Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, today I rise to introduce critical legislation that will help restore confidence in our country's ailing travel and tourism industry as well as serve as an immediate stimulus to our economy in general. As recent economic data have confirmed, our economy was ailing before the terrorist attacks on Tuesday, September, 11, but few were talking about emergency measures to stimulate it. What is different after September 11 is the downward spiral of the economy, led by the travel industry. Proposals for stimulating the economy have centered on traditional arguments as to whether we should focus more on stimulating business investment, consumer demand, or infrastructure. Eager for a bipartisan approach, members of Congress and President Bush appear agreeable to splitting the difference and doing a little of each. To me, that's a political solution and it ignores the emergency created in the aftermath of September 11. I believe that we need to rethink what has happened to our economy to arrive at the stimulus legislation that attacks the major problem, and, therefore, will do the most overall good. Before September 11, our economy was ailing for precisely the reasons Federal Reserve Chairman Alan Greenspan articulated, a lack of business investment. The terrorist attacks have made the general situation worse and caused an absolute emergency in certain sectors of the economy. Although I certainly agree that Congress should stimulate business investment and shore up consumer expectations, for example, by making our recent tax law permanent, cutting capital gains taxes, eliminating corporate AMT and accelerating our outdated cost recovery periods, I contend that our first focus should be directly on the sector hardest hit by these events. To illustrate my point, an analogy is useful. Our economy had a bad case of the flu before September 11. Reducing interest rates, providing tax relief, and cutting regulatory burdens were all part of the antibiotic medicine needed to get the economy healthy again. During the economy's rehabilitation period, however, it sustained a major trauma. Under these circumstances, what should be a first priority, another dose of flue medication, or treatment applied directly to the gaping wound? I believe that we must focus an emergency economic stimulus on the sector that has been most harmed: our travel industry. If we are to prevent thousands of bankruptcies, hundreds of thousands of lost jobs, as well as numerous indirect consequences to the rest of the economy, it is essential that we provide some immediate help to the travel industry. Accordingly, I am introducing legislation that seeks to treat this emergency economic situation or wound before it spreads an infection throughout the entire economy. Elements of my legislation include: Providing a temporary $500 tax credit per person ($1,000 for a couple filing jointly) for personal travel expenses for travel originating in and within the United States. This will help encourage Americans to resume their normal travel habits. Unlike general rebate checks to taxpayers, a tax credit conditioned on travel expenses ensures that the money is spent on a specific activity, in this case an activity that will generate positive economic ripples throughout the entire American economy. It will also help create confidence and encourage Americans to get back on airplanes. Since business travel expenses are already deductible, temporarily restoring full deductibility for all business entertainment expenses, including meals, that are now subject to a 50 percent limitation, would help bring back the backbone of the travel industry, the business traveler. Finally, in order to provide tax relief to those travel-related businesses most hurt by the terrorist attacks, Congress should allow these companies to ``carry back'' their losses incurred after September 11, for a temporary period of three additional years, a total, temporary, ``carry back'' period of five years. This will allow companies that have been profitable until September 11, but then lost money in excess of the past two years' amount of profit, to offset previous years' profit. Without this relief, many companies will go bankrupt, solely due to the terrorist attacks. To be quick and temporary, the credit should be available for expenses incurred before December 31, 2001. The travel could occur later. This legislation meets the criteria set forth by President Bush and the chairman of the Finance Committee. By definition, the relief would be temporary. The revenue loss attributable to this legislation for 2001 should occur no later than 2002 and so there would not be a long- term, negative drag on our federal budget. In fact, I believe that it would help ensure a positive, long-term budgetary position by getting America moving and doing business again. As for the need to stimulate consumer spending, providing consumers with incentives to travel is clearly a demand-driven idea. I also contend that it will help stem the retrenchment in business investment that the economy is experiencing in the travel industry and many related industries. Finally, travel is not a partisan issue, it is one of the most bipartisan of all issues. As Secretary O' Neill said before the Finance Committee on October 3, ``The medicine has to work and be worth the cost.'' Without airline travel, collateral consequences to related industries will be substantial. Of all the competing proposals I can think of, none more directly affects the major cause of the problem in our economy. So there it is. Our economy has sustained a specific trauma. We need a quick and focused response to this emergency condition. the ``Travel America Now Act'' provides the right medicine for the most acute problem. I urge my colleagues to join me and support this legislation. Mr. President, I ask unanimous consent that the text of this bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I rise to speak to an amendment to the fiscal year 2001 National Defense Authorization Act. This body is understandably focused right now on the issues of terrorism and homeland defense. It is entirely appropriate. With the imminent release of the Quadrennial Defense Review, however, we should not lose sight of the broader picture of U.S. foreign policy and national security for the decades ahead. While we can and will wage the war against international terrorism that is our duty, we cannot afford to ignore other future national security concerns that will most assuredly require the United States to maintain a large and robust conventional military capability. Chief among our concerns to U.S. national security and alliance relations remains the threat to Taiwan, and to U.S. interests in the Asia Pacific of an emerging China. My intent here is not to beat the drums of war, for the events of September 11 have already heightened our emotions and awareness of the dangers that confront us in the 21st century. It would be irresponsible of us, however, to ignore Chinese military modernization and its implications for U.S. national security. That is why I believe it imperative that the United States be more aware of the nature of China's modernization programs. An integral part of those efforts is China's acquisition of advanced technologies, including dual-use technologies. My amendment is simple. It requires the Secretary of Defense to provide an assessment of China's efforts at acquiring certain military- related technologies, how its military strategy relates to its technology requirements, and the impact those technology requirements and that military strategy have on our ability to protect our interests in the Pacific. The amendment would also require the Secretary of Defense, in consultation with the Secretary of Commerce, to develop a list of technologies that, for purposes of national security, should be denied the People's Republic of China. This amendment is entirely consistent with Congress' overwhelming support for such initiatives as the creation at the National Defense University of a Center for the Study of the Chinese Military, and with the emphasis we have place in force structure discussions on the future challenge of China's growing military strength. It is a commonsense amendment that I hope will have bipartisan support.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Was that the nature of the unanimous consent request?

Mr. KYL. Mr. President, I simply didn't hear what the assistant majority leader just said.

Mr. KYL

Mr. KYL. Mr. President, I rise in opposition to the amendment proposed by my good friends and colleagues, Senators Bunning and Lott, concerning eliminating the authorization for another Base Realignment and Closure review in 2003. In February of 2001, the Business Executives for National Security, a non-profit organization focused on improving the Nation's defense business policies reported that nearly 70 percent of the defense budget is spent on support functions including bases and infrastructure. In the 1997 Department of Defense Report on Base Realignment and Closure, Secretary Cohen noted that our force structure has been brought down significantly, 33 percent, but our domestic infrastructure has decreased only 21 percent. In June of this year, Secretary Rumsfeld stated that he needed ``greater freedom to manage,'' and he pointed out that a ``reduction in excess military bases and facilities could generate savings of several billion dollars annually.'' This year, the Joint Chiefs testified before the Armed Services Committee, and each one--General Ryan, Admiral Clark, General Jones, General Shinseki--agreed to a need for an additional round of base closures or realignments. In their comments they pointed out that savings from excess capacity are real and that the excess infrastructure burdens their ability to efficiently execute their national strategy. On September 3, 2001, Admiral David Jeremiah, former Vice Chairman of the JCS, and General Richard Hearney, former Assistant Commandant of the USMC wrote in commentary that ``Every billion not spent on unneeded bases is a billion that can be re-directed toward building an even stronger military.'' To those of my friends and colleagues who say that we are in a different time than in 1997, or in February 2001 or even August, and that we must support our military at this time, I say I agree with you. We must support our soldiers, sailors, airmen and women and Marines. We must give them the financial tools and operational and administrative flexibility to effectively carry out their mission, especially at this time. I draw my colleagues' attention to September 21, 2001, as it is after the horrific events of September 11. On that date Secretary Rumsfeld communicated to the Congress, once again, his strong support for converting ``excess capacity into warfighting ability.'' My colleagues, a stronger more applicable comment could not have come at a more critical time. To my colleagues who may point out that in that letter Secretary Rumsfeld noted that ``our future needs as to base structure are uncertain . . .'' I point out that he goes on to emphasize that the DoD, ``simply must have the freedom to maximize the efficient use of our resources.'' By authorizing another round of realignments and closures we let our war fighters mold their infrastructure to fit their requirements. Let us not burden them for political reasons with infrastructure that should have been retired with the P-51, the Enfield rifle and the Sherman tank. I stand with the Secretary, the Joint Chiefs of Staff, and the Senate Armed Services Committee in opposition to this amendment.

Mr. KYL

Mr. KYL. Mr. President, I wish to speak on this bill and to add my voice to those who have pointed out how critical it is that the U.S. Government support our airline industry. I share some concerns, such as those expressed by the Senator from Kentucky. There are other concerns that others have expressed that also have merit. I will note in a moment why I am very concerned about a provision of the bill. I would not have written it the way it is written, but I think fundamentally the U.S. Government must support our airlines at this critical time. Everyone knows what happened on September 11. Everybody knows that as a result the U.S. Government shut down the airlines--no more air travel until we deemed it was safe. That shutdown resulted in huge losses to our airlines, not just for the days those airlines were down, but we have seen a continuation of a reluctance of people to fly, a diminution in the revenues of these airlines, fewer flights, people laid off and, frankly, the possibility of a spiraling down of this industry to the point that it could affect many other facets of our economy and drive our GNP down to an unacceptable level. In my State, which depends a lot on tourism--either everyone has come to Arizona for a vacation or would like to, I suspect, just as they would for the State of the Presiding Officer, States such as Hawaii, Nevada, Arizona--we have had a tremendous loss in our tourism industry, everything from the hotels and the motels, the golf courses, the limousine and taxi services, and everything else connected with it. Those losses are going to be extraordinary and a huge drag on our economy if people do not begin to have confidence that they can fly in safety at reasonable fares. That brings up the concern I have about the legislation. We need to support this industry. I think we are going to pass this legislation overwhelmingly. I hope so. I look forward to supporting it. I want to issue a warning about the way this will be implemented because the administration will have a fork in the road and they will have to choose which path to follow. I am going to argue strongly for the first path rather than the second, and I want to explain why. This bill actually provides, among other things, some financial relief for the airlines of two different kinds. The first is $5 billion of grants. This is to make up for the immediate loss to the airlines when the Federal Government shut them down. That is fair. Everybody agrees with that. There is a formula for that based on passenger miles and some other factors that have been agreed to by the airline industry. That same formula was supposed to apply to the subsequent loan guarantees. The bill has $10 billion of loan guarantees. The industry wanted more, but there is $10 billion of loan guarantees in the bill. That is also very important for the industry because besides getting over the immediate hump of those revenue losses, they need to make themselves whole again by going out to the financial market and financing their future needs until the fares begin to make up for that lost revenue. To do that, they need the backing of the U.S. Government because most of them cannot convince lenders at this point that they are a good credit risk, for all of the obvious reasons of which we are aware. The administration did not want the formula to apply to the loan guarantees and has fought very hard to take that formula out. This is regrettable because it suggests the possibility that this administration will actually involve itself in picking winners and losers in a free market. That is not right. One can say it is not a free market if the Government guarantees loans, but the Government is supposed to be guaranteeing these loans on an equal basis to everybody. It should not be deciding which companies to favor and which ones not to favor. That is my concern about the possibility that because there is no formula for the loan guarantees, some Federal official is going to literally be picking winners and losers. They certainly would not do that on the basis of some prejudice. I am not suggesting that. Instead, they would argue they need to protect the taxpayers' money. There is not anybody who has been stronger in this body on that than I have been. We all agree we need to protect the taxpayers and to grant these loans on the basis that they are going to be repaid, obviously so the taxpayers are not left holding the bag. Therein lies the rub because some airlines are different from other airlines in terms of what they can show the bank. Let me give an example. The older, larger, well-established airlines have what is called collateral. They have assets they can pledge as collateral for the loans. They go to the bank and say: We need to borrow $200 million, and we promise, if we do not pay it back, you can have these three airplanes worth $200 million. That is probably way off, but you get my point. The newer airlines have not established the collateral, the asset base which enables them to pledge to the bank that if their loan defaults, they have all these assets with which they can repay the loan. Instead, the newer airlines have financed themselves based upon the projection of future revenues, and future revenues have, obviously, panned out in most cases. So they have been able to obtain financing, too. I will give an example. An airline headquartered in my State, America West Airlines, which is 9th or 10th in the country, but a relatively new airline, had just obtained a commitment for a $200 million line of credit based upon future expected revenues. That was set to go through on September 11, when the bottom fell out. Obviously, no lender under the current circumstances wants to lend to anybody. That is why we are talking about guaranteed loans. There are those who say these loans should be based on some collateral, something very specific and definite, or else the Federal Government should not be in the business of guaranteeing the loan. That would cut out certain companies, the very companies that offer the primary competition to these older, larger airlines to keep the fares low. The reason these newer airlines have succeeded is that they have been able to offer low-fare service, and the net result has been a lot of people have gone to these newer, smaller airlines. But it has also served to keep the older, larger airlines' fares within a reasonable level. I happen to fly a couple of these older, larger airlines a lot, and I love them. They have provided very good service, and I want to help them, but I think they would agree that it would not be fair simply because of a difference in size or age, therefore representing different circumstances, that one airline should be preferred over another airline in terms of the ability to get these loans. The legislation has embodied within it total discretion on the part of the President and his agents in any event because it says that the loans that are made under this guaranteed loan provision are only to be offered under rules and regulations the President deems necessary--no other further restrictions. The reality is, if the President of the United States wants to say: I want to make sure the taxpayers get their money back, so I am going to require a condition of X, he can do that. The ability, however, to do that should not be confused with the ability of an airline to say: Even though the President has total discretion to grant terms and conditions that we may not be able to satisfy, if there is a formula involved, we at least have the right to go to the banks or other lenders and say: Under the legislation, we are, in effect, guaranteed the right to apply for 3 percent or 5 percent, or whatever that percentage is, of the available loans, and therefore would you, please, based upon that commitment of the Federal Government, lend us that money? There is at least a right to apply for a certain amount of money to borrow. There is no guarantee the Government is going to approve the terms of the loan, but there is at least the right to do that. That is what returning the formula to the legislation would do. Senator McCain and I have considered offering an amendment to that effect. We know the leadership would like to consider the bill without amendments, and we are willing to proceed on that basis if everyone else is as well. What I am saying to our leadership, to you, Mr. President, and to anybody in the administration who will listen, is we are willing to cooperate on this, and, on behalf of the people we represent, we are willing to be cooperative, but we plead with them that for good public policy, they need to appreciate the differences among the airlines, the fact that some can do one thing, others can do another, and that this Government should not be in the business of literally picking winners and losers, the result of which could be to drive companies into bankruptcy. I do not think anybody wants that on their hands. In the granting of these loans, I hope it will be done in such a way that they do not disadvantage certain companies with the result that they cannot stay in business. All of the industry will suffer as a result, and the American travelers will suffer as a result.

Mr. KYL

Mr. KYL. Mr. President, I rise at this time to lend my full support to S. 1426 the emergency supplemental appropriations bill. The United States is engaged in war against terrorism. We have been engaged in that war for a long time, but seldom has it tread upon our Nation's soil. On September 11, it did, in a most horrific way. Last night, this body took a great step in its fight against terrorism. We passed legislation that will significantly improve the effectiveness of our intelligence and legal apparatus. The measure before us will provide much needed funds to the President to help heal the wounded, repair the broken and enable our Nation's military, justice, and intelligence agencies to carry out the arduous duties that lay before them. The threat will not soon go away. The missions of the agencies we provide for with the funds from this bill will continue long past the day when these funds will run out. It is up to us, our colleagues in the House and the President and his administration to develop a long-range plan and provide the resources to the men and women who will carry out necessary steps to prevent what happened 3 days ago from ever happening again. It is up to us to promote and insure the Nation's resolve in the coming days, months, and years. So, I support emergency supplemental legislation.

Mr. KYL. Mr. President, I rise today in full support of S.J. Res. 23, authorizing the use of the U.S. Armed Forces against those responsible for the recent attacks launched against the United States. As the President and many of my colleagues have asserted since the heinous acts of Tuesday past, we are at war. In fact, we have actually been at war against terrorists for a long time, but seldom has it touched our shores. The time has come for us, and for our allies, to act with all appropriate force to remove the threat of similar acts occurring on our soil, or the soil of other free nations. As the President has stated, America is the primary target because we are the shining beacon of freedom and democracy. In recent days, our allies have recommitted themselves to the support of those ideals, and they have pledged their support for the actions that must be taken in response to the murderous crimes of September 11. With so much of the world behind us, there will never be a better time for us to make a concerted effort to rid outselves of the threat of terrorism. Today we have put partisan politics behind us and created a joint resolution that authorizes the President to use ``all necessary and appropriate force'' against the terrorists who perpetrated these acts and the countries of organizations that supported, aided and harbored them. We stand united in our resolve to take whatever actions are deemed necessary by the President to defeat the enemy--terrorism.

Mr. KYL

Mr. KYL. This amendment doesn't deal with any question of payment for agent services. I presume we could do that. This amendment doesn't have anything to do with that. The problem that we have here is the former Director of the CIA created the policy because of some things that occurred in our past--if we are going to recruit assets, people who would do work for us, those people cannot have in their background human rights abuses. They cannot have that kind of background. That is a principle policy if you are recruiting somebody to act against another government. But when you are trying to infiltrate a terrorist organization, you are probably going to have to talk to people who themselves have pretty checkered backgrounds. If you could use those people--whatever their motivation; maybe they do it for money, or for some other reason--but if they are willing to give you information based upon their ability to find out what a terrorist organization is doing, then it is very valuable. As the distinguished chairman knows, our ability to collect information on these groups is very limited. Almost everybody in the community talks about the need for better human intelligence. Unless we are able to recruit the kind of people who could provide that intelligence, it is going to be pretty difficult for us to get it.

Mr. KYL. If I could respond, that is not the issue we are addressing here--the purchasing of information. What we are addressing is the recruitment of what the intelligence community calls ``assets''--people who would be useful in infiltrating an organization and getting information out of that cell and sharing that information with us.

Mr. KYL. Yes. I am happy to yield to the chairman.

Mr. KYL. I believe Senator Schumer will have some things to say in a moment. He may ask as well to be added. Let me be very clear about the intent of this legislation. This country has just suffered the worst terrorist attack in its history. All of us are focused on the victims. We are focused on the terrible devastation and the individual lives impacted. But, as policymakers, we have also been asked some hard questions by our constituents and those questions include things such as: Why can't our Government do something about these horrible crimes? As policymakers, we have to respond to that. We have such an opportunity. I use that word advisedly because in the circumstances that put us where we are today, that word seems hardly appropriate. But we do have an opportunity, given the fact we are here doing business on behalf of the American people, and that part of that business is the bill that relates to the jurisdiction of the Justice Department, the funding for that Justice Department, and the fact that the bill before us, in fact, even includes some revisions in the law with respect to the authority to deal with terrorism. It sets up a special new office in the Attorney General's office, a Deputy Assistant Attorney General, to deal specifically with terrorism, and in other ways deals with terrorism. Therefore, there is an ability for us today to focus on some additional improvements that can be made in our law to deal with terrorism. I hasten to say that this is not ``the answer'' to the problem of terrorism. In the first place, I do not think there is a silver bullet. There is no single answer. We already know that there are a whole lot of things we are going to have to do to improve our ability to detect it, to predict it, to stop it, and to enforce whatever action is appropriate after the fact. I am sure we will be creating commissions and we will be passing legislation. In fact, we are going to be passing an appropriations bill to begin to fund some of the cleanup of this in the very near future, I hope. There are a lot of things that we have to do. One set of things experts in terrorism have been telling us for a long time and the Director of the FBI has been telling us has to do with a few changes in the law that make it easier for our law enforcement people to do their job. I have a copy of just one of the three major commissions that have reported on terrorism. This is a report called ``Countering the Changing Threat of International Terrorism,'' a report from the National Commission on Terrorism. This was chaired by former Ambassador Bremer and Maurice Sonnenberg, both of whom testified before the Terrorism Subcommittee of the Judiciary Committee, which I chaired at the time. In fact, all of these commission reports have been the subject of hearings before our subcommittee, as well as numerous other hearings dealing with the subject. In addition to that, we have had a lot of testimony from the Director of the FBI and other U.S. Government officials all imploring us to do some things to help in this battle against terrorism. We took a run at some of these things. In fact, we incorporated some of the provisions of these commission recommendations in the bill that passed the Senate a year and a half ago. It is hard to put a percentage on it, but maybe half of the amendment before us tonight embodies those same recommendations. So we have already voted on half of the things that are in this amendment. Some of the others have come later. The point is that we dealt with these issues. There has been legislation dealing with these issues. There have been numerous hearings about these issues. They were in effect lying on the table waiting for us to deal with them. Unfortunately, it is the case that even though from time to time we have put some of these ideas out, there has always been a reason not to do it, to wait, to defer, to hold off on that, and that we will have a comprehensive look at this or whatever it might be. We have to set our priorities around here. But those of us who sit on the terrorism committee--the Intelligence Committee and other committees of jurisdiction--have become increasingly restless because we keep getting briefed on the potential for terrorist threats, and we keep imploring our colleagues to please let us act on these things. Finally, we have an event that is so horrendous and so deplorable that all of America is asking us to declare war on terrorism. Indeed, that should be our attitude, in effect. So we are now faced with a challenge from our constituents, and they are absolutely right. What are you going to do about it? Of course, the first question they have been asking us is, What have you been doing about it? My answer is there are a whole lot of things you are going to see us doing that we need to do. We can start tonight with a few substantive changes in the law that will make an impact on our ability to fight these crimes of terrorism. Some of this bill calls for analysis and reports about some additional things that we might want to do. It will give us the factual basis for acting in the future. Some of the provisions are actual operative provisions that will take effect the minute the President signs the bill to begin to give our law enforcement and intelligence agencies the tools they need to better fight these kinds of crimes. The former chairman of the Judiciary Committee has just talked about a couple of these provisions--the so-called ``predicate crime provisions.'' It is incredible our law enforcement agencies have to begin investigating crimes of terrorism under the auspices of looking into other crimes. Maybe there is computer fraud or credit card fraud and we will use that as we look to investigate crimes which are really crimes of terrorism. With this, we call a spade a spade, and say we are investigating terrorism. That is what we expect is the case. That gives us the legal authority to go to the judge and get the warrant or authority to move forward. In addition, we have an odd thing which crept into our policy that we change. It made sense when it was applied to other governments. We said we are not going to recruit people to spy on other governments guilty of crimes or human rights abuses. That is a policy. I don't think we were thinking about terrorism because it is pretty hard to infiltrate a terrorist organization with a Boy Scout. They sort of show. What you need are people who are accepted by these terrorist cells. Some of them are undoubtedly going to have some things in their background of which ordinarily we would not approve. But it is the only way they are going to get into the terrorist cell. We provide that kind of recruitment can take place.

Mr. KYL. Mr. President, it is my intention to be very brief, unless there is some objection to what we are doing, because I think all of us would like to get on with the adoption of this piece of legislation so we can conclude work on this bill. But just to ensure there is an adequate description of it, I would like to take a minute. I also ask unanimous consent that Senators DeWine, Sessions, and Thompson be added as original cosponsors.

Mr. KYL. Mr. President, I wish to associate myself with the remarks of my good friend, the Senator from California, and also look forward to working with the Chairman and Ranking Member of the subcommittee to resolve the funding disparity in the State Criminal Alien Assistance Program (SCAAP). Before I begin my comments about this important program and the level of funding in the Senate Commerce-Justice-State Appropriations bill, I want to state my full support for the $565 million funding level for SCAAP in the House FY 2002 bill. Through the Crime Control Act of 1994, the Congress created SCAAP to reimburse states and localities for the costs they incur incarcerating criminal illegal aliens. Such costs, it has been made clear, are the responsibility of the federal government. SCAAP has been authorized at $650 million, although total expenditures of the states and localities exceeds $1.6 billion per year. Though the financial burden to process and incarcerate criminal illegal aliens overwhelms the budgets of many states and localities, SCAAP has never been allocated its full authorization. Over the past five years, SCAAP has usually been funded at levels between $500 million and $600 million, which has provided states and localities reimbursement of about 30 cents for each dollar spent on incarceration. The Congress would be doing the right thing if it allocated $1.6 billion. In FY 2001, the state of Arizona and its localities incurred costs of well over $30 million to incarcerate criminal illegal aliens, and received $18 million in federal reimbursement--when SCAAP was funded at $585 million overall. To reduce the total 2002 SCAAP fund from its $565 million level to $265 million (a $300 million decrease), is unacceptable. Should funding be reduced to $265 million, all 50 states, D.C., and the increasing number of localities that incur costs, which now receive an unacceptable 30 cents for each dollar spent, will receive an even more unacceptable level of reimbursement. Mr. President, I very much hope that Senators Gregg, Hollings, Feinstein, Graham and I can work to resolve these issues before this bill is signed into law.

Mr. KYL. I want to assure the distinguished chairman that we are not changing the law. This is simply a guideline the previous CIA Director felt was needed. We are not changing the law. We are not doing anything untoward or unconstitutional. Our constituents are calling this a war on terrorism. In wars, you don't fight by a Marquis of Queensberry rules. The time to be overly punctilious about who you get to work with you to get information from the enemy ought to come to an end. I will assure the distinguished chairman that we are assured that in the past this has not been too much of a problem. But the problem is, our folks are a little reluctant to try to go recruit people with the current limitations in place because of the difficulties that presents. All this does is to change a guideline--no legal statutory change-- that simply says if they believe particular people would be useful in gathering intelligence against terrorist organizations--it is specifically limited to that--then they may recruit those people even though there might be something in their background that suggests they have a checkered past. If we cannot use informants against terrorist organizations, which by definition means there are no good actors, then we start this war with one hand tied behind our back. There are a lot of other changes that we make in this amendment. Let me just illustrate the nature of the things we do. I think almost all of them are going to be very uncontroversial. We ask for a study on the role that the National Guard could play in these events. We say it is the sense of Congress that we should commence a long- term research and development program to address catastrophic terrorist attacks. Our intelligence folks really need to begin R&D into techniques for dealing with things such as fiberoptic cable. It is very difficult to intercept communications. With things such as encryption, it is very difficult to hear what people are really saying. Times are a changing. We need to be able to develop the techniques to meet these new challenges. This simply expresses the sense of the Senate that we should get on with that. There is a section in this amendment that permits disclosure by law enforcement agencies of certain intelligence obtained by the interception of communications. We implement one of the recommendations of the Bremer commission, which said there is a lot of illicit fundraising for terrorist organizations going on in the United States. We need to get a handle on that. So again, we have the sense of the Senate in this amendment that Congress needs to do that. It is not a significant operational provision. We have a report required on controls on pathogens and equipment for the production of biological weapons. I think this is something everyone will support. There has been a lot of testimony on its need. There is a provision that our law enforcement people would like, which I think is eminently reasonable, and that is that they be reimbursed for the cost of professional liability insurance. When we send them off to do certain kinds of work and they may act in such a way that they are going to get sued, ordinarily the Government would be the party that is sued. But the Government is immune from suit, so the individual agents are sued. We would like to at least pay for part of their professional liability insurance when we have asked them to go off and do something. Then the final provision, other than the two Senator Hatch has already talked about, deals with authorities that the last Director of the FBI has implored our committee to give him for years. I will state the problem and then tell you what the solution to it is. When you do a wiretap, it is fairly straightforward. You go to a court, get an order based upon cause, and then you tap into the phone line. But with regard to computer attacks, whether it be a terrorist attack, all the way down to a hacker--and even hackers can cause a lot of problems, but what you want to do, hopefully in real time, is trace the attack back to its source, so you can stop it or you can prosecute the perpetrators. And if it is a terrorist attack, you want to get to it immediately. The problem is, these people are very clever. Someone, let's say in Afghanistan, will electronically hook into somebody in New Delhi. And then through that computer they hook into somebody at the University of California in San Francisco. And through that computer they hook into AT&T in Chicago. And through that computer they hook into the Pentagon. It is well known that you can do this. It is not apparently that difficult to do. Unfortunately, under the law, when the Pentagon starts getting hit, first you get a court order in Virginia. Then you go to Illinois and you get a court order there. Then you go to San Francisco and get a court order there. I don't know what you do in New Delhi. But the bottom line is, we need to have one place where you go get your court order, just like you do for a wiretap. That is what the FBI Director, on numerous occasions, asked us to provide, the authority to be able to do that. I can quote you page after page of his testimony asking for this. I will not do that in the interest of time. These are the kinds of things that law enforcement has asked us for. This combination is relatively modest in comparison with the kind of terrorist attack we have just suffered. Clearly, there are a whole range of actions that we are going to need to take, but the benefit of it is they have all been the subject of hearings or reports by these commissions. They are clearly the kinds of steps that we need to begin to take. And we can do that tonight on a bill which clearly relates to the subject and at least begin the process of assuring the American people that we are doing what we can do to stop these horrible events.

Mr. KYL

Mr. KYL. Mr. President, today our entire Nation confronts an evil inflicted upon it by those who resent our values and our way of life. All of us address the Nation as Americans, not partisans. That is as it should be when we are hit by a tragedy of this magnitude. I first want to join my colleagues in assuring our fellow Americans our Government is carrying on the business of the people. Our Nation has not bowed and will never bow to violence and terror. Second, I join in expressing our love and concern for the victims of these evil deeds. We will never forget them. Third, if our words are to have effect, we have to change the way we deal with terrorism. Things have changed. No nation can ever be completely safe from threats to its security, but sadly today our Nation is forced to recognize what many of us have long known: that America is vulnerable to attack. But there are steps we can take to make it safer. As members of the Intelligence Committee, and as chairman and ranking member of the Senate Judiciary's Subcommittee on Terrorism, respectively, Senator Dianne Feinstein and I have held a series of hearings on recommendations about how to deal with terrorist threats. Some have to do with the overall organization of our Federal Government to deal with these threats and the aftermath of such attacks. Others bring Federal law into conformity with law enforcement and the intelligence community needs to pursue evidence and information necessary both to thwart terrorist attacks or to prosecute the perpetrators. Former FBI Director Louis Freeh testified before our Terrorism Subcommittee for several years that he needed certain legal authorities to investigate these kinds of crimes, including things such as trap and trace authority which would give the FBI greater ability to trace computer crimes to their source; additionally, recommendations to put countries on the terrorist lists that are not currently there but that ought to be; to make a better effort to limit fundraising of terrorist organizations right here in the United States; to examine the so-called Deutch requirements pertaining to criteria for recruiting agents--this cripples our efforts to infiltrate certain terrorist organizations--to enhance information sharing and cooperation between law enforcement and intelligence agencies such as the FBI and the CIA; to examine the safety of our airlines and our airports. Clearly, measures must be taken to increase security here. Two years ago, the major airlines at Boston's Logan Airport and the Port Authority were found to have committed 136 security violations. In the majority of incidents, screeners hired by the airlines to staff checkpoints in terminals routinely failed to detect test items such as pipe bombs and guns. These glaring security failures must be the subject of prompt congressional scrutiny. We must reevaluate our intelligence-gathering activities worldwide and devote appropriate resources. The Nation had no warning of this attack, though it was clearly long planned and very well coordinated. I join my colleagues in calling for prompt hearings to examine this failure of our intelligence network. We must now assess how we ascertain what information is credible about attacks from abroad and how we might have missed what was clearly an elaborate plot to undermine and demoralize the United States. In the process, we should recognize the information which would justify the action is very difficult to come by in cases such as this. A very important point is that our Nation must decide how it is going to deal with terrorists and the nations that harbor them after attacks of this kind. President Bush, in his statement yesterday, emphasized this point. Terrorists are frequently protected internally by certain nations or they are very much on the move and difficult to find. But after we have identified who is responsible, if the perpetrators cannot be brought to justice in the United States, then, as other speakers have noted, we must be prepared to take other appropriate action. The legal authority to do that could be in a new form of declaration of war, a war on the terrorists who engaged in this evil activity, as well as those who harbor and support them. In the end, the greatest way for us, as leaders, to confirm our commitment to the victims of this evil is to dedicate ourselves to a real and forceful battle against this terrorism. Action not words, that is the challenge before us. As Prime Minister Winston Churchill said in 1940, ``Let us brace ourselves to our duties.''

Mr. KYL

Mr. KYL. Mr. President, a consensus emerged during the 1990s with regard to the national security of the United States. That consensus was and remains that the proliferation of weapons of mass destruction-- nuclear, chemical and biological--and their means of delivery constitute the most important threat to our national security. There is also widespread acknowledgment that a number of rogue nations, and particularly China, represent the new national security challenge for the United States. Yet, this body, the U.S. Senate, is about to pass with overwhelming support a major piece of legislation that stands in direct contradiction to the objectives of U.S. national security policy--to limit the spread of weapons of mass destruction and their means of delivery. This is not hyperbole; it is a simple statement of fact. I acknowledge that the administration has endorsed S. 149. A campaign pledge has been kept. But the long-term ramifications of the vote we are about to take should not be underestimated. S. 149 received the strong opposition of the former chairmen, now ranking members, of each committee and subcommittee with responsibility for national security. It can in no way be considered to represent a prudent balance between commerce and national security. It is, in fact, heavily weighted in favor of the former, with scant regard for the latter. The list of exports with which we have traditionally been concerned, the Commerce Control List, has 2,400 items on it. It is important to note that exports of these items are licensed, not prohibited. Contrary to the rhetoric of some, it also is not the shopping list of someone making a Sunday trip to Radio Shack. It is, rather, a compilation of esoteric items that have military applications, including for the construction of nuclear weapons and ballistic and cruise missiles. The amount of commerce at issue is minuscule relative both to the amount of U.S. exports and to the size of the gross domestic product. Restrictions or limitations on the export of items on the Commerce Control List do not now, nor have they ever had a deleterious effect on the U.S. economy, or on U.S. competitiveness. They do, however, represent the regulatory manifestation of our national security requirements and the role our moral values should play in the conduct of foreign and trade policies. Some of us who oppose this bill support permanent normal trade relations with China. And, yet, we oppose this bill. We oppose it because it will, by design, open the door to the export without government oversight of the very items and technologies that contribute to the threats to our security that justifies a defense budget of over $300 billion per year. When we debate national missile defense over the months ahead, we should not hesitate to reflect on the connection between what we do here today, and what those of us who support missile defenses hope to do tomorrow.

Mr. KYL

Mr. KYL. Madam President, let me explain what this amendment does and indicate to my colleagues that I believe I have the concurrence of the chairman of the committee and the ranking member of the subcommittee and have met this morning with the ranking member of the Banking Committee who worked out the language with us. In fact, much of this is his language. This is the amendment I spoke to yesterday regarding the post- shipment verification that sometimes has to occur when we say, in the granting of an export, we will grant the license to send the item overseas but for a peaceful purpose, for a commercial purpose, or research, or university, a business purpose; we don't want you to take this item and put it in your defense facility or a nuclear weapons facility, something of that kind. We are going to verify, after we ship it, that it went to the right place. Remember these are dual-use items. They have two different uses. They may be very useful in a private way, business way. They may also be useful in a military way. Let me give an example. Not too long ago, some folks in Germany developed a very important medical device called the lithotriptor which, with a high-energy beam, literally zaps kidney stones so they break up into a million little pieces and surgery is not necessary to remove them. It is a very important medical treatment now for people. It is nonintrusive, no surgery, and has a great success rate. These are very sophisticated pieces of equipment. They have some special switching components in them. It turns out that Iraq has found that those switches are useful in their nuclear weapons program. This is a good example of a dual-use item. It was not invented for defense purposes. It has an item in it that can be used for weapons. We know that. We don't want that item to be used for that purpose. Saddam Hussein has ordered 50 of these. I don't think there is a need for 50 lithotriptors in Iraq, frankly. We want to be careful about the export of items that are available on the market. Any hospital can buy a lithotriptor if they have enough money. They are available. By now I am sure there are more companies than just the one German company that make them. These are items that can be acquired. They have dual-use capabilities. In the granting of an export license on this kind of product, you have to be careful that it is not used for military purposes. It may be that the example I used isn't technically correct in the way the bill would work, but I think I make my point. The bill has a provision in it which says that if a company to which you sell, let's say a company in China, uses this product improperly, or they don't let you inspect to see where they have used it to verify that the shipment went to where it was supposed to go, then the Secretary shall cut that company off from further exports; they can't buy anything else from the United States. But since countries such as China have established a rather gray relationship between the Government and businesses, there also needs to be a way of making the same point with the Government of China or any other government. I am not trying to pick on China. There happen to be some very egregious examples of the Government of China right now not living up to agreements or post-shipment verification. We need to have some kind of enforcement mechanism in a country such as China as well. I proposed that we have the same kind of provision and say if the Chinese Government won't permit a post-shipment verification, then the Secretary shall stop such exports until they begin to comply. Well, supporters of the bill said, ``That is too drastic; why don't you say `may' so that the Secretary has total discretion?'' I was willing to do that. That would have been the simplest way to solve the problem. That is something I would like to offer in the spirit of cooperation with my friend Phil Gramm, who said, ``Let's try to work a few of these things out; since we know the bill will pass, you can make it marginally better.'' So we sat down with him. Frankly, the language we are offering is not what I would have personally offered, but it is acceptable to him and it marginally makes the bill better. I will read it and offer it. It is simple. It says: If the country in which the end user is located refuses to allow post-shipment verification of a controlled item, the Secretary may deny a license for the export of that item, any substantially identical or directly competitive item or class of items, any item that the Secretary determines to be of equal or greater sensitivity than the controlled item, or any controlled item for which a determination has not been made pursuant to section 211 to all end users in that country until such post-shipment verification is allowed. That latter reference to section 211 has to do with the item subject to foreign availability. It would have been simpler to say the Secretary may deny a license for any item on the list until post- shipment verification is allowed by the country in question. Total discretion of the Secretary would have been easier. We have created jobs for lawyers now. I am not necessarily against that, but when we have terms such as this in the statute, we are going to have litigation on what it means. It would have been easier to do it the other way. But this is the language I will offer. The Secretary, at least with respect to some items on the control list, can say to a country such as China, for example: Until you are willing to allow post-shipment verification of items A and B, which you already have, then we are not going to grant a license on items X, Y, and Z. They can pick what those items are if they so choose. In closing, I will give examples of what would happen to illustrate the need for this particular provision. In 1998, very recently, China agreed to allow post-shipment verification for all exports. They signed an agreement. But the Cox Commission issued its report and deemed the terms of the agreement wholly inadequate, from the U.S. point of view, to ensure that these verifications really occur. The amendment I proposed is designed to try to fill a void the Cox Commission identified in the U.S.-China agreement. For example, the Commission's report discusses a number of weaknesses in the agreement as it relates to the export of high-performance computers. According to the Bureau of Export Administration, out of 857 high performance computers that have been shipped to China, only 132 post-shipment verifications have been performed. Some of these have been outstanding for a long time. First you get foot-dragging, and then you get a ``no.'' On other occasions they say: If you allow us to do the post- shipment verification, that ought to suffice. But, of course, it does not. These items would not necessarily be subject to the terms of this section, although they might. I think it illustrates the nature of the problem that exists if you don't have an enforcement mechanism. You have to have the will to enforce. I think there will be great questions as to whether or not the Secretary, in the exercise of his discretion, is going to be willing to deny a license to an American company which, after all, hasn't done anything wrong and is simply trying to make a buck, in order to get China to enforce the limitation. Let me respond to that point. Any American company which understands that the item it is wanting to export to a third-tier country, countries of concern here, has dual-use capability has to exercise some responsibility. I think it has to take some of the consequences of the person to whom it is exporting not being willing to guarantee that the item is going to be used for appropriate purposes. So I don't think you can make the case that all we are doing here is potentially punishing American businesses that are totally innocent and therefore we should not really be very forward-leaning in the enforcement of this section. The fact is that any American business worth its salt should want to ensure that the terms of the export license are being complied with. It doesn't want to sell dual-use technology to a country that could use it against us militarily. It ought to be willing to ensure that the verification of the end user has in fact been established and enforced. So it seems to me there is no argument that all we are doing here is hurting American businesses. Any American business would have the same interest as the U.S. Government in ensuring that the end user is in fact who it is supposed to be, both from a national security standpoint and being able to make future exports. There has even been an idea advanced, that I think has some merit, which would put all of the burden on American business. It would basically privatize this enforcement and say the Government is going to get out of this business; it cost a lot of money, and we have trouble getting in the door to verify these things. Private industry, in effect, has to certify that the item it sold abroad went to the user that filled out on the form the certificate. And if the company isn't willing to verify that, or isn't able to certify it under penalty of some financial detriment here in the United States, then it is going to become much more careful about to whom those items are sold and how the post-shipment verification is actually implemented. So my suggestion to American businesses is, if you really want to continue to be able to export, then help us work out a system that ensures that these items you are exporting, which have a dangerous potential use, get to the proper people and are not misused. If you are not willing to help us do this and if you are going to argue against enforcement of a section such as this, then something worse could happen. You could have the enforcement responsibility put on your shoulders. And if you are not able to certify that it went to the right place, you are not going to be able to make exports in the future. Everybody should have an interest in making this work. Let me close with a note about some testimony that verified the need for this. David Tarbell, Deputy Under Secretary of Defense for Technology Security Policy, testified in July at a hearing before the House International Relations Committee regarding the right to perform post-shipment verifications. He very diplomatically said: The Chinese government has been unwilling to establish a verification regime and end-use monitoring regime that would get all of the security interests that we are interested in to ensure that items that are shipped are not diverted. Impressed further by Chairman Hyde about whether the post-shipment verification regime is a failure, Secretary Tarbell delicately said: I am not sure I would characterize it as a complete failure, but it is close to it. It is not something I have a great deal of confidence in. The point here is to create something that we do have confidence in, that we know would work, that we can enforce and ensure the safety and security of the United States in the future, knowing we have not allowed the wrong people to get the wrong things into their hands in a way that comes back against the United States in a military way. Therefore, I urge my colleagues to support the amendment I have offered and which has the concurrence of Senators Gramm and Enzi and, I believe, the Senator from Maryland, Mr. Sarbanes.

Mr. KYL. Madam President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. KYL. Madam President, I have an amendment I send to the desk and ask for its immediate consideration.

Mr. KYL

Mr. KYL. For example, the bill prohibits export controls on items that contain controlled components comprising less than 25 percent of the total value of an item and sets an extremely high standard for the President to meet in order to control such items. Nations such as Iran and Iraq spend millions of dollars to establish elaborate procurement companies with front companies and shadowy middlemen in order to obtain items that in some cases really only cost a few thousand dollars. These nations could easily take advantage of this by purchasing the larger items that contain the desired part. There are a lot of examples of this, where you purchase the larger item, and all you want is the little piece embedded in it. That is what you need for your particular nuclear program or missile program. We all know that the particular item is highly sensitive, that it has military application. But in the bill, if it is only 25 percent of the total value of the overall item, then it goes, notwithstanding the fact that it can be easily taken apart, that the sensitive item can be pulled out and put onto a missile or a nuclear weapon or whatever the use of it might be. That doesn't make sense. Finally, the current bill weakens current controls by treating export controls adopted for foreign policy reasons as a sanction. The bill's provisions in this area subject such export controls to a process that is intended to make it as difficult as possible for either the President or the Congress to impose or maintain sanctions. And it requires that all such export controls sunset every 2 years. Let me describe a little bit further the problems with the foreign availability and market exemptions. As I said, the bill calls for the creation of an office at the Commerce Department charged with performing studies of whether products controlled for export by the Federal Government are available from foreign suppliers or are widely available in the United States. At least at first blush it would make some sense that if you can get this thing anywhere, then why should the United States punish its own people for exporting the item, but there is more here than meets the eye. The President may only maintain export controls on an item if he certifies--and I am going through the bill--one, that the absence of an export control on the item would be detrimental to the United States national security and, two, there is a high probability that the foreign availability of an item will be eliminated through multilateral negotiations within a reasonable period of time. Furthermore, the President may only maintain controls on an item for 6 months at a time, up to a total of 18 months, if he has not reached some agreement with the foreign suppliers to limit availability of the item. The President of the United States, the ultimate person in our country charged with our national security responsibility, is limited by this legislation to only provide three 6-month extensions of a limitation on the export of an item under this provision of the law. Otherwise, after that, it goes. The bill has a provision that says the President has an opportunity to try to negotiate with the foreign supplier a limitation on the export of the item to a third country. Why would any country have any incentive to negotiate that when they know that after 18 months the lid is off? It seems to me that it is very important for us to try to change provisions such as this in the legislation to try to tighten up the situation in which there is a finding of foreign availability but there is an important reason for the United States to restrict the transfer of an American component. One example of this has to do with comparable quality. There is nothing in the legislation as it is written right now that requires there be comparable quality between the products. You can easily have something called a computer that is available from two or three countries on the foreign market and a computer that is available in the United States. They may be roughly the same price and they may have roughly the same capacity, but that doesn't mean they are equal in quality in the least. There are many qualitative factors that differentiate products. One reason why people want to buy American products is because of that built-in quality. Maybe the United States product is less prone to break down. Maybe it has better service contracts. Maybe it is more robust, it can stand more hustle and jostle. The fact is, there are a lot of different reasons why two roughly comparable products may be of substantially different quality. When we go to the auto dealer to buy a car, some of the things we look at are: how will it stand up? What is its service record? How much do the repairs cost? All of these different things have to do with quality. Yet there is nothing in this legislation that permits anybody to look at the quality aspect. So a company in the United States says: Look, one of our foreign competitors is beating us out here; they are selling a product that is roughly comparable to ours in price and capability so lift the restriction on us. There is a matter of foreign availability involved. Somebody in the United States needs to say: Yes, there is a matter of foreign availability. But the reason you are being undercut is because that is a product they can sell cheaper that countries will buy because it is of lesser quality, but the fact is, they would rather have your product because they know the quality is better. We can deny them the quality of the United States product for their military use if we have serious export controls. If we have nothing but this test of foreign availability, then the sky is the limit. The standards in the bill for maintaining controls on a product are also very difficult to reach. The President may only maintain export controls if ``decontrolling or failing to control an item constitutes a serious threat to the national security of the United States, and export controls on the item would be likely to diminish the threat to, and advance the national security interests of the United States.'' There are a lot of items on the list. For the President to have to go through every one and try to justify meeting a standard such as that is unrealistic. By incorporating into law the foreign availability and mass market criteria that ignore both our moral responsibilities and our vital if, for proprietary reasons, difficult to articulate technological advantages, this legislation would open the floodgates to an outpouring of highly sensitive goods. Foreign countries want American technology. The fact that they can purchase roughly comparable items elsewhere does not detract from the fact that we are the world leader in most key technologies and that the United States and its corporations should not be in the business of advancing the military capabilities of potential enemies of the United States. This matter of foreign availability is going to be forever subject to interpretation. It is my view that the Department of Defense should have a lot more in the way of a seat at the table to influence this process. The best example--at least one good example--of this situation is the export of high-performance computers. Our technology exceeds that of all foreign competitors. Yet our companies are asking for more liberal controls on this basis of foreign availability. As I said before, the Clinton administration, for all practical purposes, eliminated restrictions on the sale of these computers. But because of the 18- month limitation I cited before, the reality is there is almost no way to control, at least after 18 months, the export of these items. It is a very dangerous situation. The Wisconsin Project on Nuclear Arms Control to which I referred before addressed this issue. Let me quote one paragraph: This [foreign availability] pushes export control down to the level of the worst abuser. Let me restate that: This [foreign availability] pushes export control down to the level of the worst abuser. Germany sold Iraq more pieces of dangerous equipment before the Gulf War than all other countries combined. If American policy had been as lax as Germany's, Saddam's bomb program would have advanced much faster. And for exports to Iran, U.S. policy would now have to be relaxed because of sales by Germany, Japan and Switzerland. Moreover, U.S. officials acknowledge that estimates of foreign availability are too imprecise to dictate export policy. That is from the Wisconsin Project on Nuclear Arms Control. They are interested in trying to limit the export of this kind of technology that would spread nuclear technology around the world, nuclear weapons technology. Their point is that the United States should not be dragged down to the least common denominator. Simply because a country in the world is willing to sell a rogue nation whatever it wants doesn't mean that the United States should permit that same kind of export. More important is the fact that under this bill if Iraq or Iran or North Korea, for example, seek to sell China high-technology items that can be used in constructing weapons of mass destruction and their means of delivery, then U.S. companies would be similarly free to sell such items to China. The bill does nothing to prevent such a situation from occurring. So here you have a case where it is not one of our allies such as Germany; it is North Korea, Iran, or Iraq. If they are willing to sell an item to a country such as China, the provisions will say the United States must be willing to do so, too. With Iraq and China's penchant for constructing these well-configured front operations to conceal their activities, it is not outside the realm of possibility that they could surreptitiously attain high-tech items to be ``sold'' to China. Indeed, countries such as Germany and France that have sold weapons of mass destruction capabilities to Libya and Iraq should not be setting the tone for U.S. export control policy either. If China sells dual-use items to Pakistan, does that qualify as ``foreign availability'' under this bill? Yes, it does. Is that the test we want to apply here--if a country such as China sells a dual-use item to Pakistan, therefore it is available on the foreign market? China's record as perhaps the worst proliferator in the world does not detract from its value as a market. It will receive dual-use technologies under the export regime established by this bill. The risk of those technologies ending up in countries such as Iraq should not be ignored. The bill contains a provision, section 301, that would prohibit the President from placing controls on ``the export from a foreign country (whether or not by a United States person) of any item produced or originating in a foreign country that contains parts or components produced or originating in the United States.'' Section 301, which is the principal foreign policy control provision of the bill, places unreasonable standards for controlling the item of technology for foreign policy purposes. By statutorily requiring a finding that a ``serious threat''--not just a ``threat''--would be posed to U.S. interests by the export of the item in question, the bar has been raised very high indeed. What to do, Mr. President? We are going to offer suggestions how to improve the bill. Some changes have been made based on suggestions we made, but there is far too much that has not been done in response to the concerns we have raised. By ``we,'' I don't hesitate to note that we are talking about the chairmen, primarily, of the committees of jurisdiction with a concern of national security--chairman of the Armed Services Committee and Ranking Member Warner, the ranking member of the Intelligence Committee, the ranking member of the Foreign Operations Committee, the ranking member of the Government Operations Committee, I chair a Subcommittee on Terrorism and am a member of the Intelligence Committee and Senator McCain, the ranking member on the Commerce Committee. These are people who have expressed concerns about provisions of the bill, as I have today. We have tried to get some changes made in the bill. We will continue to work with the sponsors of the bill and the administration to try to make some additional changes that are a little bit more in line with what we believe are true national security interests and closer to the version passed by the House of Representatives. Eventually, there is going to have to be a compromise between the House and Senate. We have amendments we would like to offer. One I will describe briefly. I will offer it later on, unless we can work this out. There is a possibility that we can work it out. It has to do with the question of how you verify an agreement with another country to inspect after the transfer has been made, to make sure that the shipment has gone to the place they said it would go. Remember, we are talking about dual-use technologies. They say: We want to buy item X to use in our commercial sector. And you say: If you use it in the commercial sector, that is OK, but it is not OK to use in your defense establishment. They agree, so the item is shipped. Somebody needs to go check to make sure the use is indeed in the commercial sector, that they haven't surreptitiously sent it across the street to the defense plant to be used for illicit purposes. Under regimes that exist with China today, there is very little postshipment verification permitted by China. If we are going to have a trusting set of export controls, as we have in this legislation, we need to have some way of enforcing the agreement these other countries make when a limitation is placed upon a license that it must be used for commercial, nondefense purposes. The bill, right now, doesn't provide an enforcement mechanism with respect to these countries. It does with respect to companies but not countries. But in the case of China, for example, which has permitted less than one-fourth of the transfers with respect to satellites to have postshipment verification, notwithstanding its agreement in 1998 that it would do so, we need to have some kind of enforcement that, in fact, when we sell them something for commercial purposes, that is what it will be used for. The only way to do that is to change a provision of the law which would enable us to go in and inspect--not have the Chinese do it for us, which is sometimes what they do today. They insist on doing their own inspection. We need to verify postshipment that the item went where it was supposed to go. If a country such as China does not permit that, or we find they have violated the terms of the agreement, then we have to have the ability to say no to future licenses. Under the bill, the only thing you can say no to is that same kind of item. Clearly, the U.S. Government needs a broader authority. If the Chinese are cheating on satellites, for example, and then they want to buy nuclear components ostensibly for a powerplant, but we also know it has nuclear weapons capability, we want to have the ability to say no until they show us they are abiding by the agreement with respect to satellites; we are not going to export something that could be used militarily by their armed services for a nuclear program. I have suggested language to the proponents, and I hope they will be receptive to a change that would give the U.S. the ability with respect to subsequent license decisions to say no if, in fact, the U.S. believes there is a lack of cooperation by this country. There is so much detail one could get into here, and there are so many changes I think we should make. I hesitate to go further with the description. I have tried to generally describe some of the aspects we think are wrong. I think it is important for us to have the ability to offer some amendments, describe specifically the improvements we think should be made in the bill, and hopefully throughout the course of the proceedings we will be able to come to some agreement that will make the bill a little better so we can get on with the work of dealing with the House of Representatives so we can conclude work on this legislation. I know it is important to the administration. I don't want to hold it up because of that. If the President says he wants to have a bill on this subject, that is good enough for me. I am willing to try to have that happen. We hope we can get work done on improving the bill in the next day or two. Assuming that we can, my guess is that consideration of the legislation will go more quickly. I appreciate the indulgence of my colleagues. Later, I will discuss the specific amendments I think would be appropriate--not in detail, but by general subject matter--and that will enable us to decide how we can move forward on the legislation at this time.

Mr. KYL. This mentality that enforcing the law could further fray relations with countries such as China, for example, lies at the core of much of what we are debating with respect to the legislation before the Senate. It is the continued relevance of robust export controls on the one hand versus legislation that is explicitly designed to weaken those controls in order to enhance trade on the other. While the case that the Washington Post article discussed involves Chinese technology transfers to Pakistan, these actions on the part of foreign countries with records of proliferating militarily sensitive technologies are central to the overall debate over U.S. controls on exports to countries that in turn transfer knowledge and hardware to third countries to which the United States would not currently export such items or knowhow. In other words, it is the transfer of this technology through a middleman, so to speak. In addition to this most recent China-related proliferation development, the U.S. Customs Service last week arrested two United States-based Chinese nationals involved in smuggling, and smuggling extremely sensitive military encryption technology to China--another violation of the Arms Export Control Act. While the encryption case does involve the Arms Export Control Act and not the export administration regulations which are the issue today, it does nevertheless significantly highlight the scale of the problem that confronts the United States in preventing certain countries from either legally or illegally obtaining militarily sensitive technologies that could most assuredly be used against the United States or our allies in a future conflict. There exists a mistaken notion that the end of the cold war eliminated the national security justification for controlling exports in technologies with both civilian and military applications, but nothing could be further from the truth. The President, in April, announced his decision to sell to Taiwan $4 billion worth of weaponry to better defend itself against the growing military threat from China. That threat, already considerable, involves primarily conventional arms, including the 300 missiles currently targeted against Taiwan, a number that is projected to grow in the future. A decision to liberalize controls on dual-use technologies, every one of which by definition have military applications, while acknowledging, as we all do, the very real threat posed by China to Taiwan and to U.S. interests in the Far East, is therefore inconsistent with and clearly contrary to our national interest. Make no mistake, much of this debate is about China. The so-called rogue nations are at issue here only to the degree that other nations such as China, and at times even the United States, end up selling military-sensitive items to those countries, either directly or, as I said before, through third parties. So this is just one example of the fact that the end of the cold war has not ended the necessity of keeping an eye on the kind of dual-use technologies sold abroad because in the end those technologies could be used against the United States or our allies. Let me just give some examples of things that have happened with exports in the not too distant past that illustrate this point. In July of 1998, IBM's east Europe/Asia subsidiary entered a guilty plea for the unlawful export of computers to Arzamas-16, a Russian nuclear weapons laboratory. Silicon Graphics similarly illegally sold high-performance computers to Russia's Chelyabinsk-70 nuclear laboratory. This past July a company in my home State, Arizona, settled charges that it had illegally exported diode lasers to Israel, 16 times between 1995 and 1997. And, of course, there is the 1994 sale by McDonnell to China National Aero-Technology Import-Export Corporation of an entire warehouse full of machine tools for the production of modern military aircraft and missiles continues to represent not just a highly inappropriate export but the problem of diversion of exported dual-use technologies to the noncommercial side of the equation. Some of the machine tools in question were diverted to a factory that manufactures Silkworm missiles--the very missiles that now line Iran's coastal waters on the Persian Gulf. These are just a few examples of what can happen. When the post-World War II export control regime was established in 1949, there was an explicit recognition of the difficulties that would be faced in regulating militarily sensitive items that also had benign commercial applications and that should not necessarily be denied to all potential customers. It is a problem. The principal country at issue then, of course, was the Soviet Union, with China a secondary concern. The success of United States unilateral, as well as COCOM multilateral export controls in keeping many vitally important dual-use technologies out of the hands of the Soviet Army was an important component in the national strategy that ultimately resulted in the Soviet Union's demise. There is no denying the gravity of the problems we faced after the cold war when sensitive technologies exported by western countries to Iraq were suddenly threatening United States and allied troops in the Persian Gulf war. The lack of a more far-sighted export control policy--and I would be remiss were I to ignore the geopolitical context in which legal if questionable sales to Iraq occurred during the Iran- Iraq war--was instructive as to the nature of the problem we face today. It must be assumed that nondemocratic regimes will exploit dual-use technologies for military purposes. So the end of the cold war has not reduced the need for us to continue to be concerned about the export of these dual-use items. I would like to take a couple of minutes to review a classic case of dual-use technologies being permitted to be sold a nondemocratic regime known to be interested in developing weapons of mass destruction and the means to deliver them: the case of Gerald Bull's Supergun. The British author James Adams back in 1992 wrote about Iraq's covert efforts at acquiring the components with which Canadian ballistics expert Bull was to assemble a cannon capable of firing large nuclear payloads to Israel. We can discuss the military utility of that gun, had it not been destroyed during the Persian Gulf war, all we want. What we can't ignore is the manner in which it was being built. It is also indicative of the type of problem the Customs Service recently uncovered with regard to Chinese efforts at attaining United States military encryption technology. This Adams described in his book on the life of Gerald Bull: British intelligence knew that . . . the Iraqis had already established a vast international procurement effort . . . [I]n information was discovered in Europe that suggested two British companies, Walter Somers and Sheffield Forgemasters, were also implicated in the scheme [in addition to a Spanish company]. At the beginning of April, a few weeks after Jerry Bull had been killed, SIS (British intelligence) was tipped off that a shipment of parts destined for the supergun was about to be sent to Iraq . . . On Tuesday, April 10, 1990, customs officers examined a number of crates stored in the warehouse on Quay Seven of Tees Dock . . . Eight wooden cylinders, each twenty-five feet long by three feet wide, were marked ``Republic of Iraq, Ministry of Industry and Minerals, Petrochemical Project, Baghdad, Iraq.'' The crates were about to be loaded onto the Gur Mariner, a ten-thousand-ton Bermudian-registered cargo ship that was due to sail for the Iraqi port of Umm Qasr. The ship had been chartered by the Iraqi Maritime Organization. Inside each crate was a smoothbore barrel that had been carefully machined so that it fit perfectly into the next barrel, with the tube tapering toward one end. Adams goes on to write: ``We are considering the possibility that the gun was manufactured in Britain for the Iraqis,'' said a spokesman. ``It is capable of firing a nuclear shell, or anything else you wanted to put on top of a one-meter shell, and could easily hit Iran or any other Middle East spot.'' [Note: The gun was, in fact, immobile and constructed against a mountain pointing directly at Israel] To conclude the item from the book: After the raid on the company premises of Sheffield Forgemasters, customs officials raided another company, Walter Somers . . . the maker of high-technology heavy forgings. They also claimed they had been supplying forgings to an Iraqi petrochemical project. Both companies claimed that the forgings were steel pipes and had no military application . . . The company that had made the pipes, Sheffield Forgemasters, claimed not only that the pipes were for the oil industry but that the company had received permission to export them from the Department of Trade and Industry. Finally, on this case, Adams notes that: In fairness the DTI (Department of Trade and Industry) was not familiar with the latest intelligence, and neither the intelligence community nor the MOD (Ministry of Defense) was made aware of the petrochemical contract. In addition, the DTI employs ninety-four staff members to vet seventy thousand export applications a year . . . It was precisely this kind of bureaucratic fumbling that had allowed Iraq to build up such an effective military machine in the face of international arms embargoes. Forgive the digression onto an 11-year-old case, but it is highly relevant to our discussions on S. 149, the Gramm-Enzi export facilitation bill. S. 149 places inordinate control over dual-use exports in the hands of the Federal agency least capable of making informed decisions on the military applications of dual-use technologies and most interested in increasing U.S. exports, namely the Department of Commerce. So the point of discussing the case is to illustrate that if you do not have the involvement of the intelligence community, which knows what is going on, or of the Department of Defense, that if you only have the Department of Commerce approving the export of these items, they are going to look at the face value of the application and assume it is for a benign commercial purpose. Without the knowledge of the intelligence community or the defense community, it will not necessarily know that in point of fact there is an ongoing specific effort to use that technology for very aggressive military purposes. That is why you need an export regime which enables all of the communities of interest to be able to be a part of the decisionmaking process: To put the items on the list that need to be reviewed, to review the items that are subject to review, and to grant whatever licenses are appropriate to grant. It is a big mistake to simply assume the department that is in charge of commerce is going to be able to make those decisions using all of the criteria that should inform the decision. I go back, then, to this past weekend's stories on the sanctioning of the Chinese company for transferring missile technology to Pakistan, bringing this full circle. That simply illustrates the continued relevance of cases such as the one that I described in the story of Gerald Bull and the Iraqi supergun. Take a look at the web site of the China Metallurgical Equipment Corporation (MECC), the company sanctioned. This was the subject of a Washington Post story. On the surface, this is a legitimate company with legitimate customers. As its web site states, ``. . . the core enterprise of the China Metallurgical Equipment Group, MECC is involved in sectors of metallurgy, nonferrous metals, building materials, environmental protection and light industry.'' It does business around the world and considers itself a private enterprise. While I support trade with China and certainly encourage privatization of its industries, we cannot let this hope that China will privatize industry and that we can expand trade with China get in the way of our national security interests. China Metallurgical may qualify as a private-sector company. It operates, however, under the thumb of an autocratic regime that is the single worst proliferator of technologies associated with nuclear weapons and ballistic and cruise missiles, and which as violated numerous agreements that ban such proliferation. There should also be no mistaking the fact that we are not talking about technologies that anyone can purchase today at Radio Shack, which is something that sometimes you hear. We are talking about technologies with applications for the design and construction of weapons of mass destruction and their means of delivery. Cavalier assertions about the availability of these items in your neighborhood electronics store trivialize the gravity of this issue. The case of the Iraqi supergun involved pipe sections forged with highly advanced machine tools for extreme precision. At the end of the day, though, they were still something as otherwise seemingly innocuous as pipe sections. If supporters of S. 149 have their way, the kinds of technologies that will be available for export will be far more threatening than the Iraqi supergun. For example, the Commerce Control List, which is maintained by the Department of Commerce and which lists dual-use items for which a license may be needed, has 2,400 items on it. The military applications of most of them would, in the wrong hands, directly threaten the security of the United States. For example, thiodiglycol, which admittedly now falls under the Chemical Weapons Convention and its production is being phased out, is nevertheless a dual-use item. An industrial solvent, 500 tons were sold by the Belgian company Phillips Petroleum to the Iraqi State Enterprise for Pesticide Production. In 1988, the United States company Alcolac International exported over 300 tons of it to Iraq. It is believed that these shipments were diverted for use in the manufacture of mustard gas. Aluminum alloy, which has a number of legitimate commercial industrial applications, is also used in the manufacture of rocket casings. China developed a welded aluminum alloy for use in its Yu-3 torpedo. Ceramic composite materials are used in commercial electronics, but are also used in the construction of ballistic missile reentry vehicle antenna windows. Side-looking airborne radars are on the CCL, yet have a very obvious application for foreign military aircraft against which we may find ourselves fighting some day. Something as simple as wind tunnels, used in measuring the aerodynamic performance of airframe designs, are routinely used in the design of military fighter jets and missiles. The Wisconsin Project on Nuclear Arms Control has noted, with respect to arguments that we should ``build higher walls around fewer goods,'' that ``Saddam Hussein's scientists were masters at upgrading medium- tech items to `chokepoint' level. The Iraqis imported equipment that was dual-use . . . The Iraqis bought dual-use isostatic presses to shape A-bomb parts, dual-use mass spectrometers to sample A-bomb fuel, and dual-use electron beam welders to increase the range of Scud missiles. One of those Scuds killed U.S. troops sleeping in Saudi Arabia.'' That was the largest loss of life in any single attack in the Persian Gulf war. There are many more examples. A United States company headquartered in Rockville, Maryland, American Type Culture Collection, was the most prominent of a long list of United States biological laboratories that exported pathogens to Iraq during the 1980s. Biological pathogens represent the penultimate ``dual-use'' item. Even the Biological Weapons Convention permits the possession of otherwise banned pathogens for the purpose of developing vaccines. We have just seen on the news this morning the breaking news about the work the United States is doing on certain strains of anthrax for purely defensive purposes because we understand those were developed for offensive purposes by countries. Without some kind of antidote to them, their use against other people would, of course, be devastating. That is why we need to develop the technology to find a defense against--a way of inoculating against--these particular pathogens. But common sense should have indicated that the regime of Saddam Hussein would use the dozens of shipments he received from American commercial laboratories for the development of biological weapons, which is precisely what happened. Such biological agents as anthrax and botulinum toxin were sold to Iraq by American firms. Gary Milhollin of the Wisconsin Project on Nuclear Arms Control has noted another example of this kind of dual-use proliferation to Iraq. It involved the component of what we refer to as the lithotriptor, which is a medical device that is used in destroying kidney stones by blasting high-energy beams. There are high-precision electronic switches which are part of the lithotriptor. These kinds of switches are also needed to detonate nuclear weapons. They would be decontrolled here because they are part of the lithotriptor, a medical device. It is interesting also because of their foreign availability. You can buy them elsewhere, but they would be decontrolled in effect under this legislation. Iraq purchases these lithotriptors. The amount of lithotriptors they purchase is interesting. Milhollin has also noted the suspicious nature of the Iraqi purchases of lithotriptors, state-of-the-art machines used in breaking up kidney stones. Iraq's purchases of the lithotriptors, and far more spare parts than should ever be required, is suspicious because these devises are also used as triggers for nuclear weapons and the number purchased is consistent with the number of assembled weapons--minus the requisite fissile material--Iraq is believed to have by former members of UNSCOM. So the point is that we should be highly suspicious of the import of these dual-use technologies by Iraq when they appear to be directly related to Iraq's nuclear program. Yet under the legislation before us, this shipment would be liberalized, and there is virtually no way to stop that kind of export to Iraq. Another case is glass and carbon fibers used in ballistic and cruise missile construction as well as the enrichment of uranium. This would be decontrolled because of their use in the manufacture of items such as skis, tennis rackets, boats, and golf clubs. These fibers would also fall under the mass market of foreign availability criteria of S. 149. Maraging steel used in the manufacture of solid rocket motor cases, propellant tanks, and interstage for missiles, as well as the enrichment of uranium, would also be decontrolled because of their application in the commercial rocketry and their availability in other countries. Another example listed is corrosion-resistant valves used in the enrichment of uranium for nuclear weapons, yet also used in commercial energy, paper, and cryogenic industries. The list of deadly serious military applications for items this legislation would decontrol is long and sobering. I will later ask unanimous consent to put in the Record a list that further illustrates this point. Let's focus on the case that has been discussed in the past about fiberoptic cables. All of us know about the situation in which the United States actually had to destroy Iraqi air defenses because of the development of these air defenses as a threat to the United States and British aircraft carrying out their mission in Iraq. The systems were being upgraded through the installation of fiberoptic cable provided and installed by the Chinese. Fiberoptic cable is clearly a dual-use item, but it also clearly has significant strategic importance. And its export to China again would be permissible under S. 149. Allow me to talk for just a moment about the cost of business of these export controls, because the argument is frequently used that the reason we have to do this is because there is such a drag on the United States economy from the existence of export controls today, and that is why we have to liberalize the export of these dual-use technologies. Many major corporations are lobbying hard for this legislation based on this argument. While I support free trade and support these appropriations normally, I disagree with them on this description of the sense of urgency. The fact is that the effect is only negligible from the export controls because they represent such a minor part of our overall economy. According to the Department of Commerce figures, the total value of all the goods exported to the control destinations represents less than 3 percent of all U.S. exports. We would be talking here about a very small percentage--less than 3 percent--of all of our exports. Of just over 1,200 applications filed with the Commerce Department in 1999, for example, for licenses to export control dual-use items to China, the total value of those applications of sales was less than $1.5 billion, which is obviously a minuscule number as a percentage of our gross domestic product. In short, I don't think we should judge this legislation on the basis that the U.S. economy is going to suffer if we continue to maintain a sensible export control regime worthy of the values we represent and the interests we seek to defend. In fact, there is really a critical argument being made by some here. On the one hand, they argue there is such a dramatic negative impact on the American economy that we have to loosen up these exports. On the other hand, they assure us nothing much is going to change, that the same kind of items that have been controlled in the past that we believe are necessary to control will continue to be controlled, so don't worry about national security implications. One of those two assertions cannot be true. Now let me discuss for a moment why I think Senate bill S. 149 actually makes the problem worse. There is one advantage to the legislation: It increases some penalties for violation by U.S. companies. That is an important advantage, but it is about the only thing that is better than current law. I have spent a long time discussing some of the complexity of dealing with dual-use technologies because it is a complex subject. But that fact should not require us to throw up our hands and say we give up; that because some of these things can be mass marketed in the United States and because they are available abroad, we have to throw our hands up in the air and forget controlling these items. The question is whether the United States wants to be part of the proliferation of technologies that could come back to haunt us in the future simply because somebody else in the world might do the same. Let me just illustrate the point. I say this with all due respect to the members of these committees. The issue of export controls falls under the jurisdiction of the Banking Committee. This creates a situation analogous to that at the executive branch level. The Department of Commerce, under the provisions of S. 149, would be given most of the influence in the definition of what is on the control list and the subsequent regulation and licensing of those items. That is essentially at the expense of the involvement of the Department of State and the Department of Defense, who heretofore have been much more directly involved in the decisions made with respect to the export of these items. Remember the case I cited, on which I took some pains to get into detail, of the gun sold to Iraq that could deliver a nuclear weapon. The point was that the Commerce Department of Great Britain did not know what the intelligence community and the defense community knew about the potential use of the item that was being exported, which calls into question a regime which only involves the agency of our Government which is most interested in seeing that exports are increased. So it should come as no surprise that the Banking Committee, which has this jurisdiction, has produced this bill which gives the Commerce Department most of the jurisdiction and gives, frankly, what I consider short shrift to the agencies of the Department of Defense, the State Department, and our intelligence agencies that should have more of a role to play. The House version of this bill, on the other hand, interestingly, originates with the International Relations Committee and will next go before the Armed Services Committee, and it, of course, is much more heavily tilted toward the involvement of the State Department and the Defense Department, I would suggest, as a result. So it seems to me we have to be a little more careful in the Senate to recognize that there are other committees, that there are other departments, and that we need to reconcile these differences between the House version and the Senate version of this legislation in the interest of national security. Of course, it is true that the White House has endorsed S. 149. But I think it is also recognized that there is the potential for some improvements. They have indicated that in the administration of this legislation, with an Executive order that will implement it, some of the issues we have raised with them will be addressed. I very much appreciate their willingness to address these concerns. I must say, I have the highest confidence in the current administration and in the officials who would have the obligation to administer this legislation. So hopefully there will be some improvements made at that time in the execution of the law. It is also my hope--and I will echo what Senator Thompson said a moment ago--that before we conclude the discussion on this legislation, it will be possible for us to agree on at least some provisions that would improve the bill from our standpoint. So I will be participating in those negotiations. I hope we can come to some conclusions on this matter. I will discuss a couple of the items I think we should address in just a moment. But to move forward with the description of the bill itself and why I think it is problematic, the primary concern is the fact that it will seriously weaken controls on literally thousands of items that have a dual-use capability--again, items that have some commercial application but also have some specific military capability. For example, its provision establishing a National Security Control List would continue the unfortunate trend of marginalizing those agencies that are most responsible for national security--the Department of Defense, the Department of State, as well as the intelligence organizations that possess vital knowledge about the military significance of some of these items. Specifically, the bill diminishes the role of the Department of Defense, the Department of Energy, the State Department, and the intelligence community in the license review process. Even the Clinton administration Executive order regulating dual-use exports in the absence of a permanent Export Administration Act authorized the Departments of Defense, State, and Energy to review any license application submitted to Commerce. But S. 149 would leave to the Secretary of Commerce the discretion to refer to the national security agencies those applications the Secretary of Commerce deems appropriate. The bill would also repeal the requirement in the fiscal year 1998 National Defense Authorization Act that computers with certain capabilities be controlled. This is important because this represents the work of the Congress and the signature of the President on important legislation just 2 years ago, in response, primarily, to the breaking news of the technology transfers to countries such as China and the work that different groups did to evaluate the way that was happening, especially the work of the Cox committee which made, in addition, a variety of recommendations of how we could tighten up the process for exporting these kinds of items. This National Defense Authorization Act had a very specific provision about the export of computers. But President Clinton, as he was leaving the White House, loosened significantly the export controls on high- performance computers significantly. Under President Clinton's guidelines, computers with a processing speed of fewer than 85,000 million theoretical operations per second--or MTOPS--no longer require a license for export to military organizations in so-called tier III countries, countries such as Russia, China, India, and Pakistan. By contrast, in 1997, computers with processing speeds above 2,000 MTOPS were barred from export for military end-users or users in tier III countries. Now, to contrast: 85,000 MTOPS computers are extremely powerful. As a comparison, in 1997, some of the initial computers developed in the United States under our Stockpile Stewardship Program's Accelerated Strategic Computing Initiative, the so-called ASCI--and the specific project was called ASCI Red and ASCI Red/1024; very sophisticated computing programs--these programs had processing speeds of 46,000 and 76,000 MTOPS, respectively. These computers were used for 3D modeling and shock physics simulation for nuclear weapons applications; in other words, the best we had just 3 years ago, used in the most sophisticated analysis in which our country is involved right now, and these are computers with less capability than those that are now off the list for control with respect to export to countries such as China. Under this bill, there are two major exemptions created that permit this to happen. One is the so-called foreign availability, and the other is the mass market status exception. Both of these would effectively prevent the Federal Government from regulating the export of many sensitive technologies that could be used to threaten U.S. security. Under these provisions, if a product is available from a foreign supplier or is widely available in the United States, it is very unlikely that the President could meet the standards in the bill necessary to maintain export controls on the item. We all know trade is vital to the United States, but I hope that most of us would agree that national security concerns do trump trade if there is an irreconcilable conflict; at least it should. U.S. national security interests dictate that there are some goods which should not be sold in some markets. Again, I think all of us would agree to that proposition, hypothetically at least. The fact that some Western European firms, for example, helped Libya construct a chemical weapons production complex should not justify the involvement of United States companies in similar ventures. If we don't want that complex to be built, then the United States should not sanction the export of U.S. products which help to develop that chemical weapons production complex. Nations which threaten our security interests should not be armed by the United States. The fight against proliferation and rogue regimes must include some degree of self-discipline within our own borders. The bill also weakens current export controls by making it very difficult to control the export of a sensitive item if it is incorporated or embedded into a larger product. (Mr. CARPER assumed the chair.)

Mr. KYL. Madam President, this past weekend the Washington Post ran articles on a Bush administration decision to impose sanctions on a Chinese company that it found to be transferring sensitive missile technology to Pakistan in violation of last November's agreement to terminate such transfers. Two of my colleagues, the chairman of the House Intelligence Committee and the chairman of the Senate Intelligence Committee, and I just returned from a visit to Pakistan, and we expressed concerns about the proliferation of weapons of mass destruction technology in that area of the world. We are very aware of the situation which could easily evolve in that part of the world because of tensions between different countries that could inadvertently result in the use of nuclear weapons, something no one in the world wants to occur. Part of that is because of the willingness of countries such as China to transfer technology to countries that could use those weapons. Sunday's Washington Post article to which I referred noted that the decision to impose sanctions on the Chinese Metallurgical Corporation came over the objections of Asia experts in our State Department who ``had warned that this could further fray Sino-American relations.'' Of course, anytime one enforces a provision which is designed to protect the U.S. national security on a corporation that is violating the terms of agreements or provisions which could prevent the transfer of this technology, it will upset someone. They have been caught cheating, and to the extent we are willing to enforce it, they are not going to like the result. However, that is what is at stake: Our willingness to enforce the regime which we have heretofore imposed that hopes to at least reduce the amount of transfer of technology to countries that would use that technology in an irresponsible fashion. I ask unanimous consent to have printed in the Record the article ``Chinese Arms Firm Faces U.S. Sanctions.''