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Beyond Control: Reforming Export Licensing Agencies for National Security and Economic Interests

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Beyond Control: Reforming Export Licensing Agencies for National Security and Economic Interests S. Hrg. 110–831 BEYOND CONTROL: REFORMING EXPORT LICENSING AGENCIES FOR NATIONAL SECURITY AND ECONOMIC INTERESTS HEARING BEFORE THE OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE OF THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED TENTH CONGRESS SECOND SESSION APRIL 24, 2008 Available via http://www.gpoaccess.gov/congress/index.html Printed for the use of the Committee on Homeland Security and Governmental Affairs ( U.S. GOVERNMENT PRINTING OFFICE 42–751 PDF WASHINGTON : 2009 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 11:52 Jun 08, 2009 Jkt 042751 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 P:\DOCS\42751.TXT SAFFAIRS PsN: PAT COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS JOSEPH I. LIEBERMAN, Connecticut, Chairman CARL LEVIN, Michigan SUSAN M. COLLINS, Maine DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska THOMAS R. CARPER, Delaware GEORGE V. VOINOVICH, Ohio MARK L. PRYOR, Arkansas NORM COLEMAN, Minnesota MARY L. LANDRIEU, Louisiana TOM COBURN, Oklahoma BARACK OBAMA, Illinois PETE V. DOMENICI, New Mexico CLAIRE MCCASKILL, Missouri JOHN WARNER, Virginia JON TESTER, Montana JOHN E. SUNUNU, New Hampshire MICHAEL L. ALEXANDER, Staff Director BRANDON L. MILHORN, Minority Staff Director and Chief Counsel TRINA DRIESSNACK TYRER, Chief Clerk OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE DANIEL K. AKAKA, Hawaii, Chairman CARL LEVIN, Michigan GEORGE V. VOINOVICH, Ohio THOMAS R. CARPER, Delaware TED STEVENS, Alaska MARK L. PRYOR, Arkansas TOM COBURN, Oklahoma MARY L. LANDRIEU, Louisiana JOHN WARNER, Virginia RICHARD J. KESSLER, Staff Director JOEL C. SPANGENBERG, Professional Staff Member THOMAS J.R. RICHARDS, Professional Staff Member JENNIFER A. HEMINGWAY, Minority Staff Director THOMAS A. BISHOP, Legislative Aide JESSICA K. NAGASAKO, Chief Clerk (II) VerDate Nov 24 2008 11:52 Jun 08, 2009 Jkt 042751 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 P:\DOCS\42751.TXT SAFFAIRS PsN: PAT C O N T E N T S Opening statements: Page Senator Akaka .................................................................................................. 1 Senator Voinovich ............................................................................................. 2 WITNESSES THURSDAY, APRIL 24, 2008 Stephen D. Mull, Acting Assistant Secretary for Political Military Affairs, U.S. Department of State .................................................................................... 4 Beth M. McCormick, Acting Director, Defense Technology Security Adminis- tration, U.S. Department of Defense .................................................................. 7 Matthew S. Borman, Acting Assistant Secretary of Commerce, Export Admin- istration, U.S. Department of Commerce ........................................................... 8 Ann Calvaresi Barr, Director, Acquisition and Sourcing Management, U.S. Government Accountability Office ...................................................................... 10 William A. Reinsch, President, National Foreign Trade Council ........................ 22 Daniel B. Poneman, Principal, The Scowcroft Group ........................................... 25 Edmund B. Rice, President, Coalition for Employment Through Exports, Inc .. 28 ALPHABETICAL LIST OF WITNESSES Barr, Ann Calvaresi: Testimony .......................................................................................................... 10 Prepared statement .......................................................................................... 54 Borman, Matthew S.: Testimony .......................................................................................................... 8 Prepared statement .......................................................................................... 48 McCormick, Beth M.: Testimony .......................................................................................................... 7 Prepared statement .......................................................................................... 44 Mull, Stephen D.: Testimony .......................................................................................................... 4 Prepared statement .......................................................................................... 37 Poneman, Daniel B.: Testimony .......................................................................................................... 25 Prepared statement .......................................................................................... 74 Reinsch, William A.: Testimony .......................................................................................................... 22 Prepared statement .......................................................................................... 70 Rice, Edmund B.: Testimony .......................................................................................................... 28 Prepared statement .......................................................................................... 78 APPENDIX Background .............................................................................................................. 84 Subject: ‘‘Background for Hearing on U.S. Export Controls,’’ CRS report by Ian F. Fergusson and Richard f. Grimmett ....................................................... 89 Subject: ‘‘United Arab Emirates: Political Background and Export Control Issues,’’ CRS report by Kenneth Katzman and Ian F. Fergusson ................... 100 Copy of Executive Order 12981 submitted by Mr. Poneman ............................... 105 ‘‘Combating Proliferation of Weapons of Mass Destruction,’’ Report of the Commission to Assess the Organization of the Federal Government to Com- bat the Proliferation of Weapons of Mass Destruction, containing Chapter 4, Export Controls, submitted by Mr. Poneman ................................................ 109 (III) VerDate Nov 24 2008 11:52 Jun 08, 2009 Jkt 042751 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 P:\DOCS\42751.TXT SAFFAIRS PsN: PAT IV Page Questions and Responses for the Record from: Mr. Mull ............................................................................................................ 117 Ms. McCormack ................................................................................................ 138 Mr. Poneman ..................................................................................................... 139 Mr. Reinsch ....................................................................................................... 140 Mr. Borman ....................................................................................................... 141 Ms. Barr ............................................................................................................ 147 VerDate Nov 24 2008 11:52 Jun 08, 2009 Jkt 042751 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 P:\DOCS\42751.TXT SAFFAIRS PsN: PAT BEYOND CONTROL: REFORMING EXPORT LICENSING AGENCIES FOR NATIONAL SECURITY AND ECONOMIC INTERESTS THURSDAY APRIL 24, 2008 U.S. SENATE, SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA, OF THE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS, Washington, DC. The Subcommittee met, pursuant to notice, at 2:33 p.m., in room 342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, Chair- man of the Subcommittee, presiding. Present: Senators Akaka and Voinovich. OPENING STATEMENT OF SENATOR AKAKA Senator AKAKA. This hearing will come to order. This is a hear- ing of the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia. I want to wel- come our witnesses to this Subcommittee hearing and thank you very much for being here today. This is the first in a series of hearings that the Subcommittee is holding to explore the effectiveness and efficiency of government management in various aspects of national security. Today’s hear- ing focuses on the management of export controls for licensing mili- tary as well as commercial and military use, or dual-use, tech- nology for export. Our export controls regime struggles against the challenges of a globalized world. Too often, dual-use technology falls into the wrong hands. We do stop some of it. For example, Commerce De- partment enforcement officers recently arrested two men boarding a plane bound for China. These men had in their possession sen- sitive thermal imaging equipment that was not and would not have been licensed to them. On the other hand, as you know, much gets through. At bazaars in the United Arab Emirates, sensitive dual-use technology is counted among the many items for sale. Three aircraft protected as dual-use technology were diverted illegally by a British company to Iran. At my request, Kenneth Katzman and Ian Fergusson of the Congressional Research Service produced an excellent background (1) VerDate Nov 24 2008 11:52 Jun 08, 2009 Jkt 042751 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\42751.TXT SAFFAIRS PsN: PAT 2 report on issues relating to the UAE, which, without objection, I will introduce into the record.1 Today’s hearing will examine key Federal Government agencies responsible for licensing exports, how their processes help or hinder the licensing process,
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