as I may consume. (Mr. BEREUTER asked and was given permission to revise and extend his remarks.)

Mr. BEREUTER. Mr. Chairman, this amendment would prohibit United States participation in any post-launch failure investigations involving the launch of a U.S. satellite from the People's Republic of China. On February 15, 1996, a Chinese rocket carrying a satellite built by the Loral Corporation crashed on liftoff from a launch facility in southern China. In the aftermath of that launch failure, the PRC established a review commission to investigate the failure and determine what went wrong. American technical experts from Loral and Hughes electronics participated in this investigation. On May 10th of that year, this commission completed a preliminary report finding that the cause of the accident was an electrical failure in the electronic flight control system. The report discussed very sensitive aspects of the rocket's guidance system and flight control system. Copies of this unredacted report, including much highly sensitive material, was promptly shared with the Chinese prior to its presentation to U.S. officials! In the aftermath, the U.S. Air Force and the National Air Intelligence Center completed a damage assessment of the incident, and found that U.S. national security had been harmed. My colleagues will understand that providing technical information designed to address problems in Chinese rocket guidance and flight control systems also addressed the same problems in Chinese Intercontinental Ballistic Missiles (ICBMs). There is a real question as to whether Chinese ICBMs are more accurate and reliable because of the advise of American citizens, and ICBMs pose a very real risk to the United States. Regrettably, and amazingly, Mr. Speaker, some of those Americans who participated in the Chinese rocket failure investigation argued that they were under no obligation to return the copies of this highly sensitive report. Now, the background on this amendment is that it seeks to prevent the transfer of sensitive military-related information to China. In 1996, two companies, Loral and Hughes, participated in a launch failure investigation involving the failed launch from China of a U.S. satellite on a Chinese launch vehicle. As a result of that investigation, information was passed to China that quite apparently could be used to improve the guidance accuracy and warhead delivery capability of China's missiles. The information was reportedly transferred illegally, without a license from the State Department, that is, and the incident is now the subject of a Justice Department criminal investigation. Even asking questions, Mr. Chairman, of the Chinese during investigations can transmit technical information and assist China in improving its launch capabilities. Anybody that understands even a little bit about gaining intelligence knows this is a process for gaining intelligence, even though it would be the intention, perhaps, and certainly would be the intention, I would imagine, of these firms not to transfer classified and sensitive information. Now, this amendment would make it clear that the Congress is opposed to assisting China in the development of its space launch and missile capabilities. Why? Because Chinese missiles are targeted at U.S. cities and, obviously, we do not want to make them more accurate and jeopardize American lives. I can tell my colleagues that as unfortunate as the Indian nuclear explosions are, that is a related incident, because if Chinese missiles are more accurate, it creates instability not only in Asia but certainly in South Asian countries like India. This amendment would help prevent the transfer of militarily sensitive U.S. technology to China that could be used to improve that missile capability. The amendment would relieve American industry from the burden of determining what information can and cannot be transmitted to China by preventing U.S. participation in launch failure investigations. The amendment would also discourage U.S. satellite companies from seeking to launch satellites on Chinese launch vehicles. That is not the primary intent, but that is likely to be the result. If those launch vehicles are likely to be a failure or prone to failure, that would encourage alternative, more commercially viable launch options, including commercial American launch services. The amendment, therefore, Mr. Chairman, would send what should be a very obvious and certainly important signal prior to President Clinton's upcoming summit trip to China that the United States should not agree to measures that would help China improve its space launch or missile launch capabilities. The guidance systems on these missiles are all-important in determining how vulnerable our population really is, and so it is in our best interest not to have this technology flowing to China or, for that matter, to any other country.

Mr. BEREUTER. I yield to the gentleman from Missouri, the distinguished ranking Democrat member of the Armed Services Committee, now called the Committee on National Security.

Mr. BEREUTER. Mr. Chairman, I thank the gentleman for his comments. Mr. Chairman, I yield 30 seconds to the gentleman from Indiana (Mr. Buyer), and I apologize it is not more.

Mr. BEREUTER. Mr. Chairman, I demand a recorded vote.

Mr. BEREUTER. Mr. Chairman, I offer an amendment made in order by the rule.

Mr. BEREUTER

Mr. BEREUTER. Mr. Speaker, I thank my colleague the distinguished minority whip for yielding. I wonder if I might ask a question, under his reservation, of the majority leader. As the majority leader I think knows, there are bipartisan interests in activities of official business on Friday of next week, and I am wondering is it possible for the majority leader to give us a 2 o'clock or a 3 o'clock certain adjournment time, or, at least, would he be willing to entertain a request from this gentleman that we adjourn as early as possible on Friday?

Mr. BEREUTER. If the gentleman would continue to yield, I just wanted to thank the majority leader for that indication. I think it would be helpful in our planning and it is of bipartisan importance.

Mr. BEREUTER

Mr. BEREUTER. Mr. Chairman, I rise in opposition to the amendment as a member of the Committee on Banking and Financial Services. I understand the greater flexibility for small and middle size banks, and that is important. But there is something more important, and I want to remind my colleagues that this Congress listens, the Americans listen, and the world listens to Alan Greenspan when he speaks. Alan Greenspan has been quoted here several times. Here is what he had to say before the House Committee on Banking and Financial Services on May 22, and he made a similar statement on July 17 to the Committee on Commerce: The Federal Reserve Board is of the view that the risks from securities and insurance underwriting are manageable using the holding company framework as compared to the operating subsidiaries. But there is another risk, the risk of transference to nonbank affiliates of the subsidy implicit in the Federal safety net. Deposit insurance, the discount window and access to the payment window with attendant moral hazard. As the committee knows, the Board believes that the subsidiary is more readily transferable to a subsidiary of the insured deposit institution than to its affiliates, and the holding company structure creates the best framework for limiting this leakage. The Federal Reserve Board will oppose this bill if we approve the LaFalce amendment.

Mr. BEREUTER

Mr. BEREUTER. Madam Chairman, I just wanted to point out to the gentleman from Minnesota (Mr. Vento) regarding the grandfathering arrangement, it is a 10-year period. It could be extended for five years. But this is dealing with an anomalous situation. It is a condition created by regulators because the Congress did not act earlier. These anomalous conditions are not a good situation, but the grandfather clause is a valuable way to remedy these anomalous situations.

Mr. BEREUTER. The Chairman is exactly right about the small number of entities, if any, that are supportive of it. There are a handful of firms and banks. But on the other side, perhaps it is good to reiterate the people that are in favor of the Leach amendment, maintaining the status quo of the zero basket. The chairman has mentioned a few of them before.

Mr. BEREUTER. Madam Chairman, will the gentleman yield?

Mr. BEREUTER. I thank the gentleman for that clarification. I watch with awe and wonder the gentleman from New York (Mr. LaFalce), who speaks to us in such a soothing voice, about how the changes that are being made here are actually reducing it from 15 percent basket to 10 percent basket. And, well, that is accurate. But in reality, of course, the status quo is a zero basket. And that is what we are supportive of the Leach amendment think is a crucial and proper level. It is crucial that we maintain this barrier against mixing banking and commerce. I think it provides us a much higher likelihood of the impartial provision of credit by bankers to people and to businesses that deserve to receive credit. It avoids a concentration of economic power. Earlier, too, we heard references about a bloody flag being waived in the debate on S&Ls. But I think that is appropriate for we have to learn from our experience. And it boggles my mind, it boggles foreign legislators' minds that we in America would be recreating, the kind of unhealthy banking situations that we find in Asian countries. And as the gentlewoman from New Jersey (Mrs. Roukema) ask earlier, well, what about Europe? Well, in fact, the problems resulting from the mix of commerce and banking exists in Europe, too. And, in fact, in France and Spain the public treasuries were raided to make insolvent large banks more solvent after they made imprudent commercial investments. And that is what we would have to have. Do not trade the separate American banking and commercial systems for the failures of Asia or Europe.