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66–294PDF 2011

EXPORT CONTROLS, ARMS SALES, AND REFORM:

BALANCING U.S. INTERESTS, PART 1

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MAY 12, 2011

Serial No. 112–37

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

ILEANA ROS-LEHTINEN, Florida, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

DANA ROHRABACHER, California 

DONALD A. MANZULLO, Illinois 

EDWARD R. ROYCE, California 

STEVE CHABOT, Ohio 

RON PAUL, Texas 

MIKE PENCE, Indiana 

JOE WILSON, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

GUS M. BILIRAKIS, Florida 

JEAN SCHMIDT, Ohio 

BILL JOHNSON, Ohio 

DAVID RIVERA, Florida 

MIKE KELLY, Pennsylvania 

TIM GRIFFIN, Arkansas 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

ANN MARIE BUERKLE, New York 

RENEE ELLMERS, North Carolina 

VACANT 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

BRAD SHERMAN, California 

ELIOT L. ENGEL, New York 

GREGORY W. MEEKS, New York 

RUSS CARNAHAN, Missouri 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

DENNIS CARDOZA, California 

BEN CHANDLER, Kentucky 

BRIAN HIGGINS, New York 

ALLYSON SCHWARTZ, Pennsylvania 

CHRISTOPHER S. MURPHY, Connecticut 

FREDERICA WILSON, Florida 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

YLEEM D.S. POBLETE, Staff Director 

RICHARD J. KESSLER, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable Ellen Tauscher, Under Secretary, Arms Control and International Security, U.S. Department of State ..................................................... 10

The Honorable Eric L. Hirschhorn, Under Secretary, Bureau of Industry 

and Security, U.S. Department of Commerce .................................................... 18

The Honorable James N. Miller, Jr., Principal Deputy Under Secretary of 

Defense for Policy, U.S. Department of Defense ............................................... 29

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ileana Ros-Lehtinen, a Representative in Congress from the 

State of Florida, and chairman, Committee on Foreign Affairs: Prepared 

statement .............................................................................................................. 4

The Honorable Ellen Tauscher: Prepared statement ........................................... 12

The Honorable Eric L. Hirschhorn: Prepared statement ..................................... 20

The Honorable James N. Miller, Jr.: Prepared statement ................................... 31

APPENDIX 

Hearing notice .......................................................................................................... 60

Hearing minutes ...................................................................................................... 61

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 63

The Honorable Eric L. Hirschhorn: Material submitted for the record .............. 64

Questions submitted for the record to all witnesses by the Honorable Ileana 

Ros-Lehtinen ......................................................................................................... 83

Written responses received from the Honorable Eric L. Hirschhorn to questions submitted for the record by the Honorable Ileana Ros-Lehtinen and 

the Honorable Jeff Duncan, a Representative in Congress from the State 

of South Carolina ................................................................................................. 86

Questions submitted for the record to the Honorable Ellen Tauscher by the 

Honorable Jeff Duncan ........................................................................................ 100

Questions submitted for the record to the Honorable James N. Miller, Jr., 

by the Honorable Jeff Duncan ............................................................................ 101

(1)

EXPORT CONTROLS, ARMS SALES, AND 

REFORM: BALANCING U.S. INTERESTS, PART 1

THURSDAY, MAY 12, 2011

HOUSE OF REPRESENTATIVES, COMMITTEE ON FOREIGN AFFAIRS, Washington, DC. 

The committee met, pursuant to notice, at 10 o’clock a.m., in 

room 2172 Rayburn House Office Building, Hon. Ileana RosLehtinen (chairman of the committee) presiding. 

Chairman ROS-LEHTINEN. The committee will come to order. 

After recognizing myself and the ranking member, my good 

friend Mr. Berman of California after 7 minutes each for our opening statements, I recognize the chairman and the ranking member 

of our Terrorism, Nonproliferation, and Trade Subcommittee for 3 

minutes each for their statements. We will then hear from our witnesses. I would ask that you summarize your prepared statements 

in 5 minutes each before we move to the question and answer period with members under the 5 minutes rule as well. 

Without objection, the witnesses’ prepared statements will be 

made a part of the record. Members may have 5 legislative days 

to insert statements and questions for the record subject to the 

length limitations in the rules. 

The chair now recognizes herself for 7 minutes. 

This morning the committee is holding the first in a series of 

hearings examining United States strategic export controls, what I 

would prefer to call trade security, and sweeping changes proposed 

by the Executive Branch. 

As members are aware, the main goal of export controls is to 

keep certain states or non-state actors from developing or acquiring 

military capabilities that could threaten important U.S. security interests. United States policy, with respect to the export of sensitive 

technology, has long been to seek a balance between the U.S. economic interest in promoting exports, and our national security interest in maintaining a military advantage over potential adversaries, and denying the spread of technologies that could be used 

in developing weapons of mass destruction. 

Clearly, the U.S. has a compelling interest in protecting its critical technologies from theft, espionage, reverse engineering, illegal 

export, and diversion to unintended recipients. 

In this regard, we understand from press reports that a U.S. helicopter with certain advanced radar-evading designs crashed during the otherwise flawless raid to capture or kill Osama bin Laden 

in Pakistan. While the U.S. team took steps to destroy the helicopter to protect the know-how relating to the design, engineering, 

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and manufacture of this sensitive defense item, there are reports 

that sufficient parts of the helicopter remained intact to afford foreign entities significant insight into our technology. Pakistani officials must offer full cooperation to the U.S. to safeguard and ensure the immediate return of any parts, and prevent the sharing 

of any information about them with third parties. 

This example clearly illustrates the need and value of strategic 

export controls. Over the years, numerous Congressional hearings 

and GAO reports have called attention to the need to reexamine 

our export control system. Responding to these concerns, the President announced in August 2009 that he had directed the National 

Security Council to carry out such a study. Last year the administration proposed a complete reorganization of the current system, 

proposing a single export control list, a single licensing agency, a 

single primary enforcement coordination agency, and a single information technology system. 

Ultimately, the new legislative authorities would be required to 

implement the administration’s plan, a plan substantially at variance with the current statutory scheme for controlling defense articles under the Arms Export Control Act and dual-use items under 

the Export Administration Act, and requiring committee review. To 

date, a compelling case has not been made for the wholesale restructuring of our current system, especially one that would include 

the creation of a costly and perhaps unaccountable new Federal bureaucracy. 

Although there are several aspects of the ongoing reforms that 

many of us do support, I want to focus on challenging issues associated with proposed reforms of the current munitions and dual-use 

control lists. We are particularly concerned that the pace and scope 

of the ongoing ‘‘list review,’’ which simultaneously includes: Establishing a new ‘‘tiering’’ structure for controlled exports; a comprehensive review of the Munitions List; and a complete re-write 

of that list’s 21 categories of defense items, is straining the system 

and its personnel to its breaking point. 

The Executive Branch interagency review is only one part of the 

process. As required by section 38(f) of the Arms Export Control 

Act, any item which the Executive Branch proposes to remove from 

the Munitions List must first be reviewed by the Committees on 

Foreign Affairs and Foreign Relations of the House and Senate, respectively. 

Although the committee intends to work with the administration 

to expeditiously review hundreds or thousands of 38(f) cases in the 

months ahead, we will and must vigorously perform our due diligence on these important security matters in accordance with existing protocols. The committee cannot fulfill its oversight responsibilities in this regard, however, until it understands fully how such 

articles would be regulated under Commerce jurisdiction, as well as 

assess enforceability of the new controls. 

However, largely due to the complexity of the ongoing reforms, 

clarity with respect to future licensing policy has not been forthcoming. The administration should reconsider this time-consuming 

exercise and focus on common sense reforms upon which we can all 

agree. 

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One example may be the treatment of generic parts and components treatment; rivets, wire, bolts and the like currently controlled 

on the Munitions List because they were designed for military use 

but which have little in the way of inherent military utility. Toward this end, I intend to introduce legislation to clarify that generic parts and components need not be regulated in the same 

manner as the more sensitive defense articles. This modest, but important, step would address a key concern of small- and mediumsized enterprises, larger defense firms, and our allies. 

Unlike the breathtaking scope of the proposed administration reforms, this initiative can be implemented in a timely manner without precipitating institutional gridlock or sparking significant friction within the Legislative Branch. In so doing, the committee will 

seek to ensure that this effort is fully consistent with our broader 

national security interests, including by: Preventing transfers or retransfers of such articles to Iran; ensuring consistency with current 

prohibitions on the transfer of defense and dual-use items to China, 

for example; and requiring that any subsequent lessening of controls for these items meet with the concurrence of the Department 

of State and the Department of Defense, as well as can be reviewed 

by Congress. 

These, and other legislative changes, together with our intent to 

authorize a short-term extension of the lapsed Export Administration Act, will help enable Congress and the administration to tackle 

together the critical changes necessary to strengthen our national 

security, while advancing commercial interests. 

I now recognize Mr. Berman, the ranking member, for his opening remarks. 

[The prepared statement of Chairman Ros-Lehtinen follows:]

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Mr. BERMAN. Thank you, Madam Chairman. And thank you, witnesses. And Ellen, particularly good to see you again. 

In July 2009 Defense Secretary Gates and National Security Advisor Jones urged President Obama to launch the Export Control 

Reform Initiative that we are reviewing today. Their concern, 

which I share, is that our export controls are out of date, more unilateral and therefore less effective than they were in the past and 

are fast becoming a burden on our defense industrial base, our scientific leadership and our national security. 

My concern is widely shared among our national security and scientific leaders. Two years ago the National Research Council published a report which concluded that America’s national security is 

highly dependent on maintaining our scientific and technological 

leadership. The committee was co-chaired by former National Security Advisor Brent Scowcroft and Stanford University President 

John Hennessy. They were joined by former four star generals, admirals and senior intelligence officers, university presidents and 

Nobel Laureates. 

In stark terms these leaders reported that our outmoded export 

controls were designed for the Cold War when the United States 

had a global dominance in most areas of science and technology. 

The current system of export controls now harms our national and 

homeland security as well as our ability to compete economically. 

It goes on to state that,

‘‘In the name of maintaining superiority, the United States 

now runs the risk of becoming less competitive and less prosperous. We run of the risk of actually weakening our national 

security. The Cold War mentality of Fortress America cripples 

our ability to confront the very real dangers of altered world 

conditions.’’

The Obama administration’s Export Control Reform Initiative 

has taken on the mammoth task of reforming our export control 

system, and I commend them for doing so. 

The administration formed an interagency task form of all agencies responsible for administering export controls, and there are a 

lot, to assess what needed to be done and how to implement 

changes. This task force has accomplished an astonishing amount 

of work in the last 18 months, proving that if focused, an efficient 

interagency review and planning is indeed possible under the right 

leadership. 

Last week, the NSC-led interagency team doing the work on this 

project was selected as a finalist for one of the most prestigious 

awards for public service, the Samuel Heyman Service to America 

award. They deserve our congratulations and thanks. 

I welcome and generally support the administration’s Export 

Control Reform Initiative, although I have some questions about 

some aspects, especially the idea of a single-licensing agency. There 

are also measures that the Congress should take, such as giving 

the President the flexibility to determine how controls should be 

applied to exports of commercial satellites and related components. 

The House passed my provision to accomplish this in the last Congress with bipartisan support. I hope the House will approve again 

in this Congress. 

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But more broadly, we need to update and revise the Export Administration Act which lapsed from 1994 to 2000 and again in 

2001. Shortly I will introduce legislation to accomplish that objective. 

Reform has generally been interpreted in terms of making the 

military export control system more responsive to exporters, more 

efficient and more predictable. But reform is also a call for reassessment for questioning old assumptions and patterns of thinking. 

For example, the Arab Spring has shattered old assumptions 

about the Middle East. It is a time of hope, but it is also fraught 

with peril. The region is in turmoil. We all hope that governments 

throughout the region will become more democratic and stable, but 

it is a real possibility that we will see new governments that are 

less sympathetic to our concerns; more hostile to Israel then the 

current regimes. It is time for a new level of caution on what we 

sell to the Middle East and Persian Gulf. Arms will not produce 

more democratic regimes. 

I would be interested in hearing from the witnesses about the additional levels of review that arms sales to this region are now undergoing to lower the risk to the security of the United States and 

our friends and allies, especially Israel. 

A second area of caution is that our controls on munitions largely 

ignore the domestic environment. Persons and companies in the 

United States are able to purchase military items that are controlled for export without a license and without so much as a background check so long as the item is not to be exported. This is a 

God-send to smugglers for Iran and other countries of concern, and 

a nightmare for Customs agents. Our export control system is literally fighting with one arm tied behind its back if we continue to 

ignore this loophole. 

Investigators from the GAO using fake identities and front companies were able to purchase several defense items, including a 

flight computer for an F–16 aircraft and ship them out of the 

United States with no difficulty as commercial mail. I would be interested in the witnesses’ thoughts about whether it makes sense 

to set up a system whereby all domestic purchasers of components 

for significant military equipment, excluding the firearms, should 

be licensed and vetted by the U.S. Government in order to purchase those components with an easily accessible database that defense manufacturers and distributors should check before selling to 

them. 

In sum, our national security requires a wholesale revision of export control policy, a re-evaluation of our arms transfer policy in 

the Middle East and a critical review of domestic access to military 

technology. 

Thank you very much, Madam Chairman. And I yield back my 

time. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Berman. 

We will hear now from Mr. Royce, the chairman of the Subcommittee on Terrorism, Nonproliferation, and Trade from 3 minutes, and then Mr. Sherman the ranking member. 

Mr. ROYCE. Madam Chairman, thank you very much for holding 

this hearing and for recognizing me here. 

8

And let me just make one overarching point that I have to keep 

our eye on, and that is that a country of particular concern as we 

engage in this whole effort has got to be China. As a matter of fact, 

that is where our focus needs to be. And the reason for it is because Beijing is targeting our technology by hook or by crook, and 

the Commerce Department and State Department have been naive 

regarding China. I would argue all of us in the United States have 

been woefully naive. 

And I think that at the end of the day export control reform must 

be very clear-eyed about Chinese intentions. We should not kid 

ourselves anymore about what is going on. 

So, as you know, Mr. Sherman and I have had several hearings 

in the TNT Subcommittee on export control reform. We heard 

about the broken U.S. export system, which is a relic of the Cold 

War that is poorly suited for today’s global economy; we know that. 

The GAO has said export controls needs substantial reform and we 

do know bureaucracies fall behind the times. Conflicts between 

agencies further burden the system. 

As one witness testifies: ‘‘Interagency commodity jurisdictions 

over the years have bordered on epic.’’

The losers here are America’s national security and economic 

competitiveness. So this has to be fixed. 

And in moving forward we must realize that it takes only one 

key piece of cutting edge technology slipping through the cracks to 

seriously compromise our security. Our technological capabilities 

will only become more important, too, as the costs of maintaining 

armed forces hits fiscal reality. So national security here is paramount. 

So is our economic competitiveness, which is a core component of 

national security. And simply put: We will not remain a military 

super power without a world class technological base. Exports are 

essential to that base. So to balance these issues, the administration is proposing a single=licensing agency and putting fewer items 

behind higher walls. Higher walls should be a greater scrutiny and 

a law enforcement focus on key technologies. 

So, we await the details. 

Thank you again, Madam Chairman. 

Chairman ROS-LEHTINEN. Mr. Sherman? 

Mr. SHERMAN. Thank you, Madam Chairman, for holding these 

hearings. They would be justified even if it was just a chance to 

see our old friend Ellen Tauscher. But they are also justified by the 

substance that we are dealing with today. This is an issue critical 

not only to our national security but also our economy. 

Before addressing the administration’s export control efforts, I 

want to mention one little noticed State Department decision that 

is, I believe, still in process. And that is granting a waiver allowing 

for the inspection and repair of jet engines on the airplanes owned 

by Air Iran and the Iranian Mahan Air. Under Secretary Tauscher 

and I have discussed this. I have not been sufficiently persuasive 

up until now, but now I have another chance. 

These are so-called civilian aircraft, but they have been used to 

ship weapons to Hezbollah, Hamas and other terrorist organizations. They have been used for terrorist/intelligent operations in 

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Europe. And Mahan Air, in particular, is known as a Revolutionary 

Guard affiliate. 

It is natural for us to want all planes to be safe, but we do not 

have to fix these planes. We can tell the world loudly that they are 

unsafe and that no one should fly them, and that Iranians wishing 

to fly should fly anyone of the many dozens of Asian and European 

airlines that fly into and around Iran. 

If instead, we fix the planes that are the very implements of Iranian terrorism, then we demonstrate that our sanctions against 

Iran go right up until the point where we might inconvenience any 

Iranian citizen or any American corporation which makes a mockery of those sanctions. 

In early 2007, our Subcommittee on Terrorism, Nonproliferation, 

and Trade held hearings that highlighted the inefficiencies in the 

licensing process at the State Department’s Directorate of Defense 

Trade Controls. I joined with Mr. Manzullo in introducing the Defense Trade Controls Improvement Act of 2007. I should point out 

our subcommittee has also had, as I think Ed Royce points out, 

over half a dozen hearings on this issue. The bill was substantively 

folded in the State Department Authorization Bill authored by 

Howard Berman. That bill did not become law because the Senate 

lacked adequate wisdom, but many of the provisions were acted 

upon and implemented by the State Department, showing considerable wisdom in that body. 

Subsequently, the Obama administration has focused on export 

controls. It even garnered a couple of sentences in the State of the 

Union Address. This is in importance, though often thankless task. 

The main focus of the effort seems to be the category-by-category 

review of the U.S. ML and Commerce list to loosen unnecessary 

controls and eventually produce a single unified list with different 

tiers. 

I agree that we ought to have a higher fence around a smaller 

yard. And I agree with Mr. Berman that that higher fence has got 

to include licenses sometimes for domestic purchasers who otherwise could easily be front companies. 

I see that my time has expired, and I look forward to questioning 

the witnesses. 

Chairman ROS-LEHTINEN. Thank you so much. 

Our first witness will be the always lovely, ever engaging and 

talented and smart and witty Ellen Tauscher, Under Secretary of 

State for Arms Controls and International Security. 

Under Secretary Tauscher is well known to members of this committee, having previously served with distinction for 13 years in 

this body representing California’s 10th Congressional District and 

a founding member of the Fun Gals’ Caucus. We will not talk about 

that. 

And Eric Hirschhorn serves as the Under Secretary of the U.S. 

Commerce Department’s Bureau of Industry and Security. I am 

sure that he is a fun guy in his own right. 

Prior to serving in this capacity, Mr. Hirschhorn worked as a 

partner in the Washington, DC, office of Winston and Straun. 

Thank you. 

And then we will finish with Dr. James Miller, the principal Deputy Under Secretary of Defense for Policy. Prior to his confirmation 

10

Dr. Miller served as Senior Vice President for Director Studies at 

the Center for a New American Security. 

We welcome all of you. All of your statements will be made a 

part of the record. Please feel free to summarize it within the 5 

minutes. 

Honorable Tauscher is recognized. 

STATEMENT OF THE HONORABLE ELLEN TAUSCHER, UNDER 

SECRETARY, ARMS CONTROL AND INTERNATIONAL SECURITY, U.S. DEPARTMENT OF STATE 

Ms. TAUSCHER. Thank you, Madam Chairwoman and Ranking 

Member Berman, and members of the committee. 

It is an honor to be here today. I have submitted my full statement for the record, and I will give an abbreviated statement because I appreciate the opportunity to be here today with you to 

speak on the Obama administration’s effort to reform the United 

States export control system. 

The Obama administration has two priorities in our efforts to reform the export control system. We want to improve the current 

system that it enhances United States national security and we 

want an efficient system to help American companies compete in 

the global marketplace. 

I want to use my time to outline the administration’s reform 

strategy and the actions that the State Department is taking to 

support that strategy. 

For decades the United States export control system worked adequately to keep sophisticated United States technologies out of the 

hands of our Cold War adversaries. But today we face a different 

challenge. We no longer face a monolithic adversary like the Soviet 

Union. Instead, we face terrorists seeking to build a weapon of 

mass destruction, states striving to improve their missile capabilities with back door acquisitions of technology and elicit front companies seeking items to support such activities. 

We also face far more rapid developments in technology beyond 

our borders. The United States is no longer the sole source of key 

items in technologies. In many cases, United States companies 

must collaborate with companies in allied countries to develop, 

product and sustain leading edge military hardware and technology. 

In November 2009, the White House stood up a task force to create a new approach to export controls that would address today’s 

threats and the changing technological and economic landscape. 

The task force included the Departments of State, Defense, Commerce, Energy, Treasury, Justice, Homeland Security and the Office of the Director of National Intelligence. The sheer number 

agencies involved in export controls alone is a key indicator for the 

need of reform. 

The review found numerous deficiencies in our current systems. 

Agencies have no unified computer system that will permit them 

to communicate with each other, let alone with U.S. exporters. Exporters must deal with numerous paperwork requirements which 

in the case of my Department alone can be 13 different forms. And 

licensing requirements are confusing which causes delays for U.S. 

exporters and helps those who would evade our controls. 

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There is no regular process to review all of what we control, and 

so controls lists have not been comprehensibly updated since the 

early 1990s. 

Our enforcement agencies do not always communicate well, so we 

have seen instances of enforcement actions that are ineffective and 

waste resources. 

The task force recommended steps to address these problems by 

creating standardized policies and processes, and consolidating resources in four key areas which we refer to, and Madam Chairman 

talked about, we call them the four singularities. These include 

drafting a single control list, designing a single information technology system, implementing a single enforcement coordination capability and creating a single licensing agency. 

We are implementing these recommendations in three phases. 

In phase 1, we made core decisions on how to rebuilt our lists, 

recalibrate and harmonize our definitions, regulations and licensing policies and create an export enforcement coordination center, 

and to build a consolidated licensing database. 

We have started to implement phase 2 by revising the U.S. Munitions List and a Commerce Control List. Dr. Miller will discuss 

this topic in more detail 

The Departments of State, Commerce and Treasury are adopting 

the Department of Defense’s export licensing computer system as 

an initial step to creating a government-wide computer system 

dedicated to supporting the export control process. 

We will create a single form for applications to State, Commerce 

and Treasury, and exporters will submit these applications through 

a single electronic portal. 

And we hope to work with Congress to pass legislation to create 

a primary U.S. export enforcement agency. 

American businesses have complained for decades about the lack 

of clarity and predictability as to just what a munition is or what 

a dual-use item is. So we are creating a bright line between munitions and dual-use items to provide clear guidance on commodity 

jurisdiction issues. 

The administration also wants to improve how Congress is notified about arms sales and a transfer of items from the United 

States Munitions List because the current process is lengthy and 

unpredictable. This reform is of special interest to me as a former 

Member of Congress. I know that by working together we can better. 

In phase 3 we plan to create the four singularities that I mentioned, which will bring the initiative to its logical conclusion. 

Unless we complete this agenda and create a single list and single licensing agency, we will miss the opportunity to better focus 

our export control efforts and face higher national security risks as 

a result. We have more to do to refocus our export control system, 

but we are committed to this initiative because it will enhance our 

national security and the competitiveness of American companies. 

I am happy to answer any questions, Madam Chairman. But 

first, I would like to turn to my colleagues from the Commerce Department and the Defense Department to give their Department’s 

perspectives on the reform effort. 

[The prepared statement of Under Secretary Tauscher follows:]

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Chairman ROS-LEHTINEN. Thank you very much. 

Mr. Hirschhorn? 

STATEMENT OF THE HONORABLE ERIC L. HIRSCHHORN, 

UNDER SECRETARY, BUREAU OF INDUSTRY AND SECURITY, 

U.S. DEPARTMENT OF COMMERCE 

Mr. HIRSCHHORN. Thank you very much, Madam Chairman, and 

Ranking Member Berman, members of the committee. 

Chairman ROS-LEHTINEN. If you could turn on your microphone. 

Mr. HIRSCHHORN. It is a pleasure to be here this morning. I appreciate the chance to discuss with you export control reform and 

the effort to bring that about. 

The Export Control Reform Initiative recognizes that first and 

foremost, our export control policy must keep sensitive items out of 

the hands of end users who would harm our national security. It 

also must facilitate interoperability with our allies and, at the 

same time, should not undermine our defense industrial base. 

As you know, BIS, the Bureau of Industry and Security controls 

exports and reexports of dual-use items. Working with our colleagues at the Departments of State, Defense and Energy, our policy and technical personnel evaluate more than 20,000 license applications a year to ensure that items sold abroad are destined for 

appropriate end-users and appropriate end uses. 

In addition, we work on educating the regulated community 

about our regulations and enforcing those regulations, including a 

dedicated corps of special agents located here and aboard. 

Under Secretary Tauscher has noted the four ultimate goals of 

export control reform. An interim but essential step is to harmonize 

the U.S. Munitions List and the Commerce Control List because 

the items we control and the means by which we control them are 

the cornerstone of an effective export control system. As part of 

this process, less critical items can be moved to the more flexible 

licensing system under the Export Administration Regulations. 

These items are primarily parts and components for military end 

items. 

Many of the items to be moved are inherently similar and functionally identical to comparable items that are subject to the EAR. 

All items especially designed for military application will remain 

subject to control even after transfer unless there is a contrary consensus among the agencies, including the Departments of State 

and Defense. 

We are also recrafting the Commerce Control List into a three 

tiered structure that allows controls on items to cascade over their 

life cycles based on their sensitivity and foreign availability. This 

will facilitate more quickly adding controls on new items and technologies while enabling the transition off the list of items that no 

longer warrant control. 

We anticipate that items in the highest tier, for example, will require licenses worldwide. 

For the second tier, a new license exception STA—for strategic 

trade authorization—would permit exports of certain dual-use 

items to our most trusted allies and friends, subject to certain safeguards and requiring consignees within that group of countries to 

19

obtain authorization from the United States to re-export such items 

to any country not in the group. 

Consignees, and their consignees, must agree not to reexport or 

transfer the items without authorization. This one piece of export 

reform will eliminate about 3,000 low risk licenses a year. 

At the same time, we will continue to maintain controls on items 

for foreign policy reasons, such as specially designed implements of 

torture, and maintain comprehensive controls and sanctions on terrorist supporting countries. 

Once the lists have been made positive and more specific, we will 

have two aligned lists that can be combined into a single control 

list. We believe that this single list can best be administered by a 

single licensing agency. 

We are also harmonizing definitions of key terms such as ‘‘technology’’ and ‘‘specially designed’’ across the various sets of export 

control and sanctions regulations. 

We owe a level playing field to those who seek to comply, and 

therefore we are going to continue to enhance our education outreach to the exporting and re-exporting community. And domestically on the compliance side we are expanding our enforcement operations and taking advantage of the permanent law enforcement 

authorities that this committee played a major role in providing 

last year as part of the Comprehensive Iran Sanctions Act. We appreciate that very much, and it is helping us do our job. 

In November 2010, the President signed an Order creating the 

Export Enforcement Coordination Center. This will better enable 

us to share information with other enforcement agencies and prevent us from getting under foot between one another. 

This brings me to my final point and a central issue before us 

today. The administration has recognized from the outset that it 

needs to work closely with the Congress to ensure that the goals 

of this reform initiative are met. This includes continuing to brief 

members and staff regularly, providing updates on our efforts and 

seeking your input on regulations, and of course and most importantly, the enactment of legislation. Success in this joint effort will 

strengthen our national security and in doing so, strengthen our 

economy as well. 

Thank you very much, and I look forward to your questions. 

[The prepared statement of Mr. Hirschhorn follows:]

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Chairman ROS-LEHTINEN. Thank you, sir. 

Dr. Miller? 

STATEMENT OF THE HONORABLE JAMES N. MILLER, JR., 

PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE FOR 

POLICY, U.S. DEPARTMENT OF DEFENSE 

Mr. MILLER. Thank you, Madam Chairwoman, and Ranking 

Member Berman and members of the committee for the opportunity to testify today on export control reform. I am very pleased 

to join my colleagues Under Secretary of State Ellen Tauscher and 

Under Secretary of Commerce Eric Hirschhorn. 

I wanted to start by emphasizing what the chairwoman said the 

outset: ‘‘U.S. armed forces should always have the technology advantage, and we should take all reasonable steps to prevent potential adversaries from using our own technology against us.’’ It is in 

fact because export controls are so important to our national security that reform is so essential. 

As I think we all now recognize, over the years the bureaucracy 

that surrounds our current systems has grown into a byzantine set 

of processes with diffuse authority scattered throughout the government. This structure results in time wasted on process and jurisdiction issues, and it creates opportunities for mistakes, enforcement lapses and openings for problematic exporters to probe the 

system for the best results. 

We have made incremental changes in progress in our export 

system over time squeezing our processes for efficiencies, but this 

is clearly not enough. We need to focus our efforts on the most critical technologies that underpin U.S. military advantages where 

they could be dangerous in the hands in others. We need to focus 

on what Secretary Gates has called ‘‘U.S. crown jewels.’’

In over 95 percent of U.S. export control cases we say yes, go off 

and only after a lengthy and cumbersome review mandated by our 

current processes. By focusing our efforts better, we will be better 

to protect the technologies and capabilities that really matter. 

As you know, the administration has proposed what we have 

called the four singularities and that Ellen Tauscher outlined. I 

want to say just a few words about each of them. 

We are already making very good progress on the first two. Last 

November, President Obama signed an Executive Order to establish an Export Enforcement Coordination Center which will bring 

together representatives from Commerce, FBI, ICE, the intelligence 

community, military law enforcement and components in other 

agencies. Agencies are now in the process of standing up the center 

and establishing procedures for its operation. So a single law enforcement coordination center is well underway. 

We are also making good progress toward a single IT system. 

The DoD is the executive agent for the new U.S. Government-wide 

export licensing system which will be based on DoD’s USXPORTS 

system. We signed a Memorandum of Agreement with the Department of State in February 2010, and expect initial operational capability by August 2011. We signed an MOU with the Department 

of Commerce in October 2010, and expect initial operational capability in October 2011. 

30

So, good progress on the first two. And in addition, work is progressing toward the establishment of a single export control list. 

We obviously need congressional support to complete this task. 

Establishing a single list is essential because the line between 

purely commercial and purely military technologies has blurred, 

and it will continue to blur. For example, high accuracy gyroscopes 

that were once used only by the U.S. military are now being used 

in commercial aircraft, conversely our military uses commercial 

computers and processors in military systems. From a national security perspective we should treat items with similar capabilities 

the same way, irrespective of whether an item was designed for a 

specific civil or military purpose. 

A single list based on positive control language that capture key 

performance characteristics will allow us to focus our efforts on key 

items that provide the U.S. with an important military advantage 

or that pose risk to our security. 

As you know, DoD has taken the lead in rewriting the U.S. Munitions List. This is a major undertaking that is an essential precursor to a single control list. We have involved experts from the 

military departments and are working closely also with the Departments of State, Commerce, Energy and other Departments and 

Agencies. 

Under a single list items that we consider to be U.S. ‘‘crown jewels,’’ those items and technologies that are the basis for maintaining our military technology advantage, especially those items that 

no foreign government or company can duplicate such as hot section engine technology, will be placed in that top tier, Tier 1 and 

guarded with extreme vigilance. This is the highest of our higher 

walls of expert control reform. 

Items that provide substantial military and intelligence capabilities will be placed in tier 2 and would be available export on a 

case-by-case basis, including certain items that would be eligible 

for license exemptions to specified U.S. allies and partners as appropriate. 

For tier 3, a license would be required for some but not all destinations. 

As Under Secretary Hirschhorn noted, the administration has 

also begun revising and tiering dual-use controls on the Commerce 

Control List so that when coupled with revised USML, the two lists 

can be merged. 

If we are able to move forward successfully to a single list, it 

makes perfect sense and would make no sense otherwise, to move 

forward with a single licensing agency. Our vision is that the 

expertises that we currently have in government from various 

agencies, including State, Commerce, Department of Defense, 

Treasury and others would be involved and that these individuals 

would work together to strengthen our approach. A Board of Governors consisting of the Secretaries of key department, including 

State, Commerce and DoD would oversee the work of the single 

agency. 

In conclusion, our national security will be far better served by 

a more agile, transparent, predictable and efficient export control 

regime. We have made good progress, but we need help and we 

need support from Congress to complete this critical effort. 

31

Thank you very much for the opportunity to speak today, and we 

look forward to your questions. 

[The prepared statement of Mr. Miller follows:]


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Chairman ROS-LEHTINEN. Thank you very much for excellent testimony. 

I will begin the round of questioning. 

Under Secretary Tauscher, I wanted to ask about the Middle 

East. Can you assure this committee that arms sales proposals are 

based on well formulated, focused and realistic capability requirements or ‘‘wish lists’’ from our friends for the latest technology? Are 

you also confident that all sales comply with U.S. conventional 

arms transfer policy? And I ask because, as you know, the GAO recently found that State and DoD did not consistently document 

‘‘how arms transfer to Persian Gulf countries advanced U.S. foreign 

policy and national security goals.’’ And as Mr. Berman said, the 

Arab Spring is remaking the political map of the Middle East, go 

or for bad, creating new opportunities but new challenges. 

So, what plans, if any, does the administration have to review 

arms sales to that ever changing region? 

Ms. TAUSCHER. Thank you for that very comprehensive and timely question, Madam Chairwoman. 

Yes, I can assure you that the United States State Department 

goes through significant processes and consultations both with the 

region, our allies and with the Congress, and with the other Departments before we agree to front military sales and agree to arm 

sales. 

I know that everyone is sensitive about the Middle East. We 

have been consistently working on consultations both with House 

and Senate committees, but also inside the government and with 

the region before we go forward with any kinds of arms sales. 

So, I think that the answer is yes, Madam Chairwoman, we are 

confident that we are consulting in a vigorous way. And, yes, we 

are confident that when we do make these announcements of a sale 

that they are going where they are supposed to be going and that 

are not transferred. But as you said in your testimony, it is very 

important that we make sure that there are no questions about 

this system, and that is why reform is so important. 

It is important that we have common sense and we have a comprehensive nature to this reform. As you know, attempts have been 

made in the past through various administrations, both Democratic 

and Republican, to make these reforms. Both the bureaucracy 

fights it at times, and certainly just doing things the way we have 

done them before is a way for people to rationalize that we cannot 

make reforms. But the truth of the matter is, and Secretary Gates 

has said this very elegantly, ‘‘We cannot have a 20th century export reform regime for 21st century threats and for 21st century 

global competitiveness of American businesses.’’

So I think that, once again, I reassure you that we are confident 

that we are doing as best we can and that we are protecting what 

we need to protect. 

Chairman ROS-LEHTINEN. Thank you. 

And turning to Taiwan, it has been nearly 14 months since the 

last major arms sales was notified for Taiwan. Over a year ago, Assistant Secretary of State for Political Military Affairs Andrew Shapiro assured the Committee on Foreign Affairs that the State Department would undertake an extensive but honest discussion with 

our committee regarding Taiwan. No such discussions have been 

39

held for nearly 9 months, and you have also violated requirements 

related to the Javits Report. So consistent with the Taiwan Relations Act, when will the administration be prepared to discuss Taiwan’s defensive needs with our committee? 

Ms. TAUSCHER. Madam Chairwoman, we will appear before the 

committee whenever you ask. And I will make sure that that is as 

timely and as soon as possible, depending on your schedule. 

Chairman ROS-LEHTINEN. Thank you very much. 

And a good place to start that discussion would be with Taiwan’s 

increasingly urgent requirements for a new practical fighter aircraft. If Taiwan presents the administration with a letter of request for the transfer of the new F–16 CD Fighter Aircraft, will the 

administration accept that request? If not, why not? And does Communist China have a veto on U.S. arms sales to Taiwan? 

Ms. TAUSCHER. No foreign country has a veto on any sales of 

military requirements to our allies and friends; that is for sure, 

and certainly not China. 

But let me turn to Dr. Miller who can talk some more about the 

Taiwan requirements. But let me say this. This administration, 

like all previous administrations, values its relationships with its 

allies, whether they be NATO allies or near-NATO allies or members of different organizations that we belong to. These are prized 

relationships. And part of the projection of American power and 

American prestige is by selling armaments to our friends. And so 

we will do everything we can to have these consultations both open 

with you and at the same time respectful of the relationship of our 

allies and friends. 

Chairman ROS-LEHTINEN. Very good. 

Dr. Miller, just for 1 minute. 

Mr. MILLER. Yes, of course. 

Madam Chairwoman, let me first reiterate what the Under Secretary had to say, and that is that no nation including China has 

any veto over our export of arms, of course. 

The Department of Defense in working with the Department of 

State and others owes a report to Congress, as you know, on Taiwan and arm sales. We are very close to concluding that. We have 

done the detailed analysis that has been requested and required in 

order to do that. And we will be prepared to come forward and brief 

very soon on the topic. 

And just to reiterate what Ellen Tauscher, also pleased to come 

forward in whatever format you would like when you ask. 

Chairman ROS-LEHTINEN. Look forward to it. Thank you so 

much. 

My good friend Mr. Berman of California is recognized. 

Mr. BERMAN. Thank you very much Madam Chairman. And 

thank all of you for your testimony. 

In line with the chairman’s question regarding the Middle East, 

for me the underlying question is there are huge changes going on, 

changes that none of us anticipated. With respect to future arms 

sales to that region, is there some process going on within the administration to reassess and re-evaluate those decisions in the context of what’s happening and what the implications are? Has that 

kind of reassessment either formally or informally been undertaken? Are people thinking about undertaking it? 

40

Mr. MILLER. Mr. Berman, let me answer in two time frames. 

First, in the near term the administration has put on pause, put 

on hold some transactions that were otherwise planned, as I think 

you know and I expect that you have been briefed on. It would 

probably be better to talk about those in a closed session. Be happy 

to provide more information. 

For the longer, for the question of where we go next and does it 

imply a different set of guidelines. The administration is looking at 

the implications and looking both on the broad basis of Middle East 

and North Africa, looking on a country-by-country basis. And I can 

assure you that the question of what is the appropriate role of export and export control broadly for the region and on a country-bycountry basis has got to be a part of that assessment. 

Mr. BERMAN. Okay. In this vein, I do want to particularly congratulate the administration for its outreach and consultation with 

Israel on U.S. security policies in the Middle East, including possible arm sales. My own sense is the level of consultation that has 

gone directly with them by this administration far exceeds what I 

have seen in the past. And one way I know it is because I do not 

hear people complaining about the lack of consultation. So, I appreciate that. 

Mr. Miller, I would like to just take sort of the devil’s advocate’s 

point of view for a second regarding the four singularities: A single 

IT system, a single licensing list, a single licensing agency and a 

single enforcement agency. As you may know, and I sure did not 

before my staff wrote this, in cosmological terms a singularity is a 

black hole, so dense that nothing useful, not even information can 

come out of it. And what goes on inside is a complete mystery beyond the law of physics. 

There are redundancies in the current system, and that is what 

motivates a lot of us trying to get this reform. But let us take the 

other side of the coin for a second. That redundancy and that inefficiency and those different agencies and bureaucracies, in effect create a system of checks and balances with multiple agencies, with 

different missions review of sales from their own perspectives. One 

wants those different perspectives in this process. We want a Commerce Department that is thinking about America’s technological 

edge. We want a State Department understand, evaluating the foreign policy implications of export decisions, we want a Defense Department that is thinking about what this is going to mean for our 

national security and our forces. How in a system of four 

singularities will those different perspectives still be brought to 

bear? 

Mr. MILLER. Mr. Berman, let me very briefly comment on the 

term. I thought that we should use the four singles instead because, as you probably also know, singularities is referred to a situation in which artificial intelligence reaches the point at which it 

equals or surpasses human intelligence. So——

Mr. BERMAN. Is that on a case-by-case basis or——

Mr. MILLER. I will take under advisement to change our terminology. And I think the idea that four singles could equal a homerun would be, perhaps, more appropriate. 

41

I agree, and the administration agrees with your suggestion that 

different perspectives need to brought to bear. Let me talk about 

that at two different levels. 

The first is that different perspectives, different expertises on 

various technologies, on the expertise associated with military operations and no intelligence assessments of what other countries 

have and may have in the future have to be brought together. That 

is a key purpose of having a single licensing agency and a staff 

that is able to look across these various types of technologies and 

items. We expect that this staff of the SLA, the single licensing 

agency, would be able to deal with the straightforward issues to be 

able to implement guidance associated with it. But at the same 

time we expect that for cases that are particularly challenging because they represent a new technology or they represent an item 

of technology going to a country that we think is essentially marginal for the tier of the technology we are talking about, we fully 

expect that the Departments will contribute their views. 

So while we would expect that some of our experts for the Defense Technology Security Agency for the Department of Defense 

would join the SLN, we also expect that we will continue to have 

experts on these issues that will provide a Department of Defense 

input, and that on the whole the number personnel involved will 

be about the same, perhaps slightly less. But in ballpark, about the 

same as they are today. But those people will be able to work directly together on what we think will be smaller number of difficult 

cases and be able to then bring in departmental expertise overseen 

by a board of governors that involves the Secretaries of these three 

Departments and others that will bring in that outside expertise 

and, where necessary escalate, take to higher levels those new 

choices where new policy has to be made. 

Chairman ROS-LEHTINEN. Thank you very much. 

Mr. Rohrabacher is recognized. 

Mr. ROHRABACHER. Thank you very much, Madam Chairwoman 

for having us look at his very serious issue today. And special welcome to Ellen Tauscher. We are very, very pleased you are with us 

today. 

And I would just like to start off by pointing out that I have a 

newspaper, this is put out by the Communist Chinese Government. 

And their headline is, ‘‘Dialogue Produces Positive Results.’’ And I 

am sure that there were all sorts of newspapers like this before 

World War II were positive results with dialogues with the fascists 

and the Nazis that we had to deal with in World II, people thought 

that they were going to make war less likely and make friendship 

more likely by dealing with those folks. And the fact is that the 

Hitler regime benefitted greatly by its relationship to England, 

trade relationship with England just prior to the Second World 

War. 

On the issue today, clearly what it sounds like at the end of this 

strategic and economic dialogue with China, which this headline is 

referring to, Chinese Vice President Wang stated, ‘‘The United 

States committed to accord China fair treatment in a reform of its 

export control regime and relaxed high tech export controls toward 

China.’’

42

It sounds like to me that the United States Government still cannot differentiate between a dictatorship that murders religious believers every day, has no opposition, political opposition, no opposition parties, no freedom of speech and press; that we cannot differentiate that country from Belgium or France, or even Brazil. 

There should be a differentiation between these countries, should 

there not in terms of the technology that they are allowed to import from the United States? 

Ms. TAUSCHER. As my friend from California knows, engagement 

is not endorsement, as Secretary Albright said many years ago. 

And Secretary Clinton, if you read the American papers, gave a 

very, very tough and consistent message to the Chinese on a number of areas where we are not happy and we do not believe our relationship is as transparent or as forthcoming as it needs to be. 

Certainly on human rights, the Secretary gave a very, very tough 

message. 

Mr. ROHRABACHER. Excuse me for interrupting. But are you trying to suggest that the Clinton administration should be looked at 

as making a tough statement with China? It was during the Clinton administration that the technology from our space program was 

transferred to China, which is now being used and has been used 

to perfect the Chinese rocket systems, for Pete’s sakes. 

Ms. TAUSCHER. I was speaking about Secretary Clinton just 2 

days ago. 

Mr. ROHRABACHER. Oh, pardon me. 

Ms. TAUSCHER. Just 2 days ago. 

Mr. ROHRABACHER. Pardon me. 

Ms. TAUSCHER. And if you read the——

Mr. ROHRABACHER. Sometimes I get my Clintons mixed up here. 

Ms. TAUSCHER. Yes, well it can happen. 

But Secretary Clinton made very clear to the Chinese just 2 days 

ago, I was there, about many different issues, especially human 

rights. And that was a very tough message to give in an engagement. 

Mr. ROHRABACHER. Yes. 

Ms. TAUSCHER. But as I said, engagement is not endorsement. 

And we do have a complicated relationship with the Chinese. But 

nothing about that relationship includes special preferences. And I 

think that as often happens in newspapers around the world, the 

hometown paper sometimes engrandizes what exactly happened. 

Mr. ROHRABACHER. Well, how about the statement of the Vice 

President? You know, it is one thing to make a tough statement on 

human rights and then the next day to leave people with the impression that the United States is committed to relax high tech export controls. I mean, this is a statement from the Vice President 

right out of meetings with the administration. And I can see why 

it might confuse them to think that we are actually serious about 

protecting specific transfers. 

Let me just get right to the heart of the matter, because I got 

just a couple of seconds left. Should we have tougher export controls toward dictatorships that are potentially enemies, as China is 

potential, is an adversary but not an enemy, but it is a rotten dictatorship? Should we have more serious export controls and why is 

43

that not mentioned in the interim report? Should it be a dual 

track? 

Mr. HIRSCHHORN. If I may, Congressman. 

The whole point of export control reform is to make exports to 

our friends and allies easier and to build higher walls to ensure 

that they do not go to improper places. 

Mr. ROHRABACHER. Yes. 

Mr. HIRSCHHORN. And with the chair’s indulgence, I would like 

to read from the Joint Statement rather than from the——

Mr. ROHRABACHER. Okay. That list that you said, it does not include China, is that right? 

Mr. HIRSCHHORN. That is correct. 

Mr. ROHRABACHER. Okay. 

Mr. HIRSCHHORN. I would like to ask that the record include the 

actual text from the Joint Statement. 

Chairman ROS-LEHTINEN. Without objection, subject to size limitations. 

Mr. HIRSCHHORN. Thank you. 

Chairman ROS-LEHTINEN. Congressman Cicilline is recognized. 

Mr. CICILLINE. Thank you, Madam Chairwoman. 

And I thank the witnesses for their thoughtful testimony this 

morning. 

Under Secretary Tauscher, I want to particularly thank you for 

your leadership on export control reform. We live in very challenging economic times and international arm sales I think are 

really critical to sustaining a strong industrial base here in our 

country, and certainly our national security as well as our interests 

in promoting robust job growth. 

This is especially important in my District where several of my 

constituent companies are affected by the long process of arms 

sales. We received the letter in this committee from Secretary Clinton raising the issue of the long process of arm sales notification 

and congressional review. And I think like many members of this 

committee, I am interested in finding a solution that speeds up the 

process but also allows our committee to exercise appropriate oversight in order to protect our national security. 

One suggestion has been made to add a time limit on the 

prenotification process, similar to what is in place in formal notifications. But, of course, some have criticized that idea as saying 

that a time limit could impede congressional oversight on sensitive 

arms transfers. And since you have the unique perspective of having been on both sides having served here in Congress and now at 

the State Department as Under Secretary, could you share with us 

your thoughts on that? And also comment on the State Department’s concerns, if there are any, about this informal review process and whether or not the Department will propose a time limit 

for a period of review similar to what is in place in formal notifications? 

Ms. TAUSCHER. Thank you very much, Congressman. 

You know, I think that we all agree that we want to get this 

right, and this is not about a clock that would interfere with our 

ability to protect American technology, especially our most sensitive technology. But it is also important that we deal with the 

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44

nant in so many areas and where it is very, very important for our 

economic recovery for American exports to move out into those 

marketplaces and to create jobs. 

So what we have here is over the years the average time for the 

pre-consultation period for foreign military sales went from an average of 29 days to an average of 57 days. The different Departments have different time periods for the USML and for the CCL. 

It is about 15 days in the State Department, it is double that in 

the Commerce Department. 

So we do not want to have an artificial metric. We do not want 

time to be the metric. We want it to be done right, but at the same 

time we believe that there are efficiencies that you can get in the 

system by doing things where there is a common view for the many 

different people and a common agency to go; one place to go, one 

phone call that gives what we hope are both comprehensive but 

common sense answers to how to go forward, especially for the 

small and medium businesses that are very, very dependent on exports for their livelihood. 

So I think, Congressman, you have hit upon what is a difficult 

tension area: How do we do this efficiently, in a timely way so that 

we can trade with our allies, trade with our friends and keep growing businesses, but at the same time as Congressman Rohrabacher 

has made a very significant point, that we make sure that people 

that are trying to go around the system or trying to use the system, 

the inefficiencies in the system to beat us, do not get that victory. 

So as Congressman Berman said, redundancies are important, so 

we need to build a system that has redundancies so that we are 

making sure that we are checking and balancing each other and 

getting things done in the right way. But stovepipes are not 

redundancies. They are barriers to efficient processes. And so what 

we want to do is remove these, and that is why the singularities 

have been developed. We think that that is the best way for us to 

give both the enforcers and the people that are going to say yes 

and no a common view, having common applications, things that 

are going to provide the efficiencies of the system but also have 

redundancies to check and balance and to move the system more 

quickly but we do not have a number of days that we have to meet. 

We expect that it will shorten, but this is not about just that. 

Mr. CICILLINE. Thank you. 

I yield back the balance of my time. 

Chairman ROS-LEHTINEN. Thank you, sir. 

Mr. McCaul of Texas is recognized. 

Mr. MCCAUL. Thank you, Madam Chair. 

And it is nice to see a former colleague in such high places now. 

I want to talk about a couple of issues. I just got off the phone 

with Howard Schmidt, the Cyber Security Coordinator about the 

presence of proposed legislation on cyber. And I think that is important because while we can talk a lot about the physical espionage, we know that that is taking place every day in the virtual 

world. The Pentagon has been hacked into, NASA, and one of the 

most hacked into offices, as you know, is the Export Control Office 

in the Department of Commerce, and that is open source. 

I just say that. I think beyond that we probably cannot talk a 

whole lot about that in a public hearing, but it is a big concern to 

45

me. And I hope I can work with the administration on this important issue. 

Secondly, end use monitoring as it pertains to Pakistan. We have 

teams that are supposed to be allowed to go in and monitor end 

use, and yet Pakistan is denying these teams access. To me that 

is very disturbing, particularly in light of the latest revolution of 

the helicopter being shown off to China. Can you very quickly in 

the time I have comment on the end use monitoring issue? 

Ms. TAUSCHER. Well, any country that does not provide the access that we have in the agreement, immediately will come under 

suspicion. And all of the different processes to approve anything 

further will stop. So I think we have very good controls in the existing system. 

But as you know, and perhaps, Congressman, the best thing to 

do is to offer you and other colleagues on the committee a more 

classified briefing on some of these issues. Because I think that we 

could satisfy some of your questions and certainly get your input 

in that kind of forum. 

But the key here is that we already have processes and a system 

that stopped continuing business with people that do not live up 

to their agreements. If it is about end use monitoring or if it is 

about other kinds of controls that are part of the agreement, if they 

do not live up to those agreements, things begin to stop. 

Mr. MCCAUL. Thank you. And I look forward to that briefing. 

China has been on my radar screen for a long time. And when 

I worked in the Justice Department I worked on the Campaign Finance Investigation. I had the Johnny Chung case, which led us directly to the Director of Chinese Intelligence funneling money to 

him to be used in the campaign through China Aerospace. And it 

was very disturbing. And going back to Pakistan and China, we have $3 billion in for- eign aid, $1.5 billion of that for counterterrorism. And when I look 

at what they are using the money for, it is defense priorities, which 

is okay. It is supposed to be for counterterrorism, but it is being 

used to pursue a joint venture with China to develop the JF–17 

Fighter Aircraft, a surface-to-surface nuclear-capable missile with 

the help of China, and a $1.3 billion deal which allows Pakistan 

to receive J–10 fighters and six submarines from China; is that of 

any concern to the administration? 

Ms. TAUSCHER. Well, I think that it is fair to say that the relationship with Pakistan is a significant one because of its geography 

and because of the relationship and border with Afghanistan. But 

as you know, this is a very complicated relationship. 

I think that once again, Congressman, if we could come in a classified setting, I think we could assure you in many ways of what 

is going on and have your input as to what you think should be 

done. 

Mr. MCCAUL. Well, I would welcome that. Because I think it is 

very troubling and disturbing if this all is true because this is taxpayer money being used to further China’s interest. You know, I 

think I speak for most Americans when I say we would prefer that 

money to be used to buy American. 

And so I see my time is just about expired. With that, I will yield 

back. 

46

And thank you so much for the testimony. 

Chairman ROS-LEHTINEN. Thank you so much. 

Ms. Bass of California? 

Mr. Connolly of Virginia. 

Mr. CONNOLLY. Thank you, Madam Chairwoman. 

And Ellen Tauscher, welcome back to Congress. We are so glad 

to you, and we miss you. 

I would like to ask the panel, I guess the longer I have looked 

at export controls of any kind, they strike me as something that 

with good intentions, that almost always go awry. 

Technology, you know at the height of the Cold War maybe we 

could control the transfer of technology, maybe we could control 

certain sensitive items. But given the universality of technology 

and access to information, I guess I would ask this question: Are 

we on a full zone here? And that is question number one, and I 

mean it quite sincerely. As somebody who, you know I worked for 

a defense contractor and every year I had to take a refresher 

course in compliance with Export Administration controls. And I 

have to tell you, you almost needed a Ph.D. to fully understand all 

the implications to make sure you were never technically in violation of anything. And if you have not taken those tests, I urge each 

and every one of you take it and look it from the point of view of 

people who have to comply. 

So, the first question is: Given the changes in technology, what 

are we doing here? And then secondly: What about unintended consequences? 

One looks at the commercial satellite industry as a case study in 

good intentions that actually lead to all the results that were undesirable. China got the technology anyhow, the French got the business and we hurt our own domestic industry capacity which seems 

to run counter to President Obama’s laudable goal of tripling our 

exports. 

And let me before you answer, also applaud the administration 

for this thorough review. Long overdue. Thank you for doing it. But 

I wanted to add this other layer given the end of the Cold War and 

the universality of access to technology, how viable is an Export 

Administration in this part of the 21st century? And what about 

unintended consequences? 

Mr. HIRSCHHORN. Let me take a moment, Congressman, to respond to at least the more general portion of your question and 

then either Dr. Miller or Under Secretary Tauscher can address 

the satellite issue if there is anything to add on that. 

This is not a unilateral exercise on the part of the United States. 

We are members of four broad-based multilateral regimes that include just about all the Western industrialized countries and many 

other countries. There are between 35 and 45 countries that are 

members of each of those regimes, and we have general agreement 

on what is to be controlled. That covers most, if not all in some 

cases, of the places where this kind of technology is available. No 

one can deny that there has been a spread of technology. We and 

our allies and the members of these regimes do what they can, 

which is a great deal as we see from intelligence reports, to prevent 

the untoward spread of this technology. Some of it does get out, but 

47

we are trying to retard it, we are trying to prevent it as best we 

can. 

Mr. MILLER. Congressman, if I could add first a broad comment 

and then I will talk about a few key technologies of satellites in 

particular. 

The broad comment is that I do think it would be foolish to try 

to continue our system with its inefficiencies and, as you have suggested, a number of self-inflicted wounds to speak specifically to 

satellites. 

A couple of decades ago the United States had about 75 percent 

market share globally of satellites. We are down in the ballpark of 

25 percent today. And when you see companies advertising USML 

free satellite components and so forth, you know that we have got 

some thinking to do. On that subject, we recently provided a summary of what has been a very extensive effort looking at applying 

export control reform to satellites. We are in the middle of an in 

depth review, in fact past the middle of an in depth review of Category 15 of the USML which is on satellites. And while we think 

at this point that there are a substantial number of items associated with commercial satellites that could be moved from the 

USML to the Commerce Control List, we expect that as we continue this review we will find a number of other items that are so 

widely available globally that we will feel comfortable in exporting 

them and allowing our companies to compete better. 

And another category that, while not as widely available are 

available to our allies and partners, and we want to make sure 

that our companies are able to compete with that for those specific 

countries. 

There is a few other examples. And one of the key points I want 

to make is that what is critical, what is not available to others 

changes over time and that is one of the reasons why we think the 

integration of these lists and a single focal point makes a lot of 

sense. 

To date stealth technology remains a critical technology where 

we have a real advantage. Some propulsion technologies, including 

for space launch, I talked about hot section engine technology, that 

is actually applied now in commercial aircraft. We have a special 

variant basically that we use for the military aircraft that we really 

do not want to get out into——

Mr. CONNOLLY. Unfortunately, my time is up and the chairman 

is being very indulgent. And I know Ms. Tauscher knows how strict 

that time limit is. But I hope you will come and see me and talk 

about this. I have a deep abiding interest in the subject. 

Thank you. 

Chairman ROS-LEHTINEN. Thank you so much. 

Mr. Royce is recognized. 

Mr. ROYCE. Yes. Thank you. I appreciate Mr. Connolly’s line of 

inquiry there. And my colleague’s from California as well. And 

maybe we could get a little further into this right at this juncture 

while you are here, Mr. Miller. 

And I guess it was a pretty meager report that came out the 

other day. I think it was a five pager. Is there a more detailed report behind that that you are going to be publishing subsequently? 

Is that my understanding? 

48

Mr. MILLER. Excuse me, Congressman. Yes, there is. 

Mr. ROYCE. Okay. Well let me ask you this——

Mr. MILLER. We had a, frankly, a lengthy report that did not 

take account of the ongoing review of Category 15 of USML. We 

would like to take that into account. And so as we complete that 

in July, we will give a report that, frankly, is based on the type 

of detailed analysis that you expect. And on behalf of the administration, I know that we are late and I apologize. We want to get 

it right. 

Mr. ROYCE. Well I want to ask you this: Will that future report 

now that we have got a little time where it examined this question 

if the space industry-base continues to erode, what would that 

mean for U.S. national security? And specifically I think you should 

look, obviously, China. But I was going to ask what other countries 

you are most concerned with in this regard when it comes to satellites? 

Mr. MILLER. Congressman, the focus of this report will be on the 

export control related issues. 

Mr. ROYCE. I understand. 

Mr. MILLER. We——

Mr. ROYCE. But how do we get to that question I just asked so 

that we are looking at this in sort of the totality of what it means 

to national security vis-a ́-vis satellites? How do we get you to do 

an addendum or a focused discussion of that especially as it relates 

to China? 

Mr. MILLER. I was just about to say, one of the due outs from 

the National Security Space Strategy that was completed a few 

months ago is a hard look at our industry-base and our capabilities 

over time. If we look in the rearview mirror, we see a pretty 

daunting trend. And as we look forward, we see a lot of challenges. 

So the Defense Department is working on that and will be working 

with our interagency colleagues to provide an assessment. And as 

we move forward on that, we would be happy to come up and brief 

you and other members on that, sir. 

Mr. ROYCE. Yes, I think Mr. Connolly and I, and Mr. Rohrabacher and others here would certainly appreciate that. 

Let me ask a question of Under Secretary Hirschhorn, because 

in the testimony that I read Commerce you say is stepping up its 

presence in Asia adding an export control officer who will conduct 

end-use visits for dual-use items. So in reading this, and maybe I 

misread it. I might not understand this, but you say you have 

added a second ECO in China. And I was just going to ask you, 

does that mean that there are only two export control officers in 

all of China, or have I just misread that? Well, anyway, let me 

begin with that. 

Mr. HIRSCHHORN. You are correct that there are two in China. 

We also have export control officers in a number of countries where 

we think they are needed. 

Mr. ROYCE. Well, we have been holding a series of hearings, and 

of course I saw the agreement that we made with China the other 

day and just how focused they are on us loosening our expert control regime in certain ways. It just seems to me that given inordinate amount of attention on the other side of the Pacific, but especially given the amount of theft that routinely occurs of intellectual 

49

property and attempts to get at this technology, that that seems 

questionable that we would only have two there. And I was also 

going to ask you about the language skills; whether these individuals are really going to be able to have access to Chinese facilities? 

Do they always have that access? Let me ask you that very quickly. 

Mr. HIRSCHHORN. Well, we select which facilities we visit. 

Mr. ROYCE. Yes. 

Mr. HIRSCHHORN. And which licenses we think are important 

and ought to be followed up. 

Mr. ROYCE. Can they really make a dent? Maybe this is something we have missed. Maybe we are just too light on our supervision on this front. But two export control officers in all of China 

for all of the factories in China in order to try to monitor what is 

going on given what we are finding out in the hearings that we are 

doing here, and the Harvard Business Review article from December of last year which is the expose on a lot of what China’s done 

here. It just seems kind of lax. 

Mr. HIRSCHHORN. Well, we are trying to do more, Congressman Royce. We have asked for an additional $10 million for enforcement——

Mr. ROYCE. Yes. 

Mr. HIRSCHHORN [continuing]. In 2011 and now again in the 

2012 budget. We are hopeful that we will see some of that funding, 

which will help our intelligence capability as well as add to our enforcement staff. 

We also work with the other agencies and through the Export 

Enforcement Coordination Center which was established by the 

President’s Executive Order, and ultimately through the primary 

enforcement coordination agency. We are trying to make sure we 

use these resources in the most efficient way we can and to be as 

aggressive as we can be. 

Mr. ROYCE. Thank you, Mr. Hirschhorn. 

And I am out of time, Madam Chairwoman. 

Chairman ROS-LEHTINEN. Thank you very much. 

Mr. Deutch of Florida. 

Mr. DEUTCH. Thank you, Madam Chairwoman. 

Just a follow-up Secretary Hirschhorn. I had a meeting not too 

long ago with a former BIS official who suggested that we could 

better verify end user status and better control our exports if we 

had more export control officers, particularly in China given the 

seemingly bipartisan support for this. And I know you spoke of the 

additional $10 million. How many additional export control officers; 

what would make a difference? I know there is now one more. 

What would you like to see and what impact would that have? 

Mr. HIRSCHHORN. Well, what I would like to see and what we are 

able to see may be two different things. I would like to submit 

something to the committee on that, if I might. 

Certainly we do not have too many in China. I certainly will 

grant you that. 

Mr. DEUTCH. Right. We all agree. 

Mr. HIRSCHHORN. But there are finite resources. We are trying 

to put them where they will do the most good and be the most efficient in finding diversions and making sure our technology is protected. 

50

Mr. DEUTCH. I appreciate that. I would ask you to consider that 

further and, please, submit your thoughts. 

I wanted to talk a bit about the ability of foreign nations to take 

U.S. commercial technology and convert it to military technology. 

Secretary Miller spoke earlier about the hot section of aircraft engines. The U.S. does strictly control what are considered the truly 

critical components of aircraft engines, which is the hot section. It 

is my understanding and I would ask Secretary Miller this question and Secretary Hirschhorn as well, that this amounts to only 

about 10 to 20 percent of the critical technology for aircraft engines, which allows other nations then to acquire 80 to 90 percent 

of the available technology for the aircraft engine through technology offset agreements and then focus their internal resources on 

the remaining 10 to 20 percent. The reason I am concerned about 

this is especially the fact that China has announced recently it is 

going to be investing a $1.5 to develop aircraft engines, could you 

speak to whether BIS is looking at increased controls of other parts 

of the engine? And Secretary Miller, if you could also address this 

issue that the notion quite simply that while we are protecting 

what is the truly critical component, the technology has advanced 

to the point that if 80 percent of the technology is available that 

sophisticated countries are able to then to adapt and figure out the 

remaining 10 to 20 percent? 

Mr. HIRSCHHORN. Let me just briefly state that the hot section 

technology is, indeed, uniquely available to us. The other 80 percent of aircraft engine technology of which you speak is, as you 

rightly observe, pretty broadly available outside the United States. 

And that is a principal reason why we do not control it in the same 

way we control the technology that is critical for military purposes, 

and that we have close to a monopoly on. 

I think Dr. Miller will add something about hot section technology. 

Mr. MILLER. I think Under Secretary Hirschhorn got it just right. 

When you think about, in a sense, categories and the line moves 

over time. There is a category of this technology that is widely 

available internationally. I do not know what the percentage is, but 

it is creeping upward over time and it is creeping upward because 

of the indigenous interest in it. And I think that we just have to 

take that into account. 

There has been some fairly sensitive technology that we can 

share with close allies, and then there is some that in our future 

system that we call tier 1, that the presumption would be against 

export that is really absolutely cutting edge and that we would expect that there would be very, very rare exceptions that they would 

be shared. 

Mr. DEUTCH. I had this concern. I would like to explore this further with you, perhaps after the hearing. 

I wanted to quickly change in my remaining minute to the technical advisory committees. And the suggestion that has been made 

to me that often the participants in these technical advisory committees are larger corporations. I would like to know whether there 

are alternative methods being considered by BIS to receive additional input to the technical advisory committee, particularly from 

smaller companies, perhaps retired industry experts, other ways to 

51

provide information where there will not be a specific economic interest involved? 

Mr. HIRSCHHORN. Well, we do look to the technical advisory committees to give us technical advice. And obviously in many cases 

the large companies have the most forward looking technology. 

That said, we are making a concerted effort to diversify those committees and to make sure that smaller and medium size businesses 

are represented. But it takes time. This is a long process because 

it involves not only a selection process, but an extended process of 

getting security clearances. We are trying to do that. 

Mr. DEUTCH. I appreciate it. 

And, Madam Chairwoman, if I just beg your indulgence for 15 

additional seconds? 

If you could provide my office some detailed information on what 

it is that the BIS is doing to include smaller companies, how you 

are reaching out to them, the standards that are being applied, 

that would be a great help to me and I believe, ultimately to these 

technical advisory committees as well. 

And thank you, Madam Chair. I appreciate that. 

Chairman ROS-LEHTINEN. Thank you. We would love to have access to that information as well. So if you could send it to the committee, also. 

Thank you. 

Mr. Manzullo is recognized. 

Mr. MANZULLO. Thank you. 

I appreciate you all being here, especially a former colleague. 

Let me give some of our colleagues a real life example of what 

we are talking about. 

This is a cable manufactured by one of our 2500 manufacturers 

in Illinois. It is a cable made to a specified length. It is an ITAR. 

If it were a quarter inch shorter, it would not even be regulated. 

This is the type of stuff which you call the nuts and bolts of plates 

that have a strategic hole in them. It is constant. It goes over and 

over. One of the reasons why our machine tool world share has 

shrunk to 4 percent is because of our insistence that anything involving access to more than four countries needs a license. 

The United States now has a reputation of being an unreliable 

supplier. We have completely lost in the machine tool industry. The 

satellite industry, as Dr. Miller said, has gone from 75 percent 

down to 25 percent. Manufacturing jobs in this country have 

shrunk. It took three of us 3 years ago, 2 years to correct two sentences in Section 17(c) of the Export Administration Act to allow 

the additional billions of dollars in aircraft exports that were arbitrarily being held up by some bureaucratic problem because people 

just are not talking to each other. 

A police helmet is uncontrolled, but you put a shield on it and 

it is on ITAR. 

I have seen time after time again, my constituents involved in 

manufacturing having their European competition say that, ‘‘We 

are ITAR free.’’

You just reach a certain point where we end up binding ourselves. Fifteen years ago the United States led the world in neodymium iron boron and Samarium-cobalt permanent magnets. 

52

Ninety-seven percent of that is now in China and we are desperately trying to get that type of manufacturing to this country. 

I just want to commend the administration for spending a tremendous amount of time in my office with this new proposal. It is 

very transparent. To be able to combine the lists so that my constituents can access one portal and find out exactly what it is that 

they are doing wrong. We have been successful with the AES system so that now people are able to tell whether they are in compliance before they actually begin manufacturing the product. 

But my big concern, again, is what is the big picture on this 

thing? I think it is absolutely essential that this country maintain 

a manufacturing base. What I would like to know are thoughts 

from the three of you as to how you think the new system that you 

are proposing with the one list and the portal can help the United 

States increase its manufacturing base? 

Ms. TAUSCHER. Congressman, thank you for your support. And 

thank you for your consistent help in representing your District so 

well. 

I think that what you are talking about is a very narrow area 

that needs special attention. It is called specially designed. And for 

many decades these specially designed systems and apparatus were 

basically based on the assumption that technologies and items were 

developed for the military and only later some subset found themselves to be commercially viable. The truth is the exact opposite is 

true in the 21st century. 

And so we have many specially designed items that are under 

control that really do not need to be. They are commercially available all over the world and this really hurts American productivity, 

it hurts especially small businesses and medium sized businesses. 

It hurts job creation. And what we are proposing is a new definition for specially designed that will provide clear guidance consistent with how the phrase is used in international agreements for 

focus controls only on those items that we intend to control and not 

capturing big baskets of things that create all kinds of havoc for 

small and medium sized businesses. 

Mr. MANZULLO. I appreciate that. 

Just one unrelated question. The Section 1248 report, when do 

you expect that to be finalized? 

Mr. MILLER. Congressman, we expect to finish the review of Category 15 on the USML in July, and to be able to provide the report, 

I think I would have to give us about a couple of months after that. 

So, I would say this fall. And we are, as I said earlier, conscious 

that we are late and we will move it forward as quickly as possible. 

And be very pleased to brief in the meantime as we have the intermediate steps, sir. 

Mr. MANZULLO. Thank you. 

Chairman ROS-LEHTINEN. Thank you. 

Mr. Sherman is recognized. 

Mr. SHERMAN. Thank you. 

My first question is for the record because it deals with a detail 

that you will want to look at when you get back to your offices. 

Right now a satellite license is pending at State. It is a communication satellite for the Government of Azerbaijan. Now this is 

packaged as if it is just a satellite that would allow people in Baku 

53

to make cell phone cells or send emails. And, of course, that means 

a general in the Azeri army could make a call to his mother in 

Moscow or some general in Moscow, but that is, after all, just a 

telephone call or an email. 

I would hope that you would look carefully at this license to see 

whether the particular satellite will give Azerbaijan the ability to 

do surveillance or jamming. And so my question for the record is 

will you reject this license if the satellite in question gives the 

Azeri government the capacity to jam or Armenian communications 

or surveil Armenia or Nagorno-Karabakh? So, I look forward to 

reading your answer. 

I do want to pick up on the chairwoman’s comments that you are 

moving forward with this. You are going to moving a lot of things 

from one list to another. Please give us enough time to review 

things. You have worked carefully with us in the past and you do 

not want us to protest 200 items just because you gave us 400 

items and we only got time to look at 200. 

My question relates to the industrial base of this country. If we 

do not export a particular item, then we do not get the money 

which helps build our industrial base. And somebody else gets the 

order and that builds their industrial base. But sometimes when 

you take something off the Munitions List what is being exported, 

perhaps, is not the product but the tools and the dies that allow 

somebody else to make the product or the technology, the plans. 

Does a decision to take, say that wire that Don Manzullo hold 

up, if you took that off the Munitions List, does that mean that you 

would have to take off the list the tools, the dies, the plans on how 

to make that component or can you deal separately with the technology for manufacture and the product that is manufactured? 

Mr. HIRSCHHORN. We do today treat technology separately from 

end items and from capital goods that manufacture end items. So 

the existing Commerce List, for example, does allow us to treat 

them differently. But in many cases, technology that is widely 

available is not going to be preserved by our controlling it. If it is 

out there, it is out there. And we are trying to limit——

Mr. SHERMAN. Yes. And the technology of making that particular 

wire may not be all that secretive. 

But what you are saying is if you take a particular item off the 

Munitions list, you could very well leave on the list the plans, specifications, tools and dies that would allow somebody else to make 

that product? 

Mr. HIRSCHHORN. It is certainly possible. And it is going to be 

an item-by-item review, but in many cases part of why these items 

are going to moved to Commerce control, and I stress that they still 

will be controlled but it is a more flexible set of controls, is because 

either the items do not have a particular military use or because 

the technology is——

Mr. SHERMAN. Let me ask the Under Secretary of State, I mean 

is there a jobs analysis here where we would say, ‘‘Well, exporting 

this particular product produces jobs in America and it is generally 

consistent with U.S. national security.’’ And at the same time say, 

‘‘We are going to prohibit the export of the manufacturing technology, both because that could give another country a lot more 

than just the product.’’ I mean, it is the technology to make this 

54

product and they could soup that up and make next year’s product 

or next decade’s product as well. It is a national security issue, but 

also it means exporting jobs. Is there going to be a separate analysis of the industrial-base input back fact of exporting a product 

versus exporting the tools and the dies and the techniques? 

Ms. TAUSCHER. Well, Congressman Sherman, no, there is no specific jobs analysis but it is intuitive, and I think everyone believes, 

first and foremost this review is about national security. But we believe that the importance of protecting national security and having 

bigger fences over smaller property will give us the transfer of——

Mr. SHERMAN. I would point out that the statute says that our 

industrial-base is critical to our national security. And so it is not 

just the product, it is whether you are building the industrial-base 

of the United States or building an industrial base in a rival country. And so I hope that a job/industrial-base is part of it, not just 

talking to generals about what this particular box can do on that 

particular airplane 

Chairman ROS-LEHTINEN. Thank you, Mr. Sherman. 

Ms. Buerkle of New York is recognized. 

Ms. BUERKLE. Thank you, Madam Chairman. And thank you for 

holding this very important hearing export control reform. And 

thank you to all of our witnesses this morning for being here. 

I think that we can all agree that the export system in its current form is a complex, bureaucratic maze that we need to correct. 

The question is: What are those corrections going to look at? 

If small or a medium sized firm looked at this reform, do you 

think it is going to be their assessment that this is going to be simpler, more streamlined approach to exporting? 

Ms. TAUSCHER. I was actually going to answer Congressman 

Sherman. But, thank you, Congresswoman, I think that is a great 

question and it is a metric that is very important to us. 

I think one of the reasons why the President’s reforms are so 

supported by the Chamber of Commerce, the National Association 

of Manufactures and many technology business associations is for 

the very reason that the ancillary benefit is more American job creation and more streamlined system that protects national security. 

Mr. SHERMAN. Will the gentleman yield for 10 seconds? 

It is about jobs——

Chairman ROS-LEHTINEN. Hold on. Hold on. Hold on. 

Ms. BUERKLE. Absolutely. 

Mr. SHERMAN. It is about jobs, not profits. And if the Chamber 

of Commerce says it is great and the machinist says it is wrong, 

who cares about jobs? 

I yield back. 

Chairman ROS-LEHTINEN. Ms. Buerkle. 

Ms. BUERKLE. Thank you. 

And going back to my colleague Mr. Cicilline’s point, it is about 

the clock when it comes to these businesses. And when I hear redundancy is important, not for businesses it is not important. They 

need to get their product out to market as quickly and as efficiently 

as possible. 

Ms. TAUSCHER. But redundancy does not have to cost time. There 

has to be checks and balances that ensure that national security 

is the number one effort to make sure that we protect the most preVerDate 0ct 09 2002 17:32 Jul 19, 2011 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051211\66294 HFA PsN: SHIRL
55

cious national security secrets. Redundancy does not mean that we 

have to have more time added to the clock. But we do have to ensure you and the American people that we have checks and balances in the system to make sure that we do not have a little slip 

between lip and cup and cause something to be transferred that is 

not meant to be transferred 

Ms. BUERKLE. Thank you. 

Mr. MILLER. Could I just briefly? 

Ms. BUERKLE. Absolutely. 

Mr. MILLER. The other thing from a business perspective I would 

think would be desirable is predictability. And as we shift USML 

to a positive Control List where we specify the elements that would 

be allowed and not allowed rather than say everything in a broad 

category is subject to review over some unspecified period of time, 

I think that predictability of outcome as well as timeliness would 

be valuable. 

Ms. BUERKLE. Thank you. 

Mr. Hirschhorn, my next question is for you. It is regarding the 

Coordination Center. How would you counter the argument that 

this just represents another bureaucratic layer on top of an already 

complicated system? 

Mr. HIRSCHHORN. Well, it is not a bureaucratic layer. It is not 

going to involve, for example, additional personnel other than one 

or two people who will be permanently situated there. Everyone 

else will be participating from their existing agencies. 

It is essential that the various agencies that have enforcement 

responsibilities in this area not step on one another’s toes. The last 

thing we want is a situation where Agency A goes after a suspect 

company that turns out to have been Agency B’s front operation, 

another enforcement agency’s front operation. And the point of this 

Coordination Center and this coordination effort is to make sure we 

do not run into a situation like that, and also to make sure we do 

not duplicate one another’s work. 

I do not think it is creating another bureaucracy so much as 

making the enforcement system a lot more efficient. When we start 

a case, for example, we are going to submit the names of the people 

that are possibly involved to the Coordination Center. And we are 

going to get back from the other agencies whether they have any 

information on those kinds of individuals. 

It is really quite convenient to have a place where everybody 

goes and the people can sit in the same place rather than having 

to rely on long distance kinds of communication. 

Ms. BUERKLE. Thank you. 

And my last question, and I will allude back to what my colleague Mr. Sherman mentioned in his opening remarks, and that 

is the coordination between Congress. I mean, I think we all agree 

that this export reform needs to be coordinated with Congress. And 

so I would like to just hear assurances of how you think that that 

will happen. 

Ms. TAUSCHER. Yes, Congresswoman. We are anxious to continue 

briefing both staff and members. And as Dr. Miller said, the 1248 

Report will be ready and in the not too distant future we look to 

bring that report up and have briefings. And I know for myself and 

for my colleagues, anytime you choose to call, we will be sure to 

56

answer the call in the same day and get back to you. And come up 

on our horse as fast as we can to answer whatever questions you 

have. 

Mr. MILLER. I agree fully with Under Secretary Tauscher. 

Ms. BUERKLE. Thank you. 

Chairman ROS-LEHTINEN. Thank you so much. 

Mr. Rivera? 

Mr. RIVERA. Thank you, Madam Chair. 

With your permission and indulgence, my subcommittee chair, 

the gentlemen from California Mr. Rohrabacher has asked to follow-up on some questions. May I yield my time to him? 

Chairman ROS-LEHTINEN. Mr. Rohrabacher is recognized. 

Mr. ROHRABACHER. You know I have heard references to bolts 

earlier and to gyroscopes. Let us note that those were pivotal technologies in the development of the Chinese missile system. Before 

we gave them exploding bolts which permits stage separation, their 

long march rocket system was totally unreliable. And it was the 

United States that developed exploding bolts and this methodology 

of separating stages. Also at the same time we provided them the 

information they needed to have more than one payload. And, yes, 

that was for delivering satellites but guess what? It also makes 

sure their rockets now, their missiles now can deliver more than 

one nuclear warhead. 

The gyroscopes that we are talking about as well. These are 

things that cost us billions of dollars to perfect. The United States 

has spent billions of dollars of research that ends up in the hands 

of a country that is targeting us with their missiles. Is there any 

doubt in anybody’s mind out there what group is targeted by these 

Chinese missiles? It certainly is not Belgium, and it probably is not 

Great Britain. But we can rest assured we are high on the target 

list. 

That is a travesty and we should make sure that never happens 

again, and yet we have another article by another Chinese Communist publication at the end of the meetings with the administration, ‘‘U.S. To Ease High Tech Limits.’’ They are not meaning high 

tech limits to Belgium, they are meaning it to Beijing. 

I hope that we are not on the way to another great transfer of 

technology in the name of some company getting a couple of years 

of higher profits. 

The interim report restricts launch failure investigations. And let 

me just note that that was the vehicle in which these other technologies that I just mentioned that were transferred 15 years ago 

to the Chinese. But it also says that among the information that 

we can transfer to unspecified foreigners, is that technology which 

‘‘will ensure a safe ride to orbit.’’ Does that mean we can help the 

Chinese perfect? Because it does not say who they are referring to. 

Are the Chinese excluded from that, helping ensure a safe ride to 

orbit? It does not say they are excluded in the report. Are they excluded from that? 

Mr. MILLER. Congressman, the principles that are outlined in 

that very short report which will be, as you know, as I said will 

be elaborated, are applicable. And that is that the answer will depend on what technology is helping provide a safe ride to orbit. 

57

And that a country such as China will not be accorded the same 

treatment as a country such as the United Kingdom. And we——

Mr. ROHRABACHER. Okay. So there is something in the report 

that should suggests that creating a safe ride to orbit and the technology that does that will be permitted to a democratic country like 

Great Britain, but not to China? Where does it say that in the report? 

Mr. MILLER. That report is a very short summary of——

Mr. ROHRABACHER. Then it will be in the full report? You are 

saying that that will be specifically delineated in the full report? 

Mr. MILLER. Sir, no, what I am saying is that we will have a system and what we propose is to move toward a system where this 

is more transparent to Congress and to others——

Mr. ROHRABACHER. The answer is no, is that what you are telling 

me? You can answer that with a yes or no. Is that going to be in 

the report? 

Mr. MILLER. Well, Congressman——

Mr. ROHRABACHER. It is not going to be, is it? 

Mr. MILLER. Congressman, what I will tell you is that——

Mr. ROHRABACHER. Usually when people do not answer yes or no 

to questions like this, it is because they do not want to give a specific answer. 

Mr. MILLER. Congressman, I will assure you that it is question 

that will be asked of the report by me as I review it. 

Mr. ROHRABACHER. All right. 

Mr. MILLER. As I said, I think the right answer——

Mr. ROHRABACHER. And who will it be answered by? 

Mr. MILLER. I will review the report before it comes back up. And 

so I think the correct answer is to think that there categories of 

technology that can be broadly transferred, there are other categories that should not be broadly transferred. And other——

Mr. ROHRABACHER. There are some countries that should not be 

transferred——

Mr. MILLER. And there are some countries——

Mr. ROHRABACHER. And that should not be transferred to because they are violators of human rights and potential threats to 

our national security. 

Last year this committee endorsed the removal of some satellites 

and components from the Munitions List, but clearly stated the exception of barring any of these transfers to China. I would hope 

that remains our policy, Madam Chairwoman. 

Chairman ROS-LEHTINEN. Thank you very much, Mr. Rohrabacher. 

And I thank the witnesses as well as the excellent questions 

from our members. We all look forward to working with you as this 

process moves forward either in an open setting or in a classified 

setting. 

Thank you. 

And with that, the committee is now adjourned. 

[Whereupon, at 11:50 a.m., the committee was adjourned.] 

(59)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

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MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE ERIC L. HIRSCHHORN, 

UNDER SECRETARY, BUREAU OF INDUSTRY AND SECURITY, U.S. DEPARTMENT OF

COMMERCE


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QUESTIONS SUBMITTED FOR THE RECORD TO ALL WITNESSES BY THE HONORABLE

ILEANA ROS-LEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF

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WRITTEN RESPONSES RECEIVED FROM THE HONORABLE ERIC L. HIRSCHHORN, UNDER

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ROS-LEHTINEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA, 

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QUESTIONS SUBMITTED FOR THE RECORD TO THE HONORABLE ELLEN TAUSCHER, 

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QUESTIONS SUBMITTED FOR THE RECORD TO THE HONORABLE JAMES N. MILLER, JR., 

PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE FOR POLICY, U.S. DEPARTMENT

OF DEFENSE, BY THE HONORABLE JEFF DUNCAN, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF SOUTH CAROLINA

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