EXPORT ADMINISTRATION ACT OF 1979

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00003R000100030011-2
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 92
• Document Creation Date: December 21, 2016
• Document Release Date: October 27, 2008
• Sequence Number: 11
• Publication Date: July 21, 1979
• Content Type: OPEN SOURCE

S 10122
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CONGRESSIONAL RECORD -SIENA`ICIE July 21, 1979
aggressive and forthright way. He has
demonstrated outstanding leadership in
championing the accessibility needs of
our elderly and handicapped citizens,
the merits of a modern and fully func-
tional public transportation system, the
need to stick by and improve upon our
previous commitments to make automo-
biles as fuel efficient and nonpolluting
as possible, enhanced safety in all modes
of transportation, and regulatory re-
forms which make sense for a major'
portion of our country's transportation
system.
Mr. President, I have not always
agreed with the Secretary of Transpor-
tation, my. friend, Brock Adams, on
every, issue. But I must say, as chairman
of the Appropriations Subcommittee on
Transportation, I always found Secre-
tary Adams to be a strong and eloquent
spokesman for the President's policy.
When he found his personal views
on funding levels and policy matters
overriden by the President's need to
balance our transportation spending
with the overall Federal budget, Brock
was insistent that we should keep the
DOT budget at or near the President's
request. We have done that each year
that I have chaired the subcommittee
and I hope to be able to do so this year.
Brock Adams will be sorely missed in
the coming months, and I hope he will
keep in close touch with those of us
who have responsibilities on transpor-
tation issues as legislation is moving
through the Senate. The President will
not easily find a successor to Brock
Adams who is dedicated, enthusiastic
and able to do the job. It is important
that the momentum that Secretary
Adams and the administration have ob-
tained on many important transporta-
tion issues not be lost at this very critical
time in our Nation's struggle to become
more energy independent and as we
attempt to help control inflation through
wiser transportation priorities and less
burdensome regulatory policies.
In the Congress and the Cabinet,
Brock Adams has been a man of con-
science, a dedicated American who has
served his country with distinction. I
am proud to call him my friend.
CONCLUSION OF ROUTINE
MORNING BUSINESS
The ACTING PRESIDENT pro tem-
pore. Is there further morning business?
EXPORT ADMINISTRATION ACT
OF 1979
The ACTING PRESIDENT pro tem-
pore. Under the previous order the Sen-
ate will now resume consideration of
S. 737 which the clerk will state by title.
The assistant legislative clerk read as
follows :
A bill (S. 737) to provide authority to
regulate exports, to improve the efficiency
of export regulation, and to minimize inter-
ference with the right to engage in com-
merce.
The Senate resumed consideration of
the bill.
The ACTING PRESIDENT pro tem-
pore. The pending question is amend-
ment No. 340.
Who yields time?
Mr. STEVENSON. Mr. President, I ask
that this statement be taken from the
time on the bill and not on the amend-
ment that is now pending.
The ACTING PRESIDENT pro tem-
pore. The Senate has that right. It will
be.
Mr. STEVENSON. Mr. President,
S. 737 is necessary to extend and. revise
authority to control U.S. exports and to
authorize appropriations to meet the
expenses of administering export con-
trols. The existing authority which is
provided in the Export Administration
Act of 1969 expires September 30.
S. 737 would establish a new export
control statute, the Export Administra-
tion Act of 1979, superseding the 1969
act. S. 737 incorporates many provisions
of the 1969 act, but also makes extensive
improvements to insure that export con-
trol authority is exercised with maxi-
mum efficiency and controls confined to
those necessary to achieve important
national purposes.
Mr. President, this legislation is one
product of a year long study of U.S. ex-
port policy by the Subcommittee on In-
ternational Finance. The subcommittee
report based on that study concluded
that :
Delays in export licensing decisions o C o
are a significant cause of U.S. export
loss. U O 0 Because U.S. licensing policy is
often unclear, foreign purchasers come to
regard the U.S. as an unreliable supplier. In
areas of rapidly expanding technology, the
control levels should be revised more fre-
quently. Too often the Commerce Depart-
ment responds to a rapidly evolving state of
the art around the world only when deluged
by license applications which should not
have been required in the first place. If the
Executive departments will not devise a more
efficient way to provide essential monitor-
ing and control without excessive disruption
of U.S. exports, Congress must.
Mr. President, the U.S. trade deficit
continues to set records. The United
States has now run a trade deficit each
month for the past 36 months. There is
no end in sight, and imported oil is
only part of the problem.
The United States is becoming less
competitive at home and abroad. In 1975
the Nation had a $20 billion trade surplus
in manufactured goods; last year it ran
a $5.8 billion defict. Other nations more
dependent on imported oil run trade
surpluses. They go all out to beat us, and
they win.
A factor in declining U.S. competitive-
ness is Government restriction of U.S.
exports. U.S. exporters face export li-
cense controls, antitrust, antibribery,
antiboycott, antinuclear proliferation,
human rights, envirommnteal reviews
and other restrictions not faced by for-
eign competitors. We are the only na-
tion in the world which treats exports
as a favor to bestow upon worthy for-
eigners rather than an essential contri-
bution to our economic well-being.
S. 737 is an important step in the
development of a national export policy.
It can become a symbol of our willing-
ness to revamp our laws to 'meet the
competitive challenge without sacrific-
ing other major objectives.
Mr. President, S. 737 would establish
an export control policy which protects
vital security and foreign policy interests
without unnecessarily 'restricting U. S.
exports. It would reduce the number of
controlled items and focus national se-
curity controls on technologies and re-
lated products critical to military sys-
tems. It would set criteria which the
President must consider before imposing
export controls for foreign policy pur-
poses. It would reduce paperwork by
establishing licenses under which multi-
ple shipments could be made to a speci-
fied purchaser for a stated end use. It
would expedite interagency review by re-
quiring agreement in writing on types
and categories of applications requiring
interagency referral and setting a 30-day
deadline for returning comments to the
Commerce Department. It would insure
final decisions on all applications within
a maximum of 180 days.
The bill is lengthy. I will not take up
the time of the Senate to go through
each provision. Senate Report 96-169
contains a thorough description of the
provisions of S. 737. I will mention only
a few key provisions.
S. 737 requires that export controls
maintained for national security pur-
poses be reviewed by the President every
3 years in the case of controls main-
tained cooperatively with other nations
and every year in the case of unilaterally
maintained controls. Priority in admin-
istering such controls is to be given to
preventing exports of militarily critical
goods and technology, and the Secretar-
ies of Commerce and Defense are re-
quired to review and revise such controls
to insure they are focused upon and
limited. to the maximum extent possible
consistent with the purposes of the bill,
to militarily critical goods and tech-
nology and the mechanisms through
which they may be effectively
transferred.
As the committee noted in its report
on S. 737:
The number of license applications re-
ceived by the Department of Commerce is
expanding rapidly, nearing an annual level
of 80,000 applications per year. The increased
applications reflect a failure to prune the
control lists and to concentrate licensing re-
quirements where they can be most effec-
tive. The Defense Science Board Task Force
on Export of U.S. Technololgy recommended,
in a report released February 27, 1976, that
export controls for national security pur-
poses be focused upon retarding transfers of
technology which could significantly en-
hance the military capacity of potential ad-
versaries. The Task Force report suggested
that other controls, particularly on end
products, could be reduced once effective
controls on the transfer of militarily critical
technology were in place. Three years after
the Task Force report, a critical technology
approach has still to be devised and imple-
mented. Failure to implement the Task
Force report could result in controls which
limit some exports unnecessarily while con-
trolling insufficiently other exports which
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
underwh med. And Mr. Carter's re-
sponse to i 11 has been to make his cam-
paign chief 's Chief? of Staff. It will not
do. It just wi not do at all.
QUO UM CALL
Mr. CRANSTO Mr. President, I
suggest the absence a quorum.
The ACTING PRE IDENT pro tem-
pore. The clerk will call a roll.
The assistant legisla 've clerk pro-
ceeded to call the roll.
Mr. CRANSTON. Mr. Pre 'dent, I ask
unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT p o tem-
pore. Without objection, it is so o erect.
Mr. CRANSTON. Mr. President, ask
unanimous consent that the time or
the quorum call be charged equally o
both leaders.
The ACTING PRESIDENT pro tem-
pore. Without objection, it is so ordered.
Mr. CRANSTON. I suggest the ab-
sence of a quorum.
The ACTING PRESIDENT pro tem-
pore. The clerk will call the roll.
The assistant legislative clerk pro-
ceeded to call the roll.
Mr. CRANSTON. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The ACTING PRESIDENT pro tem-
pore. Without objection, it is so ordered.
Mr. CRANSTON. Mr. President, I
yield back the remaining time of the
majority.
Mr. HEINZ. Mr. President, I yield
back the remaining time of the minority.
ROUTINE MORNING BUSINESS
The ACTING PRESIDENT pro tem-
pore. There will now be a period for the
transaction of routine morning business
for not to extend beyond the hour of
9:40 a.m. with statements therein
limited to 2 minutes each.
Mr. CRANSTON. Mr. President, If
there be no further morning business I
suggest we end that period and go to the
bill.
IF WE CAN GO TO THE MOON * * *
Mr. BAKER. Mr. President, yesterday
the American people celebrated the 10th
anniversary of our Nation's greatest
technological triumph-the landing of
American astronauts on the Moon.
That surpassing achievement-that
combination of organizational and tech-
nical genius with the courage of the hu-
man spirit-has led us in our time to
believe that "if we can go to the
Moon," we can do anything.
I believe that to be true Mr. President.
I believe the capacity of the American
people to set goals for themselves and
then to reach.them-no matter what the
odds against them-is what sets this Na-
tion apart from all others.
It is this capacity which has won us
our independence, which helped us con-
quer a wilderness continent, which
helped us to go to the Moon. This capac-
ity in our people is undiminished by
time or circumstance, and waits only for
the inspiration and the new goal.
Space exploration itself has reserved
for our generation a special place in the
history of mankind. It may well define
our most important and enduring con-
tribution to that history. Having set the
Nation on course to a new and endless
frontier, we have laid a foundation on
which a hundred generations can build.
The distinguished gentleman from
New Mexico, Mr. SCHMITT, is one of the
handful of men who have walked the
barren plains of the Moon and into the
history of our country and our human
race.
On the 10th anniversary of man's first
landing on the Moon, Senator SCHMrrT
has proposed exciting new objectives for
space exploration, through the end of
this century.
I believe each of my colleagues will
find Mr. SCHMITT'S vision compelling and
his timetable invigorating. I ask unani-
mous consent that his article entitled
"Space Is Our Destiny," which appeared
Friday's Washington Star, be printed
in the RECORD at this point.
ere being no objection, the article
was de red to be printed in the RECORD,
as foil ws:
SPACE Is OUR DESTINY
y HARRISON SCHMITT)
I would li to tell you about a place i
have seen: a lley on the moon known as
the Valley of Ta us-Llttrow. Taurus-Littrow
is a name not ch en with poetry in mind;
but, as with many awes, the mind's poetry
The Valley of Taurus-L trow is confined
by one of the most maj tic panoramas
within the view and experien of mankind.
The roll of dark hills across t valley floor
blends with bright slopes that eep evenly
upwards, tracked like Snow, to dohe rocky
tops of the massifs. The valley es of have
the jagged youthful majesty ?I cal Hima-
layas or the glacially. symmetrical fj ds of
the north countries or even the no in-
triguing rifts of Mars. Rather, it has e
subdued and ancient majesty of a vall
whose origins appear as one with the sun.
The valley has watched the unfolding of
thousands of millions of years of time. Now
it has dimly and impermanently noted man's
homage and footprints. Man's return is not
the concern of the valley... only the con-
cern of man.
Those words, spoken before the House of
Representatives in 1973, expressed my
thoughts after returning from the moon.
They set part of the stage for my views on
future space policy.
The main thrust of what must be this
nation's space policy can be summarized in
one phrase: Our destiny is space.
The expansion of human activities in space
is of fundamental significance to the history
of our civilization. We are lucky that it is
our destiny to be the vanguard for the move-
ment of both routine and unimaginable
activities into outer space; to be the first
truly spacefaring nation.
Can anyone imagine what awaits us in
space? Did the Europeans really know how
the "New World" would benefit them? Did
Jefferson do a cost/benefit analysis of the
Louisiana territory? In these instances the
leaders realized that there were opportunities
for social and economic benefits in the new
territories, even though they could not quan-
tify those benefits or even perceive most of
them. We need an aggressive space policy
to expand our opportunities for such bene-
fits in space.
S 10121
.My proposed policy entails a number of
goals. The first involves the development of
a world information system. The second is
the establishment of orbital enterprise fa-
cilities and the third is a second period of
solar system exploration by man.
A world information system can be seen
within the context of our private enterprise
system. We must find ways to provide in-
centives to expand private enterprise in outer
space, to smooth the way so that government
space and aeronautics research can be inte-
grated into the private sector.
My second goal is by the year 2000 to create'
the basic facilities necessary for orbital en-
terprise activities, such as education, health
care, manufacturing and solar power utiliza-
tion. Permanent facilities in orbit will help
alleviate many problems facing this nation
and provide many new opportunities. For ex-
ample, the creation of new export commo-
dities and the supply of inexhaustible energy
are needs that cannot be ignored by this gen-
eration nor denied to future generations.
Many in this country, particularly young
Americans, have an increasing awareness of
outer-space activities and how they can be
exciting and how they can benefit society.
They accept the vision.
This leads me to my third goal which is,
by the year 2010, for the United States to
undertake further solar system exploration,
which includes a base for research and test
activities on the moon. A lunar base would
permit us to develop and test the systems
necessary to sustain a permanent mining,
agricultural and research settlement. And
other exploratory missions may be more
economically staged from the moon.
These directions are part of an aggressive
space policy which reflects our destiny in
space. What is needed is a space policy of
support for such activities.
The greatest of all accomplishments that
we can achieve in our lifetime is to assure
our children of their destiny in space.
BROCK ADAMS-SECRETARY OF
TRANSPORTATION
Mr. BAYH. Mr. President, I have al-
ways felt that it was the responsibility
of a President of the United States to
run the executive branch of our Gov-
ernment. As impossible as that job is,
it is critically important for the legisla-
tive branch to give great leeway to the
1resident in the choice of those Cabinet
aother executive officials that he
gat Drs around him and on whom he
must ely to run the Government.
I fr kly believe at this particular
time, w changes are being made, I
have no 're to comment on the wis-
dom of th a particular changes, trust-
ing that if President feels a greater
degree of con ence in those he chooses
he should be en this leeway and we
should support and hope the de-.
cisions are right.
I would like to say, however, Mr.
President, that, hay g had the oppor-
tunity over the past w years to have
the privilege of chaff ' g the Senate
Subcommittee on Transp tation, I have
considered it a real privile to have the
opportunity to serve with an work with
a -former colleague from .the ouse of
Representatives, - who was cho n by
President Carter to serve as Secretary of
Transportation. I am speaking, of course,
of Secretary Brock Adams.
In my judgment, he has done a -re-
markable job over the past 21/2 years
in addressing the many complex trans-
portation issues facing this Nation in ail
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July 21, 1979
could be seriously detrimental to national
security.
Mr. President, S. 737 provides the
statutory basis for implementing the
critical technologies approach recom-
mended in the report of the Defense
Science Board Task Force.
S. 737 also sets forth criteria to be
considered by the President when im-
-posing export controls for foreign pol-
icy purposes, including:
First. Alternative means to further
the foreign policy purposes in question;
Second. The likelihood that foreign
competitors will join the United States
in effectively controlling the exports in
question;
Third. The probability that such con-
trols will achieve the intended foreign
policy purpose;
Fourth. The effect of such controls on
U.S. exports, employment and production
and on the international reputation of
the United States as a supplier of goods
and technology;
Fifth. The reaction of other countries
to the imposition or enlargement of such
export controls by the United States;
and
Sixth. The foreign policy conse-
quences of not imposing controls. The
bill provdies that the President shall
report to Congress his reasons for im-
posing such controls, and that such
controls must be reconsidered annual-
ly.
No aspect of U.S. export controls pol-
icy received sharper criticism during
committee and subcommittee hearings
than controls maintained for foreign
policy purposes. Former Under Secre-
tary of State George Ball -testified that
"such controls should be used very spar-
ingly."
Former Under Secretary of Defense
David Packard testified:
? I do not believe these unilateral con-
straints are effective in changing the poli-
cies or the behavior of the targeted coun-
tries. In fact, I think the only thing such
policies do is to guarantee the loss of busi-
ness for the United States.
Former Secretary of State Dean'Rusk
testified that the United States should
reconsider its attitude toward the use
of export controls for foreign policy
purposes :
We should begin by reminding ourselves
that trade occurs when it is of benefit to
both parties. When we refuse to trade for
security or political reasons. we should re-
call that we are depriving ourselves of the
benefits of that trade, whether in the form
..of convertible currencies or goods and serv-
ices which we ourselves need for our own
national life. I would strongly advise
against a drift into self-imposed economic
isolationism by weighing trade in terms of
approval or disapproval of the institutions
of other trading nations.
Uncertainty over U.S. policy toward
the use of export controls for foreign
policy purposes has discouraged poten-
tial exports and tarnished the reputa-
tion ? of U.S. exporters as reliable sup-
pliers to foreign countries. Controls.
applied for foreign policy reasons often
restrict the export of goods and tech-
nology freely available from foreign
suppliers, often from our allies. Yet
there is no evidence that the effects of
CONGRESSIONAL RECORD -SENATE S 10123
such controls are receiving due con-
sideration, nor that efforts are being
made to obtain agreement by our allies
to adopt similar restrictions on their
exports.
S. 737 requires that foreign availability
of goods and technology subject to ex-
port controls be determined both with
respect to controls maintained for for-
eign policy purposes and those main-
tained for national security purposes. If
the goods or technology are available
without restriction from sources outside
the United States in significant quan-
tities and comparable in quality to those
produced in the United States, the
-President shall not impose export con-
trols unless he determines that adequate
evidence has been presented to him
demonstrating that the absence of such
controls would prove detrimental to the
foreign policy or national security of the
United States. If the President decides
to maintain export controls despite for-
eign availability, he is required to initi-
ate negotiations with other governments
to try to remove such foreign availability.
S. 737 would not interfere with the
President's ability to respond immedi-
ately to foreign policy crises. The Presi-
dent could decide that one, several, or
all of the factors listed in section 4(a)
(2) (C) and referred to in section 4(a)
(2) (D) were not relevant to imposing
export controls in a given situation. He
could also impose export controls before
it is known whether foreign availability,
as referred to in section 4(a) (2) (E),
exists.
Moreover, controls could be continued
if they were inconsistent with these fac-
tors or if it later became apparent that
foreign availability does exist. These fac-
tors are to be taken into consideration,
but they are not conditions which must
be met. Controls may be continued not-
withstanding foreign availability if the
President determines that failure to do
so would be detrimental to U.S. foreign
policy.
S. 737 assigns clear responsibility for
assessing the foreign availability of goods
and technology subject to U.S. export
controls. A report by the General Ac-
counting Office notes that no one in the
executive branch is given responsibility
to determine whether products or tech-
nology are freely available to controlled
countries from our foreign competitors.
Each agency makes its own assessment,
leading to needless duplication of effort
and delays in license reviews.
The GAO recommended that foreign
availability be assessed by a single office
drawing as necessary on expertise and
information from other Federal agencies.
Our bill re uires e h n Of-
fice o ore f3I1 rode and Tech-
-l--Assessment in the Department of Com-
merce office could call upon an
era genes f r assistance n ac essmz
foreiig~a4l b'4i. ?,o, an would also re-
ceive information from the business sec-
tor. Centralizing responsibility for for-
eign availability assessments should yield
substantial savings in administrative ex-
pense and license processing time.
S. 737 authorizes the President to dele-
gate authority under the act to such
departments, agencies, or officials as he
chooses, but not to any official of any
department or agency whose head is not
appointed by and with the consent of the
Senate. The committee intends the pro-
vision to apply in particular to the Na-
tional Security Council which is reported
to have been assigned a role in formulat-
ing export control policy and in reviewing
particular export license applications.
The expanded role of the NSC staff in
export licensing and export control pol-
icy has frustrated effective congressional
oversight and diffused responsibility for
export controls in the executive branch.
Mr. President, former Secretary of
State Dean Rusk made the following
comments before the Banking Commit-
tee last year:
Mr. Chairman; as far as the National Secu-
rity Council staff is concerned, I think it's
of the utmost importance they remain in
the staff capacity and they not be injected
into the line responsibility of command .. .
The National Security staff does not carry
major statutory responsibilities as do Cabinet
officers. They do not appear regularly down
here before committees and subcommittees
of the Congress.-They do not hold press con-
ferences in which they can be interrogated
regularly by the press. Theirs is a staff
responsibility.
S. 737 is intended to discourage the
assignment of export licensing responsi-
bilities to the NSC.
S. 737 contains all-the antiboycott pro-
visions of the Export Administration Act
of 1969, as amended, and makes no
changes in those provisions. The com-
mittee received letters from major busi-
ness organizations and Jewish groups
recommending that no change be made
in the boycott provisions this year. This
bill does not amend the antiboycott pro-
visions of the act as implemented by reg-
ulations issued by the Commerce De-
partment.
S. 737 provides a 4-year extension
of export control authority from Sep-
tember 30, 1979, to September 30, 1983.
Congress will have an opportunity each
year to exercise effective oversight of ex-
port control policy and to make statutory
changes, because S. 737 requires that ap-
propriations for administering the act
be authorized annually.
Mr. President, S. 737 would streamline
U.S. exports control, eliminating unnec-
essary restrictions on U.S. exports while
providing more effective control over ex-
ports which truly threaten our national
security. The approach adopted in the
bill is realistic; it recognizes that the
United States is no longer the world's
only producer of advanced technology; it
recognizes the intensity of foreign com-
petition and the impossibility of prevent-
ing the spread of technology; it recog-
nizes that truly effective export controls
must be multilateral controls. The
United States must continue to work in
cooperation with NATO allies and Japan
to design and implement an export con-
trol policy which effectively serves our
mutual security interests, without need-
lessly sacrificing our economic well-
being. S. 737 provides the foundation for
an export control policy to serve all our
principal interests, neglecting none.
Mr. HEINZ. Mr. President, I yield my-
self such time as I may consume from the
bill.
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Mr. President, I join my distinguished Mr. President,, I urge my colleagues to S., 737 provides-is a streamlined and
colleague, the senior Senator from IIli- reject any attempts. to attach crippling predictable export control policy, which
nois, in urging passage. of the Export amendments to S. 737. One such amend- can be used. as a reliable guide to market-
Administration Act of 1979, S. 737.-This ment which has been. proposed would ing and long-term commitments.
bill is a significant improvement over its create a cumbersome validated licensing I urge my colleagues to reject, crippling
predecessor, the 1969 act. It incorporates procedure for trade with. even our clos- support.
many of the recommendations, for im- est allies, such as Britain and West Ger- The ACTING PRESIDENT pro tem-
provements made by the General Ac- many, where none existed before. The pore. Time continues running; equally
counting Office's two extensive reports on case for such controls is obscure at. best, against both sides..
the export licensing process, the National and through this action we may very well Mr. HEINZ. Mr. President, I suggest,
Governors' Association's special task undermine' whatever hope we. have for the absence of a quorum.
force report on this subject, and numer- strengthening the collective efforts to The ACTING PRESIDENT pro tem-
ous expert private witnesses, who de- control technology transfer. This. type of pore. Charged to the Senator's time on
tailed the defects of the current system arbitrary, unilateral. control at this. time the bill?
during the four hearings we held on this is, both unnecessary and unwise. More- Mr. HEINZ: I withdraw the request.
subject, over, it is likely to cost U.S. exporters bil- The ACTING PRESIDENT pro tem-
Mr. President, when the original. Ex- lions of dollars in. lost business in their pore. Time continues to run equally
port Control Act legislation was enacted strongest product area, high technology, against-both sides.
after World War II, Ar ierica' was the with no palpable increase in security. re- Mr. HEINZ. Mr. President, I suggest
technological leader in the world and sulting. from this. futile, exercise in self- the absence of a quorum and' that. the
could maintain unilateral controls. on denial. time be charged equally to both sides, if
much of its technology. This. is no longer Adding more countries and goods to that. is all right with the. majority man-
the case. We are now in a highly com- the validated licensing. process. is. likely ager.
petitive international trading arena. to be counterproductive to the goal of The ACTING PRESIDENT pro tem-
During the past decade alone, for ex- preventing. technology transfer, an ob- pore. Does the Senator wish time to run
ample, U.S. exports as a percentage of jective which I share with authors of against the bill or against the amend-
gross national' product increased from such amendments. But, the consequence merit?
approximately 4 percent' to 7 percent, would be an additional. licensing burden Mr. HEINZ. Against the. bill.
while our share of total. world trade of undefined dimension, with no assur- The ACTING PRESIDENT pro tem-
nonetheless declined. ance that our allies, would apply equiva- pore. Is there objection? The Chair-hears
We still have the greatest absolute vol- lent controls. For example, while Japa- none, and it is so ordered.
ume of exports with $143 billion in 1978, nese semiconductor manufacturers, are The clerk will call.the roll..
but increasingly our trading takes on the seizing Asian and European markets, The assistant legislativ& clerk pro-
pattern of a less developed country; with U.S. companies will be waiting months ceeded.to call. the roll.
agricultural raw materials acounting for for validated licenses to be approved: Mr.. STEWART. Mr. President, I ask
an ever greater percentage of the volume. Moreover,. it. is likely that more dual use unanimous consent that the order for
Our defeated enemies; Germany and'Ja_ technology and equipment will slip the quorum. call be. rescinded.
Pan,. have surpassed our- share- of the through the bureaucratic cracks it we. The ACTING PRESIDENT pro tem-
world market in manufactured' goods: increase the paperwork burden. pore. Without objection, it is so ordered.,
Our once substantial lead in technology- Mr. President, I. urge my colleagues, to Mr. STEWART. Mr. President,, I ask
has been overtaken in many significant consider the fact that. our Nation's, edge. unanimous consent that the. Jackson
areas of medium and high technology- in high. technology--and many other in amendment be, temporarily laid aside.
machine tools, power turbines, reactors; dustrial goods-is a precious resource for The ACTING PRESIDENT pro tem-
jet aircraft, naval vessels. Foreign com- jobs, and capital growth which we must, pore. Without objection, it is so ordered.
petitors from Europe and Japan export aggressively promote in foreign markets.. UP AMENDMENT NO. 422,
goods that approach or surpass the best Each time a. license. is, denied for insuffi- (Purpose: To revise the. petitioning. process
American designs. Thus; in a good many cient cause,. or delayed to the point where, in, section. 7)
cases, countries denied American goods, customers, are discouraged and begin to. Mr. STEWART. I send an amendment
or countries- which experience inordinate look elsewhere, that precious, resource is, to the desk and ask for- its immediate
delays in, obtaining those goods, can ear- squandered: Worse still, there is a multi consideration.
ily find them elsewhere. They, will not plier effect, in. which potential exporters The ACTING PRESIDENT pro. tem-
pay a double price-both economic and lose patience with the export licensing, pore. The clerk will report.
Political-for U.S. exports. process and potential importers, of. U.S, The assistant legislative clerk read as
Mr. President, in recent years,there has; goods turn to other,,more reliable sources, follows:
been a dangerous decline in the ability for their needs, in some cases despite. the. The Senator from Alabama (Mr. STEWART)
of U.S. industry to compete in the world U.S. edge in quality, technology, or price., proposes an, unprintedt amendment num
marketplace. We had a trade deficit. I believe U.S. citizens have a right to bered 422.
which totaled $31 million in 1977, $34 engage in international as well as. do- Mr. STEWART. Mr. President, I ask
billion last year, and which could reach mestic commerce unfettered by govern- unanimous consent that further read-
the same abysmal level in 1979' despite merit restriction. unless the Nation's vital' ing of the amendment be dispensed with.
the significant devaluation of the dollar interests are affected. Present controls. The ACTING PRESIDENT pro tem-
which has taken place in the meantime.. on U.S. exports are more stringent than
S. 737 is a crucial step in the develop- is consistent with the right of citizens, pore. Without objection, it is s: ordered.
ment of a national export policy: Our the national interest, or commonsense. The.amen ,linesis as follows:
national security depends not only on S. 73.7 mandates annual review of ex-, on page 73,. lines 24 and 25, strike out.
sector thereof; or any o
" or -
our military hardware and our men un- any
port controls and requires consideration stantial iai segment" and insert in Mier industry lieu- the thereof
der arms but also on the strength and of foreign availability-which applies. at. "or any sector".
the vitality of our economy. present.only to national security controls. Beginning with page 92, line 24, strike out
S. 737 strikes a delicate balance be- Before imposing new controls for foreign all through page 95, line 5, and insert in lieu
tween controlling the transfer of tech- policy reasons, the President would have thereof the following:
nologies which might convey some mill- to consider the economic costs the re sec' 7. (a) (r) Any entity, including, a
tary advantage to potential' enemies. action of other countries, and alterna-? trade auni ngtigro p o
f or certified or which is i~ed while at the same time attempting to en- tive ways to further-U.S. foreign policy,, representative of an workers,
industry hor is-
hance the export of U.S. manufactured The, President, would be required to re- substantial, segment of an industry which
products to provide jobs for American port his conclusions to the Congress, and processes any, material or- commodity
workers and to assist the U:S. balance, of the public. for. which an increase in domestic prices or a
payments. The bill, as reported; offers a. Mr. President, the: message. I have re- domestic shortage. has. or may have a-, signi-.
y ficant adverse effect,on the trans national. economy
rational basis for a positive. export pro- ceived from exporters is, not. that the
writ-
gram, with adequate, safeguards for na- are asking for a. removal of restraints:, tenp ye sector. o thereof may transmit. a orrice
tional security. Rather,, what. they want-and; what. this requesting the' imposit on of of Commerce
export con-
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
trols, or the monitoring of exports, or both,
with respect to such material or commodity.
(2) Each petition shall be in such form
as the Secretary of Commerce shall prescribe
and shall contain information in support
of the action requested. The petition shall
include information reasonably available to
the petitioner indicating (A) that there has
been a significant increase over a represent-
ative period in exports of such material or
commodity in relation to domestic supply,
and (B) that there has been a significant in-
crease in the price of such material or com-
modity under circumstances indicating that
the price increase may be related to exports.
(b) Within 15 days after receipt of any
petition described in subsection (a), the
Secretary of Commerce shall cause to be
published a notice in the Federal Register.
The notice shall include (1) the name of
the material or commodity which is the sub-
ject of the petition, (2) the Schedule B
number of the material or commodity as
set forth in the Statistical Classification of
Domestic and Foreign Commodities Ex-
ported from the United States, (3) notice
of whether the petitioner is requesting that
controls or monitoring, or both, be imposed
with respect to the exportation of such ma-
terial or commodity, and (4) notice that
interested persons shall have a period of 30
days commencing with the date of publica-
tion of such.notice to submit to the Secre-
tary of Commerce written data, views, or
arguments, with or without opportunity for
oral presentation. At the request of the peti-
tioner or any other entity described in sub-
section (a) (1) with respect to the material
or commodity which is the subject of the
petition or at the request of any entity repre-
sentative of the producers or exporters of
such material or commodity, the Secretary
shall conduct public hearings with respect to
the subject of the petition, in which event
the 30-day period shall be extended to 45
days.
(c) Within 45 days after the end of the
30-day or 45-day period described in sub-
section (b) or within 75 days of publica-
tion of the petition in the Federal Register,
whichever is the later, the Secretary of Com-
merce shall-
(1) determine whether to impose moni-
toring or controls or both on the exporta-
tion of such material or commodity; and
(2) publish in the Federal Register a de-
tailed statement of the reasons for such
determination.
(d) Within 15 days following a decision
under subsection (c) to impose monitoring
or controls on the exportation of a' material
or commodity, the Secretary shall publish
in the Federal Register proposed regulations
with respect to such monitoring or controls.
Within 30 days following the publication of
such notice, and after considering any pub-
lic comments, the Secretary shall publish
and implement final regulations.
(e) For the purposes of pubilshing notices
in the Federal Register and the scheduling
of public hearings, the Secretary shall have
the authority to consolidate petitions and
responses thereto with respect to the same
or related commodities.
(f) If a petition has been fully considered
under this section and a notice has been
published with respect to. a particular com-
modity or group of commodities and in the
absence of significantly changed circum-
stances, the Secretary shall have authority
to determine that a petition for monitor-
ing or control of such commodity or com-
modities does not merit the full considera-
tion mandated under this section.
(g) The procedures and time limits set
forth in this section shall take precedence
over any review undertaken at the initiative
of the Secretary.
(h) The Secretary shall have the authority
to impose monitoring or controls on a tem-
porary basis during the period following the
filing of a petition under subsection (a) (1)
and the Secretary's determination under
subsection (c) if the Secretary deems such
action to be necessary to effectuate the pol-
icy set forth in section 3(2) (C) of this Act.
If such authority is used the Secretary shall
afford interested persons an opportunity to
submit written comments thereon and such
comments shall be considered by the Secre-
tary in making the determination required
under subsection (c) and, in the development
of any final regulations.
(i) The authority under this section shall
not be construed to affect the authority of
the Secretary of Commerce under section 4
(e) (1) or any other provision of this Act.
(j) The provisions of this section shall
not apply to any agricultural commodity.
Mr. STEWART. Mr. President, I will
speak very briefly to the amendment.
This amendment, which would be
known as section 7 of the bill, was origin-
ally offered by Senator HEINZ and my-
self during the Banking Committee
mark up of this legislation. It establishes
a petitioning process in the procedure
in the Department of Commerce for the
filing of petitions seeking the monitor-
ing or control of certain materials or
commodities. It provides for interested
parties from both sides to present their
views in a public hearing and it lays out
a specified time frame for a final de-
cision from the Department of Commerce
to be published in the Federal Register. In
short, it is a sunshine amendment which
attempts to bring a measure of fairness
and openness to a process, which for too
long has been made behind closed doors
without the benefit of free and open pub-
lic debate.
The amendment I am offering today
represents a balanced revision of the
original section 7. We have sought to
tighten the requirements a petitioner
must meet and have included a more
specific outline of what information the
petition itself must include.
An important addition to the section
is a new subsection which specifically
excludes agricultural commodities from
participation in the petitioning process.
The reason for this addition is that re-
gardless of the petitioning process an
agricultural commodity might have gone
through under the provisions'of this sec-
tion, the final decision of whether to
implement monitoring or controls on
such commodities would still remain
with the Secretary of Agriculture under
existing law. Because the petitioning
process in section 7 applies only to the
Department of Commerce, it is only fair
to eliminate Agricultural commodities
from the petitioning process altogether.
The amendment I am offering today
has incorporated certain recommenda-
tions of the Department of Commerce as
well as suggestions of Senator STEVEN-
SON, and I am pleased that they have
removed their objections to the amend-
ment.
It is my understanding that the dis-
tinguished floor managers of the bill
have agreed to accept the provisions of
this amendment, and with that I yield
to the Senator from Illinois and the Sen-
ator from Pennsylvania.
The ACTING PRESIDENT pro tem-
pore. The Senator from Illinois.
Mr. STEVENSON. Mr. President, X
S10125
thank the distinguished Senator from
Alabama for his cooperation and for the
contribution he has made to this bill.
The amendment which he now offers
will make it clear that new procedures
which permit petitions for export con-
trols do not include agricultural com-
modities, and those procedures are clar-
ified by this amendment. I think it is a
good amendment, and I am happy to ac-
cept it.
The ACTING PRESIDENT pro tem-
1=ore. The Senator from Pennsylvania.
Mr. HEINZ. Mr. President, if the Sen-
ator will yield, I have examined the
amendment and find it consistent with
the spirit of the bill. Indeed, I think it
improves the bill, and I think the Sen-
ator from Alabama is making a very
good contribution, and I would like to
see the committee accept it.
Mr. STEWART. Mr. President, before
I yield back my time I want to thank the
Senator from Illinois for his contribu-
tion to the amendment and for his con-
sideration for me and those I represent
in proposing this amendment.
I thank the Senator from Pennsyl-
vania for his consideration.
I yield back the remainder of my time
on the amendment.
The ACTING PRESIDENT pro tem-
pore. Is all time yielded back? The ques-
tion is on agreeing to the amendment
of the Senator from Alabama.
The amendment was agreed to.
Mr. STEWART. I thank the distin-
guished floor managers.
AMENDMENT NO. 340
The ACTING PRESIDENT pro
tempore. The question recurs on the
amendment of the Senator from the
State, of Washington. Who yields time?
Mr. JACKSON. Mr. President, I ask
unanimous consent that the name of my
distinguished colleague from Indiana
(Mr. BAYH) be added, as a cosponsor to
amendments 340 through 352 to S. 737.
The ACTING PRESIDENT pro
tempore. Without objection, it is so
ordered.
Mr. JACKSON. Mr. President, amend-
ment No. 340 would amend the bill to
give the Secretary of Defense primary
responsibility for identifying the list of
goods and technologies subject to na-
tional security controls. Under present
law the Secretary of Commerce has this
responsibility, and the Secretary of De-
fense has a role as consultant. The bill
would confirm the status quo, despite the
fact that the Department of Commerce
is unqualified to carry out this important
task. Under its administration, the ex-
port control process is in total shambles,
as acknowledged by Larry Brady, the
Deputy Director of the Office of Export
Administration, in testimony before a
House subcommittee. As a result of its
mismanagement and failure to develop
a coherent export control policy, the
Department of Commerce is too over-
burdened with paperwork involved in
processing well over 70,000 license appli-
cations per year'Commerce is too pre-
occupied with the movement of paper
within the statutory deadlines to make
the necessary reappraisal of our export
controls.
Mr. Brady also acknowledged in his
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CONGR JONAL, RECORD SEND
House testimony what, has long been inability to grasp; the, realities of protect
known by persons. familiar with. the ex' ing national security and do little to com-
port control system-that. the Depart- mend it for the leading role in imple-
ment, of Commerce's judgments an li- menting an export control approach
cease applications are not reliable be- upon which the future security of our
cause of Commerce's very strong trade Nation so vitally depends.
promotion focus. Despite its, trade pro- Mr. President, I ask. unanimous con-
motion bias, however, the Department sent that the letter to me from Secretary
of Commerce has failed to take any ini of Commerce and Mr. Brady's letter to
tiatives to effect. a. comprehensive relaxa- the secretary be printed in the RECORf%
tion of controls on noncritical end There- being no objection, the letters
products., were ordered to be printed in the RECORD,
Recent events further seriously can as follows:
into question the judgment of the - De- THE SECEErAas of COMMERCE,
paxtment of Commerce. There are con- Washington, D.C., June 18) 1979.
firmed reports, that the. Kama River Hon.. HENav M. JAcrosose,
truck plant in the Soviet Union, built. U.S. Senate,
with. hundreds of millions of dolars of Washington, D.C.
American technology and equipment, ID DEAR SENAma JACKSON: In the course
of testimony before the Subcommittee. on
turning out. diesel engines for military Research and Development of the House
vehicles. Deputy Director of OEA, Larry committee on Armed Services, the Deputy
Brady, told a. House subcommittee that Director of the Office of Export Administra
this evidence demonstrated the ineffec- tion, Lawrence J. Brady, testified. that trucks.
tiveness of safeguards. and end-use re- Produced at the Kama River truck factory in
strictions in preventing diversion of U.S.. the Soviet Union were being "diverted" to
technologies and goods to military use. military use in violation of U.S. export con-
by the Soviet Union. trol restrictions..
That testimony has led to newspaper stories
In the past few days I received an implying that Soviet military capability hen
unsolicited letter from the Secretary of been helped as a result of an apparent lack
Commerce making the preposterous sug- of vigilance. by this Department. This is in
gestion that the military use of the., error.
Kama plant by the Soviets did not con- As You know, our nation no longer enjoys
stitute a diversion" of the plant to mill- ppromfavorable balance Of trade, and ot on of exports is more important thathe
n
tary use and, therefore, no violation Of ever before. Even so, the national security is
U.S. export controls. had occurred and paramount, and we must be careful that we
the Department of Commerce was not do not export materials and technology that
guilty of lack of vigilance. This, letter would advance at our own expense the mill
reads like a legal brief in defense of the tary capabilities of other nations. To walk-
Russian's gross misconduct,, especially this line is a difficult and delicate job. That
when it asserts that there is no evidence Is why it Is essential that issues which may
that the Russians specifically agreed notarise be discussed on the -basis of accurate
to divert the plant. to military use. The Information.
~' First, there was no "diversion" in oanec-
Secretary also makes inappropriate USe tion with the Kama River truck factory and,
of a memorandum by Mr. Brady to'sup- therefore, no violation of U.S..export controls.
port her assertion that there was. no A diversion occurs only, when end-use re-
such evidence. Mr. Brady has so noted. strictions pertaining to a license are violated.
in a letter to the Secretary of Commerce. The Kama River truck plant licenses were
Hi. letter points out. that it was the issued during the Nixon Administration and
clear understanding of the U.S.. Govern- contained no restrictions which we can iden-
ment, including the Department of De- gin limiting the use of the trucks and en-uced
the
factory.
cor y, that the plant would produce gen- military use of at trucks or ng neea pgreral purpose trucks for industrial and duced at Kama River would not constitute
agricultural use. Mr. Brady correctly a. diversion or violation of the law because.
points out that the issue facing the Com- the licenses contained no restrictions per
merce Department is not whether diver- taming to the use of those trucks or engines.
sion has occurred-that is indisputable- Nor would any military use of Kama River
but whether Commerce will. deny future trucks or engines entail diversion of the
foundry's computer, to further support the Kama the use of use of the. computter pertained litaineed to ations use of
d of
plant and cancel outstanding licenses. its computing capacity, not to use of prod-
The Secretary of Commerce is clearly ucts manufactured at the foundry. Several
creating- legalistic and sophistical obsta- of the licenses contain technical conditions
ties to rationalize its past nonfeasance which have nothing to do with limitations
and reluctance to take present action on the use of the factory output.
which would cut off further exports to This view is confirmed by the attached
con-
the Kama plant-an action which it ap- memorandum from Mr. Brady which con-
the tl eludes that n thorough review, which was
y perceives. to be incompatible requested by Senior Deputy Assistant Sure-
with its trade promotion function. tary Stanley J. Marcuss, has failed to dis-
The extent. to which the Department close the existence of any document which
of Commerce is willing to go to prevent. could be construed as a limitation on the
taking remedial action against the Soviet use of the factory output for civilian as on
Union is best illustrated by the fact that trasted with military purposes. Two excep-
the new Acting Director of OEA asked relevant nt to mentioned in me River memorandum are not the
plant. Mr. Brady to consider changing his testi- Second, at the time the licenses were is-
mony to the House subcommittee because sued, the Nixon Administration knew of the
it was causing the administration prob-
lems in dealing with the amendments
.that % and several of my colleagues, have
sponsored.
Mr. President, these actions by the
Department of Commerce underscore its
Finally,- contrary to some press reports.
Mr.. Brady has, not been -'demoted" nor has
any action been. taken: against him. He re-
tains. his position as, Deputy Director of the
Office of Export Administration,. a position
he has held for the last five years. Because
of his, position. as Deputy Director, Mr. Brady
served as Acting Director of the Office of Ex-
port Administration in the period between
the retirement of the previous director and
the appointment of the. new one.
I hope this will lay, to rest the misinforma-
tion which has recently surrounded this
subject.
Sincerely,.
[From the U.S. Department of Commerce]
Memorandum for Robin B. Schwartzman,
Deputy Director, Bureau of Trade Reg-
ulation.
From: Lawrence J. Brady, Deputy Director,
Office of Export Administration.
Subject: Kama River Case File.
On June 22; 1979, pursuant to your re-
quest, I thoroughly reviewed' the relevant
export license applications and supporting
documents submitted by various U.S. firms
seeking Department of Commerce authori-
zation to export commodities to the USSR's
Kama River Project. The results of this ex-
amination, with two exceptions, failed to
disclose the. existence of any document
which could be construed to represent an
agreement between parties or assurances an
to the specific application of products, i.e.,
military vs. civilian, in the truck manufac-
turing process.
The exceptions are found in license ap-
plications case numbers 813124 and 849531.
Case number 849801 contains a "letter of
protocol" between Mack Trucks, Inc., and c
Soviet trade delegation indicating that the
trucks assembled at Kama River would be
used for agricultural and industrial pur-
poses.
A copy of the protocol Is attached.
With regard to the protocol, I am con-
cerned that because Mack Truck pulled out
of the deal after signing the protocol,, which
you will note also included other parties,
including. SATRA, it may not be consid-
ei,ed' relevant to subsequent licensing ac-
tions. I intend to go through all of the li-
cense applications to see whether, or not we
referenced the protocol in subsequent li-
cense actions. I think we did. I am also send-
ing you separately a copy of the entire "front
office" file on KAMA.
Also attached is a June 14 memorandum
Dick Isadore prepared on the basis of a
quick review of all license applications for
the Kama River plant.
Attachments.
Memorandum for Juanita M. Kreps,. Secre-
tary, Department of Commerce.
Subject: Your letter to Chairman Ichord of
In your letter to members of Congress on
the subject of diversion from the Kama River
Truck plant, you have indicated that my
testimony to the effect that trucks produced
at Kama were being diverted to military use
was in error. You also Indicate that stories
implying that' Soviet military capabilities
have been helped as a result of an apparent
lack of vigilance by the Commerce Depart-
ment are in error.
You base this statement on your defini-
tion- of diversion as an activit
which o
l
y
y
n
possibility that Kama trucks. or engines could occurs when end-use restrictions pertaining
be used by the 'Soviet military. This factor to a patricular license are violated You fur-
.apparently was fully considered before- the ther state that the Kama River licenses con-
decision was. made. Thus, it cannot be said tained no restrictions on the use of the trucks
that. this matter was overlooked or that the and engines produced at the factory. There-
export control system failed to ensure that fore, you conclude, military use of the trucks
an relevant. factors, were. considered. is not diversion.
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I believe this definition of diversion is ex-
cessively narrow. Diversion occurs when the
product exported, or the product manufac-
tured from the technology exported, is used
in a manner contrary to the end-use repre-
sentation made to the U.S. Government at
the time of licensing. We know this has oc-
curred at the Kama River Truck plant.
The issue before the Department is not
one of prosecuting a "violator" as in a situ-
ation when an exporter illegally exports, but
rather the issue is what position the Com-
merce Department will take on pending and
future license applications for the Kama
River plant.
Now, exactly what kind of end-use repre-
sentations were made to the U.S. Govern-
ment at the time the licenses were granted?
Basically, there were three kinds. First, the
files reveal that in high-level government to
government discussions the Kama project
was discussed. Second, the U.S. Government
received many end-use statements attached
to license applications to the effect that the
end use was to manufacture "trucks." Third,
a protocol had been signed in May of 1971
between the USSR and Mack Truck, Satra
Consultant Corp., and the Greg Gary Intl.
Corp. stating that the Kama River Truck
plant was to produce eight-to-eleven-ton
trucks for agricultural and industrial use in
the USSR.
How reliable are these representations of
end use? Taken as a whole, there is no doubt
that the U.S. Government was led to believe
that these trucks were general-purpose to be
used for agricultural-industrial use.
You refer to my June 22 memorandum to
support the position that no distinction was
made between military and civilian use in
the licenses. My memorandum is quoted out
of context to support a much broader con-
clusion than I Intended. I was asked specif-
ically to search the files to determine whether
the words "civilian" or "military" appeared
in any document. I had, this done and made a
preliminary report.
The Government issued licenses on the
basis that general purpose trucks would be
produced at Kama. We would not have
wanted to build a plant for military products.
The Mack Truck protocol terms, which ap-
parently became null and void in September,
1971 after Mack Truck pulled out of the proj-
ect, specifically stated that the trucks to be
built were for agricultural and industrial
uses. That 'protocol helped form the context
in which the U.S. Government made its de-
cision to approve licenses for the Kama
River plant in 1971 and became void only
after the government had already made some
licensing determinations.
Even if there is a question about what end
use conditions or restrictions were applied in
this case, we would not want such a situation
to be repeated again. Commerce, therefore,
now has the responsiblity to assure that no
future licenses are issued which further sup-
port the plant.
With regard to the conclusion that no
diversion of the Foundry computer has oc-
curred, I believe this is open to serious ques-
tion. As I have said before, the wealth of
evidence presented to the Government was
that the entire facility was to produce civil-
ian trucks. The Foundry is the heart of the
facility, and the computer essentially con-
trols the Foundry. According to your defini-
tion, computer time is only being diverted if
it were to be programmed to guide an ICBM.
Next, I would like to address the matter
of my demotion. I was not replaced by n
new permanent Director. but by a new Act-
ing Director. Mr. Kent Knowles had to as-
sume active military duty when appointed
as Acting Director and was absent from the
office for two weeks. There was a real ques-
tion as to who was in command and by
whom official documents should be signed.
I was unformed the next day to continue to
sign everything and deal with all office
matters, but as Deputy instead of Acting
Director.
Furthermore, I had been repeatedly prom-
ised by the Personnel Office that the Direc-
tor's job would go through normal
personnel procedures and be open to com-
petition, and that I would have an oppor-
tunity to compete for it. This procedure was
not carried out.
In summary, I believe your letter confirms
my testimony on the export control system.
It is in essence, a "shambles". We have
before us the fact that the Soviets are
diverting trucks to military use, when end-
use representations made to the U.S. Gov-
ernment signified that they were to build
civilian, general-purpose trucks. We do not
deny that the Kama Factory is engaging in
military activity, but through a legalistic
and bureaucratic definition of diversion, we
take the position that this is not diversion.
We do not even indicate what position we
will take in the future.
This all points up what I said in my testi-
mony, namely that:
(1) The Soviets are diverting U.S. equip-
ment and technology whenever they have
the ability or the need to do so;
(2) There are no adequate safeguards
against diversion;
(3) The end-use certification basis upon
which the export control system functions
presently is meaningless.
If your letter indicates that the good faith
reached between the U.S. and the U.S.S.R. on
this project was meaningless, this will not
bode well for the SALT II Treaty in which
we are told that verification rests partly on
good faith between the parties and the
"spirit" of the agreement.
Lastly, I was not asked to participate in
the meetings which resulted in preparation
of the letter which you signed. I wished I
had been asked.
Mr. Knowles did approach me yesterday
afternoon however, and asked me whether
I would consider reviewing my testimony and
perhaps changing my statement on diversion,
because he said my statement was causing
the Administration problems. He was refer-
ring, he said, to the amendments Senator
Jackson intends to propose to the Stevenson
Bill. I told him that trucks were going to the
military at Kama and that regardless of the
semantics one used, I believed that was di-
version because it was contrary to the in-
tended end-use.
Because your letter and a copy of my June
22 memorandum (taken out of context) has
been sent to the Hill, I am making this
memorandum, along with the final report I
was preparing in answer to the Deputy Bu-
reau Director available as well.
Sincerely,
LAWRENCE J. BRADY,
Deputy Director,
Office of Export Administration.
JULY 19, 1979.
Memorandum for: Robin Schwartzman,
Deputy Director, Bureau of Trade
Regulation.
From: Lawrence J. Brady, Deputy Director,
Office of Export Administration.
Subject: Kama River.
This statement constitutes my final re-
port on my review of the Kama River Truck
Factory export licenses and is my response
to your July 12th note to me. I feel bound
to write this statement because I have been
omitted from all meetings discussing this
case. I strongly disagree with your draft
memorandum which concludes that no
conditions whatever were attached to the
Kama export licenses, and that no diver-
sion of U.S. equipment to Soviet military
use has occurred. I strongly object to the
use of a memorandum of mine to support
these conclusions.
S 10127
I feel this case clearly involves the Com-
merce Department's responsibility to pro-
tect U.S. national security as required by
the Export Administration Act of 1969, as
amended. Resolution of the diversion issue
calls for a judgment based on the U.S. Gov-
ernment's commitment to enforce that Act.
In connection with the Act, as a part of
its export control. policy, the Government
conceived the end-use/end user system in-
cluding consignee statements and "safe-
guard conditions" as a warning signal to
go off if U.S. exports were being used to
contribute significantly to the military ac-
tivity of its potential adversaries. Presum-
ably, the U.S. Government was sincere in
its commitment to take action if this "warn-
ing signal" were sounded, and to apply sanc-
tions if improper use were made of its ex-
ports of equipment and technology to con-
trolled designations.
The first test of such a safeguard system
is verification or confirmation of the use of
U.S. exports to significantly contribute to
the military activity of a potential adver-
sary. I have testified that such verification
is almost impossible, and therefore the first
test of the system always fails, not only
due to secrecy, but because of the conflict
of interest for businessmen expected to re-
port on such use. Nevertheless, in the Kama
case, the use of U.S. equipment and tech-
nology to perpetuate a Soviet military pro-
gram was reported and confirmed. by U.S.
intelligence sources. So, in this rare in-
stance, the first test was passed.
The second test of the system is whether
it can be enforced. That judgment should
carry out the Government's responsibility to
enforce the Export Administration Act as the
law of the land.
End-use statement, protocols, political
understandings and written conditions at-
tached to computer licenses are all part
of the imput into the judgment of whether
diversion has or is taking place. In the case
of Kama, the Government must make a de-
cision. Either it will take some sanction
against the consignee, the Kama River plant,
(the only real sanction available is to cease
further support of the plant by denying
pending and future licenses) or it will avoid
action by rationalizing the control process.
In the case of Kama, it is clear from the
evidence surrounding the granting of li-
censes that the Government should exercise
its judgment to enforce the Foundry Safe-
guards attached to the IBM computer used
to run the foundry. These conditions clearly
state that:
The reason for taking such action would
be to clearly demonstrate that the United
States no longer wishes to contribute to the
on-going military function of the world's
largest truck and engine manufacturing
plant.
SPECX71C FACTS ABOUT THE CASE
Having thus expressed my general assess-
ment of the Kama case, I'd like to address
your draft memorandum of July 10, 1979 to
Stanley Marcues. (See Attachment A) In your
first paragraph, you misquote and misinter-
pret the content of my report of June 22,
1979, on Kama. You state that:
The Office of Export Administration has
reviewed the files of over 176 cases identified
as part of the Kama River Truck Plant com-
plex (1 AMAZ). Its reports and additional
personal review support the conclusion that
dedication to military use of trucks or en-
gines produced by KAMAZ would not vio-
late the terms of U.S. export licenses issued
to companies which supplied technology and
equipment for the plant.
According io this logic, if the Kama River
facility were to tomorrow shift into full-
scale production of tanks or armored per-
sonnel carriers, this would not constitute a
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CONGRESSIONAL RECORD -SENATE July 21, 1979
violation of the licensing conditions at-
tached to the IBM computer. The only con-
dition which you would have us believe is
attached to the computer is that in which it
is programmed for direct use in a military
activity, such as guiding an ICBM.
The Office of Export Administration's re-
view did not support that conclusion. In
my June 22 memorandum (See Attachment
B), I reported that our review of the applica-
tions had produced two documents which
could be construed as agreements between
parties as to the snecific aonlication of the
products of the truck manufacturing proc-
ess. These were two copies of a protocol
signed in 1971, which had been attached to
two license applications.
I clearly stated in my fourth paragraph
that, "I intend to go through all the license
applications to see whether or not we refer-
enced the protocol in subsequent license ac-
tions." Thiq was obvio""slv not my final re-
port on safeguard conditions in the Kama
case, and it did not support the conclusion
you drew in the first paragraph of your
memorandum to Mr. Marcuss, stated above.
My report, in fact, implied that certain terms
of our licensing policy (which included any
protocol which may have applied), had been
violated.
THE PROTOCOL
The May protocol formed the control con-
text in which the U.S. Government made its
decision to apnrove licenses for the Kama
River Plant. Before Henry A. Kissinger,
Nixon's National Security Advisor, ordered
approval for further Kama licenses, with
stipulation for White House review, a series
of discussions took place between Soviet and
U.S. policy makers. In addition, a protocol
was stoned which applied to MACK Trucksp
Inc., Greg Gary Int'l. Corn., Satra Consulting
Corp., and the Soviet Union. The protocol
was signed on about May 11, 1971 and the
first licenses for Kama were approved in
August. It was not until September 16 that
MACK Trucks withdrew from the transac-
tion and by the terms of the protocol, appar-
ently became void. The protocol understand-
ing, was a viable instrument at the'time li-
cense applications were being reviewed in the
interagency system.
The protocol stated that:
Mack Trucks, Inc. later did not fulfill its
contract with the Soviet trade delegation,
but some of the other parties to the protocol
went on to receive licenses for the sale of
equipment to the Kama?River Truck factory.
In your memorandum, you quote Dr.
Maurice Mountain as saying in a report on
the computer safeguards that the United
States Government never required the Soviet
Union to promise not to use trucks or en-
gines Produced at Kamaz for military pur-
poses. However, you also quote Dr. Moun-
tain as saying that he predicated his report
on the fact that the civil nature of the end-
user was assumed to have been established
presumably by Commerce. Dr. Mountain
presumably assumed that the suitability of
the plant's end product was made in 1971
when the President ordered the issuance of
the first KAMAZ license. I suggest that this
assumption could be made largely on the
basis of the protocol and its context in
U.S.-Soviet discussions on Kama.
According to your logic, however, Dr.
Mountain's report assumed that the Com-
merce Department had already established
peaceful use of the end-products, whereas
in fact you say it had not. If your argument
is correct the licenses were ordered approved
without peaceful end-use requirements.
Furthermore, just to argue in the same logic,
it was certainly never stated in any under-
standing between parties or any document
that military use of the trucks or engines
was to be acceptable.
No one ever realized, either, how high the
value of U.S. equipment and technology
going to Kama actually was. A current tabu-
lation shows that the U.S. licensed about 1.5
billion dollars worth of equipment and tech-
nology for the Kama factory. The actual ex-
tent of U.S. involvement in this factory's
present activity must be part of the context
in which decision is made.
END-USE STATEMENTS
In addition to the protocol, some of the
licenses also contained end-use statements,
which makes the second paragraph of your
memorandum of July 10 incorrect when it
states:
On the contrary, the licenses for equipment
for the KAMAZ production line for which
President Nixon acting through his National
Security Advisor, ordered approved over a
period of years beginning in 1971 contained
no end-use conditions whatever.
This is incorrect. In addition to the com-
puter conditions the end-use statements
which we found attached to some licenses
in the files usually stipulated that the U.S.
equipment was to produce "trucks." This
ordinarily leaves room for interpretation
but there is no doubt that at the time the
general understanding was that these state-
ments referred to "general-purpose" trucks.
I gather also that it was this understand-
ing that "general-purpose" trucks were to be
produced at KAMAZ that led to the formu-
lation of the licensing conditions for the
computer by Dr. Maury Mountain, who ac-
cording to your memorandum assumed the
civil use of the factory's end-products when
he wrote the conditions.
When I stated in my June 22 memoran-
dum that no document (except the May pro-
tocol) could be found which could be con-
strued to assure an agreement as to the
"specific application of products," (Exhibit
B), I did not go into the complex matter of
the general-purpose trucks. Further I told
you orally that my statement did not apply
to the end-use consignee statements. I
fully intended to amplify that report at a
future date, after searching for further ref-
erences to the May protocol, as clearly im-
plied in my memorandum.
I therefore consider your memorandum
to be misrepresentation of the facts per-
taining to end-use statements, while I was
merely stating the literal findings of my in-
vestigation to that point.
This is not a "compliance" case. Let me
make that clear. The Export Administration
Regulations were not written to include the
"enforcement" of a controlled consignee's
end-use representation under the safeguard
system.
The definition of diversion is therefore dif-
ferent from the one which refers to a U.S.
firm's unlawful shipment of an export to
a consignee not stated on the consignee
statement.
Rather, this is a case calling for a deci-
sion based on the enforcement of the Ex-
port Administration Act of 1969, as amended.
In sum on the basis of all the above, I
suggest that your analysis and conclusions
do not apply in this case. Peaceful use of the
end-products produced at KAMAZ were as-
sumed by Dr. Maury Mountain when he
wrote the computer conditions. Peaceful
use was also part of the understanding that
end-use statements referred to "general-
purpose" trucks. Peaceful use was also stip-
ulated in the May Protocol as "agricultural
and industrial use." Whether or not some
Officials at the time who 'opposed the li-
censes questioned the extent to which the
Soviets could be held to those conditions,
this Department relied on all these factors,
involving end-use statements and safe-
guards.
Mr. JACKSON. Mr. President, the im-
plementation of the critical technologies
approach endorsed by the bill will not be
realized unless independent judgments
are made of the national security risks
of exporting America's most sophisti-
cated technology. The Department of
Defense has expertise to carry out these
reforms. The Department of Com-
merce-which has proven itself institu-
tionally and philosophically incapable of
developing a coherent export policy
which protects national security without
impairing legitimate trade--cannot be
entrusted a lead role in this important
undertaking.
Mr. President, I wish to say further
that the amendment that is pending is
-a product of bipartisan effort, as reflected
by the cosponsorship of the amendment
by our distinguished colleagues Mr.
NUNN, Mr. HOLLINGS, Mr. COHEN, Mr.
HATCH, Mr. HARRY F. BYRD, JR., Mr. CAN-
NON, Mr. MOYNIHAN, Mr. THURMOND, and
Mr. BAYH. I hope that the Senate will
agree to this amendment.
Mr. President, an amendment such as
the one we have proposed is necessary if
we are to turn an approach that every-
one agrees is sensible into an effective
instrument for balancing the require-
ments of national security against the
requirements of international trade.
Mr. President, I suggest the absence of
a quorum.
Mr. BAYH. Mr. President, will the Sen-
ator withhold thn,t, and yield to me?
Mr. JACKSON. Yes; I yield to the Sen-
ator from Indiana.
Mr. BAYH. Mr. President, I compli-
ment the Senator from Washington for
his initiative in introducing this amend-
ment. I appreciate the opportunity to co-
sponsor it with him.
I think the trade relationships which
exist between the Soviet Union and the
United States offer a good deal of bene-
fit for the citizens of the United States,
if those trade relationships are handled
properly. But for the life of me I do not
see why some of our corporations and
some of our businessmen and women in
this country should insist that-we give
their companies the opportunity to trade
technology to the Soviet Union that, in
the event of a major difference of opin-
ion between ourselves and the Soviets,
could accrue to the detriment of the
United States.
The Senator from Washington has
Pointed out that some of this very trade
has occurred; and this amendment is de-
signed to make impossible the repetition
of that practice in the future.
As chairman of the Senate Intelligence
Committee, it has been my good fortune,
together with the Senator from Illinois
(Mr. STEVENSON), who is managing this
bill, the. Senator from Washington (Mr.
JACKSON), who is the sponsor of the
amendment, and several of our col-
leagues, to have had the opportunity, in-
deed the privilege, to examine carefully
what we have had the capacity to do in
intelligence.
All of us have had the opportunity and
the responsibility to carefully monitor
the overall defensive capability of the
United States of America; and, although
there are things about our defensive pos-
ture that I suppose all of us would like to
see strengthened a bit, and hopefully as
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 July 21, 1979 CONGRESSIONAL RECORD -SENATE
time goes by in this session we can take
steps to do that very thing, I have been
extremely proud of the kind of work that
many of our intelligence people have
been doing in collecting information all
over the world.
One of the major elements is that avail-
able to our, military and to our intelli-
gence is sophisticated space age technol-
ogy. Yet we have a handful of people in
this country who would like to open the
doors and sell for profit this very criti-
cal technology, which could be all that
would save this country in the event of a
major confrontation.
So it is a privilege to join with the Sen-
ator from Washington to help our col-
leagues understand, recognizing the ben-
efits we can have from trade with the
Soviet Union-certainly many of our
farmers are getting tremendous benefits
from that trade-and at the same time,
the Senator from Washington would put
on a "safety valve" and say, "Wait just a
minute; let us make sure we are not giv-
ing the Soviet Union or some other coun-
try the critical technology which is the
real basis of the military strength of this
country."
It seems to me utterly reasonable that
we finally place the responsibility for
the determination of what items and
products can be effectively utilized by the
military of a potential adversary with
the Secretary of Defense and that is
what amendment No. 340 does. In addi-
tion, this amendment makes it clear that
a list will be prepared by the Secretary
of Commerce subject to the authority
of the Secretary of Defense to provide
a full record of those critical items and
technologies which will be prohibited
under the act. Finally the amendment
places the Secretary of Defense in a posi-
tion to make a determination of foreign
availability of an item or technology
which might be put to military use by
a potential adversary.
By making these importants changes
in existing law, we are recognizing the
dangers which might result in an un-
bridled and uncontrolled transfer of
'technologies to the Soviet Union. At
a time when we depend more than ever
before on the vast technological ca-
pability of our Nation's military to sus-
tain our security in an age of essential
equivalence, we simply must be sure that
no door is left ajar in protecting our Na-
tion's security. This is one prudent step
which is probably long overdue. I cer-
tainly hope that the Senate will take
that step today.
Mr. President, one of the events which
prompted this amendment was the
revelation that the U.S. technology pro-
vided at the Kama River truck plant
is turning out diesel engines for military
vehicles. This was disturbing. But what
was even more disturbing was to learn
that in fact, during the Nixon adminis-
tration, no provision was made against
end-use diversion to military purposes.
As the Department of Commerce indi-
cated, " * * * military use of the trucks
or engines produced at Kama River
would not constitute a diversion or vio-
lation of the law because the licenses
contained no restrictions pertaining to
the use of those trucks or engines." This
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being the case, it is theoretically pos-
sible that if a means could be found to
utilize the Kama foundry American com-
puter to make engines for a BMP infan-
try fighting vehicle or other type of troop
transport, there is nothing we could do
because it is already too late to insist on
restrictions once the technology is trans-
ferred.
This example of what can be done
through the utilization of technology
transfer for military purposes is, how-
ever, of much greater concern in the
area of computer technology used in
look-down/shoot-down radars, target
discrimination and sonar capability in
antisubmarine warfare, flight control
technology for V/STOL aircraft, preci-
sion guidance systems in antitank guided
weapons and the list goes on and on.
The late Hubert Humphrey said that
he was in favor of selling to those Com-
munist bloc countries who would be our
adversary "anything they can't shoot
back." It is pretty clear that the critical
items and technologies which we are
talking about today are things that can
be shot back at us with deadly precision
and destabilizing accuracies. I would
hope, therefore, that the Senate over-
whelmingly adopts.the amendment now
being considered and hope that it will
put us on the road to a more coherent
and rational process whereby the tech-
nologies critical to our national security
are accordingly controlled by those in a
position to correctly assses their military
potential.
At an appropriate time during the de-
bate on this amendment I would like to
propose to the Senator from Washington
an amendment that has been suggested
by the intelligence community, which
would protect the sources and methods
that are utilized in the collection of in-
telligence.
I again compliment the Senator from
Washington, and yield the floor.
Mr. HAYAKAWA. Mr. President, will
the Senator from Washington yield me
a couple of minutes? I would like to
speak in support of his amendment.
Mr. JACKSON. I yield the Senator
from California 3 minutes.
Mr. HAYAKAWA. Mr. President, I
wish to speak in support of this amend-
ment.
Mr. President, one of the most im-
portant things about the Soviet system
is the complete suppression of freedom
and personal liberty. Therefore, techno-
logical breakthroughs are most likely to
occur in free countries where researchers
and scientists can proceed with their own
experiments, experiments of their choice.
I do not see why, when we have some-
thing of great value which is beyond the
capacity of Soviet technicians and scien-
tists to produce, we should let them have
free access to it at our own cost and at
our own peril, especially in the case of all
of that equipment which the Senator
from Indiana has mentioned which has
to do with the procuring of intelligence
and military information, and which also
has to do with the development of fur-
ther armaments.
I am very, very much in support of our
not giving our technology away to others.
S 10129
I am happy to support the amendment
of the distinguished Senator from Wash-
ington.
Mr. JACKSON. Mr. President, I thank
the distinguished Senator from Cali-
fornia for a very fine statement. -
Mr. President, I have received letters
from both the AFL-CIO and the Indus-
trial Union Department of the AFL-CIO,
expressing full support for this amend-
ment and the other amendments that I
will be proposing.
I ask unanimous consent that the' let-
ters of support from the two labor orga-
nizations be printed in the RECORD at
this point.
There being no objection, the letters
were ordered to be printed in the RECORD,
as follows:
AFL-CIO,
Washington, D.C., July 19,1979.
Hon. HENRY M. JACKSON,
U.S. Senate,
Washington, D.C.
DEAR SENATOR JACKSON: The AFL-CIO fully
'supports the amendments which you and
seven of your colleagues hav.r proposed to
S. 737, the Export Administration Act of 1979.
As Larry Brady, the Acting Director of the
Office of Export Administration, indicated in
his testimony, controls on exports of
security-sensitive technologies are seriously
defective. The Commerce Department is so
overburdened with export license applica-
tions that it cannot effectively enforce the
existing weak provisions in the law. More
fundamentally, the responsibility for protect-
ing national security should not rest with an
agency whose primary concern is to increase
exports. We agree with you that the chief
responsibility for formulating a list of goods
and technologies to be controlled for na-
tional security purposes should be shifted to
the Secretary of Defense.
Your amendment designed to produce a
"reliable evidence test" with regard to deter-
mining the foreign availability of advance
technology would provide the assurance a
sound policy requires that foreign avail-
ability is not merely an excuse for otherwise
improvident licensing.
The current SALT debate has focused on
the presumed U.S. technological advantage
in the strategic competition. Every step must
be taken to prevent the Soviets from closing
that gap. Your amendments are an important
step in that direction.
Sincerely,
LANE KIRKLAND,
Secretary-Treasurer.
AFL-CIO,
INDUSTRIAL UNION DEPARTMENT,
Washington, D.C., July 17, 1979.
DEAR SENATOR:
The Senate is expected to vote this week on
S. 737, the Export Administration Act of 1979..
There are two issues which will be raised dur-
ing the debate that are of critical importance
to the Industrial Union Department, AFL-
CIO.
Senator Jackson will offer a series of
amendments designed to restrict the flow
of critical technologies to controlled nations.
These amendments would not impose any
additional burdens on trade. They would,
however, provide a more effective framework
for the identification and effective control of
security related technologies and for the re-
laxation and elimination of unnecessary con-
trols.
The Acting Director of the Office of Export
Administration (OEA) at the Commerce De-
partment recelitly testified to a House Sub-
committee that the export controls process is
"a shambles." It is clear that a loose and
inefficient export control system threatens
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. CONGRESSIONAL RECORD -SENATE July 21, 1979
to undermine the narrowing technology gap
on which our security increasingly depends.
What we need to create is an effective sieve
through which our technology will flow, and
the Jackson amendments seek to.do that.
One series of proposed amendments would
give the Secretary of Defense primary respon-
sibility for formulating a list of technolo-
gies and goods that would be subject to na-
tional security controls. The Commerce De-
partment is presently overburdened with
some 70,000 license applications each year,
and lacks the expertise to formulate the list
of critical technologies.
Another series of amendments would ad-
dress the important area of foreign availabil-
ity. Too often a mere assertion of "foreign
availability" on export license applications is
used by the Commerce Department to justify
license approval when close investigation
might have revealed that U.S. suppliers exer-
cised effective control over the goods ar tech-
nologies involved. The proposed amendments
set down a more serious evidentiary test be-
fore concluding that advanced technologies
or goods are available from sources other
than the U.S. This "reliable evidence test"
is clearly the only logical way to go. I
At the present time, licenses may be
granted on the basis that the recipient na-
tion makes a representation that the "end-
use" of the technology will be non-military;
or on the basis that there are effective safe-
guards against diversions to military use.
Past experience tells us that such safeguards
cannot be devised. A proposed amendment
would direct that, to the maximum practi-
cable extent consistent with the provisions
of the act, export of critical items shall be
prohibited to nations threatening U.S. secu-
rity. This would also have the benefit of obvi-
ating many unnecessary license proceedings.
A related amendment would provide that ex-
ports to non-communist nations be subject
to validating controls which are reasonably
designed to prevent the re-export of such
critical items to communist nations, as pres-
ent export regulations generally do not con-
trol such exports of technologies.
These amendments dealing with the trans-
fer of technology are the only amendments
to the Export Administration Act which we
support.
'The bill also contains language which
would extend and strengthen current restrict-
tions on the export of Alaska oil. We urge
your support. This is no time to ship millions
of barrels of oil to foreign lands while Amer-
lcans are sitting in gas lines. Only if all
Alaska oil remains in the U.S. will the oil
companies have any incentive to build the
west to east pipelines our country so badly
needs, and to rebuild the west coast refiner-
ies. An efficient energy transportation system
is an essential element of national energy self
reliance. There is already more than enough
profit incentive in Alaska oil's decontrolled
price to encourage increased production.
Alaska oil belongs at home where it can be
used by the American people.
The Industrial Union Department, AFL-
CIO urges your support of the restriction on
Alaska oil contained in S. 737 and of the
amendments which would provide restric-
tions on the transfer of technology to con-
trolled nations.
Sincerely,
JACOB CLAYMAN,
President-Secretary-Treasurer.
The ACTING PRESIDENT pro tem-
pore. Who yields time?
Time will be charged equally on the
amendment.
Mr. HEINZ. Mr. President, I yield not
to exceed 5 minutes to the senator from
South Carolina.
Mr. THURMOND. Mr. President, I rise
as a cosponsor of the amendments pro-
posed by the junior Senator from Wash-
ington (Mr. JACKSON) and others, to
tighten controls on the export of tech-
nology with military application to the
Soviet Union and other Communist
states.
When the war machine of the Soviet
Union becomes stronger, our own secu-
rity and the security of the entire free
world is adversely affected. Obviously.
we have no way of imposing an absolute
prohibition on the Soviet military build-
up-a buildup which already far eclipses
the Nazi military power growth which
preceded World War II.
However, at a time when we are spend-
ing $130 billion a year for the defense of
the United States, it simply makes no
sense that we should be aiding the So-
viets in improving the mobility and the
deadliness of their enormous war ma-
chine by permitting, and even encour-
aging, the export to the Soviets of high
technology equipment, including entire
industrial plants.
As a member of the Senate Armed
Services Committee, I believe the re-
peated reports that the administration
intends to further relax the already
sadly inadequate limitations on the con-
trol of exports to the Soviet Union is a
challenge Congress must meet headon.
The amendments proposed by Senator
JACKSON and his cosponsors will result
in realistic and effective controls on this
most serious situation. The need for
these amendments is obvious and I would
like to relate to the Senate why I believe
these changes are necessary.
In one of his statements before a con-
gressiot;al committee, Dr. Malcolm R.
Currie, then director of Defense Research
and Engineering stated;
American security ... stands on a foun-
dation of technological superiority. We need
superiority in defense technology. First, be-
cause the openness of our society tells our
adversaries what we are planning in military
technology, while their secrecy-forces us to
provide for many possibilities. Second, in mil-
itary operations, we traditionally depend on
superior quality to compensate for inferior
numbers. Third, in order-to interpret vital
but fragmentary intelligence information, we
must have extensive prior experience in the
area.
But, instead of attempting to retain
and expand our technological lead in or-
der to compensate for the numerical in-
feriority of our Armed Forces, we appear
to be determined on helping the Soviets
to catch up with us by providing them
with access to our most sophisticated
technologies and equipment.
Mr. President, the able Senator from
Washington (Mr. JACKSON) wrote to
President Carter on July 25, 1977:
. I am persuaded that the effect of our
past and current policies in this area has been
to enable the Soviets and their allies to ac-
quire technology that bears importantly on
the military balance between East and West.
.. : In my judgment, our current condition
can best be described as acute hemorrhaging.
The situation has, if anything, become
worse since this statement was made.
In the paragraphs that follow, I intend
to examine several case histories, from
a much longer list of such histories, deal-
ing with the export of technology and
equipment that have dramatically aug-
mented the Soviet military threat to the
United States.
THE CASE OF THE BRYANT GRINDERS
Back in 1960-61 the Soviet Union
sought to purchase from the United
States 45 Bryant Centalign-B grinders,
which are machines used in the mass
porduction of ultra-high precision minia-
ture ball bearings. Our ability to produce
these miniature ball bearings and the
Soviet inability to do so, gave us at that
time a substantial lead in the fields of -
miniaturization, missile accuracy, and
the precision control of our firing
systems. The sale of the Bryant grinders
at that time was approved first by the
Eisenhower administration and then by
the Kennedy administration. Fortu-
nately, the Senate Subcommittee on In-
ternal Security held hearings on the pro-
posed export of the Byrant machines to
the Soviet Union. After taking testimony
from 13 of the top ball bearing engineers
in the country, it wrote a report so per-
suasive that President Kennedy, when he
read it, overruled the CIA, the Advisory
Committee on Export Control, and his
own Cabinet, and ordered the cancella-
tion of the shipment.
I should like to quote just two brief
paragraphs from the report, which
changed President Kennedy's mind, be-
cause these paragraphs have an across-
,the-board application to the entire prob-
lem of technology transfer.
One of the ball bearing engineers who
testified, Mr. Henry Konet, told the sub-
committee that-
It is necessary to distinguish between giv-
ing away secrets, and know-how and capabil-
ity. Our manufacture of these small devices
is no secret-even the manner is not difficult
to determine-but the capability to do it well
and economically has taken years to develop
and should not be sold to a potential adver-
sary.... The situation is not one of selling
our adversary a club-but machines which
help to produce better clubs faster and
cheaper.
After summarizing the testimony, the
subcommittee's report offered this basic
conclusion:
. our national security obviously de-
mands that we stop helping Soviet industry,
especially the Soviet defense industry, to
overcome its weaknesses. It demahds, on
the contrary, that we inflict delays on them
whenever this is within our power, that we
make things more difficult for them rather
than easier.
. the Senate Subcommittee on Internal
Security is strongly of the opinion that the
machines in question should not be shipped
to the Soviet Union.
Unfortunately, the Nixon administra-
tion in 1972 approved the export of 164
Bryant Centalign grinders to the Soviet
Union. In the 12 years that had elapsed
since they had first attempted to buy
the Bryant machines, the Soviets had
desperately been seeking to duplicate
their technology. Left to their own re-
sources, the Soviets were unable to do so.
That is one of the chief reasons why we
were able to retain our technological
lead in inertial navigation controls and
missile accuracy throughout the 1960's
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and into the early 1970's Conversely, our
sale of the Bryant grinders to the Soviet
Union, according to members of our in-
telligence community, has played a major
role in the dramatic rate at which the
Soviets have been able to improve the
precision of their own missiles and to
catch up with us in the field of MIRVing.
The improved accuracy of the Soviet
'missiles has made our own Minuteman
system increasingly vulnerable to the
threat of a Soviet first strike-as a result
of which we may now have to spend as
much as $40 to $45 billion to replace the
Minuteman system with a mobile missile
system.
THE KAMA RIVER TRUCK PLANT
In the early 1970's, the administration
approved a project under which an
American engineering combine, headed
by the Swindell-Dressler Co., contracted
to build a giant truck plant for the
Soviet Union on the Kama River in
Siberia. This plant is now nearing com-
pletion. When it is completed, it will, re-
portedly, have an annual production ca-
pacity of 250,000 multiple axle trucks,
which, according to the noted expert,
Dr. Miles Costick, is "more than the ca-
pacity of the entire U.S; heavy truck in-
dustry."
It is not just the size of the project
that is disturbing. In testifying before
a congressional committee on April 23,
1974, Donald E. Stingel, president of the
Swindell-Dressler Co., stated that the
technology that was being built into the
Kama River plant was in advance of that
in any plant in the United States.
The export of the Kama River plant
to the Soviet Union was approved by the
Commerce and State Departments on
the ground that the equipment involved
was "nonstrategic." In addition, the
Soviets had to sign a statement in this
case, as they do in importing other high
technology equipment, pledging not to
use the technology for military purposes.
All this, in my opinion, is nonsense be-
cause we have absolutely no way of en-
forcing such a pledge. In fact, it should
have been obvious from the beginning
that the Kama River plant was going to
be used to service the Soviet military es-
tablishment rather than to service the
non-military sector of the Soviet econ-
omy.
Mr. President, it came as no surprise
to me-and it should not have come as
a surprise to anyone who knows any-
thing about the Soviet Union-that Mos-
cow has been using the Kama River
plant not only to build conventional
transport and scout vehicles for the
Soviet Armed Forces, but also for the
purpose of producing armored personnel
carriers and assault vehicles, including
the T-72 battle tank-the most advanced
tank in the Soviet military inventory.
This information was developed in the
course of a hearing of the House Armed
Services Committee in May 1979.
In this hearing, Representative RICHARD
ICHORD, quoted from 'a classified intelli-
gence report and from the .testimony of
Hans Heymann, the CIA's national in-
telligence officer for political and eco-
nomic affairs. Mr. ICHORD noted that, ac-
cording to Heymann, the Kama River
plant, although not in full production,
has been turning out some 50,000 diesel
engines a year for installation in mili-
tary vehicles.
When the Senator from the State of
Washington (Mr. JACKSON) spoke of
"acute hemorrhaging" the export of the
Kama River truck plant was one of the
things he had in mind.
In the case of the Bryant grinders, we
were selling Moscow technology that has
helped it to enormously upgrade the
quality of its strategic missile arsenal. In
the case of the Kama River plant, we
have sold them technology which greatly
enhances the Red Army's capability to
launch a blitzkrieg attack against West-
ern Europe.
THE SALE OF DEEP-WELL PETROLEUM
TECHNOLOGY
Only last year, the Carter administra-
tion approved a total of 74 applications
for the export of oil technology to the
Soviet Union. One of these applications
involved the sale by Dresser Industries of
a $144 million plant designed to produce
the highly specialized bits used in deep-
well petroleum drilling. Writing about
this transacton in the April 1979 issue of
Commentary, Mr.'Carl Gershman said,
This particular deep-well technology is
needed by the Soviet Union if it is to develop
major new oil reserves, an urgent priority
since it is now expected to become a net im-
porter of oil by the mid-1980s. Lacking ade-
quate energy sources, the Soviet economic
growth rate could slow to about 3 percent.
which would make it exceedingly difficult
to increase military spending by 4 or 5 per-
cent every year, or to finance a Cuban expedi-
tion to Africa. Hence the Soviet Interest in
American oil technology.
I want to call to the attention of the
Senators the fact that the Dresser In-
dustries application to export deep-well
technology to the Soviet Union was
strongly opposed by Energy Secretary
James Schlesinger, by members of the
National Security Council and by a spe-
cial task force set up by the Defense Sci-
ence Board. The report of the task force
stated that the petroleum drill bit tech-
nolgy we have now sold to the Soviet Un-
ion was "wholly concentrated in the Unit.
ed States," that it "has strong strategic
value in the 1980's," and that the con-
struction of the plant by Dresser Indus-
tries would make it possible for the So-
viets "to enter world markets with ad-
vanced drilling capabilities,"-thus giving
them ac:ess to enhanced influence in the
oil producing areas. The report also noted
that, as a by-product of the new technol-
ogy which we are helping them to ac-
quire, the Russians would also be enabled
to manufacture more sophisticated
armor piercing projectiles.
These are only three examples of a
mush longer list of technology transfers
that have had the effect of enhancing-
dangerously enhancing in my opinion-
the military capabilities of our only seri-
ous adversary. Dr. Miles Costik, direc-
tor of the Institute on Strategic Trade,
has compiled a much longer list of such
technology transfers in a recent paper
entitled "The Soviet Military Power as a
Function of Technology Transfer from
the West." Among the other items in Mr.
Costick's compendium are "American
wide-body jet aircraft technology (crit-
ical in deployment of air-launch cruise
missiles; numerous space technologies
also relevant for military effort in space
(space capsules coupling technology,
astronaut's space-suit technology,
relevant computer technology, etc.) ;"
and highly advanced computers that
have obvious military applications and
which the Soviets could not possibly have
produced left to their own technologi:al
resources.
Summing up this entire situation, Mr.
Costick stated:
The success of the continuing Soviet raids
on Western technology, but most important-
ly U.S. technology, that can be used in sys-
tems for ICBM guidance, anti-submarine
warfare, automatic fire control and other
military applications has clearly demon-
strated a critical need for an intensified reex-
amination of what, how and why it is being
sold to the Soviet Union, its satellites around
the globe and Communist China.
Mr. President, so that the Senators will
have available the documentation an
which I have based my statement, I ask
unanimous consent to have printed in
the RECORD at this point the following
items:
An article by Dr. Miles Costick, pub-
lished March 22, 1979 by the Institute
on Strategic Trade entitled "The So-
viet Military Power as a Function of
Technology Transfer from the West;"
an article by Carl Gershman published
in the April 1979 issue of the Commen-
tary magazine entitled "Selling Them
The Rope;" an article published in Hu-
man Events on May 26, 1979 entitled
"Carter Begins Drive to Step Up Soviet
Trade;" a report by the Senate Sub-
committee on Internal Security printed
in March 1961 entitled "Proposed Ex-
port of Ball Bearing Machines to the
Soviet Union;" and another article in
Human Events published June 2, 1979
entitled' "Will House Beef Up USSR Mili-
tary Capability?"
Mr. President, in conclusion, I wish
to state that these amendments which
I am cosponsoring are of great impor-
tance to the national security of our
country. I urge the Senate to consider
them carefully and I believe in so doing
each member will find that by adopting
these amendments, we will be enhancing
our own security and helping to protect
the free world.
There being no objection, the material
was ordered to be printed in the RECORD,
as follows: -
THE SOVIET MILITARY POWER AS A FUNCTION
OF TECHNOLOGY TRANSFER FROM THE WEST
(By Dr. Miles Costick)
Due to its implications for national and
international security, the trade between
the industrialized democracies of the West
and communist governments cannot be
treated as a strictly economic proposition.
The perennial protracted conflict between
two socio-economic systems, which prevail
in the world today, clearly demonstrates
that in international commerce, economic
and strategic elements are inextricably in-
tertwined. In recent years, more than ever,
the strategic elements in commerce have
come to outweigh the economic as far as
the so called "superpowers" are concerned.
One thing that must be understood is the
need for consistancy between a nation's
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strategic objectives and its foreign economic
policies.
. DETENTE AND TRADE
On February 10, 1922, British Prime Min-
later Lloyd George made a statement:
"I believe we can save her (Russia) by
trade. Commerce has a sobering influence
. trade, in my opinion, will bring an
end to ferocity, the rapine, and the crudity
of Bolshevism surer than any other method."
Since the early days of Soviet Bolshevism,
the Western world has been trying to coax
the communists into not being communists
with periodic injections of credits and tech-
nology. The hoped-for result echoed in
British Prime Minister Lloyd George's state-
ment-now more than 57 years past-has
failed to materialize. Yet leaders of the cap-
italist world continue to charge ahead like
so many modern-day Don Quixotes in search
of their impossible dream: The merger of
totalitarian dictatorship with capitalism.
NOTE.-Nothing written here is to be con-
strued as an attempt to aid or hinder the
passage of any bill before Congress.
. It is not a common perception that the
industrialized democracies and the Soviet
Union-with its surrogates around the globe
are currehtly engaged in World War III,
and the battlefields are economic. The
economic warfare conducted by the Soviet
Union is an intrinsic -part of its ideology
and the world wide revolutionary process.
On the free world side of the equation, this
is not perceived for what It is, and the result
is "economic detente" which facilitates
transfer of wealth from the West to the
East. By providing critical technology, gov-
ernments and entrepreneurs of the in-
dustrialized democracies strengthen Soviet
strategic capabilities and enhance Soviet
self-assurance, which translates itself in the
International arena into more and more
daring actions. The United States and its
allies do not have a clear commercial policy
tailored to their strategic and economic-A_
terests vis-a-vis the communists. Instead
they conduct commerce with the totalitari-
ans based on a vulgar assumption that "one
can tame them or buy them through tom-
merce".
' Current U.S. policy on trade with the
communists was the brainchild of Henry
Kissinger. However, the same policy has con-
tinued unabated under the Carter adminis-
tration. Kissinger's concept of "economic de-
tente" was baseil on an attempt to link the
Soviet geostrategic behavior with availability
or denial of economic benefits from the
United States and its allies. Kissinger en-
visioned that "through a set of strategic and
economic agreements, the U.S. Gould spin a
web of vested interests thereby encourag-
ing the Soviet Union to temper its inter-
national behavior."
This, of course, has not happened. The
U.S.S.R. continues to pursue its strategic
and ideological objectives and through that
process seriously threatens U.S. national
interests.
After the infusion of $64 billion worth
of credits from the Western world and Japan,
and about 1,000 joint manufacturing ven-
utres with Western and Japanese firms, as
well as about 1,200 contracts on industrial
cooperation signed between COMECON gov-
ernments and Western firms, the Soviet
Union using proxy Cuban troops and its
Eastern European satellites threatens the
free. world's access to the critical resources
of Africa and the Middle East.
The massive transfer of technology and
capital from the West to the East, instead
of enhancing Soviet interest in peace and
tranquility has accomplished exactly the
opposite. It made a tremendous contribu-
tion to the Soviet strategic capabilities and
in consequences encouraged its belligerency.
The aforementioned development is ab-
solutely in accordance with the plans laid
down by Leonid Brezhnev to Warsaw Pact
communist parties' leaders in Prague in June
1973. In a secret meeting Brezhnev spoke
very frankly about using "economic detente"
to consolidate the strength of Soviet bloc
economies and to advance their standing
strategic objectives.
Brezhnev told the Soviet bloc party lead-
ers that by 1985 they will have achieved most
of their objectives in Western Europe, that
they will have consolidated the Warsaw Pact
position, improved the economy, and
achieved a decisive shift in the correlation of
forces, and that they will be able to exert
their will wherever they need to.
In his famous treatise on Soviet military
strategy, Soviet Marshal V. D. Sokolovskiy
commented,
"In the present epoch, the struggle for
peace and the fight to gain time depends
above all on an unremitting increase in
Soviet military power and that of the entire
socialist camp based on the development of
productive forces and the continuous growth
of its material and technological base."
TECHNOLOGICAL COMPETITION
With respect to national security, the term
"technological competition" refers to the ef-
forts of competing. political-economic sys-
tems to maintain, or to achieve, superiority in
high-technological areas- that are important
in effective military systems. In this era of
unprecedented change, our technological
strength is the key to our long-range sur-
vival as a nation.
In one of his statements before a Congres-
sional committee, Dr. Malcolm R. Currie,
then Director of Defense Research and Engi-
neering, stated:
"American security ... stands on a foun-
dation of technological superiority. We need
superiority in defense technology. First, be-
cause the openness of our society tells our
adversaries what we are planning in military
technology while their secrecy forces us to
provide for many possibilities. Second, in
military operations, we traditionally depend
on superior quality to compensate for inferior
numbers. Third, in order to interpret vital
but fragmentary intelligence information,
we must have extensive prior experience in
the area."
In some very important areas our tech-
nological lead over the Soviet Union is gone;
in others the Soviets are ahead-(i.e.- di-
rected energy weapons based on laser beams
or charged particle beams, surface-effect ve-
hicles, anti-personnel pressure weapons, ap-
plication of certain technologies including
computers in entirely new military systems
and operations, etc.). \
The technology balance is dynamic. In
evaluating the current technology balance
and its dynamics, the experts agree that the
Soviet Union has a very substantial and de-
termined effort. According to a recent state-
ment by Defense Secretary Harold Brown,
the Soviet R. & D. expenditures are three
times greater than that which the U.S.
spends on its R. & D. Moreover, the Soviets
are inexorably increasing their level of tech-
nology relative to ours and are, in fact, seiz-
ing the initiative in numerous important
areas.
The technology development is molding
future Soviet strategy. From all indications,
the future Soviet strategy will be world dom-
inance, with technology as a central factor.
TRANSFER OF TECHNOLOGY
Design and manufacturing know-how lie
at the foundation of America's world posi-
tion-both economic and military. Until
relatively recently, the United States had
out-distanced the rest of the world through
its particular genius, to turn- laboratory
dreams into realities.
"Yet today that mastery of design and
July 21, 1979
manufacturing i$ being rapidly transferred
to friendly nations, to non-aligned nations
and to Warsaw Pact nations." So wrote, not
too long ago, J. Fred Bucy of Texas Instru-
ments. Bucy wrote, "Exporting design and
manufacturing know-how to potential ene-
mies strengthens them militarily. And ex-
porting that same know-how to potential
economic competitors-friends or foes-
strengthens them to compete against us for
world markets. Yet we continue to transfer-'
know-how by many means."
Over the past 10 years, the outflow of
technology to the Communist dominated
countries has dramatically increased. The
amount of significant technology that has
been transferred and its impact on the
military capability of the Communist coun-
tries, particularly the Soviet Union, is not
exactly known.
Some will argue that its impact has been
minimal. Our concern is that the transfer
of militarily significant technology has been
of major proportions, and that the Soviet
Union has narrowed the gap in its relative
weapons capability with the United States
to our detriment. The change will become
evident over the next five years. Unfortu-
nately, by the time it becomes apparent, it
will be too late to act.
The Soviet Union and Eas+ern Eurone have
consistently lagged behind the West in in-
dustrial technology and have used detente
as a means to pursue access to the latest
technology from the United States and other
industrialized nations. Increasingly, they are
insisting that continued updating of the
technology be a part of all new contracts.
They are not interested in pure science,
which they can get free through scientific
publications and exchanges or for the price
of tuition at major graduate schools and
technical institutes. They are highly skilled
in scientific theory. They also don't want
to purchase products over an extended pe-
riod of time, but only to fill in the gaps
that they cannot currently make themselves.
Technology acquisition is their obiective
because, once acquired, it provides. them a
capability to produce their own goals and
services to satisfy both present and future
needs. And technology provides a base to
support subsequent advances in the per-
formances of products.
The Soviet Union and Eastern European
go' ernments have used a variety of mecha-
nisms to acquire Western technology. They
include the purchase of turnkey factories
from the United States and other free in-
dustrialized nations; protocol and technical
exchange agreements with Western and Jap-
anese firms; government-to-government sci-
ence and technology exchange agreements;
visitations and consultations with U.S. tech-
nical experts in industry and universities;
enrollment at the best technical universities;
unauthorized transfers from third countries;
and outright espionage.
Concern, for this threat to the United
States security, has led Senator Henry Jack-
son to write President Carter on July 25,
1977: ". . I am persuaded that the effect
of our past and current policies in this area=
has been to enable the Soviets and their
allies to acquire technology that bears im-
poFtantly on the military balance between
East and West." "... In my judgment, our
current conditions can best be described as
acute hemorrhaging,"
DUAL PURPOSE TECHNOLOGIES
Many of the technologies of greatest inter-
est to the COMECON governments have im-
portant military as well as commercial ap-
plications. In recent years, the leading edge
of these technologies have increasingly been
developed by the private sector for commer-
cial applications and only later for military
applications.
As a consequence, increased commercial
contacts with the. U.S.S.R. and Its COMECON
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partners may result in the outflow of signifi-
cant technologies, before the application of
these technologies to advanced weapon
systems in the United States.
Soviet intelligence agencies have a long
tradition of focusing heavily on acquiring
industrial know-how. The Soviets have made
major covert efforts to acquire key compo-
nents of high technology, particularly in the
computer field. They often focus on very
small firms which can supply particular crit-
ical components or facilities.
The Soviet agency which actually uses a
product may be different from the agency
that comes to purchase it. End use controls
are, therefore, often ineffective; particularly
with sales to a completely state owned eco-
nomies of the Soviet bloc. This problem of
multiple end uses is, if anything, more acute
with the most modern technology. Reproc-
essing plants may produce plutonium for
bombs as well as for fuel. Technology for the
production of wide-body aircraft can con-
tribute to military airlift capabilities as easily
as to civilian transportation. The equipment
for producing circuits used in pocket calcula-
tors may also be used for guidance computers
of missiles. New technology used in medicine
may have highly important military or in-
telligence applications. Computers for proc-
essing seismic signals in?geological explora-
tion might also be used to process sonar sig-
nals in antisubmarine warfare. Capabilities
for launching communications satellites may
be used for military missiles. The technology
for high-bypass turbofan engines and high
inlet temperature turbines can be used in
military as well as civilian aircraft. And
NASA's "joint ventures" in space exploration
will inevitably help Soviet experts to run
their military space program.
MILITARY DIMENSION OF TRADE
It is important to realize that what the
Soviet Union needs to improve its strategic
tactical and conventional forces is not purely
military in character. What the Soviet Union
needs is certain key applied technology to
improve its guidance systems, avionics, mis-
sile technology, and key bomb components.
Such technology is now available in commer-
cial applications from the U.S., France, Ger-
many, Japan, and the United Kingdom. The
acquisition of such "non-military" tech-
nology should enable the Soviet Union to
quickly upgrade its bomber force; and allow
it to make almost instant improvements in
its targeting and warning technologies.
As a consequence of the lack of coherent
national policy-controlling the transfer of
technology to communist dominated coun-
tries-numerous critical technologies have
been transferred to the Soviet's either di-
rectly or through "the back door". Here are
some of the major technological transfers
that took place:
The Soviets succeeded in obtaining Ameri-
can wide-bodied jet aircraft technology
(critical in deployment of air-launched
cruise missiles).
The Soviets obtained RB-211 high-bypass
ratio turbo fan jet engine technology, devel-
roped on $300 million in U.S. government
R. & D. grants to the Lockheed Corp. (The
engine powers wide-bodied jet aircraft, and
is suitable for long-range bombers.)
The Soviets succeeded in obtaining U.S.
semi-conductor technology of critical im-
portance in guidance systems for ICBM's
and other missiles as well as in miniaturized
military computers.
The key technology for the Soviet KAMA
River heavy duty truck plant came from the
United States. This is the largest truck fac-
tory in the world with an annual production
capacity of 250,000 10-ton multiple-axle
trucks and 350,000 diesel engines, which can
be used to power tanks. In additicn,
KAMAZ, will have the capacity to produce
tanks, tank turrets, tank engine blocks,
scout cars and rocket launchers.
The Soviet Union obtained from the U.S.
numerous space technologies also relevant
for military effort in space (space capsules
coupling technology, astronaut's space-suit
technology, relevant computer technology,
etc.).
The U.S.S.R. used the U.S. heat-seeking
shoulder-launched "Redeye" missile for
development of its own SA-7 Grail missile.
The Soviets purchased 164 Centalign-B
machines, and accompanying technology, to
produce precision miniature ball-bearings
without which ICBM's guidance mechanism
could not be built. This technology is also
an imperative for MIRVing and MARVing
mechanisms. As a result of this deal the
Soviets were able to close up the critical
MIRV gap.
The most modern and only effective air
traffic control center in the U.S.S.R. at Mos-
cow's Vnukovo Airport (the contract is
valued at $74 million) is being constructed
with integrated circuits from the U.S. This
computerized air traffic control system has
a direct military spillover.
Soviet dissident Anatoly Sharansky was
sentenced to a long jail term for informing
Western reporters that the Soviets have vio-
lated agreements signed with the U.S.
Department of Ccmmerce regarding the use
of U.S. purchased computers. According to
Sharansky, in his capacity as computer
expert within the Soviet military establish-
ment, he worked on American computers
sold to the U.S.S.R. for civilian purposes
only.
The Soviet Union is making every attempt
to obtain a critical military technology from
the U.S.-the small high-efficiency aircraft
gas turbine engine of the type currently used
in the U.S. Air Force/Boeing ALCM-B-and
the Navy/General Dynamics Tomahawk
cruise missiles. The manufacturer in the
U.S. is Detroit Diesel Allison, the engine,
ironically, is classified as "commercial" and
consequently easy to obtain by any commu-
nist government. The export application is
pending for engines and manufacturing tech-
nology to Poland and Rumania. The amazing
aspect of the potential sale is in fact that
the Carter administration denied this tech-
nology to U.S. NATO allies and is considering
the sale of the same to the Soviet Warsaw
Pact allies.
The success of the continuing Soviet raids
on Western technology, but most importantly
U.S. technology, that can be used in systems
for ICBM guidance, anti-submarine warfare,
automatic fire-control and other military ap-
plications has clearly demonstrated a critical
need for an intensified reexamination of
what, how, and why it is being sold to the
Soviet Union, its satellites around the globe
and Communist China.
Just how fast and how far the Soviets have
moved in overcoming what was believed to be
a major disadvantage in miniaturized elec-
tronics and precision guidance systems was
made clear last year. The Soviets then tested
prototypes of two new intercontinental bal-
listic missile systems and demonstrated they
could deliver nuclear warheads within 600
ft. of a designated target.
The tests sent a "shock wave" through
high-level defense planning sanctums be-
cause it had been believed the Soviets would
not achieve such accuracy with their ICBM's
until the mid-1980's or later.
The test results have led Secretary of De-
fense Harold Brown to revise the Pentagon's
latest military posture statement to show
that the Soviets may deploy the more-ac-
curate ICBM system in the "early to mid-
1980's," giving them the ability to destroy a
large percentage of the U.S. ICBM force by
direct hits.
The mass production of the Soviet MIRV's
and the accuracy of the new, so called "5th
generation" Soviet ICBM's also is a major
reason and argument for deployment of the
S 10133
new, $35-40 billion MX missile system that
Secretary Brown insists the United States
must have to counter the rapid Soviet ad-
vances in missile technology.
Just how much US-derived technology is
represented in the new Soviet ICBM system
is not totally known. This analyst as well as
a number of policy makers of the past and
present believe that the US export and policy
moves during the last 10 years have given
the Soviets the know-how and equipment
needed for increased ICBM accuracy.
One case, which was already mentioned,
involves a 1972 deal by the Bryant Chucking
Grinder Co. of Vermont, to sell the Soviets
164 precision ball-bearing grinding machines
capable of producing pin head-size ball
bearings (size roughly 0.04 inch in diameter),
having tolerances of less than one-twenty-
five millionth of an inch. The $20 million
sale approved by the Nixon administration,
at the peak of detente euphoria, is to a great
extent responsible for the $40 billion MX
missile system program. In 1976, Edwin E.
Speaker, a weapons expert for the Defense
Intelligence Agency, testified before a Con-
gressional subcommittee.
"It is a certainty that the products of these
grinders could and will be found in a wide
variety of current and future ground, air,
sea, and space military hardware that require
precision guidance equipment, optical re-
cording devices as well as associated scien-
tific test equipment.
Another sale that caused "a broad consen-
sus of concern" among specialists at the CPA
and Defense Department was a 1974 sale of
a turn-key plant for manufacture of inte-
grated circuits. The plant, which was based
on technology licensed by US semi-conductor
firm-Fairchild, was sold by a French con-
sortium to Poland after the deal was ap-
proved by the Nixon administration.
Large-scale integrated circuits, are listed
among nine key categories in which defense
and intelligence officials, as well as U.S. In-
dustry are trying to clarify export controls.
However, while the intelligence community
and Department of Defense believe that-it is
an imperative to tighten technology export
controls, the business community, Commerce
Department, and State Department are work-
ing in the opposite direction.
The devices in question are complex elec-
tronic circuits that are reduced photographi.
cally and etched on tiny silicon chips. They
can be used, for example in missile-guidance
and aircraft-fighter fire-control systems, giv-
ing computer-like control while contributing
miniscule weight, bulk, and electrical drain.
They are typical dual-purpose technology
end-products also used in the non-military
items such as pocket calculators, digital
wrist watches, microwave-oven controls, and
television and high fidelity sets.
The Soviet Union has also acquired by
clandestine means the integrated circuits
technology and manufacturing capabilities
from Japan in one of the most daring under-
takings of their industrial espionage.
The Soviet acquisition of sophisticated
U.S. ICBM technology goes beyond integrated
circuits and precision ball bearing technolo-
gies without which they could not build the
gyroscopes for ICBM's and for the individual
MIRVs. Major General George J. Keegan Jr.,
former head of Air Force Intelligence has
stated:
"The Soviet Union has acquired all of our
inertial guidance technology for ballistic
missiles."
Many other technologies which protect the
current U.S. military lead in certain areas are
also little-known, dual-purpose items. Small
array transform processors, called ATP's, are
used, for instance, in seismic oil exploration-
equipment. ATP's are electronic devices
which enhance the computer speed so com-
puters can interpret millions of tiny varia-
tions in the sounds of geologic formations
below the earth.
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CONGRESSIONAL RECORD ' SEN TIE July 2'1, 1979
Attached to shipboard computers, ATP's
perform cne of the central functions of anti-
submarine warfare: They assist the computer
in digital signal processing and signal analy-
sis which enables the computer to identify
tiny differences in the sounds under the
ocean's surface, a process that yields the lo-
cation of enemy submarines.
It is known that Geo Space Corp. of Hous-
ton, Texas, has sold 38 ATP systems, critical
for submarine detection systems, to the So-
viet Union and Communist - China.
Litton Industries is another business en-
terprise which has also been involved in the
sale of similar anti-sub warfare systems.
The sale 'of the submarine detection system
and technology, especially to the Soviet
Union, has created an entirely new problem.
We have already observed that the transfer of
precision miniature ball bearings technology
and integrated circuits technology to the
Soviet Union have resulted in a direct threat
to the survivability of our Minuteman
ICBM's. And to offset this we must have a
new ICBM system which involves not only
time to develop and deploy after prolonged
and tedious, debates, defense policy disputes,
and political maneuvering but it also imposes
an additional cost of $35-40 billion.
Our latest submarine class-Trident,
enormously expensive, has been developed
on the basis that the Soviets had no sub-
marine detection technology. However, a
Soviet breakthrough in submarine detection
technology would make our latest genera-
tion of submarines vulnerable. At the time
of the development of the Trident class sub-
marines the US military experts saw no evi-
dence that the Soviets were close to a break-
through in submarine detection technology.
In the absence of a breakthrough a given
number of missiles in 10 Trident class size
and weight submarines (the sub due to its
big and heavy reactor had required a huge
hull, and that huge hull, in turn, had to
be fitted with an unprecedently large num-
ber of missiles to justify its size and cost)
would clearly be cheaper than the same num-
ber of missiles in 20 subs, even though the
smaller subs would be individually cheaper.
As a result we have been building large subs.
On the other hand, if we were to assume a
highly effective Soviet detection capability,
the 20 subs would permit many more of the
missiles to survive to arrive at Soviet targets.
However, we are stuck with expensive large
submarines vulnerable due to the trans-
ferred sub detection technology and due to
transferred guidance technology for the
Soviet ICBM's.
The vulnerability of our Trident class subs
clearly required a remedy. That remedy spells
time consuming, frustrating defense policy
debates and disputes, tedious political and
congressional processes, again time consum-
ing development and deployment of new
class subs, and billions upon billions of dol-
lars for the development and deployment
of the new subs.
THE CAUSE OF THE PROBLEM
U.S. policy on international trade consists
of two elements that are not always rec-
oncilable: 1) to promote trade and com-
merce with other nations, and 2) to control
exports of goods and technology which could
make a significant contribution to the mili-
tary potential of any other government or
governments when this would prove detri-
mental to the national security of the United
States.
Our chief concern is with the second of
these goals. Our concern, however, must be
discharged without restricting free trade
flow with the free nations around the globe.
The given empirical evidence proves that,
since the onset of "economic detente"-that
has resulted in the liberalization of trade
legislation pertaining to commerce with the
communist governments-the export control
efforts have failed. Also, due to political
detente with the U.S.S.R. and its satellites,
there was a flood of communist agents to
the U.S. Numerous government-to-govern-
ment scientific, technological, and cultural
exchanges have created tremendous oppor-
tunities for stealing U.S. scientific and tech-
nological secrets. All these, as we have dem-
onstrated, has had and is having a detri-
mental impact on U.S. national security.
SOLUTION
The U.S. government's objective in the
control of exports of U.S. technology should
be to protect the United State's lead time
relative to its principal adversaries in the
application of technology to military capa-
bilities. In addition, it is in the national in-
terest not to make it easy for any country
to advance its technology in ways that could
be detrimental to U.S. Interests. These con-
trols, however, are to be applied so as to
result in minimum interference in the con-
duct of commerce between free trading
partners.
For the purpose of effective export con-
trols we perceive a need for new definitions
and for new administrative procedures. First,
one has to define what is to be understood
under the term "critical technology." The
term "critical technology" should refer to
the classified and unclassified nuclear and
non-nuclear unpublished technical data,
whose acquisition by Warsaw Pact members,
or any other potential adversary, could make
a significant contribution, which would
prove detrimental to the national security
of the U.S., to the military potential of such
country-irrespective of whether such tech-
nology is acquired directly from the United
States or indirectly through another recipi-
ent, or whether the declared intended end-
use by the recipient is of military or non-
military use.
"Technical data" means information of
any kind that can be used, or adopted for
use, in the design, production, manufacture,
utilization, testing, maintenance or recon-
struction of articles or materials. The data
may take a tangible form such as a model,
prototype, blueprint, or an operational man-
ual, or they may take an intangible form
such as technical service or scientific and
technological exchanges.
Control of such critical technology also
requires the control of certain associated
critical end products defined as "keystone"
that can contribute significantly in,and of
themselves to the transfer of critical tech-
nology because they 1) embody extractable
critical' technology and/or 2) are equipment
that completes a process line and allows it
to be fully utilized.
Second, it is 'our conclusion that the
key role in definition of what constitutes
critical technology should be assigned to
the Defense Department. Also, the Defense
Department should be responsible to desig-
nate those items which shall be considered
as defense articles and defense services so
that they can be properly placed on the
United States Munitions List administered
by the State Department. In its present
form ,'the Security Assistance Act and Arms
Export Control Act of 1976 does not require
this procedure. At this time, there is no
specific provision under any of the individ-
ual classifications of the Act for the identifi-
cation of any design, production or test data
as "significant combat equipment." The cri-
teria for the selection of categories to be
designated "significant combat equipment"
does not necessarily involve judgment as to
strategic or advanced technology. For ex-
ample, while category "significant combat
equipment" includes M1 rifles and bayonetts,
it excludes CDC's Cyber-76 computer, and
certain technologies and equipment neces-
sary for the production of nuclear warheads.
In order to protect and strengthen U.S.
defense production capabilities, procedures
need to be established to separate the mili-
tary articles required by most foreign coun-
tries from the design and manufacturing
know-how essential to the production of
the articles. Under existing agreements with
our NATO Allies, a number of projects in-
volving coproduction and standardization
require the transfer of such 'information in
both directions, but this flow of technology
with- other friendly countries requires more.
control than is presently possible. Similarly,
while the export of some commercial, tech-
nological products could be more readily
available to even the Soviet Union, it is
essential to restrict the export of the asso-
ciated design and manufacturing of those
products which are also on the U.S. Muni-
tions List.
The present Commerce Department's Com-
modity Control List is derived from the
Munitions List by way of the Battle Act
and the Mutual Security Assistance Act,
which are administered by the State Depart-
ment. Because the role of the Defense De-
partment has not yet been specified in any
legislation as the basic source for the defi-,
nition of "defense articles" or "strategic
technology", there continues to be uncer-
tainty and delay in the processing of Com-
merce Department and Munitions Depart-
ment license applications. The present
reports required by the Arms Export Con-
trol Act and the studies to be required when
the Export Administration Act comes for
deliberation before U.S. Congress, should
provide the Administration with the unique
opportunity, now, to restructure the entire
Arms and Export Control process.
NOTE: This Current Analysis No. 2 is part
one dealing with the titled, subject matter.
Forthcoming part two will be based on the
results of the Interviews conducted with
former Soviet scientists, engineers, military
officers, and intelligence officials.
SELLING THEM THE ROPE-BUSINESS AND THE
Sovxzrs
(By Carl Gershman)
I must say that Lenin foretold this whole
process. Lenin, 'who spent most of his life In
the West and not in Russia, who knew the
West much better than Russia, always wrote
and said that the Western Capitalists would
do anything to strengthen the economy of
the USSR. They will compete with each other
to sell us goods cheaper and sell them
quicker, so that the Soviets will buy from
one rather than from the other. He said:
they will bring it themselves without think-
ing about their future. And, in a difficult
moment, at a party meeting in Moscow, he
said: "Comrades, don't panic, when things go
very hard for us, we will give a rope to the
bourgeoisie, and the bourgeoisie will hang
itself."
Then, Karl Radek, ... who was a very re-
sourceful wit, said: "Vladimir Ilyich, but
where are we going to get enough rope to
hang the whole bourgeoisie?" Lenin effort-
lessly replied: "They'll supply us with it."-
ALEKSANDa SOLZHENITSYN, June 30, 1975, in
a speech to. the AFL-CIO
The issue of trade has figured prominently
in relations between the United States and
the Soviet Union ever since the Nixon ad=
ministration initiated the policy of detente
almost a decade ago. Already in 1969, even
before detente had become the central theme
of the Nixon administration's foreign policy.
the President signed into law the Export Ad-
ministration Act, replacing the Export Con-
trol Act which had been adopted two decades
earlier. The new act greatly liberalized re-
strictions on the export of goods and tech-
nology to the Soviet Union. While continu-
ing to prohibit exports that would "make a
significant contribution to the military po-
tential" of the Soviet Union, it lifted the ban
against those that would strengthen the
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Soviet Union's "economic potential" The
change grew out of pressure from American
corporations anxious to do business with
Moscow and fearful of losing contracts to
competitors in Europe and Japan. But to
President Nixon and his principal foreign-
policy adviser, Henry Kissinger, the change
had chiefly political, not economic, signifi-
cance. They saw increased U.S.-Soviet trade
as an essential component of detente.
The idea of using trade to promote detente
with the-Soviet Union did not originate with
the Nixon administration. President John-
son too had expressed the desire to "build
bridges" to the Communist world through
trade. A special committee he appointed to
look into the matter had concluded that
trade could be "one of our most powerful
tools of national policy," since it would en-
able us to "influence the internal develop-
ment and the external policies of European
Communist societies along paths favorable
to our purpose and to world peace." Kissin-
ger's version of this general view was the
concept of linkage, according to which in-
creased U.S.-Soviet trade would help to es-
tablish "a web of constructive relationships"
that would give the Soviet Union a stake in
peace by making it "more conscious of what
it would lose by a return to confrontation."
Finally, increased trade might also, in Kis-
singer's words, "leaven the autarchic ten-
dencies of the Soviet system" and eventually
lead to the integration of the Soviet Union
into the world economic system and thus to
the gradual liberalization of Soviet society.
The Nixon administration's eagerness to
embark on this new course was evident in
the terms of the trade agreement reached
with Moscow on October 18, 1972. It provided
both for the financing of Soviet purchases
with long-term loans through the Export-
Import Bank, and for a request to Congress
to grant most-favored-nation tariffs fcr So-
viet Imports. Congress, however, reacting to
the Yom Kippur War and the continuing
harassment of Sakharov; Solzhenftsyn, and
other Soviet dissidents,'was In no mood to
grant Moscow such generous terms. It added
the Jackson amendment to the Trade Re-
form Act, making freer immigration from
the Soviet Union the condition for lowering
tariffs and qualifying for Export-Import
Bank loans. Subsequently, Congress adopted
the Stevenson amendment limiting Export-
Import Bank credits to $300 million without
further congressional approval. The Russians
objected to these amendments-especially
the credit ceiling, for they had been willing
to compromise on the emigration issue-and
in early 1975 canceled the whole agreement.
The issue of U.S.-Soviet trade became a
point of controversy once again last summer
when President Carter, in reponse to the
trials of Soviet dissidents Anatoly Shcharan-
s.cy and Aleksandr Ginsburg, blocked the
salo of a Sperry-Univac computer system to
the USSR and placed the export of oil and
gas technology to the Soviet Union under
government control. Moscow immediately
charged that the President was taking a
"path of confrontation," and a U.S. Com-
merce Department oMcial warned that the
trade curbs would have "a substantial chill-
ing effect on exports." The Carter adminis-
tration quickly backed off, and approved all
74 of the applications submitted for the ex-
port of oil technology to the Soviet Union.
Last December, the President dispatched
Commerce Secretary Juanita M. Kreps and
Treasury Secretary Michael Blumenthal to
Moscow with the message that the adminis-
tation wanted more trade between the two
countries and was in favor of removing some
of the obstacles standing in its way-.pre-
sumably the Stevenson and Jackson amend-
ments.
It appears, then, that another round is
looming in the ongoing battle over the trade
Issue. Once again it is being argued that
D - SENATE S10135
the United States, with its balance-of-pay-
ments deficit running at record levels, has a
vital economic stake in trade with the Soviet
Union and a vital political stake as well,
since closer economic ties will promote the
liberalizing tendencies inside the Soviet
Union and establish a foundation for im-
proved U.S.-Soviet relations. William Verity,
the chairman of Armco Steel Corporation
and co-chairman of the U.S.-USSR Trade and
Economic Council, said recently that "a pol-
icy of holding trade hostage for political
reasons is self-defeating." And Averell Harri-
man, at a luncheon meeting of U.S. business
leaders in Moscow, blamed U.S. congressional
leaders for the "outrage that for all these
years we cannot have normal trade relations
with the second greatest nation in the
world." In Harriman's view, which is shared
by many businessmen, U.S.-Soviet trade
would blossom were it not for anti-Soviet
forces in this country.
And yet from a strictly economic point of
view, trade with the Soviet Union hardly
merits the attention that has been lavished
upon it by U.S. businessmen and trade offi-
cials. In 1978, for example, the volume of
trade with the USSR was $2.8 billion, an all-
time high, but just over one-third the
amount of trade that was carried on with
Taiwan last year. One would hardly know
this from comparing the sheer volume of
congressional studies, books, conferences,
and news articles devoted to the two sub-
jects; and yet in a sense it is beside the
point. It is not the present level of trade
with the Soviet Union that excites U.S. busi-
inessmen, but the possibility of exploiting
the vast, hitherto forbidden Soviet market.
"Otherwise cautious executives," Marshall I.
Gold ha rltt " 11 b t t 1
man s w n a u r
m
er
a o
Russian economy in a state of total wreck-
age, Lenin invited Western firms back to
Moscow and asked them to set up conces-
sions. In the West this new policy was wel-
comed as a sign of moderation and a move
toward "peaceful coexistence," but Lenin, as
it turned out, had not ceased to be a Bol-
shevik. "Concessions-," he told a meeting of
the Soviet /Communist party in 1920, "these
do not mean peace with capitalism, but war
on a new plane." Lenin's sole objective was
to revive Soviet industry, and, as subsequent
events revealed, he had every intention of
expropriating the concessions after produc-
tion had been organized and sufficient capi-
tal, equipment, and skills had been brought
into the country.
Nevertheless, Western firms, oblivious to
the risks involved, flocked to the Soviet Union
once more, bringing with them technicians,
machinery, technology, and capital. From
Germany came such major companies as
Krupp, Thyssens, Otto Wolff, Siemens, the
AEG, Junkers, Telefunken, and I. G. Farben;
from the United States, General Electric,
Westinghouse, International Harvester, RCA,
Alcoa, Singer, Du Pont, Ford, and Standard
Oil of New York. Concessions were also estab-
lished by important English, French, Swed-
ish, Danish, and Austrian companies. All
told, the government granted about 350 con-
cessions, and their impact on the Soviet
economy was extraordinary. A recent study,
which analyzes in painstaking detail the im-
pact of the concessions on each sector of the
Soviet economy, concluded that by 1930 there
was not a single important industrial
process-from mining, oil production, met-
allurgy, chemicals, transportation, com-
munications, textiles, and forestry to the
p
a
v
production of industrial and. agricultural
one another in their effort to establish a equipment and the generation of electrical
foothold on this new frontier." power-which did not derive from trans-
But how new is this frontier? When the
question of trade is debated, it is frequently'
forgotten that there are many historical
precedents for the current efforts to expand
trade with the Soviet Union, and while they
explain why Russia is so interested in trade,
they do little to justify business's contin-
uing optimism.
There was substantial Western investment
in Russia during the half-century preceding
the Bolshevik revolution. The coal, iron, and
steel-producing region of southern Russia
was developed with capital and technical as-
sistance from British, French, and Belgian
companies, and German and -Dutch firms
helped develop these industries in the north.
The "iron king" of Russia was an English-
man, John Hughes, who built the mining
and metallurgical factories' of Yuzovka-
named in his honor-in the Donets Basin.
The Swedish Nobel brothers developed the
oil fields of Baku on the shores of the Cas-
pian Sea, which helped make Russia the
world's leading oil producer by 1901. The
Trans-Siberian railway was built with West-
ern (principally French) capital and tech-
nology, and the parallel telegraph line was
built and operated by the Danes. Many
American firms, too, participated in Russia's
industrial development during this period.
International Harvester was the largest
manufacturer of agricultural equipment in
pre-war Russia and Singer Sewing Machine
had holdings worth over $100 million and
employed a sales force in Russia of over 27,-
000 People in 1914.
When the Bolsheviks seized power in 1917,
all this came to an end, as thec new regime
expropriated all Western capital investment
and financial assets. But even this unprece-
dented act of industrial theft did not dis-
courage Western business interests, eager to
regain access to the alluring Russian market.
the opportunity came soon enough. Just
three years atfer the revolution, with the
ferred Western technology.-
If the advantages to the Soviets from all
this are obvious, one is hard-pressed to
identify any benefits accruing to the West-
ern firms involved. By 1933, there were no
foreign manufacturing concessions left in
the Soviet Union, even though many firms
had signed contracts covering periods of
thirty and even fifty years. Some of the
concessions were closed down by force, but
the more common methods were punitive
taxation, breach of contract, legal harass-
ment, and disruptions by workers. The
largest concession of all, the British min-
ing company Lena Goldfields Ltd., had
assembled its technicians, invested almost
$80 million in equipment, and completed
its surveys when it was attacked as a
"weed in the socialist system." The OGPU
raided its units, threw out many of its per-
sonnel, and jailed several of its leading
technicians on charges of "industrial
espionage."
In only a handful -of special cases was
compensation granted. Armand Hammer,
who represented 38 large American firms in
their dealings with Moscow and was a po-
litical sympathizer (his father had been a
member of the steering committee that
Sounded the U.S. Communist party in 1919).
was compensated for the liquidation of his
abestos and pencil-manufacturing conces-
sions. (Interestingly, these were also the
only concessions to earn significant profits.)
The Soviet authorities also agreed to com-
pensate Averell Harriman for the liquidation
of his manganese concession in Chiaturi in
1928, but only after Harriman had agreed
to arrange a long-term loan for them in the
United States (aimed both at demonstrating
Soviet credit-worthiness and undermining
official U.S. policy against such loans). Most
firms were not so lucky, however, and those
which had lost their holdings once before
in 1917 had the dubious distinction of being
expropriated twice,
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Far from signaling the end of Western
business involvement in the Soviet Union,
the liquidation of foreign concessions
marked the beginning of the most massive
transfer of Western technical resources yet
undertaken in the form 'of American assist-
ance to the first Five-Year Plan (1928-33).
The plan, still thought by many to have
been a remarkable Soviet achievement, turns
out to have been largely the work of Ameri-
can management and engineering, as Stalin
acknowledged in 1944, when he told Eric
Johnston, the president of the U.S. Chamber
of Commerce, that two-thirds of the large
industrial projects in the Soviet Union had
been built with American assistance.
America's leading industrial-architecture
firm, the Albert Kahn Company, was con-
tracted to design and supervise the major
units of the plan, as well as to organize
Gosproektstroi, the Soviet Design Bureau.
Kahn's engineer, G.K.i Scrymgeour, directed
Gosproektstroi and also chaired the Build-
ing Commission of the Supreme Council of
the National Economy, while various other -
American companies got individual con-
tracts to build the mammoth separate proj-
ects outlined in the plan -;6 Du Pont built two
nitric-acid plants at Kalinin and Shostka;
the Arthur G. McKee Company of Cleveland
managed the construction of the steelworks
at Magnitogorsk, a replica of U.S. Steel's
Gary Indiana plant and the largest steel
complex in the world; Colonel Hugh Cooper,
the builder of the great Wilson Dam at
Muscle Shoals, supervised the construction
of the even larger Dniepr Dam, for which
he received the Order of the Toilers of the
Red Banner. In addition, General Electric
built and installed the massive generators
at the Dniepr and also designed the Kharkov
turbine works which had a manufacturing
capacity two-and-a-half times greater than
its own central plant in Schenectady. The
Austin Company, builder of Ford's River
Rouge factory, constructed the great auto
plant at Gorki (known as "the Detroit of
Russia") while the U.S.S.R.'s other auto
plants, at Moscow and Yaroslavl, were built
respectively by the A.J. Brandt Company of
Detroit and the Hercules Motor Corporation
of Canton, Ohio. Austin's John Calden
(whom Maurice Hindus called "Russia's
miracle man" at the time) managed the con-
struction of the Stalingrad Tractor Plant,
Europe's largest, which was first built in the
United States then dismantled and shipped
to Russia, where it was put together again.
For this achievement (and for salvaging the
construction of another plant at Chelya-
binsk after an abortive effort by a Russian
team of engineers) Calder received the Order
of Lenin. as did his colleague, Leon A.
Swajian, who was chief engineer for the con-
struction of an identical tract or plant
at Kharkov.
In 1930, Business Week proclaimed that
Russia, though unrecognized politically, had
"come to the aid of depressed American in-
dustry." American businessmen, delighted
with these Russian contracts, looked forward
to a period of expanding U.S.-Soviet trade.
Unfortunately, the benefits that American
business actually derived from this unprece-
dented burst of commercial activity proved
to be meager and short-lived-as well as
absurdly disproportionate to what the Rus-
sians gained. In 1900, U.S. exports to Russia
reached the all-time high of $230 million,
but it was still only a small fraction of total
U.S. exports. By 1932, exports had dropped
to less than 028 million, and the following
year they dropped still further to $14 mil-
lion. The Soviet government (which had sold
grain to finance imports while millions of
Russians starved) had simply run out of
money.
But even after the Export-Import Bank
Footnotes at end of article.
had been set up in 1934, primarily to finance
Soviet purchases, exports still did not in-
crease significantly. The main reason for
this was that Russia had by then attained
a considerable degree of industrial self-
sufficiency, made possible by the willingness
of American companies to construct finished
plants and assist in their duplication, and
to transfer essential technology to the USSR.
To its $30-million sale of auto parts, for ex-
ample, the Ford Motor Company threw in
an extra bonus in the form of an agreement
to send its technicians to Gorki to introduce
Ford production methods 4 and to bring
Soviet engineers to its River. Rouge plant
for training. (Of the 1,039 Soviet nationals
arriving in the U.S. between January 1, 1929
and June 15, 1930, 81 per cent came for
industrial-training programs.)
America's wartime alliance with the Soviet
Union produced still another wave of
euphoria at the prospects of trade with the
USSR. In 1944, soon after his meeting with
Stalin, Eric Johnston wrote in Nation's
Business that "Russia will be, if not our
biggest, at-least our most eager customer
when the war ends." The following year
Fortune published a poll showing business
leaders to be the "most friendly" toward
the USSR of all American groups and also
the most hopeful about postwar relations-
annual exports to Russia, the magazine pre-
dicted, would be between $1 billion and $2
billion. Alas, in 1946 annual U.S. exports to
Russia, though still financed by Lend-
Lease credits; totalled only $236 million, and
even that level would not be reached again
for more than a quarter of a century.
While the export controls imposed by the
U.S. In 1949 played a part in delaying a new
round of Soviet purchases, they had nothing
to do with the initial drop in exports after
1946. What happened to cause this drop was
precisely what had happened fifteen years
earlier when Russia reverted to autarchy im-
mediately after having absorbed an enormous
amount of Western technology and equip-
ment. Under Lend-Lease, Russia had received
$2.6 billion worth of nonmilitary goods from
the U.S. (in addition to $8.5 billion in mili-
tary hardware), Including $1.25 billion of the
latest American industrial equipment. Even
more significant, however, was the more than
$10 billion worth of industrial and military
equipment dismantled in Germany and
shipped to Russia in the greatest and most
systematic looting of a defeated' country in
the history of war .5 From the Soviet Zone the
Russians acquired several thousands plants
representing 41 per cent of Germany's 1943
industrial capacity, and still more was re-
moved from the Western Allied zones under
an agreement allocating 25 per cent of the
plants there to the Russians. The booty in-
cluded such plants as the famous Karl Zeiss
factory at Jena which manufactured optical
precision instruments, and the Opel auto-
works at Brandenburg. (Small wonder that
the 1947 Moskvich 401 was a replica of the
1939 Opel Kadett!) Berlin's entire electrical-
equipment industry was removed, as was
two-thirds of Germany's aircraft and rocket
industry, including the enormous under-
ground V-2 rocket plant at Nordhausen
which provided the foundation for the Soviet
Union's Sputnik program.
Since specialists were needed to bring this
new industrial capacity into operation and to
develop it further, technicians were also
shipped off to Russia. On a single night-
October 22, 1946-6,000 German scientists,
engineers, and aviation experts, along with
20,000 dependents, were placed on trains and
transported to various points throughout the
Soviet Union where German industry had
been reassembled. Once again Russia had
become "self-sufficient."
Contemporary champions of U.S.-Soviet
trade ? view this historical background as
relevant only to the extent that it helps to
explain why psychological barriers to the un-
restricted expansion of commercial relations
with the USSR still exist in the United
States. Fears based on past experience are
groundless, they argue, since the Soviet Un-
Son is a vastly different country today-less
oppressive, more stable, and more committed
to consumerism-than it was after the dev-
astations of World War II, not to mention
during the periods of revolutionary con-
solidation and forced industrialization. Sam-
uel Pisar, for example, a leading trade advo-
cate, is confident that the American and So-
viet economic systems, at one time diametric
opposites, are now "actually creeping toward
convergence," a process that will accelerate
if there is increased trade?
But how different is the Soviet Union to-
day? Like every other country in the world,
the USSR has of course changed over the
past thirty years, but nothing has happened
to alter the nature of its economic relations
with the West in any fundamental way. The
Soviet Union's chief priority is'still the pro-
curement from the West of advanced tech-
nology for its heavy industry (machine-
building,' metalworking, chemicals, and so
forth). Though the new emphasis on con-
sumer needs in the ninth Five-Year Plan
(1971-75) raised hopes that the Soviet Union
would enter the market for consumer goods,
this emphasis was dropped when the plan
was actually implemented, and the current
Five-Year Plan restores producer goods to
their traditional preeminence.
The continuing Soviet need for Western
technology results directly from the weak-
nesses of its centralized, state-run, com-
mand economy. Much has been written about
the inefficiencies of the Soviet economy
which produces about half the American
GNP using a larger workforce (and which
now suffers from a labor shortage). What is
not sufficiently appreciated is the degree to
which the system, because of its stifling
rigidity, is structurally resistant to techno-
logical innovation. This problem became
acute in the 1960's with the slowdown in the
Soviet growth rate and with the realization
by Soviet leaders that the country could not
keep pace with the West. let alone catch up
with it, if it did not obtain access to revo-
lutionary Western, innovations in computers
and electronics. There is no question that
the need for such access was a critical factor
in the Soviet conversion to detente.
Indeed, the one change that can be detected
In the pattern of Soviet trade relations with
the West involves the absorption of Western
technology, which no longer occurs at fitful
intervals, as it did in the 30's and 40's, but
appears, at the moment at least, to have
become an uninterrupted process.
Still, the importance of this development
should not be exaggerated. It is not the result
of changes that have taken place inside the
Soviet Union, nor is it evidence that Russia
has been drawn into "the disciplines of inter-
national economic life," as the original link-
age policy had hoped. It merely means that
Soviet leaders are satisfied with an economic
relationship in which, according to the Soviet
journal Foreign Trade (1977), the USSR
"efficiently uses the benefits of the interna-
tional division of labor and constantly im-
ports technically advanced plant and the
latest licenses and know-how."
And why Indeed should they not be satis-
fled with an arrangement which virtually
guarantees greater advantages to the USSR
than to its Western partners? If for not other
reason, the Soviet Union stands to benefit
simply by virtue of its technical backward-
ness. During the early years of detente, for
example, the Nixon administration encour-
aged top American firms to sign "technolog-
ical-exchange" agreements with Moscow. The
firms had nothing to gain technologically
from such agreements, but went along with
them in the hope that "exchanges" of this
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July 21, 1979 CONGRESSIONAL RE G
sort might eventually lead to large contracts.
The contracts rarely materialized, but the
Russians received valuable technology in the
meantime. A spokesman for control Data
Corporation, which signed a ten-year agree-
ment with the Soviet Ministry of Science and
Technology that included a plan for the joint
development of a new super computer, ad-
mitted not long ago that the Russians gained
fifteen years in research and development by
spending just $3 million over three years.
And government-to-government exchange
agreements, another by-product of the early
euphoria over detente, have had the same
result. The Apollo-Soyuz space program, one
of the better known examples, has been called
by Zbigniew Brzezinski "a vehicle for the
one-sided transfer from the United States
to the USSR of a technology that has obvious
military applications."
The asymmetry of the technological "ex-
change" relationship is reinforced by the
Soviet Union's obsession with secrecy and
by its unabashedly predatory approach.
While American firms are expected to be
forthcoming with technical information, es-
pecially if they hope to win contracts, the
Russians have been extremely reluctant to
divulge information on plant operations, let
alone to allow American technicians to visit
the plants for which they have been asked
to design systems.
At the same time, American firms have
trained hundreds of Soviet technicians in
the U.S., and teams of Soviet specialists-
ostensibly looking into possible purchases-
have been allowed to tour defense-related
American plants. A member of one such
group, -which closely inspected the Boeing.
Lockheed, and McDonnell Douglas factories
in 1973 and 1974, admitted privately to a
Boeing official that purchases had never been
contemplated-meaning, of couse, that the
group's real purpose had been industrial es-
pionage. Within the PET, concern has been
expressed that Moscow's espionage efforts
have expanded in recant years owing to the
sharp increase in the number of Soviet citi-
zenb here on official business and to the
treaty arrangement allowing Soviet ships to
call at 40 American ports.
Still another factor that works to the
USSR's advantage is that Soviet foreign trade
is a state monopoly. As the sole buyer in a
situation where there are many sellers-
competing American firms as well as firms
from Europe and Japan-it has unequal bar-
gaining leverage which it uses not only to
bring down prices but also to secure maxi-
mum technological benefits that include the
provision of technical data and licenses, ex-
tensive training of Soviet personnel, and; in-
creasingly, longterm arrangements for the
continuous supply of new technology. Ameri-
can flrms'in high-technology fields like com-
puters, aerospace, and automotives are will-
ing to agree to such arrangements in order to
compensate for the high cost of research and
development. But the end results favor the
Russians, as exemplified in the Soviet pur-
chase not too long ago of space suite for
$150.000 which had cost the Americans $20
million apiece to develop.
There have even been some instances where
American firms have provided valuable tech-
nology in the hope of landing a major
contract, only to lose the contract to a com-
petitor. In 1973 the Raytheon Corporation,
seeking direct contract with the USSR's Min-
istry of Civil Aviation to promote the sale of
an advanced air-traffic contr''l system (ATC),
mounted an elaborate exhibition in Moscow
in cooperation with the U.S. Federal Aviation
Administration. After Raytheon had in-
vested $220.000 in the exhibition and pre-
sented plans for an ATC system more
advanced than the one in the United States,
the Russians asked for competing bids from
four other American and two European com-
panies. They also indicated is the course of
the negotiations that an American bid would
receive more favorable attention if it were
accompanied by an offset purchase of Soviet-
made YAK-40 jet aircraft, and if the U.S.
granted increased landing rights to Aeroflot.
In all, the U.S. companies spent over $500,000
and provided the Russians with quite a
lot of valuable technical. work before the
contract was awarded to a Swedish-Italian
consortium.
Not all the American firms dealing with
Moscow have been quite so unsuccessful as
Raytheon, but according to a prominent
U.S. businessman quoted in a recent report
in the Wall Street Journal, "Nobody is doing
the business he expected." (Even the mod-
est U.S. export figures-$2.26 billion in 1978-
overstate the amount of trade carried on
by high-technology firms, since agricul-
tural products account for more than 75
per cent of U.S. exports to the Soviet Union.)
In addition, U.S. businessmen stationed in
Moscow have had to work under extremely
trying conditions: the enormous, impenetra-
ble Soviet bureaucracy; the bugging of their
offices, conference rooms, and private resi-
dences by what the Journal report called
"the omnipresent official eavesdroppers"; the
fear for their personal safety, as pointed up
by the arrest last June of International Har-
vester's F. Jay Crawford.
Still, it is oll worth it In the opinion of
Harold B. Scott, the former president of the
U.S.-USSR Trade and Economic council, for
the Soviet Union "will one day be the largest
market in 'the world. The systems put in,
place there now will determine the patterns
of trade. Now 1s the time when it is crucially
important to put our technology there"
With all due respect to Mr. Scott, It is hard
to believe that this perpetually alluring Rus-
sian market really exists, or if it does exist,
that it will one day be ours, especially if we
continue to 'put our technology there," as
he urges. Why should such a market come
into being when by selling, whole factories
(called "turnkey" plants) and training So-
viet personnel, we help Russia produce by
itself what it might otherwise have to buy
from us or from other Western countries?
Ironically enough, the way trade has been
conducted with the Soviet Union not only
does not discourage those autarchic tenden-
cies Kissinger was talking about, but actu-
ally reinforces them, even as Soviet purchases
of Western technology continue.
Many businessmen claim that the chief
obstacle to more U.S.-Soviet trade is the
Jackson amendment tying lower tariffs to
freer emigration. But even if the USSR were
granted most-favored-nation tariffs, Soviet
exports to the U.S. would still not increase
significantly (which means that its ability to
import American goods would also not in-
crease by very much). Even now, the great
bulk of Soviet exports consists of raw ma-
terials and semi-manufactured goods which
are not subject to discriminatory tariffs. The
only exports which would be affected if the
Jackson amendment were withdrawn are
manufactured goods, and there Just is not
very much of a market in the U.S. for Soviet
products.
The congressional limitation. on Export-
Import Bank credits is far more important
in this connection since the Soviet Union
simply does not have the hard currency to
finance its purchases. The amendment limit-
ing credits, adopted in 1974 In the climate of
growing disillusionment with detente, result-
ed in the U.S. government's withdrawal from
a reckless economic venture, the financing of
the huge Soviet-bloc debt. This debt was
about $8 billion at the end of 1970. By the
end of 1975, it had mushroomed to $38 bil-
lion, according to an estimate by the Chase
Manhattan Bank, and by 1976, it had in-
creased still further to $48 billion. Today .it
has reached $55 billion and is still growing.
At a ministerial meeting of the QEQD in June
. S 10237
1976., Henry Kissinger described the debt
surge as "sudden" and "striking" and went
on to raise questions about its economic and
political implications. Kissinger also voiced
concern that the debtor countries had ac-
quired substantial leverage over the creditor
countries through the latter's fear of default.
The Soviet Union's lack of hard currency
has led to another practice which also skews
the trade relationship In its favor. This is
the so-called compensation agreement where-
by a Western firm builds a plant in a Com-
munist country and supplies equipment and
know-how in return for part of the plant's
eventual output. Once again, the advantages
of this arrangement to the Soviet Union and
Its satellites are considerable. They not only
increase their production with Western fi-
nancing and advanced machinery and tech-
nology, but are also given access to Western
markets in the course of "repayment"-and
all this without spending any hard currency.
The advantages to Western firms are cheap,
strike-free labor (which, however, means a
loss of jobs in the West) and access to un-
tapped sources of raw materials. At the same
time, however, they risk substantial losses
if the market is glutted at the time of repay-
ment, which is what happened to Armand
Hammer's Occidental Petroleum, for instance.
in its $20-billion fertilizer deal with the
USSR.
Furthermore, they have no protection
against repayment in substandard products,
or against market disruption if the Com-
munists, seeking hard currency or market
penetration, choose to dump goods in the
West. Flat, for example, had no idea that it
was creating-a trade rival when it built the
Volga Auto Plant at Togliatti (since it was
assumed that Soviet domestic needs would
easily absorb the plant's production). But
the Fiat-like Lads, is being sold right now
in Europe and Canada at well below the cost
of production. Similarly, unions throughout
Europe's depressed chemical industry have
expressed alarm that the products of the
massive petrochemical plants to be built with
Western support at Tomsk and Toboisk will
one day flood the European market.
In addition to the problems of market
disruption and job displacement, Western
firms run the added risk-always present
when dealing with Communist countries-
that political relations may deteriorate be-
fore compensation has been received. In
some agreements the payback period Is
twenty years, a longer time than "detente"
(by any prudent estimate) can be expected
to hold up. If the Russians, for whatever
reasons, should decide to cancel the com-
pensation agreement at any time during
that period, it will not do a Western firm
much good to know that its collateral con-
sists of oil pipelines buried beneath the
Siberian steppes, or Industrial machinery
installed in Tobolsk. The knowledge that
their investments have made them hostages
to political circumstances could well turn
Western businessmen into fervent defenders
of appeasement.
Among votaries of U.S.-Soviet trade, how-
ever, the idea that political relations might
deteriorate even in the face of expanded
trade is virtually ruled out, since it is taken
as axiomatic that trade will strengthen the
liberalizing, peaceful tendencies in the So-
viet Union. This is an old notion. In 1922,
British Prime Minister Lloyd George said
that trade "will bring an end to the ferocity,
rapine, and the crudity of Bolshevism surer
than any other method." In our own-time it
is widely believed that trade, in Daniel
Yergin's words, "draws the Soviet Union into
the community of advanced industrial na-
tions." From this point of view, of course,
trade with the Soviet Union is valuable even
if it does entail certain economic disadvan-
tages. But is there any evidence so far of
this happy outcome?
The view that trade will lead to liberaliza-
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S 10138
CONGRESSIONAL RECORD -SENATE July '21, 1979
tion in Russia is partly based on the not
illogical belief that exposure to the West
will encourage the development of Western
norms and values in the USSR. Unfortu-
nately, the present Soviet leaders, like the
Czars before them, are as mindful of this
possibility as anyone else, which is why they
-take great care to shut out Western cultural
influences even while helping themselves to
Western products and technology. To realize
how far the Soviet authorities are willing to
go to prevent any contacts from taking place
outside of very tightly controlled official
channels, one need only think of the con-
fiscation of follow-up cards passed out at a
seminar in Moscow conducted by Singer per-
sonnel, or the removal of subscription forms
from all copies of Aviation Week and Space
Technology distributed at the Raytheon ex-
hibition, or the totally self-contained office,
hotel, and apartment complex for foreigners
that is being constructed in Moscow-the
modern equivalent of the Nyemetskaya
Sloboda, or "foreigners' quarter" (literally,
"German Quarter") built by Vassily III
almost 500 years ago.
But the Soviet regime not only isolates
Westerners, it also tightens internal controls
to prevent Western influences from seeping
through. Particularly during periods of
detente-the last decade is a good exam-
ple-there seems to be an increased tend-
ency for the regime to step up repression and
ideological vigilance. All of this would seem
to suggest that trade does not promote
liberalization, and may actually have the
opposite effect.
The fact, too, that trade is used as a way
to obtain the technology needed for rapid
modernization means, in the context of a
command economy, that it is frequently
associated with forced industrialization and
the use of slave labor. The program of
Westernization under Peter the Great was
achieved at the cost of immense sacrifice and
suffering imposed on the Russian people.
Two centuries later, Stalin's first Five-Year
Plan, which marked another period of in-
tense absorption of Western technology, took
an even greater toll in freedom and human
life .8
The argument is also made-again to show
the link between trade and freedom-that
the Soviet Union must liberalize its system
in order to solve its economic problems, and
that increased exposure to our superior eco-
nomic methods will encourage Soviet leaders
to take this course. This argument might be
valid if the Soviet leaders were interested
in nothing more than promoting economic
efficiency and technological innovation. But
they also have a stake in maintaining their
totalitarian system which is inherently In-
efficient and uncreative. If this fundamental
contradiction were allowed to work itself out,
it might conceivably lead to real reforms in-
side Russia, but Soviet leaders have been able
to avoid the choice bettween reform and stag-
antion precisely by turning to the. West for
totalitarianism's "missing dynamic." (It is
instructive to recall that Brezhnev's decision
to import Western technology on a large scale
followed a brief but politically costly experi-
ment in the 60's with economic decentral-
ization.)
Thus trade, by injectiing into the Commu-
nist system the technological innovations
without which it could not survive but which
it cannot achieve on its own, actually helps
to sustain totalitarianism.
The strategic as well as the moral impli-
cations of this fact- have thus far been ig-
nored. The idea that trade promotes East-
West peace, central to the thinking of those
who shaped the policy of detente, remains
basically unchallenged among U.S. policy-
makers today, despite evidence that the in
crease in trade since 1970 has not been ac-
companied by reduced Soviet military
spending or greater moaeration in the Mid-
dle East, Africa, or elsewhere. In fact, in-
creased trade (or, more specifically, the in-
creased pace of technology transfers) has
been accompanied by the continuing build-
up of Soviet military forces and by,a greater
Soviet readiness to intervene in local con-
flicts.
Pre-revolutionary Russian history offers
numerous examples of the rules of Russia im-
porting technology from the West to
strengthen their country's military capacity.
And far from ending the practice of import-
ing Western technology for military use, th,
Bolshevik rulers have simply recast its revo-
lutionary terms. Occasionally these acqui-
sitions have been accomplished by theft-as.
in the case of the atomic espionage of the
40's-but more often the same result has been
achieved through political and trade. agree-
ments, in accordance with Lenin's famous
statement that the capitalists "will sunnly
us with the materials and technology which
we need for our future victorious at-
tacks upon our supplier."
In the 20's Germany was the main for
source of military assistance. Thereafter, the
United States took over, becoming the main
supplier of military-related technology,
along with Germany and Britain, until the
cold war. Fertilizer plants supplied by the
West were used to produce explosives, ma-
chine plants turned out gun barrels, and-
most important-the automotive industry
which had been set up by U.S. firms pro-
duced tanks and armored trucks? For years
after World War II, Lend-Lease transfers
and the dismantling of German industry
were providing the Soviet Union with the
foundation for military production..
This process is still going on today. In-
deed, there is now a growing concern in the
United States that the technology we have
already supplied to the Soviet Union, par-
ticularly in the computer field, has contrib-
uted to Soviet advances in strategic weap-
onry and strengthened the USSR's overall
economic and military capability. The
president of Texas Instruments, J. Fred
Bucy, - who chaired the Defense Science
Board Task Force on the Export of U.S.
Technology, told a Senate panel In 1977 that
"the transfer of militarily significant tech-
nology has been of major proportions," and
the full consequences of this development
"will become evident over the next five
years."
Presumably the U.S. government approves
only technology transfers which have no
military significance, but the problem is
that most modern technologies have both
civilian and military uses. The air-traffic
control system, for example, can also be used
for air defense and vectoring fighter aircraft;
the semiconductor technology used in com-
puters has numerous military applications,
including missile-guidance systems; tech-
nology for the manufacture of wide-body
aircraft and high-bypass turbofan jet en-
gines can be used in the production of
military aircraft. And while precision ball
bearings certainly have many industrial
uses, they are also essential for the produc-
tion of the guidance mechanism in MIRV
warheads.
The problem is further complicated by the
fact that the technologies -of-.greatest inter-
est to the Soviet Union are 'first developed
by the private sector in the U.S. for com-
mercial use, and are only later adapted to
military programs. As Bucy pointed out, this
means that "increased pressures for com-
mercial trade with the USSR and its Come-
con partners may result in the flow of sig-
nificant technologies before similar tech-
nologies are applied, to advanced weapon
systems in the U.S."
To add to the problem, many Soviet fac-
tories have both civilian and military lines
of production. It would be most surprising,
for example, if the Western-built Kama River
truck factory, which is slated to be the larg-
est industrial complex in the world, did not
produce military vehicles upon its comple-
tion, in addition to diesel trucks and en-
gines. This has been standard procedure in
Soviet motor plants for some 'time, and,
given the regime's obsessive secrecy-which
is not, after all, a psychological aberration
but has a rational purpose-it will be im-
possible to verify whether or not the Kama
plant is producing for the military. Indeed,
when one considers for a moment that mili-
tary production is the first priority of the
centralized Soviet economy, and that it is
the sector in which the best available tech-
nological and human resources are concen-
trated, the notion that imported Western
technology will not be used for military pur-
poses seems rather farfetched.
Nor need this technology be directly used
by the military in order for it to be "mili-
tarily significant." Even if applied to in-
dustry, it serves the purpose of freeing scarce
research talent for military work. It seems
perfectly obvious that if f9reign technology
relieves the labor shortage by modernizing
Soviet industry, it makes it easier for Mos-
cow to maintain a standing army of 4 mil-
lion men. And if this modernization is fi-
nanced with Western credits, it reduces the
burden of a military budget that now con-
sumes somewhere between 11 and 15 per cent
of the Soviet GNP.
An example of how technological trans-
fers to Russia of great strategic importance
can take place with the approval of the U.S.
government is provided by the recent con-
troversial sale by Dresser Industries of a
?x144-million turnkey plant for the manu-
facture of deep-well drilling equipment. This
particular deep-well technology is needed by
the Soviet Union if it is to develop major new
oil reserves, an urgent priority since It is now
expected to become a net importer of oil by
the mid-1980's. Lacking adequate energy
sources, the Soviet economy's growth rate
could slow to about 3 per cent, which would
make it exceedingly difficult for Moscow to
continue to increase military spending by
4 to 5 per cent every year, or to finance
Cuban expeditions to Africa. Hence the So-
viet Interest in American oil technology.
Nevertheless, last summer, only. weeks
after President Carter announced that the
government would assume control over all
sales of oil technology and equipment to the
Soviet Union, the administration approved
the Dresser sale. Its reasoning, summed up
by the Washington Post in an approving edi-
torial, was that "the technology is widely
available" outside the U.S., and that in view
of the energy shortage "it serves American
interests to get the maximum number of ex-
plorers "into operation as soon as possible."
The administration appears to have given
no consideration at all to the strategic sig-
nificance of this sale, which greately en-
hances the USSR's oil-production capabil-
ities by giving it the capacity to manufac-
ture premium rock-drill bits equal to the
entire U.S. output, and greater than the So-
viet Union's anticipated deep-well drilling
requirements for the 1980's!
In the controversy surrounding the sale,
attention was focused on only two items of
the manufacturing equipment which were
thought to have possible military applica-
tion. These two items were subsequently
approved by the Defense Department, de-
spite expert opinion which.-held that one of
them could produce armor-piercing projec-
tiles. Senator Jackson, chairman of the Sen-
ate subcommittee which investigated the
sale, cited pressure by both the Commerce
Department and Dresser Industries as a fac-
tor that "may have contributed to what ap-
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pears to have beefs a less than thorough
assessment of national-security questions."
Following protests by Energy Secretary
Schlesinger and members of the National
Security Council, approval of the sale was
suspended pending a review by a special task
force of the Defense Science Board. The task-
force report concluded that the deep-well
technology in question "has strong strategic
value in its application to Soviet energy
needs of the 1980's" and that it is "wholly
concentrated in the U.S.," thus giving this
country effective control over its export to
the Soviet Union. The report also pointed
out that the transfer of this technology to
the Soviets would allow them "to enter world
markets with advanced drilling capabilities,"
thereby enabling them to increase their pres-
ence and influence in the Middle East and
other oil-producing areas of the world. On
the question of the two supporting tech-
nologies which the Defense Department had
previously approved, the report concluded
that both would contribute significantly to
the Soviet Union's military potential.
Despite these warnings, the President ap-
proved the Dresser sale a second time. Sub-
sequently. he told a news conference that the
administration takes adequate precautions
"to be sure that we are not deliberately or
inadvertently giving to [Communist] coun-
tries a means by which their military ca-
pability would be greatly escalated. This
would be contrary to the existing law."
But what exactly did the President mean
when he used the words "greatly escalated"
here? The ambiguity of the formulation can-
not be attributed only to the informal con-
ditions prevailing at. a news conference. It
also serves to point up the fact that the
United States does not at present have an
effective or even coherent policy governing
the export through commercial trade of
strategic technology to the Soviet Union. The
agency authorized to control commercial ex-
ports affecting national security is the Com-
merce Department, and since this depart-
ment is interested primarily in promoting
trade and reducing the U.S. balance-of-pay-
ments deficit, these considerations play a
great part in influencing judgments on what
is "militarily significant."
But the fundamental reason for the ab-
sence of a sound policy in this area is politi-
cal. As long as it is assumed that . trade
promotes peace, no matter what is being
traded, the problem of the flow of strategic
technology to our principal adversary is not
likely to be given serious consideration.
The argument heard most often-that con-
trols cannot work since other nations will
export what we embargo-is a rationaliza-
tion for having no policy at all. In the
Dresser case, for instance, there was no for-
eign producer the Russians could have
turned to if we had denied the sale, but we
approved it nonetheless. It is hard to see how
the U.S. can expect to gain the cooperation
of its allies in denying strategic technology
to the Soviet Union if we ourselves continue
to supply it in abundance. In fact, the relax-
ation of U.S. controls over the last decade is
a major reason for the diminishing effective-
ness of CoCom, the international body estab-
lished in 1950 to regulate the export of stra-
tegic items to Communist nations'"
Only a rigorous control policy can be ex-
pected to shore up the faltering CoCom ar-
rangement and win broad support in the
U.S. The objective of such a policy need not
be to restrict trade with the Soviet Union,
but only to shut off the flow of strategic
technology in accordance with the Defense
Science Board's crucial distinction between
products and technology-that is, between
the item produed and the know-how required
to produce it.
This distinction did not matter so much
thirty years ago, when the U.S. and its Co-
Com allies first attempted to work out a
control policy for trading with the Soviet
Union. At that time a favorite Soviet method
of acquiring technology was to copy Western
prototypes which had been procured through
single-item purchases. But as technology be-
came more, complex and the pace of techno-
logical change increased, this kind of "reverse
engineering's became less feasible-by the
time a process had been mastered and
brought to production the product would
have become obsolete. So the Russians natu-
rally dropped their interest in individual
products, and turned instead to the direct
acquisition of critical technologies and pro-
duction capability.
Control policies, however, have been ob-
livious to these changes and are still focused
on the regulation of product transfers, so
that items of secondary importance to the
Soviet Union are now regulated while the
U.S. and other Western countries actually
encourage the transfer of what the Russians
want most. We now have a policy, in other
words, which allows Western firms to build
whole production facilities in the Soviet
Union, transfer vital manufacturing informa-
tion, and train Soviet personnel, while with-
holding one particular item in the sale be-
cause it is on the CoCom list of embargoed
goods. Small wonder that our allies are
cynical about it.
It seems clear that this must change.
While controls on selected critical products
should be maintained, policy must be re-
vised to take account of the central impor-
tance of technology transfers which con-
tribute in any way at all to the Soviet
Union's military and industrial strength. To
be sure, in a world where technology is
widely diffused, a policy aimed at denying
the Soviet Union access to such technologies
cannot be airtight. But as Fred Charles
Ikle. the former director of the Arms Con-
trol and Disarmament. Agency, has observed,
"gradual seepage is one thing. It is quite an-
other matter to expedite the spillage of some
of the most advanced and complex tech-
nologies." And even if Soviet acquisition of
such technologies cannot be prevented, it
can at least be delayed, which may serve
to maintain and perhaps extend what is
called "the strategic lead time" of the United
States over the Soviet Union. Our present
lead in strategic technologies, estimated at
three to ten years, is smaller than it was
before "detente." but it is still a factor that
restores some stability to the growing im-
balance between U.S. and Soviet military
forces.
Despite the current avidity for trade, it
should be possible to win at least a measure'
of business support for a policy of stricter
controls on technology transfers to the Soviet
Union. In his new book, A Time for Truth,
former Treasury Secretary William E. Simon
traces the history of U.S. business aid to the
Soviet Union by way of demonstrating the
economic superiority of capitalism over Com-
munism. But except in a footnoted after-
thought in which he calls the whole enter-
prise "desperately unwise," Simon never
comes to grips with the basic question of
who stands to benefit most from current
U.S.-Soviet trade ventures. Lenin put it
rather succinctly in his famous question,
"kto kogo?". ("Who (will defeat) whom?"),
and perhaps it is time this question was
asked by more than a small handful of busi-
ness leaders. Capitalism is indeed more effi-
cient than Communism, but if this very effi-
ciency is used to sustain and fortify the
enemies of free society, does this not, in the
words of Seymour Martin Lioset, constitute
"the ultimate failure of capitalism"?
But business need not even bother about
such ultimate conclusions in order to sup-
port a policy of controls on the transfer of
technology to the Soviet Union-it need only
recognize its own economic self-interest. The
transfer of production capability will dry up
markets and create competitors far sooner
1910139
than it will enhance trade or profits. All it
takes is one firm-poorly managed, perhaps,
and needing a Soviet deal to balance its
books-to transfer the technology of an en-
tire industry; surely this consideration
should provide sufficient incentive for busi-
ness to demand an effective policy of con-
trols. Then, too, there is the question of the
competitive disadvantage individual firms
now face in negotiating with the Soviet state
trading monopoly. Should not businessmen
see the need for a central clearing house for
U.S.-Soviet trade to offset this disadvantage?
A policy of control on technology transfers
differs significantly from the so-called policy
of "economic diplomacy" which has stirred
up so much pointless controversy in recent
months. The former would shut off tech-
nology transfers to the * Soviet Union while
the latter would offer technology as an in-
centive to moderation and deny it as punish-
ment for hostile acts. But "economic di-
plomacy" is no substitute for a policy of
military deterrence, and common sense
should dictate that anything the Russians
might want badly enough to forgo oppor-
tunities tor expansion is probably something
they should not have in the first place. A
policy of controls, on the other hand, would
not be tied to politics, but for reasons that
should already be clear, it could in the long
run limit the Soviet Union's ability to
threaten the security of the West.
The denial of foreign technology might
very well succeed-where the present policy
has failed-in bringing about a greater de-
gree of decentralization and liberalization
within the Soviet Union, but such a policy
should not be aimed at changing the
Soviet system. Nor should controls be
loosened in response to favorable Soviet
gestures on human rights. Technology is too
valuable to be turned into a pawn in a game
which the Soviet Union could easily manipu-
late in its favor. (This criticism, incidentally,
does not bear upon the Jackson amendment,
which in any case does not offer technology
in exchange for freer emigration but'only a
modest amount of hard currency in the form
of credits and lower tariffs on Soviet imports.
There is nothing wrong with buying people's
freedom, which is what the Jackson amend-
ment amounts to. On the contrary, it is an
objective worthy of a democratic society.)
It is difficult to speculate on future trends
inside the Soviet Union and more difficult to
influence them from the outside. If we have
learned anything at this late date in our re-
lations with the USSR it is that interaction
with the West does not necessarily yield
helpful results, and that the rich creations
of a free system become distorted when ab-
sorbed by a system that is not free. Those
who wish to build bridges to the East
through trade might recall that Brezhnev,
on the eve of detente, observed that "scfen-
tiflc-technical progress has now become one
of the main bridgeheads of the historical
struggle of the two systems."
It would be ironic if the one system able
to generate such progress lost the struggle
because it lacked the wisdom to understand
its. advantage and the will to protect it.
FOOTNOTES
I Detente and Dollars: Doing Business with
the Soviets, Basic Books, 1975, p. 5.
See Anthony C. Sutton's Western Tech-
nology and Soviet Economic Development
1917-1930, Hoover Institution Publications,
1968. Two subsequent volumes by Sutton de-
scribe the transfer process and assess its con-
tribution to Soviet economic development for
the periods 1930-45 and 1945-65.
3 Anthony C. Sutton, in this context, de-
fines the phrase "built by Western compan-
ies" to mean not just the management of
construction and equipment installation, but
also the supply of technology, patents, en-
gine-test results, and operator training, as
well as supervision of the plant during its
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CONGRESSIONAL RECORD -SENATE July 21, 1979
initial period of operation. The Russians sup-
plied labor, semi-fabricated materials, and
middle-level engineers whose chief job was to
learn from the Americans.
4 One of these Americans, Victor Herman,
has just published an extraordinary memoir
of his experiences in Russia (Coming Out of
the Ice, Harcourt Brace Jovanovich, 369 pp.,
$12.95). At the age of sixteen, Herman ac-
companied his family from their home in
Detroit to Gorki, where they were planning
to stay for three years working in the auto
plants. He ended up spending forty-five years
in Russia, eighteen of them in the Gulag,
where he encountered many Americans. Her-
man describes his ordeal with an austerity
that makes it all the more horrifying. He
claims to be the only survivor of all the men,
women, and children from the American vil-
lage at Gorki who were sent to the Siberian
camps-forgotten victinis of an earlier period
of Soviet-American "cooperation."
G Germany was not the only country looted
by Russia. A U.S. mission headed by Ambas-
sador Edwin Pauley in the spring of 1946
concluded that Russia had dismantled and
removed $895 million worth of industrial
equipment from Manchuria. In addition, $400
million worth of equipment was taken from
the Soviet Zone in Austria, while peace trea-
ties with Finland and Rumania resulted in
the transfer of $600 million of equipment.
See, for example, The Psychology of East-
West Trade, by Zygmunt Nagorski, Jr., Mason
& Lipscomb, 1974.
7 Coexistence and Commerce: Guidelines
for Transactions Between East and West,
McGraw Hill, 1970, p. 8.
s The American-Russian Chamber of Com-
merce, whose board included representatives
of the top American corporations doing busi-
ness in Moscow, did what it could to white-
wash the Soviet Union on charges of forced
labor during this period. In a speech at the
Bankers Club in New York In 1932, Colonel
Hugh Cooper said that "The Chamber has
made a real study of these charges. It has
obtained signed statements from many lead-
ing American businessmen, who have actu-
ally been to Russia and have personally ob-
served labor conditions there, and I am glad
to say that not one of these men think labor
in Russia is forced." Since American firms
instructed their engineers not to discuss
conditions in the USSR, only the apologists
were heard from. Alcan Hirsch, who super-
visted the construction of the Du Pont nitric
acid plant at Chernorechenaki, claimed in
his book, Industrialized Russia (1934), that
while the Soviet Union had "not as yet
reached unprecedented eminence in the arts,
science, or industry, ... sociologically it is
far ahead of the rest of the world." With
all the attention paid to intellectual fellow-
traveling with Stalinism in the 30's, it ap-
pears that the subject of business complicity
has been sorely overlooked.
9 Much of this was known to American of-
ficials. In 1933, for example, the American
engineer, Zara Witkin, who supervised con-
struction of some of the "secret industry"
plants in Russia (Eugene Lyons called this
task "the most important given to any single
foreign specialist"), told a U.S. Consul in
Poland that every tractor plant "is of course
a tank factory and an automobile plant [isj
a factory which may at any time produce
mobile artillery."
10 CoCom's full name is the Coordinating
Committee of the Consultative Group of Na-
tions, and its membership consists of. NATO
nations (except Iceland) and Japan. It main-
tains a common list of embargoed strategic
items.
of State, Treasury and Commerce have con-
vinced the White House it must also take
positive steps to reassure the Soviets that we
are not tilting in favor of Peking.
Thus, as the Washington Post reported last
week, the Administration has launched a
"diplomatic initiative" to press for the re-
sumption of U.S. trade . and tariff benefits
for the Soviet Union-all before President
Carter meets with Soviet chief Leonid I.
Brezhnev to sign the SALT II agreement June
15 in Vienna.
To this end, Secretary of State Cyrus Vance
and Secretary of the Treasury Michael Blu-
menthal met with Soviet Ambasador Anatoly
F. Dobrynin April 27 to stress the Administra-
tion's commitment to increased -trade. And
they discussed, frankly, ways to circumvent
the Jackson-Vanik amendment of 1974 which
has limited East-West trade.
That amendment, adopted at a time the
Soviets were engaged in brutal persecution
of their dissidents, makes freer emigration
from the USSR the price for lowering U.S.
tariffs and qualifying for Export-import
Bank loans. Asserting that the Congress had
no right to interfere in their "internal af-
fairs," the Soviets cancelled the 1972 trade
agreement designed to increase commerce be-
tween the two nations.
Under the terms of the 1974 law, the Pres-
ident can grant trade benefits for one year
if he receives "assurances" that Soviet poli-
cies will in the future "lead substantially" to
freer emigration. Some State Department
lawyers argue that the "assurances" must be
in writing. Others-aware that the Soviets
are unlikely to provide written guarantees
about their "internal" affairs-have suggest-
ed that the assurances can take some other
form.
Thus the April 27 meeting. According to
the Post, Vance and Blumenthal stated it was
the Administration's understanding that the
recent liberalization of Soviet emigration
policies has become the norm and is expected
to continue. If Moscow will accept this,
Washington will consider the tran-acticn to
be the necessary assurances under the Jack-
son-Vanik amendment.
How Jackson will react to the Administra-
tion interpretation of his statute was not
known at press time. He 1s known, however,
to be gravely concerned that in pushing de-
tente the Administration has completely
disregarded the strategic consequences of its
technological exports.
Last summer, for instance, in the wake of
the trials of Soviet dissidents Anatoly
Shcharansky and Alexander Ginzburg, Presi-
dent Carter announced that he was placing
the export of oil and gas technology to the
Soviet Union under government control.
When Moscow issued a blustery attack on
Carter's decision, the Administration backed
away. All 74 of the applications for export
of the oil technolcgy were quietly issued. As
Carl Gershman notes in a brilliant article in
the April Commentary, the $144-million
Dresser industries deal approved by- Carter
conferred enormous strategic benefits:
"This particular deep-well technology is
needed by the Soviet Union if it is to develop
major new oil reserves, an urgent priority
since it is now expected to become a net
importer of oil by the mid-1980s. Lacking
adequate energy sources, the Soviet economic
growth rate could slow to about 3 per cent,
which would make it exceedingly difficult to
increase military spending by 4 or 5 percent
every year, or to finance a Cuban expedition
to Africa. Hence the Soviet interest in Ameri-
can oil technology."
Energy Secretary James Schlesinger and
members of the National Security Council
raised similar objections, and a special task
The Administration will move quickly in force of the Defense Science Board was set
coming weeks to step up exports to the So- up to study the deal. The task force con-
viet Union. Eager to increase trade with the eluded that the deep-well technology "has
Peoples Republic of China, the Departments , strong strategic value In the 1980s" and that
it is "wholly concentrated in the United
States," thus giving us the power to deny
critical oil technology to the Soviets.
The report also noted that the transfer
of the technology would enable the Kremlin
"to enter world markets with advance drill-
ing capabilities," thereby permitting them to
increase their presence and influence In the
Middle East and other oil producing areas.
Finally, the report concluded that two of the
items involved in the deal could enable the
Russians to manufacture armor-piercing
projectiles, clearly increasing their military'
potential.
Nevertheless, the President himself ap-
proved the sale.,It was only the latest in a
long line of strategic items which profit-hun-
gry businessmen have funneled to the enemy.
As a former Polish intelligence officer, Mi-
chael Checinski, has reported, "every ma-
chine, device, or instrument imported from
the West is sent to a special analytic group.
Their job is not only to copy technical solu-
tions, but to adapt them to the specifications
of the Soviet military."
Consider the 1972 approval of the sale of
164 Centalign-B machines, and accompany-
ing technology, to produce miniature ball
bearings. This windfall drastically reduced
the time required by the Soviets to improve
the accuracy of their missile warheads. As
a result, says former CIA official Cord Meyer,
"the U.S. must spend $30 billion on new
mobile missiles because of the vulnerability
of our fixed silos."
Meyer also cites a recent Soviet defector
still under security wraps who has spelled
out just how the export' of technology for
peaceful purposes can backfire. Eruipment
sold to the Soviets to modernize their
weather forecasting has been secretly di-
verted to improve the efficiency of their spy
satellites.
There is a sense of deja vu in all of th's as
the Administration moves to remove the few
remail}ing curbs on Soviet bloc exports in an
effort to build the profits of American busi-
ness and somehow improve East-West rela-
tions. Solzhenitsyn referred to it in his June
1975 speech to the AFL-CIO:
"I must say that Lenin foretold this whole
process. Lenin, who spent most of his life in
the West and not In Russia, who knew the
West much better than Russia, always wrote
and said that the Western capitalists would
do anything to strengthen the economy of
the USSR. They will compete with each other
to sell us goods cheaper and sell them
quicker, so that the Soviets will buy from one
rather than from the other. He said: 'They
will bring It themselves without thinking
about their future.' And, in a difficult mo-
ment, at a Party meeting in Moscow, he said:
'Comrades, don't panic, when things go very
hard for us, we will give a rope to the bour-
geoisie and the bourgeoisie will hang itself.'
"Then, Karl Radek ... who was a very re-
sourceful wit said: 'Vladimir Tlyich, but
where are we going to get enough rope to
hang the whole bourgeoisie?' Lenin effort-
lessly replied: 'They'll supply us with it.' "
WILL HousE BEEF UP USSR MILITARY
CAPABILrrY?
At the precise moment the Administration
has begun a determined drive to expand
U.S.-Soviet trade, the intelligence commu-
nity has informed Rep. Richard Ichord
(D.-Mo.) that the Russians have illegally
diverted for military usage American tech-
nology poured into the Soviet Kama River
truck plant.
Ichord is chairman of the Research and
Development subcommittee of the House
Armed Services panel. Tn hearines on May 23,
Ichord, basing his information on a classi-
fied intelligence document and testimony
on Hans Heymann, the CIA's national in-
telligence officer for political and economic
affairs, told witness Stanley Marcuss, a son-
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for Department of Commerce official, "We
know for a fact that the Kama River project
was diverted to military use." Heymann con-
firmed to Ichord that some 50 000 diesel en-
gines annually produced by the plant were
being installed in military vehicles.
Ichord later informed a Human Events
reporter that the Soviets were using U.S.
technology furnished for the Kama River
plant to produce "armored personnel carriers
and assault vehicles," the latter a euphemism
for tanks and heavy assault guns. Kama
River technology, in fact, has reportedly been
Incorporated into the most advanced Soviet
battle tank, the T-72, now being introduced
into Central Europe.
Started in the early 1970s, the Soviet
plant, supposedly designed for the produc-
tion of civilian vehicles, 'has been largely
constructed with advanced American tech-
nology. Donald E. Stingel, president of Swin-
dell-Dressler Co., which was the principal
engineering contractor for this huge proj-
ect, testified before Congress on April 23,
1974. that his firm was providing the So-
viets with a technology that had not even
been realized in the United States.
The plant is scheduled to have an annual
production capacity of 250,000 10-ton multi-
ple-axle trucks, "more than the capacity of
the entire U.S. heavy-duty truck industry,"
noted Miles Costick in his study, "The Stra-
tegic Dimensions of East-West Trade." The
Kama River project's foundry, the largest
and most modern in the world, is completely
automated and equipped with one of the
biggest industrial computer systems extant,
courtesy of IBM. The foundry will be capa-
ble of manufacturing no fewer than 350,000
diesel engines annually.
The irony, wrote Costick, is that the proj-
ect will have the "capacity to produce tanks,
military scout cars, rocket launchers and
trucks for military transport, but it was
approved by the Commerce and State De-
partments as 'non-strategic'!"
The Kama River diversion was not the
only explosive news to come out of the
hearings, though it may have the most sig-
nificant impact on the Congress in terms
of dealing with the East-West trade issue.
Rep. Larry McDonald (D.-Oa.), a member
of the Ichord panel, also brought out another
critical point: that the United States, not
our European allies, has taken the lead in
undermining the CoCom strategic trade list.
All the member nations that comprise NATO
(save Iceland) and Japan have drawn up a
common list of items-the CoCom list-that
they agree will not be sold to the Soviet bloc
because of their potential military value.
Over the years, the U.S. government has al-
leged that the Europeans have been taking
the lead in trying to make the list less
restrictive.
But McDonald's questioning prompted Ad-
ministration officials to admit, at least in-
directly, that the U.S. has taken the lead.
McDonald, for instance, asked Marcuss if
some of our allies didn't think we were being
hypocritical about the list because of the
number of times this country has sought
-waivers of various Stems. Marcuss Initially
replied: "From time to time we hear that
argument, but it's not credible in our view."
But Larry Brady, acting director of the Ex-
port Administration, who accompanied Mar-
cuss, later released figures showing that in
1978 the U.S. sold 1,050 restricted CoCom
items to the bloc, receiving more than 62 per
cent of the waivers granted.
Brady also acknowledged what Commerce
has denied in the past-that it is extremely
difficult to find out if the Soviets divert our
technology for military use. Although the
Soviets must sign a statement pledging not
to use American technology for such pur-
poses, Brady admitted that U.S. safeguards
"have only marginal utility." Thus, despite
the "safeguards"-which largely consist of
U.S. company executives informing Com-
merce if their-supplies are being misused-
the Soviets could easily be engaged in a
massive effort to divert U.S. technology for
military purposes. And judging from those
Kama River intelligence reports, they are.
While this information was tumbling out
of the Ichord hearings, however, the House
moved a step closer to passing a new bill
(HR 4034) which will actually expand trade
with the Soviets and even loosen restrictions
on items of trade with military potential.
Repprted out of the Foreign Affairs Com=
mittee on May 15 and expected to come to the
House floor in the next week or two, the bill
has as its primary sponsor Rep. Jonathan
Bingham (D.-N.Y.). The chairman of the
panel, Rep. Clement Zablocki (D.-Wis.), is
also a sponsor, as, surprisingly, is Rep. Rob-
ert Lagomarsino (R.-Calif.), a conservative.
Indeed it is clear that even conservative
members of the Foreign Affairs Committee
who are not sponsors, such as Representatives
Ed Derwinski (R.-Ill.) and Dan Quayle (R.-
Ind.), appear unconcerned about the meas-
ure insofar as it would vastly increase Soviet
opportunities to receive the most advanced
American technology.
Yet the Bingham bill is considered "disas-
trous" for the U.S., according to such Red
trade experts as Costick. The Pentagon's role
in determining what goods should be sold to
the Soviet Union, for instance, has been con-
siderably reduced. Under the Jackson amend-
ment as it applies to present law, the Presi-
dent, if he overrules the Defense Depart-
ment's objection to the sale of a certain item,
must submit a report to Congress telling
why. But this requirement for a report has
been eliminated, thus clearly making it easier
for this soft-on-Red trade President to veto
the Pentagon.
Of even greater consequence is the so-
called "indexing" provision, which comes
close to mandating that the secretary of
commerce make important U.S. technology
available to the Soviets on a steady basis. In-
deed, this provision calls for the secretary of
commerce to annually remove U.S. technol-
ogy from the restricted list.
"In order to ensure that requirements for
validated licenses. and qualified general li-
censes are periodically removed," this section
says, the secretary may "provide for annual
increases in the performance levels of goods
of technology subject to any such licensing
requirements." In sum, the secretary of com-
merce can unilaterally remove huge quan-
tities of computers and machine tools from
our restricted list by simply claiming that
the newest technology makes even advanced
but less new technology out of date.
Still another gigantic loophole eliminates
any right on our part to block Western Eu-
rope or Japan from reselling our technology
to the Soviet bloc or other enemy or adver-
sary nations. That section reads that "no
condition. shall be imposed by the United
States" on such reselling ventures.
While this bill is marching through the
House (with a similar version being readied
by Senators Proxmire and Stevenson in the
upper chamber), conservatives, moderates
and liberals who oppose expansion of Soviet
trade are rallying around H.R. 3216, a bill
mainly sponsored by Representatives Clar-
ence Miller (R.-Ohio), Richard Ichord (D.-
Mo.), Lester Wolff (D.-N.Y.) and Robert
Dornan (R.-Calif.).
That measure would drastically change the
method by which export licenses for the So-
viet Union are approved, shifting the major
responsibility from Commerce and the State
Department to the Pentagon. Many think it
will be offered in whole or in part as an
amendment to the Bingham measure when
it reaches the floor. And if it fails to win, the
Soviets are almost certain to be the benefi-
ciaries of even more advanced U.S. tech-
nology.
As Rep.. Miller testified before Ichord on
May 15, there is already considerable evidence
that U.S. technological sales to the Soviets
in recent years have enabled them to perfect
the guidance systems and MIRV capabilities
for their monster SS-18 intercontinental
'missiles which so threaten our nation. And
Congress, it seems, may end up fortifying our
enemies even more.
PROPOSED SHIPMENT OF BALL BEARING
MACHINES TO THE U.S.S.R.
The Senate Subcommittee on Internal Se-
curity has undertaken its investigation of
this matter not in any desire to find scape-
goats, but because we felt that the larger
issue involved in the Bryant case was, poten-
tially, of life-or-death importance to Amer-
ica and the free world. We are now convinced,
for reasons that are set forth below, that the
decision to grant the license was a grave er-
ror-an error in judgment which stems from
a more basic error in procedure.
In justifying the decision to grant the
license for the export of the Bryant machines
to the Soviet Union, Secretary Mueller wrote
to Senator Dodd on January 18:
"We had originally issued the licenses
on evidence which satisfied us that:
first, denial of the licenses would not be effec-
tive in preventing or significantly delaying
procurement of substantially comparable ma-
chines (our emphasis) by the U.S.S.R. from
other sources than the United States; and
second, the potential output and utilization
of the machines is not such as to represent
a significant strategic hazard to the United
States. And because our denial action would
not be substantially effective from a national
security standpoint, its only result would
be to withhold a - business opportunity
from a member of a particular American
industry ? 0 0."
With minor modification, this, in essence,
has been the position of the Commerce De-
partment in its testimony to the subcom-
mittee and in subsequent correspondence.
This position was restated by Secretary
Hodges in his letter of February 9 to Senator
Dodd. The letter reads in its concluding
paragraph:
"May I emphasize, in closing, I made the
decision to release the Bryant machines for
shipment to the Soviet Union on the basis
of the best technical information and evalu-
ation that was available to me. This tech-
nical information was to the effect that the
national interest would not be prejudiced
by the export of these machines by an Amer-
ican company, but on the contrary our na-
tional interest would be served. In my own
judgment of the matter I have paramounted
considerations of security and have given
only secondary consideration to the com-
mercial or trade aspects."
Any Secretary of Commerce, by the nature
of things, must rely on the reports of his
experts for guidance in such matters. One
of the serious questions raised by this in-
vestigation is whether the Secretary of Com-
merce has had at his disposal the highly
specialized expert opinion which is essential
in making determinations about highly spe-
cialized machinery.
The conflict of testimony between the
Commerce Department and Defense Depart-
ment revolved around the following points:
(1) The Defense Department and Minia-
ture Precision Ball Bearing Co. (hereafter
referred to as MPB) held the Bryant Model B
Centalign machine to be unique. The Com-
merce Department said that equal, or ap-
proximately equal machines could be ob-
tained from European. firms or built by the
Soviets themselves.
(2) MPB emphasized that the function
performed by the Bryant Model B machine
is of critical importance in facilitating the
mass production of high precision miniature
bearings. The Department of Commerce and
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S 10142 CONGRESSIONAL RECORD -SENATE July 21, 1979
the Bryant Co. contended that it is simply
one among many equally important func-
tions in the production of precision bear-
ings.
(3) The Defense Department 'and MPB
contended that the possession of these
machines would enable the Soviet Union
to produce smaller and better missile guid-
ance systems, gyros, and other military
items. The Bryant Co. held it probable that
the Kremlin plans to use these machines
for the manufacture of bearings, of lower
quality, largely destined for ccnventlonal
uses.
The subcommittee was greatly impressed
by the testimony of the Miniature Precision
Ball Bearing Co. and of others who opposed
the shipment. But to help throw some inde-
pendent light on the matter, Senator Thomas
J. Dodd, on behalf of the subcommittee,
asked for the opinions of 12 private experts
in the ball bearing field.
So that they would be familiar with argu-
ments on both sides, the experts we retained
as consultants were provided with tran-
scripts of the hearings on the proposed
export of the Bryant machines plus the
briefs submitted by the Bryant Co. and
MPB. They were encouraged to contact the
Bryant Co. and the Miniature Precision Ball
Bearing Co., and other companies in the
field.
All told, we have now received opinions
from 12 men recognized as experts in the
ball bearing field. Eleven of them are Ameri-
cans, one is an Englishman. A list of our
consultants, stating their present positions
and their qualifications, is appended to this
report. We have also taken testimony, in
a staff interview, from a Russian expert
employed by the Library of Congress, who
has made an intensive study of the litera-
ture relating to the Soviet ball bearing
Industry.
The list of our consultants is attached to
this report. Their statements are printed in
the hearing record.
We believe that this testimony gives over-
whelming support to the stand taken by the
Department of Defense in this matter, and
to the -arguments presented -by MPB in op-
posing the shipment. This testimony es-
tablishes conclusively (1) that the minia-
ture bearings produced with the help of the
$ryant machine are used primarily for de-
fense purposes; (2) that the function per-
formed by the Bryant machine is of critical
importance; (3) that no comparable ma-
chines can at present be obtained from other
sources; (4) that Soviet industry has not
been able to master the problems involved
in mass producing high precision miniature
bearings; that the industry is in fact plagued
by poor quality and obsolete equipment;
that, with its own resources, it would prob-
ably take a number of years to develop the
capability; (5) that the possession of these
machines would greatly accelerate Soviet
mastery of the art of miniaturization.
Before proceeding to the recommenda-
tions which we wish to submit, we think it
would be helpful if we briefly summarized
some of the high points of this testimony,
and recapitulated some of the essential facts.
1. At least 85 percent of the bearings man-
ufactured with the help of the Bryant ma-
chine are used by defense industries:
Subject machine is a key factor in the
oconomical production of the highest qual-
ity ball bearing parts. It enables us to pro-
duce a bearing assembly of the highest pre-
cision for many important Department of
Defense applications, such as the latest
guidance systems, navigation, fire control,
computer, aynchro and servo mechanisms
used for aircraft, ordnance, ships, missiles
and other space vehicles (statement of Mr.
J. R. Tomlinson, president, and Mr. B. L.
Mims, vice president in charge of engineer-
Ing, the Barden Corp., Danbury, Conn.).
2. The function performed by the Bryant
machine is of critical importance:
The outer ball track grinding operation
is one of the last and most vital of those
performed on the bearing outer ring. It is
the operation which, until the advent of
this machine, could probably be called the
bottleneck opposing the precision perform-
ance of miniature bearings. The necessary
perfection of other operations has been
achieved 5 to 20 years ago (statement by
Mr. H. B. Van Doren, vice president in charge
of engineering, Fafnir Bearing Co., New
Britain, Conn.).
3. The Bryant machine is unique in its
field: Secretary Mueller in his letter of Jan-
uary 18, 1961, to Senator Dodd, said that
"substantially comparable" machines could
be obtained from other sources. Mr. Bradley
Fisk, Assistant Secretary of Commerce for
International Affairs, In his testimony be-
fore the subcommittee on January 24 said
that there are "five factories outside of Rus-
sia that could make similar machines" (p.
156, transcript). It was not clear from his
statement whether the companies he named
do, in fact, make'such machines, or whether
they are theoretically capable of making
them. A careful check has revealed that none
of the companies named by Mr. Fisk produce
machines that can be considered equal or
"substantially comparable" to the Bryant
machine.
(1) The Manganti Co. of Italy was one of
the five listed by Mr. Fisk. Miniature Preci-
sion Ball Bearing, In its memorandum to the
subcommittee, pointed out that it-
"Was consulted as to the capabilities of
the Italian machine when it was in the final
stage of development and obtained samples
of bearings in late July (1960), tests upon
which were completed in August. It was
found that on "concentricity of bore" 90
percent of the bearings were not within the
allowed tolerance and 30 percent had to be
rejected because the bore roundness was not
within the specified tolerance."
Such a machine cannot be considered
"substantially comparable."
(ii) UVA of Sweden was another company
named by Mr. Fisk. Mr. Stanley Hensby,
technical director of the EMO Instrumenta-
tion Co. of Bracknell, England (an affiliate
of the Barden Corp.), cabled this informa-
tion on the UVA "machine" in response to
a query from the subcommittee.
UVA: No equipment machine available.
Work is now progressing in field and ma-
chine will probably be shown at Brussels
show on September 2-12. Feel that it would
take several years before production of this
machine would become surplus to SKF re-
quirements and available to world market.
A machine that will not be commercially
available for several years cannot, again, be
considered "substantially comparable."
(iii) The Studer Co. of Germany was also
included in the list submitted by Mr. Fisk.
Studer machines are in operation, under the
same roof as Bryant machines, in both the
Barden Corp. of Danbury, Conn., and in the
EMO Co. of England. Eyewitness testimony
on the relative working capabilities of the
Studer machine Is therefore available.
Mr. Hensby of TMO said in his cable:
"Studer: No equivalent available. Studer
approach is for universal application rather
(than) mass production. We have se"eral of
these machines in use. Only suitable for
small-scale production."
Mr. Tomlinson'and Mr. Mims of the Barden
Corp., reported:
"0 0 C the Studer grinder. manufactured
In Germany, is a machine which the Barden
Corp. has recently purchased and is using
in its experimental laboratory in Danbury.
This machine is basically a very accurate
toolroom machine, but it is not capable of
producing accurate bearing races in large
quantities with great efficiency."
Such a machine can also not be considered
"substantially comparable."
(iv) The Voumard Co. of Switzerland was
the fourth company named by Mr. Fisk. The
Voumard machine was examined at the
Swiss Industries Fair in Basel in the spring
of 1960 by Mr. Donald Williams, chief proc-
ess engineer of the New Departure Ball Bear-
ing Co. Mr. Williams reported that-"these
machines were presumably capable of rela-
tively accurate work. However, these ma-
chines do not incorporate features such as
fully automatic cycles, including loading
and unloading, centerless chucking, and
automatic wheel dress and compensation,
which are considered prerequisites for pro-
duction equipment. The Bryant Model B B.
Centalign machine incorporates all of these
features."
So much for the fourth "substantially
comparable" machine.
Why has American industry been able to
produce a machine that the European ma-
chine tool industry, with all its capabilities,
has thus far not approached? The answer to
this was.stated by Mr. Tomlinson and Mr.
Mims
"It seems quite logical that, since the large
market for highly precise bearings in the
United States is supported almost entirely by
the Department of Defense, there would be
no reason for anyone in Europe to have man-
ufactured a machine tool specifically for
highly precise miniature bearings, since the
quantities of these bearings used in Europe
have been infinitely email compared to the
quantities used in the United States."
4. Soviet industry, left to its own resources,
is years removed from the production of a
machine comparable to the Bryant model B.
Mr. Fisk In his testimony gave some cre-
dence to reports that the Soviets were on the
verge of producing a comparable or even
superior machine.
Mr. Joseph Gwyer, senior research special-
ist of the Library of Congress had this to say
on the subject of the capabilities of the So-
viet ball bearing industry and of that por-
tion of the machine tool industry that sup-
plies it:
"During the last year, the Soviets pub-
lished a terrific amount of data on the ball
bearing industry, the difficulties the Soviet
ball bearing industry is facing today, and
the availability of modern technologically
advanced equipment suitable for the manu-
facture of ball bearings."
Mr. Gwyer quoted an article in the Soviet
"Economic Gazette" (Aug. 27, 1960) as stat-
ing that the ball bearing industry had re-
ceived little of the equipment planned for
it, that the production of centerless grind-
ers was entrusted to the Vitebsk Plant,
which is not in a position to cope with this
task, that the Saratov Machine Tool Plant
and the Voronezh Plant had not yet pro-
duced internal grinders that satisfy the needs
of the industry.
The articles published during the fall
period of 1960-said Mr. Gwyer-"have cre-
ated great concern. As a result of the reports
showing the great deficiencies in precision
machine tools specifically used by the bear- .
ing industry, the Council for Automation and
Mechanization, with the Council of Ministers,
initiated a field survey during which the
machine tool plants responsible for manufac-
turing equipment for the ball bearing indus-
try Pero visited. The findings of this special
group, or this special investigating body,
showed that the complaints were justified,
and consoquently, the Committee for Auto-
mation and Mechanization set a number of
points, clarification points and recommenda-
tions, in order to improve the condition or
actually remedy this situation."
Gwyer quoted a report in the Economic
Gazette of October 20, 1960, as stating that
"production problems of automatic size con-
trol equipment have not been solved for
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centerless grinders." In the same issue of the
Economic Gazette, it was pointed out that it
had taken 5 years to build the prototype of a
semiautomatic internal grinder, after the ma-
chine had first been designed, that this pro-
totype was only half as fast as the machine
it was designed to replace, and that it did not
produce a cylindrical surface.
Bryant Co., in defending the shipment,
argued that, if the Soviet Union could not
buy the machines, it would copy them, and
little would be gained from a national secu-
rity standpoint. In support of this, it is
pointed out that the Soviet Government is
already in possession of certain assembly
plans for the Bryant machine.
Addressing himself to this point, Mr.
Henry' Konet, consulting engineer in the field
of instrumentation, said:
"It is necessary to distinguish between giv-
ing away secrets, know-how and capability.
Our manufacture of these small devices is no
secret-even the manner is not difficult to
determine-but the capability to do it well
and economically has taken years to develop
and should not be sold to a potential adver-
sary. V ? o The situation is not one of sell-
ing our adversary a 'club'-but machines
which help to produce better 'clubs,' faster
and cheaper."
When queried about this matter, several of
the committee's consultants estimated that,
if the Soviets had to build the machines on
their own, it would take at least another year
to manufacture 45 machines. Mr! Gwyer's
estimate was even more pessimistic.
He said that the-"copying of equipment
of the nature of precision machine tools en-
ters into a new realm, where the Russians
have demonstrated inability and consistent
failures ? a o "
He pointed out that the Bryant machine
was much more complex than the internal
grinder which had taken 5 years to move
from design to prototype. On the basis of
their past record, Mr. Gwyer estimated that
it might take the Soviets as long as 5 years
to build a prototype of the Bryant machine,
iron out the bugs, and then build 45 ma-
chines of high quality.
Whether it would take 5 years or 2 years,
or 1 year, our national security obviously de-
manus that we stop helping Soviet industry,
especially the Soviet defense industry, to
overcome its weaknesses. It demands, on the
contrary, that we inflict delays on them
whenever this is in oyr power, that we make
things more difficult for them rather than
easier.
Based on the testimony given at our hear-
ings and on the additional statements which
we herewith transmit, the Senate Subcom-
mittee on Internal Security is stronely of the
opinion that the machines in question should
not be shipped to the Soviet Union.
The Soviets have a considerable edge over
us in the thrust of their rockets. We have
compensated, or more than compensated for
this disadvantage by our own very consider-
able lead in miniaturization and high-pre-
cision instrumentation. If the Soviets could
ever achieve near equality with us in these
areas, their lead In missile thrust would be-
come a very serious matter.
Before they can close the miniaturization
and precision gaps, the Soviets will have to
develop an ability similar to our own to mass
produce qurylity miniature bearings. Their
press indicates that they are intent on do-
ing this; and this is confirmed again by their
eagerness to acquire the Bryant machines.
They can obtain, or have already obtained
from European sources, machine tools used
at other points in the process of manufactur-
ing precision miniature bearings. What they
ccnnot obtain in Europe is a machine
equivalent to the Bryant machine in the
critical procesq of grinding the races.
There are 72 Bryant model B machines in-
stalled in, the United States. We have been
informed that on these 72 machines, all of
the precision miniature bearings used by the
Department of Defense are, at one point,
processed. The 45 machines that will be
shipped to the Soviet Union, unless the
Bryant license is revoked, include 35 of this
model, thus will give them a capability half
as large as our own,
If we ship these machines, therefore, we
will endow them with a readymade ability to
produce precision miniature bearings in
quantity. If we withhold these machines, it
will almost certainly take them another sev-
eral years to achieve this capability.
There can be no doubt about the course
we should follow.
The subcommittee believes that the Bryant
Chucking Grinder Co. acted in good faith
and followed all the established procedures
in arranging for the export of the Bryant
grinders to the Soviet Union. Is it to be
noted in this connection that it waited un-
til the Department of Commerce had ap-
proved the sale before it concluded the
contract.
The subcommittee also recognizes that in
delivering plans, or partial plans, for the
assembly of the Bryant grinder to the Soviet
purchasing agency, the Bryant Co., was fol-
lowing an accepted and unavoidable proce-
dure which is the natural concomitant of the
sale of equipment. The subcommittee be-
lieves, however, that in future, companies
which obtain Department of Commerce ap-
proval for shipments of machines tools or
other complex equipment to the Communist
bloc, should be instructed to wait until their
equipment has been shipped before trans-
mitting assembly plans or other technical
diagrams.
LIST OF INDEPENDENT EXPERTS RETAINED AS
CONSULTANTS BY THE SENATE SUBCOMMIT-
TEE ON INTERNAL SECURITY IN THE MATTER
OF THE BRYANT EXPORT LICENSE
Mr. Richard H. Valentine, director of re-
search and development, New Departure Co.,
Bristol, Conn. ?-
Mr. Seth H. Stoner, general manager, New
Departure Co., Bristol, Conn.
Mr. D. L. Williams, chief process engineer,
New Departure Co., Bristol, Conn.
Mr. Kenneth V. Knebel, general works
manager, New Departure Co., Bristol, Conn.
Mr. J. R. Tomlinson, president, Barden
Corp., Danbury, Conn.
Mr. Bruce L. Mims, vice president in
charge of engineering, Barden Corp., Dan-
bury, Conn.
Mr. E. J. Karkut, vice president in charge
of manufacturing, Barden Corp., Danbury,
Conn.
Mr. H. B. Van Dorn, vice president .in
charge of engineering, Fafnir Bearing Co.,
New Britain, Conn.
Dr. Charles Stark Draper, professor and
head of the Department of Aeronautics and
Astronautics and director of the Instrumen-
tation Laboratory, Massachusetts Institute
of Technology.
Mr. William G. Denhard, assistant direc-
tor, instrumentation laboratory, Department
of Aeronautics and Astronautics, Massachu-
setts Institute of Technology, Cambridge 39,
Mass.
Mr. Henry Konet, consulting engineer in
instrumentation, Konet Co., Hohokus, N.J.
Mr. John S. Towresey, consulting engineer
(in ball-bearing field), the Franklin Insti-
tute, Philadelphia, Pa.
Mr. Stanley Hensby, technical director,
EMO Instrumentation Co., Bracknell, Eng-
land.
Mr. STEVENSON. Mr. President, I
ask unanimous consent that Robert
Russell, Andrew Carothers, and Bruce
Hubbard of my staff and the Banking
Committee staff, and Ellen Lessard of
Senator EAGLETON'S staff be given the
S 10143
privilege of the floor during considera-
tion of this bill and -all amendments
thereto.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. BAYH. Mr. President, will the
Senator be kind enough to add Chris
Aldrich and Eve Lubalin to that list,
please?
Mr. STEVENSON. Yes, Mr. President.
Mr. DOMENICI. Mr President, will
the Senator ' yield for a unanimous-
consent request?
Mr. STEVENSON. Of course.
Mr. DOMENICI. I ask unanimous
consent that Bruce Barr and George
Ramonas of my staff be granted the
privilege of the floor also.
The PRESIDING OFFICER (Mr.
PRYOR). Without objection, it is so
ordered.
Mr. STEVENSON. Mr. President, the
objectives of the proponents and oppo-
nents of this amendment and others
which may be offered by the distin-
guished Senator from Washington are
the same. Our objective is to strike a
fair balance between the necessity of
national security on the one hand and
a strong, competitive economy on the
other. The risk is that the balance will
not be struck and that the United States
will, once again and in the name of
national security, shoot itself in the
foot, depriving itself of national security.
Technology tends to float in the winds,
and the United States no longer is the
dominant resource of technology in the
world.
More technology is now created out-
side of the United States than within.
Often a control on technology by the
United States simply gives the business
to some other nation, a foreign competi-
tor of the United States, with the result
that our economy is hurt, that the tech-
nology is transferred, and without the
safeguards that are frequently asso-
ciated with transfers of U.S. technology.
So the result is not only injury to
our economy, but also to our national
security.
This argument so far implies there
are no controls on technology. Well, that
is nonsense. There are controls and
there are effective controls.
In fact, the Defense Department has
never been turned down by the Depart-
ment of Commerce. In every instance
in which it has sought controls on
exports of technology, it has been
granted the controls by the Department
of Commerce.
I suggest to the Senate that the ad-
ministration of export controls will not
be improved, as this amendment intends,
by spreading and dividing the authority
for the imposition of controls.
The lead agency for that purpose is
now the Department of Commerce. But
in exercising that authority, it is re-
quired by law to consult with ? the De-
partment of Defense. During those con-
sultations, the Department has adequate
opportunity to identify critical technol-
ogies, to urge controls where they are
necessary for purposes of national se-
curity, and, in all such instances, they
are granted and will continue to be
granted.
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 S 10144
imple-
mented now and
mented within t
But some of th
inadequacy of the
th export controls on tech-
tech-
the imposition of e
The Kama River
been cited. Well, t
con-
in that case because
The decision w
administration to
stance.
Why the administration
took that position,
reason may have
that, had the United
business, it would
how would the a
States be enhanced
the business to th
th
the manufacture
could do so for
Jap-
West Germans or the
Italians, the Wes
anese could supply
trucks, and it is
go-
especially a great
by one means or another.
ing to get them b
have been any di
diversions.
forth the facts in
as follows:
ing and Urban
tes-
DEAR MR. CHAIR
Subcommittee on Research
timony before the S
and Development o
Armed Services, -th
capa-
stories implying t
t
bility has been helped
As you know, ou
a favorable balance
ou w
promotion of exports
ever before. Even s
paramount, and w
tary capabilities o
o
this line is a difficult
is why it is essential
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CONGRESSIONAL RECORD -SENATE July 21, 1979
o suggest the adminis- arise be discussed on the basis of accurate Case number 849801 contains a "letter of
controls cannot be im- Information. protocol" between Mack Trucks, Inc., and
a Soviet trade delegation indicating that
The recommendations First, there was no "diversion" in connec- the trucks assembled at Kama River would
ence Board Task Force tion with the Kama River truck factory and, be used for agricultural and industrial pur-
trols are being imple- therefore, no violation of U.S. export con- they are being poses.
A copy of the protocol is attached.
A diversion occurs only when end-use re- he existing framework. With regard to the protocol, I am con-
strictions pertaining to a license are vio- cerned that because Mack Truck pulled out
of the deal after signing the protocol, which
wereAssued during the Nixon Adn-dnistra-e statements about the
tion and contained no restrictions which we you will note also included other parties,
can identify limiting the use of the trucks including SATRA, it may not be considered
present procedures for
and engines produced at the factory. Ac- relevant to subsequent licensing actions. I
aisleading, and in Cer- cordingly, milltary use of the trucks or en, intend to go through all of the license ap-
y are not true. gines. produced at Kama River would not to see whether or not we refer-
constitute a diversion or violation of the enced the protocol in subsequent license
truck factory has actions. I think we did. I am also sending
law because the licenses contained no re-
here were no diversions you separately a copy of the entire "front
strictions pertaining to the use of those there were no con-
trucks or engines. Nor would any military office" file on KAMA.
Also attached is a June 14 memorandum
use of Kama River trucks or engines entail diversion of the foundry's computer, because
as made by the Nixon Dick Isadore prepared on the basis of a
permit the exports to quick review of all license applications for
limitations on the use of the computer per-
tained to use of its computing capacity, not the KAMA River plant.
ut safeguards or end tiere were no such con- to use of products manufactured at the WASHINGTON, D.C. June 14, 1979.
n violated in that in- Memorandum for: Lawrence Brady.
Subject: Kama River Truck Plant Licenses.
with limitations on the use of the factory at that time At your request all case files which could
output. I cannot say. But the
This view is confirmed by the attached be identified as part of the Kama River Truck
memorandum from Mr. Brady which con- complex have been retrieved from Archives.
been the obvious one,
cludes that a thorough review, which was Staff members reviewed each case file, ex-
States not got the
requested by Senior Deputy Assistant Sec- amining all documents including actual ap-
have gone to Italy, and
retary Stanley J. Marcuss, has failed to dis- of the United plications, supporting documents, Single
close the existence of any document which Transaction Statements, internal memo-
in this world, or its
ened, by simply giving could be construed as a limitation on the and chron sheets for any indication
which would show:
use of the factory output for civilian ase Italians? 1. Limitation on the truck usage for civil-
ipply the factories f or versus military applications.
not relevant -to the Kama River plant. 2. Conditions attached to individual li-
Of automobiles. They
Second, at the time the licenses -were Is- And if not the censes.
3. Letters of conditions attached to 11- -
sued, the Nixon Administration knew of the censes.
possibility that Kama trucks or engines them. Over 175 case files were reviewed and there
was no indication of limitation of use for
gines, and trucks are caculd be used by the Soviet military. This tor apparently was fully considered be- naive to think nations, the trucks to be produced at Kama River.
superpower, is not The computer equipment licenses issued to
IBM have the visitation conditions which
that the export control sy9tem failed to en- are a part of all major computer sales to
is that there were no sure that all revelant factors were considered' Bloc countries.
refore, there. could not Finaliy, contrary to some press reports, AV. At the time these licenses were issued, they
Brady has not been "demoted" nor has any were microfilmed and sent to Archives. The
action been taken against him. He retains procedure did not include microfilming let-
ters or supporting documents accompanying
nted in the RECORD at of Export Administration, a position he has licenses as is done now in our microfiching
r to me dated June 18, held for the last five years. Because of his processes. We are retrieving these microfilm
ry of Commerce setting, position as Deputy Director, Mr. Brady served. files and will review the face of all licenses
as Acting Director of the Office of Export issued to insure that conditions were not
this matter.
typed on the license itself.
o objection, the letter All cases and the Capital Goods & Produc-
tion Materials Kama River file have been
I- hope this will lay to rest the Inisinfor- given to Paige Bryan.
TON, D.C., June 18,1979. mation which has recently surrounded this RICHARD ISADORE.
NSON, III, subject.
Mr. STEVENSON. Mr. President, I
mittee on International Sincerely, nittee on Housing, Bank- JUANITA M. KREPS, also have a letter from Mr. Charles Dun-
Secretary
A/fairs, Washington, D.C.
can in his capacity as the Deputy Secre-
MAN: In the course of tary of Defense, dated July 20, 1979, in
WASHINGTON, D.C., June 22, 1979. which he expresses the views of the De-
Memorandum
f the House Committee on partment of Defense on this amendment.
Deputy Director, Bureau of Trade Reg-
e Deputy Director of the Let me read from the letter:
t trucks produced at the From: Lawrence J. Brady, Deputy Director, The Department of Defense supports the
Administration's position on the amend-
actory in the Soviet Union Office of Export Administration. ments which are expected to be offered to
S. 737, the Export Administration Act of
rt control restrictions. On June 22, 1979, pursuant to your re- 1979.
has led to newspaper quest, I thoroughly reviewed the relevanthat Soviet military
export license applications and supportin Most of these proposals do not impact
documents submitted by various UB. firm! directly on the Department of Defense. Two,
as a result of an ap-
however, do and we are opposed to both of
ance by this Department. seeking Department of Commerce authori- them. One would tend to reverse the relative
zation to export commodities to the USSR'sr nation no longer enjoys roles of the Secretary of Defense and Secre-
of trade, and thus the taro of Commerce in reviewing and revising
amination, with two exceptions, failed to is more important than export controls maintained for national
disclose the existence of any document which o, the national security is security purposes. While the intent appears
could be construed to represent an agree-e must be careful that we to be to inure that the Department of De-
ment between parties or assurances as to has an adequate role in the. export
rials and technology that the specific application of products, Le., control system. It is our judgment that 'the
ur own expense the mill- military versus civilian, In the truck manu-f other nations. To walk Secretary of Defense already has and exercises
facturing process. and delicate job. That adequate authority in this area.
The exceptions are found in license ap- .
that .issues which may
plications casenumbers 813124 and 849801. Mr. President, I ask unanimous con-
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July 21, 1979 CONGRESSIONAL RECORD - SENATE
sent that the letter be printed in the
RECORD.
There being no objection, the letter
was ordered to be printed in the RECORD,
as follows:
THE DEPUTY SECRETARY OF DEFENSE,
Washington, D.C. July 20, 1979.
Seliator ADLAI E. STEVENSON,
U.S. Senate,
Washington, D.C.
DEAR SENATOR STEVENSON: In response to
your letter of July 19, 1979, the Department
of Defense supports the Administration's
position on the amendments which are ex-
pected to be offered to S.0737, the Export
Administration Act of 1979.
Most of these proposals do not impact
directly on the Department of Defense. Two,
however, do and we are opposed to both of
them. One would tend to reverse the rela-
tive roles of the Secretary of Defense and
Secretary of Commerce in reviewing and
revising export controls maintained for na-
tional security purposes. While the intent
appears to be to insure that the Department
of Defense has an adequate role in the export
control system, it is our judgment that the
Secretary of Defense already has and exercises
adequate authority in this area.
The other amendment would authorize
inclusion in the Defense budget of funds
especially appropriated for export control
functions. Our opposition to this proposal
is that such an authorization is not currently
needed.
By means of a separate letter, I plan to
answer the other questions you raised about
the adequacy of U.S. export controls main-
tained for national security purposes. In
the meantime, I thought it might be helpful
to let you know at once where we stand on
the amendments issue.
Sincerely,
C. W. DUNCAN, Jr.
Mr. STEVENSON. Mr. President, I
have another letter from the Assistant
Secretary of Defense for International
Security Affairs addressed to me and dat-
ed July 20, 1979, which says, in reference
to the Kama River truck plant, as fol-
lows :
The Kama River Truck Plant licenses for
the foundry and production machinery were
Issued during the Nixon Administration and
contained no restrictions so far as we know
Limiting the use of the trucks and engines
produced in the factory. Accordingly, use by
the Soviet military of the trucks produced
at Kama or inclusion of the engines in mili-
tary vehicles would not constitute a viola-
tion of U.S. export control restrictions.
Whether and If so to what extent Kama River
engines are being used In Soviet military
vehicles has not been verified. Accordingly,
there is no basis on which a judgment can
be made about the contribution such use
might make to the Soviet military potential.
In other words, not only could there
have been no diversions, because there
was no safeguard or end use restriction,
it cannot even be verified that there has
been any use of engines or trucks from
this plant for military purposes.
Now, this letter, Mr. President, goes on
to address other amendments which may
be offered.
I ask unanimous consent that it be
printed in the RECORD.
There being no objection, the letter
was ordered to be printed in the RECORD,
as follows:
ASSISTANT SECRETARY OF DEFENSE,
Washington, D.C., July 20, 1979.
Hon. ADLAI E. STEVENSON III.
U.S. Senate,
Washington, D.C.
DEAR SENATOR STEVENSON: We have re-
viewed your 19 July 1979 letter in which you
requested Department of Defense views on
several amendments which are expected to
be offered to S. 37. Our views on the questions
raised In your numbered paragraphs are as
follows:
1. The Kama River Truck Plant licenses for
tie foundry and production machinery,were
issued during the Nixon Administration and
contained no restrictions so far as we know
limiting the use of the trucks and engines
produced in the factory. Accordingly, use by
the Soviet military of the trucks produced
at Kama or inclusion of the engines in mili-
tary vehicles would not constitute a violation
.of U.S. export control restrictions. Whether
and If so to what extent Kama River engines
are being used in Soviet military vehicles
has not been verified. Accordingly, there is
no basis on which a judgment can be made
about the contribution such use might make
to the Soviet military potential.
2. A number of technologies employed in
the Cruise Missile System can be exported
to most non-Communist countries without a
validated export license. None of them, how-
ever, are either sensitive or "critical" because
they are not unique to cruise missile design,
development or production and are readily
available in a number of countries In the
West. Those few technologies which are both
unique to cruise missiles and available only
in the U.S. require validated licenses from
either the Departments of State or Com-
merce. An example is the technology asso-
ciated with the small jet engine which is
currently under development for the cruise
missile. This technology can only be exported
under a Munitions license.
8. The existing allocation of responsibility
under the Export Administration Act for ex-
port controls does not hinder the Depart-
ment of Defense's efforts to formulate a list
of critical military technologies or otherwise
interfere with the implementation of an ef-
fective and fully adequate system of export
controls for national security purposes. In
particular, the Department of Defense would
oppose any amendment which would tend to
reverse the relative roles of the Secretary of
Defense and the Secretary of Commerce in
reviewing and revising export controls main-
tained for national security purposes. It is
our judgment that the Secretary of Defense
already has and exercises adequate authority
in this area.
4. Statutory authority is already available
to embargo exports of "critical" goods. and
technologies to all controlled country desti-
nations. We would oppose any amendment
which would make this a mandatory re-
quirement because, on the one hand, the
items to be covered are not presently fully
determined, and, on the other hand, there
may be occasions, even though rare, on which
such action would be, ill-advised.
With regard to end use statements and
safeguard provisions, we do not regard them
as applicable to transactions in which tech-
nology, either in the form of technical data
or equipment from which technology may
be extracted, is invdlved. It is our judgment
that technology once transferred can be
neither controlled nor recalled. We consider
the usefulness of safeguards as limited to
hardware items whose diversion to other than
their stated purpose we wish to deter. We
do not count end use statements as a safe-
guard.
S10145
As for computers, there are some applica-
tions for which we have unable to devise
technically and economically feasible safe-
guards. These are automatically recom-
mended for denial. For others, experienced
USO technical and intelligence experts have
determined that safeguard provisions, ju-
diciously applied, provide a reasonable as-
surance of detecting and thus deterring
significant diversion of the system from its
stated end use.
5. The Department of Defense has no
evidence that Moscow has used American
seismic equipment to enhance its anti-
submarine warfare potential or that Ameri-
can machine tools for producing precision
ball-bearings have probably helped Soviet
engineers to develop multiple warheads for
new Intercontinental missiles.
I trust this is the information you desire.
Sincerely,.,
DAVID E. MCOIFFERT.
Mr. STEVENSON. Mr. President, in
sum, I commend the Senator from
Washington for his concern about the
transfer of technology which could have
adverse national security implications
for the United States. I share that con-
cern, but existing procedures are ade-
quate. Existing procedures are being im-
proved. The danger of this amendment is
that by transfering this authority and
changing a procedure which is adequate
and, is functioning adequately, we will
end up harming ourselves economically,
and with no improvement in our na-
tional security.
So I hope the Senate will reject this
amendment.
The PRESIDING OFFICER. Who
yields time?
Mr. HEINZ. I yield myself such time as
I may require.
Mr. President, I ask unanimous con-
sent that Peter Clark and Jacques
Gorlin, of Senator JAVrrs' staff, have the
privilege of the floor during the consi-
deration of this measure.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. HEINZ. Mr. President, I associate
myself with the comments of the Sen-
ator from Illinois (Mr. STEVENSON), re-
garding Senator JACKSON'S amendment.
I say to my good friend the Senator
from Washington that I do share his
many concerns, and I compliment him
on being a very consistent and a very
thoughtful advocate of maintaining a
strong national defense and making sure
that our defense is in no way dissipated
through thoughtless moves by any ad-
ministration.
Nonetheless, Mr. President, I oppose
this amendment because I really do not
think it accomplishes the goal the Sen-
ator from Washington wishes to achieve.
Also, it would create a terribly compli-
cated and counterproductive situation
for those seeking to export, those who do
not export, and those who do not seek
to export critical technology.
I suspect-this is hypothesis, but it is
hypothesis based on the Senator from
Washington's discussion of the Kama
River Truck Plant-that what.he really
seeks to do is to try to constrain the Presi-
dent. In the case of the Kama River
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CONGRESSIONAL RECORD -SENATE July 21, 1979
Truck Plant, it was President Nixon and
Secretary Kissinger who simply, I sus-
pect, told the Defense Department to
lie low, and that they would impose, for
foreign policy reasons, a decision to go
ahead and build the Kama River Truck
Plant.
Mr. JACKSON. Mr. President, will the
Senator yield?
Mr. HEINZ. I yield.
Mr. JACKSON. I think the Senator
might be interested to know that then
Secretary of Defense Melvin Laird took
a very strong position against the posi-
tion taken by the Commerce Department
and the State Department. He believed
that there was a significant risk that
the Kama River Plant would turn out
military vehicles. It is rather interesting,
and I want to give Melvin Laird credit
for his foresight. They went ahead, nev-
ertheless, and overruled Melvin Laird in
that situation.. .
Mr. HEINZ. Mr. President, I am glad
that the Senator from Washington put
that on the record, because I think it
illustrates exactly the problem, the prob-
lem with which this amendment does
not deal.
The real objective of the Senator from
Washington is to find a way to constrain
a President's foreign policy. I must say
that I share the concern of the Sena-
tor from Washington about this Presi-
dent's foreign policy. I wish I knew what
to do about it.
However, the fact is that I do not
think that legislating a procedure, as
this amendment would do, which at-
tempts by a cumbersome legislative proc-
ess, after the fact, to second guess a
Presidential decision in foreign policy
by indirect means, is the way to do this.
The Senator from Washington has a
very interesting amendment that I think
he intends to bring up later today, which
would require the President, when he
seeks to override the advice of the De-
fense Department, to put that on the
record. The Senator from Pennsylvania
has no objection to that.
I say to the Senator from Washing-
ton that it is problematical whether a
very loyal Secretary of Defense, loyal to
the President, will handle the business
of the Defense Department in such a
way that that record will be necessary,
but in some instances it may. I have
no objection to that approach. It deals
with the problem. This amendment, I
fear, does not.
What it does, Mr. President, is to
change the whole thrust of our Export
Administration Act. It really will give-
for the first time-very significant au-
thority to the Defense Department over
the Secretary of Commerce on these
critical technology issues.
So far as we have been able to tell
on the record, the Secretary of Com-
merce never has overruled-in any ad-
ministration that we have been able to
research-the recommendations of the
Defense Department on the commodity
control list. Obviously, there have been
instances in which Presidents, as is their
due in foreign policy under our Consti-
tution, have overridden the Defense De-
partment. But I think the amendment
of the Senator from Washington seeks
to impose a brandnew bureaucratic
maze that does not deal with the prob-
lem and will only slow down our ability
to export those items we need to export.
Let me give the Senate one example.
One of the items on the commodity
control list right now-or at least it was
until recently-is a microprocessing unit.
That microprocessing unit is available
currently at the low bargain price of
$12.95 from Radio Shack anywhere in
the United States.
We,cannot export-or at least until re-
cently, we have not been able to export-
that microprocessing unit because the
Secretary of Commerce, being true to the
Department of Defense, which listed this
microprocessing unit as critical technol-
ogy, has been restrained from exporting
it, despite the fact that the Soviets or the
Chinese or the Albanians or Idi Amin, if
he were still with us today, could walk
into Radio Shack and buy a dozen or sev-
eral thousand.
So I say to the Senator from Washing-
ton that I understand his goal. But what
his amendment seeks to do would not in
any way achieve that goal.
To the contrary, it would change the
system and would make it even more
complicated for us to consider questions
of foreign availability, because the Sec-
retary of Defense would be publishing
this list and the Secretary of Commerce
could only consult. If the Secretary of
Commerce found that there was broad
availability of microprocessing units at
Radio Shack for $12.95, for example, he
would have to seek an appointment with
the Secretary of Defense to try to con-
vince him. But we do not need that extra
layer of bureaucracy.
I urge my colleagues to bear this in
mind and to reject the amendment of the
Senator from Washington.
The PRESIDING OFFICER. Who
yields time?
Mr. JACKSON. Mr. President, I ask
unanimous consent that the name of the
Senator from New Mexico (Mr. DOMEN-
Ici) be added as a cosponsor of amend-
ments 340 through 352.
The PRESIDING OFFICER. Is there
objection? The Chair hears none, and it
is so ordered.
UP AMENDMENT NO. 423
(Purpose: To clarify the responsibility of the
Secretary of Defense to prepare lists of
critical goods and technology)
Mr. STEVENSON. Mr. President, I
send to the desk an amendment, to the
amendment.
The PRESIDING OFFICER. The Chair
informs the Senator that the amend-
ment to the amendment is not in order
until the time has been used or yielded
back on the first amendment.
Mr. STEVENSON. I ask unanimous
consent that the amendment be in order.
The PRESIDING OFFICER. Is there
objection? The Chair hears none, and it
is so ordered.,
The amendment will be stated.
The second assistant legislative clerk
read as follows:
The Senator from Illinois (Mr. STEVENSON)
proposes an unprinted amendment num-
bered 423 to amendment No. 340.
Mr. STEVENSON. Mr. President, I ask
unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
Strike lines 1 through 4 on page 1 and
lines i and 2 on page 2 and insert in lieu
thereof the following:
"On page 60 at line 25, strike the word
"The" following the period and insert in lieu
thereof the following:
"The Secretary of Defense shall bear pri-
mary responsibility for indentifying such
militarily critical goods and technologies.
Takng this fully into account, the Secretary
of", 11.
Mr. HEINZ. Mr. President, I ask unan-
imous consent that the Senator from Il-
linois add me as a cosponsor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The Senator from Illinois.
Mr. STEVENSON. Mr. President, as I
indicated earlier and as has the distin-
guished Senator from Pennsylvania, we
have the same objective as the distin-
guished Senator from Washington.
Mr. JACKSON. There is no question
about that.
Mr. STEVENSON. And we have, as the
Senator from Washington indicated,
been working to try to resolve our dif-
ferences on this subject.
This amendment, I hope, does so. ,It
leaves the responsibility in the law for
the imposition of export controls where
it is, in the Secretary of Commerce. But
it also recognizes, as does the amend-
ment offered by the Senator from Wash-
ington and his distinguished cosponsor,
that the primary responsibility for iden-
tifying such militarily critical goods and
technologies should rest with the Secre-
tary of Defense.
I think with this clarification we can
accomplish our purposes, that is to say,
protect the national security against im-
provident exports of technology without
unnecessarily injuring our economy and
hence our national security.
So I am hopeful that the distinguished
Senator from Washington will accept
this as an amendment to his amend-
ment.
Mr. JACKSON. Mr. President, I com-
mend the Senator from Illinois (Mr.
STEVENSON) for his cooperation as well
as the understanding and support of the
Senator from Pennsylvania (Mr. HEINZ).
I am pleased to accept it.
I understood, and I understand that
is the situation, that the goods and tech-
nologies identified by the Department of
Defense will go on the critical list and
that in that connection, in connection
with this amendment, the Department
of Defense will consult with other de-
partments, agencies, advisory commit-
tees, and others within the executive
branch so that there is some coordina-
tion in the administration of the pro-
gram. But, as the amendment states, the
Secretary of Defense shl have "primary
responsibility."
I take it that the authors of the
amendment have that same understand-
ing as to how it shall be administered.
Mr. STEVENSON. Mr. President, we
have no misunderstanding. It is our pur-
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
pose to require such consultation and
indeed the bill does require such con-
sultation as a matter of law. As I indi-
cated earlier, requests that critical tech-
nologies be placed on the control lists
have always been honored by the Sec-
retary of Commerce, and it is certainly
our hope and expectation that they con-
tinue to be.
Mr. JACKSON. Mr. President, I be-
? lieve the yeas and 'nays have been or-
dered previously, and I ask unanimous
consent that that request be withdrawn.
There is no point in going through
with it.
The PRESIDING OFFICER. The yeas
and nays have been ordered on the
amendment in the first degree.
Mr. JACKSON. On the original
amendment.
The PRESIDING OFFICER. But not
on the amendment in the second degree.
Does the Senator yield back his time?
Mr. JACKSON. I yield back my time
on the amendment.
Mr. STEVENSON. I did not realize
the yeas and nays had been ordered.
I ask unanimous consent that the yeas
and nays on the second amendment be
withdrawn.
The PRESIDING OFFICER. No yeas
and nays were ordered on the second
degree amendment.
Mr. JACKSON. On the original
amendment.
Mr. STEVENSON. On the original
amendment.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. JACKSON. Now we shall vote.
The PRESIDING OFFICER. Do.Sen-
ators yield back their time?
Mr. JACKSON. I yield back my time.
Mr. STEVENSON. I yield back my
time.
Mr. HEINZ. I yield back my time.
The PRESIDING OFFICER. All time is
yielded back.
Therefore, the question now is on
agreeing to the second degree amend-
ment offered by the Senator from Illinois.
(Putting the question.)
The amendment was agreed to.
The PRESIDING OFFICER. Do Sen-
ators yield back their time?
Mr. JACKSON. I yield back my time on
amendment. No. 340.
Mr. STEVENSON. I yield back my
time, Mr. President.
Mr. HEINZ. I yield back my time.
The PRESIDING OFFICER. The ques-
tion then is on agreeing to the amend-
ment of the Senator from Washington,
as amended.
(Putting the question.)
The amendment was agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. HEINZ.-I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
AMENDMENT NO. 341
(Purpose: To clarify the meaning of critical
technology)
Mr. JACKSON. Mr. President, I call up
amendment No. 341 and ask for its im-
mediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as follows:
The Senator from Washington (Mr.,JACK-
sox), for himself, Mr. NUNN, Mr. HOLLINGS,
Mr. COHEN, Mr. HATCH, Mr. HARRY F. BYRD,
JR., Mr. TOWER, Mr. MOYNIHAN, Mr. BAYH,
and Mr. DOMENICI proposes amendment
numbered 341.
Mr. JACKSON. Mr. President, I, ask
unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 60, line 22, strike out "military
systems" and insert in lieu thereof
"capabilities". .
On page 61, lines 6 through 10, strike out
"for the purpose of insuring that such con-
trols are limited, to the maximum extent
possible consistent with the purposes of this
Act, to such militarily critical goods and
technologies and the mechanisms through
which they may be effectively transferred"
and insert in lieu thereof "for the purpose of
insuring that such controls cover and (to the
maximum extent consistent with the pur-
poses of this Act) are limited to such critical
goods and technologies and the mechanisms
through which, they may be effectively
transferred".
Mr. JACKSON. Mr. President, amend-
ment No. 341 would amend the bill to
clarify the meaning of "critical tech-
nologies." The bill declares that it is
important that the administration of
export controls imposed for national
security purposes give special emphasis
to controlling exports of technology and
goods which contribute significantly to
the transfer of such technology which
could make a significant contribution to
the military potential of any nation
which threatens U.S. national security.
(Section 2(a).) The bill further provides
that priority should be given to prevent-
ing the effective transfer to such nations
of goods and technology- and I quote-
"critical to the design, development, pro-
duction or use of military systems which
would make a significant contribution to
the military potential of any nation or
nations which could privide detrimental
to the national security of the United
States"-end quote. (Section 4(a) (2)
(B).) These provisions constituted an
endorsement of a "critical technologies"
approach. However, the reference to
"military systems" may be read incor-
rectly to imply that the particular goods
and technologies must be used in "mili-
tary systems," a term which is not
defined nor is it used in the present law.
The amendment would substitute the
word "capabilities" for the words "mili-
tary systems" in order to remove this
ambiguity and avoid possible misapplica-
tions of the critical technology concept.
The concept of critical technologies
and goods is not limited to items which
are critical to the design, production,
and use of military systems, but applies
to any "capabilities" which would make
a significant contribution to the mili-
tary potential of an adversary nation.
These technologies may not have any
present use in U.S. military systems
because they may be obsolete by United
States, but not by Soviet standards.
Also, these technologies may enhance
S 10147
the capability of -the Soviet Union to
'develop counter measures against U.S.
weapons systems, as distinguished from
manufacturing a specific military prod-
uct. The technologies may be crucial to
civilian communications networks, but
could be adapted to military use by the
Soviets.
The reference to military systems also
ignores an important change that has
occurred in U.S. military and commer-
cial technology. For many years the mili-
tary provided the cutting edge of the
development of new technologies. Funds
for military research and development
were used extensively to push outwards
the frontiers of commercial scientific
technological innovation. However, all
of that has been significantly reversed.
Now new technology is developed with
commercial applications in mind. Indeed
the integration of sophisticated tech-
nology into military systems now lags
behind the use of high technology in con-
sumer goods and industrial products.
One result of this radical change is that
military- research and development is no
longer a reliable guide as to whether
advanced technology has military im-
plications.
It is important that the statutory
framework for our modern export con-
trol policy makes it crystal clear the dual
civilian/military uses of critical tech-
nologies:
The other amendment would merely
conform other language in section 4(a)
(2) (B) of the bill to the foregoing
amendment and would make it clear that
the purpose of the review of export con-
trols is to insure that controls cover
critical goods and technologies, as well
as to insure that they are limited to such
critical items.
Mr. President, I reserve my time.
The PRESIDING OFFICER. The Sen-
ator from Illinois is recognized.
Mr. STEVENSON. Mr. President, once
again our objectives are similar if not
identical. The bill states:
In administering export controls for na-
tional security purposes, priority shall be
given to preventing the effective transfer to
countries to which exports are controlled
for national security purposes of goods and
technology critical to the design, develop-
ment, production, or use of military systems
which would make a significant contribution
to the military potential of any nation or
nations which could prove detrimental to
the national security of the United States.
Now, I can see reason why some might
feel that that use of the expression
"military systems" was too narrow. It is
possible that advanced technology, lasers,
for example. might be transferred with
no known present use in military sys-
tems, but with a potential for such use
as rapidly changing technology evolves
and new application for technology are
developed.
On the other hand, the substitution of
the expression "capabilities for military
systems" strikes me as being entirely too
broad. Most anything contributes to the
capability of a foreign nation, and most
any articles, even including wheat or
corn, could make a significant contribu-
tion to the military potential of a nation.
Food is essential, shoes are essential. I
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S 10148 CONGRESSIONAL
cannot offhand think of anything that
is not essential to the military potential
of a foreign nation that could not be used
in conjunction with, and to enhance, its
capabilities.
So while I am sympathetic to the pur-
pose of this amendment, I think it goes
too far and, perhaps, farther than the
Senator really intends to go.
So, Mr. President, once again I am
hopeful we can agree on some language
which will express what I believe to be a
common concern, and without running
the risk of writing into law something
that goes far beyond anything we in-
tend, and could have adverse con-
sequen:es for our economy, an economy
which, I add, is much in need of increased
exports.
The trade deficit was about $34 billion
last year. There is very little relief in
sight. The dollar is weak, and the results
include inflation, recession and rising un-
employment. Here we are at some risk
of shooting ourselves in the foot again,
and with no or very little chance of en-
hancing our national security, because
every time we impose controls that do not
enhance our national security, why other
countries come along and get the busi-
ness.
The word "capabilities" could lead to
a broadening of the critical technologies
approach to cover nonmilitary critical
goods and technologies, and transform
that critical word "critical" into a
euphemism for what contributes to the
Soviet economy, in other words, any ex-
port. Then the door would be opened to
a vast expansion of controls to cover non-
dual use items as well as those which do
have military and dual uses.
So unless the Senator from Indiana or
another Member wants some time, I pro-
pose to-
Mr. BAYH. Mr. President, I would like
to make an observation or two, but I
apologize for interrupting the Senator.
Mr. STEVENSON. I am happy to yield
to the Senator.
Mr. BAYH. Mr. President, I guess what
I want to do is to make an observation,
and I appreciate the courtesy of my
friend from Illinois, and to point out the
concern. I have, and to raise a couple of
questions either to him or to the Senator
from Washington.
I said earlier that I thought there were
great advantages to be gained by opening
the doors of trade, and I think really we
are after the same goal, or trying to re-
fine the language so that we can take
advantage of trade opportunities and not
damage the country. None of us wants to
do that, even though we might disagree
on the final craftsmanship of the lan-
guage.
The truck factory has been used as an
example. As the Senator from Illinois
pointed out, that was an example where
there were no restrictions placed on it,
so what might happen really would not
violate any restrictions. That is unfortu-
nate, but that is the case.
However, I think that truck factory
also points out one of the important ele-
ments of this whole effort to try to per-
fect what we are doing here. We nat-
urally are concerned about taking a corn-
RECORD -SENATE July 21, 197
puter or a machine that is designed to
make civilian trucks and not permitting
it to be used in such a way so that it can
be used in the manufacture of military
vehicles. But I understand that there is
another element of technology that was
not immediately available in the case we
are discussing, and that is one of the rea-
sons why this particular plant is valu-
able in making trucks. It has a rather
sophisticated computer system that is in-
tricately involved in the casting of the
motor blocks.
So, it seems to me, it is important for
us to be absolutely certain that this kind
of computer technology, which can be
taken away and separated from the mis-
sion it now has in perfecting the casting
of engine blocks, will not enhance Soviet
capabilities in this area that I mentioned
earlier of intelligence collection and in
compilation and analysis, with which
the Senator from Illinois is very familiar,
both in his capacity as a member of the
intelligence committee and in his sig-
nificant role in another committee deal-
ing with advanced space age technology.
So that concern is the major concern the
Senator from Indiana has.
As far as the redtape and the drag-
ging out interminably which has been
the case in the past is concerned, is the
Senator from Indiana accurate-I realize
I am transgressing on the Senator from
Illinois' time, and if he would rather I
will find some other way to handle it,
but I was of the opinion that the same
time there will be for resolving this
problem could be imposed upon who-
ever might seek to make an objection or
suggestion that there needs to be a
broader decision or that the defense posi-
tion has to be taken into consideration;
all of this would have to be resolved
in the same time frame, would it not?
Mr. STEVENSON. We may be talking
about two subjects. There is a time frame
for action on license applications, but
there is none for preparation of the con-
trol list, the list which identifies the tech-
nologies that are critical and for which
export license applications must be ob-
tained.
There are no time restrains on tech-
nology lists except as to the processing
of those lists, the preparation of which,
as a matter of fact, is an ongoing process.
The preparation of critical technology
lists has been going on for about 3 years
now.
Once a technology goes on the list and
is proposed for export to a controlled
country, then a license has to be ap-
plied for, and within that framework
there is a time limitation for action on
the application.
Mr. BAYH. I would think that would
help alleviate the problem where it
shows the existence of some military
or advanced technology in question
which might drag it on, to where we could
speed it up to conform to the limits.
Correct me if I am not right on this,
but do we not have a provision where
foreign achievements in technology
would be taken into account, so that
the issue raised by our distinguished col-
league from Pennsylvania would be clari-
fied by the bill? In other words, if the
Germans are going to do it and the
Japanese are going to do it, then we are
not going to permit our business people
to suffer as a consequence?
Mr. STEVENSON. The role of the De-
partment of Defenss includes the assess-
ment of foreign availability and in-
volves agencies over which the Senator
from Indiana has some important over-
sight responsibilities. Intelligence comes
into play at that point.
We are attempting by this legislation
to expedite all these procedures; and the
procedures involving the marketing of
advanced technology and the problems
associated therewith are troubling.
The Senator mentioned computer
technology with respect to the Kama
River Truck Factory. This year, the
Japanese come onstream with fourth
generation computer technology. There
is very little American technology that
is unique anymore. That is why it seems
to this Senator extremely important to
rely on cooperative efforts with other
nations to Jointly control exports of
military significance, and why we have
for that purpose COCOM.
Unilateral efforts to control tech-
nology simply undermine COCOM and
risk giving advantage to foreign. com-
petitors. We end up diminishing our
authority in the world.
The bottom line, it seems to this Sen-
ator, is that the United States must
maintain its preeminence in the devel-
opment of science and technology. Tech-
nology itself is increasingly difficult to
control. It is also increasingly of import-
ance to our economy, especially facing,
as we do the foreign oil bill, the shrink-
ing dollar, and the trade deficits.
I believe the way to maintain the eco-
nomic strength of our country, as well
as our national security, is by staying
ahead of everybody. They are getting
ahead of us. There is a larger invest-
ment in technology outside the United
States than in the United States. In fact,
there is evidence of a larger investment
in commercial technology in Japan
alone, now, than in this country. If we
continue to concentrate simply on per-
fecting the technology we already have,
we will end up producing the best
toilet paper in the world, and Japan
will end up producing the best com-
puters for truck factories and every
other application.
I think this is a useful debate. It
underscores the importance of export
controls, but above all, the importance
of maintaining our investment in basic
research and enhancing our capacity for
technological innovation, the lack of
which is the real threat to our national
security. .
Mr. SCHMITT. Mr. President, will the
Senator from Illinois yield? If the Sen-'
ator will yield briefly, I underscore and
italicize everything I have heard the
Senator from Illinois say, that the real
danger is that we do not keep up and
that we allow, through a variety of
means, regulatory taxes and just lack of
commonsense, our research and innova-
tion capability in this country to further
decay and not increase, as it must, both
in the public and private sectors. It is
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21, 1979 CONGRESSIONAL RECORD -SENATE
the practical applications that result,
that is running dry relative to other
countries.
I suggest that controls of any kind
will not solve our particular problems. I
hope that the Senate does hear this de-
bate. It is going to continue. It will come
up in many different avenues, that this
.country has for the past decade or so
allowed itself to think that it was in-
vesting in new technologies, to think it
was keeping ahead of the world in basic
research, when in fact it was not.
Until we fully recognize that in the
budget process, in the authorization
process, and in the country as a whole,
and in our tax policies in particular, we
are going to see increasing pressure from
other nations on our export economy,
and increasing adverse impacts to our
economy.
So the Senator from Illinois is exactly
right on that score.
Mr. MOYNIHAN. Mr. President, will
the Senator from Illinois yield to me?
Mr. HEINZ. Mr. President, I yield to
the Senator from New York.
Mr. MOYNIHAN. I thank my friend
from Pennsylvania. Before the Senator
from New Mexico leaves the floor, if that
is his purpose-
Mr. SCHMITT. It is not my purpose.
Mr. MOYNIHAN. I am happy to hear
that. I wonder if I might call attention
to several distinctions which are com-
pounded in the remarks he has just
made.
Mr. President, we have heard some
wise remarks and observations from the
first natural scientist to serve in the U.S.
Senate, if my understanding is correct,
since Thomas Jefferson presided as Vice
President. It is a happy commentary on
the American political system. Among
other things, it may suggest that ours is
the greatest political system. In the
main, it is true that scientists have had
better things to do, and did them, and
were left free for such purposes. But the
arrival of the Senator from New Hamp-
shire in this body means we are at least
entering the 19th century, if not attain-
ing as yet to a contemporaneous condi-
tion.
I take the occasion to make these re-
marks in that yesterday was, of neces-
sity, a special day for him. He is not only
the first scientist in this body in the mod-
ern period, but he is one of those blessed
and historic men who have walked on the
moon.
He made some observations about that
In a superbly concise and intelligent-
well, we would note the intelligence; it
need not be concise-article in the Wash-
ington Evening Star yesterday, which I
ask unanimous consent to have printed
in the RECORD at this point.
There being no objection, the article
was ordered to be printed in the RECORD,
as follows: .
(From the Washington Star, July 20, 19791
SPACE Is OuR DESTINY
(By HARRISON SCRMITT)
I would like to tell you about a place
I have seen: a valley on the moon known
as the Valley of Taurus-Littrow. Taurus-
Littrow is a name not chosen with poetry
in mind; but, as with many names, the
mind's poetry is created by events. Events
surrounding not only three days in the lives
of three men, but also the close of an un-
paralleled era in human history.
The Valley of Taurus-Littrow is confined
by one of the most majestic panoramas
within the view and experience of mankind.
The roll of dark hills across the valley floor
blends with bright slopes that sweep evenly
upwards, tracked like snow, to the rocky
tops of the massifs. The valley does not
have the jagged youthful majesty of the
Himalayas or the glacially symmetrical
fjords of the north countries or even the
now intriguing rifts of Mars. Rather, it has
the subdued and ancient majesty of a val-
ley whose origins appear as one with the
sun.
The valley has watched the unfolding of
thousands of millions of years of time.
Now it has dimly and impermanently noted
man's homage and footprints. Man's return
is not the concern of the valley . . . only
the concern of man.
Those words, spoken before the House of
Representatives in 1973, expressed my
thoughts after returning from the moon.
They set part of the stage for my views on
future space policy.
The main thrust of what must be this
nation's space policy can be summarized in
one phrase: Our destiny is space.
The expansion of human activities in
space is of fundamental significance to the
history of our civilization. We are lucky
that it is our destiny to be the vanguard
for the movement of both routine and un-
imaginable activities into outer space; to
be the first truly spacefaring nation.
Can' anyone imagine what awaits us in
space? Did the Europeans really know how
the "New World" would benefit them? Did
Jefferson do a cost/benefit analysis of the
Louisiana territory? In these instances the
leaders realized that there were opportuni-
ties for social and economic benefits in the
new territories, even though they could not
quantify those benefits or even perceive
most of them. We need an aggressive space
policy to expand our opportunities for such
benefits in space.
My proposed policy entails a number of
goals. The first involves the development of
a world information system. The second is
the establishment of orbital enterprise fac-
ilities and the third is a second period of
solar system exp.oration by man.
A world information system can be seen
within the context of our private enterprise
system. We must find ways to provide in-
centives to expand private enterprise in
outer space, to smooth the way so that gov-
ernment space and aeronautics research can
be intgerated, into the private sector.
My second goal is by the year 2000 to
create the basic facilities necessary for or-
bital enterprise activities, such as educa-
tion, health care, manufacturing and solar
power utilization. Permanent facilities in
orbit will help alleviate many problems fac-
ing this nation and provide many new op-
portunities. For example, the creation of
new export commodities and the supply of
inexhaustible energy are needs that cannot
be ignored by this generation nor denied to
future generations.
Many in this country, particularly young
Americans, have an increasing awareness of
outer-space activities and how they can be
exciting and how they can benefit society.
They accept the vision.
This leads me to my third goal which is,
by the year 2010, for the United States to
undertake further solar system exploration,
which includes a base for research and test
activities on the moon. A lunar base would
permit us to develop and test the systems
necessary to sustain a permanent mining.
S 10149
agricultural and research settlement. And
other exploratory missions may be more
economically staged from. the moon.
These directions are part of an aggressive
space policy which reflects our destiny in
space. What is needed is a space policy of
support for such activities.
The greatest of all accomplishments that
we can achieve in our lifetime is to assure
our children of their destiny in space.
Mr. MOYNIHAN. I rise simply to join
with what I am sure would be all of my
colleagues in congratulating our, astro-
naut colleague on that wild and incom-
parable adventure in which he partici-
pated.
Mr. SCHMITT. If the Senator from
Pennsylvania will yield further, I thank
my distinguished colleague from New
York. It is said that the only thing New
?Mexico and New York have in common
is the word "New." I would hope that
they have a great deal more in common.
I think over the last 2 y2 years we are
finding, as a consequence of the inter-
action of the delegations from those two
States, that there is a great deal we have
in common and a great deal of interac-
tion between our two States. I would
make a slight correction to the remarks
of the Senator, or maybe two. One is
they were overgenerous, but appreciated.
The other is that my roots are in New
Hampshire, but my life is in New Mexico.
I would add, apropos of this subject,
that I find it extremely unfortunate that
scientists, technologists, engineers, too
many business people, too many people
from all professions, have felt that the
business of making law, the business of
politics, the people's business, was some-
thing to be left to someone else, that they
had no interaction, no concern about
what was done within the halls of Con-
gress, within the halls of the State
houses, of the State legislatures.
I hope that is changing because, if we
are going to meet the challenges of our
third century of national existence, we
are going to need as broad a breadth of
understanding of human existence ..as
did, our Founding Fathers, as did the
writers of the Declaration of Independ-
ence, the framers ? of the Constitution,
the Congress in which Jefferson served.
If we do not develop that breadth and
understanding, that aggregation of all
of the pertinent aspects of human knowl-
edge, and knowledge of the human con-
dition, then we run a great risk of failure
in framing the pathway and framing
the roadmaps for our future in our third
century. It is probably the greatest po-
litical challenge over all that faces this
country, to develop within this body and
other legislative bodies, and within the
administration as a whole, the capability
to view these problems in all their com-
plexities but view them with understand-
ing and not just an awareness of their
complexities.
We must view them with an under-
standing of what those complexities are
and how we interweave the solutions to
affect such complexities.
I am glad that my friend from New
York pointed this out in the way he did.
I appreciated, his remarks and I am sure
the country will appreciate his remarks.
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S 10150
CONGRESSIONAL RECORD - SENATE July 21,
Mr. HEINZ. Mr. President, first of all,
I commend the Senator from New Mex-
ico and the Senator from New York for
adding to the quality of this already
highly elevated debate. I also rise with
Senator STEVENSON to oppose this
amendment by my good friend from
Washington, Senator JACKSON.
I believe we both understand his goals
and his goals, indeed as always, are quite
sensible. His goals, I think, recognize the
fact that there are certain uses of mili-
tarily related, equipment that may not
necessarily be subsumed in the words
military systems.
For example, certain kinds of elec-
tronic countermeasures equipment may
in fact not fall within the term "military
systems." But there is a real danger with
the Senator's amendment as drawn be-
cause I fear that the word "capabilities"
is a bit too broad. There is practically no
technology I can think of that does not
have some indirect bearing on military
capability. It would not be too farfetched
to characterize the word "capabilities"
as the buttons, belts; and boots ap-
proach. Every military force is suitably
attired in a way that requires buttons,
belts, and boots, and without those
clothes I do not know of any Army which
would be able to fulfill its military ca-
pabilities.
I know the Senator from Washing-
ton did not intend to put restraints on
buttons, belts, and boots, and I would
hope, therefore, that we would be able to
find a way to tighten up this language
so that we address the real problem the
Senator from Washington has identi-
fied for us.
I have one final ,word, Mr. President.
Senator STEVENSON and Senator SCHMITT
have stated that the real danger to the
United States is that we are not keeping
up the kind of pece we have relied upon
in the past for the development of new
technology. Indeed, last year some 63
percent of the patents filed in this coun-
try were filed by and granted to foreign
nationals, not to Americans. The Depart-
ment of Defense, therefore, has a tre-
mendous stake in the health of U.S. in-
dustry.
Only a U.S. industry that has appro-
priate access to foreign markets as well
as domestic markets will be healthy.
Therefore, it seems to me that the De-
partment of Defense, having the great
stake that it does in technology. must
have an equally great interest in having'
our technological base continue to be
premised upon a strong, healthy, finan-
cially sound American enterprise system
and the companies that comprise it so
that they can make the investments in
research and development leading to new
technology, which is the base, as the Sen-
ator from New Mexico eloquently pointed
out, of the real strength of this country.
Mr. TSONGAS. Will the Senator yield?
Mr. HEINZ. I am hapoy to yield.
Mr. TSONGAS. I would like to com-
ment concerning the remarks of the Sen-
ator from New Mexico about the reason
we do not have many scientists in Gov-
ernment. If you look at scientists. with
many of them located in Massachusetts,
and then talk to them about Government
redtape and about the problems about
expanding the export market, many of
them face frustration. Here we are legis-
lating in very broad terms. When we get
down to the various technologies in-
volved, they are much more complicated,
with great distinctions. This time of de-
veloping language, although making
sense to us, is met in the technical com-
munity with great dismay. I would hope
as the day goes on that we consider that
there is indeed a community out there
involved with high technology, which
wants to expand foreign trade and wants
to try to compete with the renewed vigor
displayed by the Japanese and others. It
seems to me that given our balance-of-
payments problem we would be encour-
aging that and not discouraging it. I
think today will be a critical day in the
long-term outlook for this country. I
thank the Senator from Pennsylvania
for yielding.
Mr. SCHMITT. Will the Senator yield
me some time?
Mr. HEINZ. I am happy to yield time
to the Senator from New Mexico.
Mr. SCHMITT. Mr. President, the only
additional remarks I have are that, in
geology, which is my profession, we often
say that the past is the key to the pres-
ent. That is a fairly good remark so long
as you do not go too far back in the past,
where you find that things may have
been much different on our planet than
they are today. I think it is clear that,
in the area of political technology, if you
will, and technology in general, the past
is no longer the key to the present or the
future; because, as Toffier pointed out in
his book, "Future Shock," and as many
others have pointed out in other ways,
the rate of change in our society, par-
ticularly the rate of our technological
society, is accelerated. That is basically
a new condition for human beings on
this planet.
Another example, since the distin-
guished Senator from New York has
mentioned Thomas Jefferson. I say what
I think can clearly be demonstrated, that
when he was in this body and was look-
ing into the future, he would be able to
predict the kind of life that his children
and the children around him would live
50 years ahead with some considerable
degree of accuracy. You cannot do that
any longer. We cannot even predict what
our situation is going to be personally 10
years ahead, much less what kind of life
our children will lead.
That may be the simplest way to illus-
trate what I mean and what we mean
when we say the rate of change of society
and of technology in particular, is in-
creasing. It is increasing at a rate that is
going to get larger and larger. So, every
time we try to protect ourselves, every
time we forget that we are a maritime
nation in the historic sense, -every time
we draw barriers between, ourselves and
the rest of the world or between ourselves
and each other in technological ways and
economical ways, all we are doing is act-
ing to our own disservice. We are restrict-
ing the rate at which we can grow, where-
as the rest of the world is growing at this
ever-increasing rate.
something we cannot control. We cannot
control this changing rate of change
of our society, this ever-increasing avail-
ability of new technologies, of new ideas,
not only to our own people, but to all
of the people of the world.
UP AMENDMENT NO. 424
(Purpose: To clarify the scope of critical
goods and technology)
Mr. STEVENSON. Mr. President, I
'send an amendment to the amendment
to the desk and ask unanimous consent
that it be considered and that Senator
HEINZ be added as a cosponsor.
The PRESIDING OFFICER. (Mr.
CHURCH). The Chair advises the Senator
that until the time on this amendment
has either expired or been yielded back
on both sides, the amendment of the
Senator is not in order.
Mr. JACKSON. Mr. President, I yield,
back my time.
Mr. STEVENSON. Mr. President, II
ask unanimous consent that it be in
order. .
The PRESIDING OFFICER. Very well.
Is there objection?
There being no objection, it is so
ordered.
Mr. STEVENSON. I also asked unani-
mous consent that Mr. HEINZ be added
as a cosponsor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment will be stated.
The assistant legislative clerk read as
follows :
The Senator from Illinois (Mr. STEVENSON)
for himself and Mr. HEINZ, proposes an un-
printed amendment numbered 424 to amend-
ment 341.
Mr. STEVENSON. Mr. President, I ask
unanimous consent that further reading
be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
Strike lines 1 and 2, and insert in lieu
thereof e following:
"O'n page 60, line 22, strike the words
'military systems' and insert in lieu thereof
the following: 'existing or potential military
systems including weapons, command, con-
trol, communications, intelligence systems
and other military capabilities, such as
countermeasures.'."
Mr. STEVENSON. Mr. President, I
have discussed this amendment with the
distinguished Senator from Washington
and I am hopeful that it clarifies the in-
tent of this amendment in a way that
makes it acceptable to myself and to the.
Senator from Pennsylvania. As he and I
have already indicated, the use of the ex-
pression, "capabilities," may have con-
sequences not fully intended.
This amendment would strike the
phrase, "military systems." and instead
of inserting "capabilities," would insert
the following: "existing or potential
military systems. including weapons,
command, control communications. in-
telligence systems, and other military
ca-ahilitipc such as countermeasures."
I believe and hope. Mr. President. that
with this change, the amended amend-
ment will carry out the Senator's pur-
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CONGRESSIONAL RECORD - S ENATIE S 1015
On page 63, line 6, after the period insert
"With respect to controls imposed for na-
tional security purposes, a finding of foreign
availability which is the basis of a decision
to grant a license for, or to remove a con-
trol on the export of a good or technology,
shall be made in writing and be supported by
reliable evidence, such as a scientific or
physical examination, expert opinion based
upon adequate factual information, or in-
telligence information: In assessing foreign
availability, no weight may be accorded rep-
resentations?as to foreign availability by an
applicant for an export license, unless sworn
to in writing by the chief executive officer
of the applicant. Such sworn representations
without adequate independent corroboration
shall not constitute reliable evidence.".
The Senator from Washington (Mr. JACK-
SON), for himself, Mr. NUNN, Mr. HOLLINGS,
Mr. COHEN, Mr. HATCH, Mr. HARRY F. BYRD,
JR., Mr. TOWER, and Mr. MOYNIHAN, proposes
an amendment numbered 345.
On page 63, line 11, after the period insert
the following: "A technology or good which
is proposed for, or subject to, export.control
for national security purposes and which is
not possessed in comparable quality or quan-
tity by a nation or combination of nations
threatening the national security of the
United States shall not be deemed to be
available to such nation or nations from
foreign sources until the Secretary of State
certifies in writing that negotiations with the
appropriate foreign governments for the
purpose of eliminating foreign availability
have not been successful. In order to secure
cooperation of foreign governments in elim-
inating availability of critical goods and
technologies, the President is authorized,
except as otherwise prohibited by law, to
impose trade or other commercial sanctions,
including but not limited to prohibiting ex-
ports of all or certain technology or goods
to such a nation, or prohibiting imports of
all or certain technology or goods from such
a nation. Within one year after the date of
enactment of this Act, the President shall
submit a report to Congress on the specific
limitations other provisions of law impose
on the exercise of his authority under this
subparagraph, together with his recom-
mendations.".
Mr. MOYNIHAN. Mr. President, I shall
take the time of the Chamber very brief-
ly to make the general observation about
the concerns we are dealing with this
morning. It seems to me the public ought
to know something of the larger under-
standings behind the specific actions at-
tempting to control and limit the amount
of technology transferred to the totali-
tarian states of this age, which, for prac-
tical purposes, are the Marxist totali-
tarian states.
Mr. President, because we use, some-
times, such different words and there is
almost a proposition that there are dif-
ferent cultures involved in the culture of
science and technology on the one hand
and of the liberal, humane arts on the
other, it is easy to miss the essential con-
tinuum of all these activities of the hu-
man mind and of society. Particularly, it
is easy to miss that freedom of inquiry,
freedom of association, freedom of dis-
sent is as essential to science as ever it is
to any of the liberal professions-more
so.
Indeed, if we were to look for the basis
of the ideas of freedom and independ-
ence and the autonomy of individual
opinion in the West today, we would find
their origins as much in scientific in-
quiry as we would ever do in theological
or legal thought.
Alen science first confronted the tra-
ditional doctrines with contrary evi-
dence, that it became necessary to seek
the question of society, is there a place
for dissent, is there a place for orthodox
opinion, having accepted that, answered
that question in the affirmative, we have
entered into the most extraordinary cre-
ative period of technological advance,
such as the Senator from New Mexico
has described, somewhat Faustian, al-
most, in the degree to which it challenges
us to deal with the consequences of our
wishes.
But the fact that free inquiry is at the
base of this phenomenon is nowhere
more dramatically shown than in the to-
talitarian societies where the absence of
freedom of inquiry and of dissent in the
basic political realms has inevitably' con-
taminated the same processes in the sci-
entific realms. We see them coming di-
rectly, one from the other.
Perhaps it is no accident, as the Marx-
ists would- say, that there have been
scientists who have been the leading dis-
senters of the Soviet Union at this point,
that Nobel prize winner Sakharov is the
symbol of dissent.
And what we say when we ask to limit
export of technology to these nations is
that we wish to limit the degree to which
those regimes do not suffer because of
their very obscenity. I put it in this way,
these regimes know that repressing po-
litical freedoms involves them with a re-
pression of scientific and technological
innovation, as well, and they hope that
if they can import the science, which is
the result of our free inquiring, they
need not free up their own societies that
might otherwise produce this freedom.
Remember that we have a bad habit of
thinking of the Soviets in terms of the
primitive standards of their political life.
But the Soviet Union of the 19th century
was among the most creative scientific
societies in the world. I see the Senator
from New Mexico is agreeing. In mathe-
matics, physics, chemistry, and certain
basic forms of metallurgy, they were
among the leading nations on Earth. It is
totalitarianism that destroyed their sci-
ence and it is the totalitarians who wish
to use our science in order to preserve
their totalitarianism.
Mr. SCHMITT. Will the Senator yield?
Mr. MOYNIHAN. I am happy to yield
to the Senator.
Mr. SCHMITT. There are so many ex-
amples that prove the point the Senator
from New York is making that I will not
pose the whole litany at this point.
However, I Just happen to recall, be-
cause we are 1 day after the 10th anni-
versary'of Apollo landings, looking at the
panorama of craters as we circled the
Moon, and others have also circled the
-Moon, and looking at the maps and see-
ing the names of those craters. So many
of them are commemorating the advan-
ces of human knowledge that occurred
within the minds of Russian citizens, or
citizens of that vast land, whatever name
might have been applied to the politics.
Mr. MOYNIHAN. The astronomers.
Mr. SCHMITT. The names go on and
on.
Of course, many other nationalities are
poses, and they are purposes that I share,
without going beyond them at some risk
of unnecessarily interfering with exports
from the United States. I am hopeful,
therefore, that he will accept it.
Mr. JACKSON. Mr. President, I am in
accord with the proposal of the two Sen-
ators. I think it does reach the result
that both sides seek. In all of these situ-
ations, we are simply trying to find a so-
lution that will address properly and ef-
fectively the national security area and,
at the same time, not create an impasse
in trade and commerce.
I commend the Senator from Illinois
and the Senator from Pennsylvania for
having offered this amendment to the
amendment.
Mr. STEVENSON. Mr. President, I
thank the Senator. I believe that neither
of us intends, by the use of the word
"communications," to include ordinary
commercial communications.
Mr. JACKSON. Ordinary civilian or
commercial communication; only if it
has military, specific military applica-
tion.
Mr. STEVENSON. I thank the Sena-
tor for that clarification.
Mr. HEINZ. Mr. President, I, too,
thank the Senator from Washington for
his cooperation in this. I am prepared
to yield back our time.
Mr. JACKSON. I yield my time.
The PRESIDING OFFICER. All time
is yielded back on the amendment.
The question is on agreeing to the
amendment to the amendment.
The amendment to the amendment
was agreed to.
Mr. JACKSON. I yield back my time
on the amendment itself.
Mr. HEINZ. Mr. President, I yield back
the minority's time.
The PRESIDING OFFICER. The ques-
tion is .on agreeing to the amendment, as
modified.
The amendment, as modified, was
agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
AMENDMENT NO. 344
(Purpose: To modify foreign availability
criteria)
AMENDMENT NO. 345
(Purpose: To provide for the elimination
of foreign availability through negotia-
tions and trade of commercial sanctions
to secure cooperation)
Mr. MOYNIHAN. Mr. President, I call
up amendment No. 344 and amendment
No. 345 and ask unanimous consent that
they be considered en bloc.
The PRESIDING OFFICER. Is there
objection?
Without objection, the two amend-
ments will be considered en bloc.
The clerk will state the amendments.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACK-
SON) for himself, Mr. NUNN, Mr. HOLLINGS,
Mr. COHEN, Mr. HATCH, Mr. HARRY F. BYRD,
JR., Mr. TowER, and Mr. MOYNIHAN, proposes
an amendment numbered 344.
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S 10152 CONGRESSIONAL RECORD -SENATE July 21, 1979
represented. Copernicus; Galileo, it goes basic discipline and freedom of inquiry
on through. in their minds, and 'they were some of
I think about this, as the Senator ob- the leaders-obviously, the leader-not
viously has, the totalitarian regime has only of the Revolution, but the beautiful
generally been completely unsuccessful. documents and foundations that came
in tying up the imagination and the from that Revolution.
fruits that come from that imagination Mr. MOYNIHAN. In a happy age, when
of the human mind. the political and natural sciences were
But they have been extraordinarily thought to be part of a single continuum.
successful in preventing the translation Mr. SCHMITT. If the Senator will
of the fruits of the human mind into yield again, the reaction to that, that
practical applications for the benefit of is, that they still are. We tend to forget
people, or the benefit of mankind, or that.
whatever one may want to define. Mr. MOYNIHAN. I will not disagree.
That is exactly the point I believe the Mr. President, the purpose of these
Senator is trying to make. - two amendments is to advance the gen-
Mr.. MOYNIHAN. It is, indeed. oral understandings that the Senator
Mr. SCHMITT. The intellectual ca- from New Mexico and I have just spoken
pacity of the Russian people, all the peo- about.
ple under Soviet domination, is no differ- Amendment No. 344 has the simple
ent today than it ever was. ' declaratory purpose of stating that when
It is an intellectual capacity based, as the Department of Commerce produces
everywhere else in this. world, on free- a finding of foreign availability-a mat-
dom of inquiry, the basic scientific prin- ter now under discussion-that it docu-
ciples that relate to freedom of inquiry. ment that finding, not a large proposi-
That is what science is all about. tion, and one would have thought one
If it is done right, it is fruitful. If it is not necessary, but, alas, it turns out to
not done right, then it is so much gar- be.
bage. The operating sentences state:
With Copernicus and others before and In assessing foreign availability, no weight
after him, we saw a great revolution in may be accorded representations as to for-
this freedom of inquiry, an inquiry that eign availability by an applicant for an ex-
went against the established policies and port license, unless sworn to in writing by
dogma of their times. the chief executive officer of the applicant.
Also, if we look back in history, those Such sworn representations without ade-
persons persecuted throughout recorded quate independent corroboration shall not
history, more often than not because constitute reliable evidence.
they were practicing science in some One must think that that would be a
form or another, have been practicing normal procedural standard. It has not
the freedom of inquiry in its broadest been followed. This amendment would
definition, relative to the human mind. require that it be.
I would agree completely with the Amendment No. 345, in fact, would
Senator that we have to be extraor- constitute an extension of our efforts and
dinarily careful that we do not allow a deepening of our commitment in this
our freedom to be exported, and to sub= field. It simply states, with respect to this
stitute, and, therefore, shore up this de- whole question of availability elsewhere,
ficiency- that in order to secure cooperation of
Mr. MOYNIHAN. Precisely. foreign governments in eliminating the
Mr. SCHMITT (continuing), That availability of critical goods and tech-
exists within totalitarian regimes. nologies, the President is authorized, ex-
On the other hand, we have to be cept as otherwise provided by law, to im-
realistic about what we do and make pose trade or other commercial sanctions,
sure, in preventing that transfer and including but not limited to prohibiting
that shoring up, that we do not also pre- exports of all or certain technology or
vent ourselves from benefiting from the goods to such a nation, or prohibiting im-
fruits of our own freedom. ports of all or certain technology or goods
Mr. MOYNIHAN. It seems to me the from such a nation.
Senator, our only scientific source in this Within a year after the enactment of
body, has made the case explicitly and this legislation, if it is enacted, the Pres-
incomparably well. ident will report to Congress on the spe-
I simply note that American science, cific limitations other provisions of law
as well as the science of some other impose on the exercise of his authority
countries, has incomparably benefited under this paragraph, together with his
from the mass exodus of scientists from recommendations.
Nazi Germany. Indeed, I Put the Sena- So it is a limited measure, but an lm=
tor's point, who resists totalitarian so- portant one. What it says is that we mean
cieties, who flees them? The first per- it when we ask other nations not to join
sons almost, after the very thin veneer in a competitive export of technology to
of political opposition is overcome, the the totalitarian states. -
first culture that has to resist is science, What it says, in effect, is that the Sec-
and it does. retary of State, who will make these rep-
Mr. SCHMITT. The Senator is entirely resentations, has some-sanctions, has
correct. I guess he has in mind Albert some potential influence, can speak from
Einstein in modern times. If we go back a government whose Congress has made
to our own times we can see the scien- its intention clear that it takes this ser-
tific imprint of inquiry on the creation iously, that these are not just gestures,
of our basic foundations of political life, that we are prepared to act in ways
Jefferson and Franklin being two that which are not agreeable to us but which
come to mind immediately, having that we feel to be necessary.
Mr. President, the most difficult of all
political undertakings is to maintain an
alliance in concert. We perhaps under-
estimate the extraordinary duration of
the NATO alliance. In the history of the
world, no such political alinement has
endured into now its second generation.
Yet, there are constant, efforts to weaken
it that are dynamics internal to any such
arrangement.
The Senator from New Mexico has
mentioned one of the dynamics at the
present time, which is the very great
expansion of technological rates of
change in countries with which the
United States is allied and which are
fellow members of COCOM.
At a time when technological initia-
tives were overwhelmingly to be located
in the United States and in Britain, it
was easier to maintain these standards.
Today, it is harder. The societies that
are producing the technology pay for it.
The Senator from New Mexico and the
Senator from Pennsylvania observed the
higher rates of investment in tech-
nology in these other nations. Those na-
tions necessarily will hope to see a re-
turn on that investment.
These markets present such oppor-
tunities for return that if the United
States is to dissuade them, it has to have
some sanctions-economic sanctions, ob-
viously-to provide the economic incen-
tives that are involved.
Accordingly, Mr. President, we submit
these modest but we feel not unimport-
ant amendments and wonder what is to
be the reaction to them by the Senator
from Illinois and the Senator from
Pennsylvania.
Mr. PERCY. Mr. President, will the
distinguished Senator yield a couple of
minutes?
Mr. STEVENSON. I am happy to yield
to the Senator from Illinois.
Mr. PERCY. Mr. President, I commend
Senator STEVENSON and Senator HEINZ.
As they know, the Senator from Illinois
served on the Banking Corirmittee at the
time the 1969 so-called Export Control
Act was up.
I have had many years of industrial
experience and have seen, time after
time, a policy that was shortsighted, that
was not realistic, that was not adapted
to the real world in which we live. We
worked mightily at that time to change
this from a control act to an adminis-
tration act, whereby we had an even-
handed approach to it.
In the experience I had in industry,
we were faced with a very ludicrous sit-
uation. Bell & Howell Co. manufac-
tured, in this country, film printers and
perforators, a quarter of a million dol-
lars apiece, ordered by the Soviet Union
for their film industry. We were re-
stricted from shipping it from the United
States, using American labor. But there
was no problem in the Soviet Union buy-
ing it from J. Arthur Rank Organiza-
tion, the licensee of Bell & Howell, who
made identical equipment. This was a
piece of machinery that cost a quarter
of a million dollars and was used in the
printing and perforation of motion pic-
ture film. The only change in the thou-
sands of parts was a nameplate. It was
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
just a nameplate. It was "Bell and
Howell-Rank" instead of "Bell and
Howell." But it was made in England
instead of in the United States.
Back in the 1960's, the restrictive laws
of the United States were such that,
time after time, we were dealing our-
selves out of business.
In visiting the Soviet Union with Hu-
bert Humphrey, on our last trip there,
we met with the business community
and found many times that they were
absolutely frustrated. Here was a huge
growing market.
So, instead of trying to make it as
tough as possible to earn extra dollars,
we tried to find an even-handed way to
do it and to protect our national secu-
rity-this is paramount-but not to go
in the direction of making it more and
more onerous and difficult for American
companies to compete against Germany,
the United Kingdom, Italy, and many
other countries that were doing business
successfully.
Here I hope that some compromise can
be worked out on the pending amend-
ment. I cannot imagine any of our com-
petitors abroad-Japan, Italy, Germany,
Great Britain-adopting an amendment
which would require the chief execu-
tive officer, who is not the most com-
petent person, to sit there and sign the
certificate, certifying something that
would take research on his part. He is
not necessarily the best person to do it.
But it adds to him as a paperwork signer
rather than a policy director dealing
with the immediately urgent, rather
than a chief executive who should be
dealing with long-range plans and pro-
grams. It assigns to him a clerical func-
tion that he should not be designated to
do.
I think, also, that some compromise
should be worked out so that if the
statement of a company is the only evi-
dence you have, I would say it is not
sufficient evidence. But it should be
looked at as a part of the evidence.
I hope something can be worked out
on this point between the manager of
the bill and the distinguished Senator
from New York, who represents a very
large business community, who would be
interested in working out something
special.
Mr. MOYNIHAN. Mr. President, I be-
lieve that the senior Senator from Illi-
nois has made some wise observations
based upon real experience.
I understand that the distinguished
manager of this legislation has some
thoughts as to how, in fact, his specific
concerns might be accommodated.
UP AMENDMENT NO. 425
(Purpose: To prevent undue reliance on
self-serving representations as to foreign
availability)
Mr. STEVENSON. Mr. President., I
send an amendment to the amendment
to the desk. I do so on behalf of myself
and the Senator from Pennsylvania.
Mr. PERCY. Mr. President, I ask
unanimous consent that I be added as
a cosponsor to the amendment. Having
looked at the wording of the amend-
ment, I agree.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr, STEVENSON. Mr. President, I ask
unanimous consent that it be in order to
consider the amendment.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from Illinois (Mr. STEVENSON)
for himself, Mr. HEINZ, and Mr. PERCY pro-
poses an unprinted amendment numbered
425 as an amendment to amendment No.
344.
Mr. STEVENSON. Mr. President, I ask
unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
Strike the second sentence and substitute
in lieu the following:
"In assessing foreign availability with re-
spect to license applications, uncorroborated
representations by applicants shall not be
deemed sufficient evidence of foreign avail-
ability."
Mr. STEVENSON. Mr. President, as
my good friend from Illinois has pointed
out, amendment No. 344. offered by the
Senator from New York requires the ex-
ecutive officers of exporters when apply-
ing for export licenses in effect to certify
as to point of availability under oath.
This amendment, which I offer to that
amendment, simply strikes that lan-
guage, the last sentence of the amend-
ment-that starts on page 2 of the amend-
ment, and substitutes the following lan-
guage:
In assessing foreign' availability with re-
spect to license applications, uncorroborated
representations by applicants shall not be
deemed sufficient evidence of foreign avail-
ability.
In other words, the statements of ap-
plicants can only be taken into consid-
eration on foreign availability if they are
corroborated by other evidence.
I believe this is just what the other
Senator, my distinguished colleague from
Illinois, was suggesting, and I think it is
a reasonable means of accomplishing
the objective of the Senator from New
York and hope, therefore, that it is ac-
ceptable on both sides.
Mr. MOYNIHAN. Mr. President, if I
may respond, this is indeed a reasonable
accommodation to the real concern ad-
dressed by the senior Senator from Illi-
nois, and on behalf of the sponsors of
the amendment, I am happy to accept
the substitution of my friend from Il-
linois and the Senator from Pennsyl-
vania.
Mr. HEINZ. Mr. President, I think we
have a reasonable arrangement that will
seek td accommodate the concerns and
objectives here of the Senator from New
York and the Senator from Washington.
I am very,strongly in support of Sen-
ator STEVENSON's amendment, and I am
grateful to the Senator from New York
for accepting it.
Mr. MOYNIHAN. Those are very gen-
erous remarks.
Mr. STEVENSON. I am prepared to
yield back my time.
S 10153
Mr. HEINZ. I am prepared to wield
back my time.
Mr. TSONGAS. Mr. President, a par-
liamentary inquiry.
The PRESIDING OFFICER. The Sen-
ator will state it.
Mr. TSONGAS. This referred to the
first of the amendments to be considered
en bloc.
Mr. MOYNIHAN. That is right. These
amendments are being considered en
bloc although if the Senator wishes just
to dispose of this one and move to
amendment No. 345, that would be
agreeable to the Senator from New York.
Mr. STEVENSON. Mr. President, the
pending amendment is an amendment
to amendment No. 344. After the Senate
acts on this amendment, it would be my
intention to offer another amendment.
That one would be to amendment No.
345, which I hope will become a basis for
it in that event.
Mr. MOYNIHAN. Mr. President, a par-
liamentary inquiry.
The PRESIDING OFFICER. The Sen-
ator will state it.
Mr. MOYNIHAN. May the Senator
from New York ask to vitiate his request
that amendments 344 and 345 be con-
sidered en bloc and substitute a request
that we have before us simply amend-
ment No. 344?
The PRESIDING OFFICER. The Sen-
ator may do so.
Mr. MOYNIHAN. In that case, I so
request, Mr. President.
The PRESIDING OFFICER. Very
well.
If there be no objection, the amend-
ments will now be considered separately.
Mr. MOYNIHAN. Mr. President, I yield
back the remainder of my time on
amendment No. 344.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the amendment
of the Senator from Illinois, unprinted
amendment No. 425.
The amendment was agreed to.
. AMENDMENT NO. 344, AS AMENDED
The PRESIDING OFFICER. Is all time
yielded back on amendment No. 344?
Mr. HEINZ. Yes, Mr. President.
The* PRESIDING OFFICER. The ques-
tion is on agreeing to amendment No.
344, as amended.
The amendment, as amended, was
agreed to.
Mr. MOYNIHAN. Mr. President, I
move to reconsider the vote by which
the amendment was agreed to.
Mr. JACKSON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to,
AMENDMENT NO. 345
Mr. MOYNIHAN. I thank the Chair.
Mr. President, I understand that the
distinguished manager of the legislation
and his not-less-distinguished colleague
from Pennsylvania have a proposal that
would modify amendment No. 345 with-
out in any way losing sight of these ob-
jectives nor of the desire that the execu-
tive be given greater powers with which
to pursue those objectives.
Mr. STEVENSON. Mr. President, I
suggest the absence of a quorum.
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CONGRESSIONAL RECORD - SENATE July 21, 1979
The PRESIDING OFFICER. The Clerk
will call the roll.
The assistant legislative clerk pro-
ceeded to call the roll.
Mr. STEVENSON. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. STEVENSON. Does the Senator
from Massachusetts request time?
Mr. TSONGAS. Yes.
Mr. STEVENSON. I yield to the Sen-
ator from Massachusetts.
The PRESIDING OFFICER. The Sen-
ator from Massachusetts is recognized.
Mr. TSONGAS. Mr. President, I wish
to speak to the practical implications of
amendment No. 426 which is now before
the body, and let me try to take out the
relevant parts of the amendment. So
the suggestion that we are indeed in the
real world will take place.
The amendment speaks to, if you will,
suppress the exported technology not by
the United States but by another coun-
try, to nations that are not friendly to
the United States.
Indeed, if that attempt is unsuccessful
to the negotiations process, the Presi-
dent, "in order to secure the cooperation
of foreign governments" is authorized to
impose trade or other commercial sanc-
tions of all good and imports and exports
from and to such a nation. What does
that mean? The only countries we are
really concerned with that export tech-
nology are countries like France.
So what we are saving here is that:
If we do not like what France is doing
vis-a-vis the Soviets, we will ask them
to cease and desist. In order to improve
the changes of negotiations we may im-
pose economic sanctions against France,
including prohibiting all exports of
American goods to France and all French
imports into the United States. '
Does anyone believe that prohibiting
France from importing American blue
jeans and exporting French wine is going -
to make the French any more amenable
to negotiations with the United States?
Anyone who has had experience in
dealing with foreign governments=and
certainly the distinguished Senator from
New York is probably preeminent in
this body in terms of that qualifica-
tions-knows that the one way to insure
France would not cooperate would be to
impose these kinds of sanctions.
We are not talking about less-devel-
oped countries. We are not talking about
an Iran, for- example. We are talking
about very sophisticated countries which
view the United States as an equal. There
is no way you can possibly assume that
in negotiations where hanging over
them is the specter of a U.S. trade em-
bargo that that is going to be anything
but counterproductive.
I think this amendment has serious
long-term implications that could only
hurt the very ends that the proponents
of the legislation are seeking, and I would
ask that the amendment be defeated.
I yield back the remainder of my time.
Mr. MOYNIHAN. Mr. President, I
would like to thank the distinguished
Senator from Massachusetts for his ob-
servations, which are serious and de-
serve to be considered.
I would say two things: First, in the
actual dynamics of government negotia-
tions in areas such as this no government
would ever, the United States would ever,
in fact, be threatening some large prop-
ositi.on such as the embargoing of the
French wine industry. You do not nego-
tiate that way: But the U.S. Government
would be saying to the French Govern-
ment, "Look, we are under pressures
from the Congress, which you under-
stand. These are, in effect, our instruc-
tions."
The French Government, in dealing
with its own private sector, would be in
a position-why use France? But why
not-to say that while the government
itself did not necessarily agree with the
United States. the United States was in
a situation where the government was
under pressure and legitimate legislative
actions in this country such that, in fact,
the weight of the American representa-
tion is greater than otherwise it would
be. This is a judgment you always have
to make.
But, Mr. President, The United States
can just go on providing the military
defense of the industrial democracies of
the world so long whilst they undermine
our efforts, when they do, by enhancing
the defense, the military aggressive ca-
pacity, of the totalitarians we are defend-
ing them against.
We have to give our Secretary of State
at least an opportunity to make the case
which this Congress expects of him.
I will say to the Senator from Massa-
chusetts that I understand we have al-
ternative language which will meet some
of his concerns. I think they do-I will
not speak for the Senator from Illinois-
but I wonder if the Senator from Illinois
would address this matter.
UP AMENDMENT NO. 426
(Purpose: To require negotiations to prevent
foreign availability from undermining
U.S. export controls)
Mr. STEVENSON. Mr. President, I
send an amendment to amendment 345
to the desk on behalf of myself and Mr.
HEINZ and ask unanimous consent that
it be in order.
The PRESIDING OFFICER. Without
objection, it is so ordered. The amend-
ment will be in order. The clerk will
report.
The assistant legislative clerk read as
follows:
The Senator from Illinois (Mr. STEVENSON)
proposes an unprinted amendment numbered
426.
.
,
unanimous consent that further reading There is a whole armamentarium here
of the amendment be dispensed with. that might be useful to note, to see if
The PRESIDING OFFICER Without
objection, it is so ordered. _ the Senator from Illinois agrees, that the
The amendment is as follows: President could speak of the procurement
In lieu of the language to be inserted, in-
sert the following: "Whenever this Preside it
has reason to believe goods or technology
subject to export control for 'national se-
curity purposes by the United States may
become available to controlled countries
from other countries, the President shall
prom"tly initiate negotiations with the
governments of such countries to prevent
such foreign availability. In any instance
in which such negotiations fail to prevent
or secure the removal of such foreign
availability and the President requires
additional authority to take effective action
toward that end, the President shall report
fully to the Congress and where -ppropriate
recommend measures to secure the removal
of such foreign availability."
Mr. STEVENSON. Mr. President, as
the distinguished Senator from Mas-
sachusetts indicated, amendment 345
appeared to threaten sanctions against
foreign competitors of the United States
who did not imnose controls on exhorts
to controlled countries which the United
States felt should be controlled.
The amendment, it seemed to me,
threatened delays in action on license
applications to the advantage of foreign
competitors, and by threatening sanc-
tions, it implied we might again hurt
ourselves in order to advantage our
foreign competitors.
I think this amendment accomplishes
the purpose of the distinguished Senator
from New York without any danger of
adverse consequences. It simply says:
Whenever the President has reason to be-
lieve goods or technology subject to export
control for national security purposes by
the United States may become available to
controlled countries from other countries,
the President shall promptly initiate nego-
tiation with the governments of such coun-
tries to prevent such foreign availability.
'n any instance in which such negotiations
fail to prevent or secure the removal of
such foreign availability and the President
requires additional authority to take effec-
tive action toward that end, the President
shall report fully to the Congress and where
appropriate recommend measures to secure
the removal of such availability.
Mr. President, of course such measures
could include sanctions. This is not in-
tended to eliminate that possibility, but
it does make it a little less explicit. It
does, as does the distinguished Senator
from New York, recognize that in such
cases where technology is available from
foreign sources to controlled countries
which the United States feels should be
controlled, the President will initiate ne-
gotiations, alid I agree completely he cer-
tainly should.'
So I think it retains the purpose and
eliminates one troublesome feature, and
I am hopeful, therefore. that it will meet
with the approval of the distinguished
Senator from New York.
Mr. MOYNIHAN. Mr. President, will
the Senator from Illinois yield for a ques-
tion?
Mr. STEVENSON. Of course.
Mr. MOYNIHAN. On the examples of
appropriate measures he mentioned
if the President thinks of it
sanctions
policies of the U.S. Government, of the
position of the U.S. Government in trade
and commercial negotiations, and similar
measures in addition to more conven-
tional approaches.
Mr. STEVENSON. Yes, of course he
could. His arsenal is large, and my own
feeling is that procurement policies of the
United States might be more appropriate
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July 21, 1979
than some of the other sanctions con-
templated.
To suggest that another nation will be
deprived of the right to buy goods from
us-
Mr. MOYNIHAN. To sell.
Mr. STEVENSON (continuing). Im-
plies to me that we may harm ourselves
more in this highly competitive world
than another country: But procurement
is the other side of the situation.
But procurement is the other side.
Mr. MOYNIHAN. Yes. The Senator will
agree with me that it entirely is up to
the U.S. Government to give to other
countries a percentage of the market; if
they wish to concentrate on the Bul-
garian market, as it were, well, that
would leave the U.S. market to others,
and that is a legitimate point we might
make.
Mr. STEVENSON. I agree completely
with the Senator. It is certainly the in-
tention of the authors of the amendment
to his amendment to encourage the Pres-
ident to use whatever assertions of au-
thority are available to him, including
those that have been mentioned by the
Senator.
Mr. HEINZ. Mr. President, first let me
concur with the remarks of the Senator
from Illinois and in the understanding
that he and the Senator from New York
have developed in their colloquy.
Let me also commend the Senator
from Massachusetts (Mr. TSONGAS) for
having, I think, put his finger on the
particular problem with the amendment
as originally drafted. I share his con-
cerns in that regard.
Thirdly, I wish to commend and thank
the Senator from New York for his will-
ingness to understand the concerns ex-
pressed and to appropriately modify the
amendment; and I hope, Mr. President,
that we do now have an agreement.
Mr. MOYNIHAN. Mr. President, the
Senator from Pennsylvania is charac-
teristically gracious on behalf of the
sponsorship of this amendment. We do
accept the substitute, which I believe is
jointly proposed by the Senator from.I1-
linois and the Senator from Pennsyl-
vania; and I, too, would like to thank
our colleague from Massachusetts for his
timely and fructifying intervension.
I yield back my time.
Mr. TSONGAS. Mr. President, I would
like to indicate my concurrence in the
compromise language, which gives the
President a weapon which, while in the
nonmegaton range, may be more useful.
The PRESIDING OFFICER. Is the re-
maining time yielded back?
Mr. MOYNIHAN. I yield back the re-
mainder of my time.
Mr. STEVENSON. I yield back the re-
mainder of my time. The amendment is
offered as a substitute.
The PRESIDING OFFICER. Yes. The
question is on agreeing to the substitute
amendment.
The amendment was agreed to.
Mr. JACKSON. I move to reconsider
the vote by which the amendment was
agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
COINRGRIESSIIONAIL RIECORD - SIENATIE
The PRESIDING OFFICER. The
question now recurs on agreeing to the
amendment of the Senator from New
York, as amended. Do the Senators yield
back their time?
Mr. MOYNIHAN. I yield back the re-
mainder of my time.
Mr. HEINZ. I yield back the remainder
of my time.
The PRESIDING OFFICER. Without
objection, the amendment is agreed to.
Mr. JACKSON. I move to reconsider
the vote by which the amendment was
agreed to.
Mr. MOYNIHAN. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
AMENDMENT NO. 353
(Purpose: To limit exports of animal hides
and skins until the President determines
that there are adequate domestic sup-
plies)
Mr. MUSKIE. Mr. President, I call up
amendment No. 353, and ask for its
immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as follows:
The Senator from Maine (Mr. MussIE),
for himself, Mr. BAKER, Mr. DURKIN, Mr.
ROTH, Mr. COHEN, Mr. TSONGAS, Mr. HUMPH-
REY, Mr. FORD, Mr. HEINZ, Mr. HELMS, Mr.
LEAHY, Mr. NELSON, and Mr. KENNEDY, pro-
poses an amendment numbered 353.
Mr. MUSKIE. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 78, line 11, after the period insert
the following: "Notwithstanding any other
provision of this paragraph, in order to
carry out the policies set forth in section
3(2) (C) and 3(7) of this Act with respect
to animal hides or skins, until the Presi-
dent, after receiving the advice of the Sec-
retaries of Commerce and Agriculture, deter-
mines that (A) hide producing' countries
which have enacted skin and hide export
restrictions over the past ten years have re-
sumed reasonable levels of skin and hide
exports, or (B) the supply of animal hides
or skins, after deducting export demand, is
sufficient to meet the requirements of the
domestic economy; animal hide and skin
exports shall be limited to a total volume,
per year, equivalent to the most recent
period which the President determines is
representative of exports of such products.
Before providing their advice to the Presi-
dent under the foregoing sentence, the Sec-
retaries of Commerce and Agriculture shall,
after reasonable notice, hold public hearings
and shall afford interested parties an oppor-
tunity to be present, to present evidence,
and to be heard at such hearings.".
Mr. MUSKIE. Mr. President, I ask
unanimous consent that Anita Jensen
and Jim Case be granted privileges of
the floor during Senate consideration of
S. 737, Export Administration Act, in-
cluding all votes.
The PRESIDING OFFICER. Without.
objection, it is so ordered.
Mr. MUSKIE. I ask unanimous con-
sent, if their names are not already
listed, that the names of Senators Moy-
NIHAN, ROBEgT C. BYRD, RANDOLPH, and
SASSER be added as cosponsors of this
amendment.
520155
The PRESIDING OFFICER. Without
objection, unless they are already listed,
the named Senators will be added as co-
sponsors of the amendment.
Mr. MUSKIE. Mr.. President, the
threat facing the American leather in-
dustry is the worst in its history.
The situation is critical.
The facts are simple: A reduction in
cattle slaughter has reduced the supply
of cattle hides on the world market. The
American supply has come under in-
creased pressure from the major import-
ing countries. Prices have skyrocketed.
The tanning and leather industries de-
pend almost exclusively on cattle hides
for their existence. These industries need
the raw material. Tanneries cannot turn
to alternative raw materials-there are
no alternatives. And shoe factories can-
not retool to make some other.product.
No adequate substitute for leather exists.
Canvas shoes cannot replace leather
shoes. And plastic saddles cannot re-
place leather saddles.
The shortage is worldwide. It. Is part
of the cyclical downturn in the cattle
industry. But this cyclical shortage has
been artificially aggravated by em-
bargoes on hide exports by major pro-
ducing countries. So America, which pro-
duces 15 percent of the total world skin
and hide supply, now supplies 75 percent
of the cattlehides being traded world-
wide.
The U.S. supply dropped 6.8 percent
last year. Twenty-four and one-half mil-
lion hides were exported, from a total
supply of 39.5 million. This year's domes-
tic supply will be 34.2 million hides, but
exports are not expected to decline.
If we sell 24 million hides from a sup-
ply of 34 million, we will be left with
10 million for domestic needs.
Yet the domestic industry needs a
minimum of 18 million hides to operate
at current levels. Industry withdrew 2.4
million hides from inventory last year.
This year, there is no inventory left to
fall back on.
I do not know of any industry that
could survive such a drastic curtailment
of its basic raw materials without virtual
collapse.
Four hundred thousand workers de-
pend directly on the tanning and leather
industries. The implications for these
400,000 jobs-and for the $8 billion in
retail sales of leather products-are
clear.
The inflationary impact of foreign de-
mand is evident in the doubling of hide
prices since last year. Footwear prices
have already risen 17 percent, and are
being forced higher, since the price in-
flation in the basic commodity has not
yet been fully reflected in the prices of
finished goods. When the inflated price
of those hides has worked its way
through the production pipeline, $30
leather shoes may well be a fond
memory-just as U.S.-made baseball
gloves are today.
If this situation arose from a supply
shortage aggravated by increased de-
mand, operating in a free international
market, the results would be serious for
the domestic tanning and leather indus-
tries. The outlook for their workers
would be bleak. And the inflationary ef-
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fects would be just as severe. But the
case for Government intervention in the
market would be less strong.
The fact is that this situation does not
result from a free international market.
The shortfall in hide production has
been aggravated and sustained by Gov-
ernment actions in major hide-produc-
ing countries to protect their domestic
leather industries by embargoes on hide
exports. The leather industries of coun-
tries like Brazil are being protected-
Against threats of shortages;
Against high world prices; and
Against the competition of a free
world market.
Foreign buyers are bidding up the
price of our hides and taking advantage
of the dollar's weakness because other
sources of supply have been closed off.
And it has long been the case that those
countries which import our hides are
among the most protective against im-
ports of U.S.-finished leather goods.
Brazil's Government embargoes hide
exports to protect its domestic leather
industry, while our tanneries and shoe
factories close down. And Brazil is man-
ufacturing for the U.S. market. Brazil's
shoe sales to the United States are up 40
percent from last year's levels.
Uruguay embargoed exports in 1974.
Argentina quickly followed suit. Since
1975, Brazil has exported no hides what-
ever, South African hides are available
only under a Government licensing sys-
tem and exports are limited to 1.5 mil-
lion hides a year.
The fact is that the United States is
the only nation which remains totally
committed to a free market philosophy.
The American tanning industry, the
American leather industry, and the
hundreds of thousands of Americans
they employ are being asked to bear the
entire burden of a shortage that is
worldwide. Importers, of our hides are
unwilling to reduce their imports and
share the shortage-they want to pro-
tect their industries and workers. I think
American. workers and American indus-
tries warrant that kind of consideration
from their own Government.
The Senate will soon be asked to re-
view the implementing legislation for
the multilateral trade agreements. One
of the principal results of that agree-
ment, we are told, is to increase free-
dom and reciprocity in world trade.
Nontariff barriers to trade are to be re-
duced and eliminated. The market is to
provide the means by which supply and
demand of world goods is adjusted.
In theory, it sounds Ideal.
But when I look at the situation fac-
ing us today in connection with hides,
I am compelled to ask at what point can
we expect some of that reciprocity?
We have made our supplies available
to the world. Other hide-producing coun-
tries do not do so. The hide shortfall
is worldwide, but the United States'
domestic industry is being asked to ab-
sorb the entire world shortfall-not
merely that portion attributable to our
own production decline.
Our Government's efforts to make
more supplies available to the internn-
tional market have failed. Special Trade
Representaitve Strauss stated in a letter
to me:
One approach to the problem is to en-
courage beef-producing countries with ex-
port controls an hides to ease their con-
trols . We made a major effort in the
multilateral trade negotiations to get these
countries to take such action. Unfortunate-
ly, most countries responded unfavorably to
our request.
The fact is, all countries did.
Clearly, when our Nation, which
produces 15 percent of the world's skins
and hides, simultaneously provides 75
percent of the total hides traded inter-
nationally, price inflation and domestic
shortages are inevitable.
It is for that reason I seek an amend-
ment to the Export Administration Act.
The policy outlined by this act-and It
had something to do with writing the
current version of the act when I was
a member of the Banking Committee-
in section 3(2) (C) specifies that Con-
gress finds a need for export restric-
tions "to protect the domestic economy
from the excessive drain of scarce mae-
rials and to reduce the serious infla-
tionary impact of foreign demand."
Mr. President, either that language in
the act has meaning or it does not, and
if it does not have meaning in this case
I cannot imagine a case in which it
would have meaning.
No clearer case for export restrictions
exists today than the hide situation.
This amendment is moderate and
carefully targeted. It recognizes the tem-
porary nature of this shortfall. It will
have effect only for the duration of the
shortage. It conditions unlimited hide
exports on one of two factors:
Reasonable export levels from other
hide-producing countries; or
An adequate domestic supply, taking
into account export demands.
If neither condition is met, the Presi-
dent could limit the export of U.S. hides
to guarantee an adequate domestic sup-
ply. No quotas are specified in the law.
No rigid limits are demanded. There is
no attempt to stifle world trade.
The amendment is simply a recogni-
tion that as long as other countries are
unwilling to share the worldwide short-
age, the United States must look to its
own resources to meet demand here at
home.
If the amendment results in improved
and more successful negotiations with
the countries which now restrict their
exports, no one will be more pleased
than the leather industry.
Our domestic industry does not ask
for special treatment to protect itself
against fair competition in a free inter-
national market.
It requests legitimate and limited
Government intervention where free
market economics are inoperative. Our
amendment would give the industry the
limited and temporary help it must have
to survive.
Mr. President, I will yield to the Sena-
tor from New York.
Mr_ MOYNIHAN. Mr. President, I yield
to the Senator from Tennessee.
July 21, 1979
Mr. SASSER. Mr. President, I rise to-
day to address an issue which is critically
important to 40,000 Tennesseans and
almost 400,000 other Americans. I join
in urging the Senate to take action to
secure the jobs of the workers in one of
the most labor intensive industries in
the United States.
Today, thousands of Tennesseans and
hundreds of thousands of Americans are
in danger because we have for too long
failed to put adequate restraints on the
export of cattlehides.
This amendment to the Export Ad-
ministration Act of 1979 is an attempt
to correct that failure. Currently, the'
leathergoods industry is faced with the
possibility of not being able to purchase
its most basic raw material-cowhides.
Three-fourths of all cowhides on the
world market are produced by the United
States. Seventy percent of the American
supply is exported. During the last
quarter of this year, the United States
exported 83 percent of the cowhide sup-
ply. We are not just selling cowhides-
we are sending American jobs overseas.
As a result of these massive and unre-
strained exports, the cost of cowhides
has become almost prohibitive for Amer-
ican producers-and the cost of leather
products has become almost prohibitive
for the American consumer.
The cost of cowhides has risen faster
than the price of gasoline. A cowhide
that cost 37 cents a pound In 1977 now
costs a dollar.
In the shoeshops and department
stores of America, our constitutents are
paying $10 more for a pair of shoes and
$12 more for the price of a handbag. In
all, our failure to restrain the export of
cowhides could cost Americans $2 billion-
The primary buyer of our cattlehides
is Japan. Japan will take our cowhides,
but it will not allow us to send her our
finished leather products-we cannot
sell her the products made by American
workers. This allows Japan to buy as
much leather as she can with no con-
sideration for cost. The Increased costs
can be passed on to the buyer in Japan
because there is no competition.
Of course, the American producer
must also raise the price of finished
products because the -price of raw ma-
terials has gone up. This can be seen in
the price of shoes. A pair of leather
shoes that costs $20 2 years ago now
costs $30.
In the meantime, those people who
have traditionally earned their living
in the leathergoods industry find it
harder to buy shoes and food. They are
losing their jobs.
In Tennessee alone, there are 43 shoe
manufacturing plants which employ
over 12,000 men and women. The
shoe industry in my State supports 25,-
000 other people whose jobs are indi-
rectly related. Thousands of others
work in other leather related industries,
the furniture, luggage, and handbag
industries.
Those people know what exports of
cowhides are doing to their industry
and their jobs. In the last 2 years, they
have seen thousands of their friends go
unemployed because we have put no
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July 21, 1979 CONGRESSIONAL RECORD - SENATE
restraint on the export of cowhides.
And they are afraid that they will be
next.
Mr. President, other major cattlehide
exporting nations such as Argentina,
Brazil, and Uruguay, have stopped ex-
porting cattlehides altogether. We do
not seek to do that today. We simply
ask that exports be limited to a reason-
able level.
We seek to limit the export of cow-
hides to a level at which the leather
industries of the United States can sura
vive. We seek to limit exports to a level
at which the jobs of 400,000 hard work-
ing Americans can be secure. We seek to
keep the cost of a pair of shoes at a rea-
sonable and affordable level.
Mr. President, we cannot allow the
continuation of massive, unrestrained,
and dangerous exports of American
cowhides. I strongly urge the passage
of this amendment.
(Mr. SASSER assumed the chair.)
Mr. MOYNIHAN. Mr. President, the
Senator from Maine has spoken with
great clarity and forceful fact with re-
spect to the situation we address in the
amendment before us. I would like to
supplement his remarks only to the point
of stressing the compatibility of what
we are doing here with the Multilateral
Trade Negotiations (MTN) that have
now been concluded by Ambassador
Strauss.
I am a member of the Subcommittee
on International Trade of the Commit-
tee on Finance, and one of those who
introduced the implementing legislation
to the MTN some 3 weeks ago.
The Senator from Maine is absolutely
correct. In these negotiations which
have extended over 7 years and which
are now completed, Ambassador Strauss
on behalf of the United States raised
the question of the restrictions on ex-
ports from the other hide-producing
countries, and pointed out that these
restrictions are altogether incompatible
with the General Agreements on Tariffs
and Trade (GATT). He properly pointed
out that other countries' restrictions on
exports are incompatible with the prin-
ciples and thrust of American trade
policy since the time of the reciprocal
trade agreements of Cordell Hull. Ac-
cordingly, the Ambassador asked for a
general lowering of these kinds of re-
strictive activities and that the particu-
lar one on hides be given up. The reac-
tion was "No." Not a single exporter
would agree to do that.
Their reaction in this instance is part
of a pattern of world trade which, in the
end, eventually became the focus of the
MTN itself. The MTN began as tariff ne-
gotiations, as they traditionally had
been. But it was realized that it is the-
actions by government to prohibit ex-
ports or imports in one form or another,
to impede and effectively to prohibit
trade, and not tariffs, that have become
the principle inhibiting element in in-
ternational trade.
Accordingly, the whole focus of the
MTN changed to a regime of non-tariff-
barrier codes. The purpose of these codes
is to prevent such trade restrictive activ-
ities or, when they do take place, to
authorize governments to respond ap-
propriately when their own economies
have been injured.
Now, in the matter before us our econ-
omy has been injured in a way that
seems altogether inappropriate. And the
injury comes from the refusal of other
countries to export. We continue to ex-
port our hides, following the rules of the
game, and our hides are sucked up by
nations which ironically are the ones no-
torious for the nontariff barriers they
put on our goods. It is fascinating, for
example, that the country most anxious
to get our hides is least anxious to get
the beef that is under those hides. But
try to find the beef that goes with the
hide in that country. We cannot. That
country uses the hides to make products
and export them back here and we lose
even more jobs.
What we are doing in this proposal is
to give the Government direct author-
ity from the Congress to go out and ne-
gotiate further reductions of nontarifi
barriers-in this, case the export restric-
tions that result in injury to our domes-
tic shoe and leather apparel industries.
If they will not do away with those. re-
strictions, the world should know that we
will exercise our right under the MTN to
act in a similar manner-restrict our own
exports to save the industries that would
otherwise suffer.
We are asking for equity here. We are
supporting the MTN; but we are sup-
porting American workers. We are sup-
porting principles of international trade
which, unless our trading partners begin
to abide by them, are going to break
down a system'which has been a half
century in construction and has brought
incomparable economic benefits to all in-
volved. It is being lost because of the
shortsightedness of our trading partners.
I am happy to be a cospbnsor with the
Senator from Maine. I hope I made clear
that, in this Senator's view, this action
is wholly consistent with the MTN and,
indeed, addresses the central question of
the MTN at this time.
Mr. MELCHER. Will the Senator
yield?
Mr. MUSKIE. Mr. President, may I ask
what time I have? I have only one-half
hour and I know several Senators wish
to speak.
The PRESIDING OFFICER. The Sen-
ator has just under 12 minutes.
Mr. MUSKIE. Then I do not think I
should yield to any Senator for more
than 2 minutes.
Mr. JAVITS. Mr. President, if I may
have 30 seconds.
Mr. MUSKIE. I yield to the Senator
from New York 30 seconds; then to the
Senator from Massachusetts 2 minutes. Ports in the major hide-producing coun-
Then I shall be happy to yield for a ques- tries. The leather industry is facing not
tion to the senior Senator from Mon- only reduced availability, but also a
tana (Mr. MELCHER). doubled price of its basic raw material.
Mr. JAVITS. Mr. President, I have two Jobs are jeopardized, and the costs of
points. One, I should like to join as a co- leather goods are escalating.
sponsor of this amendment. I so ask ti The United States is the only "free-
unanimous consent. trader" in the world hide market. We
The PRESIDING OFFICER. Without are simply asking that the President, af-
objection, it is so ordered. ter receiving the advice of the Secretaries
Mr. JAVITS. Mr. President, second, of Commerce and Agriculture be empow-
may I say I do not think any Senator on ered to keep available for sale to Ameri-
the floor, for a longer time, has advo- can leather goods manufacturers a sup-
S 10157
cated an open trading policy for our
country as essential not only to our coun-
try's interest but to the peace of the
world. But I deeply believe that this is a
situation in which we are being imposed
upon and that, therefore, unless we take
action against such imposition, I think
we make ourselves impotent in terms of
world trade.
May I just give the Senate this fact,
which supplements what my beloved
friend, PAT MOYNIHAN, has said. I have a
letter from the Special Trade Represen-
tative dated July 17, in which he says:
We made a major effort in the Multilateral
Trade Negotiations to get those countries to
take such action-to wit, export controls on
hides-thereby increasing worldwide avail-
ability. Unfortunately, most countries re-
sponded unfavorably to our request.
Mr. President, I hope this amendment
will get their attention. It is for that rea-
son that I join it.
Mr. MUSKIE. Mr. President, I ask
unanimous consent that Senator GLENN
be added as a cosponsor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. MUSKIE. I yield to my friend and
Mr. BAKER. Mr. President, I thank
the Senator from Maine, my good friend
(Mr. MusKIE) who is continuing a fight
he has pursued before and which I have
been privileged to join him in on other
occasions. I shall not detain the Senate
long except to say I believe in this
amendment. I think it is appropriate, I
think it is fair, and I think it is essential
to preserve industry in this country. It is
not only important to my State, where
approximately 30,000 jobs are in jeop-
ardy unless something is done to provide'-
against the excesses that burden the in-
dustry at this time, but also, because
there are 400,000 American citizens who
are directly involved in industries af-
fected by this concept.
Mr. President, I have joined 10 of my
colleagues in support of this amendment
to S. 737, to allow restrictions on the U.S.
exportation of cattle hides.
The leather manufacturing industry
in this country is in trouble. It is a diffi-
culty not of their own making and not
due to any failure of abiilty to compete
effectively. The problem is that the for-
eign competition in this extremely im-
portant industry, that employs over 400,-
000 Americans (approximately 30,-
000 in the State of Tennessee) is absorb-
ing between 70 and 80 percent of the'raw
materials available in this country.
At the same time, American access to
the raw material market in cattle hides
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S IO158 CONGRESSIONAL RECO
ply of hides ample to meet domestic de-
mand. In an equitable, fully reciprocable
market environment, the leather indus-
try in the United States can compete
with anyone. It is our task either to re-
store fairness to the competition or fol-
low suit and begin protecting our own
raw materials.
Mr. MUSKIE. Mr. President, I reserve
the remainder of my time at this point
because I have used up the bulk of it and
have not given the opposition an oppor-
tunity to speak. Later, I shall yield to
Senator KENNEDY, Senator TSONGFIS and
other Senators.
Mr. MELCHER. Mr. President, will the
Senator yield?
The PRESIDING OFFICER. Who
yields time?
Mr. HEINZ. Mr. President, I want to
take a minute on Senator STEVENSON's
time. He has been called away from the
floor temporarily. I ask those who are in
opposition to the amendment to let we
know approximately how much time they
want, because there are 30 minutes allo-
cated to Senator STEVENSON, which is the
time for the opponents. Senator MUSKIE
and others have used up most of the time,
I understand, except 6 or 7 minutes, of
the proponents.
There are seven Senators. Then we
shall try to make it about 4 minutes each,
if that is fair.
Mr. MELCHER. Will the Senator
yield?
Mr. HEINZ. I ask unanimous consent
that I be allowed to yield 4 minutes from
Senator STEVENSON's time to the Senator
from Montana.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. MELCHER. Mr. President, I thank
the Senator.
I oppose the amendent of th' Senator
from Maine. Has there been any CBO
study on the inflationary impact if the
price of hides is reduced and what result
would that have on the cost of hambur-
ger, beef roasts or steaks, in the super-
market? It is a rhetorical question, be-
cause if you take it out of the hides, you
increase the beef price in the super-
market.
Mr. MUSS. I shall be glad to answer
that.
Mr. MELCHER. If I had more than 4
minutes, I would be delighted to have the
response.
The fact is that there is only a price
for a fat steer or for a cow and if you
decrease the price of the hide, the price
of the meat from the steer or cow is
going to be higher.
When considering somebody else's
business, perhaps it is good to turn for
information to a reliable source of that
information from that business. I think
every Member of the Senate has in his
office or in his possession a telegram
from the American Association of Hides,
Skins, & Leather Merchants. It says:
The American Association of Hides, Skins
and Leather Merchants suggests that the re-
cent alarm about a purported shortage of
hides is a result of a misunderstanding of
the basic supply and demand factors that
affect cattle hides.
The supply and demand situation is
such that hides that, earlier this year,
-SENATE
were selling as high as 94 cents a pound
for Midwest native unbranded premium
hides, but has dropped to an average of
78 cents last week for those same pre-
mium hides.
It is continuing to drop, and. -we can
probably expect, when we total up what
the average price is for this current week,
we shall find it is about 70 cents per
pound.
That is the situation as it exists now.
The telegram goes on to say:
You have recently received information
from a U.S. tanner and shoe manufacturing
group operating under the name of "Hide
Action Program" that there exists a need for
export controls of U.S. "animal hides and
skins" because the domestic users of these
raw materials are unable to buy sufficient
quantities to rain their factories, and that the
reason for them inability to buy the needed
quantities is the export of these cattle hides.
The arguments put forth to you are dis-
tortions of the fact and the truth. Many
statements have been made by the hide ac-
tion program which are insinuations of mal-
practice in the export of cattle hides sup-
posedly causing higher hide prices.
By admission of those making these accu-
sations, there is no substantiation of these
charges as they are not rue.
The true facts are: ?
1) U.S. tanners have free and total access
to every U.S. hide produced, if they are will-
ing to pay the market price, and if they would
make use of hides of all origins within the
United States.
Naturally, they are competing with foreign
buyers and this is part of the free enter-
prise system.
2) Hide prices have risen in the United
States and world-wide because the U.S.
cattle herds are in the process of rebuilding
and so are the herds in other countries.
The production of cattle hides in the first
five months of this year, due to a reduced
kill of animals, was about 141/2 % lower than
last year. Traditionally the kill in the second
half of the year, especially after September.
increases. .
The demand for leather world-wide is
large, and consequently the prices for hides,
the by-products of the meat packing indus-
try, are influenced greatly under the "old
rule of supply and demand".
3) The return meat packers receive for
their hides is an important source of rev-
enue. By retaining more hides in this coun-
try than the domestic tanning industry can
possible use, again, because of supply and
demand, hide prices would decline. This
would lead to lower prices for cattle which
would hurt farmers, cattle ranchers and
cattle feeders and which would result in
higher prices for meat at supermarkets and
the biggest losers will be the consumers.
4) The price of hides represents only 5
to 15% of the total cost of producing a pair
of shoes in the U.S. Over the past twenty
years, hide prices have risen and fallen re-
acting to supply and demand, but shoe
prices being administered have never de-
clined. In fact, In recent weeks hide prices
have declined 15 to 20% from their highs.
If, when lower prices prevail, shoe prices re-
main at their high levels, then it cannot
be claimed that only hide prices are, to.be
blamed for higher shoe prices. It should be
noted that even with hide prices as they are
now, they have not kept up with the in-
flation rate of the last twenty years due to
'hides being a surplus commodity.
5) U.S. tanners are working on a reduced
scale (approximately 14-15 million hides/
yr) because of a lack of orders for their
leathers, not because they cannot obtain the
hides to tan.
The United States is importing large
amounts of shoes and other leather goods
July 219 1979
and also domestic tanners are buying large
amounts of semi-finished leather produced
in South America which augments their
tanning supplies.
6) Export controls of hides could hurt the
United States' balance of payments, espe-
cially at a time when we are attempting to
increase our exports.
7) From past experience, we know that
exporj controls are extremely difficult and
costly to administrate on a fair basis. -
Many U.S. shoe manufacturers are also
involved in the import of shoes, and the
facts indicate that many shoe manufacturers
have a good and profitable business.
The U.S. leather industry does need assist-
ance in the form of equitable access for their
leather to other countries the same as the
other countries can sell to the U.S.A., but
not in the reduction in export of cattle hides,
a surplus commodity. We support the recent
action taken by the U.S. Government special
trade group which, is trying to rectify the
inequities of other countries in permitting
access of U.S. leather goods into their mar-
kets. We do not support any restriction of
exports of cattle hides, a surplus commodity.
We respectfully request you to look into
all the facts, past and present, concerned
with this industry before voting on any
changes in the existing Export Administra-
tion Act of 1969 as amended, and to leave
this act as it concerns "animal hides and
skins" unchanged. We feel that after you
have gathered all the true facts from all
sides, and after you have disseminated and
analyzed the deliberate distorted informa-
tion which you have received from the "hide
action program", that you will agree with us.
Please do not allow jurisdiction for animal
hides and skins to be shifted from the De-
partment of Agriculture to the Department
of Commerce and please do not pass any
legislation which would lead to the unneces-
sary and dangerous imposition of export con-
trols on animal hides and skins.
The PRESIDING OFFICER. The Sen-
ator's 4 minutes have expired.
Mr. MELCHER. Mr. President, they
cannot have it both ways. When hide
prices go down, the price of beef in the
supermarket has to rise. The whole ani-
mal, hide, beef, and byproducts are sold.
When fat steers on the hoof have been
selling for 65 cents-70 cents per pound,
the total cost of a 1,000-pound steer is
$650-$700. If the hide weighs 60 pounds
at 75 cents per pound, that means $45 of
the total cost of the steer, the slaughter-
ing cost, the transportation and hand-
ling costs of the beef going to the super-
market, the cutting, wrapping and retail
costs are offset by that amount received
for the value of the hide. If the hide value
decreases $20, the consumer at the super-
market is going to pay that much more
for the beef frQm that steer. And the
cattle producer receives either less for the
steer or the consumer pays more. '
You cannot have less value for the hide
without adding price to the meat. The
effect of the amendment would lower
hide prices, cause beef retail prices to be ?
higher, or give a lower return to the
cattle producer.
The PRESIDING OFFICER. Who
yields time?
Mr. BENTSEN addressed the Chair.
Mr. HEINZ. Mr. President, I ask unani-
mous consent that 4 minutes be yielded
to the Senator from Texas on Senator
STEVENSON'S time.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. BENTSEN. Mr. President. I thank
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
the distinguished Senator from Penn-
sylvania.
I can understand the concern of the
Senator from Maine. I have shoe manu-
facturers in the State of Texas, and have
them in substantial numbers.
I sympathize with their plight and
want to be responsive. But when we talk
about export controls, we are looking for
a short-term fix that will not work.
We saw what happened several years
ago on soybeans. What did the Japanese
do when they found they were an un-
certain source of products? They invested
over $1 billion in Brazil to develop soy-
beans, and now the Brazilians are our
principal competitors in the soybean
business.
When we talk about placing export
controls on hides, the point is made that
the consumer will benefit. But if the price
of hides dropped by 40 to 50 percent, that
would result in a 2-percent saving on a
pair of shoes. You could buy $20 shoes
for $19.60; that is if the retailer did not
take the markup for himself.
That is not the sort of price break that
will restore the competitive position of
our domestic producers. It will not rout
our foreign competition. And it will not
save the consumer much money. .
We have been working, and we did
work, with the STR trying to develop
quotas and some protection for our shoe-
producing industry in this country. We
have made some progress, but the basic
problem still remains.
One of the reasons we have a problem
with hide prices today is that we have
artificial controls on the price of beef,
which has resulted in liquidation of herds
and increasing prices.
If we get into beef production and talk
about butchering and packaging, that is
a high volume, low profit business.
The Senator from Iowa has one of the
major producing plants in the entire
country in that business.
Our meatpackers operate on. a high
volume, thin margin basis. They sell the
whole cow after they buy it and, ' if we
reduce the selling of the hide, or depress
the price that can be paid, it only means
the price of beef goes up.
We have artificial controls working.
We do not have supply and demand
working in that situation. In effect, we
have hurt the consumer.
We would increase the price of beef,
a price the housewife already thinks is
too high, by this kind of action. We are
looking for a very short-term fix that will
not work and will not solve the problems
of shoe production in this country.
The problems are more basic than that.
They require tax incentives that bring
about the renovation of the manufactur-
ing-of shoe production in this country
-so we can be competitive with foreign
production.
That is the kind of approaches we
should make, trying to do things to mod-
ify and strengthen the supply side of our
economy instead of saying we will put
artificial restrictions on the export of
American products.
We are in tough enough shape today
with the dollar, but if we take away the
surplus we have in exports of agricul-
tural products and begin to depress them,
then we will find the dollar is in even
worse shape than it is now.
I know the prices of hides are high,
and that the price of hide is only a small
component of the price paid for a steer
or a beef. Buy if we take artificial meas-
ures to drive down hide prices, we must
consider the psychological impact on the
rancher, who is just now getting back off.
his knees and is finally able to meet the
payments at the bank so he can stay in
business. Just when this is happening,
along comes the big arm of the American
Government putting artificial controls
on, to see that we do not get the free mar-
ket price. Such action can only discour-
age the rancher and put more of them
out of business.
I think that is the wrong way to ap-
proach the problem of shoe production in
this country.
I urge my colleagues to defeat this
amendment. I say that we need to do
something more substantive that will
have a long-term positive effect on the
domestic leather industry. We've got to
increase productivity in that industry
and make it more competitive. We should
work to see that our trading partners
eliminate their controls on hide exports,
and their barriers to our products. I want
to help our leather industry, but we're
not going to accomplish that objective by
taking it out of the hide of the cattle
industry.
Thank you, Mr. President.
Mr. CULVER addressed the Chair.
Mr. STEVENSON. I yield to the distin-
guished Senator from Iowa.
Mr. CULVER. I thank the distin-
guished Senator.
Mr. President, I rise in opposition to
the amendment by the Senator from
Maine to impose export controls on cattle
hides.
The situation we face here on the floor
today is, in my opinion, most unfortu-
nate. I can certainly sympathize with the
Senator from Maine's position. The high
price of hides, though a temporary-phe-
nomenon, is placing in jeopardy several
thousand Jobs in his State and in other
States. These are jobs of relatively low
paid workers with few, if any, employ-
ment alternatives.
But I hope the Senator can also under-
stand the position in which his amend-
ment places me, and the over 70,000
cattle producers in my State of Iowa.
I am sure he will recall that prior
to this year, cattle producers in this
country lost money for almost 4 con-
secutive years. As a result, many individ-
uals in Iowa and other cattle producing
States, either lost their farms-their
jobs-or had to severely reduce their
standard of living.
These are not easy circumstances for
those of us who have a responsibility to
our constituents. Nor am I asking the
Senator from Maine to stand by and do
nothing for the dedicated, hard working
people of his State whose livelihoods are
threatened by current economic
conditions.
I must, however, voice my opposition to
this attempt to assist the leather goods
industry at the direct expense of Iowa's
02015
and the Nation's cattlemen. And that is
precisely what the Senator's amendment
proposes to do.
I think we are all aware of the fact
that the cattle cycle is now at a point
where fewer - animals are being
slaughtered. This means that fewer cat-
tle hides are being produced. Those of us
from cattle States have been watching
this situation develop for several years.
We all knew it was coming and we have
a pretty good idea when supplies will
increase: That is, if the Government
keeps its hands out of the market and
does not destroy the incentives that are
necessary for cattlemen to rebuild their
herds.
If we have learned anything about
consumer protection and agricultural
policy over the past 4 years it should
have been. that interference in the live-
stock market to the detriment of pro-
ducers will have the effect opposite to
that intended. Every barrier raised to
redu-e prices will only further reduce
supplies available to the American con-
sumer. Without sufficient supplies,
neither the consumer nor the leather
goods industry can enjoy the economic
health we seek for all Americans.
The case against this amendment was
well stated in the December 1976, report
on the national commission on supplies
and shortages which said:
It is short-sighted to use export controls
for the. prevention of domestic price
increases, no matter how unpopular these
price increases may be. Not only are export
controls harmful to the income of exporters
and to the credibility of the United States as
a reliable source of supply, but they are not
in the long-run interest of consumers
either.
Earlier this week the U.S. Department
of Agriculture released a task force
report entitled, "The Structure, Pricing
Characteristics, and Trade Policy of the
Irides, Skins, Leather, and Leather Prod-
ucts Industry."
The report concluded:
There is serious question about the legality
of export controls for hides. Moreover,
analysis indicates that they probably would
provide no long-term benefits to either the
industry or consumers.
Mr. President, the American cattle-
man persevered through 4 years of
negative income. They depleted their
savings and mortgaged their land in
the hope that the lives and the work
they knew and loved, would be rescued by
better times. Finally those better times
arrived, only a few short months ago,
Cattle prices have been at record levels
this year, at least, for those producers
who survived.
Yet already consumer resistance to,
high prices has led to a 15 percent
decline in cattle prices since mid-May.
This situation appears to be stabilizing
now with prices at a profitable, but cer-
tainly not an unrealistically high level.
Any action by the Congress that would
upset the delicate balance that for the
first time in years has restored some con-
fidence, some stability in the often vola-
tile cattle market, would be totally unfair
to producers and unwise public policy.
Export controls on cattle hides would
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S 80160 CONG SSIONAL RECORD - 812NATE July 21, 1979
have ramifications that reach far beyond
the impact intended by this amend-
ment's sponsors. In 1978, the 'United
States exported $686 million worth of
cattle hides. Due to improved prices, the
total will be substantially higher this
year. These export dollars will make a
significant contribution to balance of
payments problems caused by energy
and other imports.
In addition, other agricultural exports
could be adversely affected by such
action. We are still experiencing the
repercussions of the 1973 embargo on
soybean exports. In the recent Tokyo
round of the multilateral trade negotia-
tions, significant gains were made in
gaining access for our high quality beef
to the Japanese market. Janan is one of
the biggest customers for U.S. hides as
well as our largest customer for all agri-
cultural commodities. Any limitation on
hide exports to Japan could jeopardize
trade. in beef and other areas.
In conclusion, the policy advocated by
the proponents of this amendment is a
dangerous means of providing short ?
term relief to a narrow segment of the
U.S. economy. It is an attempt to take
from the half-full pockets of American
cattlemen to fill the half-empty pockets
of the leather goods industry. I oppose
this amendment and urge my colleagues
to defeat it.
Several Senators addre?sed the Chair.
The PRESIDING OFFICER. Who
yields time?
Mr. STEVENSON, Mr. President, I
yield to the Senator from Kansas.
Mi?. DOLE. Mr. President, I will need
3 minutes.
Mr. President, I am in sympathy with
the statements of the distinguished
Senator from Maine and others who are
attempting to help tanners and footwear
producers, and other industries, in this
country.
They are undergoing some hardship
because of the hide supply situation. But
I just do not believe that what they
pursue today by this amendment will ac-
complish what they might like to do.
Mr. President, no one can deny that
the tanners, footwear producers, and
other industries in this country are un-
dergoing some hardships as a result of
the hides supply situation. However, the
method by which this amendment would
seek to remedy the problem contradicts
the spirit of the bill we are now con-
sidering. runs afoul of congressional
precedent on this subject, would not
really remedy the situation, and would,
in the long run, have a broader and
more devastating impact on the cost of
living in this country than the current
state of affairs.
As r have recognized, Mr. President,
such industries as the tanners and foot-
wear producers have a legitimate argu-
ment in stating that they are undergo-
ing hard times. We have repeatedly been
made aware of their plight. For over 10
years, the hide processing industry in
this country has been on decline. This
year, Congress will be asked to approve
the reduction of duties on dye-stuffs so
that the tanners can reduce their cost of
production-that will be a plus for them.
For the past few years, a massive trade
adjustment cissistance program has been
focused on the footwear industry to help
it with trade problems which it has been
suffering for practically a decade.
So there is no question about the need
for special attention to these industries.
I agree that these industries need spe-
cial attention and innovative ideas to
help them out of their quandary. But
limiting exports of a product which is in
great demand on the international mar-
ket and which is supplied almost entirely
by the United States is not sound eco-
nomic policy. Right now, the United
States supplies about 75 percent of the
hides traded on the international mar-
ket-which is a seller's market currently.
Our livestock and meatpacking industries
are receiving top dollar for these ex-
ports-which is a happy note for our
livestock producers, who are just begin-
ning to recover financially from a 6-year
economic drought due to the cattle cycle.
The hide exports are also a happy note
for our entire country, because they are
one of the few pluses in an otherwise
disastrous trade balance picture.
The bill before us clearly intends to
ease up on export restrictions. This
amendment flies in the face of this gen-
eral policy objective. Past attempts to
limit hide exports have run afoul of con-
gressional objectives. In 1966 and 1972
attempts to limit hide exports were op-
posed by Congress. Probably the most
convincing argument in opposition to the
mechanism proposed in the amendment
is that it would have more of an adverse
impact on consumers of beef and produc-
ers of livestock than it would help the
consumers of hides and the consumers
of the products they sell. The result of
export limitations, and a consequent re-
duction in hide prices, would be that the
meatpackers would raise the cost of re-
tail beef and lower the price they pay for
livestock in order to cover their ex-
tremely narrow profit margin. Thus, it
seems to me that the impact of the pro-
posed amendment will have a greater
adverse effect on our livestock sector and
consumers of beef-and therefore infla-
tion-than it would have in helping the
tanning and footwear industries.
In effect, if we approve this amend-
ment, we will not be robbing Peter to pay
Paul, we will be robbing Peter and Paul
to pay Simon. It appears that what
we will be giving Simon will not buy him
much more than a cup of coffee. What I
mean is that livestock producers and beef
consumers will be adversely affected
while the positive effect for tanners and
footwear manufacturers will be minimal.
For example, estimates are that hides
represent only.5 to 15 percent of the
total cost of producing shoes domes-
tically. Export controls probably would
reduce hide prices, but it is unlikely that
shoe prices would be substantially lower
because of lower hide prices.
Mr. President, I would like to suggest
to my colleagues an alternative to this
ill-advised amendment. My alternative
pays Peter, pays Paul, and pays Simon--
among others. We can take an affirmative
step toward solving the hides problem
by adopting a program which provides a
relatively predictable and steady volume
of domestic hides. This will help even
out the drastic price swings which the
tanners and others encounter and will
also give them some predictability in
their business planning. At the same
time, this program can help the live-
stock producers-by giving them a mech-
anism whereby they can make more ac-
curate herd management plans and avoid
the drastic price swings attendant to the
cattle cycle. Of course, such a mechanism
would benefit the consumer by stabilizing
beef and leather prices and would pro-
mote greater job security in the trade-
impacted industries. The program I am
suggesting is embodied in the counter-
cyclical formula of the proposed meat
import law of 1979. That legislation, if
enacted into law, would set up a mech-
anism which would take a positive ap-
proach to solving the problems of all the
parties of interest in this matter. Of
course, the results of the countercyclical
formula may not provide an absolute fix
for all the problems we are discussing
here today, but it certainly would be a
more positive and sound economic
method of dealing with the matter than
that dangerous precedent the proposed
amendment would establish.
Mr. President, I urge my colleagues to
defeat, the proposed amendment. Instead,
I suggest they take advantage of a rare
opportunity in which we can help each
one of the domestic interests involved by
supporting the meat import law of 1979.
Mr. President, I ask unanimous con-
sent to have printed in the RECORD some
questions and answers raised by those
who support and those who oppose this
amendment, together with a letter from
the Special Trade Representative, Am-
bassador Strauss, dated June 26, 1979,
along with a statement by the adminis-
tration opposing the proposed legisla-
tion.
There being no objection, the material
-was ordered to be printed in the RECORD,
as follows:
QUESTIONS AND ANSWERS ON Hms EXPORT
CONTROLS
1. Why are hide export controls being
advocated?
The cattle cycle is now at the point where
less animals are being slaughtered. This,
coupled with a continued strong demand
for leather and leather products, has in-
creased the price for hides. Tanners, leather
users and shoe manufacturers argue that
these higher prices are very burdensome to
their industry. They want controls on hide
exports to drive down the price, thus allow-
ing them to hold down the price of shoes.
2. Do they have a point?
It is doubtful. First, hides represent only
5-15% of the total cost of producing shoes
domestically. Export controls probably
would reduce hide prices to some degree, but
it is unlikely that shoe prices would be
substantially lower because of lower hide
prices.
3. Have hides been embargoed before?
Yes. Attempts were made to control hide
exports in .1966 and 1972, but both times
Congress objected.
4. What if export controls were imposed
on hides?
Meat packers operate on an extremely
narrow profit margin, earning approximately
1? per sales dollar. Without being able to
sell hides-the single, most value animal
byproduct-at a fair price, packers would
be forced simultaneously to (1) lower what
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they pay for live cattle and (2) seek higher
wholesale beef prices.
5. You mean export controls would lead to
still higher meat prices?
Yes. Higher wholesale beef prices would
be passed through to the retail level, thus
further pushing up the cost of meat to
consumers.
8. Would export controls on hides cause
other problems?
Yes. Controls would damage the nation's
balance of payments. Farm exports now total
nearly $30 billion annually (including over
$600 million in cattle hides), which helps to
offset the large trade deficits we have been in-
curring in recent years. Any attempt to re-
strict exports will once again cause our
trading partners to question whether they
can continue to depend on America for much
of their food and fiber supply. If the U.S. re-
stricts trade in one farm commodity, other
nations may conclude that we will do so with
others, thus making their reliance on our
farm exports seem risky.
7. You are saying that imposing controls
would set a dangerous precedent?
Yes. If the U.S. blocks exports every time
domestic prices rise rapidly in a certain sec-
tor of the economy, other nations will be
increasingly unwilling to trade with us-and
that will hurt all Americans.
Take Japan, for example. As our number
one customer for U.S. hides, Japan has al-
ready agreed to limit Its purchase of them.
For us to limit hide exports now, according
to Special Trade Representative Robert
Strauss, would simply reinfcrce the Japanese
fear that the U.S. is an unreliable supplier,
a fear they have harbored since we embargoed
soybeans several years ago.
8. Should anything to done about the cur-
rent high price of hides?
No. It is a cyclical occurrence, and the
forces of the world market place will eventu-
ally provide the best solution. .
9. Shouldn't the government do anything
then to help the shoe and leather industries?
Maybe so. But we should not help one in-
dustry by penalizing others, especially with
a shortsighted policy which will damage our
balance of trade. If these industries are le-
gitimately suffering, the government could
establish some kind of economic assistance
plan. Another approach is to adopt a coun-
tercyclical meat import law which would
even out the supply-demand imbalance.
THE SPECIAL REPRESENTATIVE FOR
TRADE NEGOTIATIONS,
Washington, D.C., June 26, 1979.
Hon. RUSSELL B. LONG,
Chairman, U.S. Senate, Committee on Fi-
nance, Washington, D.C.
DEAR MR. CHAIRMAN: This is in further re-
sponse to your May 24 request for the views
of this Office concerning Senate Resolution
168, which calls upon the President and this
Office to take action to protect the American
leather and tanning industry.
I agree fully with the concerns that have
led to the introduction of Senate Resolution
.168. The price increases we have experienced
in raw cattlehides and in leather have re-
sulted in serious economic pressures for our
tanning industry, as well as the leather prod-
ucts industry and American consumers. As a
result of these concerns, I recently organized
a meeting between Members of Congress rep-
resenting the tanning, shoe, and cattle indus-
tries and Administration officials, including
Secretary Bergland and Assistant Secretary
Well from the-Department of Commerce, to
discuss this problem and to explore remedial
measures that might be taken. Several of your
colleagues from the Finance Committee at-
tended this meeting.
During the meeting, general agreement
was reached that the rapid increase in hide
and leather prices Is due primarily to a re-
duction In cattlehide supplies resulting from
the decrease in U.S. domestic cattle
slaughter. In fact, this has occurred previ-
ously in four to six year cycles, most recent-
ly in 1966 and 1972. It was also apparent that
the alternatives for bringing the supply of
cattlehides into closer balance with demand
are limited.
One approach to the problem is to encour-
age beef-producing countries with export
controls on' hides to ease their controls,
thereby increasing the worldwide availabil-
ity of"hides. We made a major effort in the
Multilateral Trade Negotiations to get these
countries to take such action. Unfortunately.
most countries responded unfavorably to our
request. Nevertheless, we will continue to
press hard for results wtih those countries
with whom we are still negotiating, especial-
ly Argentina.
Another approach which has been sug-
gested by some is the imposition of controls
on U.S. cattlehide exports. However, this
approach does not appear feasible for sev-
eral reasons. First, the Executive does not
have clear authority to impose controls on
hide exports. When controls were imposed in
1966 and in 1972 as a remedy to high and
rising cattlehide prices, the Congress acted
quickly in response to strong opposition
from the domestic cattle industry to ter-
minate the controls. Given this experience,
there is a real question whether controls
could again be imposed and remain in place
for long without being contested in the
Courts or removed by Congressional action.
Secondly, any benefit in terms of reduced
hide prices from export controls could be
offset by increased prices in the longer term.
The cattle industry is now undergoing the
process of rebuilding its inventory of cattle.
This rebuilding process could be slowed or
stopped by action which reduces hide prices
significantly. This would aggravate the sup-
ply problem in the longer term as cattle-
herds fail to increase sufficiently to provide
a greater supply of hides in the future.
Since there are no good solutions to the
supply side of the problem, it was concluded
that other alternatives should be explored,
including the possibility of a program to
provide financial assistance for the industry
until such time as the domestic supply of
cattlehides increases and prices begin to de-
cline. We expect supplies to increase in 1981.
The Departments of Commerce and Agri-
culture will be working with interested Con-
gressmen to see whether such a program can
be developed.
Thank you for giving this Office the op-
portunity to comment on Senate Resolution
168, and please be assured of my concern
regarding this important matter. I believe
that we are now on the right track toward
finding a solution to this problem.
Sincerely,
ROBERT S. STRAUSS.
ADMINISTRATION POSITION ON PROPOSED Ex-
PORT ADMINISTRATION ACT AMENDMENTS
CATTLEHIDE AMENDMENT
1. This amendment is contrary to the
spirit of the recently concluded Multilateral
Trade Agreements.
It would severely inhibit our efforts to in-
duce other countries to remove their tariff
and nontariff impediments'to free trade, in-
cluding those which restrict the export of
cattlehides.
It could encourage other countries to im-
pose restrictions on their exports of basic
materials for which the United States is
heavily dependent on imports.
2. The amendment is too inflexible.
It would make export controls and quotas
on cattlehides mandatory unless the Presi-
dent determines that other hide producing
countries which have enacted hide export
controls during the past ten years have re-
sumed reasonable levels of hide exports (this
S 101611,
would appear to mean that all or nearly all
of such countries must have already resumed,
reasonable levels of exports) or that the
domestic supply of hides less exports Is suf-
ficient to meet the requirements of the do-
mestic economy. (This would appear to mean
that they are now sufficient, not that they
are forecast to be sufficient to meet domestic
needs during the forthcoming marketing
year.)
3. The amendment would appear to require
a new Presidential determination each mar-
keting year, failing which export quotas
would automatically be imposed. The Presi-
dent is already so overburdened with find-
ings and determinations that he has scant
time left for addressing major foreign and
domestic issues. It is an unreasonable bur-
den to expect him to act as an individual
commodity licensing officer as well.
4. Under this amendment, the determina-
tions which the President would be required
to make would not in and of themselves
assure the adequacy of domestic supply to
meet domestic demand.
The mere fact that other major hide pro-
ducers have or have not resumed current
exports, or that the current domestic supply
of hides less export demand is or is not suf-
ficient to meet current domestic demand,
would not assure the adequacy (or lack
thereof) of the domestic supply during the
forthcoming marketing year.
To determine this, other factors Mould
also have to be taken into consideration.
Even if both the determinations in the
amendment could be made they would not
necessarily constitute adequate criteria on
which to base a decision that export con-
trols were not warranted.
Mr. PERCY. Mr. President, will the
Senator yield?
Mr. STEVENSON. I yield.
Mr. PERCY. Mr. President, I rise to
discuss the amendment offered by my
distinguished colleague, the senior Sen-
ator from Maine, and to state my posi-
tion on it.
In Illinois, 101 firms are engaged in
the manufacture of leather products and
they have, without question, been ad-
versely affected by the recent rapid rise
in the price of cattlehides. The Com-
merce Department tells us that, through
their monitoring, they have observed a
steady increase in the export of hides.
Exports have jumped from just over 50
percent of U.S. production in 1973 to
well over 74 percent in the first 5 months
of this year.
What is more, the price of cattlehides
has climbed from about 33 cents per
pound in 1973 to a record high of 96
cents a pound in May of this year.
This cannot but pinch domestic users
of leather and it is a situation that de-
serves our serious attention. Imposition
of export controls is one way to attack
this problem. But it is not the only way
nor is it necessarily the best. I believe
the adoption of the amendment would
actually be counterproductive to both
consumers, cattlemen, and leather
manufacturers in the long run. Export
controls, just like price controls in meat
a few years ago, are purely a short-run
solution that will not help us with a long-
run solution to the export drain. In fact,
they often backfire soon after being im-
posed, harming the very interests they
were meant to protect.
Let us just take a minute to look at
the origin of this export drain. It stems
from export controls imposed by other
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major cattlehide exporters-Argentina,
Brazil, and Uruguay. The shutoff of these
supplies have meant that the U.S. mar-
ket is the only large supply of hides
available to other leather-using coun-
tries.
And yet, U.S. cattlehide production is
in the downward side of a cycle. As the
commerce Department has reported:
Because cattle hides are a by-product of
meat slaughtering operations, the demand
for hides has no effect on the supply. Be-
ginning in 1974, high feed costs and low
returns on investment forced cattle growers
to send more calves and cows to market. This
liquidation of breeding stock resulted in a
decline in herd population which subse-
quently led to annual declines in cattle
slaughter beginning in 1977. Cattle slaughter
is expected to decline further through 1980.
In other words, supplies of hides are
tight in this country because of the con-
dition of the overall cattle industry. If we
had a buoyant and growing cattle indus-
try, we could accommodate more of the
demand from abroad.
Mr. President, I might digress a mo-
ment at this point to remind my col-
leagues that one reason for the low
number of cattle hides produced in re-
cent years is the volume of imported
meat that has been entering the country,
deterring the rebuilding of cattle stocks.
If we had a more comprehensive policy,
recognizing the link between hides and
beef production, we might not be in this
situation today. That is the type of long-
run solution that will help both indus-
tries, and it is the type of solution we
should pursue.
Our Special Trade Representative ac-
knowledged the importance of. a long-
run solution in a July 17 letter to my
colleague from New York, Senator
JAVITS.
In that letter, he said:
One approach to the problem is to en-
courage beef-producing countries with export
controls on hides to ease their controls,
thereby increasing the worldwide availability
of hides. We made a major effort in the
Multinational Trade Negotiations to get
these countries to take such action. Un-
fortunately, most countries responded un-
favorably to our request. Nevertheless, we
will continue to press hard for results in
this area during future bilateral negotia-
tions. We are now working closely with Ar-
gentina in search of a mutual satisfactory
means for that country to liberalize its em-
bargo on hides.
He continued by noting that:
It was, therefore, concluded at the recent
meeting between several Congressmen and
Administration officials that we-should ex-
amine the possibility of a program to provide
financial assistance for the industry until
such time as the domestic supply of cattle-
hides increases and prices begin to decline.
We expect supplies to increase in 1981. The
Departments of Commerce and Agriculture
will be working with interested Congress-
men to develop such a program.
Mr. President, let me conclude by
pointing out that the Council on Wage
and Price Stability (COWPS) and the
Department of Agriculture (USDA)
joined together this year to study the
hides situation and issued a report
earlier this month. They came out
against export controls on hides as not
in the long-term interest of either the
industry or consumers. The report also
made these points:
Productivity in the U.S. leather manu-
facturing industry has not kept pace
with other industries and "although
many factors contribute to this stagnant
productivity, it remains a major cause
of the current problems" ;
The most feasible long-run approach
to the hide shortage is for the United
States to continue pressing for freer
trade. "In terms of liberalizing trade,
freeing up hide supplies for the world
market from countries such as Argen-
tina, Brazil and Uruguay probably offers
the most relief"; and
Increased assistance should be 'offered
to the domestic industry for R. & D. so
they can improve their productivity.
The USDA report also quoted the Na-
tional Commission on Supplies and
Shortages of 1976 on the subject of ex-
port controls, which said:
It is shortsighted to use export controls
for the prevention of domestic price in-
creases, no matter how unpopular these price
increases may be. Not only are export con-
trols harmful to the income of exporters
and to the credibility of the United States
as a reliable source of supply, but they are
not in the long-run interest of consumers
either.
This is the kind, an issue when you are
damned if you do and damned if you do
not. On balance, I feel the weight of evi-
dence would be to protect the overall
national interest in both the short- and
long-run by defeating the pending
amendment.
Mr. WALLOP. Mr. President, will the
Senator yield?
Mr. STEVENSON. I yield.
Mr. WALLOP. Mr. President, I rarely
feel paranoid. It just is not o"ie of the
characteristics that God laid on my
personality. But the issue of limiting hide
exports, in fact, does get down to that
point.
The Senator from Maine has suggested
that his amendment is important and
fair, and guess it all depends on whose
ox-if you will forgive the phrase-is
being flayed here.
In this instance the amendment has
an immoral characteristic which I think
needs to be pointed out. I do not say this
is the actual intent of the cosponsors.
But, I do say that you cannot take an
industry in which, on the one hand, you
consistently allow imports into this coun-
try, which creates a lush level of competi-
tion and then, on the other hand, tell
cattle and hide producers that they can-
not export the only product that remains
of their domestic industry. It is an almost
unbelievable set of circumstances.
Mr. President, I used to be in the pack-
ing plant business. I had my own packing
plant, and I worked all phases of it.
The last year I was in that business, I
got an average of about $6.18 a hide. I
understand that now they are getting
closer to $23 a hide, and this is a small
packer's market. You will find different
figures if you look at the national pack-
er's market. The small packers always , It is my hope that the plight of leather
have a discount as opposed to big ones. .
I did not see a soul coming and saying,
"You need a little support in your in-
dustry to raise the prices." Nobody from
the shoe industry approached anybody
in the small packing or large packing in-
dustry at that time. But at that time
they were resisting any attempt to limit
imports, and we today have the imports
of beef products into this country at
higher than the legal limit.
Mr. MUSKIE. Mr. President, will the
Senator yield?
Mr. WALLOP. Mr. President, the Sena-
tor has his own time and he can answer
me at that moment. I have only 3
minutes.
What is happening is that you are
exercising your right at the expense
of somebody else's right, and it is not a
fair approach.
I point out that in 1972, we had a
limited supply, and we had a hide export
prohibition. It has been concluded that
why we do not limit hide exports today
is because the 1972 law did not function.
I quote:
The present version of section 4(f)1 re-
sulted directly from the Commerce Depart-
ment's imposition of short supply in this
case on cattle hide exports in 1972.
Can we not learn from the experience
of the past?
I wish the Senate, in the interest of
fair play, would use the multilateral trade
negotiations, use the other means of
countercy_lical imports, to adjust some
fairness of supply and demand on hide
prices, and not, take it out on the cattle
industry who already bears the brunt of
massive imports.
Mr. DANFORTH. Mr. President, will
-the Senator yield?
Mr. STEVENSON. I yield.
Mr. DANFORTH. Mr. President, I find
that this amendment puts me in an
almost intolerable position.
Back in the 1940's, at the time the St.
Louis Browns were still in existence, it
was,said that St. Louis was first in shoes,
first in booze, and last in the American
League. Shoe production was a major in-
dustry there.
In fact, the State of Missouri is the
third largest employer in leather and
leather products-third only behind the
States of New York and Massachusetts.
Clearly, this amendment would be of
benefit to a number-thousands-of my
constituents who are in a very hard-
pressed industry right now. ;
However, at the same time that Mis-
souri is third in employment of people
who work in the leather industry, we are
se:ond to Texas to calf production. So,
clearly, the amendment, which would be
helpful to some of my constituents,
would be most injurious to many others.
Therefore, I fall back on a basic philo-
sophical question to try to resolve this
conflict, and it is this: Is the future of
America, is the directon we are going to
take as a country, going to be one of re-
strictions on trade poll:y; or, instead, is
our future and the oppotrunity for
growth of our economy going to be in
the direction not of restrictions but of
workers can be helped by the Tokyo
round of GATT which was just com-
pleted. I have written to Ambassador
Strauss, asking him to do everything he
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can to put pressure on other governments
to lift the embargoes that exist in their
countries so that more hides would be
available for export into our market. It
is my hope that as a result of the com-
pletion of the Tokyo round, the use of an
embargo by other countries to depress
their domestic prices of hides will be
viewed as a subsidy which is subject to
countervailing duty.
Therefore, it is my hope that as a re-
sult of GATT, and as a result of the freer
trade policy arising from it, some assist-
ance will be on the way for leather
workers.
I do not believe that embargoes work.
I believe that the history of embargoes
has been disastrous, particularly for the
agricultural sector of our economy. For
that reason, Mr. President, I oppose this
amendment.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. Who
yields time?
Mr. KENNEDY. Senator MUSKIE has
yielded me 2 minutes.
The PRESIDING OFFICER. The Sen-
ator from Massachusetts is recognized.
Mr. KENNEDY. Mr. President, as Sen-
ator MUSKIE has stated, I believe this
amendment offers a reasonable and mod-
erate solution to what is truly an ex-
traordinary problem for over 400,000
leathergoods workers and every Ameri-
can consumer.
This measure is a last resort. Numer-
ous attempts have been made to negoti-
ate a solution with other hide producing
countries. The, fact is that our special
trade representative, in trying to deal
with the two countries which refuse to
export hides-Argentina and Brazil-
was essentially rebuffed. When this issue
was raised at the multilateral trade ne-
gotiations, he effectively reached a stone
wall.
The amendment of the distinguished
Senator from Maine, of which I am a co-
sponsor, is a measured response. It is an
interim response which attempts to deal
with a matter of enormous importance
not just to an industry, not just to leather
and footwear employees, but also to the
consumers of this Nation.
The fact is that from 20 percent to 40
percent of the wholesale price of shoes is
attributable to the price of hides. This
translates into a price increase of be-
tween 9 and 10 dollars at retail for a pair
of leather shoes. Consumers, already
hard hit by skyrocketing prices in most
other sectors of the economy, deserve
some measure of relief.
I have listened with interest to those
Senators from agricultural States who
have, spoken. I share their deep concern
for the interests of the American cattle
industry. I share their concern over past
mistakes which have Jeopardized the in-
terests of this vital industry. I would not
support this amendment if I thought
those interests would be Jeopardized. But
the fact remains that when we have had
stability in beef prices, we effectively
had stability in the hide prices. And the
price of hides, which account for only
7-10 percent of the value of a steer, is
not a significant factor in the decision
to rebuild stocks. Beef and grain prices
have much more to do with these
decisions.
This amendment offers a reasonable
and interim solution to the serious prob-
lem of artificially high hide prices. It
says: Let us try to work this'out through
negotiation. Let us be sensitive to the
unique problems posed by the lack of
free and fair trade. Let us take this ap-
proach until we are able to build up the
beef herds in this Nation, which have
diminished and which were the result
of adverse policy decisions. But at least
let us have the opportunity to assure
that the consumers of this country are
not going to once again find that as a
direct result of foreign government re-
strictions, they are paying outrageous
prices for one of the essential commodi-
ties of their lives.
Mr. President, I strongly support this
amendment. It will correct a trade im-
balance which both jeopardizes the fu-
ture of our footwear and leather indus-
tries, and strikes at the pocketbooks of
all Americans.
Since 1978, cattlehide prices have
risen an astounding 126 percent. Hides
that cost 37 cents a pound in 1977 now
cost over one dollar a pound. One shoe
manufacturer told me that a family of
five can expect a total shoe bill of at
least $500 in 1980-about $100 more than
the bill for last year's shoes. Of course,
all leather products are affected by this
dramatic rise in the price of hides. And
if we don't act now to moderate these
price increases, all Americans will be
forced to pay $2 billion more for leather
products. Two recent articles, in Forbes
and Retailweek magazines, provide ex-
cellent summaries of the consumer im-
pact of these price increases. I ask unan-
imous consent that these articles be in-
serted in the RECORD at the conclusion
of my remarks.
The severity of the problem stems pri-
marily from the fact that foreign pur-
chases of U.S. hides have reached un-
precedented levels. Historically, export
demand has taken about half of U.S. hide
production. In the last few years, how-
ever, exports have skyrocketed. From
March through May of this year, 83 per-
cent of U.S. hides were exported.
This extremely high level of exports is
not the result of substantially increased
world demand for hides. If hide prices
were only the result of worldwide demand
that the free international market could
not satisfy, I would not be recommending
this government response.
The fact is that the world market in
hides is not free. As I mentioned earlier,
major hide-producing nations-Argen-
tina and Brazil-are now protecting their
own domestic industries by embargoing
the export of their hides. As a result, the
United States has become the primary
source of supply for hides in the ' world
market. Even though we produce only 15
percent of the world supply, U.S. hides
account for 75 percent of those traded
in the world market.
This huge demand for cattle hides
overseas, particularly in Japan and Ko-
rea-coupled with hide export restric-
tions in other countries-now threatens
the jobs of 400,000 employees in the foot-
S18163
wear and leather industries. And it
threatens every American consumer who
has been forced to bear high prices for
all leather goods.
To say that we should simply wait for
substantial increases in cattle production
ignores the imediate problem. I met with
Secretary Bergland last month to discuss
this issue, and he advised me that herds
would not be substantially increased for
- at least 2 years. Production is not ex-
pected to return to 1978 levels until some-
time between 1983 and 1985. We simply
cannot afford to wait that long.
This amendment provides a reasonable
form of relief, and is designed to be effec-
tive only for the duration of the hide
shortfall. Most importantly, it is de-
signed to promote the free trade of hides.
Under this amendment, any U.S. export
controls would be lifted as soon as other
hide producing countries resume reason-
able levels of exports.
This is a reasonable amendment which
takes into account the legitimate in-
terests of both the leather industry and
the cattle industry. It provides the con-
sumer with badly needed relief from
rising prices. It provides a fair share of
cattle hides to allow our industries to
keep producing, and the more than 400,-
000 employees in the leathergoods indus-
try to keep working.
I urge my colleagues to Join me in
supporting this measure.
Mr. President, I ask unanimous con-
sent that the articles written by Richard
Greene be printed in the RECORD. -
There being no objection, the articles
were ordered to be printed in the RECORD,
as follows:
THE LAST ROUNDUP FOR LEATHER?
(By Richard Greene)
The signs are there, like vultures flying
over a diseased, but still breathing, man.
It's been years since you could easily find a
leather baseball glove made in the U.S. The
pair of leather shoes that cost $20 two years
ago goes for over, $30 today, and it's difficult
to find them at that price. All-leather at-
tache cases are out of sight, many selling in
the hundreds of dollars.
At the same time, the fashionable gent in
Tokyo is wearing all-leather shoes, carrying
a leather attache case, and probably playing
baseball with a Japanese-made leather glove.
Which wouldn't be so ironic if it weren't for
the fact that the Japanese raise virtually no
cattle-the raw material for leather. No, it's
the U.S. that raises all those cattle.
Says Lawrence McGourty, president of
Melville's Thom McAn shoe division, "The
Japanese wear leather because they know
Americans wear leather and they want to
be like Americans. But if they keep it up,
they'll be the only ones wearing leather."
So, naturally, with skyrocketing prices and
high international demand, the tanners are
cleaning up, right? Wrong. Dead wrong. The
tanning industry, which has been dismal for
years, may be on its last legs. Take Newark,
for example. Pre-World War Ir, there were
some 60 tanneries in that New. Jersey city.
Now there are three. Just ten years ago some
30 million hides were processed domestically
for leather; now it's half that.
The problem, basically, ` is that there is
a leather shortage. Last year 40 million
head of cattle were slaughtered in the U.S.
and this year it will probably be down to
34 million. So, the supply of hides is down.
Meanwhile, the demand remains high. It is
hardly surprising, then, the prices in Decem-
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5201
her 1978 were 52 percent higher than a year
earlier, and by last April they had risen
147 percent since December 1977, to 94.2
cents a pound.
The pressure driving these prices up is not
only the decreasing number of hides-a
phenomenon of the cattle cycle-but also
the huge demand overseas, particularly in
Japan and Korea, for those hides. Since
1976 the U.S. has been exporting a larger
and larger percentage of its hides; 71 percent
of U.S. output is now being exported, to
supply about 75 percent of the bides traded
on world markets.
According to Eugene Kilik, president of
the Tanners' Council of America, domestic
tanners just don't have much of a chance
at getting to the hides. There are arrange-
ments, he claims, in which the Japanese
offer to pay 10 cents a pound more than the
best bid made by American firms. That's the
kind of offer you just can't beat. Especially
as the Japanese restrict U.S. incursions into
their profitable market.
To add to the problem, the U.S. Is virtually
the only nation supplying Japan's lust for
hides. The other major cattle-producing
countries, like Brazil, Argentina and Uru-
guay, ban export of hides, preferring to
compete with finished leather goods. That's
a good Idea for developing nations because
it means jobs; shoes, handbags and the like
are labor intensive. Unfortunately, this
leaves the U.S. as virtually the only free-
market nation in an unfree market.
Since there is little that can be done to
persuade the Brazilians and others to sell
their raw hides, the U.S. leather industry
is in a quandary. The shortage doesn't hurt
only the tanners, it hurts manufacturers of
shoes, handbags and garments as well as
retailers who find it difficult to sell a pair
of $25 shoes for toddlers.
Says McGoilrty, "This is the first time I
can remember in the shoe business that
everybody-the tanners, the high price shoe
retailers, the popular price shoe retailers
and the manufacturers-is working together
to persuade the government to do
something."
Last year they had some success. The gov-
ernment negotiated some concessions from
the Japanese. Said the leather industry: Too
little, too late.
Essentially, the leather industry wants a
limited embargo on the hides being exported.
This will ease the market here and provide
blessed price relief. And Congress listens-
at least a little-to an industry that employs
about 300,000.
There is even precedent for this kind of
limited embargo in the 1969 Export Adminis-
tration Act, which President Nixon tried to
use in July 1972 to put some restrictions on
hide exports. By August the cattle lobby had
pushed in an amendment and the restriction
disappeared.
The fact is, not everybody thinks the
leather industry needs-or deserves-help
from the government. The producers of
hides--cattlemen and meat packers-would
be hurt in the pocketbook by any form of
restriction on their exporting hides. They
argue that they should be able to get the
highest price possible for their goods. Listen
to Bill Delph, vice president of Iowa Beef
Processors, one of the largest U.S. bide pro-
ducers: "The tanners are not being shut out.
They. can buy hides. They can get all the
hides they want. But they're going to have
to pay for them." The cattlemen mirror that
sentiment-perhaps even more strongly.
Funny, isn't it? These are the same people
who scream bloody murder if the U.S. lets
in foreign meat to hold prices down. They
are about as protectionist as they can be
then. But when it comes to their precious
hides-why, there's nobody here but us free-
traders.
CONGRESSIONAL RECORD - SIENATIE
ON THE TRAIL FOR CATTLEHIDES.
The recently launched Hide Action Pro-
gram may turn out to be the domestic
leather industry's last stand. Unless export
controls are imposed, the U.S. leather indus-
try won't be able to afford the price of U.S.
cattlehides.
Time was, the leather industry-from tan-
ning to turning out the finished product-
was a major U.S. industry ranking right up
there along with the likes of the steel in-
dustry. Today, those who are still left in
the U.S. leather industry are finding it nec-
essary to band together and attempt to im-
press upon Washington that this industry is
in danger of becoming as extinct as the
buggy whip.
Yes, everyone in Washington already
knows that the shoe people in particular
have been living with a knife in the back
known as imports. But what the entire
leather industry is trying to explain to
Washington is that as difficult as it is to
compete with imports of finished goods, the
manufacturers of footwear as well as hand-
bags, luggage, outerwear, sportswear, et al.,
might as well throw in the sponge if they
cannot buy the U.S. hides needed to make
U.S. products because the majority of them
are being sold to those same countries which
produce the finished products, which come
back to the U.S. to haunt the industry for
the second time around.
The irony of the situation is that the Now the U.S. leather industry is saying-
United States is the major supplier of cattle' enough is enough. It is saying it doesn't ob-
hides to the world, representing about 15
percent of the world supply. But the ma-
jority are sold abroad with these exports
representing' about 75 percent to 80 percent
of the world supply. This world-wide demand
for U.S. cattlehides is exacerbated by the fact
that other countries with substantial herds-
such as all the South American countries-
totally prohibit the export of hides; prefer-
ring to keep them at home to develop and
protect their own leather industries. These
restrictions create an inordinately high de-
mand for U.S. cattlehides that has been abet-
ted by the cattlemen's restrictions in the
size of the cattle slaughter.
This combination of foreign demand,
South America's refusal to sell hides, and a
reduced U.S. cattle slaughter have caused
the price of U.S. hides to skyrocket. The do-
mestio industry's dilemma began in 1972
when Argentina cut off its sale of hides, eli-
minating about 12-million hides from the
world market. Hide prices then jumped from
14 cents to 32 cents a pound, then stabilized
in the area of 38 cents a pound. At that time
the U.S. exported about 48 percent of its
hide supply.
But between 1975 and 1977 U.S. cattlemen
began to reduce the size of their herds. Cat-
tle slaughter peaked in 1976 when 43.2-mil-
lion hides were available, but it'is estimated
that the number of hides available In 1979
will be down to 34.2 million. While supply
has been. dwindling, however, world demand
for U.S. hides has been escalating; exports
are expected to take 24.5-million of the 34.2-
million in 1979. This means that the U.S.
in 1979 will be exporting 71.6 percent of its
hide supply and supplying 75 percent to 80
percent of the world hide trade. This export
level also means only about 10-million hides
will be left for U.S. producers when domestic
requirements for hides are between 18- and
20-million a year.
This shortage has created price levels that
the Industry cannot afford to pay, even if
enough hides were available. The jump from
14 cents to 38 cents in the early 19708 looks
like the good old days. By December 1978 '
prices reached 58 cents a pound; but be-
tween December 1978 and May 1979 prices
zoomed to more than $1 a pound.
Neither declining supply nor higher prices
have dampened the foreign, appetite for U.S.
July 219 1979
hides. Where else are the Far Eastern and
Eastern Bloc countries-anxious to build a
business in finished leather goods but with-
out a cattle supply of their own-to go for
hides? The U.S. is virtually the only coun-
try left with both a large cattle supply and
free-buying access to this supply.
The country taking the greatest advantage
of U.S. policy is Japan. Though it closes its
doors to U.S. finished leather products, Ja-
pan, neverthless, has an insatiable appetite'
for U.S. hides; buying 35.9 percent of U.S.
hide exports in 1978. The purchases of Ja-
pan and Korea combined account for more
than 50 percent of exports with '30 other.
'countries accounting for the rest. Due to
an exchange rate advantageous for Japan,
the price of U.S. hides has not deterred
Japanese purchases. On the contrary, the
Japanese have been buying more.
The upshot is that neither Brazil, Argen-
tina, Uruguay, Mexico, India nor Pakistan-
countries with substantial herds-will sell
hides in the open market. They want to pro-
tect their domestic industries. Japan, Ko-
rea and the Eastern Bloc will buy almost all
the hides the U.S. has to sell, but they will
not take finished leather goods. They want
to protect their domestic industries. That
leaves countries such as Canada, Australia,
New Zeland and those in western Europe
as world markets for the sale of hides; but
it is the U.S. that has the greatest supply.
ject to operating within the traditional laws
of supply and demand; but it cannot sur-
vive when, in reality, this means only the
U.S. has the supply and every other country
makes the demand.
That is 'why several trade associations in
the industry have banded together to launch
what is called the Hide Action Program
(HAP). This program is an attempt to bring
the plight of the industry to the forefront
through demonstrations in cities hosting
leather-using industries and by blitzing
members of Congress and President Carter
with letters and personal visits. The pro-
gram's goal is to convince Washington that
action is needed now in the form of export
controls on U.S. hides that would both bring
down the price of hides and make more of
them available to U.S. producers.
HAP's message is that the alternative to
action from Washington Is the ultimate
extinction of the domestic leather indus-
try with the resulting loss of thousands of
jobs or, at best, price increases in leather
products that the industry estimates could
cost customers over $1-billion a year. Given
the high U.S. hide prices and the fact that
foreign countries are dependent on these
hides, customers switching to imported
leather products is no longer a viable al-
ternative in an effort to economize; Neither
U.S. nor imported leather goods may be
affordable by U.S. consumers.
Unfortunately, this recent mobilization by
the industry has only a slim chance of pro-
ducing results. Though it has been aware of
the hide situation since 1972, Washington
has never displayed any great sense of ur-
gency in alleviating the problem. In 1972,
following Argentina's action, the concept of
export controls was' entertained and then
quickly dropped. Since then, despite prefer-
ential tariff treatment for the so-called de-
veloping countries, these same countries have
ignored Washington's efforts to persuade
them to sell their hides on the open market.
And, negotiations with Japan have extracted
only an unofficial promise that it will reduce
purchases of U.S. hides by 10 percent. But,
even if Japan were to honor this 'promise'-
which it hasn't-this 10 percent figure is
meaningless since U.S. cattlehide supplies
have decreased by much more than this 10
percent figure.
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July 21, 1979 CONGRESSIONAL RECORD - SENATE
Leather industry members claim that it is
only their current desperate plight and past
failures in attempting to resolve the problem
through negotiations with foreign countries
that have left no choice but to push for ex-
port controls. If this means that the U.S.
leather industry is going to have to explain
this 'protectionist' move-so be it. The in-
dustry prefers free trade in hides but has
been unable to achieve it. Understandably,
the industry is now tired of being "the un-
witting pasty in the international free trade
game". So it is shooting for export controls
because all else has failed.
Unfortunately, there is another and more
powerful lobby in Washington; they know
how to use a sixshooter, too. This lobby con-
sists of the cattlemen, or as the leather in-
dustry prefers to call them, the cowboys.
They have already made it clear to Congress
and the Administration that they don't han-
ker for hide controls. They like things just
the way they are. Evidently their message
has been heard, for the Administration has
already also declared itself against export
control of hides.
But, never fear, Washington will concoct
a solution, even if it is the wrong one. Right
now Washington has suggested that it might
be willing to provide subsidized loans to en-
able U.S. industry members to afford U.S.
hides. Unfortunately, Washington has over-
looked the fact that loaning money to U.S.
manufacturers for the purpose of buying
hides at already inflated prices will merely
drive the price of hides even higher, insuring
that more and more of the domestic leather
industry will surely go down the drain.
It is now high noon for the domestic
leather industry. The HAP program is, at
least, a sure sign that it intends to go down
fighting..
Mr. MUSKIE. Mr. President, I yield 1
minute to Senator TSONGAS, 1 minute to
Senator DURKIN, and 1 minute to Sena-
tor HUMPHREY out of, I think, 6 minutes
remaining.
Mr. TSONGAS. Mr. President, I thank
the Senator for yielding.
Mr. President, I ask unanimous con-
sent that a resolution passed by the leg-
islature of the Commonwealth of Massa-
chusetts adopted June 26, 1979, 4 weeks
ago, be printed in the RECORD.
There being no objection, the resolu-
tion was ordered to be printed in the
RECORD, as follows:
RESOLUTION
"Whereas, American shoe manufacturers,
who recently began to rebound from the flood
of cheap imported footwear, now find them-
selves shod with a potentially more crippling
problem, the steadily increasing prices for a
shrinking supply of domestic cattlehides;
and
"Whereas, the price of American cattle-
hides has more than tripled in the past 17
months, and hide prices have risen by more
than 68 per cent since January, from 59.3
cents per pound to one dollar per pound as
of last month; and
"Whereas, the impact of such increases on
consumers will probably be felt next year,
and at least two of New England's major
shoe firms fear continued higher prices could
lead to layoffs and possibly shutdowns in
leather-related industries; and
"Whereas, primarily because of Taiwanese
and Korean imports, the footwear industry
currently employs about 14,000 workers in
Massachusetts as opposed to an employment
figure of more than 20,000 eight years ago,
but the hide market situation may prove a
more serious aggravation, hitting the indus-
try from the inside; and
"Whereas, as the United States provides 75
per cent of the world's commerce in hides
yet accounts for only 15 per cent of the sup-
ply, the main reason for the bleak outlook
is the at most of the domestic hides are being
exported to nations which capitalize on the
devalued dollar, where they fetch a higher
price than if they were sold to American
tanneries and leather processors; and
"Whereas, the high amount of exports com-
bined with a steadily declining slaughter
rate have resulted in scarce supplies at in-
flated prices of raw materials needed by pro-
ducers of shoes, handbags, belts and other
leather goods, so that increased hide prices
could cost consumers from 1 to 2 billion dol-
lars; therefore be it
"Resolved, that the Massachusetts House
of Representatives hereby urges the Presi-
dent and the Congress of the United States
to pass legislation whereby a limit shall be
placed on the number of hides which may be
exported from the United States; and be it
further
"Resolved, that the President's special
trade advisor, Robert Strauss, be exhorted
to convince Brazil and Argentina to cease
and desist from restricting the export of
their own hide supplies, which would relieve
some of the demand in foreign quarters on
the purchase of material from the United
States; and be it further
"Resolved, that copies of these resolutions
be forwarded by the clerk of the House of
Representatives to the President of the
United States, special trade advisor Robert
Strauss, the presiding officer of each branch
of Congress and to the members thereof
from this Commonwealth."
Mr. TSONGAS. Mr. President, I rise
in support of the amendment introduced
by my distinguished colleagues, Senators
MUSKIE and BAKER.
It is not necessary for me to repeat the
overwhelming supply/price statistics
that have dominated the debate this af-
ternoon. All of my colleagues in the
Chamber today are aware of the condi-
tions that have led to this amendment.
The situation that confronts us is not
one of narrow parochial interests.
Rather, the action that the amendment
proposes is remedial. The United States
is the world's only major producer of
hides that does not restrict exports. I be-
lieve in free trade. But a free market
does not exist. While the United States
produces a scant 15 percent of the
world's hides, it supplies over 75 percent
of the world market. If we could con-
vince other hide producers to follow our
lead, there would be no problem. But that
is not our current situation. Argentina
and Brazil have effectively imposed ex-
port controls for over a decade, resulting
in a tightening of world supplies. The
United States has singlehandedly as-
sumed this burden.
Next week the Senate will consider the
implementing legislation for the multi-
lateral trade agreements. These agree-
ments constitute a major achievement of
S-lecial Trade Representative Robert
Strauss and the Carter administration.
A number of tariff and nontariff bar-
riers that have traditionally obstructed
world trade have been effectively re-
moved. Impressive inroads have been
made for the export of a wide range
of American goods, particularly agricul-
tural and technological goods. Negotia-
tions were undertaken and successfully
completed protecting a number of par-
ticularly sensitive domestic industries.
But little action was taken to alleviate
S 10165
the very real crisis facing our Nation's
leather and tanning industry. As long
as several of our key trading partners
persist in controlling the free flow of
trade in hides, to the direct detriment
of U.S. consumers and leather producers,
we do not have an atmosphere of free
trade.
The Muskie-Baker amendment is a
moderate, reasonable solution to a crit-
ical problem. The amendment as pro-
posed gives the administration the pref-
erable option of bargaining with the
principla hide-producing countries. Only
if the United States fails to put an end
to the protectionist measures of trading
partners, and at the same time domestic
supplies are not adequate to meet do-
mestic needs, would some sort of limit
be placed on the quantity of U.S. ex-
ports. This amendment carries no quan-
titative restrictions. Exports would be
limited to a level that the President de-
termines is representative of hide export
levels.
Mr. President, I ask the Senate to
remedy this grossly inequitable and in-
flationary condition. Consider the
American consumer, and the future
health of our Nation's economy.
Mr. President, I think it is quite true
that there is a certain regional conflict
here, and that is unfortunate. But the
conflict is really between one section of
the country that has an industry that
is on the ropes and another section of
the country that has an industry that is
experiencing a bonanza.
If you look at the prices of cattle
hides over the last 6 years going from
33 cents to 85 cents, that certainly out-
strips any definition of the rate of
inflation.
What we are seeking is simply the
capacity of our industry to survive. not
necessarily to prosper, and it is in that
direction that I commend the Senator
from Maine.
The PRESIDING OFFICER. The Sen-
ator's 1 minute has expired.
The Senator from New Hampshire is
recognized.
Mr. DURKIN. I thank the Chair.
Mr. President, I am pleased to be a
cosponsor of this amendment being
offered by the distinguished Senator
from Maine, Mr. MUSKIE, to amend
S. 737, the Export Administration Act.
I commend the Senator from Maine for
his leadership on a very important issue
not just to our area of the country but
to many areas of the country.
The purpose of this amendment is to
insure domestic users of leather of ade-
quate supplies of their basic raw mate-
rial. And let us face it. Today there is
no free world market in hides: Although
the United States produces only 15 per-
cent of the total world supply of cattle
hides, we provide over 75 percent of the
world market. Many foreign hide-
producing nations have placed embar-
goes on the extent of their own hide
supplies and refuse to import ' U.S.-
finished leather goods.
I think we have seen the failure of
the trade negotiations. Countries are not
willing to cooperate. Japan is not will-
ing to cooperate. Japan takes almost 24
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S10166 CONGRESSIONAL RECO
percent of U.S. hide exports, but refuses
to permit sales of U.S. leather goods in
Japan. Free trade must mean fair trade.
In my area of the country we have
seen thousands and thousands of shoe
workers who witness the factory door
swinging shut for the last time. It is at
least once a month that we see that
some shoe company has closed its door
for the last time.
The PRESIDING OFFICER. The Sen-
ator's 1 minute has expired.
Mr. DURKIN. Mr. President, I ask
unanimous consent to revise and extend
my remarks.
Mr. President, only immediate and
forceful action can reverse the dire
plight that the American Tanning and
Leather Industry presently faces.
The world-wide situation is this: At a
time when cattle hide supply is in the
course of a cyclical downturn, as a re-
sult of a slide introduction by the beef in-
dustry, the United States with only 15
percent of the total supply.is in the un-
enviable position of providing over 75
percent of the world market. Last year
39.5 million cattle skins were produced.
This year production levels will drop to
34.5 million. The leather industry antici-
pates there will be a shortfall in do-
mestic supply requirements of almost 10
million cattle hides. As late as May of
this year we were exporting 83 percent of
our hide supply. The logic of this situa-
tion completely escapes me.
Massive foreign purchases of our cat-
tle hides resulted in prices going through
the roof. No.industry can sustain a 900-
percent increase in its basic raw material
over a 4-year period, and expect to sur-
vive. With a question of inflation prey-
ing on everybody's mind we ought to
recognize that the estimated cost to
American consumers of increased'leather
goods prices is $2 billion in the next year.
In an $8-billion industry, an increase of
that magnitude is too significant to be
ignored by a country waging a war on
inflation.
It is unconscionable that we could con-
tinue to allow a drain of our own natural
resources to the detriment of an Ameri-
can industry so as to provide for free
trade of this commodity. We are not
talking about free trade here. There is
no free trade when the other major hide
producing countries have placed em-
bargoes on the exports of their own cat-
tle hide supplies, creating an artificial
world marketplace. The very viability of
an entire industry is being called into
question as we fiddle here with talk of
"free trade."
In testimony before the U.S. Senate
Agricultural Committee a member-of the
board of directors of the Montana Cattle-
men's Association stated:
The senseless policy of exporting hides and
skins-raw leather-has all but phased out
the American tanning industry and therefore
the American leather goods industry.
She concluded in stating that:
We are Americans. We live by American
standards, pay American taxes and believe
that as Americans we have the first right to
provide goods and services for our fellow
Americans.
I could not have better stated the sit-
uation myself.
D'-SENATE
I cannot continue to stand by and
watch as 400,000 American jobs are
threatened in the tanning and leather
industry. At least once a month the doors
of a New Hampshire footwear manufac-
turer are slammed shut; in direct re-
sponse to the adverse impact of shoe im-
ports upon domestic industry.
. The amendment we are submitting to-
day is tailored to the exigencies of the
immediate situation, stipulating that un-
til foreign governments move their own
export controls or adequate supplies are
available to domestic users, the United
States will limit our cattle hide exports to
reasonable historical levels. The amend-
ment is both reasonable and flexible.
All other avenues of action have failed
to produce a solution, however valiant
our negotiated attempts. At the Office of
the Special Trade Representative's own
admission, they have failed to arrive at
an acceptable conclusion in bilateral or
multilateral negotiations. We are then
left with the unavoidable choice of im-
plementing export controls or witnessing
the total demise of the American tanning
and leather industry.
I believe the choice is clear. I urge you
to join me in supporting the Muskie
amendment to S. 737.
There is no free world market in hides.
The United States produces 15 percent
of world supply-provides 75 percent of
trade in cattle hides.
Argentina and Brazil produce 10 per-
cent, but export none. India and Pakistan
export none.
Italy. asked for export controls at
Brussels meeting, EEC. Purchased 1.2
million hides last year. Already in this
first quarter of the year-Italy has pur-
chased over half a million-524,000.
Italy has sold us 11.6 million more
shoes this year than last-a 70-percent
increase.
Mexico embargos all hide exports.
Mexico bought 1.9 million hides last year
and had purchased 863,000 by end of
May 1979. Mexican exports shoes to
United States-up 61 percent from
1978.
Romania is the fifth largest purchaser
of U.S. hides-bought 1.9 million last
Year. Value of Romanian exports to
United States up 7.8 percent from last
year.
We are importing inflation-not just
shoes.
TRADE RECIPROCITY AND FAIRNESS
Eastern Europe purchasing decisions
are not based on economic determina-
tions as we understand them. They buy
as a matter of government policy.
Eastern Europe buys 13 percent of
U.S. hides, but does not buy U.S. finished
leather goods. Romanian exports to the
United States are up seven-eighths per-
cent in value over 1978..
Brazil exports to United States are
up 41 percent from 1978. Their value is
up 13 percent.
Brazil is building up and protecting
her leather industries and using United.
States as a market. Brazil argues that
it is a developing nation and should be
treated differently. I disagree.
July 21, 1979
This is not free trade. The U.S. leather
worker is being asked to help subsidize
and protect Brazilian leather workers,
at our expense.
Japan buys from behind a protected
market. It can pay these prices because
Japanese leather products do not have
to compete in price with others, such as
ours.
Japan takes almost 24 percent of U.S.
exports, but refuses to permit sales of
U.S.-finished leather goods in Japan.
The recent modest agreement to sell
leather to Japan is not being imple-
mented.
Korea and Taiwan took 4.7 million
hides between them and sold the shoes
to the United States. We were forced to
undertake orderly marketing agree-
ments bceause of the flood of imports.
Our overseas competitors have tried to
circumvent these by selling quasi-fin-
ished products instead.
Let us look at the balance of payments
in leather.
1978 figures:
U.S. sold $687 million in hides
abroad -------------------------
+8687
U.S. sold $194 million in leather and
shoes --------------------------
+194
U.S. Imported $222 million in
leather -------------------------
-222
U.S. imported $2.22 billion in leather
products ---------------------- -2,220
Our adverse balance of payments in
leather accounts for 8 percent of the total
U.S. trade deficit. Selling hides when we
import finished products at this rate does
not help the balance of trade. Other agri-
cultural products are exported, but do
not come back as finished food for re-
sale in the United States at the expense
of our workers.
INFLATION
Lower hide prices domestically will not
result in higher meat prices. Export
prices would not drop-the contrary
would occur in fact. Evidence that domes-
tic hide prices would drop is nonexistent.
They would stabilize. Why should that
increase beef prices?
If we care about inflation, look at
inflation in hides: Barry Bosworth; last.
October, when hides were bringing 58
cents a pound-up 100 percent from
1977---said:
Prices of hides and skins have exploded.
during 1978.
What would he say now, when hides
are bringing $1 per pound?
This inflationary pressure has a'
delayed-action impact that will hurt us
all.
Hide prices are up 162 percent over the'
last 18 months, the largest increase has
occurred in the last 5 months. Leather
prices are also up-111.7 percent from
the first quarter of 1978. Finished leather
goods prices have shown relatively little
of this explosion yet. In fact, the industry
has a good inflation record.
But it cannot keep it up at this rate.
Shoe prices rose 6.3 percent from 1978 in
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CONGR1ESSIONAIL RIECO
ID - SENATE
the first quarter--compared to a 9.8-
percent CPI for the same period.
At wholesale, shoe prices are now ris-
ing 17 percent over last year-and that
price will be reflected in our retail stores.
Leather goods constitute $8 billion an-
nually in consumer purchases. Price in-
creases already in the pipeline may add
$2 billion to that. Hide price increases in
1979, which have been much worse, will
aggravate inflation in 1980 and 1981.
Bosworth said last October: "Footwear
prices could move up sharply later this.
year." He was right.
As prices go up, competitive restraint
on imported items is lessened.
Brazil's exports to the United States
are up 13 percent in value from 1978.
Romania's are up 7 percent. Korean
sales to the United States are up 30 per-
cent. Taiwan's unit value for imports is
up 40 percent. Imported shoes have gone
up well over 16 percent in value on
average.
. When our domestic shoe prices go
through the roof, what restraint will
exist against massive price increases
from overseas? None.
Expenditures on shoes in the United
States rose 13.7 percent from 1978 and
will continue to rise.
Footwear increased its total share of
expenditures on the joint clothing/shoes
index from 14.96 cents on the dollar to
15.07 cents. This is foretaste of what will
come. Shoe industry records show that
when prices skyrocket, for example, peo-
ple buy fewer shoes. They do not switch.
to nonleather shoes.
Let us look at the employment figures
in the United States; 400,000 jobs in
tanning and leather industries directly.
Retail sales-105,000 retail stores, de-
pending in part or wholly on leather
goods sales.
Layoffs are up over 7.7 percent from
last year. Thousands of New Hampshire
shoes workers have seen the factory
doors swing shut for the last time. Pro-
ductivity in the footwear industry is
good. The industry is trying to recover its
vitality. It has registered a productivity
gain of 3 percent over last year-at a
time when productivity was declining
elsewhere in our economy. We should not
let an efficient industry collapse at this
time.
The PRESIDING OFFICER. The sen-
ator from New Hampshire.
Mr. HUMPHREY. Mr. President, it is
U.S. trado policy to promote exports of
agricultural products when supplies are
greater than what the American con-
sumer needs or wants, not to deprive him
of basic commodities he desires and
should be able to buy.
We are not exporting a surplus of
hides, but rather the bulk of the hides
in this country, over 70 percent. as a mat-
ter of fact.
Our domestic industry needs 10 to 20
million hides and they have to get by on
10 million.
Mr. President, no other agricultural
commodity is exported as the same high
rate, 83 percent in March, April and May
of this year. Last fiscal year, 54 percent
of soybeans, 55 percent of wheat, 73 per-
cent of rice, 40 percent of cotton, 40 per-
cent of almonds, 35 percent of tobacco,
30 percent of corn; other cattle by prod-
ucts-40 percent of tallow, 16 percent of
edible offal.
Mr. President, immediate action is
needed to alleviate the crisis that now
exists in our leather products industry.
I rise to support the Muskie-Baker
amendment in an effort to insure that
adequate supplies of cattlehides will be
available for domestic leather users.
Cattlehides are the principal raw ma-
terial for the production of leather prod-
ucts. Foreign governments, such as Brazil
and Argentina, have refused to export
their own cattlehides which in turn has
caused a disproportionately high demand
for reduced U.S. supplies. In March
through May of this year, 83 percent of
our U.S. hides were exported, resulting
in a price increase of over 150 percent in
just over a year. Although the United
States has only 15 percent of the world's
hide supply, it. presently accounts for 75
percent of the hides traded on the world
market.
This is not a free market situation. Ex-
port restrictions are maintained by the
other major cattlehide-producing coun-
tries. The U.S. Department of Commerce
has stated, that approaches recently
made by the Office of the Special Repre-
sentative for Trade Negotiations to the
government of these countries to encour-
age them to relax their restrictions on
hide exports, have proven unsuccessful.
These anticompetitive practices of
foreign. trading partners are injuring
our manufacturers, tanners, retailers,
workers, and consumers. Some 400,000
U.S. jobs are threatened by such prac-
tices: Without the raw material of cat-
tle hides, factories are going to close tip.
In New Hampshire, over 11,000 people
are employed in leather products in-
dustry. Tanneries are closing. Factories
are extending vacations and consolidat-
ing plants. Jobs are being lost.
The Muskie-Baker amendment to S.
737 is a fair and equitable way of as-
suring our domestic industry their fair
share of an American raw material. I
support this amendment which helps
assure U.S. Jobs, helps keep down in-
flation in leather good prices and helps
assure the continuation of a 'viable
leather goods industry in the United
States.
This is not just a shoe problem. The
leather crisis affects over 400,000 work-
ers and every industry using leather-
gloves, sportswear, handbags, belts, and
furniture.
As long as the rest of the world con-
tinues to embargo hide exports and pro-
hibits import of our leather products,
the United States must take steps to
protect its own workers and consumers.
The PRESIDING OFFICER. The Sen-
ator from Maine is recognized.
Mr. MUSKIE. Mr. President, I reserve
the remainder of my time, and ask for.
the yeas and nays on the amendment.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
second.
The yeas and nays were ordered.
S 10167
Mr. MUSKIE. Mr. President, I re-
serve the remainder of my time. I do not
have much remaining.
The PRESIDING OFFICER. Who
yields time?
Mr. HEINZ. Mr. President, is one of
the Senators seeking recognition
Mr. JEPSEN addressed the Chair.
The PRESIDING OFFICER. The Sen-
ator from Iowa is recognized? Who
yields time to the Senator from Iowa?
Mr. HEINZ. I yield. to the Senator
from Iowa 1 'minute on the bill.
Mr. JEPSEN. Mr. President, I join my
colleagues, Senators CULVER, PERCY,
DOLE, WALLOP, BENTSEN, and others, in
opposing this amendment.
I point out that if our Nation seriously
wants to reduce our trade deficit, if our
Nation truly wants to live up to the years
and years of work and the thrust and the
goals that will soon be presented in the
form of a treaty called the Multilateral
Trade Negotiations. In light of all of our,
efforts, with this new trade agreement
and other efforts to develop world trade,
I believe we should and must oppose this
kind of action that is proposed in this
amendment.
Thank you. Mr. President.
The PRESIDING OFFICER. Who
yields time?
Mr. STEVENSON. I yield to the Sena-
tor from South Dakota.
Mr. PRESSLER. Mr. President, I rise
to ask unanimous consent that a letter
originated by the National Cattlemen's
Association, with great concern about
the result of lowering the price of cattle
hides, initially by restricting exports, be
printed in the RECORD.
There being no objection, the letter
was ordered to be printed in the RECORD,
as follows:
WASHINGTON, D.C., June 19, 1979.
Hon. LARRY PRESSLER,
U.S. Senate,
Washington, D.C.
DEAR SENATOR PRESSLER: We are concerned
about an effort to lower the price of cattle
hides artificially by restricting exports. We
oppose such government interference in the
free market which would directly raise beef
prices for consumers and would be damaging
to the nation's balance of payments.
The full Senate will soon be considering
S. 737, the Export Administration Act of 1979.
At that time, a floor amendment may be of-
fered to treat the exporting of animal hides
differently from the exporting of other agri-
cultural commodities. In its present form,
Section 4(i) of S. 737-consistent with cur-
rent law-prohibits export controls on any
agricultural commodity, including animal
hides, unless the Secretary of Agriculture ap-
proves such controls. The Secretary could not
approve controls during any period he de-
termined the supply to exceed the require-
ments of the domestic economy.
The real purpose of such an amendment
to treat hides differently-thus removing the
Secretary's veto power-would be to make it
easier for the government to impose export
controls on them. We think such an amend-
ment is unwise and urge you to oppose it.
We also urge you to oppose other legislative
or administrative efforts to limit hide ex-
ports. Enclosed is a brief Question and An-
swer paper which explains the issue in more
detail and why we oppose export controls on
hides.
C. W. McMillan, Vice President, Govern-
ment Affairs, National Cattlemen's
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S 10168 '. CONGRESSIONAL RECORD -SENATIE July 21, 1979
Association; John G. Mobay, Presi- ing industries which use leather. Many industry is in deep trouble and it is in
dent, national independent Meat Pack-
t of these jobs will be lost if an adequate deep trouble on two fronts. One, because
tNational al ion; Grange; John J supply of hides is not readily available the shortage the Richard Master, Lyng, of raw material is closing
President, American Meat Institute; for domestic users, or if price increases down tanneries and closing down shoe
Roy W. Lennartson, Washington Rep- make these U.S. industries uncompeti- industries.. Two, because our leather
resentative, Western States Meat Pack- tive. hides are being converted by competi-
ers Association; Charles L. Frazier, Di- I believe it is important to emphasize tion abroad into manufactured leather
Farmers Oashingtonn Staff, National that export controls on hides will not goods that come into this' country at
damage our balance of payments. Hide lower prices than our own, and under-
Mr. PRESSLER. Mr. President, I exports account for only one two-hun- cutting our own people.
think the letter speaks for itself. It is dredth of the total value of U.S. exports. For Heaven's sake, I am for a healthy
also signed by the American Meat In- The balance-of-payments problems re- beef industry. But does that require that
stitute representative, the National In- sult from the fact that the United States we deal a death blow to another im-
dependent Meatpackers Association, the is not permitted to export its finished portant American industry? How greedy
National Grange, the Western States leather goods to foreignnarkets. Hide can you get? Beef prices are up, profits
Meatpacker Association, the National exports frequently return to the United are up. My good friend from Oklahoma,
Farmers Organization, and others. States as higher value, finished products. Senator BELLMON, tells me constantly in
I thank the Chair. In 1978, the deficit in the leather and the Budget Committee that farmers are
The PRESIDING OFFICER. Who leather products industry was almost making money this year. And here we
yields time? $2.5 billion, 10 percent of the total U.S. have New England losing jobs because
Mr. HEINZ. Mr. President, I yield my- trade deficit. of this. We have a modest amendment,
self 30 seconds on the bill. In addition, Mr. President, I think we and I urge my colleagues to vote for
Mr. President, I rise in strong support ought to keep in mind the international it.
of the amendment to the Export Ad- implications of this situation. The PRESIDING OFFICER. The Sen-
ministration Act of 1979, S. 737, offered Far from being a protectionist action, ator's time has expired.
by the distinguished Senator from Maine export controls are not designed to keep Mr. MUSKIE. Time is up.
(Mr. MUSKIE) and the distinguished Sen- anything out; and if applied equitably, The PRESIDING OFFICER. Who
ator from Tennessee (Mr. BAKER) to are not violative of the GATT. As I in- yields time?
limit U.S. exports of animal hides and dicated we have 15 percent of the world's Mr. STEVENSON. Mr. President, Y
skins to their traditional level until supply but are supplying 75 percent of oppose this amendment. It is apparent
either foreign governments remove their the freely traded hides. This. is not an from this debate that what is good for
own export controls or adequate supplies equitable marketing situation, and it the leather industry is not good for the
are available to domestic users. cannot truthfully be said we have a free livestock producers.
My reasons for supporting this amend- market in hides. I opt for exports, against Government
ment are many and varied. The amend- Under these circumstances, it is im- regulation and for efforts to enhance the
ment addresses an urgent problem facing perative that we take the action neces- productivity and the competitiveness of
the domestic leather industry. It is sary to insure adequate domestic supplies the leather industry.
needed in order to assure domestic users while at the same time are trying to rec- Mr. MUSKIE. Mr. President, will the
of leather adequate supplies of hides, and tify this situation internationally by per- Senator yield on that point? How can you
American consumers of fair prices for suading the hide producers to export. get more productivity if you cannot get
finished leather products. . It is a travesty that American consum- the raw material? Has the Senator got
Although the United States has only ers may soon be unable to afford or even an answer for that?
15 percent of the world's supply of cattle obtain leather products, despite the fact Mr. STEVENSON. The raw material .
hides, it accounts for 75 percent of the that the United States is the world's ma- in this case, Mr. President, is substan-
hides freely traded in the world. From jor producer of cattle hides. As long as tially in excess of domestic supply. There
March through May 1979, 83 percent of the rest of the world continues to em- is no shortage of raw material. It is
our hides were exported, leaving our bargo hide exports and prohibit impor- the price.
domestic leather industries with just tation of our leather goods, the United Mr. MUSKIE. Price is no problem.
over half their necessary supply. During States must take action to protect its own There is a shortage of hides in this
this same time period,-foreign govern- workers and consumers. It is my hope country that is less than half of the
ments have imposed export restrictions that my fellow Senators will- join me in domestic requirements. The facts speak
on their own hides, causing export de- supporting this much needed amend- for themselves.
mand to shift to the U.S. market. The ment to moderate the number of ex- The Senator can choose to ignore
United States has now become the only ported hides, and I urge its immediate those facts. The price has gone up, and
supplier of hides to the world. adoption. our people are paying for it, but they
The cattle hide export problem affects Mr. MUSKIE. Mr. President, what is are shipping abroad and the Japanese
every consumer in this country. Exces- the timesituation? I are sive foreign demand for domestic hides, The PRESIDING OFFICER. spe sspe Matt g the puce ctinupward,
g the ng the and
particularly in Japan and Korea, has . The Sen- that is attra hides ator
caused prices to increase as much as 15 ifrom Maine has 59 seconds remain- and taking them away from our mar-
percent in just over a year. If action is ing. ng ket.
not percent
immediately, consumers could Mr. MUSKIE. Mr. President, I sim- 'Mr. STEVENSON. Mr. President, if
no taken i
ced pay is ay, consul $ consumers ply wish to make two brief points. what the Senator says is a fact-and I
be forced
leather goads adds the next year No. 1, hides constitute, according to deny that it is a fact-then controls are for Even wit Is within the e next
lthe best information that I have, 7 to 8 available under existing authority and
products may not possible
available leather e any percent of the profit or price of beef without this amendment.
price unless American industry is allowed cattle. Leather constitutes from 20 to With that I am prepared to yield back
to buy more domestically produced hides. 45 percent of finished product value. our time.
The price of American hides has more What we are asking for here is a Mr. ROBERT C. BYRD. Mr. President,
than tripled in the past 17 months. reasonable and equitable sharing of the Yam pleased to cosponsor the pending
Cattle hide for shoe leather that cost 37 economic prospects of this country. amendment introduced by my distin-
cents a pound in 1977 costs as much as The beef industry is not in trouble guished colleague, Mr. MUSKIE.
$1 a pound today. This is the largest at the present time. If it is, then I do The American leather goods industry
inflationary increase of any primary raw not know what prices have to soar to. is facing-a monumental crisis. It is faced
material produced in our economy. I do not buy beef as often as I used to by a rapid rise in the price of domestic
American consumers cannot afford price because of the price. leather hides-over 160 percent since
increases of this magnitude. And here these representatives from December 1977-which threatens its
More than 500,000 workers are affected beef States tell me that this amendment very ability to compete with exports.
by the current leather crisis. Indirectly, is going to damage the beef industry. The leather goods and tanning in-
an additional 600,000 work in jobs serv- The fact is, Mr. President, that the shoe dustries in West Virginia and the other
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1ESSIO1\\TAL R1ECOR -SENATE S 1 169
States are hard-pressed to pay the higher
prices for hides which, I might add, will
eventually be passed on to the American
consumer in the form of higher prices
for shoes and other leather products.
What is the cause of these higher
prices? There is an artifically created
shortage of hides on the international
market because major hides producers,
including Uruguay, Brazil, and Argen-
tina, are embargoing the shipment of
hides produced in their countries in order
to protect their own leather goods in-
dustries.
The net result is that U.S. hides,
which represent only 15 percent of world
production, account for 75 percent of the
world hides trade. And the prices of U.S.
hides are going sky high.
This is clear and simply an unfair
trade situation. The amendment before
us is the appropriate remedy.
It conditions free exports of U.S. hides
on one of two factors:
First. Reasonable export levels from
hide producing _ountries, and
Second. An adequate domestic sup-
ply, taking into account export demands.
Mr. President, I support the expansion
of international trade-international
trade that is fair. This amendment con-
fronts a trade situation that is blatantly
unfair.
o Mr. NELSON. Mr. President, I rise in
support of the Muskie-Baker amendment
to S. 737, the Export Administration Act.
In the United States today there is a
trade deficit in the hide, leather, and
leather products sector of our economy
of $2.5 billion. This dollar figure is even
more startling when we consider that
this $2.5 billion represents nearly 9 per-
cent of the total U.S. trade deficit for
1978. With the exception of textiles, it is
the largest trade deficit for any industry
sector.
The trade deficit is only a small part of
the story. Hidden behind this deficit are
about 300.000 jobs nationwide as well as
the possible demise of many tanning and
leather manufacturing companies. In the
last 10 years, the number of tanners na-
tionwide has decreased from nearly 500
to approximately 250 today.
The problem that confronts the Sen-
ate today is whether our leather prod-
ucts industry needs to be protected from
unfair foreign export restrictions. I be-
lieve it does.
In 1971, the Governments of Argentina
and Brazil and, subsequently, most of
the countries of South America, Africa,
and Asia banned the export of hides. As
a result, the United States has become
the only country that has a large sup-
ply of cattlehides and calfskin and
allows unlimited foreign access to this
supply. At the same time, maior foreign
markets for leather and leather prod-
ucts are closed to U.S. producers because
of high, restrictive quotas on imports of
leather products or, as- in the case of
Korea, Mexico, and Spain, total restric-
tions on leather imports.
The United States has only 15 percent
of the world's hide supply, yet it accounts
for almost 75 percent of the hides freely
traded on. the world market. Clearly, the
interests of U.S. consumers, workers, and
industries should notbe sacrificed to the
anticompetitive practices of our foreign
trading partners.
The restrictions on access to foreign
raw materials and foreign markets has
led to the existing crisis for the U.S.
tanning and leather industries:
In 1975, hide exports were less than
50 percent of total commercial slaughter
in the United States;
In 1977, hide exports were over 5,6 per-
cent of commercial slaughter;
In 1978, hide exports were 62 percent;
and
In 1979, indications are that with
slaughter declining to 37 million head
or less, exports will amount to 68 per-
cent or more of commercial slaughter.
. If our leather products industry is to
remain strong, competitive, and a viable
sector of our economy, domestic exports
of cattlehides and calfskins must be lim-
ited to 50 percent of total U.S. hide
supply.
The Muskie-Baker amendment to
S. 737 could accomplish this goal by
limiting U.S. exports to reasonable his-
torical levels until adequate supplies are
available to domestic users or foreign
governments remove their own export
controls.
I urge Senate passage of this amend-
ment.O
COWHIDES
o Mr. BAUCUS. Mr. President, I rise to
oppose an amendment that may result
in. an export embargo on cowhides.
. Leather industry representatives have
lobbied hard for this amendment. I
don't deny that the leather industry has
problems. Nevertheless, a nexport em-
bargo is not the way to deal with these
problems.
Wednesday, I submitted for the record
a statement explaining my opposition to
the cowhide embargo. I would like to
make just a few additional comments at
this time.
First, there is not a shortage of Ameri-
can cowhides. The United States will pro-
duce 34 million hides this year. The do-
mestic demand is 18 million hides.
So there is not a shortage-the do-
mestic industry is just unwilling or un-
able to pay world prices.
Second, cowhide prices have been go-
ing down. They reached a peak of $94 per
hundred pounds on April 19. Thus, the
price of $1 per pound that leather in-
dustry representatives quoted was only
,temporary.
Representatives from agricultural re-
gions will remember disruptions caused
by President Nixon's embargoes on wheat
and soybean exports in 1974. These em-
bargoes not only drove down farm prices
and income, but they did lasting damage
to our trade relationships.
It would be just as serious a mistake
to impose an embargo on cowhide ex-
ports. I would strongly urge my col-
leagues to oppose this amendment.O
O Mr. ROTH. Mr. President, I am co-
sponsoring the proposed Baker-Muskie
amendment to the Export Administra-
tion Act, because it is fair in terms of
other countries' practices in world trade
in hides and because it will help deal
with some of the real problems of the
400,000 men and women employed in the
leather goods industry.
The United States is the producer of
just 15 percent of the world's hides, yet
is the supplier of some 75 percent of all
hides involved in world trade. This is
largely because other major producing
countries, such as Brazil and Argentina,
restrict export of their hides, thus put-
ting an undue burden on American sup-
plies.
The United States attempted to get
international agreement on the princi-
ples that ought to be followed in access
to supplies during the recent Geneva
trade negotiations. Other countries, how-
ever, were unwilling to agree to reason-
able principles. Consequently, we should
feel free to take reasonable steps, such
as pro~osed here, to protect the interests
of our Nation. Forceful U.S. action to
protect our interests, in fact, can only
help in continuing U.S. efforts to ne-
gotiate general international principles
governing supply access.
In addition to the fact that other cat-
tlehide producing countries restrict ex-
port of their hides, Japan, a maior bu-er
of hides, will not allow the United States
to sell them fin,..shed leather product.
This double whammy in the trade areas
causes our industry major economic
problems.
Others will describe the economic ef-
fects of this unfortunate situation in
terms of employment and increased
prices for the consumer. Our only re-
course, however, is to hold a sufficient
supply of hides in the United States so.
we can produce some finished' goods, also.
This will not only hem our industry eco-
nomically, but will aid in dealing with the
fair trade -practices now faced by our
industry. -
For these reasons, I support this
amendment.O
Mr. LEAHY. Mr. President, I rise to-
day to speak in support of the amend-
ment sponsored by the Senators from
Maine and Tennessee, and to say that
I am happy to be a cosponsor of this
most critical amendment.
I had planned to be in Vermont to-
day, but I canceled those plans so that
I . could be here to promote this
amendment.
The current crisis facing the leather
products industry in this country not
only threatens the jobs of some 400,000
American workers. but also stands to add
upward of $2 billion to the prices
Americans will,pay for leather goods
next year.
Mr. President, I am a strong proronent
of free world trade, but trade relation-
ships must be based on reciprocity, and
the current trade patterns in hides are
far from reciprocal.
At a time when world hide production
is at a low, other hide producing nations
haye not responded by limiting their
hide imports or increasing their exports.
In fact, they have done just the opposite.
The world's major hide-producing na-
tions, Argentina and Brazil, have em-
bargoed all hide exports to protect their
domestic industries. As a result, U.S.
hides, which constitute 15 percent of
world hide production, comprise a full
75 percent of world trade in hides.
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S 10170 CONGRESSIONAL RECORD - SENATE July 21, 1979
To meet the increased world demand
for hides, the share of U.S. hide produc-
tion devoted to exports has risen.from a
historical level of 50 percent to an alarm-
ing 83 percent. Domestic users are get-
ting just 17 percent of U.S. production.
They need more than twice that amount.
They are literally being chocked out of
business.
This Government cannot sit back and
do nothing about this outrageous situa-
tion. .
We cannot turn our backs on 400,000
domestic leather manufacturers and re-
tailers.
We cannot acquiesce to 25-percent in-
creases in the prices of leather goods to
consumers.
We cannot allow a clearly unjust trade
relationship to continue unchallenged.
I am, therefore, pleased to support this
amendment which will appropriately re-
strict U.S. exports of hides unless do-
mestic supplies are adequate, or the ex-
port levels from other hide producing
nations are more reasonable.
I urge my colleagues to support this
amendment, and thus afford our domes-
tic leather products industry and the
American consumers the protection
which they deserve.
Mr. MUSKIE. I do not have any more
time.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the amendment of
the Senator from Maine.
Mr. STEVENSON. The yeas and nays
have been ordered, Mr. President.
The PRESIDING OFFICER. The yeas
and nays have been ordered, and the
clerk will call the roll.
The assistant legislative clerk ? called
the roll.
Mr. NUNN (when his name was
called,. Present.
Mr. CRANSTON. I announce that the
Senator from Delaware (Mr. BIDEN 1, the
Senator from North Dakota (Mr. BUR-
DICK), the Senator from Nebraska (Mr.
ExoN) , the Senator from Kentucky (Mr.
FORD), the Senator from Alaska (Mr.
GRAVEL), the Senator from Colorado (Mr.
HART). the Senator from Alabama (Mr.
HEFLIN), the Senator from North Caro-
lina (Mr. MORGAN), the Senator from
Connecticut (Mr. RIBICOFF), and the
Senator from Georgia (Mr. TALMADGE)
are necessarily absent.
I further announce that, if present-
and voting, the Senator from North
Dakota (Mr. BURDICK, would vote "nay."
I further announce that, if present
and voting, the Senator from North
Carolina (Mr. MORGAN) would vote "yea."
Mr. STEVENS. I announce that the
Senator from Maine (Mr. COHEN), the
Senator from Minnesota (Mr. DUREN-
BERGER), the Senator from Texas (Mr.
TOWER), the Senator. from Connecticut
(Mr. WEICKER), and the Senator from
North Dakota (Mr. YOUNG) are neces-
sarily absent.
The PRESIDING OFFICER (Mr.
CHILES). The Senate will be in order.
The clerk will suspend the call of the
roll until order is restored.
The clerk may proceed.
The call of the roll was resumed.
Mr. DOLE. Regular order, Mr. Presi-
dent. Regular order.
The PRESIDING OFFICER. Have all
Senators who wish to be recorded voted?
The result was announced-yeas 38,
nays 46, as follows:
J Rollcall Vote No. 205 Leg.l
YEAS-38
Baker
Humphrey
Pryor
Bradley
Javits
Randolph
Bumpers
Kennedy
Riegle
Byrd, Robert C. Leahy
Roth
Chafee
Levin
Sarbanes
Cranston
Magnuson
Sasser
Durkin
Mathias
Schweiker
Eagleton
Metzenbaum
Stafford
Glenn
Moynihan
Thurmond
Heinz
Muskie
Tsongas
Helms
Nelson
Warner
Hollings
Pell
Williams
Huddleston
Proxmire
NAYS-46
Armstrong
Dole
McClure
Baucus
Domenici
McGovern
Bayh
Garn
Melcher
Bellmon
Goldwater
Packwood
Bentsen
Hatch
Percy
Boren
Hatfield
Pressler
Boschwitz
Hayakawa
Schmitt
Byrd,
Inouye
Simpson
Harry F., Jr.
Jackson
Stennis
Cannon
Jepsen
Stevens
Chiles
Johnston
Stevenson
Church
Kassebaum
Stewart
Cochran
Laxalt
Stone
Culver
Long
Wallop
Danforth
Lugar
Zorinsky
DeConcini
Matsunaga
ANSWERED "`PRESENT"-1
Nunn
NOT VOTING-15
Biden Ford Ribicoff
Burdick Gravel Talmadge
Cohen Hart Tower
Durenberger Heflin Weicker
Exon Morgan Young
So Mr. MUSKIE's amendment (No.
353) was rejected.
(Later the following occurred:)
Mr. HAYAKAWA. Mr. President, I ask
unanimous consent that my vote on the
last amendment be changed from "yea"
to "nay." I do not believe it will change
the result of the vote.
The PRESIDING OFFICER: Without
objection, it is so ordered.
(The foregoing tally has been changed
to reflect the above order.,
Mr. DOLE. Mr. President, I move to
reconsider the vote by which the amend-
ment was rejected.
Mr. STEVENSON. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
The PRESIDING OFFICER. The bill
is open to further amendment.
UP AMENDMENT NO. 427
(Purpose: To permit the -export of defense
articles and services which have a non-
lethal dessign and which are to be used in
furtherance of the safety and well-being
of the civilian population)
Mr. HELMS. Mr. President, I send an
amendment to the desk and ask for its
immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from North Carolina (Mr.
HELMS) proposes an unprinted amendment
numbered 427.
Mr. HELMS. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 82, between line's 20 and 21, in-
sert the following:
"(q) Notwithstanding any other provision
of law, the export to a country, other than
a country referred to in section 620(f) of
the Foreign Assistance Act of 1961', of defense
articles or defense services which have no
direct lethal mission.design and which are
to be used in furtherance of the safety and
well-being of the civilian population of the
country to which the items are being ex-
ported, shall not be prohibited unless the
President determines and reports promptly
to the Congress that such criteria of non-
lethality and usage are not met.".
Mr. HELMS. Mr. President, may we
have order in the Chamber?
The PRESIDING OFFICER. Will Sen-
ators please take their conversations to
the cloakroom? Maybe the Chair should
observe that the Sergeant at Arms is
sitting at the right hand of the Chair
and ready to go into action if necessary.
[Laughter.]
Will the Senate please be in order?
Mr. HELMS. Mr: President,' I will be
relatively brief.
This amendment will modify current
legislative restrictions on the sale to non-
Communist countries of so-called de-
fense articles and services so as to allow
the sale of those articles which are now
on the U.S. munitions list but which
have no direct lethal mission design,
which have a nonlethal application and
which are to be used in furtherance of
the safety and well-being-of the civilian
population.
All industries and unions in the United
States who are involved in the produc-
tion and export of medium and high
technology products-particularly the
electronics, general aviation, commercial
aviation, heavy electrical, and specialized
computer industries, will be positively
affected by this amendment. It will-pro-
vide additional jobs and the U.S. balance
of trade will benefit, thus reducing infla-
tion and strengthening the dollar in the
international marketplace.
Currently, section 38, Arms Export
Control Act CAECA), authorizes the
President to control the export of "de-
fense articles and defense services," and
to designate those items which are to be
controlled. The items so designated con-
stitute the U.S. munitions list.
However, the U.S. munitions list con-
trols many items other than weapons
and implements of war. These include
such items as trucks, transport, and gen-
eral purpose aircraft and helicopters,
oxygen masks, propulsion units and en-
gines, parachutes, navigational, systems,
training equipment, cameras, and protec-
tive clothing. Thus, the sale of these
articles is strictly controlled and, in some
cases, prohibited.
Congress has previously acted to re-
move many of these articles from such
stringent control. Section 27 of the Inter-
national Security Assistance Act of 1977
directed the President to "undertake a
review of all regulations relating to
arms control for the purpose of defining
and categorizing lethal and nonlethal
products and establishing the appropri-
ate level of control for each category."
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
S 10171
However, the administration failed to tant export markets, and American la- appreciate that fact. I am wondering if
comply. In the absence of any indication bor loses jobs. America can no longer in- I can suggest the absence of a quorum
that such a review had been accom- fluence the behavior of other nations by while we take a look at the matter.
plished, section 25 of the International economic retaliation. Our preeminent Mr. HELMS. Let's do that.
Security Assistance Act of 1978 further position in the world economy has Mr. JACKSON. Mr President, I sug-
directed the President, within 120 days eroded. Our once substantial lead in gest the absence of a quorum.
after enactment, to report in writing to technology has been overtaken in many The,, PRESIDING OFFICER. On
the Congress the results of the review significant areas. In many areas of me- whose time?
which was supposed to have been con- dium and high technology, foreign com- Mr. HELMS. Mr. President, I ask
ducted the previous year. petitors from Europe, Japan, and even unanimous consent that we have a brief
The administration report was pre- some developing countries export goods quorum, with the time to be charged to
sented to the Congress on January 26, that approach or surpass the best Amer- nobody. I assure Senators we shall not
1978. After this lengthy review, the ad- ican designs. take much time.
ministration concluded: In this climate, using export embar- The PRESIDING OFFICER. Without
It would be extremely difficult to formulate goes to achieve political goals is a pol- objection, it is so ordered.
a useful definition of "lethality" or "lethal icy that can boomerang. In most cases, Mr. HELMS. I suggest the absence of a
impact" for control purposes. Such a defini- countries denied U.S. goods can easily quorum.
tion would offer no basis for any substantial find them elsewhere. If we use economic The PRESIDING OFFICER. The clerk
revision in the level or type of export control boycotts as a political tool, we cannot will call the roll.
currently accorded defense articles and de-
fense services on the U.S. Munitions List. complain when others use this action The assistant legislative clerk pro-
A recent Library of Congress study
reached conclusions somewhat different
from that of the Administration. The
CRS study concluded:
The use of the concept of lethality as a key
ingredient in export regulations is reason-
able ? ? ?.
This amendment, therefore, is needed
in order to move a reluctant executive
branch down a road that the Congress
has previously laid out. Most U.S. sales of
"defense articles and defense services" do
not involve weapons, ammunition, imple-
ments of war, lethal, or wound-inflict-
ing articles. Of stated sales agreements
for U.S. defense articles and equipment,
only some 40 percent in recent years has
consisted of arms and ammunition; the
remaining 60 percent was comprised of
spare parts, supporting equipment, and
supporting services.
Supporting equipment includes train-
ing and cargo aircraft, tankers, tugs,
barges, trucks, trailers, radar, communi-
cations equipment, and other equipment
and supplies. Supporting services include
construction, supply operations, training,
'technical, and administrative services. It
seems obvious that most U.S. foreign
military sales have not actually involved
"arms" in the strictest sense, although
the ancillary supplies and services may
contribute to the military capabilities of
buyers.
These nonweapons articles whose sale
is controlled or prohibited by the United
States are easily obtainable elsewhere.
Thus, these U.S. restrictions on the
sale of "defense articles and defense
services" lead to ludicrous decisions.
For example, cargo helicopters and
general purpose aircraft are on the U.S.
munitions list and are thus controlled
or even prohibited from export to cer-
tain countries. These articles, to include
spare parts and maintenance service for
previously sold systems, often cannot be
exported.
But these products are easily obtained
against us or our close friends. ceeded to can the roll.
Thus, our restirction of nonarms ex- Mr. HELMS. Mr. President, I ask
ports damages only American workers unanimous consent that the order for
and the American balance of payments. the quorum call be rescinded.
Increasingly, the other side of the trade The PRESIDING OFFICER. Without
coin becomes important. America needs objection, it is so ordered.
the benefits of trade, the exports needed Mr. HELMS. Mr. President, I ask
to sustain U.S. employment and to pay unanimous consent that I be permitted
for our imports of machinery, manufac- to lay aside this amendment temporarily
tured goods, and oil. The only way open so the distinguished Senator from Colo-
to us to influence other nations through rado may call up his amendment, at the
trade without harming American work- conclusion of which another quorum call
ers is to ban imports to the United will be instituted on the basis that the
States, the world's largest consumer Senator from North Carolina suggested
market, of offending nations. a while ago.
By voluntarily limiting or eliminating The PRESIDING OFFICER. Without
our own nonmilitary export markets, objection, it is so ordered.
America's overseas economic and politi- Up AMENDMENT NO. 426
cal power is weakened. In the short run, (Purpose: To assure the submission on a
the U.S. trade balance suffers, and the confidential basis of information relevant
value of the dollar drops; this under- to the authority under section 7)
-mines confidence abroad in America's Mr. ARMSTRONG. Mr. President, I
economic vitality. In the long run, the send an amendment to the desk and ask
U.S. competitive position permanently that it be considered.
deteriorates from a willful sacrifice of The PRESIDING OFFICER. The
markets. Paradoxically, the more the amendment will be stated.
United States seeks to use the levers of The assistant legislative clerk read as
trade to achieve political results, the follows:
more it may weaken its economic and The Senator from Colorado (Mr. ARM-
political power. sTaoNG) proposes an unprinted amendment
This unnecessary restriction on Amer- numbered 428,
ican nonmilitary exports should be re-
moved Mr. ARMSTRONG. Mr. President, I
and that is the purpose of this ask unanimous consent that further
amendment. I urge its adoption.
I reserve the remainder of my time reading of the amendment be dispensed
.
Mr. JACKSON. Will the Senator yield? with.
The PRESIDING OFFICER. Without
Mr. HELMS. Gladly. objection, it is so ordered.
not Mr. had a an n opportunity rJACKSON. to read President, I the Sen- have Sa The amendment is as follows:
? o
ator's amendment, but he refers to non-, On page 95, between lines 5 and 6, insert
lethal systems. I make a point of cau- the following:
tion here that nonlethal systems would "(h) Nothing contained in this section
include, for example, sending sophists- shall be construed to preclude submission
a confidential basis
cated commercial guidance systems on Commerce rce o of information to the relevant Secretary
a of
to o a a deci-
icommercial basis. That would be a sion to impose or remove monitoring or con-
matter of great concern. trols under the authority of this Act, nor
I do not disagree with what the Sena- consideration of such information by the
tor is trying to do, but I think it might Secretary in reaching decisions required un-
be helpful if we could take a look at the der this section. The provisions of this sub-
amendment to make sure that we are section are not intended to change the ap-
plicability sending out highly sophisticated plicability of section 552(b) of title 5, United
States Code.".
States controls or denies these exports, technology. Mr. ARMSTRONG. Mr. President, un-
other nations in their own self-interest Mr. HELMS. I agree with the Senator der section 7 of the bill-
must seek other sources of supply or absolutely. Why do we not consult for a Any entity, including a trade association,
must develop their own.indigenous in- few moments? I agree with him, I say firm, or certified or recognized union or group
dustries to assure future supplies. again, about the export of sophisticated of workers, which is representative of an in-
These controls accomplish little ex- technology. dustry or a substantial segment of an indus-
cept that U.S. business loses impor- Mr. JACKSON. I know that, and I try which processes any material or com-
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S10172 CONGRIESSIONAIL RECORD - SIENATIE July 21, 1979
modity may transmit a written 'petition to
the Secretary of Commerce requesting the
imposition of export controls, or the moni-
toring of exports, or both, with respect to
such material or commodity.
And a procedure is established for do-
ing so. The purpose of my amendment
is to make it clear that, in addition to
the hearings and other public submis-
sions. it would be in order for such a per-
son or firm or organization to provide
such information on a confidential basis
to the Secretary, for the Secretary to re-
ceive that information and take it into
account, and, nonetheless, to keep it on
a confidential basis.
Obviously, what we are addressing
here are those things which are pro-
prietary in nature an which ought to
be, in fairness, protected for the indi-
viduals and firms concerned. I urge the
approval of the amendment.
Mr. STEVENSON. Mr. President, I
have discussed this with the cosponsors.
This amendment clarifies the intent of
the law. It is a useful amendment. We
are happy to accept it.
I am prepared to yield back the re-
mainder of my time.
The PRESIDING OFFICER. Is all
time yielded back? All time having been
yielded back, the question is on agree-
ing to the amendment of the Senator
from Colorado.
The amendment was agreed to.
The PRESIDING OFFICER. The clerk
will call the roll.
The assistant legislative clerk pro-
ceeded to call the roll.
Mr. HELMS. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
UP AMENDMENT NO. 427
Mr. HELMS. Mr. President, I yield to
the distinguished Senator from Kansas
such time as she may require.
Mrs. KASSEBAUM. Mr. President, I
have been very supportive of what Sen-
ator HELMS was trying to address in
exempting nonlethal systems. After dis-
cussing this with the distinguished Sen-
ator from Washington, 'I think we do
feel that, in the version that has been
passed by the House, this has been suf-
ficiently taken care of. It is my con-
cern-and I hate to speak from parochial
interests, but Beech and Cessna and Boe-
ing and Gates and General are all in
Kansas and have recently suffered some
setbacks in sales because they have not
been able to do the proper negotiating.
I think if there can be these exemptions
made for small aircraft which is used
for training purposes and so forth, I
would feel this has been taken care of.
Mr. HELMS. I thank the distinguished .
Senator. This is the point I wanted to
clear up with my friend from Wash-
ington.
Mr. JACKSON. Mr. President, I con-
cur in the comments made by the distin-
guished Senator from Kansas. I should
say that the language in the bill re-
ported by the House committee dealing
with this matter addresses the subject
properly. It is my understanding that
the House committee language permits
export of what the Senator has in mind CIVIL AIRCRAFr EQUIPMENT
to friendly countries so that there is SEC. Ill. Notwithstanding any other pro-
not any problem. vision of law, any product (1) which is
The problem here is the danger of standard equipment, certified by the Fed-
highly sophisticated systems, inertial eral Aviation Administration, in civil air-
navigation systems, for example, going craft and is an integral part of such air-
(2) Is be to
to the Soviet Union. The language in count' and other
which a co controlled co t a
ry,
the House bill, I do believe, takes care haalll tbe subject to export controls exc u
-
of the point that the Senator from lively under the Export Administration Act
North Carolina has endeavored to make of 1969 Any such product shall not be sub-
as sponsor of the amendment and the
point made by the distinguished Sena-
tor from Kansas. So I hope that the
Senator will see fit to withdraw the
amendment in light of this colloquy.
Mr. HELMS. I intend to do so in just a
moment, Mr. President. I want to under-
score that I agree with my friend from
Washington with reference to the export
of sophisticated computer technology
directly or indirectly to the Soviet
Union. A couple of years ago, I voted
against this piece of legislation-I was
the only Senator who did so-because I
saw in that bill some loopholes which
alarmed me considerably concerning the
potential export of sophisticated tech-
nology to the Soviet Union. I know that
the Senator from Washington has long-
held similar apprehensions.
Let me be sure that I understand not
only the Senator from Washington but
the professional staff members who have
worked on this legislation. The provi-
sions already in the House bill will per-
mit the export of nonlethal items to
such Latin American countries such as
Chile, who wants to be our friends, is
that right?
Mr. JACKSON. I am sorry. I did not
hear the Senator's question.
Mr. HELMS. The House-provision to
which the Senator alluded a moment
ago would permit nonlethal exports to,
say, Latin American countries such as
Chile, who want friendly relations with
the United States?
Mr. JACKSON. That is correct, friend-
ly countries.
Mr. HELMS. Chile is one of those.
Chile is trying to move in a direction
to pacify her critics in this country, some
of whom are highly selective, to say the
-least, in their human rights assessments.
This Senator has seen no point in our
failing to encourage Chile in that regard.
In fact, there is an element of folly
ject to controls under section 38(b) (2) of
the Arms Export Control Act. For purposes
of this section, the term "controlled coun-
try" means any country described in section
620(f) of the Foreign Assistance Act of 1961.
Mr. JACKSON. I thank the Senator.
Mr. HELMS. I thank my friend from
Washington.
With those assurances and with that
understanding, Mr. President, I with-
draw the amendment.
The PRESIDING OFFICER. The
amendment is withdrawn.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Sen-
ator from Washington.
AMENDMENT NO. 348, AS MODIFIED
(Purpose: To specify the obligation of gov-
ernment departments and agencies to
share foreign availability information)
Mr. JACKSON. Mr. President, I call
up my amendment No. 348.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACK-
soN), for himself and Messrs. NUNN, HOL-
LINGS, COHEN, HATCH, HARRY F. BYRD, JR.,
TOWER, MOYNIHAN, THURMOND, BAYH and
DoMENICI, proposes an amendment No. 348.
Mr. JACKSON. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 64, line 7, after the period, in-
sert the following: "Each department or
agency of the United States with responsi-
bilities with respect to export controls, in-
cluding intelligence agencies, shall furnish
information concerning foreign availability
of such goods and technologies to the Office
of Export Administration and such Office
shall furnish the information it gathers and
receives to such departments and agencies.".
in it. Mr. JACKSON. Mr. President, I have
So with the assurance that there is conferred with the majority and minor-
agreement in the Senate that we will ity on this and wish to modify the
have an open mind about all friendly amendment, which I send to the desk
countries in terms of nonlethal exports, and ask the clerk to state the modi-
and with the opinion of the able Sena- fication.
tor from Washington, which I share, The PRESIDING OFFICER. The mod-
that the House bill. provision does, in- ification will be stated.
deed, make that clear, if properly inter- The assistant legislative clerk read as
preted by the executive branch, I am follows:
inclined to withdraw the amendment. The amendment, as modified, is as follows:
Mr. JACKSON. Just for the record, On page 64, line 7, after the period, insert
so we complete it, the House bill, on the following: "Each department or agency
page 47, section 111, covers this. The of the United States with responsibilities
title is "Civil Aircraft Equipment." And with respect to export controls, including in-
I think we can telligence agencies, consistent with the pro-
print that at this point tection of intelligence sources and methods,
in the RECORD. shall furnish information concerning foreign
Mr. HELMS. I ask unanimous con- availability of such goods and technologies
sent that it be printed. to the Office of Export Administration and
There being no objection, the mate- such Office when requested or where appro-
rial was ordered to be printed in thegathers and shall receelivvees s to the such d eepar par matments nta it
and
RECORD, as follows: agencies.".
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July 21, 1979 CONGRESSIONAL
Mr. JACKSON. Mr. President, this is
the Bayh amendment to the amendment
that I proposed and, to avoid voting on
each one, we made my amendment con-
form to his.
But it is the amendment that the Sen-
ator recommended and it is really his
amendment.
Mr. BAYH. Mr. President, I just want
to say to ' my colleagues, I compliment
the Senator from Washington for intro-
ducing this amendment.
I had intended to have a similar
amendment myself and I think the way
he has handled it is consistent with try-
ing to move the legislation along.
Mr. President, I ask: Was the word
"protection" or "protector"? It should
be "protection."
Mr. JACKSON. This is "protection."
Mr. BAYH. Good..I thought it came
out "protector," and "protection" is the
word.
I thank the Senator from Washington.
Mr. JACKSON. I want to thank the
distinguished Senator from Indiana for
his most helpful suggestion.
He is chairman of the Senate Intelli-
gence Committee and, in that capacity,
of course, is keenly aware of the impor-
tance of his responsibilities, and the
Bayh amendment makes the amendment
that much more effective.
Mr. President, this amendment is in-
tended to make it clear that the various
departments and agencies involved in the
export control process have an obligation
to furnish foreign availability informa-
tion to the Office of Export Administra-
tion and that OEA, in turn, is obligated
to make it available to those departments
and agencies. OEA's role should be viewed
primarily as one of coordination of the
existing efforts by departments and
agencies to avoid duplication and to as-
sure that information is shared. The pro-
visions of the bill and amendment rela-
tive to OEA's foreign availability func-
tions should not be considered.as an au-
thorization by departments and agencies
to reduce present efforts, unless they are
determined to be duplicative.
Indeed, the GAO found there is too
frequently inadequate foreign availabil-
ity information and that foreign avail-
ability determinations go unattended.
Thus, there is a need for more, not less,
of an effort to obtain foreign availability
information, especially by our intelli-
gence agencies. Obviously, OEA is not
capable of performing intelligence gath-
ering functions. Also, other departments
and agencies, including DOD, which
. have important export control functions
must continue to make independent as-
sessments of foreign availability and to
marshall foreign availability data that
they obtain in their research and devel-
opment, intelligence, and other activities.
Thus, the intent of the Senate should
be clear that the foreign availability
functions of OEA shall be deemed to be
primarily those of a coordinator and
should not be deemed to authorize re-
duced functions by other agencies except
to the extent to avoid unnecessary
duplication.
o Mr. KENNEDY. Mr. President, I rise
in opposition to the amendments offered
by my dear friend and colleague from
]ECORID - S ENATIE S 10173
the State of Washington. These amend-
ments could in fact undermine U.S. se-
curity by imposing unnecessary controls
on critical goods and technologies to the
detriment of U.S. exports.
Adoption of these amendments will be
a step back from the progress this bill
has made in removing unnecessary re-
strictions on U.S. exports. These amend-
ments will not only reduce the competi-
tiveness of U.S. high technology exports,
but could also have a negative impact
on U.S. employment and technological
innovation.
One amendment seeks to transfer
primary responsibility for identifying
goods and technologies controlled for
national security purposes from the De-
partment of Commerce to the Depart-
ment of Defense. Such action is unnec-
essary and could serve to weaken the ex-
port control system. The current sys-
tem, in which the Commerce Depart-
ment holds coordinating authority, is
much more effective. The Commerce
Department is in a superior position to
possess knowledge on the products U.S.
industry produces and, more impor-
tantly, what the technical capabilities of
those products are.
Another proposed amendment could
lead to the disintegration of COCOM.
Threatening our allies with trade boy-
cotts if they refuse to adopt U.S. export
control standards is clearly not the
course which responsible U.S. diplo-
macy should follow. The breakdown of
COCOM would lead to decreased con-
trol over critical goods and technologies,
create -unnecessary friction in U.S. rela-
tions with our closest allies and friends,
place U.S. technology exports at a dis-
advantage, and certainly damage United
State security interests.
The fact is that in today's interna-
tional economy the United States is no
longer in a position to unilaterally im-
pose effective controls on technology
exports. I therefore believe we must rely
on close coordination with our allies to
maintain effective export controls in
those areas where they continue to be
needed. Only when effective multilater-
al coordination takes place can both the
security and the legitimate export in-
terests of the United States and our al-
lies be productive.
Mr. President, this bill accomplishes
the difficult task of assuring that effec-
tive-controls of goods and technologies
important to U.S. security are main-
tained while, at the same time, stream-
lining the bureaucratic process which
U.S. firms must undergo before they
can export abroad. The bottom line is an
increase in U.S. exports, employment,
and technological innovation while as-
suring that U.S. national security inter-
ests are not sacrificed. The Jackson
amendments would greatly undermine
these benefits. I urge my colleagues to
join me in opposing these amendments
and in supporting the bill as reported
by the committee.O
Mr. HATCH. Mr. President, I was
pleased to sponsor the package of amend-
ments with the distinguished Senator
from Washington. As we debated each
one, we see the many-faceted issue of
technology transfer. This problem is one
that I myself have been following for
quite some time and one that concerns
me a great deal. I compliment the com-
mittee for their work on the bill, but I
would like to point up during the course
of this debate some of the major flaws
in our system which would continue to'
exist even after its enactment.
DEFENSE DEPARTMENT IDENTIFICATION
Mr. President, the bill provides us with
the start of a "critical technologies ap-
proach" to controlling exports to certain
nations for national security purposes.
It does not, however, fully outline the
plan or the processes involved in this
approach, nor does it make us aware of
the advantages to adopting it.
The measure presently vests the re-
sponsibility to determine critical tech-
nologies with the Commerce Department
and the Defense Department with an
advisory role. It would seem to me that
the effectiveness of a critical technolo-
gies approach would be greatly enhanced
if the Defense Department was dele-
gated the duty to identify those tech-
nologies which were critical to our na-
tional security in the first instance.
The Defense Department currently has
the capacity for making these determi-
nations both in terms of interpreting the
sophistication of various technologies,
and knowing the impact of exportation
of critical technology on United States
and foreign military systems. Valuable
time could be saved were DOD given the
authority to identify these technologies
in the first place instead of having, their
input on a secondary referral basis. We
would recognize the identifications proc-
ess as a technical function rather than
an administrative one. Further, exporters
would have the advantage of knowing
precisely which technologies were listed
in the militarily critical category prior to
making a license application to the Com-
merce Department. This seems to me to
be a key ingredient in streamlining our
export licensing procedure.
EMBARGO OF CRITICAL TECHNOLOGIES
Mr. President, for the small percentage
of applications which propose a transfer
of critical military technology to a con-
trolled nation, S. 737 makes no clear pol-
icy statement. All of these applications
are reviewed individually as to their na-
tional security implications, a process
which leaves the door wide open for in-
consistency and political favoritism. One
amendment rightfully recommends a
general embargo of critical technologies
to controlled nations, and I support this
policy as a means to guarantee both our
security and our fairness in granting li-
censes. It makes good sense that we
should grant licenses based on policy, not
have policy made on a case-by-case basis.
FOREIGN AVAILABILTY
Mr. President, from what we have
heard, the core of the argument in favor
of a liberalized export policy is the as-
sumption that our goods and 'technol-
ogies are available in the same quantities
and qualities from foreign countries. We
assume that if the United States does
not permit the export of a technology or
good that another nation will, causing
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S1?74 CONG
American business a loss of sales and
credibility in the foreign marketplace.
This is a situation with which we are all
concerned, and I am most sympathetic
to the objective here, that is, to enhance
the ability of American suppliers to com-
pete in foreign markets. However, many
sources have testified that there is no
accurate data on the foreign availability
of critical technologies. We simply do not
know for sure that a controlled nation
could buy comparable technologies else-
where.
I maintain that our undocumented
assumptions are insufficient on which to
base export policy affecting our national
security. Another amendment which I
feel is fair, calls for the establishment of
an evidentiary test of foreign availability
on a given critical technology to assist in
the decisionmaking process. To export or
not to export is a question which de-
mands all the information possible to
render a correct answer.
INDEXING
Mr. President, I join my colleagues in
opposing the present provision of tech-
nology indexing. I believe that this pro-
vision would have two adverse effects.
What the present language suggests is
automatic export decontrol for any tech-
nology or good which cannot keep pace
with accelerated performance standards
established by the Department 'of Com-
merce.
First, we must guard against the false
assumption that because American tech-
nology has advanced that our old tech-
nology is expendable. In many cases, our
out dated knowhow is still superior to
that of a controlled nation, and we
should not permit the automatic- export
of such a technology or good without a
reapplication for licensing. Such a pro-
posed technology transfer should be re-
evaluated with the new information
taken into account.
Second, I am concerned about the ef-
fect such a provision would have on U.S.
industry incentives to develop new tech-
nologies. If this system of performance
levels is implemented, I am afraid that
it could retard our industrial research
and innovation activity since-under this
new aspect of export policy, it may be to
industry's advantage in some circum-
stances to allow technologies to become
outmoded in terms in our potential tech-
nological capability in order to avoid the
export administration process. We
should be careful not to overlook the
inherent effects export policy will have
on our own domestic R. & D. policies.
Our export process can be improved to
incorporate maximum trade opportunity
for American business, efficient pro-
cedures for the monitoring of licenses
and controls, and protection for *our
critical technologies. We recognize all of
these needs, but I believe greater emph-
asis should be given to the defense and
national security ramifications of tech-
nology transfer. Once technology has
been sold it can never be returned. It is
the knowhow which will assist foreign
nations in producing their own goods
and limit the markets for U.S. product
exports in the future, the knowhow
IESSI(ONAIL RIECORD - SIENATIE July 21, 1979.
which will fill in the gaps in our enemies'
defense systems.
I have enthusiastically supported these
amendments and feel they are construc-
tive to achieving these objectives.
Mr. STEVENSON. Mr. President, this
is a sound amendment. I am prepared to
accept it and yield back our time.
Mr. HEINZ. The minority is prepared
to accept the amendment and yield back
our time.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the amendment, as
modified.
The amendment (No. 348, as modified)
was agreed to.
The PRESIDING OFFICER. The bill
is open to further amendment.
AMENDMENT NO. 349
(Purpose: To provide specific authorization
for appropriations to the Department of
Defense to carry out functions under the
Act)
Mr. JACKSON. Mr. President, I call
up amendment No. 349.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACK-
SON), for himself and Messrs. NUNN, HoLL-
INGS, COHEN, HATCH, HARRY F. BYRD, JR.,
TOWER, MOYNIHAN, THURMOND, BAYH, and
DOMENICI, proposes an amendment numbered
349.
Mr. JACKSON. Mr. President, I ask
unanimous consent that further readings
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 111, between lines 11 and 12, in-
sert the following:
(c) There are authorized to be appropri-
ated to the Department of Defense for fiscal
years commencing on br after October 1,
1979, such sums as may be necessary for the
Secretary of Defense to carry out his func-
tions under this Act.
Mr. JACKSON. Mr. President, this
amendment would provide a specific au-
thorization for appropriations to the De-
partment of Defense to carry out. its
functions under the act. At present
DOD's export control activities are not
adequately funded. A major part of the
problem is that DOD does not have a
specific line item in its budget for this
activity. Thus, personnel and funds must
be borrowed from other activities. As a
consequence, the manpower and finan-
cial resources devoted to DOD's export
col1trol efforts are grossly inadequate
given the imortance of this work. This
is one important reason for the fact that
DOD's undertaking to identify critical
goods and technologies is far from com-
pleted even though it has been over 3
years since the Defense Science Board
recommended this concept.
UP AMENDMENT NO. 429
(Purpose: To authorize an appropriation to
the Defense Department for the purpose
of identifying militarily critical goods and
technology)
Mr. STEVENSON. Mr. President, I
send an amendment in the nature of a
substitute to the desk and ask for its
consideration.
The PRESIDING OFFICER. Is the
Senator asking unanimous consent that
this be in order in spite of the fact that
time has not been yielded back?
Mr. STEVENSON. I so request, Mr.
President.
The PRESIDING OFFICER. Without
objection, it is so ordered. The amend-
ment will be stated.
The assistant legislative clerk read as
follows:.
The Senator from Illinois (Mr. STEVENSON)
proposes an unprinted amendment numbered
429.
Mr. STEVENSON. Mr. President, I ask.
unanimous consent that further reading
of the amendment be dispensed with'
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment follows:
On page 111, line 11, insert after subsection
(b), the following new subsection (c) :
"There are authorized to be appropriated
to the Department of Defense $2,500,000 for
fiscal year 1980 to carry out its functions
under subsection 41a) of this Act."
Mr. STEVENSON. Mr. President, the
amendment offered by the Senator and
this substitute both recognize that the
Department of Defense's duties under
this bill will require an expenditure of
funds.
This amendment would, therefore, au-
thorize appropriations to the Depart-
ment for purposes of carrying out its
duties under the Export Administration
Act for fiscal year 1980 in the amount
of $2.5 million.
I think that is a reasonable amount.
I am hopeful the Senator from Wash-
ington will accept the amendment.
Mr. JACKSON. Mr. President, I am
pleased to accept the amendment and
prepared to yield back my time.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment in the second degree.
The amendment (UP No. 429) was
agreed to. -
The PRESIDING OFFICER. Is all
time yielded back?
Mr. STEVENSON. Yes.
Mr. JACKSON. Yes.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment.
The amendment (No. 349) was agreed
to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. STEVENSON. I move to lay that
motion on the table.
The motion to lay on the. table was
agreed to.
AMENDMENT NO. 350
(Purpose: To provide for the maintenance
of records of license and control)
Mr. JACKSON. Mr. President, I call
up amendment No. 350.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACK-
SON), for himself and Messrs. NUNN, HoL-
LINGS, COHEN, HATCH, HARRY F. BYRD, JR.,
TOWER, and MOYNIHAN, proposes an amend-
ment numbered 350:
On page 73, strike out lines 12 through
15 and insert in lieu thereof the following:
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ESSIONAL RECORD - SENATE
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. STE',. ENSON. I move to lay,Jhat
motion on the table.
The motion to lay on the table was
agreed to.
(9) The Secretary of Commerce, the Secre-
tary of Defense, and any department or
agency consulted in connection with a license
application or a revision of a list of con-
trolled goods and technologies and appli-
cable controls shall make and keep accurate
records of their respective advice, recom-
mendations, or decisions, including the
factual and analytical basis of such advice,
recommendations, and decisions.
Mr. STEVENSON. Mr. President, I
have discussed this with my comanager.
We believe it is a sound amendment. We
believe we are prepared to accept it.
The PRESIDING OFFICER. Is all
time yielded back?
Mr. JACKSON. Wait a minute. There
is the modification. I did not modify it.
VP AMENDMENT NO. 430
(Purpose: To provide for adequate' record-
keeping with respect to license decisions
and control list revisions l
Mr. JACKSON. Mr. President, I ask
unanimous consent that the amendment
which is now at the clerk's desk, be modi-
fled.
The PRESIDING OFFICER. The Sen-
ator has the right to modify his amend-
ment.
The amendment is as follows:
On page 73, line 15, change the period to a
comma, and insert the following: "including
the factual'and analytical basis for the de-
cision, together with any dissenting recom-
meudations received from any agency." and
on pare 63, line 23, after the period add the
following:
"The Secretary and any agency rendering
advice with respect to export controls shall
keep adequate records of all decisions made
with respect to revision of the list of con-
trolled goods and technology, including the
factual and analytical basis for the decision,
together with the dissenting recommenda-
tions received from any agency."
Mr. JACKSON. Mr. President, the lan-
guage of the recordkeeping provision of
the bill applies only to license applica-
tions. However, of equal, if not greater
importance are the more basic decisions
as to what and how to control goods and
technologies. The amendment thus
makes it clear that the recordkeeping
requirement extends to the control proc-
ess. The amendment also specifies that
the factual and analytical basis be re-
corded. These records should facilitate
consistency in control and license deci-
sions as well as permit responsible execu-
tive branch officials and congressional
committees with export oversight duties
to ascertain whether decisions are factu-
ally supported and consistent with the
policies and provisions of the act. }
The PRESIDING OFFICER. The
amendment is so modified.
Is all time yielded back?
Mr. STEVENSON. Mr. President, it is
the amendment, as modified, that we ac-
cept. I thought it had been modified.
I am prepared to yield back the re-
mainder of my time,
Mr. HEINZ. I yield back our time.
Mr. JACKSON. I yield back my time.
The PRESIDING OFFICER. All time
having been yielded back, the question
is on agreeing to the amendment, as
modified.
The amendment (No. 430) the modi-
fied version of amendment No. 350 was
agreed to.
AMENDMENT NO. 351
(Purpose: To provide for a report to Con-
gress if the President overrules the Secre-
tary of Defense)
Mr. JACKSON. Mr. President, I call
up amendment No. 351.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACx-
soN), for himself and Messrs. NUNN, HoL-
LINGS, COHEN, HATCH, HARRY F. BYRD, JR.,
TowER, and MOYNIHAN, proposes amendment
No.351:
At the bottom of page 72, add the fol-
lowing:
(D) Whenever the President exercises his
authority under this paragraph to modify of
overrule a recommendation made by the
Secretary of Defense or exercises his author-
ity to modify or overrule any determination
made by the Secretary of Defense pursuant
to section 4(a) (2) (B) or 4(b) (1) of this Act
with respect to list of goods and technol-
ogies controlled for national security pur-
poses, the President shall promptly transmit
to the Congress a statement indicating his
decision, together with the recommendation
of the Secretary of Defense.
Mr. JACKSON. Mr. President, this
amendment requires the President to re-
port to Congress if he overrules any rec-
ommendation or determination by the
Secretary of Defense. As it pertains to
the requirement for a report if the Presi-
dent overrules or modifies a licensing
recommendation by the Secretary of De-
fense-the amendment merely provides
what is now a part of section 4(h) of the
act. This provision is not in the bill. In
this connection, the Banking Committee
report (page 10) states that the bill
makes "no substantive changes from
tll9se contained in Eexisting] section 4
(h)" of the act. By deleting this report-
ing provision, the bill would effect a sub-
stantive change with no apparent justi-
fication for doing so. In addition, the
amendment would extend the reporting
requirement to situations in which the
President overrules any determination
made by the Secretary of Defense pursu-
ant to the Secretary's authority to for-
mulate a list of Moods and technologies
to be controlled for national security
purposes.
Mr. President, it is my understanding
that this amendment is acceptable.
Mr. STEVENSON. Mr. President, this
amendment continues the existing law.
It is acceptable.
I am prepared to yield back the re-
mainder of my time.
Mr. HEINZ. Mr.-President, I am pre-
pared to accept the amendment, and I
yield back the remainder of my time.
Mr. JACKSON. I yield back my time.
The PRESIDING OFFICER. Without
objection, the amendment is agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. STEVENSON. I move to lay that
motion on the table.
S 10175
The motion to lay on the table was
agreed to.
AMENDMENT NO. 352, AS MODX1 TED
(Purpose: To clarify that the President can-
not delegate his authority to overrule the
Secretary of Defense)
Mr. JACKSON. Mr. President, I call
up amendment No. 352, as modified.
The PRESIDING OFFICER. The
amendment, as modified, will ' be stated.
The assistant legislative clerk read as
follows :
The Senator from Washington (Mr. JACx-
soN), for himself, Mr. NUNN, Mr. HoL-
LINGS, Mr. COHEN, Mr. HATCH, Mr. HARRY F
BYRD, JR., Mr. TOWERS, and Mr. MOYNIHAN
proposes an amendment numbered 352, as
modified:
On page 79, line 17, after the period, add
the following new sentence: "The President
may not delegate or transfer his power, au-
thority, and discretion to overrule or modify
any recommendation or decision made by the
Secretary of Commerce, the Secretary of De-
fense and the Secretary of State, pursuant
to the provisions of this Act.".
Mr.. JACKSON. Mr. President. this
amendment would clarify that the Presi-
dent cannot delegate this authority to
overrule the Secretary of Defense. This
merely makes explicit what is already im-
plicit in the present act and the bill.
It is my understanding that we have
an accord on this amendment with the
majority and the minority sides.
Mr. STEVENSON. I have no objection
to this amendment.
Mr. HEINZ. I have no objection.
Mr. JACKSON. I yield back my time.
Mr. STEVENSON. I yield back my
time.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the amendment, as
modified.
The amendment, as modified,. was
agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
The PRESIDING OFFICER. The bill
is open to further amendment.
tIP AMENDMENT NO. 431
(Purpose: To clarify provisions restricting
export of Alaskan oil)
Mr. STEVENS. Mr. President, I send an
amendment to the desk.
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read as
follows: .
The Senator from Alaska (Mr. STEVENS),
for himself and others, proposes an un-
printed amendment numbered 481.
Mr. STEVENS. Mr. President, I. ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 74, line 22, insert new section (g)
as follows:
(g) (1) Notwithstanding any other provi-
sion of this Act, no domestically produced
crude oil transported by pipeline over rights-
of-way granted pursuant to the requirements
of either subsection (u) of section 28 of the
Mineral Leasing Act of 1920 as amended (30
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U.S.C. 185), or section 203 of the Trans-
Alaska Pipeline Authorization Act (43 U.S.C.
1653), (except any such crude oil which
(A) is exported, for the purpose of effectu-
ating an exchange in which the crude oil is
exported to an adjacent foreign state in ex-
change for the same quantity of crude oil
being exported from that state to the United
States; such exchange must meet the price
standard of paragraph 2(A) (ii) of this sub-
section, or (B) is temporarily exported for
convenience or increased efficiency of trans-
portation across parts of an adjacent foreign
state and reenters the United States) may
be exported from the United States, its ter-
ritories and possessions, unless the require-
ments of paragraph (2) of this subsection
are met.
(2) Crude oil subject to the prohibition
contained in paragraph (1) may be exported
only if-
(A) The President makes and publishes
an express finding that exports of such
crude oil, including exchanges-
(i) will not diminish the total quantity
of petroleum refined within, stored with-
in, or legally committed to be transported
to and sold within the United States;
(ii) except for minor impacts due to quali-
ty or gravity adjustments, will have no ad-
verse impact on wholesale or retail prices
of products refined from such imported crude
oil;
(111) will be made only pursuant to con-
tract which may be terminated if the crude
oil supplies of the United States are in-
terrupted, threatened, or diminished;
(iv) are in the national interest;
(v) are in accordance with the provisions
of this Act; and
(vi) in the case of crude oil which is
transported by pipeline over right-of-way
granted pursuant to the requirements of
section 203 of the Trans-Alaska Pipeline
Authorization Act (43 U.S.C. 1653), the oil
to be exported consists of volumes in excess
of that which was so transported on an
average daily basis during the 30 days pre-
ceding July 1, 1979; and
(B) The President submits reports to the
Congress containing findings made under this
subsection and after date of receipt of such
report, the Congress shall have a period of
sixty calendar days, thirty days of which
Congress must have been in session, to con-
sider whether exports under the terms of
this section are in the national interest.
If the Congress within this time period passes
a concurrent resolution of disapproval stating
disagreement with the President's findings
concerning the national interest, further
exports made pursuant to the aforemen-
tioned Presidential findings shall cease.
(C) Paragraphs I and 2 shall remain in
effect only until July 1, 1980.
3. Notwithstanding the foregoing provi-
sions of this subsection or any other pro-
vision of law Including subsection (u) of
section 28 of the Mineral Leasing Act of
1920, the President may export oil other-
wise subject to this subsection to any
foreign nation with whom the United States
has entered into a bilateral international
oil supply agreement prior to June 25, 1979,
or to any foreign nation with whom the
United States has entered into a multilateral
supply arrangement pursuant to section 251
(d) of the Energy Policy and Conservation
Act (42 U.S.C.'6271); Provided further, That
the President promptly notifies Congress of
each such agreement.
Mr. STEVENS. Mr. President, we have
a time agreement on a series of amend-
ments that I had considered offering to
deal with the question in the bill of the
treatment of Alaskan oil. It is. obvious
that because of the hour, the day, and
the situation in which we are involved,
this is not the time to offer a pack-
age of ' amendments merely to make a
record, and therefore, I am not going to
offer some of those amendments.
A copy of my principal amendment,
together with an accompanying "Dear
Colleague" letter, is on the deck of each
Senator. It is submitted on behalf of
Senators STEVENSON, KASSEBAUM, DOLE,
TOWER, DOMENICI, WALLOP, and myself,
as well as my colleague, Senator GRAVEL.
This amendment deletes the entire
section i g) of the bill and replaces it
with a new section (g).
The new section begins by making it
clear that the restrictions apply to oil
shipped through pipelines which have
rights-of-way granted under section
28(u) of the Mineral Leasing Act of 1920
and section 203-of the Trans-Alaska
Pipeline Authorization Act. Most pipe-
lines in this Nation, which cross Federal
land, have section 28(u) rights-of-way.
The only exception is the trans-Alaska
pipeline, which was granted a right-of-
way under special congressional action.
This amendment is intended to apply to
all pipelines in the Nation, which have
rights-of-ways granted under either of
these two laws.
The amendment in subsection 1, pro-
vides for a general prohibition on ex-
ports of oil unless they meet the con-
ditions allowing a swap in subsection 2.
However, oil which is exported to an
adjacent foreign state: that is, Canada
or Mexico, falls into two possible special
exemptions from the general prohibition
on export of oil.
Any oil sent to either Canada or Mexi-
co in exchange for the same amount of
oil being exported from that nation to
the United States, and which does not
result in any increase in prices to U.S.
-consumers, may be exported.
At the present time, such swaps are
common with Canada and refiners in the
Northern Tier of States: Large amounts
of petroleum (28.7 million barrels last
year) were swapped; and we do not in-
tend to interfere with those ongoing
exchanges.
A second general exception occurs in
subsection 1, which permits the export
of oil which is temporarily transported
across parts of an adjacent foreign na-
tion, like Canada or Mexico, and which
is returned to the United States. We do
not intend to stop those exports and so
have incorporated this exemption.
Section 2 of this amendment requires
that the President make several findings
before any crude oil can be exported. The
effect is to eliminate straight exports.
We are dealing with exchange, not sale
of oil. Section 2 of this amendment, as I
stated, specifically requires the President
to make these findings.
First, he must find that the proposed
swap would not diminish the total quan-
tity of petroleum available to the United
States. We must find that the quantity,
or volume, of oil to be refined within, or
stored within, or legally committed to
the United States will not be diminished.
It is not necessary that he find there is
no decrease in oil available for each of
July 21, 1979
these categories, but only that he find
that the total amount available for all of
these categories is not diminished.
This criterion is different from the
Riegle amendment, which requires that
there be no decrease in quality of oil as
well. Because of the different chemical
makeup of oil this requirement is impos-
sible to meet. Alaska oil is low in sulphur
but high in specific gravity. It is heavy
and many refineries cannot handle it.
But, since it is low in sulphur content,
it is valuable to some refineries in areas
of higher air pollution.
The second criterion in the amend-
ment provides that, except for minor ad-
justments due to quality and gravity ad-
justments, any swap or exchange must
have no adverse impact on wholesale or
consumer prices of the products re-
fined from such crude.
The Riegle amendment provides that
at least 75 percent of the savings of any
swap be passed on to the consumers.
This finding is impossible to make with-
out price controls on refined products,
and without massive auditing.
It is our intention-that any swap not
increase consumer or wholesale prices.
Conducted properly swaps should have
no impact and, hopefully, would reduce
prices somewhat. They would result in
transportation savings "and I hope that
the savings will benefit consumers. But
there is no way to require that and no
way to force that. It is much better
merely to prohibit any increase in prices
from such swaps.
In any swap, because of the difference
of the oils available, some minor adjust-
ments in prices will be necessary. Early
this year, when Mexican oil was selling
at about $14 a barrel, it was estimated
that the adjustment would be 38 cents.
This is the magnitude of the "minor ad-
justments." They will be small and
limited strictly to the normal kinds of
adjustments used by the oil industry to
compensate for differences in oil quality.
The third condition the President must
find before any swap is perhaps the most
important. It requires that, any contract
be terminated if the crude oil supplies
of the United States are interrupted,
threatened, or diminished. Any swap
must be completely contingent upon
delivery of the foreign oil to this Nation.
Any interruption of the delivery of for-
eign oil must terminate the contract and
all our obligations to provide oil. Without
these protections and absolute certainty
of delivery of the foreign oil no swap
can be permitted.
The fifth criterion requires any export
to meet the provisions of the other sec-
tions of the Export Administration Act.
This condition was in the Riegle amend-
ment and in the former restrictions in
the Export Administration Act.
The sixth condition in our amendment
is that if oil, which passed through the
Trans-Alaska pipeline is exported, it
must be oil in excess of the amount trans-
ported on an average daily basis during
the month of June 1979. It is our inten-
tion that the only Alaska oil that is ex-
ported be that which is new production.
This will insure that the current level
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of maritime activity will be preserved. No
jobs will be lost, no ships will have to be
drydocked. This will also insure that any
exported oil comes from increased pro-
duction. Not from current production.
This condition is not in the Riegle
amendment.
This amendment revises the congres-
sional review process of the current bill.
As reported, the bill requires that the
Congress pass a concurrent resolution of
approval within 60 days before any swap
or exchange can proceed. It is a cumber-
some and unwieldly process, which great-
ly diminishes the chances of a swap. No
provision is made for recess periods, or
days when Congress is not in session.
This amendment substitutes a provi-
sion allowing the Congress to reject any
swap. The swap can proceed while the
congressional review is underway. We re-
quire that of the 60 days in which Con-
gress must act, we must have been in
-session 30 days, thereby insuring that
Congress will have a chance to review the
swap. This language is the procedure in
the Mineral Leasing pct, which was orig-
inally agreed upon during the debate of
the Trans-Alaska Pipeline Authorization
Act. It is a good flexible procedure which
guarantees congressional oversight.
Our amendment places a time limit on
the restrictions. They will remain in ef-
fect only until July 1, 1980. The previous
restrictions in the Export Administration
Act contained a 2-year limit. It is our
strong belief that with the speed with
which the world oil situation changes, we
should not tie the hands of the adminis-
tration for too long a period. A reexami-
nation of this subject on a regular basis
is valuable and needed.
The final section of the amendment is
taken verbatim from the Riegle amend-
ment and provides that the restrictions
on exports do not apply to exports
needed to meet our international obliga-
tions. The agreement with Israel, we en-
tered into as a result of the peace treaty
with Egypt, must be honored, as well as
our obligations under the international
energy agreement, when it is itnple-
mented and oil sharing is required.
in sum. I feel this is a good balanced
amendment. It is not what I would like.
I would like' to eliminate entirely the
discrimination that some people are
waging against Alaskan oil. But this
amendment will revise the requirements
of the Riegle amendment in a reasonable
and careful fashion. Swaps or exchanges
will be permitted, but only when they are
in the national interest, only when our
consumers are protected against any
drastic price increase, and only with the
guarantee of receiving an equal or great-
er amount of oil. The amendment gives
the President the flexibility he needs.
I hope that we will support it.
Let me state, Mr. President, that there
are other problems with the Riegle
amendment. One of these is that it does
not recognize that some swaps take place
between gas and oil. We are in the proc-
ess of trying to get the gas pipeline con-
structed. If it is constructed, I envision
the swap of gas to northern Canada in
exchange for the delivery of oil to the
eastern part of the United States. Yet the
Riegle amendment would preclude that
from happening.
I cannot understand, in the first place,
why Alaskan oil should be restricted by
Congress. It is clear that with the bill
before us, as passed the House of Repre-
sentatives, most of its provisions will
survive, therefore I think this is the best
we can do at the present time.
I hope that the time will come when
some Members of Congress will under-
stand that 40 percent of the potential
oil production for the United States in
the future will be from my State.
The Riegle amendment will deter the
industry from making the investments
that are necessary to expand production
because the Riegle amendment will com-
mit us to a process of not utilizing an
exchange process to increase production
in Alaska in order to assure that the
transportation. will be to the benefit' of
the Nation as a whole.
I supported at the time of the Alaska
Pipeline Act the amendment that was
offered by Senator Pastore. We sought
to bring about an equitable distribution
of the crude oil supplies, particularly
those from Alaska, to' regions -through-
out the Nation.
With the completion of the gas pipe-
line and the adoption of this amend-
ment, I can assure the Senate that we
will, in fact, increase our production in
Alaska by at least 800,000 barrels a day.
These is no incentive today to increase
that production because of what some
call the glut on the west coast. It really
is a surplus of Alaskan oil over the abil-
ity of the western refineries to run
Alaskan oil, and that oil currently has to
go through the Panama Canal at an in-
creased price to the consumers. It is
taken into the gulf coast or to the Virgin
Islands for refining.
If we are to increase our production
up to at least the capacity of the trans-
Alaska pipeline's 2 million barrels a day,
we need to know that there is an ability
to transport that oil; that our transpor-
tation system will work, and that that oil
can be transported by virtue of ex-
changes that will inure to the benefit of
the country as a whole and increase the
quality of oil available to the United
States.
As I said, I had a series of amend-
ments, and this might be literally called
the last trench in which to fall back if
we failed on the other two. In the inter-
est of time, and because it is Saturday,
I have not even put those in the RECORD.
I am, hopeful that the Senate and my
Alaskan constituents will understand
that.
But I do believe the current provision
in the bill is discriminatory, is contrary
to the best interests of the United States,
ties the hands of the President, and will
not allow us to increase our production
in Alaska.
If we are to increase our production,
the Members of Congress must stop dis-
criminating against my State's oil. I firm-
ly believe that passage of the Riegle
amendment will result in this scenario.
There is no prohibition on the export of
products, and I do not think Congress
would -ever legislate one because almost
910177
every oil-producing State and every re-
finery exports some kind of product. If
the Riegle amendment stays in this bill,
the net result will be that my State will
have to adopt a policy of assuring that
Alaskan oil which is owned by the State
and refined in Alaska, and those products
resulting from it will be exported.
. The net long-term effect of the Riegle
amendment is contrary to the best inter-
est of the United States and it is con-
trary to the continuation of the refineries
that exist throughout the country that
are already constructed. It will lead to
construction of new refineries in my
State and, incidentally, that would not be
too bad from an economic point of view
for us over the long run, but in the short
run it would not `give us the incentive to
increase production.
. We are committed to increasing pro-
duction. We have the capability of in-
creasing production.
And I hope that the Members of the
Senate will understand that if we are
forced to delay increased production in
order to get time to build refineries, it is
just totally contrary to the best interest
of the United States.
I feel strongly that this amendment
should be adopted and I hope it will be.
I thank those who have supported me
in offering it.
Mr. President, I reserve the remainder
of my time.
Mr. RIEGLE addressed the Chair.
The PRESIDING OFFICER (Mr. Mc-
GovEair). Who yields time?
Mr. RIEGLE. Mr. President, I have
heard some interesting things from the
Senator from Alaska, and I always
thoughtthat-
The PRESIDING OFFICER. The Sen-
ator from Michigan will withhold. I do
not believe he has time. Will someone
yield to the Senator from Michigan?
Mr. RIEGLE. Mr. President, I will say
to the Chair under the time agreement
there were 4 hours evenly divided, and I
was in charge of 2 of those 4 hours.
The PRESIDING OFFICER. The Sen-
ator is correct.
The Chair stands corrected.
Mr. RIEGLE. I yield myself whatever
time I may use at this point.
I have always thought that Alaska
was part of the United States. I thought
it was one of the 50 States and we were
all tied together. Frankly, I detect what
I gather is something of a threatening
tone there that if Alaska is not satis-
fied with the arrangements in terms of
oil, it is going tp take this step and that
step and another step and find ways to
export that oil abroad. I hope that that
will not happen. I think that that would
be an exceedingly shortsighted thing to
do and even that suggestion is based on a
set of assertions that I have just heard
that are just not correct.
Alaska is not having any trouble sell-
ing the oil today that it has. In fact, it is
selling it very readily, and there are a
lot of people who want to buy it, and they
are prepared to buy more of it if it is
available.
We have a crude oil shortage in the
United States, and I am speaking now of
all the 50 States, and not just I of them.
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We have a shortage in the other 49
States, and the oil is badly needed. The
notion that somehow,or another we are
in a situation where we should start ex-
porting Alaskan crude abroad just does
not make any sense at all. Yes, it may
make sense to the Japanese because
Japan would like to be in a position
where it can get oil from the United
States for less than it is presently pay-
ing Mexico or other suppliers. But it
hardly seems that it makes sense from
a point of view of our trade situation
with Japan to facilitate them getting oil
at less money than they presently have
to pay and particularly because we gain
nothing, if we make it easier for Japan
to acquire Mexican oil under some kind
of a swap arrangement.
One of the advantages we have with
respect to the supply of oil in Mexico
today is proximity, and the fact that the
cost of transporting Mexican oil into
Houston is a relatively minor cost, about
45 cents per barrel, whereas, on the
other hand, the Japanese, if they are
going to buy Mexican crude, have to end
up spending $1.80 a barrel.
So it is clear to the extent we make it
easier and actually subsidize through
these kinds of swap arrangements the
movement of scarce American oil to
Japan at a lower price than they other-
wise would have to pay, makes absolutely
no sense at all.
Frankly, I think it in some respects is
even an insulting notion in terms of
what it means to the rest of the United
States.
If there is one thing that is obvious,
and was obvious before the President
spoke, to most people, and certainly
ought to have been obvious to all people
after he spoke the other evening, it was
that we have an energy problem in the
United States, and that we need oil.
What is being proposed by this amend-
ment, and what previously was defeated
in the Banking Committee, is the propo-
sition that says that scarce American
crude oil can leave this country and go
to foreign buyers.
Of course, my friend from Alaska
skips over the point that Alaskan oil is
some of the best in the world in terms
of its quality. It is not just the issue of
quantity, as serious as that issue is, but
it is also the fact that oil from Alaska
can yield more unleaded gas. It has other
beneficial qualities to it that have to be
considered. So the notion that somehow,
through some sort of an arrangement,
we should be unloading short-supply
high-quality American crude oil on for-
eign buyers is basically absurd right on
its face.
In terms of the notion that there is a
need here to provide additional markets,
foreign markets, in order to bring
Alaskan crude on line, I find not a scrap
of evidence to support that assertion. I
know of no document, no statement by
any of the major oil companies that are
participating in Alaska today and who
own the leases there, I know of no state-
ment in. writing by any chief executive
of those firms saying that they need the
export market for oil in order to increase
production in Alaska.
If anybody here can produce that in
IESSIIONAL R1ECOR1 - SENATE July 21, 1979
the course of the debate, I would like to work done, we would have to be in every
see it. But, frankly, it does not exist. It Saturday through July.
does not exist because they know they Fortunately, we were able to avoid a
can sell this oil quite readily. session last Saturday because of time
We desperately need not only to have agreements and the waiver of the 3-day
that oil available in the lower States rule, et cetera. We made more progress
but we need the pipeline facilities to be by getting those concessions than we
able to use it. I will tell you this: If the would have made had we come in.
Stevens amendment passes so that this All Senators were on notice that there
oil starts leaving the United States and would be Saturday sessions, that notice
goes to Japan and to other buyers, we was given before the Independence Day
are never going to get the pipeline built break; only moments ago 85 Senators
that we need. In fact, the Northern Tier cast their votes on the last rollcall.
pipeline, which is now ready to go, can- I do not think anyone should be under
not possibly succeed or be viable unless the impression that this was a sudden
we can depend upon that additional pro- move to have a Saturday session.
duction from Alaska to be available to We are here on Saturday and we are
come through that pipeline to serve all discussing an important matter. But
of these States in the lower 48 States of
the United States.
The Senator from Alaska knows that
but he is prepared to see that oil go to
foreign countries and, as a matter of fact,
it does absolutely nothing to provide any
benefit to American consumers or do
anything to improve our balance-of-pay-
ments situation. In fact, if one traces
through all the transactions here it is
obvious in virtually every instance that
it would hurt our balance-of-payments
situation. How that makes sense is ab-
solutely beyond me.
The only people who stand to gain
from the Stevens proposition are the
State of Alaska, at the expense of the
other 49 States, and the oil producers
who will make a little more money. In
fact, they will make a lot more money
if you multiply it by the number of
barrels.
So basically, to have that kind of spe-
cial legislation-and that is clearly what
it is--coming in in the midst of an energy
crisis that everybody understands really,
I think, stretches what we ought to be
trying to accomplish around here.
Frankly, I am not happy to see us
have to debate on a Saturday afternoon
this matter because this issue is a stra-
tegic issue in terms of the security of the
United States.
We are sitting in the United States
with about a 5- or 6-day supply of oil,
and if there should be another foreign
interruption, and we should have some
other problem arise, the notion we
should take this dwindling resource and
start sending it abroad ought to be some-
thing we should be debating and voting
on it when there are 100 Senators pres-
ent, and not in the waning and, presum-
ably, fading hours of a Saturday after-
noon. This is an absolutely vital national
strategic issue.
Mr. ROBERT C. BYRD. Mr. President,
will the Senator yield?
Mr. RIEGLE. Yes, I yield without los-
ing my right. t.n tho fin ,,.
Senators have a full-time job, and it is
very difficult for the leadership to keep
the legislative process moving if we are
only going to come in an Saturday for a
few hours and then go out.
Those Senators who do come in-and
there are 85 of them,-deserve consid-
eration, too. They are here, they are
ready to do business, and they are will-
ing to see this bill disposed of before
they go home.
Some Members may be out, but they
left knowing there was going to be a
session and knowing there were going to
be rollcall votes.
I would hesitate to see us put this bill
over until Monday if it can be disposed
of today. This bill could not be brought
up before now. The distinguished man-
ager was chairing the Ethics Committee
hearings, and he was unable to give his
attention to this bill. But he is here
today, and I say let us dispose of the bill
today. -
I understand the strong feelings of the
distinguished Senator from Michigan.
He may win. I hope we will not put this
vote over until Monday. I may vote with
him, but let us have a vote. Who knows,
on Monday there may be more than 85
here or there may be fewer.
I hope we will not put a vote over
until Monday on the basis that two or
three of our colleagues are away. I will
be happy to pair. Maybe we can get pairs
from the opposite side of the issue to
make up for any votes that the Senator
feels are lost to him due to absences
today. But let us try to get a vote and
dispose of the matter today.
I thank the Senator for being so
patient and for yielding.
Mr. RIEGLE. I am delighted to yield
to the majority leader. Let me just say
I think everyone appreciates, and cer-
tainly I appreciate, the fact that you put,
everybody certainly on notice about Sat-
urday sessions, and we need to work on
Saturdays, and I do not think there is
any question about that, and I do not
..-_ .nom -- -b IN SESSION TODAY that is not clearly understood in terms
Mr. ROBERT C. BYRD. Lest there be of where we begin from.
any misunderstanding as to why we are But I think it is also important to note,
doing this on a Saturday afternoon, be- and I think the majority leader knows,
fore the Independence holiday on two that we were ready to go with this bill
occasions I took the floor and explained as of the 1st of June, and the sponsor
the situation. I stated that from the day of the amendment had a hold on this
that Congress convened until the Inde- bill for many weeks, and we were not
pendence Day holiday the Senate had able to get that resolved. So an awful
been in for only two Fridays, and no Sat- lot of time has gone by.
urdays, and that following the Indepen- Mr. ROBERT C. BYRD. Mr. Presi-
dence Day holiday, in order to get our dent, will the Senator yield?
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July 21, 1979 CONGRESSIONAL RECORD - SENATE
Mr. RIEGLE. Sure.
Mr. ROBERT C. BYRD. The delay
was solely because the sponsor of this
amendment had a hold. There were
holds on both sides, and some of my
colleagues on this side of the aisle had
holds on this bill. Let us not say that it
was only because the author of the
amendment had a hold on it.
I guess? my point, Mr. Leader, is this:
We have been ready to go on this mat-
ter, and, from a legislative point of
view, the action of the committee has
been taken, and for whatever the rea-
sons, a month and a half has now passed
without our being able to bring the mat-
ter up.
I think I and those on my side have
been ready to deal with it for that en-
tire month and a half. We are ready to
deal with it today, and we will deal with
it today. But my concern is this: This
is a vital issue. What the President said
the other night was correct, as you and
I know, and it is a vital matter.
Mr. ROBERT C. BYRD. I want to
vote with the Senator.
Mr. RIEGLE. I understand. But the
problem is that this bill has to be de-
bated. There may be other amendments.
I have no way of knowing how many
other amendments may come up. My
concern is that we are starting very
late in the afternoon. This is a Saturday,
I am prepared to stay here, and will
stay all night long, but I do not know
whether everyone else is in the same
situation. That is also a factor.
I do not understand why, when we
have waited a month and a half, it must
be debated and voted on today. Why not
debate it today and let a vote take place
on Monday, when everyone will have the
opportunity to vote?
Mr. ROBERT C. BYRD. That may be
the only way the matter can be disposed
of, in the interest of fairness to all and
in the interest of trying to accommodate
Senators on both sides of the issue.
I would say one quick way to find out
where the votes are is to call up the
amendment and quickly move to table
it. That would bring the votes in in a
hurry. I would not try to.influence the
Senator to do that; he feels strongly
about the matter, and wants it debated.
But is it not a reasonable suggestion
that while the Senator is debating the
issue and holding the floor, that some of
those who are with him on the question
might explore the possibility of reducing
the time and voting on the amendment
today?
I am told that the Senator's side will
win if he will bring it to a vote today.
Mr. RIEGLE. I hope that is right.
Mr. MELCHER. Mr. President, will the
Senator yield, without losing his right
to the floor?
Mr. RIEGLE. Yes, I yield without re-
linquishing my right to the floor.
Mr. MELCHER. I think without a
doubt we ought to win overwhelmingly
in defeating the amendment. What is the
advantage to the Stevens amendment?
Who gets help?
First, the oil companies get help, be-
cause they can get their crude sold in a
better way. I do not question that. There
has not been one moment since we
started talking about clearing the way
for the Alaskan pipeline bill that the
owners of the crude on the North Slope
have not made it abundantly clear that
the best place for them to sell that oil
was in Japan.
Mr. STEVENS. Mr. President, will the
Senator yield?
Mr. MELCHER. I am delighted to
yield.
Mr. STEVENS. I hope the Senator does
not talk about sale, because he knows
that is what got us all the headlines
before and that this solely involves the
question of exchanges.
Mr. MELCHER. Let us talk about ex-
change, then.
Mr. STEVENS. Nobody is talking about
selling oil to' Japan. There is a specific
prohibition against selling the oil to
Japan.
Mr. MELCHER. I want to get to that
point, because that is the biggest turkey
of all. The exchange of oil, with whom?
Canada or Mexico? Canada is not going
to do it. Mexico will sell us all the oil
we want to buy from them that they have
available to sell, except for what they
need, and some other pressing commit-
ments they might have. We are getting
500,000 barrels a day out of Mexico now.
If they get their production up to a
million, I suppose we will purchase about
750.000 barrels a day from Mexico.
We do not need the amendment for
crude exchange, sending Alaskan crude
to Japan, to buy Mexican oil. The fact
is that the effect of the Stevens amend-
ment is to decrease the amount of oil
that will be coming to the United States.
We cannot gain from Mexico in that
way; they have got it for sale, all we
have to do is offer them the money. As
their production increases, our opportu-
nity to purchase more from Mexico will
be there. So we do not gain from the
exchange.
I do not begrudge the State of Alas-
ka wanting to get the biggest price they
can for Alaskan crude. An exchange ar-
rangement would give them a better re-
turn. I do not begrudge the Alaskan
Natives getting the best return they can
from Alaskan crude from the North
Slope. An exchange with Japan would
give them a better price. But I do be-
grudge decreasing the stable supply that
is near and available for the entire
United States. I do not want to do that
at all.
One of the tough agreements that we
had with the trans-Alaska pipeline bill,
on is passage, insisted upon by the New
England coalition, was the equitable
distribution clause, which is cited here
as clause U.
Mr. STEVENS. Mr. President-
Mr. RIEGLE. Mr. President, I have
not yielded the floor. I yield to the Sen-
ator from Montana (Mr. MELCHER) ;
Mr. MELCHER. I would like to make
one further point, then, if the Senator
from Michigan will yield to the Senator
from Alaska, perhaps the Senator from
Alaska will want to address this point,
too.
We are about ready, I hope, in this
country, to develop an energy policy,
S 10179
including the transportation of oil with-
in the lower 48 States. The Northern
Tier pipeline has been mentioned, a pipe-
line that would go from Port Angeles,
Wash., across Idaho, through my State,
through North Dakota, and then to
Clearbrook Minn., to hook up with exist-
ing pipelines. It is a big proposal. It
would have the capacity of 90,000 bar-
rels a day.
The hope is we are going to be able
to clear up the environmental impact
statement by late August, and by Octo-
ber 15 the Secretary of the Interior is to
make a recommendation to the Presi-
dent for selection of a route.
Hopefully, from my point of view and
I hope from that of most people in the
Northwest, that route will be the North-
ern Tier pipeline system. When that
happens, Federal permits are issued, and
if State permits are issued, the first
thing Northern Tier will have to do is
go to the bonding market and try to sell
some bonds. Without an assured supply,
a great deal of which must be Alaskan
crude, those people will have a very
tough time. The Northern Tier officials
would have a very tough time in the
bonding market selling their bonds
without available Alaskan crude sup-
plies. With Alaskan crude being avail-
able, it will be a fairly easy job selling
the bonds.
The Senator from Alaska says this is
an exchange which could be interrupted.
I want to tell you, if there is anything
that queers the money markets in this
country today, it is the doubt or uncer-
tainty about decisions of executive
branches of government to change
market supply conditions that exist. And
once this exchange goes into place, what
is the hope, or even the opportunity, for
Northern Tier going into the bonding
market and selling its bonds? It would
put their AAA rating down to A-, or
maybe B-*; but it would be a tough job.
So we are tampering here with the
opportunity of a very key part of satisfy-
ing our energy needs. We are tampering
here with the problem of distribution of
crude from" Alaska by the proper con-
struction of pipelines to the refineries
that need the crude. I thank the Senator
for yielding.
Mr. RIEGLE. Mr. President, let me
make it clear-on my time, now; I still
have the floor-what my intention is.
That is to yield briefly to the Senator
from Indiana. There are other Senators
who have asked to speak, and who want
to insert statements in the RECORD. I am
going to ask unanimous consent that
they have the opportunity to do that,
and then I want to yield a couple of
minutes to the Senator from Alaska, so
that he can say whatever in addition he
wants to in response to these points, and
then I intend to move to table the
amendment.
In any event, that is what I will very
shortly"do. So let me yield to the Sen-
ator from Indiana.
Mr. STEVENS. Mr. President, will the
Senator yield to me for a parliamentary
inquiry?
Mr. RIEGLE. I yield.
Mr. STEVENS. The Senator has no
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S1?18
CONGR]ESS][ONAIL RECORD - SIENATIE July 21, 1979
right to do what he has just said he
plans to do. We are under controlled
time, and a motion to table is not in
order until time is yielded back.
Mr. BAYH. A parliamentary inquiry,
Mr. President.
The PRESIDING OFFICER. The Sen-
ator will state it.
Mr. BAYH. If the mover of the motion
to table yields back his time, then a
motion to table is in order, is it.not?
The PRESIDING OFFICER. The time
of the proponents of the amendment
must be yielded back before a tabling
motion can be in order.
Mr. STEVENS. I will be happy to work
out a time agreement to shorten the
time allotted for the consideration of
this amendment, Mr. President. If the
Senator from Michigan wants to discuss
that time limitation now, I am sure he
can be accommodated.
Mr. RIEGLE. Let me say I thought the
Senator had yielded back his time
earlier.
Mr. STEVENS. I had reserved the re-
mainder of my time.
Mr. DURKIN. Will the Senator yield?
Mr. RIEGLE. I will yield to the Sen-
ator shortly, but I agreed to yield first
to the Senator from Indiana. I will yield
3 minutes to the Senator without losing
my right to the floor.
Mr. BAYH. Mr. President, I rise to join
with my colleague from Michigan to
state my strong opposition to unbridled
exports of Alaskan oil, and urge my col-
leagues to support the restrictions on ex-
porting Alaskan oil contained in the Ex-
port Administration Act amendments
now before the Senate. The limits on
Alaskan' oil swaps or exports in the bill,
which were sponsored by Senator RIEGLE,
and adopted by a majority of the Bank-
ing Committee, will insure that no oil
will leave bur shores unless it can be
demonstrated, beyond a doubt, to both
Houses of Congress, as well as the Presi-
dent, that such action is clearly in the
national interest. These provisions, it
seems to me, set only minimum standards
for permitting exports or swaps of
Alaskan oil: p
That exports will not diminish the
quality or quantity of oil in the United
States;
That exports will result in lower acqui-
sition costs to our refiners;
That these lower costs will be passed
on to consumers; and
That contracts for exports can be
terminated Ty the United States if our oil
supplies are interrupted.
Exports to meet our bilateral commit-
ments to Israel, in the event of Israeli
supply problems, are exempt from these
restrictions, as are any exports that
might be necessary to meet our commit-
ments to the International Energy
Agency in the event of sudden worldwide
shortages.
Finally, any Presidential recommenda-
tion for swaps will have to be approved
by both Houses of Congress, a reasonable
review process given the importance of
the issue before us.
Mr. President, I consider these provi-
sions minimum requirements. If I had
my druthers, I would permit no exports
of Alaskan oil except for the most ex-
traordinary circumstances. The question
-before the Senate today is whether
Alaskan oil should be consumed in this
country or sent abroad. I submit that it
should stay here, that it must stay here,
.and that it is our responsibility to do
everything in our power to end one of
the most glaring ironies of our times-
the presence of a surplus of oil on the
west coast coincident with hour-long gas
lines and shortages at service stations
all over the Nation.
Mr. President, there is a great skep-
ticism among the people of my State and
the rest of this Nation about the causes
for recent oil shortages and soaring
prices. In the face of this skepticism, and
the sacrifices that are going to be asked
of the American people,. I do not see how
we can permit exports of Alaskan oil and
still expect the public to contribute to
our conservation efforts or have any con-
fidence that we are making real efforts to
equitably resolve our energy problems.
The Alaska pipeline has been operating
for almost 2 years now, and approxi-
mately 1.2 million barrels of oil flow daily
through the line from Alaska's North
Slope to Valdez for tanker shipment to
California and east coast refiners. By
the end of this year, production will in-
crease to 1.4 or 1.5 barrels per day. The
pipeline could handle a throughput of 2
million barrels per day. But this addi-
tional oil is not being produced, and the
pipeline has not been modified to handle
it, because west coast refineries are in-
capable of absorbing all of this oil.
Therefore, approximately 350,000 to 400,-
000 barrels per day must be shipped
through the Panama Canal to the east-
ern part of the country, and Alaskan
producers have chosen not to increase
production by another 500,000 barrels be-
cause of the expense of shipping oil
through the canal. Conservative esti-
mates place the cost of this transship-
ment at $3 per barrel which comes out
of the producer's pockets. According to
a General Accounting Office study re-
leased last July, the west coast surplus
could reach up to 2 million barrels per
day by 1985, at the same time that large
sections of the country-the Midwest and
East especially-will become more de-
pendent on imported oil and petroleum
products.
Mr. President, the discovery of oil on
the North Slope of Alaska has been a
godsend to this Nation. Oil production
during the first year of the pipeline's
operation was responsible for keeping
$1.3 billion in this country and reducing
oil imports by 13 percent. North Slope oil
and reserves off the east and west coasts,
and the Alaskan coast, represent the only
new major sources of domestic petroleum
we are likely to have. Proven reserves on
Alaska's North Slope have been esti-
mated at 10 billion barrels, and in all
likelihood these reserves are probably
closer to 50 billion barrels. At a rate of
2 million barrels per day, this oil supply
will continue to serve America's needs
for liquid energy for decades-if we pre-
serve it for our own use.
Mr. President, the oil companies want
to export this oil, which they ironically
dub "surplus" oil. And, if they are given
the freedom to export domestic oil, you
can be sure that as production increases
in Alaska this oil will end up in Tokyo
and not in Butte or Des Moines, or Mil-
waukee or Indianapolis.
Mr. President, at a time when we are
lifting price controls on domestic oil, at
a cost of untold billions of dollars to our
constituents, in the hopes of maybe pro-
ducing a couple of hundred thousand ad-
ditional barrels of domestic oil, it is in-
credible to me that we would permit
what is likely to be considerably more
oil than this to leave our shores so that
the Alaskan oil producers can enlarge
their coffers even further.
We are going to need that Alaskan
oil down the road for ourselves, make no
mistake about it. Despite our best efforts
at conservation, and at conversion to
alternative fuels, we are going to start
running out of liquid fuels in this coun-
try sooner than we would like to admit.
It would be the height of folly and
shortsightedness to construct a situation
which rewards those who export our
rapidly diminishing and increasingly
precious supplies of petroleum, rather
than fashioning a long-term, durable
and equitable solution to our oil distri-
bution problems.
I would like to see us produce every
drop of Alaskan oil we can, Mr. President
and I am sure my colleagues who sup-
port exports of Alaskan oil feel the same
way. However, I part company from
them in that I believe we should reserve
Alaskan oil solely for our own needs and
not set up a situation where it will be
more attractive for American oil pro-
ducers to sell our fossil fuels abroad than
it is for them to sell them at home. This
is exactly what will happen without
strong and permanent legislative" re-
strictions which reduce the likelihood of
Alaskan oil exports.
EXPORTS ARE NOT NECESSARY FOR INCREASED
ALASKAN PRODUCTION
The argument has been made, Mr.
President, that we must permit exports
in order to provide increased incen-
tives-that is, profits-for the major
Alaskan oil producers to step up their
production on the North Slope. By pro-
viding the President with greater leeway
to authorize exports, the argument goes
and by allowing the producers to export
even greater amounts of Alaskan oil to
Japan, they will have the necessary in-
centive to go out and find and produce
more Alaskan oil.
I, for one, simply cannot buy this ar-
gument, Mr. President. I do not think
extra profits are the necessary key to in-
creased production in Alaska. Instead, it
seems clear to me that a transportation
system that can efficiently move that oil
to domestic. markets is the key to in-
creased production. And permitting ex-
ports of Alaskan oil is the surest way I
know of guaranteeing that that system is
never put in place.
Mr. President, I can certainly under-
stand the desire of the major. Alaskan
oil producers-Exxon, Sohio, and Arco-
to sell domestic oil abroad. Right now,
Alaskan producers receive OPEC prices,
minus transportation costs, for their
product. Thus, they have been absorb-
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
ing the $3-per-barrel cost of shipping
their oil to gulf coast ports. The desire
of the producers to export Alaskan oil
stems from their hope of capturing the
savings in transportation costs that
would accrue to them by shipping Alas-
kan oil to Japan, which is cheaper than
shipping it to American refiners through
the Panama Canal.
-Frankly, Mr. President, I am getting
tired of being told that ever larger oil
company profits is the only sure fire
method of decreasing our dependence on
foreign oil. The question before us is as
clear a refutation of that argument as
I have seen. It is clear to this Senator
that the oil companies are already mak-
ing a healthy profit on Alaskan oil, es-
pecially in light of producers' original
expectations and recent OPEC price
increases.
The return of Alaskan producers at
the wellhead was about $7 per barrel be-
fore the most recent round of OPEC
price increases. In the first 6 months of
this year, producer wellhead profits have
increased by more than 70 percent, ac-
cording to the Petroleum Intelligence
Weekly. If Alaskan producers were not
making enough to increase exploration
activities before 1979, it seems to me they
have plenty of incentive for increased
exploration and production in Alaska
now. On the average, prices for Alaskan
oil are up as much as 40 percent over
1978 end of the year prices on the west
coast. Alaskan oil is also going for much
higher prices on the gulf coast, because
of Mexican price increases. Mr. Presi-
dent, I ask unanimous consent that this
article, which appeared on June 18, be
inserted in the RECORD at the conclusion
of my remarks.
The PRESIDING OFFICER. Without
objection. it is so ordered.
i See exhibit 1.)
Mr. BAYH. A clear indication that pro-
ducers have sufficient incentive to further
develop Alaskan resources is the an-
nouncement made by North Slope pro-
ducers that production will increase by
up to 300,000 barrels a day by the end of
1979. It does not seem, therefore, that the
limitations contained in the expiring pro-
visions of the Export Administration Act
have been much of a disincentive to in-
creased production. Nor do I'think the re-
strictions placed in this bill will be either.
The plain fact is that we can expect high-
er production in Alaska because the oil
companies are sitting on a gold mine up
there and it is already profitable for them
now to develop Alaskan resources. Fur-
ther evidence of this fact is Arco's in-
tention to actively develop the Kuparuk
field, which should yield 60,000 barrels of
oil per day by 1982. Mr. President, those
producers just want to squeeze every
penny they can from that oil. That is
their responsibility to their shareholders
and I do not fault them for it. But our
responsibility is to safeguard the public's
interest by keeping that oil here in
America.
CONSUMERS WILL NOT BENEFIT FROM EXPORTS
Who can expect to benefit from ar-
rangements to swap Alaskan oil with
Japan? Certainly the oil companies will
benefit. And the State of Alaska will ben-
efit. But the American people will not
benefit. Even the proponents of Alaskan
oil swaps do not argue that the trans-
portation savings that would result from
such swaps will go to American con-
sumers. If such were the case, the pro-
ponents of swaps would have a stronger
case. And the language in this bill per-
mits swaps that will 'reduce costs to
American citizens if they are substan-
tial. I urge the Senate not to backtrack
on these provisions. While I believe ex-
ports may be a bad idea under any but
the most extraordinary conditions, they
certainly must not even be considered
unless they will benefit American con-
sumers through lower prices.
EXPORTS WILL HEIGHTEN OUR VULNERABILITY
TO FOREIGN SUPPLIES
Mr. President, the trans-Alaskan
pipeline was sold to the Congress and
the American people as a means of re-
ducing our dependence on imported oil.
Our reliance on unstable foreign, oil is
universally perceived to be one of our
most pressing national problems. There-
fore, it is essential that we consider the
impact of permitting swaps on our ef-
forts to mimmize disruptions stemming
from interruptions in the flow 'oi for-
eign oil to the United States.
Our dependence on foreign oil has
actually increased in the 2 years since
production in Alaska began. I think it is
central to our understanding of this issue
to observe that the exchange of Alaskan
oil for Mexican or Indonesian crude oil
will not reduce in any way our reliance
on imported oil. Simply put, oil swaps
will at best leave us just as vulnerable to
oil supply distruptions as we currently
are, and at worst, increase our depend-
ence on foreign oil.
Mr. President, although we cannot ad-
dress the specifics of an oil swap arrange-
ment, since none has- yet been negoti-
ated, the general outlines of such a plan
are clear. In all likelihood, the United
States would agree to send an amount of
Alaskan oil to Japan in exchange for re-
ceiving oil purchased by Japan fom Mex-
ico or Indonesia in the United States.
I think it is a very telling reminder of
the degree to which such an arrangement
would place U.S. energy supplies at the
mercy of foreign producers to recall that
only recently it was assumed that a swap
proposal would involve Iranian oil. We
need no more graphic illustration of the
foolishness of continuing to rely on for-
eign suppliers for our crude oil needs
than the Iranian oil cutoff earlier this
year. We cannot afford to overlook the
possibility that events in Mexico or In-
donesia sometime down the road could
result in disruption of oil shipments from
these countries. Where would the United
States be left then? We would still have
a commitment to ship U.S. oil to Japan.
Even if we were able to break such an
obligation, we would find ourselves in
precisely the same situation we face now
with a glut of oil on the west coast and
no transportation system in place to
move supplies to the eastern part of the.
country. In addition to subjecting our-
selves to these uncertainties, I believe
that swaps would retard progress on our
real problem; the inability to get Alaskan
S IO181
oil where it is needed and where it can
be refined. It is clear to me, that en-
couraging even greater dependence on
foreign suppliers is irresponsible and
shortsighted. Instead, we must look to-
ward a long-term solution to our Alaskan
oil distribution problem.
NEED TO BUILD WEST-EAST PIPELINES
Mr. President, I want. to see oil imports
decline and not increase. Rather than
sending our Alaskan oil to Japan in ex-
change for foreign oil, I want to see it
going to Indiana, Ohio, Montana, and
Wisconsin and Michigan and Minnesota
and other States along the Northern Tier
and in the Midwest. And I would like to
see New England rely less on imported
oil and refined petroleum products, and
more on domestic oil.
Right now, our only alternative to
shutting Alaskan oil in the ground, or
exporting it, is to ship it through the
Panama Canal all the way from Alaska
to Puerto Rico and the gulf coast. We all
agree that this process is cumbersome,
expensive and wasteful. But rather than
throw up our hands and give in to the
iongstanding desire of the Alaskan oil
producers to export American oil, we
must take decisive action to establish an
oil distribution system that can effici-
ently move Alaskan energy resources to
the lower 48.
Mr. President, permitting exportation
of Alaskan oil is the worst possible step
we can take right now if we are truly in-
terested in stimulating construction of
new pipelines to move this vast natural
resource to factories and farms and
homeowners all around this country.
What is so very frustrating about this
debate, Mr. President, is that it is not a
new issue. This is a fight many of use
have been waging for over 6 years now.
Back in 1973 I, along with our distin-
guished Vice President, opposed the Alas-
kan oil pipeline route, as opposed to a
trans-Canadian route, because it was ob-
ous to us, even at that time, that an Alas-
kan route rather than a trans-Canadian
route would not provide oil to the sections
of the country that needed it most, but
would likely result in a surplus of oil on
the west coast instead. How ironic it is.
that the route touted as superior because
it was "all-American" should now be the
stimulus for exports of American oil, and
increased dependence on foreign sup-
pliers.
Mr. President, I certainly take no
satisfaction in noting that our most dire
predictions in 1973 have come true.
When we lost the fight for a trans-
Canadian route 6 years ago. by a hair-
splitting vote. we tried to flat out pro-
hibit the export of North Slope oil to
make sure that it would be equitably
distributed within our country. We lost
that fight too and the problem is still
with us. However, back in 1973, we did
at least manage to get language re-
stricting the conditions under which
Alaskan oil could be exported. Under
the terms of that 1973 legislation, any
exports of Alaskan oil. with the excep-
tion of these to Mexico or Canada. would
have required a Presidential finding.
subject to a two-House congressional
veto, that such exports would not di-
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S 10182 CONGRESSIONAL RECORD - SENATE
minish the quality or quantity of petro- pipelines for expedited Federal proce-
leum available in the United States and dures by the year's end. Loosening ex-
that such exports would be in the port restrictions now, when the admin-
national interest. istration is ready to act, would be ex-
In 1976, the Alaskan oil problem was actly the wrong signal at the wrong
addressed once again when the Con- time.
gress passed the Alaskan Natural Gas Mr. President, permitting Alaskan oil
Act. A provision in that bill, sponsored, exports now is the best way I know to
I beileve, by my colleague from Mon- make sure that these proposed pipelines
tana i Mr. MELCHER), required the old to carry oil east will never be built. The
Federal Energy Administration to rec- more we procrastinate in providing for
ommend a means of expediting the con- the redistribution of Alaskan oil, the
struction of new pipelines designed to heavier the pressure from the oil com-
distribute Alaskan oil in an equitable panies will be to export it. Let us not for-
manner around the country. Early in get that back in 1973, the oil companies
1977, I joined with Senator MELCHER and denied that there would be an oil glut
14 other colleagues in urging the FEA on the west coast; or even that they had
to live up to its statutory responsibili- any intention of exporting any oil. But,
ties. Unfortunately, decisive recommen- clearly, this has been their preferred op-
dations were not forthcoming, although tion all along. This lingering hope has
FEA did acknowledge that several sug- slowed investments in increased refining
gested pipeline proposals were techni- capacity on the west coast, and made
cally feasible and could be made opera- investors leery of backing proposed west-
tional within a few years. east pipeline projects.
Impatient with the clear desire of the Mr. 'President, the most sensible way
oil companies to export Alaskan oil, and for us as a nation to take advantage of
the foot dragging on this issue down- Alaska's mammoth hydrocarbon reserves
town, and, in the face of rumors that is through increased refining capacity
possible oil swaps with Japan were in on the west coast and constructiton of
the offing, in May of 1977 I joined with west-east pipelines. Rather than view-
many of my colleagues, who are today ing swaps, as the administration does, as
supporting the tough provisions in this an acceptabale option in the event that
bill, to prohibit, outright, any export of these goals are not accomplished, it is
domestic oil. While our amendment high time that we here in Congress make
failed to pass the Senate, it carried in it clear, once and for all, that exports
the House, with the result that restric- will not be permitted; A clear signal on
tions on Alaskan oil imports placed in this issue will do more to remove uncer-
the 1973 trans-Alaskan pipeline authori- tainty in, the private sector about the
cation bill were strengthened. wisdom of investing in these
projects,
These new provisions required a find- than hours of moral exhortation. TO my
ing beyond that in the 1973 bill-that mind, we have already wasted 6 years
any swaps or exports of Alaskan oil on this. I say it is time to send a message
would not result in increases in con- loud and clear to all those watching these
aumer prices as a consequence of their deliberations: "There will be no export-
implementation. Further, it provided ing of Alaskan oil so get on with the job."
that one House of Congress could over-
OF TRADE
ride any Presidential decision to export BALANCE
or swap Alaskan oil. I think it is also so important, Mr. Presi-
Finally, Mr. President, almost 2 years dent, that we look very closely at one
ago, I joined with Senator MELCHER of additional argument made by those who
would Montana in introducing legislation de- alow for pa exports-the sup-
signed to stimulate constructon of pipe- hled h positive o fm act that they would
lines to carry surplus Alaskan oil from have have
a great our overall
deal of tbalance rouble e accepting of trade. I
the west coast to the interior of our argument g that exporting atthe
and
country. This bill was meant to expedite de commodity the a bes
Federal permitting processes, better co- deal l with our ur admittedly trot way to
ordinate Federal and State teuSlesamr
permitting, trade deficit with Japan. ran. As a Senator
make these projects a top priority in from a State that is desirous of export-
Federal agencies with jurisdiction over ing both agricultural and manufactured
interstate pipelines, and provide ade- products, I have spent a good deal of my
quate, but not protracted, opportunities time recently pondering this situation. I
to challenge these projects in the courts. would suggest that exporting Alaskan
In other words, our legislation was an oil offers more a seductive remedy or
attempt to free ourselves from, bureau- "quick fix" for our present trade prob-
cratic redtape and delay. lems with Japan than a well thought out
Last fall, a modified version of this proposal for addressing this legitimate
l
. .
bill was incorporated into the Nati
on
T
i
quires are now in preparation. In fact,
the Department of Energy has just re-
leased its findings, and was expect the .
President to recommend one or more
July 2'1, 1979
which could be used in Indianapolis,
where the major oil supplier for that
metropolitan area almost had to shut
down this winter because of the disrup-
tions in the world oil market. Events in
the past 4 months have demonstrated
that we can reduce our trade deficit
through enforcement of fair trade laws
and an aggressive trade negotiating
strategy to open more of the Japanese
public and prvate market to U.S. exports.
With the perseverence of our trade
negotiators, Mr. President; we have seen
the dollar recover against the yen, sharp
'reductions in steel imports from Japan
and at least some promise through
multilateral trade negotiations that In-
diana farmers will be able to export
more soybeans and other agricultural
products to Japan.
Mr. President, this is certainly not to
suggest that our trade problems with
Japan have been solved-far from it. It
is, however, to recognize that progress
can be made on these issues in a way
that can have a beneficial long-term im-
pact on strengthening the dollar abroad
and defeating inflation here at home
without mortgaging our energy security.
We can do this without shedding a drop,
of U.S. oil, which should be used to fuel
our own steel mills, and the tractors on
our family farms, and not in Japan.
In closing, Mr. President, I again
strongly urge my colleagues to support
the language the Banking Committee
has put in the bill. As I said earlier, it
is hard for me to conjure up any circum-
stances under which I think we should
be exporting Alaskan oil. To my mind,
the conditions set in this bill regarding
exporter-that they will not diminish the
quality or quantity of oil in the United
States, that they will result in lower
costs to American refiners within 3
months, at least 75 percent of which will
be passed on to American consumers,
and that they could be terminated in the
event of an interruption of U.S. oil sup-
plies-are absolute minimums necessary
to even consider exports. Should the
President find that exports would meet
these conditions, the Congress would
still have an opportunity to evaluate this
judgment and both Houses would have
to concur in this decision.
It seems to me this ' is an entirely ap-
propriate exercise of congressional over-
sight-,something we should be doing
more of.
Mr. President, at a time when we are
asking the American people to recognize
our serious energy problems, and asking
them to dig down deeper into their pock-
ets and pay more for energy, and asking
them to turn down their thermostats and
drive
tbeir c
l
ars
ess, I do not believe we
n a more efficient and effective way should
give
than by shipping American oil to Tokyo opportunity to American
near nearly half producers l-
that will be desperately needed in Nor- lion baels of oil Per to Japan hala mio
thern Tier States when the Canadians they can make even greater profits. And
cut off their oil exports to us in 1982 and I believe that is what this fight boils down
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July 21, 1979 ' CONGRESSIONAL RIECO
to. Such an action would remove all in-
centive for the construction of pipelines
that can efficiently and equitably distrib-
ute Alaskan oil throughout the Nation.
It would remove all incentive for in-
creased refinery capacity. It can only
deepen our dependence on other nations
for our energy supplies, increase our su-
sceptibility to economic disruption and
political blackmail and deplete a pre-
cious and shrinking national resource
that we desperately need for ourselves.
Further, it will only serve to increase the
confusion and skepticism of the Ameri-
can people about the nature of our en-
ergy problems and our ability to deal
with them equitably.
Mr. President, I hope the Senate will
decisively defeat any attempts to delete
or weaken the language in this bill re-
stricting exports of Alaskan oil and put
this issue behind us once and for all. By
so doing, we will send a clear message to
all concerned that this Congress wants
to see Alaskan oil used at home. This is
essential for stimulating investment in
new refining capacity and pipelines. I
suggest that it is the simplest. most direct
and fairest way to make headway on the
need to move the vast energy sources of
Alaska to the lower 48 so that they will
truly serve as a replacement for imported
oil, and not as a stimulus to increased
imports.
Mr. President. I have just a few addi-
tional remarks so we can move on to try
to get a vote on this issue. I am hopeful
that the Senator from Alaska and the
Senator from Michigan can resolve this
so we can get about voting on this and
move to other items.
It seems to me that at this particular
time we are being asked again to decide
whether the energy policy of this coun-
try is going to be based on what is in the
national interest or whether it will be
based on what is good for a small vested
interest. Some of us stood on this floor
when the pipeline issue in Alaska was
being debated. We did not say, "Do not
build a pipeline," or that we were more
concerned about the environment, but
what we said was that when the corpora-
tions of this country moved to make a
major investment to get Alaskan oil to
the lower 48, it ought to be distributed
in a way to meet the needs of all of our
citizens. The pipeline should have end-
ed in the center part of the country. so
that States east and west could benefit
from it. It does not do any good to say,
"I told you so," about the glut. I do not
like people who say that. But right now
it is time to reinforce what we said then;
that if we are short of energy it does not
make any sense to take Alaskan oil and
ship it to Japan in exchange for Iranian,
Indonesian, Kuwaitian, Mexican, or Ni-
gerian oil that we can get anyhow, or
buy foreign oil to put into the strategic
petroleum reserve in Louisiana. That
D - SIENAT
makes about as little sense as anything
we have been asked to do.
We need to have a permanent way to
distribute this petroleum. We need to be
utilizing that pipeline 100 percent. The
price Alaskan oil producers are getting.
thanks to OPEC. has increased signifi-
cantly. providing more than enough in-
centive to go out and produce more oil
on the North Slope.
We need to do what the Senator from
Montana. the Senator from Michigan,
the Senator from Indiana, and others
have been trying to do. get a pipeline
built so that Alaskan oilcan efficiently
get to our part of the country, and the
eastern part of the country. Instead of
being confined to the west coast.
Permitting Alaskan oil exports is the
wrong signal to send to the people of
this country right now. They do not be-
lieve we have an energy problem. They
think they are being ripped off by the oil
companies. What do we do? We confirm
that by doing what the oil companies
want us to do with Alaskan oil.
EXHIBIT I
ALASKA PROFITS BOOM AS OIL PaICEs TRACK
OPEC's UPPER TtEa
Oil companies producing Alaskan North
Slope crude have increased their profits by
more than 7O' thus far this year by track-
ing the leading edge of OPEC price .in-
creases. After-tax profits on Alaskan sales to
the United States West Coast and Gulf Coast
markets have soared past $3 a barrel and
could reach as much as $4.10 (an 85% jump)
when the latest boost is fully applied, ac-
cording to a Petroleum Intelligence Weekly
analysis. Alaskan crude oil prices are effec-
tively free of U.S. price controls and can be
sold at world market levels, delivered to West
or Gulf Coast markets. The price of Alaskan
oil at the wellhead is now between $9.50 and
$10.50 a barrel and could move as high as
$12.93 under present price control rules.
Alaskan crude oil prices have traditionally
been linked with Saudi Arabian Light crude
(with some adjustments for quality). But
producers are clearly not following Saudi
price "moderation" this year. In fact, one
company openly endorses a higher $17 a bar-
rel "de facto" price for marker crude, rather
than the official $14.55. The higher de facto
marker price was first proposed by Algerian
Sonatrach's Nordine Alt-Laoussine (PIW
May 28, p. Si and other African OPEC na-
tions and North Sea producers have raised
their prices accordingly. North Slope pro-
ducers are following suit, and one key seller
I Ironically. a Sonatrach customer) says."Ait-
Laoussine's view of the world isn't all that
crazy."
Higher Alaskan prices are emerging from a
rough-and-tumble of hectic price moves in
recent weeks. While the specifics vary de-
pending on buyer and seller, prices are up as
much as 40 percent over end-1978. an in-
crease of more than $5 a barrel on both the
West and Gulf Coasts. Buyers say Sohio has
been the most aggressive in seeking price
increases lit has 52.6 percent of the North
Slope's 1.22-million b/d, while Exxon and
Arco (with 20.6 percent each) are said to be
more "moderate." Last year when crude oil
5101
was in surplus. Alaskan crude buyers put
producers in a squeeze. forcing substantial
price reductions "Those that squeezed hard-
est then are probably regretting it most
now." a supplier notes.
The target price on North Slope contract
sales to West Coast buyers is now about
$17.80 a barrel. That's $2.00 a barrel higher
than the theoretical delivered price of
"cheap" Arabian light crude, but a real bar-
gain compared with alternative imported
crude supplies. By comparison, North Slope
crude, last December. was selling for $1.30
less than the landed price of Saudi Arabian
Light. "Even if you could get extra Iranian
or Kuwait or Abu Dhabi crude at official
prices-and you can't-Alaskan looks good
Compared to $35 spot crude. North Slope is a
steal at $17.80," according to a West Coast
refiner.
At a $17.80 selling price on the West
Coast, producers would reap an overall profit
of $4.11 a barrel after tax. PIW estimates.
That's at least 40' more than the profit
possible on sales to the more distant Gulf
Coast markets and explains why producers
are moving to boost West Coast sales. Vol-
umes are already up to 875.000 b/d, more
than anyone originally expected, and the
companies now talk confidently of selling
950,000 b/d in that market as total North
Slope production rises to 1.4-million b/d
later this year. The limitation is the ability
of California refiners to handle relatively
high sulfur Alaskan, though this has not
proved a major obstacle in recent times.
Demand is strong for the crude's larger fuel
oil fraction, and refiners are a lot less picky
now that crude is short.
Alaskan suppliers are clearly not interested
in selling to Gulf Coast buyers at the moment
and have cancelled many deals as soon as
contract terms allowed, Some have even re-
fused offers to "fully match" West Coast
prices, PIW understands. The nominal Gulf
Coast selling price sought by some suppliers
is now about $18.55 a barrel, leaving
producers a very substantial $3.71 after-tax
.profit. This price is basically connected with
Mexico's pricing. One buyer tells PIW: "The
Saudi price isn't the basis for the Gulf Coast
any more; we're watching Mexico." The big
$3 jump in Mexican prices April 1 (to $17.10)
was largely the basis for the $2 May jump in
Alaskan prices at the Gulf. Much of the Alas-
kan crude moving to the Gulf is part of ex-
change deals involving higher quality im-
ported crudes. A large volume also moves to
the virgin Islands refinery of Amerada Hess.
The following tabulation shows PIW's
analysis of costs and profits on North Slope
oil production based on prices asked and paid
in early June. But it doesn't reflect the latest
$1 a barrel that North Slope sellers are seek-
ing and West Coast buyers will probably pay.
Profits are shown on both crude oil produc-
tion and the Alaskan pipeline operation, with
overall margins presuming an equal share in
both sectors (though shares vary among the
companies). PIW has selected "typical"
prices for each time period, though there are
substantial differences due to the confused
nature of the market (prices were changed
in mid-quarter and even mid-month). The
"June" price was typically asked by sellers
early this month, though some are still sell-
ing for much less. In May, for example, the
prices under Gulf Coast contracts varied be-
tween $16.38 and 017.10 a barrel.
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CONGRIESSItONAIL RECORD -SENATE July 219 1979
ESTIMATED TYPICAL TAX-PAID COST AND PROFIT AND ALASKAN NORTH SLOPE CRUDE OIL
Iln dollars per barrell
4th quarter,
1978
llot quarter
197
April
May
4th quarter,
June 197
1st quarter
191
April
May
June
Delivered price__________________________________________
$12.65
$13.76
$14.41
$15.44
$16.80
$13.30
$14.25
$14.75
$16.75
$17.55
Less: Shipping cost'_____________________________________
.90
.95
.95
.95
.95
3.05
2.90
2.95
2.90
2.85
Less: Valdexf.o.b. price---------------------------------
11.75
12.81
13.46
14.49
15.85
10.25
11.35
11.80
13.85
14.70
Liability fund---------------------------------------
.05
..05
.05
.05
.05
.05
.05
.05
.05
.05
Pipeline loss ----------------------------------------
.05
.05
.05
.05
.05
.05
.05
.05
.05
.05
Pipeline tariff ---------------------------------------
6.20
6.22
6.22
6.22
6.22
6.20
6.22
6.22
6.22
6.22
Less: Wellhead price------------------------------------
8.17
9.53
3.35
5.03
5.48
7.53
8.38
Royalty (12.5 percents)------------------------------
.60
.73
.81
.94
1.11
.41
.55
.60
.86
.97
Severance tax 3 --------------------------------------
.67
.75
.82
.94
1.10
.67
.67
.67
.87
.97
Property tax----------------------------------------
.17
.17
.17
.17
.17
.17
.17
.17
.17
.17
Field operating cost ----------------------------------
.44
.44
.44
.44
.44
.44
.44
.44
.44
.44
Field financing cost__________________________________
.22
.24
.24
.24
.24
.22
.24
.24
.24
.24
Depreciation r___________ _---------------------------
.85
.85
.85
.85
.85
.85
.85
Oil profit before income tax.------------------------
2.50
3.31
3.81
4.59
5.62
1.19
2.11
2.51
4.10
4.74
Less:
State income tax (9.4 percent)------------------------
.24
.31
.36
.43
.53
.11
.20
.24
.39
.45
U.S. income taxs------------------------------------
1.20
1.52
1.75
2. 11
2.59
.57
.97
1.16
1.89
2.18
Oil profit after tax---------------------------------
1.06
1.48
1.70
2.05
2.50
.51
.94
1.11
1.82
2.11
Pipeline profit 0-----------------------------------------
1.20
1.30
1.30
1.30
1.30
1.20
1.30
1.30
1.30
1.30
Overall post-tax profit------------------------------
2.26
2.78
3.00
I Shipping costs to the Gulf of Mexico often involve producers' internal charges and are estimates.
2 Assumes average 6.5 cents deduction from wellhead price to cover collection and transport
to Pump Station I before calculation of royalty. This deduction has been challenged successfully
in the courts by the State of Alaska but companies are continuing to take deduction on tax returns
pending appeal.
Mr. RIEGLE. I yield 1 minute to the
Senator from New Hampshire without
losing my right to the floor.
Mr. DURKIN. I thank the Senator
from Michigan and rise in support of the
provisions my distinguished colleague has
placed in the S. 737, Export Administra-
tion Act of 1979. I appreciate his efforts
in onposing the transfer of Alaskan oil to
our Pacific competitors under any sort of -
arrangement. Alaskan oil and Alaskan
resources must be preserved for Amer-
icans. We must move Alaska's oil east to
the New England market now. It is as
simple as the rules in cards. I lost a lot of
money in playing cards as a young gen-
tleman, in the process of learning that
you do not bet on the next card.
The President stood in Portsmouth
High School and promised 240 million
barrels of home heating oil would be
reserved by the 1st of October. They are
20 million barrels behind at this time.
Notwithstanding all the assurances of the
Department of Energy, the President,
and whoever is in the Cabinet today, we
are running short of home heating oil
this winter in the Northeast.
We have the Alaskan pipeline. If it had
not been for the Department of Energy
we would have had a pipeline now, or it
would have been under construction, to
bring that oil east, to the midwestern
refineries and to the east coast. To send
the oil overseas in the hopes of making
up a replacement somewhere else is the
height of folly.
I need remind no one in this Chamber
that toughening the export restrictions
on this valuable commodity-Alaskan
oil-is clearly in the national interests.
At a time when Americans are suffering
from long gasoline lines and reduced
stocks of home heating oil, it would be
totally unreasonable to export Alaskan
oil.
There now exists only a very weak
restriction on the export of Alaskan oil.
3 11.7 percent in 1978 and 11.54 percent in 1979, with a minimum 66.5 cents per barrel.
4 Includes depreciation and amortization.
0 48 percent in 1978 and 46 percent in 1979.
0 After tax. Estimate based on average 1,100,000 bbl/d throughput in 1978 and 1,200,000 currently.
The strong check on the export of Alas-
kan oil contained within the Export Ad-
ministration Act expired on June 22.
Unless the Congress moves to restore
and strengthen these restrictions, it is
likely that the President will seek ways
to send Alaskan oil to Japan. Permitting
such exports, which are being disguised
as a "swap" of oil, would be contrary
to a sound energy policy and particularly
harmful to New Hampshire and New
England.
Alaskan oil must be saved for Ameri-
cans and not shipped to some distant
shore to deplete further our declining
domestic supplies of energy. I realize
that there is a problem in getting the
Alaskan oil to the east coast, the area
of the country that is perhaps most in
need of this oil, but exporting the oil
is not the way to solve this problem.
We could be receiving much more of
this oil on the east coast if we had a
pipeline from the Pacific Northwest to
the East. However, ever since the oil
started to flow through the trans-Alaska
pipeline system. the maior oil companies
have resisted efforts to build this pipe-
line so that they might export this oil
to the Far East and increase their profits.
Passage of this bill will halt this cam-
paign in its tracks and aid considerably
in getting this pipeline and other needed
facilities built. We must convince the
President that the Congress is resolute
in its conviction that Alaskan oil not be
exported.
Unfortunately for my constituents in
New Hampshire and the people of the
Northeast, the trans-Alaska oil pipeline
has become a monument to the-lack of
energy planning that existed in this
country for so long. The Congress al-
lowed the pipeline to be built in the
wrong place at the insistence of the oil
companies who naturally assumed that
they would be able to ship their product
to distant countries. The oil companies
stand to make billions of dollars in excess
profits by selling the oil to Japan, get-
ting the world price for their product
and avoiding the costly transportation
charges to send the oil to those areas of
the United States where it is really
needed. We cannot allow the majors to
blackmail the Federal Government into
allowing the export of oil because of the
shortsightedness of our energy policy in
the past. We must not become the cap-
tive of those who seek to profit from the
crisis rather than solve it.
Mr. President, I would urge all of my
colleagues to refuse steadfastly to send
American oil out of this country. We
must undertake a national commitment
of building the necessary refineries and
pipelines on the west coast so that this
oil can be used for our own internal
needs. not the needs of a foreign coun-
try. We spend almost $50 billion annu-
ally to purchase costly imported oil. Does
it make any sense whatsoever to export
this oil so that we can increase our de-
pendency on the OPEC nations:
My home State of New Hampshire is
at the empty and expensive end of the
energy pipeline. The export of Alaskan
oil will make a bad situation worse. I
urge you to retain this provision in the
export bill.
Mr. RIEGLE. I wonder if we can reach
a time agreement that everyone could
understand.
UP AMENDMENT NO. 431, AS MODIFIED
(Purpose: To clarify provisions restricting -
export of Alaskan Oil)
Mr. STEVENS. Mr. President, on my
time, and I think the Senator yielded
to me on that basis, I wish to modify
my amendment in section 3, line 4, to
delete the words "otherwise subject to
this subsection.". That is on the last
page.
The modification of this amendment
is being made at the request of the State
Department to insure that there is no
impinging upon the agreement with
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July 21, 1979
Israel as far as that provision is
concerned.
Subsection 4g(3) of S. 737-the Export
Administration Act of 1979-provides
that:
Notwithstanding the foregoing provisions
of this subsection or any other provisions
of law including subsection (u) of section
28 of the Mineral Leasing Act of 1920, the
President may export oil otherwise subject
to this subsection to any foreign nation with
whom the United States has entered into a
bilateral international oil supply agreement
prior to June 25, 1979, or to any foreign
nation with whom the United States has
entered into a multilateral supply arrange-
ment pursuant to section 251(d) of the
Energy Policy and Conservation Act, pro-
vided, that the President promptly notifies
Congress of each such agreement.
This language exempts from the
restrictions on the export of Alaskan
oil contained in subsections 4(g) (1) and
(2), exports to Israel under our bilateral
agreement and exports to fulfill our
obligations under the emergency sharing
plan of the International Energy
Agency.
The phrase "otherwise subject to this
subsection" 4(g) (3) limits the exemption
of exports to Israel to oil. Covered by this
section-presently there is an exemption
for Israel in the OCS Act but that applies
only to agreements existing in February
1977. At present, if our commitment were
activated and we had to make U.S. oil
available to Israel, we believe that pro-
viding Alaskan oil would best suit United
tates and Israeli interests. However, this
may change over the course of our 15-
year commitment. The President may de-
cide that providing oil from another
source would cause less disruption to the
U.S. economy or the U.S. energy market.
If the phrase "otherwise subject to this
subsection" were removed from 106(3),
the United States would be able to ex-
port the oil which best meets our inter-
ests.
I would like to delete the phrase "oth-
erwise subject to this. subsection." The
effect of this amendment will be to allow
the export of U.S. oil from any source
to Israel under our bilateral oil supply
agreement of March 26 and its imple-
menting arrangements. Presently, the bill
exempts just the export of Alaskan oil
to Israel from the restrictions of this
and previous legislation. If our commit-
ment to Israel were activated now and
we had to make U.S. oil available to
Israel, providing oil from Alaska might
well be the best way of fulfilling our
commitment. However, over the course
of this 15-year agreement, the President
should have as well the authority to allow
the export of oil from a non-Alaskan
source if that would be most easily ab-
sorbed by the U.S. energy market and
better suit the interests of the United
States and Israel.
The PRESIDING OFFICER. Is there
objection to the modification?
Mr. JAVITS. Reserving the right to
object, Mr. President, and I will not
ob.iect-
Mr. STEVENS. This is just a modi-
fication.
Mr. JAVITS. I would like to ask Sen-
ator RIEGLE if he will do the same thing
respecting any part of what is contained
IESSIONAL RECORD - SIEI~YATIE . S10185
in the bill which relates to the same
problem.
Mr. RIEGLE. I am sorry, I do not
believe I understood the question.
Mr. JAVITS. The problem that Senator
STEVENS is now dealing with enables the
United States to fulfill its contract with
Israel which runs for 15 years, even
though the oil may not 'be Alaskan oil.
That is quite a proper amendment. The
question I ask is this: Is the Senator
prepared to do the same thing as to the
bill?
Mr. RIEGLE. It is certainly my intent
to accomplish the same objective.
Mr. JAVITS. That is all I need to know.
I have no objection.
Mr. STEVENS. I ask that my amend-
ment be so modified.
The PRESIDING OFFICER. Is there
objection? Without objection, the amend-
ment is so modified.
The amendment, as modified, is as
follows:
On page 74, line 22, insert new section (g)
as follows:
(g) (1) Notwithstanding any other provi-
sion of this Act, no domestically produced
crude oil transported by pipeline over rights-
of-way granted pursuant to the requirements
of either subsection (u) of section 28 of the
Mineral Leasing Act of 1920 as amended (30
U.S.C. 185), or section 203 of the Trans-
Alaska Pipeline Authorization Act (43 U.S.C.
1653), (except any such crude oil which (A)
is exported, for the purpose of effectuating
an exchango in which the crude oil is ex-
ported to an adjacent foreign state in ex-
change for the same quantity of crude oil
being exported from that state to the United
States; such exchange must meet the price
standard of paragraph 2(A) (11) of this sub-
section, or (B) is temporarily exported for
convenience or increased efficiency of trans-
portation across parts of an adjacent foreign
state and reenters the United States) may
be exported from the United States, its terri-
tories and possessions, unless the require-
ments of paragraph (2) of this subsection
are met.
(2) Crude oil subject to the prohibition
contained in paragraph (1) may be exported
only if-
(A) The President makes and publishes an
express finding that exports of such crude
oil, including exchanges-
(i) will not diminish the total quantity of
petroleum refined within, stored within, or
legally committed to be transported to and
sold within the United States;
(ii) except for minor impacts due to qual-
ity or gravity adjustments, will have no ad-
verse impact on wholesale or retail prices of
products refined from such imported crude
oil;
. (iii) will be made only pursuant to con-
tract which may be terminated if the crude
oil supplies of the United States are inter-
rupted, threatened, or diminished;
(iv) are in the national interest;
(v) are in accordance with the provisions
of this Act; and
(vi) in the case of crude oil which is
transported by pipeline over right-of-way
granted pursuant to the requirements of sec-
tion 203 of the Trans-Alaska Pipeline Au-
thorization Act (43 U.S.C. 1653), the oil to
be exported consists of volumes in excess of
that which was so transported on an average
daily basis during the thirty days preceding
July 1, 1979; and -
(B) The President submits reports to the
Congress containing findings made under
this subsection and after date of receipt of
such report, the Congress shall have a period
of sixty calendar days, thirty days of which
Congress must have been in session, to con-
Sider whether exports under the terms of this
section are in the national interest. If the
Congress within this time period passes a
concurrent resolution of disapproval stating
disagreement with the President's findings
concerning the national' interest, further ex-
ports made pursuant to the aforementioned
Presidential findings shall cease.
(C) Paragraphs 1 and 2 shall remain in
effect only until July 1, 1980.
3. Notwithstanding the foregoing pro-
visions of this subsection or any other pro-
vision of law including subsection (u) of
section 28 of the Mineral Leasing Act of
1920, the President may export oil to any
foreign nation with whom the United States
has entered into a bilateral international oil
supply agreement prior to June 25, 1979, or
to any foreign nation with whom the United
States has entered into a multilateral sup-
ply arrangement pursuant to section 251(d)
of the Energy Policy and Conservation Act
(42 U.S.C. 6271) : Provided further, That, the
President promptly notifies Congress of each
such agreement.
Mr. STEVENS. Mr. President, I just
want to make a brief statement and then
yield to two of my friends who wish time.
In answer to the Senator from Mon-
tana, I call attention to the provisions
which state categorically that the Presi-
dent must make and publish an ex-
pressed finding that such an exchange
will not diminish the total quantity of
petroleum refined within, stored within,
or legally committed to be transported
to, or sold within the United States.
The charge that this would in any way
reduce the supply of oil is fallacious. As
a matter of fact, until we are certain
that we can transport this oil once it is
produced, the 800.000 barrels a day that
could be increased in this next calendar
year will not be available in the United
States.
I support the Northern Tier line. I
am surprised at my friend from Mon-
tana. The production must be there be-
fore it can be financed.
- Mr. MELCHER. Will the Senator
yield?
Mr. STEVENS. I am delighted to yield
to my friend from North Carolina for 1
minute or whatever time he needs, 2
minutes, and. to the Senator from Il-
linois after that. Again, we are doing
so without the Senator from Michigan
losing his right to the floor. I am pre-
pared, following their comments, to
agree that we would vote on the tabling
motion of the Senator from Michigan
at 5 minutes of 3 with neither of us
yielding back the remainder of our time,
if that is agreeable.
Mr. ROBERT C. BYRD. Will the Sen-
ator yield?
Mr. STEVENS. I yield.
Mr. ROBERT C. BYRD. I have dis-
cussed this with Senator BAYH, who in-
dicates it would be agreeable with the
Senator from Michigan (Mr. RIEGLE).
I ask unanimous consent that a vote
occur on the motion to table at 5 min-
utes to 3.
Mr. STEVENS. If it is on the condi-
tion that we evenly divide this time, be-
cause I have commitments to Senators
STEVENSON,- PERCY, and HELMS. I shall
take no more time myself.
Mr. ROBERT C. BYRD. Yes, with the
understanding that the 15 minutes be
equally divided and controlled in the
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SF 86
usual form, and that the tabling motion
be in order even though the time.has
not been yielded back.
The PRESIDING OFFICER. Is there
objection? The Chair hears none.
Without objection, it is so ordered.
Who yields time?
Mr. STEVENS. I yield to the Senator
from North Carolina first, then to the
senior Senator from Illinois, and then
to the junior Senator from Illinois.
Mr. HELMS. Mr. President, I thank
the Senator from Alaska for yielding
to me.
Recently I learned the details re-
lating to a lack of refining facilities and
transportation pipelines that has re-
sulted in Alaskan oil not being produced
or developed as rapidly as would other-
wise be the case.
Specifically, I am informed that pro-
duction capacity of the North Slope
field is presently at a 1.5-million-barrel
per-day level, but actual production is
only 1.2 million barrels per day.
The stated reason for this was the
lack of facilities to refine the oil on the
west coast and the lack of pipelines on
the west coast to carry the heavy Alaskan
oil to refineries in the interior of the
United States.
After assessing Senator STEVENS' pro-
posal, I view it as only a temporary
situation to be in effect only until we can
build additional refining capacity on the
west coast or a pipeline to carry this oil
to America's inland refineries.
Having said that, I should emphasize
that I do not believe that it is in Ameri-
ca's long-term or broader interests to
permit a long-term oil sales program to
Japan, although there may be some tem-
porary and short-term benefits. And I
believe that it would be a great misfor-
tune if Alaskan exports of oil to Japan
result in a failure to build the pipelines
and refining facilities which are so nec-
essary to process Alaskan oil in the
United States.
Let me explain why I feel so strongly
about this:
In my view, the superficial economies
and short-term benefits which appear to
be offered by a long-term oil sales pro-
gram to Japan are completely overridden
by broader and longer term considera-
tions. I am convinced that the so-called
swap arrangements with Japan on a
long-term basis would not be America's
best interests.
In the past we have seen a certain
amount.of erratic behavior on the part
of this administration concerning ener-
gy policy. And while I hope the adminis-
tration eventually does the right thing as
far as energy is concerned, I believe that
it is important for the Congress to make
its own views on important parts of
America's energy policy crystal clear.
One of the most important aspects of
today's energy policy is the whole ques-
tion of Alaskan oil. Some have advocated
a permanent sales program to Japan, and,
to other countries, because of the dif-
ficulty in transporting Alaskan oil to
midcontinent refineries where it could be
converted into gasoline, heating oil, and
other products urgently needed by the
American people.
L This may be justified on a temporary
CONGRESSIONAL RECORD -SENATE July 2-1, 1979
basis but, I believe the Senate should
make it clear that it believes that our
Nation's interests would not be best
served by a long-term program of sales
of Alaskan oil to foreign countries.
No one knows for sure what the pro-
duction potential of Alaska might be.
But there is one thing upon which there
is virtually unanimous agreement: Alas-
ka has significant promise for future
oil discoveries and expanded production.
If America is ever to achieve a greater
degree of energy independence, clearly,
Alaskan oil must play a prominent role.
At present, many experts appear to
believe that Alaskan oil is not being de-
veloped as rapidly as might be the case.
And there are a number of bottlenecks,
according to these experts. Until recent-
ly, leasing in some areas has been held
up. In California, a pipeline proposed
by the Sohio Co. to transport Alaskan oil
to the large -mid,ontinent oil refineries
was delayed for years by the requirement
for literally hundreds of permits and
environmental procedures. Eventually
the entire project was scrapped. And
today, it appears that the full capacity
of California's refineries is being used to
process the limited quantities of oil now
coming from Alaska and elsewhere.
It would seem to me to be prudent for
the United States to be taking steps to
increase its capacity to transport and
process oil.on the west coast.
Part of President Carter's energy pro-
gram calls for the rapid exploitation of
the massive deposits of very heavy grade
California petroleum. Assuming this
project actually happens-and I have
reason to believe it may-the resulting
crude oil will swamp suitable existing
refining capacity on the west coast.
Rather than exporting Californian
and Alaskan oil to Japan or elsewhere,
I urge, as part of the President's new
energy initiatives, that Governor Brown,
in the interests of the Nation and in the
interest of Californians, be encouraged
to facilitate the construction of a pipe-
line to the Texas and Oklahoma refin-
eries so that greatly increased. amounts
of Alaskan and heavy Californian oil
can be refined and used directly by the
people of the United States.
This project should be near the very
top of the list of projects to be handled
by the President's proposed new Energy
Mobilization Board-whose very purpose
is to cut through redtape on projects
exactly like this one.
There are a number of reasons why
I urge we follow this course of action-
and refine our own crude oil rather than
selling it to Japan or other nations.
In the first place, the entire rationale
behind the construction of the Alaskan
oil pipeline was to permit Americans to
use this oil. At the time the pipeline was
under consideration, environmentalists
claimed that the whole pipeline was un-
necessary because the oil companies
planned to sell most of the Alaskan oil to
Japan anyway. This was denied in the
strongest terms by the American oil
companies at the time, and after some
delays, the pipeline, with a potential
capacity of 2 million barrels per day,
was actually constructed, at great cost.
Sadly, the pipeline has never to this
day been used to its full capacity. Be-
cause of a lack of suitably equipped re-
fineries on the west coast to process this
oil, and the unfortunate delays which
blocked early attempts to build unload-
ing facilities and pipelines to carry the
oil to the huge inland refineries, Ameri-
cans have not been able to take advan-
tage of the Alaskan oil to the extent that
had been earlier envisioned.
Instead, we are importing extra oil
from the Middle East, and putting added
strains upon our balance of payments.
Now, what is wrong with selling Alas-
kan oil to Japanese?
Well, in the first place, these fields
will then be rapidly exploited. Japan, like
the United States, has a vast appetite for
oil. So with Japan's unlimited require-
ments, Alaskan oil fields - can become
rapidly depleted. And, given the un-
settled state of the world, I am not sure
that this is really in American Interests.
More importantly, however, it is be-
coming increasingy clear that oil on the
international market is beginning to
carry not only a heavy and direct pur-
chase price, but also heavy additional
indirect costs and political price tags.
-Take three recent cases:
First. The nations in the Middle East
have made it quite clear that unless
there is progress on the West Bank,
the United States may find it difficult
to obtan oil supplies in required
amounts from that quarter.
Second. Nigeria recently threatened
to reconsider its oil sales to the United
States it we were to drop sanctions and
recognize Zimbabwe-Rhodesia.
Third. Mexico has made it abund-
antly clear that increased access to
Mexican oil by the United States will
probably require the United States to
permit large-scale immigration of un-
employed Mexicans into the United
States, and equally 'important, much
more .open access to the American mar-
ket by Mexican manufactured and ag-
ricultural, goods. Thus, in the case of
Mexico, the United States will not only
have to pay to Mexico $7 billion- per
year for every million barrels per day
of oil that we mport, but we will also
have to shoulder the additional billions
of dollars of balance of payments that
will come from imported Mexican man-
ufactured and agricultural goods.
Here, there is also an indirect price
tag. Increased Mexican export of manu-
factured goods to the United States
means fewer jobs for Americans, and
unless the process is carefully control-
led, it also means increased unemploy-
ment and labor unrest. Finally, in-
creased Mexican immigration in the
United States also means - higher de-
mands for energy in the United States,
Although every additional million im-
migrants from Mexico contributes in
some measure to the American econ-
omy, they also obviously require addi-
tional millions of barrels of oil for the
gasoline which they use to run their
cars, the fuel to heat their homes, and
for the energy requirements of their
jobs, schooling, and so forth.
Thus, increased access to Mexican oil,
with its potential double-whammy extra
price tag on balance of payments, in-
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creased immigration, and import of
manufactured goods, is also no simple
or cheap solution to our oil requirements.
What I am suggesting here is that
there are big liabilities, both political
and economic, to our continued depend-
ence on imported oil. And, because of
the long leadtimes required to change
this situation, we are very foolish to
mortgage our future to an increased ex-
tent. by selling U.S. oil to Japan, and
thus increasing our own future depend-
ence on imported oil with the political
price tags and indirect costs associated
with it. I urge instead that we move
rapidly to increase our ability to use our
own oil.
There is, however, a second problem
associated with the selling of our Alas-
kan oil to Japan.
For years now, U.S. trade negotiators
have been unhappy about the fact that
the trading relationship between the
United States and Japan is not only
grossly out of proportion from a balance-
of-payments point of view, but more
importantly, they have become increas-
ingly concerned about the structure of
this trading relationship, which has in-
creasingly taken the form of the classic
colony-motherland trading relation-
ship.
That is, cheap raw materials from the
colony are traded in return for expen-
sive processed manufactured goods from
the mother country.
At the same time, the mother country
prevents manufactured goods from be-
ing imported from the colony by a com-
bination of tariffs and nontariff barriers
of various kinds.
Except for specialized surer high tech-
nology items, this is exactly the economic
relationship which Japan has increas-
inely developed with the United States.
And from the Japanese point of view,
this is just great. Japan buys from us
logs, raw grain and cereals, soy beans,
cotton. coal, metal ores and scrap metal,
raw skins and hides, pulp wood, et cetera.
Japan runs these raw materials through
her manufacturing plant, and then ex-
ports the resulting goods to the United
States in the form of finished steel, tele-
vision sets, textiles, et cetera.
Now, a certain amount of this is ac-
ceptable, even desirable. But when ma-
jor American industries-such as the
electronics and television industries-
are pushed to the point where serious
unemployment and structural harm is
beginning to occur, then it becomes im-
portant to change the situation.
Right now, Japan is under the gun to
make major changes in her own econ-
omy to permit American manufactured
goods and farm products to be sold at
a fair price on the Japanese market.
Our negotiators can now point to the
enormous gap in our balance of pay-
ments, and rightly demand that Japan
take corrective action to prevent dis-
crimination against American manu-
factured goods and agricultural prod-
ucts in Japan.
But, if we permit Japan to purchase
our oil, then although the bilateral bal-
ance of payments problems with Japan
will be eased, our overall balance of pay-
ments will be worsened.
And our trade negotiators' efforts to
get the Japanese economy opened up to
American manufactured goods and other
products will be undercut.
We will then have the worst of both
worlds: A balance-of-payments prob-
lem that is worsened-but the trading
partner which is causing much of our
problem with its aggressive export pro-
grams and domestic protectionist iheas-
ures-will be able to point to our bi-
laterial trade accounts and say that it is
not their fault, that our balance of pay-
ments problems are with the Persian
Gulf, Mexico, et cetera.
Then, more American industries will
be weakened, our unemployment prob-
lems will worsen, and only the Japanese
will have gained.
In my own view, Japan already profits
more than she should by her relation-
ship with the United States. The U.S.
taxpayers are shouldering much of the
burden of the defense of the free world,
including Japan.
But our ability to continue to defend
the free world depends to a large degree
on the health of the American dollar.
Balance-of-payments problems are
undermining this dollar, and it is a com-
bination of energy payments and Japa-
nese protectionism which contributes
massively to the dollar's present woes.
It is, therefore, essential in my view
that we prohibit the export of crude
American petroleum, except under very
special and controlled circumstances.
We have a commitment to our allies to
sell oil in the event that certain disas-
ters should strike. We should keep these
commitments, under most circumstances.
But an open-ended oil export program,
in my view, is a classic case of being
pennywise and pound foolish. For the
sake of small economies in transport,
and for the sake of slightly increased
profits for the oil companies which the
immediate sale of Alaskan oil to Japan
would facilitate, we are endangering
broader and vastly important long-term
American interests.
In summary, then, I urge the Senate
to exert its leadership in pushing for
every possible means to keep American
oil in America for Americans. Let us
rapidly build the pipeline and loading
facilities which are necessary to trans-
port the Alaskan and west coast oil to
the inland refineries for subsequent use
by the American people. Then the ques-
tion raised by this amendment will be
moot, and the best interest of the Amer-
ican people will be served.
The PRESIDING OFFICER. The Sen-
ator from Illinois is recognized.
Mr. PERCY. Mr. President, I know
that this issue is filled with emotion. We
have seen evidence of that right on the
floor. It is subject to great misunder-
standing in the country.
There is no misunderstanding, any
longer, I believe, that we have an energy
crisis. There is no misunderstanding that
we need now to cut through an awful lot
of things to have maximum flexibility.
The problem with the bill as it now
stands is that the process involving
S1?187
swaps would make them almost impossi-
ble. I think the administration supports
this Stevens amendment because maxi-
mum flexibility is required. The Senator
from Illinois supports it because I think
we need maximum flexibility.
This amendment is good for the con-
sumer, and good for the producer and,
I think, is an amendment supportive of
the national interest to provide the max-
imum flexibility that we need to face the
crisis we have today. For that reason,
Mr. President, I support the Stevens
amendment and urge its adoption.
Mr. STEVENSON. Mr. President, I
opposed the location of the pipeline in
Alaska. I oppose decontrol of oil. I do
not come from Alaska. And I support
this amendment.
It is the policy of the United States to
increase exports. It is also the policy of
the United States to increase oil pro-
duction. This amendment serves both of
those objectives.
It only applies to increases in produc-
tion from Alaska. It would only permit
transfers of volumes in excess of those
now flowing through the pipeline. So it
cannot decrease production. By creating
a market for additional production, it
will increase oil production. In doing so,
it will increase world oil supplies. That
has the effect of putting pressure down-
ward on the world oil price, with bene-
fits for everybody, including the Ameri-
can consumer, including all the people
of the United States, not just those in
Alaska.
If necessary, of course, the swaps that
are authorized by this amendment could
be terminated. If there were ever an
emergency, situation or any event which
interrupted the supplies or threatened
shortages in the United States or any
region of the United States, the swaps
could be interrupted and the Alaskan oil
made available.
The fact of the matter is that there
is no way of absorbing the increased pro-
duction that is possible from Alaska.
Unless this amendment is adopted, the
oil is going to stay in the ground. In the
ground, it benefits no one, least of all the
people of the United States. This amend-
ment, Mr. President, is also, for those
reasons, supported by the administra-
tion.
Mr. STEVENS. Mr. President, will my
friend allow me to find out how much
time I have left?
Mr. RIEGLE. Yes.
Mn STEVENS. Mr. President, do I
have any time remaining?
The PRESIDING OFFICER. The Sen-
ator has 31/2 minutes remaining.
Mr. STEVENS. At such, time as is con-
venient to the Senator from Michigan, I
yield to the Senator from New Mexico.
Mr. RIEGLE. I yield 1 minute to the
Senator from Wisconsin.
Mr. PROXMIRE. Mr. President, I
thank my friend from Michigan. I sup-
port him enthusiastically.
Mr. President, we ought to ask our-
seves, what is the reaction of our own
constituents? Can you imagine going out
on the streets in Oshkosh and Milwaukee
and saying you favor our export of oil to
Japan? They would laugh you right off
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CONGRESSIONAL RECORD - SENATE July 21, 1979
the street. This is one issue that is very
clear in my State, no question about it.
I think the Senator from Michigan has
answered all the real problems here. The
real beneficiaries from this are going to
be (a), the oil companies; and (b), the
State of Alaska. Americans are going to
have to pay more, we are going to have
less gas, less reliable and high-quality
gasoline, no question about that, and oil.
I hope that the position taken by my
friend from Michigan and others will be
supported and the amendment will be
defeated.
Mr. RIEGLE. Mr. President, I yield 2
minutes to the Senator from South Da-
kota (Mr. PRESSLER).
Mr. PRESSLER. Mr. President, certain
provisions of S. 737, the Export Adminis-
tration Act, prohibit an export or ex-
change of Alaskan oil unless several
stringent findings affecting oil supply
security and consumer interest are made
by the President and the proposal is sub-
mitted for congressional approval.
I support this committee language be-
cause it is necessary to reduce our de-
pendence on foreign oil by encouraging
domestic means of efficiency handling
Alaskan oil.
There is a Northern Tier pipeline pro-
posal now moving forward that is of real
significance to my area of the United
States. Its completion will mean a great
deal to the long-range benefit of the Mid-
west States, specifically, and to the
United States, generally.
1 am concerned, Mr. President, that
this area not be impacted adversely. That
is one of the reasons why I think
the committee language should be
maintained.
How did we reach this sad State of
affairs where we even consider an export
of this vital natural resource?
How is it that, in the face of a severe
crude shortage and skyrocketing prices,
there are those who advocate exporting
Alaskan oil through some convoluted ex-
change mechanism?
The basic reason, I submit, is that-
early on-we failed to differentiate be-
tween the national interest and the in-
terest of several major oil companies.
Specifically, Congress was mistakenly
led to believe that a trans-Alaskan pipe-
line was preferable to a plan that would
have brought Alaskan oil to where it is
needed-the Midwest and East. And, I
might add, many of the same voices that
urged us to build trans-Alaskan are now
equally supportive of an export.
The National Journal was correct
when it described as a "great irony" the
fact that, 10 years after discovering
America's biggest reserve of oil and gas
under Alaska's North Slope, neither the
companies nor the Government have fig-
ured out where or how to sell it all. In-
credibly, after spending billions of dol-
lars to construct a pipeline in Alaska that
was supposed to help meet California's
needs, we find that California is unable
to use all of that crude. What California
cannot use-the so-called glut which
currently amounts to about 300,000 bar-
rels per ? day-is shipped through the
Panama Canal to eager buyers on the
gulf and east coasts.
Lest I be misunderstood, Mt. President,
I emphasize, all available Alaskan crude
is being used in the United States; the
problem is the oil is not going directly
to where it is needed, the Midwest and
East. The additional transportation costs
resulting from the longer, more costly
ocean route must be absorbed by the
producer. These costs cannot be passed
along to the consumer because the pro-
ducers already receive top dollar for ev-
ery barrel of oil. This is because ANS
crude is effectively free of any control,
and its price mirrors OPEC prices.
In the case of Alaskan oil, the main
producers are Standard Oil of Ohio
t Sohio ' -the same corporation that re-
cently abandoned the plan to retrofit the
pipeline from California to Texas-Ex-
xon and Arco.
To relieve the oil companies of the
burden of transporting ANS crude to the
gulf coast, the administration has pro-
posed sending the oil to Japan in an ex-
change arrangement where the United
States would receive oil that otherwise
would have gone to Japan. Producer
profits will rise to still greater levels and,
so goes the argument, production will
increase. The economics of the situation
are intriguing. In order of profitability,
an export ranks first then a west-to-east
pipeline and lastly shipping, the oil
through the Panama Canal.
An export, as opposed to the canal
route, would increase producer profits by
about $2 per barrel. What is more unset-
tling is that an export is also more profit-
able than transporting the oil through a
pipeline. According to a recent Depart-
ment of Energy study, Sohio stands to
make 70 to 90 cents more per barrel by
exporting than by building and using a
pipeline. In short, exports will always be
favored by the oil companies to the ex-
clusion of finding more efficient means
of handling Alaskan oil domestically.
And, at the same time that oil com-
pany proponents of trans-Alaska pipe-
line system were assuring us or Califor-
nia's ability to absorb full Alaskan North
Slope production, they were also denying
any intention of exporting ANS crude to
Japan. Yet, a close examination of the
record shows that early on oil companies
recognized the attraction of the Japa-
nese markets and took steps in that di-
rection. For example, in 1970, Edward
L. Patton, president of Alyeska Pipeline
Service Co., submitted confidential esti-
mates to the interior Department target-
ing 25 percent of North Slope crude for
sale beyond the west coast of the United
States, including direct sale to Japan by
1980.
In that same year, Phillips Petroleum
president, John H. Houchin, proposed
that Alaska oil be exported to Japan in
exchange for that country's share of
Persian Gulf oil. Similarly, Atlantic
'Richfield quickly detected the attraction
of oil sales to Japan. Rollin Eckins,
Arco's vice chairman, in_ ,a 1970 pres-
entation to the Alaskan science con-
ference said that Japan would be will-
ing to pay a premium for a secure sup-
ply of Alaskan oil.
In view of this history, Mr. President,
some observers of oil company behavior
were not at all surprised when, contrary
to earlier public estimates by the oil
companies, a surplus of Alaskan North
Slope crude appeared on the west coast
and the idea of an export was revived.
We are now told to ignore this tor-
tuous history and instead to concentrate
on the future, specifically, the need to
export and to increase producer profits.
While I agree wholeheartedly that
we should not make policy on the' basis
of exacting a pound of flesh for past
transgressions, it would be equally fool-
hardy to disregard the clear lessons of
recent history.
There are times when what is good
for the oil companies is not good for the
great majority of America. The legisla-
tion before us presents such an occasion.
Restricting exports, while contrary to
the interest of the oil companies, is ab-
solutely imperative if we are to stimu-
late those developments that will put us
on the road to energy independence.
Mr. President, I urge my colleagues
to support the provisions affecting Alas-
kan oil in S. 737-as reported by the com-
mittee-and to oppose any weakening
amendments.
Mr. JAVITS. Will the Senator yield
time to me?
Mr. RIEGLE. I yield to the Senator
from New York.
Mr. JAVITS. Mr. President, at the bot-
tom of page 76 of the bill, line 25, the
words appear, "otherwise subject to this
subsection." For the same reason that
Senator STEVENS struck them from his
amendment, because it does interfere
with something nobody intended to in-
terfere with, I ask unanimous consent
that they may be stricken from the bill.
The. PRESIDING OFFICER. Is there
objection? The Chair hears none.
Without objection, it is so ordered.
Mr..RIEGLE. Mr. President, I reserve
the remainder of my time. I know the
Senator from Alaska wanted to use the
remainder of his time.
Mr. STEVENS. Let me yield briefly to
the Senator from New Mexico.
The PRESIDING OFFICER. The Sen-
ator from Alaska has 3'/2 minutes
remaining.
Mr. STEVENS. I yield such time as he
may need to the Senator from New
Mexico.
Mr. DOMENICI. I shall try to be
brief.
Mr. President, let me say to my good
friends on the Senate floor, many of
whom have argued against the Stevens
amendment, that in this Senator's
opinion, so long as the discussion about
the energy situation in the United States
continues to receive attention in the
way it is receiving attention here today,
we are not going to solve the energy
problem. That is because most of the
positions being taken have nothing
whatsoever to do with American energy
independence, but have to do with pick-
ing on somebody or blaming somebody
or being really concerned that somebody
is going to make a profit.
Let me tell you, this amendment says
that we will not swap-and I call to
your attention that swapping means at
least a barrel for a barrel. So in the
swap itself, how can you lose?
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July 21, .19 79
Second, it cannot occur if you are
cutting America's oil import& That is in
it. So it must be for more oil rather
than less..
Now, let us sit here today and talk
about those obscene oil companies and
do the ridiculous: Let us. add $3 or $4
a barrel in transportation costs just be-
cause we want to be sure,, positively sure,
that we do not let a couple of steamers
cross the ocean and we bring one to us
that is closer, started out closer to us, so
it ought ultimately to be cheaper for the
cutting of costs of transportation. Do
not do that because some oil company
might make some money. So you ought
to support Senator RIEGLE.
Mr. STONE. Will the Senator yield?
Mr. DOMENICI. Yes, I only have 30
seconds remaining.
Mr. STONE. I shall be brief.
Is it not true, if this amendment
passes, we would have an increased
leverage to work something out for in-
creased Mexican production?
Mr. DOMENICI. Precisely.
Mr. STONE. Not only oil, gas?
Mr. DOMENICI. Precisely.
Tie the hands of the President. so it
will be harder to make any deal with
Mexico. But in 2 or 3 years, we can come
back and say, however, that we did not
let anybody make an extra penny on this
because we needed to bring every bit into
America, whether it was economically
right, or the thing to do to our President.
I close by saying. that I am certain
President Carter really wants this au-
thority to let. American. oil companies
get rich..
Mr. STEVENS. Mr. President, I have
committed a minute to my good friend,
Senator JEPSEN.
Mr. JEPSEN. Mr. President, the prob-
lem is that there is a "glut" of oil on the
west coast of the United States. This is
due to environmental restrictions which
effectively prohibit the building of new
refineries. or pipelines to the central part
of the country. Thus we are presently
unable to effectively use Alaskan oil. It
Is believed that if the oil could be ef-
ficiently transported and refined that
the Alaskan oil fields could substantially
increase their output.
From this situation the idea of a swap
arrangement has arisen. We would swap
Alaskan oil to the Mexicans or Japanese
in return for Mexican oil or oil the Japa-
nese had previously contracted for. The
result would be a much more efficient
use of available oil resources and the.
U.S. would not lose one drop of oil.
It is unfortunately not feasible to
transport the oil from Alaska to the Gulf
coast, where it could be. used, because
only small freighters can fit through the
Panama Canal, rather than the. more of
ficient supertankers which - bring oil
,from the Middle East. It is possible that'
a pipeline may still be built through
Canada to bring Alaskan oil to the lower
48, but this is not certain and is. many
years away anyhow.
In conclusion, I think you should sup.
Port amendments to the Export Admin-
istration Act to allow for swap arrange-
ments for Alaskan oil..
Let us do something in this Senate. for
a change that is commonsense.
CONGRESSIONAL RECORD - SENATE S101189
Mr. STEVENS. Mr. President, If Ii have
1 minute remaining, let me again state
that this amendment is necessary to
allow my State to increase production of
oil by 800,000 barrels a day..
Today we are producing 1.1 million
barrels a day. We have a pipeline de-
signed to carry 2 million barrels.
Unless we are assured there would be
a way to transport and effectively use
that oil in the United States,, and by
agreeing to this amendment we will in-
crease the availability of oil in the
United States, then I do not believe the
investment will be made to increase the
pumping capacity or increase the pro-
duction of the wells required- to make
certain we use the. pipeline to, full
capacity.
Mr. RIEGLE. Mr. President, how much
time remains?
The PRESIDING OFFICER. The Sen-
ator has 3 minutes,
Mr. RIEGLE. I yield a minute-and-a-
half to the Senator from Louisiana.
Mr. JOHNSTON. I thank the Senator.
Mr. President, the question of produc-
tion. is a red herring. With the world oil
prices at $20 a barrel and moving up-
ward, we are going to produce all, the oil
we can find in Alaska and ship it.
What. this fight is all about is. a, fight
between big oil and American seamen.
It is not even big American oil.. It is BP,
which is British Petroleum,, which owns
over half of that. Alaskan oil.
The question is, do we give BP more
profit or put it in the hands of American
seamen, because American seamen,
under the Jones Act, of course, have to
go in American flagships. That is what
the question is all about.
It is a tough question. because it is a
question of economic efficiency.
I come down on the side. of American
seamen. because American jobs are
involved.
We are not going to do anything for
the Anerican consumers, by leasing them
to Japan.
The PRESIDING OFFICER. The Sen-
ator's time has expired.
Mr. RIEGLE. Mr. President, I want to
say, in addition to the comments of the
Senator from Louisiana? it is currently
U.S. policy to keep U.S. crude in the
United States, and it is by reason of the
fact that we need it.
There is no gain to consumers in the
proposition put forward by Senator
STEVENS. Yet, he says this, is needed to
increase production.
The oil companies. already announced,
without any export, action being taken.
they plan to increase production this
year to 1.6 million barrels. As stated by
the Senator from Louisiana, with the
price levels being what they are, and ris-
ing, every drop that can be produced
from Alaska will be, and it will be used.
So I find the situation is that. all we
can do, if we adopt the. Stevens amend-
ment, is to hurt. the United States, be-
cause we do not have: any oil for export,
today that we can afford to let go..
It would benefit Japan. I. grant it
would. It would make it easier for Japan
to receive oil at, lower prices than other-
wise.
But I do not for the life of me see how
that creates' any advantage. for the
United States.
I would like Mexico to view us as their
principal market and not the Japanese.
Finally, if we are going to. have a, pipe-
line in the Northern Tier,, we will have
to count on all the Alaskan oil.
Several Senators addressed the Chair.
Mr. RIEGLE. Mr. President, due to a
longstanding speaking engagement of
great importance to his State, the junior
Senator from Alaska 1 Mr. GRAVEL) was
unable to be present for this Saturday
session. However, those provisions of S.
737 relating to the export of Alaskan oil
are of serious concern to him, and he has
asked that I submit on his behalf pre-
pared remarks on this subject. I there-
fore ask unanimous consent that there
be printed at, this point in the RECORD a
statement by the Senator from Alaska.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The statement is as follows:
STATEMENT OF SENATOR MIKE GRAVEL OPPOSING
.8. 737 AND THE BAN ON EXPORTATION 03
ALASKAN OIL
In 1973 the. proven oil reserves of this coun-
try totalled over 36 billion barrels with do-
mestic production of 9.2 million barrels per
day. Today our reserves have fallen to less
than 29 billion. barrels while domestic pro-
duction has declined by 800,000 barrels to 8.4,
million barrels per day. During this same
period, we have seen the President shift. his
emphasis from. an energy crisis to a crisis of
confidence. However, Presidential misdirec-
tion of energy policy is not the only reason
for declining reserves. With the one exception
of approval of the trans-Alaska pipeline, leg-
islation by the Congress has done nothing to
improve the concoction of regulations which
has passed for energy policy in this country.
S. 73T Is a continuing example of the en-
ergy menu which has been served to the
American people. I have long opposed the
prejudicial treatment of Alaska's North. Slope.
resources which has surfaced from Congress
to Congress since 1973. This bill, like its pred-
ecessor, restricts the ability of Alaska to
export its. surplus oil production. Unlike its
predecessor, S. 737, with its series of criteria
and one-house veto provision, results. In an
outright prohibition on any export, regard-
less of the net advantage to the United
States.
The arguments supporting export are per-
suasive. Export could ultimately improve our
balance of trade by billions, of dollars, with
the dollar-yen exchange rate showing favor-
able activity immediately.
Export would also mean that more North
Slope oil would be produced. The TAPS line
today is operating at less than its design ca-
pacity, flowing at a rate of 1.2 million barrels
per day with a potential of 2.0 million bar-
rels. Even at this rate there is a glut of oil on,
the West Coast. of over 200,000 barrels per
day. The glut is now transshipped through
the Panama Canal at much higher transpor-
tation costs than It would obetain. were an ex-
change with Japan Initiated. The only exist-
ing plan for a West-East pipeline. can accom-
modate only the existing West Coast glut.
Therefore, if the domestic production capac-
ity of the country is to be increased, export
of excess Alaskan all is the only reasonable
course. Not only would domestic. production
be returned to. its 19.73 high,. but the 800,000
barrels per day which are not. being produced
represent a potential of $6.336 billion, per
year to offset our' deficit with Japan.
Prom my State's standpoint,, export could.
mean new pipeline construction spending,,
as well as additional oil revenues; on the
order of. $800? million per yeak,Tho expafision
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S IO190 CONYGRIESSIONAIL RECORD - SENATE .
would also allow increased production from
proven reserves, as well as expanded pro-
grams of exploration. -
Many months ago I wrote President Carter
expressing my concern about the energy
policy and urging export. I pointed out that
North Slope oil is of no use to the United
States, either in trade, in domestic consump-
tion, or in an embargo emergency, if the in-
frastructure to bring it to market does not
exist. That domestic infrastructure does not
exist today, and it will not until its cost can
be justified. The West Coast oil glut makes it
impracticable now to expand the -pipeline to
full capacity. Export to Japan would make
the expansion possible.
I continue in those sentiments and
strongly oppose the export prohibition con-
tained in S. 737.
O Mr. INOUYE. Mr. President, in your
committee report on S. 737, specifically
on page 14, within the section of the
report pertaining to the export of
Alaskan crude oil, we are told that the
committee feels that there should be in-
creased reflnerv capacity on the west
coast, especially capacity which will be
able to utilize Alaskan crude oil and
produce unleaded gasoline and other
light transportation fuels. We are told
on that same page 14 that the commit-
tee believes that-
The Department of Commerce, should in
carrying out its responsibilities under Sec-
tion 4(g), review and revise, as necessary,
those regulations concerning the export of
petrochemical feedstocks, including naptha
(sic), refined in new or reconfigured refin-
eries. Fbr example, the Department should
not interpret any provision of S. 737 In a
manner that would preclude the export of
petrochemical feedstocks, including naptha
(sic), if such export would facilitate the
construction of a new refinery designed to
produce unleaded gasoline or other light
fuels, and if domestic markets for such
products are not readily available or eco-
nomically feasible. The Department should
further take into account the need for such
projects to receive commitments regarding
the future issuance of export licenses.
In my State of Hawaii, a refining com-
pany which has historically processed
100 percent imported crude oil has been
seeking Alaskan crude oil to use in a
projected expansion of its refinery ca-
pacity. The use of Alaskan crude oil in
the expanded portion of this refinery
would stimulate the use of domestic oil
in Hawaii, which has been almost 90
percent dependent upon foreign sources
for its crude oil.
Hawaii has a heavy demand for trans-
portation fuels-jet fuel, gasoline and
diesel fuel-for its tourist-oriented econ-
omy and has minimal needs for residual
fuel oil. The fuel balance situation in
Hawaii is further compounded by the
military needs for the same fuels. The
refineries in Hawaii are unable to make
a sufficient quantity of required trans-
portation fuels without producing an
excess of other products especially
residual oil.
Due to. the composition of available
Alaskan North Slope crude oil, its use in
Hawaii's refineries would result in the
production of high sulphur residual fuel
oil as a by-product of the refining proc-
ess. United States environmental restric-
tions preclude the marketing of high
sulfur residual oil on the west coast,
therefore, the only market available for
residual fuel oil of such a sulphur con-
tent-1.74 percent sulphur by weight-
would be in the. export market.
I believe that we can help to, stimu-
late production of domestic crude oils,
provide products which meet stringent
environmental regulations to U.S. firms
and provide additional fuels of the types
required to meet both civilian and U.S.
military defense needs in Hawaii. This
can be accomplished by utilizing Alaskan
crude oil in incrementally increased re-
finery capacity.
I, therefore, submit that the intent of
the committee as outlined in the report
language on page 14 would be enhanced
by the addition of "refinery by-products
including high sulphur residual fuel oil,"
to the provision instructing the Depart-
ment of Commerce in carrying out its
responsibilities under section 4(g) to
review and revise, as necessary, those
regulations concerning the export of
petrochemical feedstocks, including
naptha refined in new, or reconfigured
refineries and that this provision should
be applied to expanded as well as new
or reconfigured refineries. Is that con-
sistent with your view?
'Mr. STEVENSON. The senior Senator
from Hawaii is correct. We want to en-
courage the utilization and refining of
Alaskan crude in west coast and
Hawaii refineries and the export of cer-
tain by-products in surplus in our west-
ern domestic markets should be assured.
For example, the Department should not
interpret any provisions in S. 737 in a
manner that would preclude the export
of refinery byproducts including high
sulphur residual oil, petrochemical feed-
stocks, including naphtha, if such ex-
port would facilitate the construction of
a new or expanded refinery designed to
produce unleaded gasoline or other light
fuels, and if domestic markets for such
products age not readily available or
economically feasible. The Department
should further take into account the need
f )r such projects to receive commitments
regarding the future issuance of export
licenses.0
PRESERVING ALASKAN OIL FOR THE
UNITED STATES
0 Mr. McGOVERN. Mr. President, I rise
in support of maintaining the existing
language of the Export Administration
Act amendments as reported by the
Committee on Banking, Housing, and
Urban Affairs.
In light of'the enormous implications
which Alaska oil exports would have on
our precarious petroleum supply picture,
we cannot condone either exports at this
time or give the President complete au-
thority to authorize such exports.
Congressional control is essential.
The basic underlying premise of the
Export Administration Act is to protect
the domestic economy from an excessive
drain of scarce materials and to reduce
the serious inflationary impact of ab-
normal demand. This policy has become
more important today than at any other
time since this act was first implemented
10 years ago.
Clearly, the intent of Congress when
we passed legislation to provide for the
transportation of Alaskan oil, was to
mandate that Alaskan crude would be
July 2'1, 1979
used domestically-to ease our short-
ages, reduce our dependence on foreign
imports,. and to assist in restoring our
devastating balance-of-payments prob-
lem.
Both the congressional intent of this
legislation and U.S. policy under the Ex-
port Administration Act, as well as our
energy security objectives would be dan-
gerously jeopardized by any attempt to-
export Alaska North Slope oil at this
time.
In point of fact, the administration,
in 1977, rejected the option to exchange-
surplus North Slope crude with Japan,
despite the anticipated transportation
savings. The administration cited very
convincing reasons for their decision-
including the fact the consumers would
probably not realize any benefit from the
anticipated transportation savings.
A recent GAO report stated that,
Given the uncertainty and concerns asso-
ciated with the exchange agreement as out-
lined above, in the interim, continued ship-
ment of oil through the Panama Canal to the
Gulf and East Coasts would appear to be
the most sound course of action.
I urge my colleagues to support. the
existing policy and language contained
in the Export Administration Act.0
ALASKAN OIL AND ENERGY INDEPENDENCE
0 Mr. CHURCH. Mr. President, with
this bill we have the opportunity to help
place our country on the road to energy
independence. Alaskan oil is a vital part
of our Nation's energy strategy because
it represents over 13 percent of our do-
mestic reserves. Congress has played a
part in each stage of the development
Alaskan oil. Congress approved the route
for the trans-Alaska pipeline; Congress
provided the necessary right-of-ways;
Congress lifted price controls to stim-
ulate production and now Congress must
decide if we are to keep the oil for do-
mestic use or export it overseas. It would
be tragic to have gone to such enormous
effort to develop this vital resource only
to have it slip through our fingers.
Recent OPEC price increases have
spurred another round of inflation. Each
new economic forecast projects a reces-
sion. I am-concerned that very soon the
Senate will be confronted with inflation'
and rising unemployment as our people
are thrown out of work as business feels
the shock of the latest OPEC price
squeeze. We need an energy strategy be-
fore it is too late; a strategy that protects
our citizens from reliance on the insta-
bility of the world oil market; a strategy
that provides workers with job security
not affected by Iranian revolutions or
Middle East hostilities. 4 central part of
any such strategy is, the full develop-
ment of our own domestic energy sup-
plies, including Alaskan North Slope oil.
Three steps should be taken to fully
utilize North Slope oil supplies. First, we
should bar the export of Alaskan oil. Sec-
ond, we should encourage west coast re-
fineries ? to retrofit their facilities to
handle Alaskan heavy crude. 'bird, we
should improve and secure our delivery
of Alaskan crude through the develop-
ment of pipelines to carry it to inland
refineries that need it.
By acting to ban the export option we
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CONGRESSIONAL RECORD -SENATE
will create an incentive for producers to
invest domestically in pipelines, and also
to retrofit their refineries to handle
larger volumes of North Slope oil. When
the trans-Alaska pipeline was built, the
oil companies were promising to make
the investment required to retrofit west
coast refineries to handle Alaska crude.
Those investments have not been made,
because the oil companies have never
abandoned their desire to export North
Slope oil at OPEC cartel prices to foreign
purchasers.
The combination of increased refinery
capacity for Alaskan crude and the de-
velopment of a pipeline would provide us
with the maximum energy security ob-
tainable from Alaskan oil. The proposed
northern tier pipeline would cross over
our oil-starved Northern States making
connections to deliver Alaskan crude to
66 refineries in 14 States with a total
capacity for more than 4 million barrels
of oil per day.
The United States relies on imported
oil for nearly half of its petroleum needs.
Our vulnerability in the event of an em-
bargo, an international crisis, or a pro-
longed cutoff by one of our major sup-
pliers has increased daily. Despite this
serious predicament, the multinational
oil companies are advocating the export
of Alaska oil on the grounds it would
yield greater profit for them if they could
sell it abroad.
When the Senate Banking, Housing,
and Urban Affairs Committee reported
this bill, it clearly indicated that energy
security was more important.
The American people fully expected that
production of oil from Alaskan fields would
relieve some of our dependence on imported
crude oil. The hazards of that dependence,
which has actually increased since produc-
tion began in Alaska, are vividly evident to-
day in the shortages suffered in California
and other areas. Proposals to export Alaskan
oil, in exchange for Mexican or Persian Gulf
crude oil, will not serve to reduce our need
for Imported oil ... Once west Coast refin-
ing capacity is increased, the East-West pipe-
lines are built, the United States will have
a little more protection from the vagaries of
international oil price increases and the at-
tendant political and economic consequences.
In view of this, the committee feels that this
amendment serves a national purpose and
will have a positive effect on efforts to re-
build our domestic petroleum infrastructure.
The need for us to develop a stable
Alaskan oil supply and delivery system is
evident. We must reduce our dependence
on foreign oil. We cannot accomplish this
goal if we export American oil. I urge my
colleagues to join me in supporting the
oil export restrictions contained-in this
bill.
The amendment offered by the Senator
from Alaska (Mr. STEVENS) should be
rejected.O
? Mr. DOLE. Mr. President, as we all
know, recently the President determined
that the United States must establish a
positive energy program, based on re-
sponsible programs and strong ? leader-
ship. The key in his decision to activate
such a policy was to seek a cut in the
level of imported oil, and at the same
time insure that significant incentives
for domestic production be provided.
In Alaska, however, the search for do-
mestic oil was successful in the early
1970's and as many of my colleagues here
in the Senate may recall, the Federal
Lands Right-of-Way Act of 1973 pro-
vided for construction of a trans-Alaska
pipeline to bring the massive amounts
of crude from the North Slope to the
lower 48 States. Unfortunately, this
crude must be shipped to refineries of
the east coast due to the shortage of
refining capability of the west coast.
This is one reason for the "glut" of oil
on the west coast, and also for the high
cost which consumers now pay.
SWAPPING OF ALASKAN OIL
The export bill reported by the Bank-
ing Committee makes it impossible for
the United States to effectively deal with
this "glut." Under the amendment of-
fered by the Senator from Alaska, rea-
sonable restrictions on the exportation
of Alaskan crude through swapping
could occur. This could only be done,
however, in the national interest and
prove to be of no adverse effect on the
American consumer.
This amendment will not allow foreign
sale, but permit exchanges or swaps of
oil which would effectively and efficiently
reduce our oil costs, and at the same
time minimize the current inefficient
and wasteful system of shipping Alaskan
oil through the Panama Canal where it
is shipped to the gulf coast and on east.
IMPACT OF THE PANAMA CANAL
The Senator, from Kansas believes that
serious consideration should be given to
this amendment if only for the cost
factors alone. The passage of the.Pan-
ama Canal Treaty last year by this body
not only alters our international posi-
tion with the South American nations,
but also alters our domestic affairs, par-
ticularly in regards to its impact on our
energy supplies.
The Senate will soon be taking up the
implementing legislation for the Panama
Canal Treaty, and what will be raised in
this measure will be costs and who will
bear them. One issue that has already
been made very clear has been the sharp
increase in toll rates for the United
States in use of the canal for transit.
This is of enormous concern to this
country's energy problem-due to the
passage of tankers carrying North Slope
Alaskan crude.
Up to 500,000 barrels per day of Alaskan
crude oil is shipped through the canal
to gulf coast refineries. These refineries
supply the east, coast with half its re-
quirements for refined petroleum, and
the proposed toll increases of 30 percent
will drastically affect prices of heating
oil and other products just prior to this
19.79-80 winter season. This Alaskan
crude is necessary to keep the refineries
operating at a more economical capacity,
and supplies 7 percent of the petroleum
supply itself; therefore any price in-
crease will immediately be felt by the
American consumer.
In light of the ramification of this
administration's foreign policy, it is my
hope that we will realize this past mis-
take and prevent ourselves from continu-
ing to be locked in by decisions that time
has proved. to be unwise and uneconomi-
cal. We must have the flexibility to swap
our Alaskan oil to Japan and avoid the
pitfall of our past Panama Canal strat-
egy. Our west coast refineries unable to
handle the heavy North Slope oil, can
make use of the lighter oil to be swapped
with Japan, and at considerable energy
savings for all Americans.
SOLVING OUR TRADE IMBALANCE
Our trade imbalance with Japan is
responsible for about $12 billion of our
$30 billion annual deficit. nearly as much
as our oil deficit. Obviously. it,is an area
on which we must focus immediate atten-
tion-perhaps as much as we are now on,
the oil situation. Oil imports do not put
Americans out of work. but Japanese im-
ports do. Through the passage of this
amendment, perhaps we can help solve
these problems and reflect the concern
that we are acting for what is best for
our national interest. rather than what
is convenient or consistent with failed
policies of the past. Time has shown we
made a mistake in our assumptions with
the Panama Canal Treaty. This Senator
believes that our policy in allowing for
the swap of Alaskan oil would be wiser
and beneficial for the American people.
DECISION TO SWAP
In the future, should a swap be pro-
posed, that decision would be a matter
for the Executive and Congress. Some
swaps would be useful, others not. How-
ever, this amendment would provide
flexibility for the Executive to propose
swaps which may become necessitated by
future events.
The increasing production from the
North Slope will not only reduce this
Nation's dependency on the OPEC cartel,
but also increase the world's available
supplies. Our net oil imports would be
reduced and higher Federal tax revenues
result.
In. emergency, a swap would be ter-
minated and the security of the Nation
would not be threatened.
BENEFIT THE NATION
Undoubtedly, Mr. President, passage
of this amendment will benefit this Na-
tion at a time when relief is desperately
needed. The costs of drilling in Alaska
would be reduced, transportation costs
would be minimized, and of particular
importance, such swaps would bring the
nations of Japan and Mexico closer in
relationship with the United States. The
Senator from'Kansas is pleased to join
in cosponsoring this amendment by the
distinguished Senator of Alaska, and
urges the Senate to act affirmatively on
this measure.O
O Mr. HAYAKAWA. I am very con-
cerned with the provision in this bill
which would tighten existing restrictions
on exports and thus preclude any type
of oil exchange with Mexico and Japan.
Currently, California is suffering from
a glut of sour heavy oil because it does
not have the refining capacity to handle
the high sulphur Alaska crude. There is
no room for storage on the west coast and
no pipeline to send the excess to needy
refineries in the Midwest. Therefore, in
many instances, producers are leaving
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oil in the ground instead of paying the
exhorbitant cost of shipping excess sup-
plies through the Panama Canal. Cer-
tainly, construction of a pipeline or re-
finery retrofitting would be the ideal
solution. However. both of these are
long-range solutions and continue to
face innumerable regulatory and en-
vironmental barriers.
The quickest, most effective way to
solve this problem is to allow the ex-
cess oil to be shipped directly to Japan
in exchange for the sweet, light Mexican
crude which would be shipped to our
Atlantic and gulf coast ports. The United
States would not lose one drop of oil,
and it would result in transportation
savings of approximately $2 per barrel.
It would help diminish our trade
deficit with Japan and strengthen ties
with Japan and Mexico. We must not
deny the administration the flexibility
of allowing such a swap which would
end the disruption of the California oil
industry, and benefit the Nation.
Mr. RIEGLE. Mr. President, I move to
table the amendment.
The PRESIDING OFFICER. Under the
previous order, a motion to table is in
order at this time.
Mr. STEVENS. I ask for the yeas and
nays.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
CONGRESSIONAL RECORD -SENATE July 21, 1979
Eagleton
Mathias
Pryor
Glenn
Matsunaga
Randolph
Hollings
McGovern
Riegle
Huddleston
Melcher
Sarbanes
Humphrey
Metzenbatun
Sasser
Inouye
Moynihan
Schweiker
Jackson
Muskie
Stafford
Javits
Nelson
Stewart
Johnston
Nunn
Tsongas
Kennedy
Packwood
Warner
Leahy
Pell
Williams
Levin
Pressler
Zorinsky
Magnuson
Proxmire
NAYS-30
Armstrong
Hatch
Percy
Baker
Hayakawa
Roth
Bellmon
Heinz
Schmitt
Boschwitz
"Helms
Simpson
B.yrd. Robert C. Jepsen
Stennis
Chafee
Kassebaum
Stevens
Dole
Laxalt
Stevenson
Domenici
Long
Stone
Garn
Lugar
Thurmond
Goldwater
McClure
Wallop
NOT VOTING-18
Biden
Exon
Morgan
Burdick
Ford
Ribicoff
Cochran
Gravel
Talmadge
Cohen
Hart
Tower
Culver
Hatfield
Weicker
Durenberger
Heflin
Young
So the motion to table the amend-
ment of Mr. STEVENS (UP No. 431i was
agreed to.
Mr. RIEGLE. Mr. President, I move to
reconsider the vote by which the motion
to lay on the table the amendment of the
Senator from Alaska was agreed to.
Mr. DURKIN. I move to lay that mo-
tion on the table.
The motion to lay on the table was
agreed to.
Mr. STEVENSON. Mr. President, will
the manager of the bill yield me 4 min-
utes?
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Sen-
ator from Missouri.
UP AMENDMENT NO. 432
(Purpose: To modify method of approval
with regard to certain crude oil exports).
Mr. EAGLETON. Mr. President, I have
an amendment at the desk and I ask for
its immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
(B) the days on which either House is not
in session because of an adjournment for
more than 3 days to a day certain are ex-
cluded in computing the 60-day period.
(4) A resolution under paragraph (3)
shall be considered in accordance with the
procedures established by section 551 of the
Energy Policy and Conservation Act.
On page 76, line 22, strike out "(3)" and
insert in lieu thereof "(5)".
Mr. EAGLETON. Mr. President, I'
yield 4 "minutes to the Senator from
Pennsylvania and the Senator from
Alaska.
Mr. STEVENS. Mr. President, the
amendment has been tabled and in so
doing the most restrictive provision
against a producing State that Congress
has ever leveled has just been, in effect,
approved by the Senate.
I can understand what the Senator
from New Mexico said when he stated
that we have. provincial differences here.
But we will not solve the problem of in-
creasing production of oil in this coun-
try if these differences persist. I just
wanted to state to the Senate that in
some ways the people of Alaska will be
very pleased by this vote. I was urged
by some not to press this amendment
because the net result of the Riegle
amendment is to prohibit entirely any
exchange. It will deter any future ex-
pansion of our production capacity until
we put refineries in Alaska.
So what Senators really have done
now is, they have deferred the.produc-
tion cycle for Alaska until the refineries
are built. I hope that as they see plans
for these refineries as announced, and
as the result of this vote I predict that
The yeas and nays were ordered.
The PRESIDING OFFICER. The yeas
and nays have been ordered, and the
clerk will call the roll.
The assistant legislative clerk called
the roll.
Mr. CRANSTON. I announce that the
Senator from Delaware (Mr. BIDEN), the
Senator from North Dakota (Mr. BUR-
DICK 1. the Senator from Iowa (Mr. CuL-
VER 1. the Senator from Nebraska (Mr.
ExoN), the Senator from Kentucky (Mr.
FORD), the Senator from Alaska (Mr.
GRAVEL 1. the Senator from Colorado (Mr.
HART). the Senator from Alabama (Mr.
HEFLIN). the Senator from North Caro-
lina (Mr. MORGAN), the Senator from
Connecticut 1 Mr. RIBICOFF) and the Sen-
ator from Georgia (Mr. TALMADGEI are
necessarily absent.
Mr. STEVENS. I announce that the
Senator from Mississippi (Mr. COCHRAN).
the Senator from Maine (Mr. COHEN),
the Senator from Minnesota ?Mr. Du-
RENBERGERI. the Senator from Oregon
(Mr. HATFIELD), the Senator from Texas
(Mr. TOWER 1. the Senator from Connec-
ticut (Mr. WEICKER 1 and the Senator
from North Dakota (Mr. YOUNG) are
necessarily absent.
I further announce that, if present
and voting, the Senator from Minneso-
ta (Mr. DURENBERGER) would vote "yea."
The PRESIDING OFFICER (Mr.
LEVIN). Is there any other Senator in the
Chamber who wishes to vote?
The result was announced-yeas 52.
nays 30, as follows:
IRollcall Vote No. 206 Leg. )
YEAS-52
Baucus Bumpers Church
Bayh Byrd, Cranston
Benteen Harry F . Jr Danforth
Boren Cannon DeConcini
Bradley Chiles Durkin
one will be announced in the next
month, they will understand that with
the refinery capacity we have now be-
come associated with OPEC whether we
like it or not.
Th Senator from South Carolina was
there when we were told OPEC was say-
ing, "In the future, if you want our oil,
you are going to have to refine it here."
Now what Senators have told Alaska
is, if Alaska is to get a fair price for its
The assistant legislative clerk read as oil, if Alaska is to work out incentives
follows: for increased production, it must have
The Senator from Missouri (Mr. EAGLETON)
proposes an unprinted amendment numbered
432.
Mr. EAGLETON. Mr. President, I ask
unanimous consent that the reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
,The amendment is as follows:
On page 76, strike lines 19 through 21 and
substitute the following:
(B) the President reports such finding to
the Congress and the report is approved in
accordance with paragraph (3).
(3) The report of the findings of the Presi-
dent required by paragraph (2) shall be con-
sidered approved, and shall take effect at the
end of the first period of 60 calendar days of
continuous session of the Congress after such
report is submitted, unless the House of Rep-
resentatives and the Senate adopt a resolu-
tion during such period stating that it does
not favor such findings. For the purposes of
this paragraph-
1A) continuity of a session of the Con-
gress is broken only by an adjournment sine
die: and .
refineries in the State of Alaska.
I have never seen a decision, which in
the long-term best interests of the peo-
ple from the Midwest and the east coast,
in particular, will do more harm.
I just want people to understand that
we tried today to make the record that
we were willing to work with the Nation,
that we in Alaska tried not to become
associated with OPEC. We will be pro-
ducing-within the next decade at least
3.5 million barrels of oil. There is no
transportation mechanism for that oil,
and it will be refined, I believe, in Alaska,
and the products will be sent where the
people who manage the refineries in
Alaska will decide they will be sent.
And the Senator from Michigan may
say that this is a threat. It is not a threat.
it is a statement - of sheer economics.
Senators have transformed Alaska into
an OPEC producer rather than making it
a part of the productive capacity of the
United States, a decision I sincerely re-
gret and one that I think the Nation will
regret in the not too distant future.
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July 21, 1979 COINTGR]ESSIONAIL RIECORD - S]ENA1I IE
The PRESIDING OFFICER. The Sen-
ator from Missouri.
Mr. EAGLETON. Mr. President, the
amendment before us is a very narrow
and targeted one dealing solely with the
issue of whether there should be a one-
House veto or a two-House veto. I do not
think the debate on this amendment will
consume any great length. It deals with.
the question of whether with respect to
this bill there should be a one-House veto
of Presidential action-that is what the
committee bill calls for-or in my opin-
ion a two-House veto.
Section 4(g) of the committee bill sets
The PRESIDING OFFICER. The Sen-
ator from Michigan.
Mr. RIEGLE. First, let me say that I
have a great regard for my friend from
Missouri and, therefore, never happily
find myself on the other side of an issue
from him.
But I think his amendment here will
substantially weaken what the commit-
tee has done in terms of drafting this
legislation that is before us.
The committee approved a provision
here which the Senator from Missouri
would replace, which requires that the
President would have to report a finding
out certain restrictions on any exchange to the Congress if he wants to engage in
of Alaskan oil for a like quantity of for- the export of American oil abroad, and
eign-produced crude oil. I support those
restrictions especially the requirement
that the President certify that at least 75
percent of the transportation costs saved
by, the exchange be passed on to con-
sumers.
My only objection to the provision as
reported is the requirement that, in ad-
dition to meeting the conditions written
into law, the final exchange plan also
be approved by concurrent resolution of
the two Houses. That means either the
Senate or the House can block the plan
by disapproving the resolution or simply
not bringing it to a vote. In short the
language in the bill would allow a one-
House legislative veto.
Mr. President, the Senate soon will
be debating in a broader context the
wisdom of the legislative veto. I will
oppose any such authority. I am con-
vinced that it would lead to chaotic con-
gressional intervention in the day-to-day
activities of executive departments and
agencies and further deflect Congress
from its policy-setting responsibilities.
I am particularly opposed to a legis-
lative veto in energy matters where we
already suffer from fragmented leader-
ship, indecision, and confusion. Some-
body has to lead this country. I think
it is essential that Congress invest some
measure of trust and confidence in the
President who is the only person in a
position to provide that leadership. That
is the issue here.
My amendment simply substitutes for
the one-House veto now in the bill a
provision for disapproval of any final
plan by both Houses within 60 days. The
amendment incorporates the expedited
procedures of section 551 of the'Energy
Policy and Conservation Act, which as-
sures that resolutions of disapproval will
not be bottled up in committee or fili-
bustered on the floor.
Mr. President, in no way would my
amendment alter the purposes of this
section which is to assure that any ex-
change of Alaskan oil meet the tests of
national and consumer interest spelled
out. The amendment merely eliminates
the unnecessary and divisive provision
for a legislative veto. I hope the amend-
ment will be accepted by the floor man-
ager.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who
yields time? Does the Senator from Illi-
nois yield time?
Mr. HEINZ. I will yield 5 minutes to
the Senator from Michigan.
after he had reported the findings to
the Congress, Congress would then have
60 days in which to pass a resolution
approving and affirming that transac-
tion that he was proposing to us. That
.requires an active and an affirmative act
by Congress.
'The reason, in my view, why the com-
mittee chose to go with that affirmative
requirement by Congress is because this
is such a vital issue. As the President
said to us the other night,
We are into a war, in effect, with our fight
on the energy problem, and we are going to
respond to it in wartime fashion.
So the notion of taking the commodity
that is in the shortest supply and that
strikes right at the heart of our ability
to function as a country, namely our oil
reserves, and to start sending those
abroad, is a matter of such importance
in terms of its economic effect, in terms
of its strategic military effect, that that
is the kind of an issue that Congress
should have to join the President in
making an affirmative judgment about it.
What the Senator from Missouri is
proposing is something very different.
and it takes away that requirement of
affirmative action by Congress and sub-
stitutes in its place what I would charac-
terize as a very passive kind of involve-
ment by Congress. It simply says that
if Congress fails to act within a 60-day
period then the action of the President
would therefore go forward.
I think that is quite a different re-
quirement. That. in my mind, puts quite
a different burden on Congress than
what the committee has chosen to insert
in the language of the bill, which is that
we address the question directly and
make an affirmative iudgment on it.
So I hone we will not accent the lan-
guage of the Senator from Missouri, al-
though I must say that. generally sneak-
ing, I support the proposition that we
ought not to be involved in legislative
vetoes on each and every item. We have
got plenty of work to do. Also I think as
a general proposition we ought not to
move further in that direction.
But, quite frankly, I do not see this as
a legislative veto. I think this crosses the
line into the kind of national policy and
foreign policy questions of a size and of
an import where it requires the President
and Congress, I think, to act together, if
we are going to go ahead and engage
in the export of American oil to foreign
customers.
Therefore, I hope we will stay with the
committee language as adopted and de-
S 10193
feat the amendment of the Senator from
Missouri.
I thank the Senator from Pennsyl-
vania for yielding the time.
Mr. EAGLETON. Mr. President, if no-
body else desires to speak on the amend-
ment, I am about at the point where I
will yield my time.
The PRESIDING OFFICER. The Sen-
ator from Missouri.
Mr. HEINZ. We are prepared to yield
back the remainder of our time on this
side.
Mr. EAGLETON. Mr. President, I have
just, a few more words and then I will
yield back the remainder of my time if
no one else decides to speak on the
amendment.
I think Senator RIEGLE has espoused
his views very ably, as he always does.
It is a choice of what is being presented
here, a question of a one-House veto or
a two-House veto.
I do not under any circumstances
think that a one-House veto is the ap-
propriate remedy. Senator RIEGLE has
pointed out from his point of view why
he thinks it is proper under the circum-
stances.
The issue is joined.
I yield back the remainder of my time.
Mr. RIEGLE. Mr. President. I wonder
if the Senator from Pennsylvania will
yield 1 more minute to me?
The PRESIDING OFFICER. Who
yields time?
Mr. RIEGLE. Mr. President, will
the Senator from Pennsylvania yield
an ajlditional minute-reluctantly?
[Laughter.]
Mr. HEINZ. With, oy in my heart.
Mr. RIEGLE. Mr. President,- I just
want to say one other thing, and that
is we do have precedents that exist today
for the exact language that is in the com-
mittee bill. In the Public Utility Regu-
latory Policies Act of 1978 we had virtu-
ally identical language to what has been
proposed in the bill here. Also in the
Alaska National Gas Transportation Act
of 1976. We again would make the same
requirement we have written into the
legislation before the Senate and which
the Senator from Missouri would strike.
So, having already in two other im-
portant measures related to energy taken
this step. I hone we will, consistent with
those precedents, stick with the commit-
tee language here.
When all time is yielded back, it will
be my intention to make a motion to
table the amendment.
Mr. EAGLETON. I yield hack my time.
The PRESIDING OFFICER. Is all time
yielded back? Does the Senator from
Pennsylvania yield back his time?
Mr. HEINZ. I am prepared to yield
back the time.
Mr. LEVIN. Mr. President, I oppose the
Stevens amendment and support the po-
sition taken by the committee for many
reasons. One basic reason is that I be-
lieve that only when the present desti-
nation of Alaskan crude is retained will
we as a nation face up to the need to
build the new refining capacity we re-
quire and construct the pipelines that
we need. Those requirements and that
need are beyond debate-and only when
we have stated clearly and definitively
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CONGRIESSIONAIL RECORD -SENATE July 21, 1979
that there is no way to evade our re-
sponsibilities in that area, will we finally
have the compelling motive to do what
needs to be done.
We may argue, Mr. President, about
the impact of this proposal on prices,
balance of payments, jobs, and energy
supply-but we cannot debate the fact
that only by preventing the sorts of
swans suggested by the Stevens amend-
ments will we take the first steps toward
making the transportation and refining
decisions we need to make in order to
face up to the needs of the Nation.
The PRESIDING OFFICER. All time
is yielded- back.
Mr. RIEGLE. Mr. President, I move to
table the amendment of the Senator
from Missouri. '
Mr. EAGLETON. I ask for the yeas
and nays.
The PRESIDING OFFICER. Is there
a sufficient second? There is a suffici-
ent second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
question is on agreeing to the motion of
the Senator from Michigan to lay on
the table the amendment of the Sena-
tor from Missouri. The clerk will call the
roll.
The second assistant legislative clerk
called the roll.
Mr. CRANSTON. I announce that
the Senator from Delaware (Mr. BIDEN),
the Senator from North Dakota (Mr.
BURDICK), the Senator from Iowa (Mr.
CULVER), the Senator from Nebraska
(Mr. ExoN), the Senator from Kentucky
(Mr. FORD), the Senator from Alaska
(Mr. GRAVEL), the Senator from Colo-
rado (Mr. HART), the Senator from Ala-
bama (Mr. HEFLIN), the Senator from
North Carolina (Mr. MORGAN), the Sen-
ator from Georgia (Mr. TALMADGE), and
the Senator from Connecticut (Mr. RIBI-
COFF) are necessarily absent.
Mr. STEVENS. I announce that the
Senator from Mississippi (Mr. COCHRAN),
the Senator from Maine (Mr. COHEN),
the Senator from Minnesota (Mr. DUR-
ENBERGER), the Senator from North
Carolina (Mr. HELMS), the Senator from
Texas (Mr. TOWER), the Senator from
Connecticut (Mr. WEICKER), and the
Senator from North Dakota (Mr. YOUNG)
are necessarily absent.
The PRESIDING OFFICER. Are
there other Senators wishing to vote?
The result was announced-yeas 34,
nays 48, as follows:
(Rollcall Vote No. 207 Leg.(
YEAS-34
Baker Kennedy Riegle
Baucus Leahy Sarbanes
Bayh Levin Sasser
Bentsen Mathias Schweiker
Boren McGovern Stafford
Byrd, Robert C. Melcher Stewart
Church Metzenbaum Tsongas
DeConcini , Moynihan Warner
Durkin Nelson Williams
Goldwater Packwood Zorinsky
Humphrey Pressler
Javits Proxmire
NAYS-48
Armstrong Cannon Eagleton
Bellmon Chafes Garn
Boschwitz Chiles Glenn
Bradley Cranston Hatch
Bumpers Danforth Hatfield
Byrd, Dole Hayakawa
Harry F., Jr. Domendcl Heinz
Hollings Magnuson Schmitt
Huddieston Matsunaga Simpson
Inouye McClure Stennis
Jackson Muskie. Stevens
Jepsen Nunn Stevenson
Johnston Pell Stone
Kassebaum Percy Thurmond
Laxalt Pryor Wallop
Long Randolph
Lugar Roth
NOT VOTING-18
Biden Exon Morgan
Burdick Ford Ribicoff
Cochran Gravel Talmadge
Cohen Hart Tower
Culver Heflin Weicker
Durenberger Helms- Young
So the motion to lay on the table was
rejected.
The PRESIDING OFFICER. The
question recurs on the amendment of
the Senator from Missouri. Does the
Senator from New Mexico wish to be
recognized?
Mr. SCHMITT. Will the Senate yield
me 1 minute?
The PRESIDING OFFICER. All time
has been yielded back on the amend-
ment, unless the Senator gets time from
the bill.
Mr. STEVENSON. Mr. President, I
yield 1 minute on the bill.
Mr. SCHMITT. Mr. President, I just
want to be sure my colleagues who are
interested in the legislative veto as ap-
plied to rulemaking activities in the
rulemaking agencies in the executive
branch draw a sharp distinction con-
cerning the discussion which has gone
on here, which is the executive veto ap-
plied to legislative action. The legisla-
tive veto as applied to rulemaking ac-
tivities is another subject which will be
coming up in the next few months.
The PRESIDING OFFICER. The
question recurs on the amendment of
the Senator from Missouri, UP amend-
ment No. 432.
(Putting the question.)
The amendment was agreed to.
Mr. EAGLETON. Mr. President, I
move to reconsider the vote by which
the amendment was agreed to.
Mr. JACKSON. Mr. President, I move
to lay that motion on the table.
The motion to lay on the table was
agreed to.
AMENDMENT NO. 343, AS MODIFIED
(Purpose: To remove automatic decontrol
through "indexing")
Mr. JACKSON. Mr. President, I~ call
up my amendment No. 343, as modified,
and ask for its immediate consideration.
The PRESIDING OFFICER. The
amendment, as modified, will be stated.
The assistant legislative clerk read as
follows:
The Senator from Washington (Mr. JACH-
SON), for himself, Mr. NUNN, Mr. HOLLINGS,
Mr. COHEN, Mr. HATCH, Mr. HARRY F. BYRD,
JR., Mr. TowER, Mr. MOYNIHAN, Mr. BATH,
Mr. DOMENICI, and Mr. THURMOND, proposes
a printed amendment numbered 343, as
modified.
Mr. JACKSON. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment, as modified, is as fol-'
lows :
Beginning with "In" on page 81, line 14,
strike out through the period on page 82,
line 4, and in lieu thereof add the follow-
ing:
? In order to assure that requirements for
national security controls are removed when
no longer necessary, the Secretary of Com-
merce shall adopt regulations which elimi-
nate unnecessary delay in implementing de-
cisions reached, according to law, to re-
move or relax such controls.
Mr. JACKSON. Mr. President, this
amendment would delete a provision of
the bill which would permit the auto-
matic decontrol of goods and technol-
ogies based upon projections of obsoles-
cence. This decontrol provision is pred-
icated upon the erroneous assumption
that the extent to which goods and tech-
nologies become "obsolete with respect
to the national security of the United
States" is a predictable and measurable
phenomenon. The provision does not de-
fine "obsolescence." The ordinary dic-
tionary meaning is "no longer used." It
is extremely difficult to predict with any
reasonable degree of accuracy when
goods and technologies will become ob-
solete by U.S. standards. However, it is
impossible to predict the rate of ob-
solescence by the standards of the Soviet
Union or other adversary nations. In any
event, an item which is obsolete by U.S.
standards may nevertheless make a
significant contribution to the military
potential of such an adversary nation.
The thrust of the provision-which
this amendment would delete-is to sub-
stitute, factual investigation and tech-
nical analysis with a simple-minded
litmus paper test. To suggest by law that
the relative rates of obsolescence of
United States and-Soviet technology is
predictable and measurable, is dangerous
folly.
Mr. President, the amendment that I
have offered has been modified after
consultation with the distinguished Sen-
ator from Massachusetts (Mr. TsoNoAs).
In place of the current language, the
following language would be substituted:
"In order to assure. that requirements
for national security controls are re-
moved when no longer necessary"-and
that, I think, is what the Senator from
Massachusetts has in mind; I support
that-"the Secretary of Commerce shall
adopt regulations which eliminate un-
necessary delay in implementing deci-
sions reached according to law to remove
or relax such controls."
I yield to the distinguished junior Sen-
ator from Massachusetts.
Mr. TSONGAS. Mr. President, the Ex-
port Administration Act of 1979 creates
a climate for export expansion to reverse
the enormous trade deficits of recent
years. We were very careful to retain ex-
port controls for security and foreign
policy purposes. In fact, section 4(o) of
the bill encourages the development of a
process that will allow more time to re-
view controlled items by removing items
which no longer present a risk to our
security. The administration supports
the provision.
During the current round of COCOM
negotiations on control lists, the United
States proposed a limited system for au-
tomatically increasing the performance
levels of goods and technology. This has
been partially adopted.
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
High-technology products advance at
a rapid rate, but performance levels are
reviewed infrequently-only every 3 to 4
years when COCOM reviews take place.
Maufacturers are forced to continue
product lines for export that have been
superseded by more cost-effective items
with a slightly higher level of technology.
The licensing process becomes bogged
down with products that should no
longer be controlled because it has no
systematic approach for their removal.
It is estimated that the Commerce De-
partment handled more than 77,000 ap-
plications for validated licenses last
year, and the number is growing by
nearly 20 percent each year. We must
institute procedures to trim obsolete
items from the lists. If we do not, the
staffs at Commerce and Defense will re-
main mired in a blacklog of applications,
and exporters will continue to be frus-
trated by delays.
For example, the U.S. computer in-
dustry has reached the end of the 100
megabyte disk drive life cycle. Most, if
not all. U.S. companies have terminated
production of this drive in favor of more
cost effective products. The artificial ex-
tension of a product's life not only ties
down valuable resources which could be
better utilized on other projects, but in-
creases the unit cost on current products
due to lower production volumes.
Performance guidelines indexing could
enable U.S. industry to:
Offer competitive equipment at com-
petitive prices;
Avoid the burdensome marketing and
production expense of selling and in-
stalling obsolete products; and
Proceed on a planned basis to install
and upgrade systems.
This is a very technical issue, Mr.
President, and I shall not take the Sen-
ate's time, but there are two tables here
which so much simplify the issue that I
should like to have them printed in the
RECORD at this point.
(The charts submitted are not repro-
ducible in the RECORD (
Mr. TSONGAS. Mr. President, the is-
sue. very briefly, is that in high technol-
ogy industries, the process of review,
which is a function of the so-called
COCOM-which is the United States-
NATO minus Japan-includes Japan
without Iceland. The review of high tech-
nology equipment takes place every 4
years where, indeed, the increase in the
technology is simply much more expan-
sive. I have worked with the distin-
guished Senator from Washington State.
If I could ask him just two questions, I
think we may resolve this issue.
One, is there not agreement that this
amendment would not preclude index-
ing if it were found to be appropriate
within the national security terms as de-
fined?
Mr. JACKSON. The Senator is correct.
Mr. TSONGAS. Second, would he agree
that we would not jeopardize our efforts
to implement indexing in COCOM, based
on the same assurances that we had pre-
viously?
Mr. JACKSON. The Senator again is
correct. The amendment would not jeop-
ardize on-going efforts within COCOM.
Mr. TSONGAS. Within those. con-
straints, Mr. President. I am prepared tc
support the amendment.
Mr. STEVENSON. Mr. President, I
understand this would, in no way, affect
the administration's authority to index.
Mr. JACKSON. The Senator is correct,
it would not affect it. We were both in
agreement as to the need to get rid of
some of the regulations and controls.
The question here was some ambiguities
which I think we have resolved and the
objectives that the Senator from Massa-
chusetts had in mind-he,.I believe, was
the author of the amendment in com-
mittee-will be achieved.
Mr. STEVENSON. Mr. President, with
that assurance, I have no objection to
the amendment.
Mr. HEINZ. Mr. President, we have no
objection on this side. I am prepared to
yield back the remainder of our time.
The PRESIDING OFFICER. Is all
time yielded back? Does the Senator
from Washington yield back his time?
Mr. JACKSON. I yield back my time.
The PRESIDING OFFICER. The
question is on agreeing to the amend-
ment.
The amendment was agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
'Mr. HEINZ. I move to lay that mo-
tion on the table.
The motion to lay on the table was
agreed to.
UP AMENDMENT NO. 433
(Purpose ? To provide a legislative veto)
Mr. McCLURE. Mr. President, I have
an amendment which I send to the desk
and ask for its immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as.follows:
The Senator from Idaho (Mr..McCLURE),
for himself, Mr. JEPSEN, and Mr. BELLMON,
proposes an unprinted amendment num-
bered 433.
Mr. McCLURE. I ask unanimous con-
sent that further 'reading be dispensed
with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 79, insert the following between
lines 6 and 7:
(3) (A) The Secretary of Commerce.shall
transmit to the House of Representatives
and the Senate a summary of any proposed
exercise of the authority conferred by this
section with regard to agricultural com-
modities.
(B) (i) Except as provided in subpara-
graph (ii), such proposal shall not become
effective if within sixty calendar days of
continuous session of the Congress after
the date of transmittal of the proposal to
the Congress,- one House agrees to a resolu-
tion of disapproval and at the end of thirty
additional such calendar days after the date
of transmittal of the resolution of disap-
proval to the other House of Congress, such
other House has not passed a resolution dis-
approving such resolution.
(ii) Notwithstanding subparagraph (i), if
at the end of sixty calendar days of con-
tipuous session of the Congress after the
date of transmittal of the proposal to the
Congress, neither House has agreed to a
resolution of disapproval concerning such
S10195
proposal, and the committee to which a reso-
lution of disapproval concerning such pro-
posal has been referred has not reported
and has not been discharged from further
consideration of such a resolution, such-pro-
posal shall be effective at the end of such
sixty-day period or such later date as may
be prescribed by such proposal.
(C) For the purposes of this chapter-
(i) continuity of session is broken only by
an adjournment sine die; and
(ii) the days on which either House is not
in session because of an adjournment of more
than three days to a day certain are excluded
in the computation of calendar days of con-
tinuous session.
(D) The provisions of this section are en-
acted by Congress-
' (1) as an exercise of the rulemaking power
of the Senate and the House of Represent-
atives, respectively, and as such they are
deemed a part of the rules of each House,
respectively, but applicable only with respect
to the procedure to be followed in the House
in the case of resolutions described by this
paragraph: and they supersede other rules
only to the extent that they are inconsistent
therewith;
(ii) with full recognition of the constitu-
tional right of either House to change the
rules (so far as relating to the procedure of
that House) at any time, in the same man-
ner and to the same extent as in the case of
any other rule of that House; and
(.iii) (I) resolutions of disapproval, and
resolutions disapproving a resolution of dis-
approval in the other House shall, upon in-
troduction, be immediately referred by the
Presiding officer of the Senate or of the House
of Representatives to the appropriate stand-
ing committee of the Senate or the House of
Representatives;
(II) if the committee to which a resolu-
tion has been referred does not report a res-
olution within forty-five * * *
days thereafter (even though a previous mo-
tion to the same effect has been disagreed to)
to move to proceed to the immediate consid-
eration of the resolution. The motion is high-
ly privileged and is not debatable. An amend-
ment to the motion is not in order.
(iii) Debate on the resolution shall be lim-
ited to not more than two hours, which shall
be divided equally between those favoring
and those opposing the resolution. A motion
further to limit debate is not in order. An
amendment to, or motion to recommit the
resolution is not in order.
Mr. MCCLURE. Mr. President, I ask
unanimous consent to yield to the Sena-
tor from New York to handle an amend-
ment which he has without losing my
right to the floor.
Mr. JAVITS. Mr. President, if my
amendment is contested, I shall with-
draw it.
The PRESIDING OFFICER. Is there
any objection to the amendment or the
Senator from Idaho being temporarily
laid aside? Without objection, it is so
ordered.
The Senator from New York is recog-
nized.
UP AMENDMENT 434
The PRESIDING OFFICER, The clerk
will state the amendment.
The legislative clerk read as follows:
The Senator from New York (Mr. JAvrTs),
for himself and Mr. RIDICOFF, proposes un-
printed amendment numbered 434.
Mr. JAVITS. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
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At the end of Section 4) page 82 after line
20) insert the following new Section:
Sec. I a) The Secretary of Commerco
shall approve no license for the export of
goods or technology to any country with re-
spect to which the Secretary of State has
made the following determinations:
0 1) that such country has demonstrated
a pattern of support for acts of international
terrorism, and 2) that the exports in ques-
tion would make a significant contribution
to the military potential of such country
or would otherwise enhance its ability to sup-
port acts of international terrorism.
b) The President may suspend the applic-
ability of paragraph )a) of this Section with
respect to any particular country or any
particular transaction if he finds that the
national interest so require.
Mr. JAVITS. Mr. President, this is an
amendment directed at international ter-
rorism and provides that the Secretary of
Commerce shall approve no license for
the export of goods or technology to any
country with respect to which the Secre-
tary of State has determined that such
country has demonstrated a pattern of
support for acts of international terror-
ism, and that the exports in question
would make a significant contribution to
the military potential of such country or
would otherwise enhance its ability to
support acts of international terrorism.
The amendment also contains a pro-
vision allowing the President to suspend
it if, in his judgment, the national inter-
est so requires.
It is a fact,- Mr. President, that three
countries are now named by the Depart-
ment as aiding and abetting inter-
national terrorism. Those countries are
Iraq, South Yemen, and Libya. There
may be others, or some of them may
be delisted. As, for example, Somalia,
which was originally listed, is now
delisted.
Mr. President, all this does is erect
a signpost for the President. I have
discussed this matter with the managers
of the bill and I have advised them that
I have talked with the Secretary of State
and he would like to provide for this
particular matter by letter to Senator
RIBIcorF and myself. That is satisfac-
tory to us. The difficulty is that we may
finish this bill today and there will be
no vestige of anything that we propose
to do.
Under those circumstances, if agree-
able to the managers, I hope they can
take the amendment and if we can
arrive at a suitable letter, then we shall
ask them to drop it in conference. If
not, we shall ask them to negotiate it
in conference under whatever condi-
tions they think are wise.
Mr. STEVENSON. Mr. President, with
the understanding just stated by the
distinguished Senator from New York,
I support this amendment. The under-
standing is that we shall have a chance
to reconsider the matter in conference
and with the benefit of views that will
be received from the Department of
State.
Mr. JAVITS. Of course, and I hope
to agree with them on a,suitable letter
in this instance.
Mr. STEVENSON. I am assured of
that.
Mr. JAVITS. Mr. President, I ask
unanimous consent that the occupant of
the chair (Mr. LEVIN I be added as a
cosponsor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Is all time yielded back?
The Senator from Pennsylvania.
Mr. HEINZ. Mr. President, I compli-
ment the Senator from New York on
this amendment. It is quite consistent
with some things he and I and Senator
RIBIcoFF have worked on for some time.
I think the majority will accept it.
I am prepared to yield back my time.
Mr. JAVITS. I yield back my time.
The PRESIDING OFFICER. All time
having been yielded back, the question
is on agreeing to the amendment.
amendment was agreed to.
Mr. JAVITS. Mr. President, I move
to reconsider the motion by which the
amendment was agreed to
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
VP AMENDMENT NO. 433
Mr. McCLURE. Mr. President, the
amendment I am offering seeks to strike
a middle ground with respect to the posi-
tions taken by the Congress on the legis-
lative veto with a Presidential veto or
with a two-House veto. The law as pres-
ently written, with the amendment of-
fered by the Senator from Kansas, has a
two-House veto on the Presidential em-
bargo of the export of agricultural com-
modities. As I understand it, this bill, if
passed, will wine out that provision. My
amendment would provide that either
House could veto the action taken by the
President in embargoing such export but
would give the other House the oppor-
tunity to override that veto, thus siding
with the President and reinstating the
embargo.
Mr. President, without belaboring the
subject of whether or not an agricultural
embargo ought to be subject to this ac-
tion specifically, let me address just that
question of the legislative veto. It has
been a very difficult thing for both the
executive and the legislative branch to
deal with.
It seems to me this middle ground,
which seems to be emerging from the de-
liberations in the other body, and as I
understand it the deliberations on the
Federal Trade Commission legislation
amendment which may be offered, is to
try to find a way around the arguments
that the one-House veto is too arbitrary
and involves only one House and does not
have in it any element of action by the
other body.
This permits both Houses of the Con-
gress to be involved, if they desire to be
involved, permits one to veto the action
of the Executive in such an embargo,-but
does not leave it there if the other body
desires to be involved.
Mr. President, I think it is a reason-
able compromise between what is exist-
ing law and wiping out the legislative
veto provision altogether.
Mr. President, I do not want to be-
labor the subject if, as a matter of fact,
the managers will accept the amend-
ment. I know that they are both puzzled
and intrigued, and I hope favorably so,
by this attempt to compromise that issue.
If, on the other hand, they are not pre-
pared to accept the amendment, I would
like to discuss for a moment the reasons
for my concern about the embargo of
the export of agricultural commodities.
Mr. HEINZ. The Senator my go ahead.
Mr. McCLURE. Mr. President, with-
out belaboring that subject, and because
I have been invited by the manager of
the bill to do so, let me indicate that a
number of years ago, when we had been
for a number of years pushing the ex=
port of soybeans and urging on our
friends in Japan that they should accept
more and more soybeans, they had done
so to the point that 43 percent of the
protein in their diet was then in soy-
beans in one form or another.
Suddenly, without any notice to the
Japanese at all, there was an embargo
imposed on the export of soybeans.
I remember that incident particu-
larly because I was in Japan at the time,
sitting down talking with a number of
the members on the Japanese Diet, and
one young man who was involved in
those discussions seemed extremely
exercised by the action that had been
taken by the President of the United
States in that precipitate embargo.
It turned out that I understood, when
I became informed that he was the Dep-
uty Minister of Agriculture in that coun-
try and, therefore, was responsible for
the Government action that had allowed
'themselves to be so dependent upon
U.S. soybeans as the source of basic nu-
trition in their diet.
It was a very damaging blow, not
only to the Japanese-American rela-
tions, but it was also a very damaging
blow to the soybean industry in the
United States, because we have never
been able to recover the credibility we
had before that time as a supplier, as
a secure source of supply, for the dietary
requirements of that specific ally of
ours, and a very important trading part-
ner.
Mr. President, I do not have to under-
score the importance of soybean exports
to the agricultural markets in this
country. They have been the salvation
for agriculture over a number of years,
and far too many farmers in the United
States, to have to demonstrate that any
action that destroys foreign markets for.
soybeans has a tremendously crippling
effect on the economic being of agricul-
ture in the United States.
I mention this incident, Mr. Presi-
dent-because I am not from a State'
that produces any soybeans, I cannot be
accused of any direct parochial interest
because of my interest in soybean ex-
port-because I am interested in the '
health of the agricultural economy.
Mr. President, it seems to me that
there needs to be some kind- of a con-
gressional involvement in a ? sudden
change of direction with respect to the
agricultural commodity exports. This
amendment which I have offered would
provide that mechanism by which the
Congress could, if it desired, exercise
some influence upon the negative effects
of a suddenly imposed embargo which
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can be and sometimes. as has been dem-
onstrated, is invoked by the legislative
branch.
Mr. President. I would hope that- the
managers of the bill, knowing of the im-
portance of this subject, as so many
Members of this body and the other
body. recognizing the sincere effort to
try to find a compromise between the
,various proposals that have been made,
would see fit to accept this proposal as
a compromise and take it to conference
with the hope we can get the Members
of the other body to agree with us with
regard to this provision.'
Mr President. I bring before the Sen-
ate today an amendment designed to
minimize the Government's ability to
grossly interfere with the export of agri-
cultural commodities..
Back in 1972. we saw for the first time
in many. many years a prosperous
domestic wheat industry. U.S. wheat
yields were good while world stocks were
down, thus giving the American farmer
the brief. unusual possibility to market
his wheat for premium prices. For many
producers. this meant paid-up mort-
gages. new and better equipment, or
maybe the opportunity to finally buy
up-after so many years of waiting-that
adjoining quarter section wanted so
badly.
For all too many. these dreams were
literally shuttered by the administra-
tion's sudden, harsh, and unnecessary
embargo of all export wheat stocks. And
the farmers were not the only parties
injured in the move. Grain companies
and farm cooperatives found themselves
unable to fulfill export contracts. Dock-
workers and ship companies had to find
work elsewhere. And, perhaps worst of
all, those foreign nations we would like
to call our trading partners, suddenly
learned what kind of risk it took to do
business with the United States. Some
are only now getting over those wounds.
Mr. President, this amendment I offer
today will minimize-if not eliminate-
the chances that such capricious embar-
goes can ever again be imposed by the
executive branch. My amendment pro-
vides a 60-day buffer zone between the
time any such embargo action on agri-
cultural commodities is proposed and the
time it can go into effect: and within
that time period, either House can stop
the action by adoption of a resolution of
disapproval. There is a further safeguard
here, however, in that if one House ap-
proves a resolution of disapproval the
other House may, within 30 days, vote to
agree with the Executive's proposed
embargo action rather than that of the
other House. In such cases, the Execu-
tive's action would go into effect as
planned.
The net result of this amendment is
not merely a shift of power away from
the executive to the legislative branch.
On the contrary, the Executive's action
may in the end prevail, however, in the
meantime, the'Congress would be given
the opportunity they fully should by law
have to oversee all aspects of commerce.
Moreover, my amendment, at the very
least, will provide an adequate time
period in which current export contracts
could be completed, new jobs could be.
found, and, for the foreign nations,
new-and perhaps more reliable-sour-
ces for their so badly needed foodstuffs
can be located.
It is my feeling this is the very least
we can and must do to protect our farm-
ers, our export cooperatives and com-
panies, and, indeed, our reputation as a
reliable and trustworthy trading partner.
Mr. President, I reserve the remain-
der of my time.
The PRESIDING OFFICER (Mr. WIL-
LIAMS). The Senator from Illinois.
Mr. STEVENSON. Mr. President, I
share the Senator's feelings about em-
bargoes on exports of agricultural com-
modities. I am against therk. But I be-
lieve there are adequate safeguards in
existing law to make us all confident
that there will not be such embargoes.
For one thing, they cannot even be im-
posed unless agricultural commodities
are insufficient to meet domestic require-
ments.
For another thing, if embargoes were
to be imposed on exports of any com-
modity, the effect would be to immedi-
ately peg the loan level at 90 percent.
That would put the rate up for corn
to $3.75; $1.94 for oats.
There is no chance that the adminis-
tration would do that.
But, Mr. President, my main objection
to this amendment is based on the veto
provision which it contains.
This measure provides for a one-House
veto of any embargo and, as I understand
it, it establishes a new procerure which
would give one House a veto over the
other House.
It is a 11/2-House veto.
I 'can appreciate that the Senator is
trying to strike a compromise on this is-
sue of one-House vetoes. But I think it is
of doubtful wisdom and constitutional-
ity.
For that reason, mainly, not because I
do not share his concern about embar-
goes against agricultural commodities, I
have to oppose this amendment.
The PRESIDING OFFICER. The Sen-
ator from Pennsylvania.
Mr. HEINZ. Mr. President, I associate
myself with the comments of the Sen-
ator from Illinois.
I say to my good friend from Idaho
that I, too, remember well the case he
cites. Obviously, it was a question of
being very shortsighted. We not only up-
set the Japanese diet, but we upset their
appetite and their parliamentary diet,
as well.,
Yet, I really do believe that the'provi-
sions we have will protect us in the fu-
ture much better than we have been
protected in the past and will protect
us from the kinds of very arbitrary ac-
tions that have been taken.
Second, I think even the Senator from
Idaho will admit his procedure is inno-
vative and unique. I have some grave
reluctance about trying out such a new
procedure in this situation.
I am not a particular fan of one-
House vetoes. Because there is a one-
House veto and a one-House override
of the veto, I find that that does not
double my pleasure or double my fun.
.S10197
Mr. McCLURE. Does it double the
Senator's displeasure with the one-House
veto?
Mr. HEINZ. In moves in that direc-
tion. So I must reluctantly oppose the
Senator's amendment.
Mr. McCLURE. Mr. President, I am
sorry that the floor managers of the bill
have seen fit to oppose the amendment.
I ask for the yeas and nays on the
amendment.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
second.
The yeas and nays were ordered.
Mr. McCLURE. Mr. President, I will
not belabor the subject, except to say
that this device of trying to strike a
balance between the arguments of a
one-house veto versus a two-house veto,
I predict, will be adopted. If not in this
amendment, it will be adopted as we go
forward, not just on this particular sub-
ject but also on the broad array of areas
in which Congress legitimately desires to
give the Executive some discretion and
legitimately desires to restrain that dis-
cretion by saying, "We want to see how
you use it," without having to come in
and pass a law, which then must be ac-
cepted by the Executive to overcome
what the Executive has just done.
We must find some way, or we are
going to find more and more develop-
ing a resistance to the delegation of au-
thority to the executive branch of Gov-
ernment and the retention of that au-
thority in the hands of the legislative
body.
Mr. President, I think this is a con-
structive effort. I hope the Senate will
agree with me and adopt this amend-
ment.
If the managers of the bill are pre-
pared to yield back the remainder of my
time, I am prepared to. do so.
Before doing that, Mr. President, I ask
unanimous consent that the names of
the Senator from Iowa (Mr. JEPSEri i
and the Senator from Oklahoma i Mr.
BELLMON be added as cosponsors of the
amendment.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. NUNN. Mr. President, I submit a
statement by the senior Senator from
Georgia (Mr. TALMADGE) and ask unani-
mous consent that it may be printed in
the RECORD.
The PRESIDING OFFICER. Without
objection, it is so ordered.
STATEMENT BY SENATOR TALMADGE
I would like to take this opportunity to
express my support for S. 737 the Export
Administration Act of 1979. This legislation
provides long overdue revisions to the exist-
ing U.S. export licensing procedures to cut
through the myriad of redtape and paper
shuffling which has needlessly burdened and
delayed American businessmen and exports.
Increased export of American products is
vitally needed as an important component
in strengthening our American economy and
the value of the American dollar worldwide.
Certainly, the enhancement of American ex-
ports and increased trade should be given a
very high priority in all U.S. policy planning
now and in the future.
I would like to join 'my colleagues in ex-
pressing appreciation for the fine job which
the Subcommittee on International Finance,
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CONGRESSIONAL RECORD - SENATE July 21,-1979
so ably chaired by the Senator from Illinois,
Mr Stevenson has done in pulling together
this desparately needed legislation In addi-
tion. I would like to pay particular tribute to
the voluntary contributions to this effort
that have been made by the distinguished
Governor of my state. the Honorable George
Busbee As Chairman of the International
Trade and Foreign Relations Committee of
the National Governor's Association. Gover-
nor Busbee has generously given of his time
and effort in directing the initiatives of our
nation's governors towards improving the op-
portunities for the export of American goods
and commodities His committee has con-
ducted seminars and met with thousands of
businessmen nationwide in order to make
available to the Congress and the American
public the kind of information which will
enable us to devise effective legislative rem-
edies to the complex obstacles that have
plagued U S export policies and procedures
in recent years
I would also like to commend and recog-
nize the efforts of the students and staff of
the Rusk Center of International Law of the
University of Georgia Law School for the
research and technical support and advise it
has provided to the Governor's Association
and to the Congress during the development
of this legislation Under the able guidance
of my warm friend Dean Rusk. the Rusk
Center has been a tremendous success during
its two years of existence and is making sig-
nificant contributions In the area of inter-
national trade and U S foreign policy
The state of Georgia is most fortunate to
be able to claim the talents of our outstand-
ing Governor and the Rusk Center of Inter-
national Law and I am happy on behalf of
the people of Georgia to have had this oppor-
trinity to recognize the contributions to this
legislation made by our Governor and the
Rusk Center
Mr STEVENSON. Mr President. if no
other Members wish to be heard on this
matter, it is my intention to move to
table the amendment.
Mr. McCLURE. Before doing that, I
ask the Senator from Illinois, since he
plainly is intrigued by the idea, and the
Senator from Pennsylvania says he is
half-pleased by' the idea, whether we
might have an up and down vote on the
merits. rather than a motion to table.
Mr. HEINZ. I would not go that far.
.Mr. STEVENSON. I am not pleased
with this amendment.
Mr HEINZ, I did not say I was half-
pleased with the amendment.
Mr. MCCLURE. I thought the Senator
from Pennsylvania said he was half-
pleased.
Mr HEINZ No. I said it did not double
my pleasure or double my fun.
Mr McCLURE. But the Senator from
Pennsylvania admitted that it cut in half
his displeasure over the single-House
veto. ,
Mr HEINZ. No, it tended to double it.
'
'Laughter
Mr. STEVENSON, Mr. President, I
sense that the happy hour is approach-
ing !Laughter..] We had better get
moving,
Is such motion in order?
The PRESIDING OFFICER. If all time
has been yielded back.
Mr. STEVENSON. I yield back the
remainder of my time,
Mr MCCLURE. I yield back the re-
mainder of my time,
Mr STEVENSON. Mr. President, I
move to table the amendment, and I ask
for the yeas and nays.
The PRESIDING OFFICER. Is there a
sufficient second?" There is a sufficient
second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the motion to table
the amendment of the Senator from
Idaho. On this question the yeas and
nays have been ordered, and the clerk
will call the roll.
The legislative clerk called the roll.
Mr. CRANSTON. I announce that the
Senator from Indiana ' Mr. BAYH' , the
Senator from Delaware # Mr. BIDEN), the
Senator from North Dakota ' Mr. BUR-
DICK', the Senator from Iowa ' Mr. CUL-
VER', the Senator from Nebraska 'Mr.
ExoN' , the Senator from Kentucky (Mr.
FORD', the Senator from Alaska I Mr.
GRAVEL' , the Senator from Colorado (Mr.'
HART-. the Senator from Alabama ' Mr.
HEFLIN', the Senator from Massachu-
setts ' Mr. KENNEDY', the Senator from
Vermont ' Mr. LEAHY' , the Senator from
North Carolina ' Mr. MORGAN - , the Sen-
ator from Connecticut ' Mr. RIBICOFF',
and the Senator from Georgia 'Mr. TAL-
MADGE' are necessarily absent.
Mr. STEVENS. I announce that the
Senator from Mississippi ' Mr. COCHRAN' ,
the Senator from Maine ' Mr. COHEN),
the Senator from, Minnesota 'Mr.
DURENBERGERI, the Senator from North
Carolina ' Mr. HELMS' ; the Senator from
Texas ' Mr. TOWER), the Senator from
Connecticut ' Mr. WEICKERI, and the Sen-
ator from North Dakota ' Mr. YOUNG)
are necessarily absent.
The PRESIDING OFFICER. Are there
any other Senators in the Chamber desir-
ing to vote?
The result was announced-yeas 33,
nays 46, as follows:
[Roilcall Vote No. 208 Leg.l
YEAS--33
Bentsen
Hatfield
Nelson
Bradley
Heinz
Pell
Bumpers
Hollings
Pryor
Byrd, Robert C. Huddleston
Randolph
Cannon
Inouye
Riegle
Chafee
Javits
Sarbanes
Chiles
Mathias
Stafford.
Cranston
Matsunaga
Stevenson
Durkin
Metzenbaum
Stone
Eagleton
Moynihan
Tsongas
Glenn
Muskie
Williams
NAYS-46
Armstrong
Hayakawa
Percy
Baker
Humphrey
Pressler
Baucus
Jackson
Proxmire
Bellmon
Jepsen .
Roth
Boren
Johnston
Sasser
Boschwitz
Kassebaum
Schmitt
Byrd,
Laxalt
Schweiker
Harry F., Jr.
Levin
Simpson
Church
Long
Stennis
Danforth
Lugar
Stevens
DeConcini
Magnuson
Stewart
Dole
McClure
Thurmond
Domenici
McGovern
Wallop
Garn
Melcher
Warner
Goldwater
Nunn
Zorinsky
Hatch
Packwood
NOT VOTING-21
Bayh
Exon
Leahy
Biden
Ford
Morgan
Burdick
Gravel
Ribicoff
Cochran
Hart
Talmadge
Cohen
Heflin
Tower
Culver
Helms
Weicker
Durenberger
Kennedy
Young
. So the motion to lay on the table Mr.
MCCLURE's amendment (UP No. 433) was
rejected.
The PRESIDING OFFICER. The
question now recurs on agreeing to the
amendment of the Senator from Idaho.
The yeas and nays have been ordered.
Mr. MCCLURE. Mr . President, I ask
unanimous consent to vitiate the order
for the yeas and nays
The PRESIDING OFFICER. Is there
objection? The Chair hears none, and it
is so ordered. '
The questibn is on agreeing to the
amendment of the Senator from Idaho.
The amendment was agreed to.
Mr. McCLURE. Mr President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr; HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
Several Senators addressed the Chair.
UP AMENDMENT NO. 435
(Purpose: To exempt from disclosure in-
formation collected from exporters under
a pledge of confidentiality until June 30,
1980, but thereafter exempt only, license
applications. 96th Congress, 1st Session)
Mr. HATCH. Mr. President, I call up
an unprinted amendment, send it to the
desk, and ask for its immediate consid-
eration.
The PRESIDING OFFICER. The clerk
will report.
The legislative clerk read as follows:
The Senator from Utah ' Mr. HATCH) pro-
poses an unprinted amendment numbered
435.
Mr. HATCH. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 104 beginning on line 16, strike
out all through the last complete sentence
on line 25, and insert -in lieu thereof the
following:
"(c) Except as otherwise provided by the
third sentence of section 5(b) (2) and by
section 9(c) (2)'C) of this Act, informa-
tion obtained-prior to June 30, 1980, under
this Act, which is deemed confidential, in-
cluding Shippers' Export Declarations, or
with reference to which a request for con-
fidential treatment is made by the person
furnishing such Information, shall be
exempt from disclosure under section 552
Ib) (3) (B) of title 5, United States Code,
and such information shall not be published
or disclosed unless the Secretary of Com-
merce determines that the withholding
thereof Is contrary to the national interest,
Information obtained after June 30, 1980,
under this Act may be withheld only to the.
extent permitted by statute, except that in-
formation obtained for the purpose of con-
sideration of, or concerning, license appli-
cations under this Act shall be withheld
from public disclosure unless the release of
such information is determined by the Sec-
retary of Commerce to be in the national
interest. Enactment of this subsection shall
not affect any judicial proceeding com-
menced under section 552 of title 5, United
States Code, to obtain access to boycott re-
ports submitted prior to October 31, 1976,
which was pending on May 15, 1979; but
such proceeding shall be continued as if this
Act had not been enacted."
Mr. HATCH. Mr. President, I am in-
troducing an amendment to delete the
indefinite blanket exemption to Freedom
of Information Act requests and replace
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it with an exemption until June 30, 1980.
This will give exporters almost a year's
time to prepare for a change in the law
at that time, which would result in all
export control information being subject
to the Freedom of Information Act ex-
cept for license applications. These li-
cense applications are the items that ex-
porters are most concerned about becom-
ing available to their competitors, plus
they contain sensitive national security
information. I have been informed that
this issue of access to export control in-
formation will be coming up again next
year, so we will have an opportunity to
more fully explore this issue at that time.
It is my understanding that the man-
agers of the bill will accept this amend-
ment and, therefore, I reserve the re-
mainder of my time.
Mr. STEVENSON. Mr. President, I
think this is a sound amendment and I
am prepared to accept it.
Mr. HEINZ. Mr. President, I want to
compliment the Senator from Utah for
offering this amendment. I think it is a
well-balanced amendment and is deserv-
ing of support.
Mr. HATCH. I am prepared to yield
back the remainder of my time.
Mr. STEVENSON. I yield back my
time.
Mr. HATCH. I move. the adoption of
the amendment.
The PRESIDING OFFICER. All time
having been yielded back, the question
is on agreeing to the amendment of the
Senator from Utah.
The amendment was agreed to.
Mr. HATCH. Mr. President. f move to
reconsider the vote by which the amend-
ment was agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
UP AMENDMENT NO. 436
(Purpose: to revise the time periods and
procedures for reviewing export licenses)
Mr. CHAFEE. Mr. President, I send to
the desk on behalf of myself and Senator
-NUNN a printed amendment.
The PRESIDING OFFICER. The clerk
will report.
The second assistant legislative clerk
read as follows:
The Senator from Rhode Island Mr.
CHAFEE), for himself and Mr NUNN, proposes
an unprinted amendment numbered 436.
Mr. CHAFEE. Mr. President, I ask un-
animous consent that further reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendment is as follows:
On page 63, lines 13 through 15, strike out
unless additional time is required and the
applicant specifically requests an extension".
On page 70. lines 5 through 7, strike out ",
unless additional time is required and the
applicant specifically requests an extension".
On page 70, line 7. after the period insert
"All agency reviews of preliminary decisions
and appeals to the appropriate authorities
set forth in this Act shall be accomplished
within that ninety-day period.".
On page 71. between lines 3 and 4, insert
the following:
"(D) If the Secretary determines that a
particular application or set of applications
is of exceptional importance and complexity,
D - SENATE S M99
and that additional time is required for ne-
gotiations to modify the application or ap-
plications, or otherwise to arrive at a deci-
sion, the Secretary may extend any time
period prescribed in this subsection. The Sec-
retary shall notify the Congress and the ap-
plicant of such extension and the reasons
therefor.".
Mr. CHAFEE. Mr. President, what this
amendment does is to remove a provision
that permits the Secretary to say to the
applicant that she, the Secretary, re-
quests an extension of time, which the
applicant therefore goes along with, be-
cause of the fear that if the applicant
does not there will be further.delay or
that the application will be denied.
It is my understanding that the man-
agers of the bill agree with this provi-
sion, and in lieu of that particular provi-
sion it provides that the Secretary, in
cases of exceptional importance or com-
plexity, can request additional time. But
if she does she must notify Congress and
the applicant of such extension and the
reasons therefor.
I reserve the remainder of my time, Mr.
President.
Mr. HEINZ. Mr. President, I earlier
examined this amendment and I think
it is quite consistent with what we are
trying to do, with the spirit of the law,
and I compliment the Senator from
Rhode Island in offering the-amendment.
On this side we are prepared to accept
it.
Mr. CHAFEE. I thank the Senator.
Mr. STEVENSON. Mr. President, I am
prepared to accept the amendment.
Mr. CHAFEE. Mr. President, I yield
back the remainder of my time.
Mr. HEINZ. I yield back the remainder
of my time.
The PRESIDING OFFICER. All time
having been yielded back, the question is
on agreeing to the amendment of the
Senator from Rhode Island.
The amendment was agreed to.
Mr. CHAFEE. Mr. President, I move to
reconsider the vote by which the amend-
ment was agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Sen-
ator from Washington.
UP AMENDMENT NO. 437
Mr. JACKSON. Mr. President, I call
up my unprinted amendment which is at
the desk.
The PRESIDING OFFICER. The clerk
will report.
The legislative clerk read as follows:
The Senator from Washington iMr JACK-
SON) proposes an unprinted amendment
numbered 437
Mr. JACKSON. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without
obiection, it is so ordered.
The amendment is as follows:
On page 61, line 10. after the period add
the following:
"Rules and Regulations shall reflect the
difficulty of devising effective safeguards
which would prevent a nation which poses
a threat to the United States from diverting
critical technologies to military use, the dif-
ficulty in devising effective safeguards to
protect critical goods. and the need to take
effective measures to prevent the re-export of
critical technologies from non-controlled
countries to nations that pose a threat to
the security of the United States Such rules
and regulations shall not assume that effec-
tive safeguards can be devised."
Mr. JACKSON. Mr, President, effec-
tive implementation of the critical tech-
nologies approach endorsed by the bill
requires far more than the creation of
a list of goods and technologies. Un-
fortunately, the bill would accomplish
little more than the formulation of such
a new list by its failure to remedy im-
portant loopholes in the existing system.
Indeed, the bill would make it U.S.
policy to subject critical technologies to
traditional validated license controls
only to the extent that multilateral con-
trol agreements could be secured. In-
stead of establishing effective control of
critical technologies and goods as our
highest national priority, the bill would
lay the groundwork for a lowest common
denominator approach whereby one
noncooperating nation could undermine
controls.
The amendment would correct this
deficiency, but in a manner consistent
with the highly desirable objective of
achieving multilateral control agree-
ments. The amendment does this by
specifying the policy that should gen-
erally be followed with respect to ex-
ports of critical technologies and goods.
As to nations threatening U.S..national
security, exports of critical items should
be prohibited. As to free world nations,
effective safeguards against reexports
should be provided by validated export
license. Both of these control policies are
to be implemented "to the maximum
extent consistent. with the other pro-
visions of the act." Thus, if efforts to
eliminate foreign availability of any
critical item by multilateral agreement
or otherwise are not successful, then the
provisions removal or relaxation of the
control would be operative, unless the
President invoked a special exception in
the bill. .
If a critical technologies approach to
national security export controls is to
achieve its purpose, there must be a
clear policy directive from Congress as
to how these technologies and related
goods should be controlled. F'xperience
has shown that the Soviet Union and
other Warsaw Pact nations have ac-
quired and will continue to seek ad-
vanced American technologies in order
to enhance their military nower Even
where multilateral controls are obtained,
the bill would merely continue the status
quo in which determinations of whether
to permit export of an item to a Com-
munist nation are made on an ad hoc
basis in the licensing vroress
Licenses may be granted on the basis
that the recipient nation makes a repre-
sentation that the "end-use" will be
non-military or on the basis that there
are safeguards against diversions to
military use. However, end-use state-
ments and safeguards provide no pro-
tection against the diversion of "criti-
cal" technology or goods. By definition.
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they consist of know-how or products
which transfer know-how for which
safeguards against diversion cannot be
devised. The amendment would direct
that, to the maximum practicable extent
consistent with the provisions of the act.
exports of critical items shall be pro-
hibited or embargoed to nations threat-
ening U.S. security. This would also have
the benefit of obviating many unneces-
sary license proceedings.
The amendment would also direct
that, to the maximum possible extent
consistent with the provision of the act,
export of critical goods and technologies
to non-Communist nations be subject to
validated license controls which are rea-
sonably designed to prevent the reexport
of such critical items to Communist na-
tions. Present export regulations gen-
erally do not control on exports of tech-
nologies to most non-Communist na-
tions. As a consequence, many sensitive
technologies-including those employed
in the cruise missile system-can be ex-
ported to most non-Communist nations
without having to obtain advance clear-
ance from the Government. Given this
loophole, the opportunities for Soviet
acquisition of U.S. technologies are most
disturbing.
This amendment would not-as some
critics have asserted-increase controls
on exports of goods to non-Communist
nations. Most high technology products
are subject to controls even to CoCom
member nations. Of course, the danger
of re-export of items subject to CoCom
controls is significantly less than the
danger present by exports to non-Co-
Com member nations. It is the purpose
of this amendment that risk of reexport
of critical goods in these situations be
carefully considered-which is not- the
case under the present system of cursory
review of, such license cases.
The most important objective of this
policy on free-world controls is to close
the glaring loopholes whereby exports of
many critical technologies are com-
pletely unregulated.
The amendment provides sufficient
flexibility to take into account our tradi-
tional special relationship with Canada.
Most items the export of which are con-
trolled to other nations do not require
validated licenses for export to Canada.
The policy with respect to exports to
free-world destinatiofls is designed to
prevent re-exports. The amendment pro-
vides that to "the maximum extent
consistent with the provisions of the act"
that the re-exports of critical technolo-
gies are to be prevented by validated li-
cense controls.
One section of the bill-which is the
same as current law-provides that 'U.S.
policy toward individual countries shall
take into account all factors, including
its relationship to countries friendly and
hostile to the United States and its abil-
ity and willingness to control retransfers
of U.S. exports in accordance with U.S.
policy. Given the special relationship be-
tween the United States and Canada and
its reliable export controls, there would
be no reason to disturb the present open
borders policy.
Mr. President, this amendment is be-
ing offered as a substitute for amend-
CONGRESSIONAL RECORD-SENATE July 219 1979
ment No. 342. I have conferred with the
managers of the bill, and I believe it
represents a fair compromise in trying
to deal with this problem of diversions of
U.S. exports to military. use by hostile
nations and diversions of U.S. exports
by nonhostile countries to hostile coun-
tries. In the case of critical technologies
and goods this problem is of special im-
portance.
It is my understanding that the
amendment is acceptable-to both sides.
Mr. MATHIAS. Mr. President, will the
Senator yield for an inquiry?
Mr. JACKSON. Yes.
Mr. MATHIAS. Do I understand it is
an unprinted amendment?
Mr. JACKSON. We have amended my
original amendment, and this is really a
substitute for that. We have stricken
everything out of my amendment 342
which involved some problems that the
administration felt would not be work-
able.
Mr. MATHIAS. Is the text available?
Mr. JACKSON. I will give you a copy.
Mr. MATHIAS. Committee counsel has
just handed me a copy.
Mr. CHAFEE. Mr. President, will the
proponent of the amendment yield for a
question?
Mr; JACKSON. Yes.
'Mr. CHAFEE. Is this amendment ac-
ceptable to the administration?
Mr. JACKSON. Yes. We worked it out
with the representative of the Depart-
ment of Commerce, who is off the floor.
Mr CHAFEE. I thank the Senator.
Mr. HEINZ. Mr. President, the minor-
ity has examined the amendment and, at
this time, I know of no objection to it.
My staff and I have worked with Sena-
tor STEVENSON'S staff, with the admin-
istration and, of course, with my good
friend from Washington, Senator JACK-
SON.
We believe it is a realistic approach
to a very difficult question which is noth-
ing less than how do you approach the
question of making sure that critical
technologies do not somehow drift into
the wrong hands. I think it is fair to say
this is about the best we can do.
Mr. JACKSON. Mr. President, I think
we have made a real effort to at least
make a beginning in dealing with this
problem of diversion as it affects critical
technologies, and I am prepared to yield
back my time.
The PRESIDING OFFICER. Is all time
yielded back?
Mr. STEVENSON. I yield back my
time.
Mr. HEINZ. We yield back our time
if everybody else does.
The PRESIDING OFFICER. All time
having been yielded back, the question
is on agreeing to the amendment of the
Senator from Washington.
The amendment was agreed to.
Mr. JACKSON. Mr. President, I move
to reconsider the vote by ? which the
amendment was agreed to.
Mr. HEINZ. I move to lay that motion
on the table.
The motion to lay on the table was
agreed to.
UP AMENDMENT NO. 438
(Purpose: f1) To provide an opportunity for
license applicants to petition for consid-
eration of licenses in conformity with
the Act 121 To require the Secretary of
Commerce to issue regulations providing
for export control list reviews 131 To pro-
vide an opportunity for interested Govern-
ernment agencies and other affected parties
to submit views on export control list re-
visions. 4 i To require reports on the
domestic economic impact of export con-
trols. 151 To require that applicants be
informed of the reasons for license denials
or deferrals and to establish appeals pro-
ceduresi
Mr. STEVENSON. Mr President. I
have five amendments at the desk. They
are all procedural amendments. I believe
no one objects to them. I ask unanimous
consent that they be considered en bloc.
The PRESIDING OFFICER. Without
objection, it is so. ordered.
The amendments will be stated.
The legislative clerk read as follows:
The Senator from Illinois 'Mr STEVEN-
SON) proposes five unprinted, amendments.
en bloc, numbered 438
Mr. STEVENSON. I ask unanimous
consent that further reading of the
amendments be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The amendments are'as follows:
On page 73, after line 15 insert a new
paragraph as follows:
"i 10) The Secretary shall establish appro-
priate procedures for applicants to appeal
denials of export licenses. In any case where
the absence of a license approval exists, be-
cause of agency action or inaction that
clearly conflicts with the procedures, stand-
ards, or policies of this Act, the applicant
may file a petition with the Secretary re-
questing that such action or inaction be
brought in conformity with the appropriate
provisions of this Act. When such petition
is filed, the Secretary shall determine the
validity of the petition and, if valid, shall
take appropriate corrective action."
On page 63, line 18. strike out the phrase
"The Secretary shall review" and insert in
lieu thereof
"The Secretary shall issue regulations pro-
viding for review of "
On page 63, strike out the last word of
line 21 and strike out all of lines 22, 23, and
24 and insert in lieu thereof "carry out the
policies of this Act, and for the prompt is-
suance of such revisions of the list as may
be necessary Such regulations shall pro-
vide Interested Government agencies and
other affected or potentially affected parties
with an opportunity. during such review. to
submit written data, views, or arguments
with or without oral presentation. Such reg-
ulations shall further provide that as part
of such review, there shall be an assess-
ment of".
On page 66, line 7, Insert the following
immediately after "controls": "and the es-
timated domestic economic impact on the
various industries affected by such controls".
trols".
On page 71, strike out the phrase, "to the
maximum" on line 1 and strike out all of
lines 2 and 3 and insert In lieu thereof: "In
writing within five days of such decision of
the statutory basis for denial, the policies
set forth In section 3 of the Act 'which would
be furthered by denial, and, to the extent
consistent with national security and for-
eign policy, the specific considerations which
led to the denial, and of the availability of
appeal procedures. In the event decisions on
license applications are deferred inconsistent
with the provisions of this subsection, the
applicant shall be informed in writing with-
in five days of such deferral. The Secretary
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shall establish appropriate procedures for ap-
plicants to appeal such deferrals or denials."
Mr. STEVENSON. I offer these amend-
ments on behalf of myself, Mr. HEINZ,
and Mr. JEPSEN. These amendments all
originated with the Governors' Commit-
tee on Exports, chaired by the Governor
of Georgia, Mr. Busby. They provide op-
portunities for the public to comment on
.proposed provisions for export control;
they provide an appeals process for li-
cense applications which are delayed be-
yond the time limits set forth in the act,
.or are denied; they provide that license.
applicants be notified promptly if their
license applications are delayed more
? than 5 days beyond the deadlines in the
act; they require the Secretary of Com-
merce to require reports on the domestic
impact of export controls; and they also
permit applicants to petition to have
their applications considered in accord-
ance with the provisions of the act.
These amendments are designed to ex-
pedite procedures to carry out the pro-
visions of the act and to improve con-
gressional oversight.
The administration has no objections
to them.
Mr. HEINZ. We have no objection.
Mr. STEVENSON. So, Mr. President,
I am prepared to yield back the remain-
der of my time.
Mr. HEINZ. I yield back the remain-
der of my time.
The PRESIDING OFFICER. The ques-
tion is .on agreeing, en bloc, to the
amendments of the Senator from Illinois
(Mr. STEVENSON) (No. 438).
The amendments, en bloc, were agreed
to.
UP AMENDMENT NO. 439
(Purpose: To provide validated license con-
trol for crime equipment exports)
Mr. STEVENSON. Mr. President, I
send another amendment to the desk and
ask for its consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as follows:
The Senator from Illinois (Mr. STEVENSON)
proposes an unprinted amendment numbered
439:
On page 82, after line 20, add a new sub-
section as follows:
Mr. STEVENSON. I ask unanimous
consent that further reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without
objection, it is so ordered..
The amendment is as follows:
On page 82, after line 20, add a new sub-
section as follows:
"(q) (1) Crime control and detection in-
struments and equipment shall be approved
for export by the Secretary of Commerce only
pursuant to a validated export license.
(2) The provisions of this subsection shall
not apply with respect to exports to coun-
tries which are members of the North Atlan-
*tic Treaty Organization or to Japan, Aus-
tralia, or New Zealand, and such other coun-
tries as the President shall designate con-
sistent with the purposes of this subsection
502(b) of the Foreign Assistance Act of 1961,
as amended.".
Mr. STEVENSON. Mr. President, this
amendment would carry over the exist-
ing provisions of law with respect to ex-
ports of crime control and detection
equipment, with one minor modification:
It requires that the primary law with re-
lation to crime control and detection
equipments be approved by the Secre-
tary of Commerce to validate a license,
except for export to countries which are
members of the North Atlantic Treaty
Organization, Japan, Australia, and
New Zealand.
The modification simply adds to that
list of countries such other countries as
the President shall designate consistent
with the purposes of the Foreign Assist-
ance Act of 1961.
I know of no objection to this amend-
ment.
Mr. HEINZ. Mr. President,.I have ex-
amined the amendment. I know of no
objection to it, or reason why it should
not be adopted. I am prepared to accept
the amendment, and yield back the re-
mainder of our time.
The PRESIDING OFFICER. All re-
maining time having been yielded back,
the question is on agreeing to the amend-
ment (UP No. 439) of the Senator from
Illinois (Mr. STEVENSON).
The amendment was agreed to.
The PRESIDING OFFICER. Who
yields time?
Mr. HEINZ. Mr. President, if there are
no further amendments, I am prepared
to yield back all time on the bill.
UP AMENDMENT NO. 440
(Purpose: To insure that the Commodity
Credit Corporation does not act as a Na-
tional Grain Marketing Board)
Mr. BELLMON. Mr. President, I have
an amendment at the desk, and ask for
its immediate consideration.
The PRESIDING OFFICER. The
amendment will be stated.
The legislative clerk read as folows:
The Senator from Oklahoma (Mr. BELL-
MON), for himself and Mr. Boscawrrz, pro-
poses an unprinted amendment numbered
440.
On page 78, strike out all after the period
in line 1 down through line 11.
Mr. BELLMON. Mr. President, I ask
unanimous consent that further reading
of the amendment be dispensed with.
The remainder of the material is simply
explanation, not a part of the amend-
ment.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. BELLMON. Mr. President, this
provision of the bill would seem to give
the Government, through the Commod-
ity Credit Corporation, authority to go
back in the business of buying and own-
ing agricultural commodities. Some
Members may remember the time when
the Commodity Credit Corporation
owned enormous quantities of various
kinds of agricultural commodities, and
the great difficulties that were experi-
enced when the Government tried to
dispose of those commodities, and also
the fact that a great many producers
of agricultural commodities felt that the
Secretary of Agriculture was using his
power in the marketplace to control the
prices of various kinds of agricultural
commodities.
I can see no reason for this bill to get
us back in the business of buying or
giving the Secretary of Agriculture or
the Commodity Credit Corporation au-
thority to buy agricultural commodities.
I believe the bill would be greatly im-
510201
proved if this section were simply
stricken.
Mr. STEVENSON. Mr. President, this
provision in the bill gives no authority
to the Secretary of Agriculture, to the
CCC, or to anybody else for export con-
trols. It. does absolutely nothing to en-
large on any existing authority in the
law for control of the exports of agri-
cultural commodities.
I am against controls on exports of
agricultural commodities. There are
more of them now than we need.
What the bill does is suggest that, if
there is a short supply situation, we
would have some alternatives to another
across-the-board embargo, such as the
soybean embargo. One of the alterna-
tives suggested in the bill is to license
exports. It is not only in this bill; it is
in the law.
The situation that the authors of this
provision had in mind would be a case
though it is hard to conceive, of a soy-
bean embargo, far enough. That requires
a short supply situation to begin with,
and then, instead of an across-the-board
embargo, this provision would have the
President consider the alternative of
using the CCC as the exclusive sales
agent for sales to foreign governments.
The bill is just permissive; it does not
provide any new authority.
The countries that we have in mind
are nonmarket countries. the PRC and
the U.S.S.R. Any sales to those countries
could be channeled through the CCC in
order to obtain for the United States
maximum economic advantage, instead
of leaving ourselves to the choice of
either embargoes across the board or the
multinational corporations.
. But I point out to the Senator again
that this does not add any additional au-
thority. The President is controlling the
volume of grain sales to the U.S.S.R.
right now under current law.
Mr. BELLMON. Mr. President, if the
language gives no additional authority,
it seems to me to be superfluous. But the
language of the section seems to me,
say very plainly-I will read beginning
on page 78, beginning on line 3:
Given.full consideration to the alternative
of using the Commodity Credit Corporation
to purchase such commodity and arrange
sales to foreign governments in accordance
with the provisions of'the Commodity Credit
Corporation Charter Act so as to stabilize
markets and maximize returns to agricul-
tural producers.
Mr. President, that is precisely what
the Commodity Credit Corporation did
for 20 years, and almost bankrupted the
agricultural sector. I can see no reason
for putting the Commodity Credit Cor-
poration back in the grain business with
this kind of bill. If that is to be done, let
it be done by an agricultural bill, where
we will know what the circumstances
are.
This business of putting the Commod-
ity Credit Corporation into the business
of stabilizing markets and maximizing
returns to agricultural producers is not
a proper function of a trade bill.
Mr. STEVENSON. Mr. President, the
Commodity Credit Corporation already
has this authority. All we are saying in
this bill is: instead of soybean embargoes
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across the board, which I want to get
away from, you can use the CCC under
its existing authority. You do not give it
any additional authority to control your,
sales to the Peoples Republic of China or
to the U.S.S.R. We do not even go that
far really. The bill just says you have to
give attention to the authority you al-
ready have before you impose an em-
bargo on soybeans, corn, wheat, or any
other agricultural commodity. What, Mr.
Prsident, is wrong with giving attention
to that kind of a possibility?
I suggest that it not only would en-
hance our competitive position in the
world, but it might begin to signify to
the world that the United States is get-
ting its act together, instead of giving,
as we do now, all the advantage in the
marketplace to the People's Republic of
China and the U.S.S.R.
This would mean that if those coun-
tries need exports and we have to em-
bargo, they are going to have to come to
any agency of the U.S. Government, as
they would with any other exporting
country in the world. They would have to
bargain instead of sneaking into our
markets quietly as they do over and over
again with prices of commodities sky-
rocketing as the word gets out, to the
disadvantage of American farmers and
the advantage of the Soviet Union, which
can then turn around and sell food at a
profit and at our expense.
As I say, it does nothing to change ex-
isting authority. It just points out that
there are some alternatives under exist-
ing authority by which the United States
can enlarge its power, its economic power
and its political power, in the world by
using an instrumentality that already
exists, and only as an alternative to an
across-the-board soybean embargo or
wheat embargo.
Mr. BELLMON. Mr. President, in the
first place, it does do something else. If
the Members will look at page 15 of the
committee report, the top of the page,
under the subtitle Agricultural Commod.
ities, it says:
S. 737 revises provisions concerning the
export of agricultural commodities which
are contained in the present Act. S. 737 adds
a requirement that the President, before re-
sorting to export controls, consider using the
Commodity Credit Corporation as the ex-
clusive sales agent for sales to foreign gov-
ernments in order to stabilize markets and
maximize returns to agricultural producers.
The Committee believes that in circum-
stances in which purchases by foreign gov-
ernments are the principal cause of a tight
supply situation for a particular agricultural
commodity, it may be preferable to have the
CCC take over sales to that country than to
apply comprehensive export controls on sales
of the commodity in question.
What we are talking about here is
putting the CCC in the business of buy-
ing and hopefully exporting agricultural
commodities. It is a very large, new
authority that the CCC has not used in
the past and, in my opinion, is not in
the national interest.
I would remind the Senator from Illi-
nois that agriculture generally has
fought for years to keep the CCC out of
the marketplcae, that we have even op-
posed establishing a so-called strategic
reserve for the reason that we do not
want the Secretary of Agriculture to
have commodities he can dump on the
market and control prices in that way.
This, no matter what good intentions the
manager of the.bill may have, is exactly
what we are doing here. If we let the
Commodity Credit Corporation start
buying commodities for one purpose we
have no way of knowing that they will
not use-them for market control.
Mr. President, I ask for the yeas and
nays on the amendment.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
second.
The yeas and nays were ordered.
Mr. BELLMON. Mr. President, the
Senator from Minnesota is to be added
as a cosponosr of the amendment.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. STEVENSON. Mr. President, I
have no desire to prolong this. I will
reiterate that this is no authority that
is not already in the law. All it does is
require that the President, before re-
sorting to export controls, consider us-
ing the Commodity Credit Corporation
as the exclusive sales agent for sales to
foreign governments. The only govern-
ments that I have in mind, or that the
authors of this provision have in mind,
are the People's Republic of China and
the Soviet Union, and only then in cir-
cumstances that authorize across-the-
board embargoes.
Under those circumstances, Mr. Presi-
dent, if embargoes would be imposed,
it would behoove us as an alternative
not to impose them except with respect
to those countries and then give ourselves
all the leverage and all the power we
can get in the marketplace. The way to
do that is through the CCC and it re-
quires -no additional authority. They
can do it right now.
With that, Mr. President,'unless there
are further comments, I intend to move
to table the amendment."
Mr. President, I move to table the
amendment and I ask for the yeas and
nays.
The PRESIDING OFFICER (Mr.
STONE). Do Senators yield back their
time?
Mr. STEVENSON. I yield back the re-
mainder of my time.
Mr. BELLMON. I yield back the re-
mainder of my time.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The ques-
tion is on agreeing to lay on the table
UP Amendment No. 440. The yeas and
nays have been ordered and the clerk
will call the roll.
The assistant legislative clerk called
the roll.
Mr. CRANSTON. I announce that the
Senator from Indiana (Mr. BAYH), the
Senator from Delaware (Mr. BIDEN), the
Senator from North Dakota (Mr. BUR-
DICK), the Senator from Iowa (Mr. CUL-
VER), the Senator from Nebraska -(Mr.
ExoN), the Senator from Kentucky (Mr.
FORD),, the Senator from Alaska (Mr.
GRAVEL) , the Senator from Colorado (Mr.
HART), the Senator from Alabama (Mr.
HEFLIN), the Senator from Massachu-
setts (Mr. KENNEDY), the Senator from
Vermont (Mr. LEAHY), the Senator from
Montana (Mr. MELCHER), the Senator
from North Carolina (Mr. MORGAN), the
Senator from Connecticut (Mr. RIBI-
coFF), . the Senator from Georgia (Mr.
TALMADGE), and the Senator from Texas
(Mr. BENTSEN) are necessarily absent.
Mr. STEVENS. I announce that the
Senator from Mississippi (Mr. COCHRAN),
the Senator from Maine (Mr. COHEN),
the Senator from Minnesota (AV.
DURENBERGER), the Senator from North
Carolina (Mr. HELMS), the Senator from
Texas (Mr. TOWER), the Senator from
Connecticut (Mr. WEICKER), and they
Senator from North Dakota (Mr. YOUNG)
are necessarily absent.
The PRESIDING OFFICER. Is there
any Senator wishing to vote in the
Chamber?
The result was announced-yeas 20,
nays 57, as follows:
IRollcall Vote No. 209 Leg.l
YEAS-20
Bradley Levin
Riegle
Byrd, Robert C. Matsunaga
Sarbanes
Cannon
Metzenbaum
Sasser
Cranston
Moynihan
Stevenson
Durkin,
Muskie
Tsongas
Glenn
Nelson
Williams
Inouye
Pell
NAYS-57
Armstrong
Hatfield
Percy
Baker
Hayakawa
Pressler
Baucus
Heinz
Proxmire
Bellmon
Hollings
Pryor
Boren
Huddleston
Randolph
Boschwitz
Humphrey
Roth
Bumpers
Jackson
Schmitt
Byrd,
Javits
Schweiker
Harry F., Jr.
Jepsen
Simpson
Chafee
Johnston
Stafford
Chiles
Kassebaum
Stennis
Church
Laxalt
Stevens
Danforth
Long
Stewart
DeConcini
Lugar
Stone
Dole
Magnuson
Thurmond
Domenici
Mathias
Wallop
Eagleton
McClure
Warner
Garn
McGovern
Zorinsky
Goldwater
Nunn
Hatch
Packwood
NOT VOTING-23
Bayh
Exon
Melcher
Bentsen
Ford
Morgan
Biden
Gravel
Ribicoff
Burdick
Hart
Talmadge
Cochran
Heflin
Tower
Cohen
Helms
Weicker
Culver
Kennedy
Young
Durenberger
Leahy
So the motion to lay on the table UP
amendment No. 440 was rejected.
Mr. HEINZ. Mr. President, I ask
unanimous consent that the yeas and
nays on the Bellmon amendment be.
vitiated.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The question is on agreeing to the
amendment of the Senator from Okla-
homa. .
The amendment (UP No. 440) was
agreed to.
Mr. BELLMON. Mr. President, I move
to reconsider the vote by which the
amendment was agreed to.
Mr. BOSCHWITZ. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
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Mr. STEVENSON. Mr. President, I do
not know if there are any more amend-
ments.
Mr. President, we have today adopted
a number of amendments which
strengthen and improve the bill. Taken
together, they leave the existing array of
responsibilities for the administration of
export controls within the executive
branch unchanged and impose no new
constraints on export licensing. The Sec-
retary of Commerce retains the respon-
sibility for maintaining the export con-
trol list, and the responsibility of the
Secretary of Defense to identify critical
goods and technologies for possible in-
clusion on that list is made clear.
I note in particular the provision in
amendment No. 340 which states that
the Secretary of Commerce shall prepare
and maintain the control list "subject to
the authority of the Secretary of Defense
under subsection [4] (a) (2) (B)." The
cross reference in this provision refers
to the authority of the Secretary of De-
fense, newly recognized by the amend-
ment, to develop a list of militarily crit-
ical goods and 'technologies for possible
inclusion on t~e commodity control list.
The present procedure whereby the Se.--
retary of Commerce prepares and main-
tains the actual commodity control list
would not be altered.
I urge the Senate to approve this bill.
SEVERAL SENATORS. Third reading!
The PRESIDING OFFICER. The bill
is open to further amendment. If there
be no further amendment to be pro-
posed, the question is on agreeing to the
committee amendment in the nature of a
substitute.
The committee amendment was
agreed to.
The bill was ordered to be engrossed
for a third reading and was read the
third time.
Mr. PERCY. Mr. President,. I ask for
the yeas and nays.
The PRESIDING OFFICER. Is there
a sufficient second? There is a sufficient
second.
The yeas and nays were ordered.
Several Senators addressed the Chair.
Mr. ROBERT C. BYRD. Mr. President,
I ask unanimous consent to proceed for
1 minute.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. ROBERT C. BYRD. Mr. President,
I wish to thank all Senators who re-
mained here today for their services in
disposing of this important piece of leg-
islation.
ORDER TO CONSIDE3 S. 1309-THE FOOD STAMP
BILL
Mr. ROBERT C. BYRD. Mr. President,
I ask unanimous consent that upon the
disposition of this measure the Senate
proceed, with the understanding there
will be no action thereon tonight, to the
consideration of S. 1309, the food stamp
bill.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The bill having been read the third
time, the question is, Shall it pass? All
time has been yielded back. The yeas
and nays have been ordered and the
D - SENATE
clerk-will call the roll on final passage.
The second assistant legislative clerk
called the roll.
Mr. CRANSTON. I announce that the
Senator from Indiana (Mr. BAYH), the
Senator front Texas (Mr. BENTSEN), the
Senator from Delaware (Mr. BIDEN), the
Senator from North Dakota (Mr. BUR-
DICK), the Senator from Iowa (Mr.
CULVER), the Senator from Nebraska
(Mr. ExoN), the Senator from Kentucky
(Mr. FORD), the Senator from Alaska
(Mr. GRAVEL), the Senator from Colorado
(Mr. HART), the Senator from Alabama
(Mr. HEFLIN), the Senator from Massa-
chusetts (Mr. KENNEDY), the Senator
from Vermont (Mr. LEAHY), the Senator
from Montana (Mr. MELCHER), the Sen-
ator from North Carolina (Mr. MORGAN),
the Senator from Connecticut (Mr. RIBI-
coFF), and the Senator from Georgia
(Mr. TALMADGE) are necessarily absent.
I further announce that, if present
and voting, the Senator from Indiana
(Mr. BAYH), the Senator from Iowa (Mr.
CULVER), the Senator from Montana (Mr.
MELCHER), the Senator from North Caro-
lina (Mr. MORGAN), and the Senator from
Vermont (Mr. LEAHY) would each vote
"yea."
Mr. STEVENS. I announce that the
Senator from Mississippi (Mr. COCHRAN),
the Senator from Maine (Mr. COHEN),
the Senator from Minnesota (Mr. DUR-
ENBERGER), the Senator from North Caro-
lina (Mr. HELPSs), the Senator from
Texas (Mr. TowER), the Senator from
Connecticut (Mr. WEICKER), and the
Senator from North Dakota (Mr.
YOUNG) are necessarily absent.
The PRESIDING OFFICER.' Is there
any other Senator in the Chamber who
wishes to vote?
The result was announced-yeas 74,
nays 3, as follows:
IRollcall Vote No. 210 Leg.)
YEAS-74
Armstrong
Hayakawa
Packwood
Baker
Heins
Pell
Baucus
Hollings
Percy
Bellmon
Huddleston
Pressler
Boren
Humphrey
Proxmire
Boschwita
Inouye
Pryor
Bradley
Jackson
Randolph
Bumpers
Javits
Riegle
Byrd,
Jepsen
Roth
Harry F., Jr.
Johnston
Sarbanes
Byrd, Robert C. Kassebaum
'
Sasser
Cannon
Laxalt
Schmitt
Chafee
Levin
Schwelker
Chiles
Long
Simpson
Church
Lugar
Stafford
Cranston
Magnuson
Stennis
Danforth
Mathiao
Stevenson
DeConcini
Matsunaga
Stewart
Dole
McClure
Stone
Domenlof
McGovern
Thurmond
Durkin
Metzenbaum
Tsongas
Eagleton
Moynihan
Wallop
Garn
Muskie
Warner
Glenn
Nelson
Williams
Hatfield
Nunn
Zorinsky
NAYS-3
Goldwater
Hatch
Stevens
NOT VOTING-23
Bayh
Exon
Melcher
Bentsen
Ford
Morgan
Biden
Gravel
Ribicoff
Burdick
Hart
Talmadge
Cochran
Heflin
Tower
Cohen
Helms
Weicker
Culver
Kennedy
Young
Durenberger
Leahy
So the bill (S. 737) was passed, as
follows.
S10203
S. 737
Be it enacted by the Senate and House
of Representatives of the United States of
America in Congress assembled, That this Act
may be cited as the "Export Administration
Act of 1979".
FINDINGS
SEC. 2. The Congress makes the following
findings:
(1) The ability of United States citizens
to engage in international commerce is a
fundamental concern of United States policy.
(2) Exports contribute significantly to the
balance of trade, employment, and produc-
tion of the United States.
(3) The availability of certain materials
at home and abroad varies so that the quan-
tity and composition of United States ex-
ports and their distribution among importing
countries may affect the welfare of the do-
mestic economy and may have an important
bearing upon fulfillment of the foreign policy
of the United States.
(4) Exports of goods or technology with-
out regard to whether they make a significant
contribution to the military potential of In-
dividual countries or combinations of coun-
tries may adversely affect the national se-
curity of the United States.
(5) The restriction of exports from the
United States can have serious adverse effects
on the balance of payments and on domestic
employment, particularly when restrictions
applied by the United States are more exten-
sive than those imposed by other countries..-
(6) Uncertainty of export control policy
can curtail the efforts of American business
to the detriment of the overall attempt to
improve the trade balance of the United
States and to decrease domestic unemploy-
ment.
(7) Unreasonable restrictions on access to
world supplies can cause worldwide political
and economic instability, interfere with free
international trade, and retard the growth
and development of nations.
(8) It is important that the administra-
tion of export controls imposed for national
security purposes give special emphasis to
the needs to control exports of technology
(and goods which contribute significantly to
the transfer of such technology) which could
make a significant contribution to the mili-
tary potential of any country or combination
of countries which would be detrimental to
the national security of the United States.
DECLARATION OF POLICY
SEC. 3. The Congress makes following
declarations:
(1) It is the policy of the United States to
minimize uncertainties in export control pol-
icy and to encourage trade with all countries
with which we have diplomatic or trading
relations, except those countries with which
such trade has been determined by the Presi-
dent to be -against the national interest.
(2) It is the policy of the United States to
restrict the ability to export only after full
consideration of the impact on the economy
of the United States and only to the extent
necessary- -
(A) to prevent the export of goods and
technology which would make a significant
contribution to the military potential of any
other nation or nations which would prove
detrimental to the national security of the
United States;
(B) to further significantly the foreign
policy of the United 'States or to fulfill its
declared international obligations; and
(C) to protect the domestic economy from
the excessive drain of scarce materials and to
reduce the serious inflationary impact of for-
eign demand.
(3) It is the policy of the United States
(A) to apply any necessary controls to the
maximum extent possible in cooperation with
all nations, and (B) to encourage observance
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S 10204
CONGRESSIONAL RECORD - S]ENATIE July 21, 1979
of a uniform export control policy by all
nations with which the United States has
defense, treaty commitments.
(4) It is the policy of the United States
to use its economic resources and trade po-
tential to further the sound growth and
stability of its economy as well as to further
its national security and foreign policy ob-
jectives.
(5) It is.the policy of the United States-
(A) to oppose restrictive trade practices or
boycotts fostered or imposed by foreign.
countries against other, countries friendly to
the United States or against any United
States person;
(B) to encourage and, in specified caves,
require United States persons engaged in the
export of goods and technology or other in-
formation to refuse to take actions, includ-
ing furnishing information or entering into
or implementing agreements, which have the
effect of furthering or supporting the re-
strictive trade practices or boycotts fostered
or imposed by any foreign country against a
counrty friendly to the United States or
against any United States person; and
(C) to foster international cooperation and
the development of international rules and
institutions to assure reasonable access to
world supplies.
(8) It is the policy of the United States
that the desirability of subjecting, or con-
tinuing to subject, particular goods or tech-
nology or other information to United States.
export controls, should be.subjected to re-
view by and consultation with representa-
tives of appropriate United States Govern-
ment agencies and private industry.
(7) It is the policy of the United States to
use export controls. includine liecn-e fees, to
secure the removal by foreign countries of
restrictions on access to supplies where such
restrictions have or may have a serious do-
mestic inflationary impact, have caused or
may cause a serious domestic shortage, or
have been imposed for purposes of influenc-
ing the foreign policy of the United States.
In effecting this policy, the President shall
make every reasonable effort to secure the
removal or reduction of such restrictions.
policies, or actions through international co-
operation and agreement before resorting to
the imposition of controls on exports from
the United States. No action taken in ful-
fillment of the policy set forth in this para-
graph shall apply to the export of medicine
qr medical supplies.
(8) It is the policy of the United States to
use export controls to encourage other coun-
tries to take immediate steps to prevent the
use, of their territories or resources to aid,
encourage, or give sanctuary to those per-
sons involved in directing, supporting, or
participating in acts of international terror-
ism. To achieve this objective, the President
shall make every reasonable effort to. secure
the removal or reduction of such assistance
to international terrorists through interna-
tional cooperation and agreement before re-
sorting to the imposition of export controls.
(9) It is the policy of the United States to
cooperate with other nations with which the
United States has defense treaty commit-
ments in restricting the export of goods and
technology which would make a significant
contribution to the military potential of any
country or combination of countries which
would prove detrimental to the security of
the United States or to the security of those
countries with which the United States has
defense treaty commitments.
SEC. 4. (a) (1) To the extent necessary to
carry out the policies set forth in section 3
of this Act, the President, by rule or regula-
tion, may prohibit or curtail the export of
any goods or technology, or for the purpose
of section 6 information, subject to the
jurisdiction of the United States or ex-
ported by any person subject to the juris-
diction of the United States. To the extent
necessary to achieve effective enforcement
of this Act, these rules and regulations may
apply to the financing, transporting, and
other servicing of exports and the partici-
pation thereof by any person. In curtailing
exports to carry out the policy set forth
in section 3(2) (C) of this Act, the Presi-
dent is authorized and directed to allocate
a portion of export licenses on the basis of
factors other than a prior history of ex-
portation.
(2) (A) In administering export controls
for national security purposes as prescribed
in section 3(2) (A) of this Act, United States
policy toward individual countries shall not
be determined exclusively on the basis of a
country's Communist or non-Communist
status but shall take into account such
factors as the country's present and poten-
ial relationship to the United States, its
present and potential relationship to coun-
ries friendly or hostile to the United States,
its ability and willingness to control re-
transfers of United States exports in accord-
ance with United States policy, and such
other factors the President may deem ap-
propriate. The President shall review not
less frequently than every three years in the
case of controls maintained cooperatively
with other nations, and annually in the
case of all other controls, United States pol-
icy toward individual countries to deter-
mine whether such policy is appropriate in
light of the factors specified in the preceding
sentence.
(B) Rules and regulations under this sub-
section to carry out the policy set forth in
section 3(2) (A) of this Act may provide for
denial of any request of application for au-
thority to export goods or technology from
the United States, its territories and posses-
sions, which would make a significant con-
tribution to the military potential of any
nation or combination of nations threaten-
ing the national security of the United States
if the President determines that their export
could prove detrimental to the national secu-
rity of the United States. In administering
export controls for national security purposes
as prescribed in section 3(2) (A) of this Act,
priority shall be given to preventing the ef-
fective transfer to countries to which exports
are controlled for national security purposes
of goods and technology critical to the design,
development, production, or use of existing
or potential military systems, including
weapons, command, control, communica-
tions, intelligence systems, and other military
capabilities, such as countermeasures. which
would make a significant contribution to
the military potential of any nation or na-
tions which could prove detrimental to the
national security of the United States. The
Secretary of Defense shall bear primary re-
sponsibility for identifying such militarily
critical goods and technologies. Taking this
fully into account, the Secretary of Com-
merce, in consultation with the Secretary of
Defense, shall review and revise not less fre-
quently than every three years in the case of
controls maintained cooperatively with other
nations, and annually in the case of all other
controls, export controls maintained for na-
tional security purposes pursuant to this
Act for the purpose of insuring that such
controls cover and (to the maximum extent
consistent with the purposes of this Act) are
l1nited to such critical goods and technol-
ogies and the mechanisms through which
they may be effectively transferred. Rules
and Regulations shall reflect the difficulty of
devising effective safeguards which would
prevent a nation which poses a threat to the
United States from diverting critical tech-
nologies to military use, the difficulty in de-
vising effective safeguards to protect critical
goods, and the need to take effective meas-
ures to prevent the re-export of critical tech-
nologies from noncontrolled countries to
nations that pose a threat to the security of
the United States. Such rules and regulations
shall not assume that effective safeguards
can be devised.
(C) Export controls maintained for foreign
policy purposes shall expire on December 31,
1979, or one year after imposition, which-
ever is later, unless extended by the Presi-
dent in accordance with this subparagraph
and subparagraph (D). Any such extension
and any subsequent extension shall not be
for a period of more than one year. Whin
imposing4increasing, or extending export
controls for foreign policy purposes pursuant
to the authority provided by this Act, the
President shall consider-
(s) alternative means to further the for-
eign policy purposes in question;
(ii) the likelihood that foreign competitors
will join the United States in effectively con-
trolling such exports;
(iii) the probability that such controls
will achieve the intended foreign policy pur-
pose;
(iv) the effect of such controls on United
States exports, employment, and, production,
and on the international reputation of the
United States as a supplier of goods and
technology;
(v) the reaction of other countries to the
imposition or enlargement of such export
controls by the United States; and
(vi) the foreign policy consequences of not
imposing controls.?
(D) Whenever the President imposes, in-
creases, or extends export controls for for-
eign policy purposes pursuant to authority
provided by this Act, he shall inform the
Congress of his action within thirty days
and, to the extent consistent with the na-
tional interest, make public a report speci-
fying his conclusions with respect to each of
the matters considered as provided in sub-
paragraph (C) of this paragraph and indi-
cating how such export controls will fur-
ther sig"iflcantly the foreign policy of the
United States or fulfill its declared interna-
tional obligations.
(E) The President shall not impose export
controls for foreign policy or national secu-
rity purposes on the export from the United
States of goods or technology which he de-
termines are available without restriction
from sources outside the United States in
significant quantities and comparable in
quality to those produced in the United
States, unless the President determines that
adequate evidence has been presented to
him demonstrating that the absence of such
controls would prove detrimental to the for-
eign policy or national security of the United
States. With respect to controls imposed for
national security purposes, a finding of for-
eign availability which is the basis of a de-
cision to grant a license for, or to remove a
control on the export of a good or tech-
nology, shall be made in writing and be sup-
ported by reliable evidence, such as a scien-
tific or physical examination, expert opinion
based upon adequate factual information,' or
intelligence information. In assessing foreign
availability with respect to license applica-
tions, uncorroborated representations by ap;
plicants shall not be deemed sufficient evi-
dence of foreign availability. Such sworn
representations without adequate independ-
ent corroboration shall not constitute reliable
evidence. Where, in accordance with this pars
agraph, export controls are imposed for for-
eign policy or national security purposes
notwithstanding foreign availability, the
President shall take steps to initiate negotia-
tions with the governments of the appro-
priate foreign countries for the purpose of
eliminating such availability. Whenever the
President has reason to believe goods or
technology subject to exoort control for na-
tional security purposes by the United States
may become available to controlled coun-
tries from other countries, the President
shall promptly initiate negotiations with the
governments of such countries to prevent
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IESSIONAIL RECORD - SIENATIE S 10205
such foreign availability. In any instance in
which such negotiations fall to prevent or
secure the removal of such foreign avail-
ability and the President requires additional
authority to take effective action toward that
end, the President shall report fully to the
Congress and where appropriate recommend
measures to secure the removal of such for-
eign availability.
(b) (1) Except as otherwise provided in this
Act, the Secretary of Commerce shall reorga-
nize the Department of Commerce as neces-
sary to effectuate the policies set forth in
this Act. Subject to the authority of the Sec-
retary of Defense under subsection (a) (2)
;(B) of this section, the Secretary of Com-
merce shall prepare and maintain a list of
goods and technology the export of which
from the United States, its territories and
possessions, is prohibited or regulated pur-
aunt to this Act. The Secretary shall issue
regulations providing for review of such list
not less frequently than every three years
in the case of controls maintained coopera-
tively with other nations, and annually in
the case of all other controls, in order to
carry out the policies of this Act, and for
the prompt issuance of such revisions of the
list as ' may be necessary. Such regulations
shall provide interested Government agencies
and other affected or potentially affected
parties with an opportunity, during such
review, to submit written data, views, or arg-
uments with or without oral presentation.
Such regulations shall further provide that
as part of such review, there shall be an as-
sessment of the availabiilty from surces out-
side the United States, its territories and pos-
sessions, of goods and technology in signifi-
cant quantities and comparable in quality to
those items included on such list. The pro-
visions of this paragraph relating to revisions
and changes in such list and assessment of
foreign availabilty apply also to the functions
of the Secretary of Defense under subsection
(a) (2) (B) of this section. In order to fur-
ther effectuate the policies set forth in this
Act, the Secretary shall establish within
the Office of Export Administration a capa-
bility for monitoring and gathering informa-
tion on the foreign availability of goods and
technology subject to export control.
Each department or agency of the United
States with responsibilities with respect to
export controls, including intelligence agen-
cies. consistent with the protection of intel-
ligence sources and methods, shall furnish
information concerning foreign availability
of such goods and technologies to the Office
of Exoprt Administration and such Office
upon request or where appropriate shall fur-
nish the information it gathers and receives
to such departments and agencies.
(2) The Secretary of Commerce shall keep
the public fully apprised of changes in ex-
port control policy and procedures instituted
in conformity with this Act with a view to
encouraging trade. The Secretary shall meet
regularly with representatives of the business
sector in order to obtain their views on ex-
port control policy and the foreign availa-
bility of goods and technology.
(c) (1) (A) To effectuate the policies set
forth in this Act, the Secretary of Commerce
shall establish at least the following three
types of licenses in addition to such other
types as the Secretary may deem appropriate:
(I) A validated license.
(ii) A qualified general license.
(iii) A general license.
(B) As used in this subsection-
(1) a "validated license" is a license au-
thorizing the export of goods or technology
pursuant to an application by an exporter in
accordance with rules and regulations issued
pursuant to this Act. A validated license may
be required for the export of goods and tech-
nology subject to multilateral controls in
which the United States participates or as
determined pursuant to paragraph (2) of
this subsection;
(ii) a "qualified general license" is a li-
cense authorizing the export to any destina-
tion of goods or technology, or a class of
goods or technology, subject to the condi-
tions contained in rules and regulations is-
sued pursuant to this Act, including condi-
tions pertaining to approval of the particular
consignee and end-use of the goods or tech-
nology. The goods and technology subject to
control by qualified general license shall be
determined pursuant to paragraph (2) of
this subsection; and
(iii) a "general license" is a license author-
izing the export of a class of goods or tech-
nology without specific approval if the export
is effected in accordance with the conditions
contained in rules and regulations issued
pursuant to this Act.
(2) To effectuate the policies set forth in
section 3 of this Act, it is the intent of Con-
gress that the -use of validated licenses be
limited to the greatest extent possible to the
control of the export of goods and technology
which. are subject to multilateral controls
in which the United States participates. To
the extent that the President determines
that the policies set forth in section 3 of this
Act require the control of the export of other
goods and technology, or more stringent con-
trols than the multilateral controls, he will
report to the Congress not later than six
months after the date of enactment of this
Act, and thereafter in each annual report,
the reasons for the need to impose; or to
continue to impose, such controls and the
estimated domestic economic impact on the
various industries affected by such control.
It is further the intent of Congress that ex-
port controls which exceed the multilateral
controls shall be effected to the greatest
extent possible consistent with the purposes
of this Act by means of qualified general
licenses.
(3) Not later than sixty days after the
date of enactment of this Act, the Secretary
of Commerce shall establish procedures for
the approval of goods and technology that
may be exported pursuant to a qualified gen-
eral license.
(d) (1) (A) All export license applications
required under this Act shall be submitted
by the applicant to the Secretary.`All deter-
minations with respect to any such applica-
tion shall be made by the Secretary, subject
to the procedures provided in this sub-
section.
(B) It is the intent of Congress that a
determination with respect to any export li-
cense application be made to the maximum
extent possible by the Secretary without re-
ferral of such application to any other Gov-
ernment agency.
(C) To the extent necessary, the Secretary
shall seek information and recommendations
from the several executive departments and
Independent agencies concerned with aspects
of our domestic and foreign policies and
operations having an important bearing on
exports. These departments and agencies
shall cooperate fully in rendering such in-
formation and recommendations.
(2) Within ten days after the date on
which any export license application is re-
ceived, the Secretary shall-
(A) send the applicant an acknowledge-
ment of the receipt of the application and
the date of the receipt;
(B) submit to the applicant a written de-
scription of the procedures required by this
subsection, .the responsibilities of the Secre-
tary and of other agencies with respect to
the application, and the rights of the appli-
cant;.
(C) return the application without action
if the application is improperly completed
or if additional information is required, with
sufficient Information to permit the applica-
tion to be properly resubmitted, in which
case if such application is resubmitted, it
shall be treated as a new application for the
purpose of calculating the time periods pre-
scribed in this subsection;
(D) determine whether it is necessary to
submit the application to any other agency
and, if such submission is determined to be
necessary, inform the applicant of the agency
or agencies to which the application will be
referred; and
(E) determine whether it is necessary to
submit the application to a multilateral re-
view process, pursuant to a multilateral
agreement, formal or informal, to which the
United States is a party and, if so, inform the
applicant of this requirement.
(3) In each case in which the Secretary
determines that it is not necessary to sub-
mit an application to any other agency for
its information and recommendations, a li-
cense shall be formally issued or denied with-
in ninety days of the receipt of a properly
completed application.
(4) In each case in which the Secretary
determines that it is necessary to submit an
application to any other agency for its in-
formation and recommendations, the Secre-
tary shall, within thirty days of the receipt of
a properly completed application-
(A) submit the application together with
all necessary analysis and recommendations
of the Department of Commerce concurrently
to other appropriate agencies; and
(B) if the applicant so requests, provide
the applicant with an opportunity to review
for accuracy any documentation to be sub-
mitted to such other agencies with respect
to such application for the purpose of de-
scribing the export in question in order to
determine whether such documentation ac-
curately describes the proposed export.
(5) (A) Any agency to which an applica-
tion is submitted pursuant to paragraph (4)
shall submit to the Secretary, within thirty
days after its receipt of the application, the
information or recommendations requested
with respect to such application. Except as
provided in subparagraph (B), any such
agency which does not submit its recom-
mendations within the time period prescribed
in the preceding sentence shall be deemed
by the Secretary to have no objection to the
approval of such application.
(B) If the head or acting head of any such
agency notifies the Secretary before the ex-
piration of the time period provided in sub-
paragraph (A) for submission of its recom-
mendations that more time is required for
review by such agency, such agency shall
have an additional thirty-day period to sub-
mit its recommendations to the Secretary.
If such agency does not so submit its rec-
ommendations within the time period pre-
scribed by the preceding sentence, it shall
be deemed by the Secretary to have no ob-
jection to the approval of such application.
(6) (A) Within ninety days after receipt of
other agency recommendations, as provided
for in paragraph (5), the Secretary shall for-
mally issue or deny a license. All agency re-
views of preliminary decisions and appeals to
the appropriate authorities set forth in this
Act shall be accomplished within that
ninety-day period. In deciding whether to
issue or deny a license, the Secretary shall
take into account any recommendations of
an agency advising on the application in
question. In cases where the Secretary re-
ceives conflicting recommendations, the Sec-
retary shall, within the ninety days provided
for in this subsection, take such action as
may be necessary to resolve such conflicting
recommendations.
(B) In cases where the Secretary receives
questions or negative considerations or rec-
ommendations from other agencies advising
on an application, the Secretary shall, to the
maximum extent consistent with the na-
tional security or foreign policy of the United
States, inform the applicant of the specific
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S 10206 CONGRESSIONAL REC
questions raised and any negative consid-
erations or recommendations made by an
agency, and shall accord the applicant an
opportunity, before the final determination
with respect to the application is made, to
respond in writing to such questions, consid-
erations, or recommendations.
(C) In cases where the Secretary has
determined that an application should be
denied, at the time of the formal denial, the
applicant shall be informed, in writing
within five days of such decision of the
statutory basis for denial, the policies set
forth in section 3 of the Act which would be
furthered by denial, and, to the extent con-
sistent with national security and foreign
policy, the specific considerations which led
to the denial, and of the availability of
appeal procedures. In the event decisions on
license applications are deferred inconsistent
with the provisions of this subsection, the
applicant shall be informed in writing
within five days of such deferral. The Secre-
tary shall establish appropriate procedures
for applicants to appeal such deferrals or
denials.
(D) If the Secretary determines that a
particular application or set of applications
is of exceptional Importance in complexity,
and that additional time is required for nego-
tiations to modify the application or applica-
tions, or otherwise to arrive at a decision, the
Secretary may extend any time period pre-
scribed in this subsection. The Secretary shall
notify the Congress and the applicant of such
extension and the reasons therefor.
(7) A) Notwithstanding any other provi-
sion of this subsection, the Secretary of
Defense is authorized to review any proposed
export of any goods or technology to any
country to which exports are controlled for
national security purposes and, whenever he
determines that the export of such goods or
technology will make a significant contribu-
tion, which would prove detrimental to the
national security of the United States, to the
military potential of any such country, to
recommend to the President that such ex-
port be disapproved.
(B) Notwithstanding any other provision
of law, the Secretary of Defense shall deter-
mine, in consultation with the Secretary,
and confirm in writing the types and cate-
gories of transactions which should be re-
viewed by him in order to make a deter-
mination referred to in subparagraph (A).
Whenever a license or other authority is
requested for the export to any country to
which exports are controlled for national
security purposes of goods or technology
within any such type or category, the Sec-
retary shall notify the Secretary of Defense
of such request, and the Secretary may not
issue any license or other authority pursu-
ant to such request before the expiration of
the period within which the President may
disapprove such, export. The Secretary of De-
fense shall carefully consider all notifica-
tions submitted to him pursuant to this
subparagraph and, not later than. thirty days
after notification of the request, shall-
(1) recommend to the President that he
disapprove any request for the export of any
goods or technology to any such country
if he determines that the export of such
goods or technology will make a significant
contribution, which would prove detrimental
to the national security of the United
States, to the military potential of such
country or any other country;
(ii) notify the Secretary that he would
recommend approval subject to specified
conditions; or .
(iii) recommend to the Secretary that the
export of goods or technology be approved.
If the President notifies the Secretary,
within thirty days after receiving a recom-
mendation from the Secretary of Defense,
that he disapproves such export, no license
RD - SENATE
or other authority may be issued for the
export of such goods or technology to such
country.
(C) The Secretary shall approve or dis-
approve a license application, and issue or
deny a license, in accordance with the pro-
visions of this paragraph, and, to the ex-
tent applicable, in accordance with the time
periods and procedures otherwise set forth
in this subsection.
(D) Whenever the President exercises his
authority under this paragraph to modify
or overrule a recommendation made by the
Secretary of Defense or exercises his au-
thority to modify or overrule any determina-
tion made by the Secretary of Defense pur-
suant to section 4(a)(2)(B) or 4(b)(1) of
this Act with respect to list of goods and
technologies controlled.for national security
purposes, the President shall promptly trans-
mit to the Congress a statement indicating
his decision, together with the recommenda-
tion of the Secretary of Defense.
(8) In any case in which an application,
which has been finally approved under para-
graph (4). (7), or (8) of this subsection, Is
required to be submitted to a multilateral
review process, pursuant to a multilateral
agreement, formal or informal, to which the
United States is a party, the license shall
not be issued as prescribed in such para-
graphs, but the Secretary shall notify the
applicant of the approval (and the date of
such approval) of the application by the
Secretary subject to such multilateral re-
view. The license shall be issued upon ap-
proval of the application under such multi-
lateral review.
(9) The Secretary and any agency to
which any application is referred under this
subsection shall keep accurate records with
respect to all applications considered by
the Secretary or by any such agency, In-
cluding the tactual and analytical basis for
the decision, together with any dissenting
recommendations received from any agency.
(10) The Secretary shall establish ap-
propriate procedures for applicants to ap-
peal denials of export licenses. In any case
where the absence of a license approval
exists because of agency action or inaction
that clearly conflicts with the procedures,
standards, or policies of this Act, the appli-
cant may file a petition with the Secretary
requesting that such action or inaction be
brought in conformity with the appropriate
provisions of this Act. When such petition
is filed, the Secretary shall determine the
validity of the petition and, if valid, shall
take appropriate corrective action.
(e) (1) To effectuate the policy set forth
in section 3(2) (C) of this Act, the Secretary
of Commerce shall monitor exports, and con-
tracts for exports, of any goods (other than
a commodity which is subject to the report-
ing requirements of section 812 of the Agri-
cultural Act of 1970) when the volume of
such exports In relation to domestic supply
contributes, or may contribute, to an in-
crease in domestic prices or a domestic short-
age, and such price increase or short-
age has, or may have, a serious adverse im-
pact on the economy, or any sector thereof.
Such monitoring shall commence at a time
adequate to insure that data will be avail-
able which is sufficient to permit achieve-
ment of the policies of this Act, and shall
Include the gathering of data concerning the
volume of exports indicated under all con-
tracts providing for the export of such goods
following the date of the filing of the peti-
tion under section 8(a) (1). Information
which the Secretary requires to be furnished
in effecting such monitoring shall be con-
f1dentfal, except as provided In paragraph
(2) of this subsection and in the last two
sentences of section 11(c) of this Act.
(2) The results of such monitoring shall, to
the extent practicable, be aggregated and in-
July 21, 1979
eluded in weekly reports setting forth,. with
respect to each item monitored, actual and
anticipated exports, the destination by coun-
try, and the domestic and worldwide price,
supply, and demand. Such reports may be
made monthly if the Secretary determines
that there is'insufcient information to jus-
tify weekly reports.
(f) In imposing export controls to effectu-
ate the policy stated in section 3(2) (C) of
this Act, the President's authority shall in-
clude but not be limited to, the imposition'
of export license fees.
(g) (1) Notwithstanding any other provi-
sion of this Act and notwithstanding subsec-
tion (u) of section 28 of the Mineral Leasing.
Act of 1920, as amended (30 U.S.C. 185), no
domestically produced crude oil transported
by pipeline over right-of-way granted pursu-
ant to the requirements of section 203 of the
Trans-Alaska Pipeline Authorization Act (43
U.S.C. 1653) (except any such crude oil
which (A) is exported, for the purpose of
effectuating an exchange in which the crude
oil is exported to an adjacent foreign state
to be refined and consumed therein, in ex-
change for the same quantity of crude ciI
being exported from that state to the United
States; such exchange must result through
convenience or increased efficiency of trans-
portation in lower prices for consumers of
petroleum products In the United States as
described in paragraph (2) (A) (ii) of this
subsection, or (B) is temporarily exported
for convenience or increased efficiency of
transportation across parts of an adjacent
foreign state and reenters the United States)
may be exported from the United States, its
territories and possessions, unless the re-
quirements of paragraph (2) of this subsec-
tion are met.
(2) Crude oil subject to the prohibition
contained in paragraph (1) may be exported
only if-
(A) the President makes and publishes an
express finding that exports of such crude
oil, including exchanges-
(I) will not diminish the total quantity or
quality of petroleum refined within, stored
within, or legally committed to be trans-
ported to and sold within the United States;
(it) will, within three months following
the initiation of such exports or exchanges,
result in (a) acquisition costs to the re-
finers being lower than the acquisition costs
such refiners would have to pay for the do-
mestically produced crude oil in the absence
of such an export of exchange and (b) that
not less than 75 per centum of the savings
shall be reflected in reduced wholesale and
retail prices of products refined from such
imported crude oil;
(iii) will be made only pursuant to con-
tract which may be terminated If the crude
oil supplies of the United States are inter-
rupted, threatened, or diminished;
(iv) are clearly necessary to protect the
national Interest; and
(v) are in accordance with the provisions
of this Act; and
(B) the President reports such finding to
the Congress and the report is approved in _
accordance with paragraph (3).
(3) The report of the findings of the Presi-
dent required by paragraph (2) shall be con-
sidered approved, and shall take effect at the
end of the first period of sixty calendar days
of continuous session of the Congress after
such report Is submitted, unless the House
of Representatives and the Senate adopt a
resolution during such period Stating that it
does not favor such findings. For the pur-
poses of this paragraph-
(A) continuity of a session of the Congress
is broken only by an adjournment sine die;
and
(B) the days on which either House is not
in session because of an adjournment for
more than three days to a day certain are
excluded in computing the sixty-day period.
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July 21, 1979 CONGRESSIONAL RECORD -SENATE
(4) A resolution under paragraph (3) shall
be considered in accordance with the pro-
cedures established by section 551 of the
Energy Policy and Conservation Act.
(5) Notwithstanding the foregoing provi-
sions of this subsection or any other provision
of law including subsection (u) of section 28
of the Mineral Leasing Act of 1920, the
President may export oil to any foreign na-
tion with whom the United States has en-
tered into a bilateral international oil supply
agreement prior to June 25, 1979, or to any
foreign nation with whom the United States
has entered into a multilateral supply ar-
rangement pursuant to section 251(d) of the
Energy Policy and Conservation Act; Pro-
vided, That the President promptly notifies
Congress of each such agreement.
(h) Petroleum products refined in United
States Foreign Trade Zones, or In the United
States Territory of Guam, from foreign crude
oil shall be excluded from any quantitative
restrictions imposed pursuant to section
3(2) (C) of this Act, except that, if the Sec-
retary of Commerce finds that a product is in
short supply, the Secretary of Commerce
may issue such rules and regulations as may
be necessary to limit exports.
(1) (1) The authority conferred by this
section shall not be exercised with respect to
any agricultural commodity, including fats
and oils or animal hides or skins, without
the approval of the Secretary of Agriculture.
The Secretary of Agriculture shall not ap-
prove the exercise of such authority with
respect to any such commodity during any
period for which the supply of such commod-
ity Is determined by him to be In excess of
the requirements of the domestic economy,
except to the extent the President determines
that such exercise of authority is required to
effectuate the policies set forth in sections
3(2) (A) or (B) of this Act.
(2) Upon approval of the Secretary of
Commerce, in consultation with the Secre-
tary of Agriculture, agricultural commodities
purchased by or for use in a foreign county
may remain in the United States for export
at a later date free from any quantitative
limitations on export which may be imposed
pursuant to section 3(2) (C) of this Act sub-
sequent to such approval. The Secretary of
Commerce may not grant approval hereunder
unless he receives adequate assuance and, in
conjunction with the Secretary of Agricul-
ture, finds (A) that such commodities will
eventually be exported, (B) that neither the
sale nor export thereof will result in an
excessive drain of scarce materials and have
a serious domestic inflationary impact, (C)
that storage of such commodities in the
United States will not unduly limit the space
available for storage of domestically owned
commodities, and (D) that the purpose of
such storage is to establish a reserve of such
commodities for later use, not Including re-
sale to or use by another country. The Sec-
retary of Commerce is authorized to issue
such rules and regulations as may be nec-
essary to implement this paragraph.
(3) (A) The Secretary of Commerce shall
transmit to the House of Representatives and
the Senate a summary of any proposed exer-
cise of the authority conferred by this sec-
tion with regard to agricultural commodities.
(B) (I) Except as provided In subparagraph
(ii), such proposal shall not become effective
if within sixty calendar days of continuous
session of the Congress after the date of
transmittal of the proposal to the Congress,
one House agrees to a resolution of disap-
proval and at the end of thirty additional
such calendar days after the date of trans-
mittal of the resolution of disapproval to the
other House of Congress, such other House
has not passed a resolution disapproving
such resolution.
(i1) Notwithstanding subparagraph (1), if
at the end of sixty calendar days of continu-
ous session of the Congress after the date of
transmittal of the proposal to the Congress,
neither House has agreed to a resolution of
disapproval concerning such proposal, and
the committee to which a resolution of dis-
approval concerning such proposal has
been referred has not reported and has not
been discharged from further consideration
of such a resolution, such proposal shall be
effective at the end of such sixty-day period
or such later date as may be prescribed by
such proposal.
(C) For the purposes of this chapter-
(I) continuity of session is broken only by
an adjournment sine die; and
(11) the days on which either House is not
in session because of an adjournment of
more than three days to a day certain are
excluded in the computation of calendar
days of continuous session.
(D) The provisions.of this section are en-
acted by Congress-
(I)" as an exercise of the rulemaking power
of the Senate and the House of Representa-
tives, respectively, and as such they are
deemed a part of the rules of each House,
respectively, but applicable only with respect
to the procedure to be followed In the House
in the case of resolutions described by this
paragraph; and they supersede other rules
only to the extent that they are inconsistent
therewith;
(if) with full recognition of the constitu-
tional right of either House to change the
rules (so far as relating to the procedure of
that House) at any time, in the same manner
and to the same extent as in the case of any
other rule of that House; and
(iii) (I) resolutions of disapproval, and
resolutions disapproving a resolution of dis-
approval in the other House shall, upon in-
troduction, be immediately referred by the
presiding officer of the Senate or of the House
of Representatives to the appropriate stand-
ing committee of the Senate or the House
of Representatives;
(II) if the committee to which a resolution
has been referred does not report a resolution
within forty-five calendar days of continu-
ous session of Congress after the date of
transmittal of the proposal to which such
resolution relates, it shall be in order to move
to discharge the committee from further
consideration of such resolution; and
(III) such motion to discharge must be
supported by one-fifth of the Members of the
House of Congress involved, and is highly
privileged in the House and privileged in the
Senate (except that it may not be made after
a resolution of disapproval has been reported
with respect to the same proposal); and de-
bate thereon shall be limited to not more
than one hour, the time to be divided in the
House equally between those favoring and
those opposing the motion to discharge and
to be divided in the Senate equally between,
and controlled, by the majority leader and
the minority leader or their designees.
An amendment to the motion is not in order.
(E) (I) Except as provided in subparagraphs
(ii) and (Ili) of this paragraph, consideration
of a resolution of disapproval shall be in
accord with the rules of the Senate and of
the House of Representatives, respectively.
(ii) When the committee has reported or
has been discharged from further considera-
tion of a resolution with respect to a pro-
posal, it shall be in order at any time there-
after (even though a previous motion to the
same effect has been disagreed to) to move
to proceed to the immediate consideration of
the resolution. The motion is highly priv-
ileged and is not debatable. An amendment
to the motion is not in order.
(iii) Debate on the resolution shall be
limited to not more than two hours, which
shall be divided equally between those favor-
ing and those opposing the resolution. A mo-
S 10207
tion further to limit debate is not in order.
An amendment to, or motion to recommit the
resolution is not in order.
(j) Nothing in this Act or the rules or
regulations thereunder shall be construed to
require authority or permission to export,
except where required by the President to
effect the policies set forth in section 3 of
this Act.
(k) The President may delegate the
power, authority, and discretion conferred
upon him by this Act to such departments,
agencies, or officials of the Government as
he may deem, appropriate, except that no
authority under this Act may be delegated
to, or exercised by, any official of any de-
partment or agency the head of which is
not appointed by and with the advice and
consent of the Senate.' The President may
not delegate or transfer his power, author-
ity, and discretion to overrule or modify any
recommendation or decision made by the
Secretary of Commerce, the Secretary of
Defense, and Secretary of State pursuant to
the provisions of this Act.
(1) (1) Any United States firm, enterprise,
or other nongovernmental entity which, for
commercial purposes, enters into an agree-
ment with an agency of a government in
another country to which exports are re-
stricted for national security purposes,
which agreement cites an intergovernmental
agreement calling for the encouragement of
technical cooperation and is intended to
result in the export from the United States
to the other party of unpublished tech-
nical data of United States origin, shall
report such agreement to the Secretary of
Commerce.
(2) The provisions of this subsection shall
not apply to colleges, universities, or other
educational institutions.
(3) The Secretary of Commerce is author-
ized to issue such rules and regulations as
are necessary to implement the provisions
of this subsection.
(m) The Secretary of State, in consulta-
tion with the Secretary of Defense, the Sec-
retary of Commerce, and the heads of other
appropriate departments and agencies, shall
be responsible for negotiations with other
countries regarding their cooperation in re-
stricting the export of goods and technolo-
gies whose export should be restricted pur-
suant to section 3(9) of this Act, as
authorized under section 4(a) (1) of this
Act, including negotiations on the basis of
approved administration positions as to
which goods and technologies should be
subject to multilaterally agreed export re-
strictions and what conditions should apply
for exceptions from those restrictions.
(n) The President shall enter into nego-
tiations with the governments _participating
in the group known as the Coordinating
Committee (hereinafter in this subsection
referred to as the "Committee") with a view
toward reaching-
(A) an agreement to publish the list of
items controlled for export by agreement of
the Committee, together with all notes, un-
derstandings, and other aspects of such list,
and all changes thereto:
(B) an agreement to hold periodic meet-
ings of such governments with high-level
representation from such governments, for
the purpose of providing guidance on ex-
port control policy Issues to the Committee:
(C) an agreement to modify the scone of
the export controls imposed by agreement of
the Committee to a level accepted and en-
forced by all governments participating in
the Committee;. and
(D) an agreement on more effective pro-
cedures for enforcing the export controls
agreed to pursuant to subparagraph (C).
(o) In order to assure that requirements
for national security controls are removed
when no longer necessary, the Secretary of
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Commerce shall adopt regulations which
eliminate unnecessary delay in implement-
ing decisions reached, according to law, to
remove or relax such controls. Consideration
shall also be given by the Secretary, where
appropriate, to removing site visitation re-
quirements for goods and technology which'
are removed from the above-mentioned list
unless objections described in this subsec-
tion are raised.
DISAPPROVAL OF LICENSE. FOR THE EXPORT OF
GOODS OR TECHNOLOGY TO COUNTRY WHICH
SUPPORT ACTS OF INTERNATIONAL TERROR-
ISM
SEC. 5. (a) The Secretary of Commerce shall
approve no license for the export of goods or
technology to any country with respect to
which the Secretary of State has made the
following determinations:
(1) that such country has demonstrated a
pattern of support for acts of international
terrorism, and
(2) that the exports in question would
make a significant contribution to the mili-
tary potential of such country or would
otherwise enhance its ability to support acts
of international terrorism.
(b) The President may suspend the appli-
cability of paragraph (a) of this section with
respect to any particular country or any
particular transaction if he finds that the
national interest so require.
(p) (1) Notwithstanding any other provi-
sion of this Act, no horse may be exported
by sea from the United States, its territories
and possessions, unless such horse is part of
a consignment of horses with respect to
which P. waiver has been granted under para-
graph (2) of this subsection.
(2) The Secretary of Commerce, in consul-
tation with the Secretary of Agriculture.
may issue rules and regulations providing
for the granting of waivers permitting the
export by sea of a specified consignment of
horses, if the Secretary of Commerce, in con-
sultation with the Secretary of Agriculture,
determines that no horse in that consign-
lment is being exported for purposes of
slaughter.
(q) (1) Crime control and detection in-
struments and equipment shall be approved
for export by the Secretary of Commerce only
pursuant to a validated export license.
(2) The provisions of this subsection shall
not apply with respect to exports to coun-
tries which are members of the North At-
lantic Treaty Organization or to Japan,
Australia, or New Zealand,- and such other
countries as the President shall designate
consistent with the purposes of this subsec-
tion 502(b) of the Foreign Assistance Act of
1961, as amended.
FOREIGN BOYCOTTS
SEC. 6. (a) (1) For the purpose of imple-
menting the policies set forth in section 3
(5), (A) and (B), the President shall issue
rules and regulations prohibiting any United
States person, with respect to his activities
in the interstate or foreign commerce-of the
United States, from taking or knowingly
agreeing to take any of the following actions
with intent to comply with, further, or sup=
port any boycott fostered or imposed by a
foreign country against a country which is
friendly to the United States and which is
not itself the object of any form of boycott
pursuant to United States law or regulation:
(A) Refusing, or requiring any other per-
son to refuse, to do business with or in the
boycotted country, with any business con=
cern organized under the laws of the boy-
cotted country, with any national or resident
of the boycotted country, or with any other
person, pursuant to an agreement with, a
requirement of, or a request from or on be-
half of the boycotting country. The mere
absence of a business relationship with or in
the boycotted country with any business
concern organized under the laws of the boy-
D - SENATE
totted country, with any national or resident
of the boycotted country, or with any other
person, does not indicate the existence of the
intent required to establish a violation of
rules and regulations issued to carry out this
subparagraph.
(B) Refusing, or requiring any other per-
son to refuse, to employ or otherwise dis-
criminating against any United States person
on the basis of race, religion, sex, or national
origin of that person or,of any owner, of-
ficer, director, or employee of such person.
(C) Furnishing information with respect
to the race, religion, sex, or national origin of
any United States person or of any owner,
officer, director, or employee of such person.
(D) Furnishing information about whether
any person has, has had,-or proposes to have
any business relationship (including a rela-
tionship by way of sale, purchase, legal or
commercial representation, shipping or other
transport, insurance, investment, or supply)
with or in the boycotted country, with any
business concern organized under the laws
of the boycotted country, with any national
or resident of the boycotted country, or with
any other person which is known or believed
to be restricted from having any business re-
lationship with or in the boycottng country.
Nothing in this paragraph shall prohibit the
furnishing of normal business information in
a commercial context as defined by the Sec-
retary of Commerce.
(E) Furnishing information about whether
any person is a member of, has made con-,
tributions to, or is otherwise associated with
or involved in the activties of any charitable
or fraternal organization which supports the
boycotted country.
(F) Paying, honoring, confirming, or other-
wise implementing a letter of credit which
contains any condition or requirement com-
pliance with which is prohibited by rules
and regulations issued pursuant to this para-
graph, and no United States person shall.
as a result of the application of this para-
graph, be obligated to pay or otherwise honor
or implement such letter of credit.
(2) Rules and regulations issued pursuant
to paragraph (1) shall provide exceptions
requirements (I) prohibiting the import of
goods or services from the boycotted country
or goods produced or services provided by
any business concern organized under the
laws of the boycotted country or by nationals
or residents of the boycotted country, or
(11) prohibiting the shipment of goods to the
boycotting country on a carrier of the boy-
cotted country, or by a route other. than
that prescribed by the-boycotting country
or the recipient of the-shipment;
(B) complying or agreeing to comply with
import and shipping document requirements
with respect to the country of origin; the
name of the carrier and route of shipment,
the name of the supplier of the shipment
or the name of the provider of other services,
except that no information knowingly fur-
nished or conveyed in response to such re-
quirements may be stated In negative, black-
listing, or similar exclusionary terms on or
after June 22, 1978, other than with respect
to carriers or route of shipment as may be
permitted by such rules and regulations in
order to comply with precautionary require-
ments protecting against war risks and
confiscation;
(C) complying or agreeing to comply in
the normal course of business with the uni-
lateral and specific selection by a boycotting
country, or national or resident thereof, of
carriers, insurers, suppliers of services to be
performed within the boycotting country or
specific goods which, in the normal course
of business, are identifiable by source when
imported into the boycotting country;
(D) complying or agreeing to comply with
export requirements of the boycotting coun-
July 21, 1979
try relating to shipments or transshipments
of exports to the boycotted country, to any
business concern of or organized under the
laws of the boycotted country, or to any
national or resident of the boycotted coun-
try;
(E) compliance 'by an individual or agree-
ment by an individual to comply with the
immigration or passport requirements of any
country with respect to such individual or
any member of such individual's family or
with requests for information regarding re-
quirements of employment of such individ-
ual within the boycotting country; and
(F) compliance by a United States person
resident in a foreign country or agreement
by such person to comply with the laws of
that country with respect to his activities ex-
clusively therein, and such rules and regu-
lations may contain exceptions for such res-
ident complying with the laws or regulations
of that foreign country governing imports
into such country of trademarked, trade
named, or similarly specifically identifiable
products, or components of products for his
own use, including the performance of con-
tractual services within that country, as may
be defined by such rules and regulations.
(3) Rules and regulations issued pursuant
to paragraphs (2) (C) and (2) (F) shall not
provide exceptions from paragraphs (1) (B)
and (1)(C).
(4) Nothing in this subsection may be
construed to supersede or limit the operation
of the antitrust or civil rights laws of the
United States.
(5) Rules and regulations pursuant to this
subsection shall be issued not later than
ninety days after the date of enactment of
this section and shall be issued in final form
and become effective not later than one
hundred and twenty days after they are first
issued, except that (A) rules and regulations
prohibiting negative certification may take
effect not later than one year after the date
of enactment of this section, and (B) a
grace period shall be provided for the ap-
plication of the rule4 and regulations issued
pursuant to this subsection to actions taken
pursuant to a written contract or other
agreement entered into on or before May 16,
1977. Such grace period shall end on Decem-
ber 31, 1978, except that the Secretary of
Commerce may extend the grace period for
not to exceed one additional year in any case
in which the Secretary finds that good faith
efforts are being made to renegotiate the
contract or agreement in order to eliminate
the provisions which are inconsistent with
the rules and regulations issued pursuant to
-paragraph (1).
(6) This Act shall apply to any transaction
or activity undertaken, by or through a
United States or other person, with intent
to evade the provisions of this Act as im-
plemented by the rules and regulations is-
sued pursuant to this subsection, and such
rules and regulations shall expressly provide
that the exceptions set forth in paragraph
(2) shall not permit activities or agreements
(expressed or implied by a course of con-
duct, including a pattern of responses) oth-
erwise prohibited, which are not within the
intent of such exceptions.
(b) (1) In addition to the rules and regu-
lations issued pursuant to subsection (a) of
this section, rules and regulations issued
under section 4(a) of this Act shall imple-
ment the policies set forth in section 3(5).
(2) Such rules and regulations shall, re-
quire that any United States person receiv-
ing a request for the furnishing of informa-
tion, the entering into or implementing of
agreements, or the taking of any other
action referred to in section 3(5) shall re-
port that fact to the Secretary of Commerce,
together with such other information, con-
cerning such request as the Secretary may
require for such action as he may deem ap-
propriate for carrying out the policies of that
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July 21, 1979 ' CONGRESSIONAL RECORD -SENATE
section. Such person shall also report to the
Secretary of Commerce whether he intends
to comply and whether he has complied with
such request. Any report filed pursuant to
this paragraph after the date of enactment
of this section shall be made available
promptly for public inspection and copying,
except that information regarding the quan-
tity, description, and value of any goods or
technology to which such report relates may
be kept confidential if the. Secretary deter-
mines that disclosure thereof would place
the United States person Involved at a com-
petitive disadvantage. The Secretary of Com-
merce shall periodically transmit summaries
.of the Information contained in such reports
to the Secretary of State for such action as
the Secretary of State, In consultation with
the Secretary of Commerce, may deem ap-
propriate for carrying out the policies set
forth in section 3(6) of this Act.
(c) The provisions of this section and the
rules and regulations issued pursuant there-
to shall preempt any law, rule, or regula-
tion of any of the sevaral States or the Dis-
trict of Columbia, and any of the territories
or possessions of the. United States, or of any
governmental subdivision thereof, which law,
rule, or regulation pertains to participation
in, compliance with, implementation of, or
the furnishing of information regarding re-
strictive trade practices or'boycotts fostered
or imposed by foreign countries against other
countries.
PROCEDURES FOR HARDSHIP RELIEF FROM
EXPORT CONTROLS
SEC. 7. (a) Any person who, in his domestic
manufacturing process or other domestic
business operation, utilizes a product pro-
duced abroad in whole or in part from a
commodity historically obtained from the
United States but which has been made sub-
ject to export controls, or any person who
historically has exported such a commodity,
may transmit a petition of hardship to the
Secretary of Commerce requesting an exemp.
tion from such controls in order to alleviate
any unique hardship resulting from the im-
position of such controls. A petition under
this section shall be In such form as the
Secretary of Commerce shall prescribe and
shall contain' information demonstrating the
need for the relief requested.
(b) Not later than thirty days after re-
ceipt of any petition under subsection
(a), the Secretary of Commerce shall trans-
mit a written decision to the petitioner
granting or denying the requested relief.
Such decision shall contain a statement
setting forth the Secretary's basis . for the
grant or denial. Any exemption granted
may be subject to such conditions as the
Secretary deems appropriate.
(c) For purposes of this section, the Sec-
retary's decision with respect to the grant
or denial of relief from unique hardship
resulting directly or indirectly from the im-
position of controls shall reflect the Secre-
tary's consideration of such factors as-
(1) whether denial would cause a unique
hardship to the petitioner which can be al-
leviated only by granting an exception to the
applicable regulations. In determining
whether relief shall be granted, the Secre-
tary will take into account:
(A) ownership of material for which
? there is no practicable domestic market by
virtue of the location or nature of the
material;
(B) potential serious financial loss to the
applicant if not granted an exception;
(C) inability to obtain, except through
import, an item essential for domestic use
which is produced abroad from the com-
modity under%control;
(D) the extent to which denial would
conflict, to the particular detriment of the
applicant, with other national policies in-
cluding those reflected in any international
agreement to which the United States is a
party;
(E) possible adverse effects on the econ-
omy (including unemployment) in any lo-
cality or region of the United States; and
(F) other relevant factors, including the
applicant's lack of an exporting history dur-
ing any base period that may be established
with respect to export quotas for the par-
ticular commodity; and (2) the effect a
finding in favor of the applicant would have
on attainment of the basic objectives of the
short supply control program.
In all cases, the desire to sell at higher
prices and thereby obtain greater profits
will not be considered as evidence of a
unique hardship, nor will circumstances
where the hardship is due to imprudent acts
or failure to act on the part of the petition-
er.
PETITIONS FOR MONITORING OR CONTROLS
SEC. 8. (a) (1) Any entity, including a trade
association, firm, or certified or recognized
union or group of workers, which is repre-
sentative of an industry or a substantial seg-
ment of an industry which processes any
material or commodity for which an increase
In domestic prices or a domestic shortage
has or may have a significant adverse effect
on the national economy or any sector there-
of may transmit a written petition to the
Secretary of Commerce requesting the im-
position of export controls, or the monitor-
ing of exports, or both, with respect to such
material or commodity.
(2) Each petition shall be in such form
as the Secretary of Commerce shall prescribe
and shall contain information in support of
the action requested. The petition shall in-
clude information reasonably available to the
petitioner indicating (A) that there has been
a significant increase over a representative
period in exports of such material or com-
modity in relation to domestic supply, and
(B) that there has been a significant in-
crease in the price of such material or com-
modity under circumstances indicating that
the price increase may be related to exports.
(b). Within fifteen days after receipt of
any petition described in subsection (a), the
Secretary of Commerce shall cause to be pub-
lished a notice in the Federal Register. The
notice shall Include (1) the name of the ma-
terial or commodity which is the subject of
the petition, (2) the Schedule B number of
the material or commodity as set forth in the
Statistical Classification of Domestic and
Foreign Commodities Exported From the
United States, (3) notice of whether the
!petitioner is requesting that controls or
monitoring, or both, be imposed with respect
to the exportation of such material or com-
modity, and (4) notice that interested per-
sons shall have a period of thirty days com-
mencing with the date of publication of
such notice to submit to the Secretary of
Commerce written data, views, or arguments,
with or without opportunity for oral pres-
entation. At the request of the petitioner or
any other entity described in subsection (a)
(1) with respect to the material or com-
modity which is the subject of the petition
or at the request of any entity represena-
tive of the producers or exporters of such
material or commodity, the Secretary shall
conduct public hearings with respect to the
subject of the petition, in which event the
thirty-day period shall be extended to forty-
five days.
(c) Within forty-five days after the end
of the thirty-day or forty-five-day period
described in subsection (b) or within seven-
ty-five days of publication of the petition in
the Federal Register, whichever is the later,
the Secretary of Commerce shall-
(1) determine whether to impose moni-
toring or controls or both on the exportation
of such material or commodity; and '
S 10209
(2) publish in the Federal Register a de-
tailed statement of the reasons for such de-
termination.
(d) Within fifteen days following a deci-
sion under subsection (c) to impose moni-
toring or controls on the exportation of a
material or commodity, the Secretary shall
publish in the Federal Register proposed
regulations with respect to such monitoring
or controls. Within thirty days following the
publication of such notice, and after consid-
ering any public comments, the Secretary
shall publish and implement final regula-
tions.
(e) For the purposes of publishing notices
in the Federal Register and the scheduling
of public hearings, the Secretary shall have
the authority to consolidate petitions and
responses thereto with respect to the same
or related commodities.
(f) If a petition has been fully considered
under this section and a notice has been
published with respect to a particular com-
modity or group of commodities and in the
absence of significantly. changed circum-
stances, the Secretary shall have authority
to determine that a petition for monitoring
or control of such commodity or commodi-
ties does not merit the full consideration
mandated under this section.
(g) The procedures and time limits set
forth in this section shall take precedence
over any review undertaken at the initiative
of the Secretary.
(h) The Secretary shall have the author-
ity to impose monitoring or controls on a
temporary basis during the period following
the filing of a petition under subsection
(a) (1) and the Secretary's determination
under subsection (c) if the Secretary deems
such action to be necessary to effectuate the
policy set forth in section 3(2) (C) of this
Act. If such authority is used the Secretary
shall afford interested persons an opportu-
nity to submit written comments thereon
and. such comments shall be considered by
the Secretary in making the determination
required under subsection (c) and in the
development of any final regulations. '
(i) The authority under this section shall
not be construed to affect the authority of
the Secretary of Commerce under section
4(e) (1) or any other provision of this Act.
(j) The provisions of this section shall not
apply to any agricultural commodity.
(k) Nothing contained in this section
shall be construed to preclude submission on
a confidential basis to the Secretary of
Commerce of information relevant to a de-
cision to impose or remove monitoring or
controls under the authority of this Act, nor
consideration of such information by the
Secretary in reaching decisions required un-
der this section. The provisions of this sub-
section are not intended to change the ap-
plicability of section 552(b) of title 5,
United States Code.
CONSULTATION AND STANDARDS
SEC. 9 (a) In determining what shall be
controlled or monitored under this Act, and
in determining the extent to which exports
shall be limited, and department, agency, or
official making these determinations shall
seek information and advice from the several
executive departments and independent
agencies concerned with aspects of our do-
mestic and foreign policies and operations
having. an important bearing on exports.
Such departments and agencies shall fully
cooperate in rendering such advice and in-
formation. Consistent with considerations of.
national security, the President shall seek
information and advice from various seg-
ments of private Industry in connection with
the making of these determinations. In addi-
tion, the Secretary of Commerce shall con-
sult with the Secretary of Energy to deterw
mine whether, in order to effectuate the
policy stated in section 3(2) (C) of this Act.
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monitoring or controls are necessary with
respect to exports of facilities, machinery, or
equipment normally and principally used,
or intended to be used, in the production,
conversion, or transportation of fuels and
energy (except nuclear energy), including
but not limited to, drilling rigs, platforms,
and equipment; petroleum refineries, natu-
ral gas processing, liquefaction, and gassifl-
cation plants; facilities for production of
synthetic natural gas or synthetic crude oil;
cil and gas pipelines, pumping stations, and
associated equipment; and vessels for trans-
porting oil, gas, coal, and other fuels.
(b) (1) In authorizing exports, full utiliza-
tion of private competitive trade channels
shall be encouraged insofar as practicable,
giving consideration to the interests of small
business, merchant exporters as well as pro-
ducers, and established and new exporters,
and provision shall be made for representa-
tive trade consultation to that end. In addi-
tion, there may be applied such other stand-
ards or criteria as may be deemed necessary
by the head of such department, or agency,
or official to carry out the policies of this Act.
(2) Upon imposing quantitative restric-
tions on exports of any goods to carry out
the policy stated in section 3(2) (C) of this
Act, the Secretary of Commerce shall include
in the notice published in the Federal Regis-
ter an invitation to all interested parties to
submit written comments within fifteen days
from the date of publication of the impact of
such restrictions and the method of licensing
used to implement them.
(c) (1) Upon writtertrequest by representa-
tives of a substantial segment of any industry
which produces goods or technology which
are subject to export controls or are being
considered for such controls because of their
significance to the national security of the
United States, or whenever he deems appro-
priate to further the purposes of this Act,
the Secretary of Commerce shall appoint a
technical advisory committee for any group-
ing of such goods or technology which he
determines is difficult to evaluate because of
questions concerning technical matters,
worldwide availability and actual utilization
of production and technology, or licensing
procedures. Each such committee shall con-
sist of representatives of United States In-
dustry and government, including the De-
partments of Commerce, Defense, and State,
and,, when appropriate, after Government de-
partments and'agencies. No person serving
on any such committee who is representative
of indsutry shall serve on such committee
for more than four consecutive years.
(2) It shall be the duty and function of
the technical advisory committees established
under paragraph (1) to advise and assist the
Secretary of Commerce and any other de-
partment, agency, or official of the Govern-
ment of the United States to which the Pres-
ident has delegated power, authority, and dis-
cretion under section 4(e) with respect to
actions designed to carry out the policy set
forth in section 3 of this Act. Such commit-
tees, where they have expertise in such mat-
ters, shall be consulted with respect to ques-
tions Involving (A) technical matters, (B)
worldwide availability and actual utilization
of production technology, (C) licensing pro-
cedures which affect the level of export con-
trols applicable to any goods or technology,
and (D) exports subject to multilateral con-
trols in which the United States participates
including proposed revisions of any such
multilateral controls. Nothing in this sub-
section shall prevent the Secretary from con-
sulting, at any time,lwith any person repre-
senting industry or the general public re-
gardless of whether such person is a member
of a technical advisory committee. Members
of the public shall be given a reasonable
opportunity, pursuant to regulations pro-
scribed by the Secretary of Comerce, to pre-
sent evidence to such committees.
CONGRESSIONAL RJECORD - S]ENAT]E July 21, 1979
(3) Upon request of any member of any
such committee, the Secretary may, if he
determines it appropriate, reimburse such
member for travel, subsistence, and other
necessary expenses incurred by him in con-
nection with his duties as a member.
(4). Each such committee shall elect a
chairman, and shall meet at least every three
months at the call of the Chairman, unless
the Chairman determines, in consultation
with the other members of the committee,
that such a meeting is not necessary to,
achieve the purposes of this Act. Each such
committee shall be terminated after a pe-
riod of two years, unless extended by the
Secretary for additional periods of two years.
The Secretary shall consult each such com-
mittee with regard to such termination or
extension of that committee.
(5) To facilitate the work of the technical
advisory committees, the Secretary of Com-
merce, in conjunction with other depart-
ments and agencies participating in the ad-
ministration of this Act, shall disclose to
each committee adequate information, con-
sistent with national security and foreign
policy, pertaining to the reasons for the ex-
port controls which are in effect or contem-
plated for the grouping of goods or technol-
ogy with respect to which that committee
furnishes advice.
(6) Whenever a technical advisory com-
mittee certifies to the Secretary of Com-
merce that goods or technology are avail-
able in fact from sources outside the United
States in sufficient quantity and of compar-
able quality so as to render United States
export controls ineffective in achieving the
purposes of this Act, and provides adequate
documentation for such certification, the
Secretary of Commerce shall investigate and
report to the technical advisory committee
on whether the Secretary concurs with the
certification. If the Secretary concurs, the
Secretary shall submit a recommendation to
the President who shall act in accordance
with section 4(a) (2) (E.) of this Act.
(d) The Secretary of Defense shall have
the same authorities and responsibilities as
the Secretary of Commerce under paragraphs
(1) through (5) -of subsection (c) in order
to carry out his responsibilities under this
Act.
VIOLATIONS
SEC. 10. (a) Except as provided In subsec-
tion (b) of this section, whoever knowing.
ly violates any provision of this Act or any
regulation, order, or license issued there-
under shall be fined not more than five
times the value of the exports involved or
$50,000, whichever is greater, or imprisoned
not more than five years; or both.
(b) Whoever willfully exports anything
contrary to any provision of this Act or any
regulation, order, or license Issued there-
under, with knowledge that such exports will
be used for the benefit of any country to
which exports are restricted for national
security or foreign policy purposes, shall
be fined not more than five times the value
of the exports involved or $100,000, which-
ever is greater, or imprisoned not more
than ten years, or both.
(c) (1) The head of any department or
agency exercising any functions under this
Act, or any officer or employee of such de-
partment or agency specifically designated
by the head thereof, may impose a civil
penalty not to exceed $10,000 for each vio-
lation of this Act or any regulation, order,
or license issued under this Act, either in
addition to or in lieu of any other liability
or penalty which may be. imposed.
'(2) (A) The authority under this Act to
suspend or revoke the authority of any
United States person to'export goods or tech-
nology may be used with respect to any
violation of the rules and regulations issued
pursuant to section '5(a) of this Act.
(B) Any administrative sanction (includ-
ing any civil penalty or any suspension or
revocation, of authority to export) imposed
under this Act for a violation of the rules
and regulations issued pursuant to section
6(a) of this Act may be imposed only
after notice and opo rtunlty for an agency
hearing on the record in accordance with
sections 554 through 557 of title 5, United
States Code.
(C) Any charging letter or other docu-
ment initiating administrative proceedings
for the imposition of sanctions for violations
of the rules and regulations Issued pur-
suant to section 6(a) of this Act shall be
made available for public inspection and
copying.
(d) The payment of any penalty imposed
pursuant to subsection (c) may be made. a
condition, for a period not exceeding one
year after the imposition of such penalty,
to the granting, restoration, or continuing
validity of any export license, permission.
or privilege granted or to be granted to the
person upon whom such penalty is imposed.
In addition, the payment of any penalty im-
posed under subsection (c) maybe deferred
or suspended in whole or In part for a
period of time no .longer than any proba-
tion period (which may exceed one year)
that may be imposed upon such person. Such
a deferral or suspension shall not operate
as a bar to the collection of the penalty in
the event that the conditions of the sus-
pension, deferral, or probation are not ful-
filled.
(e) Any amount paid in satisfaction of any
penalty imposed pursuant to subsection (c)
shall be covered into the Treasury as a mis-
cellaneous receipt. The head of the depart-
ment or agency concerned may, in his dis-
cretion, refund any such penalty, within
two years after payment, on the ground of
a material error of fact or law in the impo-
sition. Notwithstanding section 1348(a) of
title 28, United. States Code, no action for
the refund of any such penalty may be main-
tained in any court.
(f) In the event of the failure of any per-
son to pay a penalty imposed pursuant to
subsection (c), a civil action for the recov-
ery thereof may, in the discretion of the head
of the department or agency concerned, be
brought in the name of the United States.
In any such action, the court shall deter-
mine de novo all issues necessary to the es-
tablishment of liability. Except as provided
in this subsection and in subsection (d), no
such liability shall be asserted, claimed, or
recovered upon by the United States in any
way unless it has previously been reduced to
judgment.
(g) Nothing in subsection (c), (d), or (f)
limits-
(1) the availability of other administrative
or judicial remedies with respect to violations
of this Act, or any regulation, order, or li-
cense issued under this Act;
(2) the authority to compromise and set-
tle administrative proceedings brought with
respect to violations of this Act, or any regu-
lation, order, or license issued under this
Act; or
(3) the authority to compromise, remit or
mitigate seizures and forfeitures pursuant to
section 1(b) of title VI of the Act of June 15,
1917 (22 U.S.C. 401 (b) ).
ENFORCEMENT
SEC. 11..(a) To the extent necessary or
appropriate to the enforcement,of this Act
or to the imposition of any penalty, forfeit-
ure, or liability arising. under the Export
Control Act of 1949, the head of any depart-
ment or agency exercising . any , function
thereunder (and officers ?o; employees of such
department or agency specifically designated
by the head thereof) may make such investi-
gations and obtain such information from,
require such reports or the keeping of such
records by, make such inspection of the
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books, records, and other writings, premises,
or property of, and take the sworn testimony
of, any person.. In addition, such officers or
employees may administer oaths or affirma-
tions, and may by subpena require any per-
son to appear and testify or to appear and
produce books, records, and other writings,
or both, and In the case of contumacy by,
or refusal to obey a subpena issued to, any
such person, the district court of the United
States for any district in which such person
is found or resides or transacts business.
upon application, and after notice to any
such person and hearing, shall have juris-
diction to Issue an order requiring such per-
son to appear and give testimony or to ap-
pear and produce books, records, and other
writings, or both, and any failure to obey
such order of the court may be punished by
such court as a contempt thereof.
(b) No person shall be excused from com-
plying with any requirements under this sec-
tion because of his privilege against self-
incrimination, but the immunity provisions
of the Compulsory Testimony Act of Febru-
ary 11, 1893 (27 Stat. 443; 49 U.S.C. 46) shall
apply with respect to any individual who
specifically claims such privilege.
(c) Except as otherwise provided by the
third sentence of section 6(b) (2) and by
section 10(c) (2) (C) of this Act, information
obtained prior to June 30, 1980, under this
Act, which is deemed confidential, includ-
ing Shippers' Expert Declarations, or with
reference to which a request for confiden-
tial treatment is made by the person fur-
nishing such information, shall be exempt
from disclosure under section 552(b) (3) (B)
of title 5, United States Code, and such In-
formation shall not be published or disclosed
unless the Secretary of Commerce determines
that the withholding thereof is contrary to
the national interest. Information obtained
after June 30, 1980, under this Act may be
withheld only to the extent permitted by
statute, except that information obtained for
the purpose of consideration of, or concern-
ing, license applications under this Act shall
be withheld from public disclosure unless the
release of such information is determined by
the Secretary of Commerce to be in the na-
tional interest. Enactment of this subsection
shall not affect any judicial proceeding com-
menced under section 552 of title 5, United
States Code, to obtain access to boycott re-
ports submitted prior to October 31, 1976,
which was pending on May 15, 1979; but
such proceeding shall be continued as if this
Act had not been enacted.
Nothing in this Act shall be construed as
authorizing the withholding of information
from Congress, and all Information obtained
at any time under this Act or previous Acts
regarding the control of exports, including
any report or license application required
under section 4(b), shall be made available
upon request to any committee or subcom.
mittee of Congress of appropriate jurisdic-
tion. No such committee or subcommittee
shall disclose any information obtained un-
der this Act or previous Acts regarding the
? control of exports which Is submitted on a
confidential basis unless the full committee
determines that the withholding thereof is
contrary to the national interest.
(d) In the administration of this Act, re-
porting requirements shall be so designed as
to reduce the cost of reporting, recordkeep-
ing, and export documentation required un-
der this Act to the extent feasible consistent
with effective enforcement and compilation
of useful trade statistics. Reporting, record-
keeping, and export documentation require-
ments shall be periodically reviewed and re-
vised in the light of developments in the
field of information technology.
CONGRESSIONAL RECORD -SENATE
EXEMPTION FROM CERTAIN PROVISIONS RELATING
TO ADMINISTRATIVE PROCEDURE AND JUDICIAL
REVIEW
SEC. 12. (a) Except as provided in section
10(c) (2), the functions exercised under this
Act are excluded from the operation of sec-
tions 551, 553 through 559, and 701 through
706 of title 5, United States Code.
(b) It is the intent of Congress that, to
the extent practicable, all regulations im-
posing controls on exports under this Act
be issued in proposed form with meaningful
opportunity for public comment before tak-
ing effect. In cases where a regulation im-
posing controls under this Act is issued
with immediate effect, it is the intent of
Congress that meaningful opportunity for
public comment also be provided and that
the regualtion be reissued in final form after
public comments have been fully consid-
ered. The Secretary shall include in the an-
nual report required by this Act a detailed
accounting of the issuance of regulations
under the authority of this Act, including
an explanation of each case in which regula-
tions were not issued In accordance with the
first sentence of this subsection.
ANNUAL REPORT
SEC. 13. (a) The Secretary of Commerce
shall make an annual report to the Presi-
dent and to the Congress on the implemen-
tation of this Act.
(b) Each annual report shall include an
accounting of-
(1) actions taken by the President and
the Secretary of Commerce to effect the anti-
.boycott policies set forth in section 3(5) of
this Act;
(2) organizational and procedural changes
instituted, and any reviews undertaken in
furtherance of the policies set forth in this
Act;
. (3) efforts to keep the business sector of
the Nation informed about policies and pro-
cedures adopted under this Act;
(4) any changes in the exercise of the
authorities of section 4(a) of this Act;
(5) the results of review of United States
policy toward Individual countries called
for in section 4(a) (2) (A);
(6) the results, in as much detail as may
be included consistent with the national
security and the need to maintain the con-
fidentiality of proprietary information, of
the actions, including reviews and revisions
of export controls maintained for national
security purposes, required by section 4(a)
(2) (B);
(7) actions taken pursuant to section
4(b) (1), including changes made in control
lists and assessments of foreign availability;
(8) evidence demonstrating a need to
impose export controls for national security
or foreign policy purposes in the face of
foreign availability as 'set forth in section
4(a)(2)(E);
(9) the information contained in the re-
ports required by section 4(e) (2) of this
Act, together with an analysis of-
(A) the Impact on the economy and world
trade of shortages or increased prices for
commodities subject to monitoring under
this Act or section 812 of the Agricultural
Act of 1970;
(B) the worldwide supply of such com-
modities; and
(C) actions being taken by other nations
in response to such shortages or increased
prices;
(10) delegations of authority by the Presi-
dent as provided for under section 4(k) of
this Act;
(11) the progress of negotiations under
section 4(n) of this Act;
(12) the number and disposition of-export
license applications taking more than ninety
S 10211
days to process pursuant to section 4(d) of
this Act;
(13) consultations undertaken with tech-
nical advisory committees pursuant to sec-
tion 9(c) of this Act, the use made of advice
given, and the contribution such commit-
tees made in carrying out the policies of this
Act;
(14) violations of the provisions of this
Act and penalties imposed pursuant to this
Act; and
(15) any revisions to reporting require-
ments prescribed in section 11(d).
(c) The heads of other involved depart-
ments and agencies shall fully cooperate
with the Secretary of Commerce in provid-
ing all information required by the Secre-
tary of Commerce to complete the annual
reports. _
DEFINITIONS
SEC. 14. As used in this Act-
(1) the term "person' 'includes the singu-
lar and the plural and any individual, part-
nership, corporation, or other form of asso-
ciation, including any government or agency
thereof;
(2) the term "United States person" means
any United States resident or national (other
than an individual resident outside the
United States and employed by other than a
United States person), any domestic con-
cern (including any permanent domestic
establishment of any foreign concern) and
any foreign subsidiary or affiliate (including
any permanent foreign establishment) of
any domestic concern which is controlled in
fact by ? such domestic concern, as deter-
mined under regulations of the President;
(3) the term "goods" means any article,
material, supply or manufactured product,
including inspection and test equipment,
and excluding technical data; and
(4) the term "technology" means the in-
formation and know-how that can be used
to design, produce, manufacture,'utilize, or
reconstruct goods, including computer soft-
ware and technical data, but not the goods
themselves.
EFFECTS ON OTHER ACTS
SEC. 15. (a) The Act of February 15, 1936
(49 Stat. 1140), relating to the licensing of
exports of tinplate scrap, is hereby super-
seded; but nothing contained in this Act
shall be construed to modify, repeal, super-
sede, or otherwise affect the provisions of
any other laws authorizing control over ex-
ports of any commodity.
(b) The authority granted to the President
under this Act shall be exercised in such
manner as to achieve effective coordination
with the authority exercised under section
38 of the Arms Export Control Act (22 U.S.C.
2778).
(c) On October 1, 1979, the Mutual Defense
Assistance Control Act of 1951, as amended
(22 U.S.C. 1611.-1613d), is superseded.
AUTHORIZATION OF APPROPRIATIONS
SEC. 16. (a) Notwithstanding any other
provision of law, no appropriation- shall be
made under any law to the Department of
Commerce for expenses to carry out the pur-
poses of this Act for any fiscal year com-
mencing on or after October 1, 1980, unless
previously and specifically authorized by leg-
islation.
(b) There are authorized to be appropri-
ated to the Department of Commerce
$8,000,000 (and such additional amounts as
may be neecssary for increases in salary, pay,
retirement; other employee benefits author-
ized by law, and other nondiscretionary
costs) for fiscal year 1980 to carry out the
purposes of this Act, of which $1,250,000
shall be available only for purposes of es-
tablishing and maintaining the capability to
make foreign availability assessments called
for by section 4(b) (1).
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S 10212 CONGRESSIONAL RECORD -SENATE
(c) There are authorized to be appropri-
ated to the Department of Defense
$2,500,000 for fiscal year 1980 to carry out
Its functions under subsection 4(a) of this
Act.
EFFECTIVE DATE
SEC. 17. (a) This Act takes effect upon
the expiration of the Export Administration
Act of 1969.
(b) All outstanding delegations, rules, reg-
ulations, orders, licenses, or other forms of
administrative action under the Export Con-
trol Act of 1949 or section 6 of the Act of
July 2, 1940 (54 Stat. 714), or the Export
Administration Act of 1969 shall, until
amended or revoked, remain in full force
and effect, the same as if promulgated under
this Act.
TERMINATION DATE
SEC. 18. The authority granted by this
Act terminates on September 30, 1983, or
.upon any prior date which the President by
proclamation- may designate.
The title was amended so as to read:
"A bill to provide authority to regulate
exports, improve the efficiency of export
regulation, and to minimize interference
with the ability to engage in commerce."
Mr. ROBERT C. BYRD. Mr. President,
I move to reconsider the vote by which
the billwas passed.
Mr. BAKER. I move to lay. that motion
on the table.
The motion to, lay on the table was
agreed to.
Mr. ROBERT C. BYRD. Mr. President,
I congratulate the distinguished chair-
man of the Subcommittee on Interna-
tional Finance of the Banking Commit-
tee, Mr. STEVENSON, for his leadership
and extensive work on the Export Ad-
ministration Act of 1979. He has guided
the Senate in its consideration of a
matter of the most vital importance for
our Nation.
The U.S. Government needs the au-
thority to Impose export controls for the
purpose of pursuing national security,
foreign policy, and domestic economic
goals. Particularly in the area of critical
technology, we require controls on ex-
ports which could make a significant
contribution to the military potential of
adversary nations. At the same time,
recognizing that restrictions on U.S. ex-
ports from the United States can have
serious adverse effects on our balance of
payments and on the availability of jobs
for American workers, we must strive to
limit restrictions on exports to those
absolutely necessary.
The Senator from Illinois. together
With the ranking minority member of
the subcommittee, Mr. HEINZ, and the
other members of the Banking Commit-
tee, have carefully evaluated these Is-
sues. In developing the Export Adminis.
tration Act of 1979. they sought to main-
tain the balance between our need to
protect critical technology from our
adversaries with the need to allow and
encourage U.S. foreign trade.
Mr. President. the task before the
drafters of S. 737 was no easy one. They
are to be congratulated for a job well
done.
Mr. MAGNUSON. Mr. President, will
the Senator yield to me?
Mr. ROBERT C. BYRD. I yield to the
Senator from Washington.
DEPARTMENTS OF LABOR AND
HEALTH, EDUCATION, AND WEL-
FARE AND RELATED AGENCIES
APPROPRIATIONS, 1980
Mr. MAGNUSON. Mr. President, as
much as I hate to revive the Labor-HEW
appropriations bill, I must.
This will correct a printing error in
the bill.
It conforms with the action taken by
the subcommittee, approved by the full
committee, and explained fully on page
27 of the report.
Senator MATHIAS had moved this
deletion of bill language in the commit-
tee. I believe Senator KASSEBAUM also
had an interest in this matter.
While the committee was supportive of
the "intent" of the House action, such a
broad, all-inclusive prohibition went too
far. The Department of HEW was off-
base in their interpretation of existing
law and corrective action is taking place.
This technical amendment will merely
bring the Senate-passed bill into con-
formation with the action taken by the
committee and adopted Thursday and
Friday during consideration of H.R.
4389.
-- There is a printer's error in the Labor-
I move the following technical amend
ment.
On page 53, strike out lines 8 through
1
1.
This was the intent of the Senate.
The amendment was agreed to.
BUDGET ACT WAIVE
Mr. ROBERT C.' BYRD. Mr. Presi-
dent, I ask unanimous consent that the
Senate proceed to the consideration of
Calendar Order No. 263.
Mr. BAKER. Mr. President, reserving
the right to object, and I shall not ob-
ject, my reservation was for the purpose
of advising the majority leader that the
calendar item is cleared on this side and
we have no objection to consideration
and passage.
The PRESIDING OFFICER. The res-
olution will be stated.
The assistant legislative clerk read as
follows:
A resolution (S. 195) waiving section 402
(a) of the Congressional Budget Act of 1974
with respect to the consideration of S. 1309.
The PRESIDING OFFICER. Is there
objection to the present consideration
of the resolution?
There being no objection, the Senate
proceeded to consider the resolution.
The PRESIDING OFFICER. The ques-
tion is on agreeing to the resolution.
The resolution (S. 195) was agreed to
as follows:
Resolved, That pursuant to section 402(c)
of the congressional Budget Act of 1974, the
provisions of section 402(a) of that Act are
waived with respect to the consideration of
S. 1309i a bill to increase the fiscal year 1979
authorization for appropriations for the food
stamp program. Such waiver is necessary be-
cause S. 1309 authorizes the enactment of
new budget authority that would first be-
come available in fiscal year 1979, and the bill
was reported after May 15, 1978.
July 2'1, 1979
. S. 1309 is emergency legislation that would
authorize increased appropriations for the
1979 food stamp program. The amount of
appropriations currently authorized for the
1979 program will not be sufficient to pro-
vide participants in the food stamp program
with full program benefits through the end
of the 1979 fiscal year.
Mr. ROBERT C. BYRD. Mr. President,
I move to reconsider the vote by which
the resolution was agreed to.
Mr. BAKER. I move to lay that mo-
tion on the table.
The motion to lay on the table was
agreed to.
ROUTINE MORNING BUSINESS
Mr. ROBERT C. BYRD. Mr. President,
I ask unanimous consent that there now
be.a period for the transaction of routine
morning business not to extend beyond
30 minutes and that Senators may speak
therein up to 15 minutes each.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The Senator from New York.
FORMER SECRETARY OF TRANS-
PORTATION BROCK ADAMS
Mr. MOYNIHAN. Mr. President, I
rise to call attention and to pay tribute to
an extraordinary act of political integrity
resentatives and until yesterday a mem-
ber of the President's Cabinet as Secre-
tary of Transportation, chose to leave the
Cabinet rather than to submit to condi-
tions which in his view were incompatible
with the institution as we have known
it and in which he has served with such
distinction as Secretary of Transporta-
tion.
This morning, Mr. President, there was
an editorial in The Washington Post
praising the Transportation Secretary for
his courage under pressure and the clari-
ty of his understanding of his role.
I ask unanimous consent that this
editorial be printed in the RECORD..
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
AND A CLASS ACT AT DOT
Transportation Secretary Brock Adams
acted with class. He was a good team player
for two and a half years. But the president
misjudged the man if he assumed that Mr.
Adams would react gratefully or compliantly
to the declaration that he could stay at
DOT only if he would just jettison some of
his top staff. Mr. Adams's reply was that he,
too, had a few points to get settled before
he made up his mind.
The most refreshing aspect of his rejoinder
was that it reached beyond conflicts of per-
sonnel and personalities to the issues on
which Mr. Adams has felt most frustrated:
promotion of mass transit and development
of a more efficient automobile.
On both, questions, Mr. Adams has been
very strong-and very right. He drove this
region's Metro system through the most
searching reexamination that it has ever
received-because he wanted to ensure Its
success. For three years, too, he has been
arguing for a larger federal investment in
mass transit nationwide. Just last weekend
it seemed that energy problems had finally
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