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[House Report 108-105]
[From the U.S. Government Publishing Office]

108th Congress 
 1st Session            HOUSE OF REPRESENTATIVES          Rept. 108-105
                                                                 Part 3
_______________________________________________________________________

                                     

 
    FOREIGN RELATIONS AUTHORIZATION ACT, FISCAL YEARS 2004 AND 2005

                               __________

                              R E P O R T

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                                   ON

                               H.R. 1950

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

      [Including cost estimate of the Congressional Budget Office]

                                     

                                     

 June 30, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                        U.S.GOVERNMENT PRINTING OFFICE

19-006                       WASHINGTON : 2003

                   HOUSE COMMITTEE ON ARMED SERVICES
                      One Hundred Eighth Congress

                  DUNCAN HUNTER, California, Chairman
CURT WELDON, Pennsylvania            IKE SKELTON, Missouri
JOEL HEFLEY, Colorado                JOHN SPRATT, South Carolina
JIM SAXTON, New Jersey               SOLOMON P. ORTIZ, Texas
JOHN M. McHUGH, New York             LANE EVANS, Illinois
TERRY EVERETT, Alabama               GENE TAYLOR, Mississippi
ROSCOE G. BARTLETT, Maryland         NEIL ABERCROMBIE, Hawaii
HOWARD P. ``BUCK'' McKEON,           MARTY MEEHAN, Massachusetts
    California                       SILVESTRE REYES, Texas
MAC THORNBERRY, Texas                VIC SNYDER, Arkansas
JOHN N. HOSTETTLER, Indiana          JIM TURNER, Texas
WALTER B. JONES, North Carolina      ADAM SMITH, Washington
JIM RYUN, Kansas                     LORETTA SANCHEZ, California
JIM GIBBONS, Nevada                  MIKE McINTYRE, North Carolina
ROBIN HAYES, North Carolina          CIRO D. RODRIGUEZ, Texas
HEATHER WILSON, New Mexico           ELLEN O. TAUSCHER, California
KEN CALVERT, California              ROBERT A. BRADY, Pennsylvania
ROB SIMMONS, Connecticut             BARON P. HILL, Indiana
JO ANN DAVIS, Virginia               JOHN B. LARSON, Connecticut
ED SCHROCK, Virginia                 SUSAN A. DAVIS, California
W. TODD AKIN, Missouri               JAMES R. LANGEVIN, Rhode Island
J. RANDY FORBES, Virginia            STEVE ISRAEL, New York
JEFF MILLER, Florida                 RICK LARSEN, Washington
JOE WILSON, South Carolina           JIM COOPER, Tennessee
FRANK A. LoBIONDO, New Jersey        JIM MARSHALL, Georgia
TOM COLE, Oklahoma                   KENDRICK B. MEEK, Florida
JEB BRADLEY, New Hampshire           MADELEINE Z. BORDALLO, Guam
ROB BISHOP, Utah                     RODNEY ALEXANDER, Louisiana
MICHAEL TURNER, Ohio                 TIM RYAN, Ohio
JOHN KLINE, Minnesota
CANDICE S. MILLER, Michigan
PHIL GINGREY, Georgia
MIKE ROGERS, Alabama
TRENT FRANKS, Arizona
                    Robert S. Rangel, Staff Director
               Eric R. Sterner, Professional Staff Member
               Erin C. Conaton, Professional Staff Member

                            C O N T E N T S

                              ----------                              
                                                                   Page

Purpose and Background...........................................     3
Legislative History..............................................     5
Section-by-Section Analysis......................................     5
  Section 224--Reimbursement Rate for Airlift Services Provided 
    to the Department of State...................................     5
  Section  227--Security Capital Cost Sharing....................     6
  Section  701--Reports on Benchmarks for Bosnia.................     6
  Section 1501--Export Controls on Satellites and Related Items..     6
  Section 1502--Mandatory Review by Department of State..........     6
  Section 1503--Export Restrictions Not Affected.................     6
  Section 1504--Definitions......................................     6
Committee Position...............................................     6
Fiscal Data......................................................     6
  Congressional Budget Office Estimate...........................     7
  Committee Cost Estimate........................................    15
Oversight Findings...............................................    15
Constitutional Authority Statement...............................    15
Statement of Federal Mandates....................................    16
Changes in Existing Law Made by the Bill, as Reported............    16
Additional views of Vic Snyder...................................    18
Dissenting views of Ellen O. Tauscher............................    20
108th Congress                                            Rept. 108-105
                       HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 3

======================================================================

    FOREIGN RELATIONS AUTHORIZATION ACT, FISCAL YEARS 2004 AND 2005

                                _______
                                

                 June 30, 2003.--Ordered to be printed

                                _______
                                

    Mr. Hunter, from the Committee on Armed Services, submitted the 
                               following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 1950]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Armed Services, to whom was referred the 
bill (H.R. 1950) to authorize appropriations for the Department 
of State for the fiscal years 2004 and 2005, to authorize 
appropriations under the Arms Export Control Act and the 
Foreign Assistance Act of 1961 for security assistance for 
fiscal years 2004 and 2005, and for other purposes, having 
considered the same, report favorably thereon with amendments 
and recommend that the bill as amended do pass.
  The amendments (stated in terms of the provisions of the 
amendment in the nature of a substitute reported by the 
Committee on International Relations) are as follows:
  Strike section 224 and insert the following:

SEC. 224. REIMBURSEMENT RATE FOR CERTAIN AIRLIFT SERVICES PROVIDED BY 
                    THE DEPARTMENT OF DEFENSE TO THE DEPARTMENT OF 
                    STATE.

  (a) Authority.--Subsection (a) of section 2642 of title 10, 
United States Code, is amended--
          (1) by striking ``provided by a component of the 
        Department of Defense to the'' and inserting ``provided 
        by a component of the Department of Defense as follows:
          ``(1) To the''; and
          (2) by adding at the end the following new paragraph:
          ``(2) To the Department of State for the 
        transportation of armored motor vehicles to a foreign 
        country to meet unfulfilled requirements of the 
        Department of State for armored motor vehicles in that 
        foreign country.''.
  (b) Conforming and Clerical Amendments.--(1) The heading for 
such section is amended to read as follows:

``Sec. 2642. Airlift services provided to Central Intelligence Agency 
                    and Department of State: reimbursement rate''.

  (2) The item relating to such section in the table of 
sections at the beginning of chapter 157 of such title is 
amended to read as follows:

``2642. Airlift services provided to Central Intelligence Agency and 
Department of State: reimbursement rate.''.

  Strike section 227, relating to security capital cost 
sharing, and insert the following new section 227:

SEC. 227. GAO ASSESSMENT OF SECURITY CAPITAL COST SHARING.

  (a) In General.--Not later than 120 days after the date of 
the enactment of this Act, the Comptroller General of the 
United States shall submit to the Congress a report on plans 
for security capital cost sharing between the Department of 
State and other Federal agencies with personnel assigned to 
United States diplomatic facilities under the authority of a 
chief of mission pursuant to section 207 of the Foreign Service 
Act of 1980 (22 U.S.C. 3927).
  (b) Report Elements.--In addition to such other information 
as the Comptroller General considers appropriate, the report 
described in subsection (a) shall address and make 
recommendations regarding the following:
          (1) The anticipated projected costs that the 
        Department of State proposes to be paid through an 
        inter-agency security capital cost sharing program.
          (2) The mechanism the Department of State proposes to 
        use in allocating assessments under such a program and 
        any alternatives the General Accounting Office suggests 
        be considered.
          (3) Factors that should be incorporated into any 
        process for implementing such a program and a financial 
        assessment of such factors, including the cost of 
        services provided to the Department of State by other 
        Federal agencies.
          (4) The means of ensuring transparency in the cost 
        assessment process of such a program.
          (5) Mechanisms for adjudicating disagreements among 
        Federal agencies regarding assessed fees under such a 
        program.

  Strike section 701, relating to reports on benchmarks for 
Bosnia.
  Strike title XV, relating to export controls on satellites 
and related items.
  Redesignate sections and titles accordingly and conform the 
table of contents.

                         Purpose and Background

    The purpose of H.R. 1950, the Foreign Relations 
Authorization Act, Fiscal Years 2004 and 2005, as amended, is 
to authorize activities of the Department of State in pursuit 
of U.S. foreign policy and national interests in fiscal years 
2004 and 2005. The Committee on Armed Services met to consider 
those portions of the bill within its jurisdiction and that 
directly affected the authority and responsibilities of the 
Secretary of Defense and the armed forces of the United States 
and national security controls on certain exports. The 
committee adopted two amendments that would preserve or enhance 
U.S. national security in several areas.
    First, as amended by the committee, the bill would preserve 
existing national security controls on communication satellite 
exports. Title XV of H.R. 1950, as reported by the Committee on 
International Relations, contained a provision that would 
permit the President to determine what, if any, regulatory 
regime would be used to control the export of communication 
satellites to NATO and non-NATO major allies. In effect, title 
XV would nullify the national security controls on satellite 
exports adopted in the Strom Thurmond National Defense 
Authorization Act for Fiscal Year 1999 (Public Law 105-261) and 
the National Defense Authorization Act for Fiscal Year 2000 
(Public Law 106-65). The satellite export provisions in both 
acts were adopted in response to revelations that the People's 
Republic of China (PRC) had exploited the export of U.S. 
commercial satellites to the PRC to improve the performance of 
its space launch vehicle and ballistic missile capabilities. 
Concerned that key aspects of our current military superiority 
depend on maintaining a technical advantage in space 
capabilities, the committee adopted an amendment that would 
strike title XV from H.R. 1950 in order to maintain existing 
national security controls on U.S. satellite exports.
    Second, the committee recommends limiting the applicability 
of a provision in H.R. 1950 that would have transferred the 
financial costs of Department of State airlift requirements to 
the Department of Defense (DOD). Under current law, the 
Department of Defense may provide airlift services to other 
departments and agencies at cost. Section 224 of H.R. 1950 
would have authorized the Secretary of Defense to provide such 
services to the Department of State below cost, charging the 
same rate that the United States Transportation Command 
(TRANSCOM) charges internal DOD customers. Because air 
transport is funded through a working capital fund under 
section 2208 of title 10, United States Code, which mandates 
full recovery of costs, section 224 would force other elements 
within DOD to pay higher rates in order to make up for any 
discounts provided to the Department of State. After 
consultation with the Committee on International Relations, the 
Committee on Armed Services adopted an amendment to section 224 
so that the Department of State could only receive discounted 
airlift rates for the transport of armored motor vehicles. The 
committee understands that the Department of State would only 
seek such reduced rates in conjunction with the overseas travel 
of the Secretary of State himself. The amendment enables the 
Department of Defense to support limited Department of State 
needs, which cannot otherwise be met through routine Department 
of State procurement of commercial air transportation services. 
In doing so, the provision would ensure that limited military 
airlift resources remain available for military missions.
    Third, the committee recommends striking section 227 of 
H.R. 1950, which would establish a security capital cost 
sharing fund controlled by the Department of State but funded, 
in part, by other departments and agencies with an overseas 
presence. As reported by the Committee on International 
Relations, section 227 would authorize the Secretary of State 
to assess and collect mandatory fees from all federal 
departments based on their total overseas presence. The 
Secretary of State would then use those funds to accelerate the 
construction or modernization of roughly 150 embassies and 
address security limitations at overseas facilities.
    The provision raised several concerns. First, although the 
Department of State developed the concept as part of the 
President's ``freedom to manage'' initiative, the security 
capital cost sharing program fund has not been completely 
vetted, adopted, or endorsed in the interagency process or by 
the President. The committee understands that the Department of 
Defense has registerd concerns over the proposal with the 
Office of Management and Budget. Moreover, section 227 would 
not begin the cost sharing program until fiscal year 2005. 
Thus, it appears premature. Second, responsibility for security 
at its embassies is, ultimately, the responsibility of the 
Department of State, which is fully capable of seeking specific 
authority and funding from Congress for any construction or 
security improvements it deems necessary through the normal 
authorization and appropriations processes. Section 227 would 
negate the normal legislative process and, by arbitrarily 
moving funds from multiple departments to the Department of 
State, undermine Congressional responsibility for authorizing 
and appropriating funds for the activities of the federal 
government. Third, section 227 contained no ceiling on fees 
that the Secretary of State might impose on other government 
agencies and gave those agencies no authority over expenditure 
of funds appropriated to them but remitted to the Department of 
State. As a result, section 227 contained no incentive for the 
Department of State to exercise due diligence in management of 
the security capital cost sharing fund; it simply moved 
responsibility for financing Department of State activities 
into the budgets of other departments and agencies. At a time 
when the Department of Defense is assessing how to reduce 
spending on its own overseas facilities, the committee believes 
it is inappropriate for the defense budget to take 
responsibility for the financing of embassy construction. 
Finally, the provision does not offset fees based on the value 
of goods and services that other departments and agencies 
provide to the Department of State. Defense attaches, for 
example, routinely report the results of their discussions with 
foreign military services to ambassadors and country desk 
officers at the Department of State, improving their ability to 
perform diplomatic missions. Similarly, the Department of 
Defense provides secure courier services to the Department of 
State at no cost. For these reasons, the Committee on Armed 
Services recommends striking section 227. However, because 
committee members agreed with the importance of improving 
security at Department of State facilities, the committee 
adopted an amendment by Mr. Skelton directing the General 
Accounting Office to review the Department of State's cost-
sharing proposal and identify means by which the Department of 
State's needs might be met.
    Section 701 of H.R. 1950, as reported by the Committee on 
International Relations would repeal reporting requirements 
related to the U.S. military presence in Bosnia established by 
the 1998 Supplemental Appropriations and Rescissions Act and 
the Strom Thurmond National Defense Authorization Act for 
Fiscal Year 1999. Those laws required the Departments of State 
and Defense to report regularly to Congress on progress made in 
developing a sustainable peace process in Bosnia, giving 
Congress a means of continually gauging the need for U.S. 
military deployments in Bosnia and encouraging the Executive 
Branch to continue its diplomatic efforts to reduce the need 
for those deployments. In considering and passing H.R. 1588, 
the National Defense Authorization Act for Fiscal Year 2004, 
the committee recommended repealing 65 reports required by 
existing law. It did not recommend repealing the Bosnia 
benchmarks report. Therefore, Section 701 of H.R. 1950 would 
essentially reverse considered decisions by Congress to require 
those reports in the first place, and the position of the 
Committee on Armed Services and House of Representatives in 
deciding not to repeal them as part of the fiscal year 2004 
defense authorization bill. Therefore, after consultation with 
the Committee on International Relations, the Committee on 
Armed Services adopted an amendment that would strike section 
701 from the bill.

                          Legislative History

    H.R. 1950 was introduced on May 5, 2003 and was referred to 
the Committee on International Relations. The bill was reported 
(amended) May 16, 2003 by the Committee on International 
Relations (H. Rept. 108-105, Part I). The bill was also 
referred jointly and sequentially to the Committee on Armed 
Services, the Committee on Energy and Commerce, and the 
Committee on the Judiciary on May 16, 2003.
    On June 26, 2003, the Committee on Armed Services held a 
markup session to consider H.R. 1950 as amended by the 
Committee on International Relations. The committee adopted the 
amended bill with amendments and reported the same favorably by 
a voice vote.

                      Section-by-Section Analysis

    The following is a section-by-section analysis of those 
sections of H.R. 1950 amended by the Armed Services Committee.

Section 224.--Reimbursement rate for airlift services provided to the 
        Department of State

    Changes to this section would preserve the Defense 
Department's authority to charge the State Department below-
cost reimbursement rates in providing certain air 
transportation services to the Department of State. As amended, 
this section would not require the Secretary of Defense to 
provide services to the Department of State at below-cost 
reimbursement rates, but would limit the provision of such 
services to the State Department to those instances when 
transport of armored motor vehicles was required. The committee 
understands that the Department of State would only seek those 
lower rates in conjunction with travel by the Secretary of 
State himself.

Section 227.--Security capital cost sharing

    As proposed in H.R. 1950, this provision would establish a 
security capital cost sharing funds program under the control 
of the Secretary of State, but funded through mandatory fees 
assessed on other departments and agencies. The committee 
amendment would delete this section.

Section 701.--Reports on benchmarks for Bosnia

    As proposed in H.R. 1950, this section would repeal reports 
on progress in achieving a sustainable peace in Bosnia required 
by the Strom Thurmond National Defense Authorization Act for 
Fiscal Year 1999. The committee amendment would delete this 
section.

Section 1501.--Export controls on satellites and related items

    Section 1501 would let the President determine whether and 
how satellite exports to NATO or major non-NATO allies should 
be regulated, ``notwithstanding any other provision of law.'' 
The committee amendment would delete this section, thus 
retaining current law with respect to satellite export 
controls.

Section 1502.--Mandatory review by Department of State

    As contained in H.R. 1950, this section would establish a 
process for increased State Department scrutiny of satellite 
launches by the People's Republic of China for U.S. persons. 
The provision also contains Congressional reporting 
requirements. The committee amendment would delete this 
section.

Section 1503.--Export restrictions not affected

    This section would direct that nothing in Title XV shall be 
``construed'' to modify other provisions of law relating to 
restrictions of exports, including provisions contained in the 
Strom Thurmond National Defense Authorization Act for Fiscal 
Year 1999 and the National Defense Authorization Act for Fiscal 
Year 2000. The committee amendment would delete this section.

Section 1504.--Definitions

    This section would define those defense services that 
required increased State Department scrutiny if provided to the 
People's Republic of China (PRC) in conjunction with the PRC's 
launch of a satellite. The committee amendment would delete 
this section.

                           Committee Position

    On March 6, 2002, the Committee on Armed Services ordered 
H.R. 2581, as amended, reported to the House with a favorable 
recommendation by a vote of 44-6, a quorum being present.

                              Fiscal Data

    Pursuant to clause 3(d)(2)(A) of rule XIII of the Rules of 
the House of Representatives, the committee attempted to 
ascertain annual outlays resulting from the bill during fiscal 
year 2004 and the four following fiscal years. The results of 
such efforts are reflected in the cost estimate prepared by the 
Director of the Congressional Budget Office under section 402 
of the Congressional Budget Act of 1974, which is included in 
this report pursuant to clause 3(c)(3) of rule XIII of the 
Rules of the House.

                  Congressional Budget Office Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the cost estimate prepared by 
the Congressional Budget Office and submitted pursuant to 
section 402(a) of the Congressional Budget Act of 1974 is as 
follows:

                                                     June 30, 2003.
Hon. Duncan Hunter,
Chairman, Committee on Armed Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1950, the Foreign 
Relations Authorization Act, Fiscal Years 2004 and 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.

H.R. 1950--Foreign Relations Authorization Act, Fiscal Years 2004 and 
        2005

    CBO estimates that H.R. 1950 would authorize appropriations 
of $32.2 billion for the Department of State and related 
agencies, and for various security and economic assistance 
programs. Implementing the bill would result in additional 
discretionary spending of $30.5 billion over the 2004-2008 
period, assuming appropriation of the authorized amounts, CBO 
estimates. The bill also contains several provisions that would 
affect direct spending and revenues. CBO estimates that 
enacting those provisions would increase direct spending by $25 
million over the 2006-2008 period and have an insignificant 
effect on revenues.
    H.R. 1950 also would affect trade in defense articles and 
services. It would give the President authority to control 
transfers within the United States of defense articles and 
defense services to foreign persons. It would lower the 
standard for violation of arms-export regulations and increase 
certain fines for violations of export controls. In addition, 
the bill would call for stringent control and scrutiny of the 
export of missile technology and would authorize the President 
to sanction any foreign governmental entity that the President 
determines has facilitated violations of export controls of 
missile equipment or technology. CBO estimates the trade-
related provisions would not significantly affect federal 
spending.
    H.R. 1950 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 1950 is shown in Table 1. For this 
estimate, CBO assumes that the authorized amounts will be 
appropriated by the start of each fiscal year and that outlays 
will follow historical spending patterns for existing programs, 
except as otherwise described. The costs of this legislation 
fall within budget functions 050 (national defense), 150 
(international affairs), 300 (natural resources and 
environment), and 800 (general government).

  TABLE 1.--BUDGETARY IMPACT OF H.R. 1950, THE FOREIGN RELATIONS AUTHORIZATION ACT, FISCAL YEARS 2004 AND 2005
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2003      2004      2005      2006      2007      2008
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION

Spending Under Current Law for the State Department,
 Related Agencies, and Various Assistance Programs:
    Authorization Level 1,2........................    17,937       900         0         0         0         0
    Estimated Outlays...............................    17,650     7,067     3,117     1,773       995       520
Proposed Changes:
    Estimated Authorization Level...................         0    15,221    15,570       476       478       479
    Estimated Outlays...............................         0     9,991    13,644     3,945     1,737     1,231
Spending Under H.R. 1950 for the State Department,
 Related Agencies, and Various Assistance Programs:
    Estimated Authorization Level 1,2..............    17,937    16,121    15,570       476       478       479
    Estimated Outlays...............................    17,650    17,058    16,761     5,718     2,732     1,751

                                           CHANGES IN DIRECT SPENDING

    Estimated Budget Authority......................         0         *         *         5        10        10
    Estimated Outlays...............................         0         *         *         5        10       10
----------------------------------------------------------------------------------------------------------------
NOTE: * = less than $500,000.

\1\ The 2003 level is the amount appropriated for that year and includes appropriations provided in Public Law
  108-11, the Emergency Wartime Supplemental Appropriations Act, 2003.
\2\ Public Law 106-113, an act making consolidated appropriations for the fiscal year ending September 30, 2000,
  and for other purposes, authorized appropriations of $900 million for Embassy Security, Construction, and
  Maintenance in 2004.

Basis of estimate

    H.R. 1950 would provide a comprehensive two-year 
authorization of appropriations for the State Department and 
related agencies, and it would authorize appropriations for 
various security and economic assistance programs. In addition, 
the bill contains several provisions that would affect direct 
spending and revenues.
            Spending subject to appropriation
    CBO estimates that Divisions A and B of H.R. 1950 would 
authorize appropriations of about $32 billion for the 
Department of State and related agencies and for various 
security and economic assistance programs. CBO estimates that 
implementing the bill would result in additional discretionary 
spending of $30.5 billion over the 2004-2008 period, assuming 
appropriation of the authorized amounts.
    Division A--Department of State Authorization Act, Fiscal 
Years 2004 and 2005. CBO estimates that Division A would 
authorize appropriations of about $9.3 billion in 2004, $10.7 
billion in 2005, and $0.1 billion a year over the 2006-2008 
period for the Department of State and related agencies (see 
Table 2). It would specifically authorize appropriations of 
$9.3 billion in 2004, $10.1 billion in 2005, and some small 
amounts over the 2006-2008 period. In addition to the costs 
covered by the specified authorizations, the division contains 
provisions primarily dealing with international peacekeeping, 
public diplomacy, and personnel, that CBO estimates would 
require additional appropriations of almost $0.9 billion over 
the 2004-2008 period to implement. CBO estimates that 
implementing this division would cost almost $19.5 billion over 
the 2004-2008 period, assuming appropriation of the specified 
and estimated amounts.

                TABLE 2.--ESTIMATED SPENDING SUBJECT TO APPROPRIATION FOR DIVISION A OF H.R. 1950
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2003      2004      2005      2006      2007      2008
----------------------------------------------------------------------------------------------------------------
Spending Under Current Law for the State Department
 and Related Agencies:
    Authorization Level 1,2........................     9,257       900         0         0         0         0
    Estimated Outlays...............................     8,998     3,338     1,649     1,065       657       347
Proposed Changes:
    Estimated Authorization Level...................         0     9,340    10,694       106       108       109
    Estimated Outlays...............................         0     6,422     8,534     2,587     1,179       762
Spending Under Division A of H.R. 1950 for the State
 Department and Related Agencies:
    Estimated Authorization Level 1,2..............     9,257    10,240    10,694       106       108       109
    Estimated Outlays...............................     8,998     9,760    10,183     3,652     1,836    1,109
----------------------------------------------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year and includes appropriations provided in Public Law
  108-11, the Emergency Wartime Supplemental Appropriations Act, 2003.
\2\ Public Law 106-113, an act making consolidated appropriations for the fiscal year ending September 30, 2000,
  and for other purposes, authorized appropriations of $900 million for Embassy Security, Construction, and
  Maintenance in 2004.

    International Peacekeeping. Section 113 would authorize the 
appropriation of $550 million in 2004 and such sums as may be 
necessary in 2005 for contributions to international 
peacekeeping activities. Based on information from the 
Department of State and adjusting for inflation, CBO estimates 
that the department would require $560 million in 2005.
    Middle East Broadcasting Network. Section 501 would 
authorize annual grants for a Mideast Radio and Television 
Network to provide radio and television broadcasts to the 
Middle East region. Under current law, Radio Sawa provides 
radio programming to the Middle East at an annual cost of about 
$10 million. The Broadcasting Board of Governors (BBG) plans to 
add a satellite television network that would provide news, 
entertainment, and information programs to complement this 
radio programming. Public Law 108-11, the Emergency Wartime 
Supplemental Appropriations Act, 2003, provided $26 million in 
2003 for start-up costs of the network. The bill provides an 
authorization of appropriations of $47 million in each of 2004 
and 2005 only. Based on information from the BBG, CBO estimates 
that operating costs for this television network would be $37 
million a year over the 2004-2008 period, and the costs for 
Radio Sawa would continue at about $10 million a year.
    Exchange Programs. Section 251 would establish new 
educational and cultural exchange programs and expand existing 
ones in countries with predominantly Muslim populations. 
Section 112 would authorize the appropriation of $35 million a 
year for this purpose in 2004 and 2005. CBO estimates that 
continuing these programs would cost an additional $112 million 
over the 2006-2008 period.
    Promotion of Free Media. Section 607 would establish an 
International Free Media Fund within the department to promote 
the development of free and independent media all over the 
world. The bill would authorize appropriations of $15 million 
in 2004 for this purpose. Section 608 would require the BBG to 
support free media, especially in countries where it is 
reducing or discontinuing international broadcasting, and would 
authorize appropriations of $2.5 million each year in 2004 and 
2005 for this purpose.
    Hardship and Danger Pay Allowances. Section 307 would 
increase the cap on hardship and danger pay allowances from 25 
percent to 35 percent of basic pay for State Department 
employees serving overseas. Based on information from the 
Department of State, CBO estimates implementing this section 
would cost $8 million to $9 million annually over the 2004-2008 
period.
    Office of Global Internet Freedom. Section 524 would 
authorize the BBG to establish an Office of Global Internet 
Freedom to prevent foreign governments from censoring or 
jamming the Internet and persecuting their citizens who use the 
Internet. The bill would specifically authorize appropriations 
of $8 million a year in 2004 and 2005 to establish and operate 
this office. CBO estimates implementing this section would cost 
$8 million to $9 million annually over the 2004-2008 period.
    Indefinite Authorizations for Currency Fluctuations. 
Section 113(c) would authorize the appropriation of such sums 
as may be necessary in 2004 to compensate for adverse 
fluctuations in exchange rates that might affect contributions 
to international organizations. Any funds appropriated for this 
purpose would be obligated and expended subject to 
certification by the Office of Management and Budget. Currency 
fluctuations are extremely difficult to estimate in advance, 
and they could result in spending either higher or lower than 
the amounts specifically authorized in the bill for 
contributions to international organizations and programs. 
Therefore, this estimate includes no costs associated with 
currency fluctuations.
    Colin Powell Center for American Diplomacy. Section 230 
would authorize the Secretary of State to establish the Colin 
Powell Center for American Diplomacy at the Harry S. Truman 
Building in Washington, DC. According to the Department of 
State, it would establish the center through a partnership with 
the nonprofit Foreign Affairs Museum Council (FAMC). The 
department would provide the space, staff, and security for the 
center, while FAMC would provide funding from private sources. 
A feasibility study is currently underway, and the department 
was unable to provide details that would allow CBO to estimate 
the operating costs of the center.
    Reporting Requirements. Division A includes several 
provisions that would expand or introduce new reporting 
requirements. Combined, these provisions would raise spending 
subject to appropriation by about $2 million annually, but each 
provision would likely cost less than $500,000 a year.
    Miscellaneous Provisions. CBO estimates that the following 
sections of Division A would have an insignificant impact on 
spending subject to appropriation:
     Section 206 would authorize a demonstration 
program in library sciences to help foreign governments improve 
literacy and public education in their countries by 
establishing or upgrading public library systems.
     Section 224 would reduce by about half the 
reimbursement rate paid by the Department of State to the 
Department of Defense (DoD) for transporting armored vehicles 
by air. Over the 2000-2002 period, the department reimbursed 
DoD an average of $2 million a year. Based on this information, 
CBO estimates that implementing this section would save the 
department $1 million a year, which would be offset by 
additional costs to DoD of the same amount.
     Section 301 would authorize an exchange program 
for the assignment of civil and foreign service employees to 
fellowship positions in foreign governments, and the reciprocal 
assignment of foreign government employees as fellows in the 
department.
     Section 302 would clarify the department's 
authority to settle claims of back pay and other administrative 
claims and grievances.
     Section 310 would give the department greater 
flexibility in awarding meritorious step increases in salaries.
     Section 504 would authorize the BBG to conduct a 
pilot program to promote travel and tourism by broadcasting 
information on regions of the United States that rely on 
tourism.
     Subtitle C of title V would transfer all functions 
and assets of the BBG and the International Broadcasting Bureau 
to a new independent agency named the International 
Broadcasting Agency.
    Division B--Defense Trade and Security Assistance Reform 
Act of 2003. Division B would tighten regulation of trade in 
defense and dual-use articles and technologies and authorize 
funding for various security assistance programs (see Table 3). 
Unlike Division A, which provides a comprehensive two-year 
authorization of appropriations of foreign relations 
authorizations, this division would authorize funding for 
various programs, projects, and activities through specific and 
indefinite authorizations of appropriation or through earmarks 
of funds not authorized elsewhere in the bill. For this 
estimate, CBO treats these earmarks as authorizations of 
appropriations since there are no amounts authorized for the 
programs in general. CBO estimates that implementing Division B 
would cost $3.6 billion in 2004 and $11.1 billion over the 
2004-2008 period, assuming the appropriation of the necessary 
amounts.

                TABLE 3.--ESTIMATED SPENDING SUBJECT TO APPROPRIATION FOR DIVISION B OF H.R. 1950
----------------------------------------------------------------------------------------------------------------
                                                               By fiscal year, in millions of dollars--
                                                     -----------------------------------------------------------
                                                        2003      2004      2005      2006      2007      2008
----------------------------------------------------------------------------------------------------------------
Spending Under Current Law for Various Security
 Assistance Programs:
    Budget Authority 1..............................     8,680         0         0         0         0         0
    Estimated Outlays...............................     8,652     3,729     1,468       708       339       173
Proposed Changes:
    Estimated Authorization Level...................         0     5,881     4,876       370       370       370
    Estimated Outlays...............................         0     3,569     5,110     1,359       558       470
Spending Under Division B of H.R. 1950 for Various
 Security Assistance Programs
    Estimated Authorization Level 1.................     8,680     5,881     4,876       370       370       370
    Estimated Outlays...............................     8,652     7,298     6,578     2,067       897      643
----------------------------------------------------------------------------------------------------------------
1 The 2003 level is the amount appropriated for that year and includes appropriations provided in Public Law 108-
  11, the Emergency Wartime Supplemental Appropriations Act, 2003.

    Security Assistance and Related Provisions. Title XIII 
would authorize the appropriation of $4.4 billion for foreign 
military financing and $91.7 million for international military 
education and training in 2004.
    Sections 1321 and 1322 would authorize foreign military 
financing and Economic Support Fund appropriations for Israel 
and Egypt through 2005. The sections would specify formulas 
that would continue through 2005 the gradual reduction of 
economic assistance to those two countries and the increase in 
foreign military financing for Israel begun in 1999. For 
Israel, section 1321 would authorize foreign military financing 
of $2.160 billion in 2004 and $2.220 billion in 2005, and 
Economic Support Fund appropriations of $480 million in 2004 
and $360 million in 2005. For Egypt, section 1322 would 
authorize foreign military financing for Egypt of $1.3 billion 
in both 2004 and 2005 and Economic Support Fund appropriations 
of $575 million in 2004 and $535 million in 2005.
    Section 1337 would authorize the appropriation of $60 
million a year for the nonproliferation fund in 2004 and 2005 
and $25 million a year in 2004 and 2005 to secure highly 
enriched uranium in the states of the former Soviet Union.
    Missile Threat Reduction Assistance. Title XIV would 
authorize the appropriation of $250 million for assistance to 
countries that agree to destroy their ballistic missiles and 
their facilities for producing those missiles. Under the bill, 
the President would determine the terms and conditions for 
providing the assistance which could be economic or military in 
character. For this estimate, CBO assumes the funds would be 
appropriated at the rate of $50 million a year over the 2004-
2008 period, consistent with report language accompanying the 
bill, and the rate of spending would be comparable to that for 
the Former Soviet Union Threat Reduction.
    Belarus. Title XV would authorize the appropriation of such 
sums as may be necessary in 2004 and 2005 for assistance and 
radio broadcasting to promote the development of democracy and 
civil society in Belarus. The assistance could be used to 
develop democratic parties, nongovernmental organizations, an 
independent broadcasting and print media, or to observe 
elections. Based on information from the State Department, CBO 
estimates that funding for such assistance in Belarus would 
continue at the 2003 level of $10 million each year. Based on 
information from the BBG, CBO further estimates that funding 
for international broadcasting to Belarus would double to $3 
million a year, for an increase of $1.5 million each year over 
the amount authorized in Division A of the bill.
    Israeli-Palestinian Peace Enhancement Act. Title XVI would 
express the sense of the Congress with respect to U.S. 
recognition of a Palestinian state and express a willingness to 
provide substantial economic and humanitarian assistance to 
such a state. It would authorize the appropriation of such sums 
as may be necessary to promote the economic and civil 
development of a Palestinian state. However, the President must 
certify a binding peace agreement between Israel and the 
Palestinians has been achieved under a set of conditions before 
any assistance may be provided to a Palestinian state. The 
President may waive the certification and the restrictions 
would not apply to humanitarian or development assistance 
provided to nongovernmental organizations for the benefit of 
the Palestinian people. CBO estimates that implementing title 
XVI would cost $0.8 billion over the 2004-2008 period, assuming 
the appropriation of the necessary amounts. The estimate 
assumes that funding in 2004 would continue at the 2003 rate 
and would increase to over $0.3 billion a year over the 2006-
2008 period.
    It is difficult to estimate the cost of implementing title 
XVI because of the uncertainty over when or whether Israel and 
the Palestinians may reach an agreement recognizing a two-state 
solution to peace in the Middle East region. Under the roadmap 
to a permanent two-state solution, as outlined by the State 
Department on April 30, 2003, the goal would be a permanent 
status agreement in 2005. CBO estimates that substantially 
increased funding for the Palestinian people could begin by 
that year.
    Neither the bill nor the Committee report accompanying the 
bill provide much guidance for interpreting the intent of the 
phrase ``substantial economic and humanitarian assistance.'' 
For the purpose of the estimate, CBO assumes that funding in 
2004 for West Bank/Gaza in the Economic Support Fund would 
continue at the $75 million funding level appropriated for 2003 
and triple to $225 million in 2005. For the 2006-2008 period, 
we assume that the funding for a Palestinian state would be 
increased by the $95 million that the United States has in the 
past contributed for assistance to the Palestinian people 
through the United Nations Relief and Works Agency for 
Palestinian Refugees. That increase would raise funding to $320 
million a year. In the past, breakthrough agreements such as 
the Camp David accords and peace with Jordan have been followed 
by bilateral assistance appropriations of billions or many 
hundreds of millions of dollars. Funding after a true peace 
agreement between Israel and the Palestinians could be much 
higher than CBO estimates. Without an agreement, funding would 
be much lower.
    Miscellaneous Provisions. Title XVII contains a number of 
provisions that would authorize appropriations for various 
economic and security assistance programs. They include:
     Section 1703 would authorize $2 million a year in 
2004 and 2005 for a cooperative development program with 
Israel.
     Section 1706 would authorize $25 million a year in 
2004 and 2005 for economic assistance for East Timor.
     Section 1707 would authorize $15 million a year in 
2004 and 2005 for grants to individuals and groups supporting 
democracy building efforts in Cuba.
     Section 1709 would authorize $18.6 million a year 
in 2004 and 2005 for a Congo Basin forest partnership program.
     Section 1710 would authorize $10 million for 
programs to provide equipment and training to law enforcement 
officials, prosecutors, and judges in foreign countries in 
interpreting intellectual property laws and in complying with 
obligations under various international copyright and 
intellectual property treaties and agreements.
     Section 1711 would authorize assistance to law 
enforcement agencies in India and Ireland in 2004 and 2005. 
Based on information from the State Department, CBO estimates 
that implementing the provision would cost $3 million each 
year, assuming the appropriation of the necessary funds.
     Section 1712 would authorize $24 million in 2004 
and such sums as may be necessary in 2005 for the human rights 
and democracy fund administered by the Department of State. 
Based on information from the Department of State, CBO 
estimates funding in 2005 would continue at the level specified 
for 2004.
     Section 1715 would authorize the appropriation of 
$1 million in 2004 and such sums as may be necessary in 2005 
for a grant to the African Society for programs in Africa. CBO 
estimates funding in 2005 would continue at the level specified 
for 2004.

Direct spending and revenues

    CBO estimates that several provisions in the bill would 
increase direct spending or have an insignificant effect on 
receipts.
    Transfer of Defense Articles in the U.S. War Reserve 
Stockpile for Allies (USWRSA). Section 1332 would extend for 
five years the President's authority to transfer to Israel 
obsolete or surplus defense articles in the USWRSA in Israel in 
return for concessions to be negotiated by the Secretary of 
Defense. The concessions may include cash, services, waiver of 
charges otherwise payable by the United States, or other items 
of value. Since articles may be transferred by sale under 
current law, CBO estimates that the authority provided by the 
section could be used to negotiate noncash concessions thereby 
lowering offsetting receipts to the DoD.
    According to DoD, much of the materiel in the USWRSA in 
Israel was used in the recent Iraq conflict and the department 
is conducting a new inventory to determine what stocks remain. 
DoD also indicates that the existing authority has not been 
used for Israel in the past, though similar authority has been 
used for the stockpile in Korea. Given the current status of 
the USWRSA in Israel, CBO estimates the authority would not be 
used in 2004 and probably not in 2005. If the authority 
provided in section 1332 were used to the same extent as that 
for the stockpile in Korea, CBO estimates forgone receipts 
would total between $5 million and $10 million a year over the 
2006-2008 period.
    Colin Powell Center for American Diplomacy. Section 230 
would authorize the Secretary to provide museum visitor and 
educational outreach services at the center and to sell, trade, 
or transfer documents and articles that are displayed at the 
center. Any proceeds generated from these services or sales 
would be retained and spent by the center. CBO estimates that 
this provision would have an insignificant net effect on direct 
spending.
    Arms Export Controls. Provisions in titles XI and XII would 
revise licensing requirements for the export of certain defense 
articles and technology and would lower the standard and 
increase fines for violations of export controls. CBO estimates 
implementing the provisions would have an insignificant effect 
on receipts and direct spending.
    Intergovernmental and private-sector impact: H.R. 1950 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimates
    On April 24, 2003, CBO transmitted a cost estimate for S. 
925, the Foreign Relations Authorization Act, Fiscal Year 2004, 
as ordered reported by the Senate Committee on Foreign 
Relations on April 9, 2003. Several sections in Division A of 
H.R. 1950 are similar or identical to sections of S. 925 and 
would have similar costs. (The Senate bill would authorize 
appropriations only for 2004, whereas H.R. 1950 would authorize 
appropriations for 2004 and 2005.)
    On June 9, 2003, CBO transmitted an estimate for S. 1161, 
the Foreign Assistance Authorization Act, Fiscal Year 2004, as 
reported by the Senate Committee on Foreign Relations on May 
29, 2003. Several sections in Division B of H.R. 1950 are 
similar or identical to sections of S. 1161 and would have 
similar costs; however, the Senate bill would provide a more 
comprehensive authorization of appropriations for economic and 
security assistance programs in 2004.
    On June 11, 2003, CBO transmitted a cost estimate for H.R. 
1950, the Foreign Relations Authorization Act, Fiscal Years 
2004 and 2005, as reported by the House Committee on 
International Relations on May 16, 2003. Both versions of the 
bill have similar or identical sections and would have similar 
costs; however, H.R. 1950 as ordered reported by the House 
Committee on Armed Services does not include provisions 
affecting cost-sharing for the construction of new diplomatic 
facilities and export controls on satellites.
    Estimate Prepared by:
         Federal Costs: State Department: Sunita D'Monte, 
        Security Assistance and Foreign Aid: Joseph C. 
        Whitehill.
         Impact on state, local, and tribal governments: 
        Victoria Heid Hall.
         Impact on the Private Sector: Patrice L. Gordon.
    Estimate approved by: Paul R. Cullinan, Chief for Human 
Resources Cost Estimates Unit of the Budget Analysis Division.

                        Committee Cost Estimate

    Pursuant to clause 3(d) of rule XIII of the Rules of the 
House of Representatives, the committee generally concurs with 
the estimate contained in the report of the Congressional 
Budget Office.

                           Oversight Findings

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives, this legislation results from 
hearings conducted by the committee pursuant to clause 2(b)(1) 
of rule X.
    With respect to clause 3(c)(2) of rule XIII of the Rules of 
the House of Representatives and section 308(a)(1) of the 
Congressional Budget Act of 1974, this legislation does not 
include any new spending or credit authority, nor does it 
provide for any increase or decrease in tax revenues or 
expenditures. The fiscal features of this legislation are 
addressed in the estimate prepared by the Director of the 
Congressional Budget Office under section 402 of the 
Congressional Budget Act of 1974.
    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the committee amendments do not 
authorize specific program funding. However, the committee 
amended section 224 relating to the reimbursement rate for 
airlift services provided to the Department of State to ensure 
the fiscal integrity of the working capital fund established 
pursuant to 10 U.S.C. 2208.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, section 8 of the United States 
Constitution.

                     Statement of Federal Mandates

    Pursuant to section 423 of Public Law 104-4, this 
legislation contains no federal mandates with respect to state, 
local, and tribal governments, nor with respect to the private 
sector. Similarly, the bill provides no unfunded federal 
intergovernmental mandates.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported by the Committee on International 
Relations, are shown in Report 108-105 part 2, filed on June 
11, 2003.

  The Committee on the Armed Services adopted amendments (shown 
at the beginning of this report) to the bill as reported by the 
Committee on International Relations. Changes in provisions of 
existing law that would result from those amendments and differ 
from the changes that would result from the bill as reported by 
the Committee on International Relations are shown as follows 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

TITLE 10, UNITED STATES CODE

           *       *       *       *       *       *       *

Subtitle A--General Military Law

           *       *       *       *       *       *       *

PART IV--SERVICE, SUPPLY, AND PROCUREMENT

           *       *       *       *       *       *       *

                      CHAPTER 157--TRANSPORTATION

Sec.
2631.  Supplies: preference to United States vessels.
     * * * * * * *
[2642.  Reimbursement rate for airlift services provided to Central 
          Intelligence Agency.]
2642.  Airlift services provided to Central Intelligence Agency and 
          Department of State: reimbursement rate.

           *       *       *       *       *       *       *

[Sec. 2642. Reimbursement rate for airlift services provided to Central 
                    Intelligence Agency]

Sec. 2642. Airlift services provided to Central Intelligence Agency and 
                    Department of State: reimbursement rate

  (a) Authority.--The Secretary of Defense may authorize the 
use of the Department of Defense reimbursement rate for 
military airlift services [provided by a component of the 
Department of Defense to the] provided by a component of the 
Department of Defense as follows:
          (1) To the Central Intelligence Agency, if the 
        Secretary of Defense determines that those military 
        airlift services are provided for activities related to 
        national security objectives.
          (2) To the Department of State for the transportation 
        of armored motor vehicles to a foreign country to meet 
        unfulfilled requirements of the Department of State for 
        armored motor vehicles in that foreign country.

           *       *       *       *       *       *       *

             ADDITIONAL VIEWS OF REPRESENTATIVE VIC SNYDER

    H.R. 1950, as referred to the Committee on Armed Services, 
contained Section 227 that authorized a program of capital 
security cost sharing for security and construction of new 
embassies. Under the program, agencies and departments of the 
government who station personnel overseas in U.S. embassies 
would have paid the Department of State an amount annually 
based on the number of personnel stationed in the various 
diplomatic facilities and the type of office space they 
occupied. These funds would then have been applied to 
construction of new embassies in future years.
    The Manager's amendment to the bill struck the capital 
security cost-sharing program authorization provision along 
with several others. I offered a second-degree amendment to the 
manager's amendment to put the section back in, but with 
additional safeguards to ensure transparency, fairness, and 
accountability. My amendment was unfortunately rejected by a 
vote of 25-21, and the manager's amendment was adopted by voice 
vote.
    It is important to note, first of all, that the capital 
security cost-sharing program did not originate as a whim of 
the State Department to lay its bills off on others departments 
of the government. The 1999 Overseas Presence Advisory Panel 
report called for such a measure as a management tool to 
encourage agencies to examine their presence in diplomatic 
facilities and align those with their actual needs. Similarly, 
the President's Management Agenda 2002 called for a mechanism 
to link agency policies, integrate ``rightsizing'' into 
workforce plans, and link the overseas assignment process with 
construction planning. The cost of an embassy is directly 
linked to its size and security requirements and these, in 
turn, are directly linked to the size of the workforce 
stationed there. It is in our interests, as stewards of the 
taxpayer dollars, to encourage agencies to actually link their 
requirements with their actual overseas presence and, 
hopefully, reduce the cost of replacing our many inadequate and 
unsafe embassies.
    A second advantage of the program would have been to 
accelerate the ongoing program to replace the many woefully 
inadequate and insecure U.S. diplomatic facilities around the 
world. Over half of all U.S. diplomatic facilities are 
considered to have inadequate security. And scarcely a month 
goes by without another report of an attack, attempted attack, 
or planned attack that was foiled on one of our embassies or 
consulates. In the past, a number of these attacks have 
succeeded and Americans have been killed. These attacks will 
not stop. There will be future attacks, some of them will 
succeed, and Americans will be killed. The chances of this 
happening are a lot higher if we continue on the current path 
versus adopting the capital security cost-sharing program and 
accelerating the replacement of insecure facilities. I am 
afraid that the Committee's action, if allowed to become law, 
will continue us on the current path of slowly replacing these 
facilities, over 26 years instead of 14 under the capital 
security cost sharing plan, and risking the lives of the 
dedicated Americans who serve our government overseas.
                                                        Vic Snyder.

          DISSENTING VIEWS OF REPRESENTATIVE ELLEN O. TAUSCHER

    I am deeply concerned that while the Armed Services 
Committee usually tries to craft legislation that strengthens 
national security and sustains American technological 
leadership, the committee's decision to strike language 
relating to the export of satellites in the State Department 
Authorization bill was both misguided and harmful to U.S. 
interests.
    The short debate regarding satellite export controls 
preceding the vote focused extensively on the 1996 incident in 
China involving Loral and Hughes but had little to do with the 
substance of Title XV, the section of the bill before the 
committee that dealt with NATO and major non-NATO allies of the 
United States. The debate also ignored the larger opportunity 
the committee had before it to take a modest step toward 
reforming the United States' satellite export control regime 
which remains dangerously out of sync with developments in 
satellite technology.
    While the transfer of licensing authority to the State 
Department in 1998 is not the only reason for the dismal state 
of the commercial satellite market today, the slow review 
process of licenses at State is undermining an industry we used 
to dominate at a time when the nation's economy is in a major 
slump.
    Indeed, the market share of the U.S. industry for 
internationally competed orders fell from a historic seventy-
five percent in the early 1990s to less than fifty percent in 
1999 and 2000. So far, 2003 is a disastrous year for industry 
as well.
    Commercial satellites provide cell phone and internet 
access as well as vital information to businesses and help 
protect Americans at home and abroad. They also offer video, 
data and voice service to millions of users around the world.
    They should not be subjected to the same convoluted, 
archaic and paper regulatory processes as weapons.
    The language in Title 15 was tightly focused on providing 
the President with urgently needed authority to determine the 
appropriate process for licensing commercial communication 
satellites to our NATO allies.
    It maintained all the national security safeguards put in 
place in 1998 including: tight restrictions on satellite 
activities with China; a ban on launches in China; DoD cradle-
to-grave monitoring of interactions with any foreign nationals; 
Tiananmen sanctions; launch vehicles licensing; and technology 
control plans.
    Finally this Presidential authority did not apply to 
military, scientific, weather and remote sensing satellites 
that all remain under the jurisdiction of the State Department.
    Our national security is closely linked to our 
technological leadership which guarantees the military 
advantage we have today.
    But our national security is being undermined by a sick 
industry that is falling behind its European competition in the 
world market.
    This decline will hurt the men and women that are working 
to produce our defense and intelligence satellite systems. With 
extensive national security safeguards in place, the President 
should have the authority to decide how to regulate commercial 
satellites.
    This small reform would remove some of the unpredictability 
and time lag that is involved in the State Department's review, 
which irresponsibly regards all satellite technology as 
sensitive and controlled, irrespective of its use, its intended 
recipient, or its availability from non-U.S. sources.
    The President has the authority to determine the licensing 
regime for our most lethal military weapons--that authority 
should be extended to commercial satellites.
    By voting to strike Title XV of the State Department bill, 
this committee is abrogating its oversight of international 
developments that are having a significant impact on the United 
States' security and economy and has lost the opportunity to 
make itself part of a thoughtful solution to this serious 
problem.

                                                 Ellen O. Tauscher.
                                
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