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[House Report 106-868]
[From the U.S. Government Publishing Office]

106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-868

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

 
                    SECURITY ASSISTANCE ACT OF 2000

                                _______
                                

               September 19, 2000.--Ordered to be printed

                                _______
                                

Mr. Goodling, from the Committee of Conference, submitted the following

                           CONFERENCE REPORT

                        [To accompany H.R. 4919]

      The committee of conference on the disagreeing votes of 
the two Houses on the amendment of the Senate to the bill (H.R. 
4919), to amend the Foreign Assistance Act of 1961 and the Arms 
Export Control Act to make improvements to certain defense and 
security assistance provisions under those Acts, to authorize 
the transfer of naval vessels to certain foreign countries, and 
for other purposes, having met, after full and free conference, 
have agreed to recommend and do recommend to their respective 
Houses as follows:
      That the House recede from its disagreement to the 
amendment of the Senate and agree to the same with an amendment 
as follows:
      In lieu of the matter proposed to be inserted by the 
Senate amendment, insert the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Security 
Assistance Act of 2000''.
    (b) Table of Contents.--The table of contents for this Act 
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definition.

                TITLE I--MILITARY AND RELATED ASSISTANCE

      Subtitle A--Foreign Military Sales and Financing Authorities

Sec. 101. Authorization of appropriations.
Sec. 102. Requirements relating to country exemptions for licensing of 
          defense items for export to foreign countries.

    Subtitle B--Stockpiling of Defense Articles for Foreign Countries

Sec. 111. Additions to United States war reserve stockpiles for allies.
Sec. 112. Transfer of certain obsolete or surplus defense articles in 
          the war reserve stockpiles for allies to Israel.

                      Subtitle C--Other Assistance

Sec. 121. Defense drawdown special authorities.
Sec. 122. Increased authority for the transport of excess defense 
          articles.

         TITLE II--INTERNATIONAL MILITARY EDUCATION AND TRAINING

Sec. 201. Authorization of appropriations.
Sec. 202. Additional requirements.

        TITLE III--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

Sec. 301. Nonproliferation and export control assistance.
Sec. 302. Nonproliferation and export control training in the United 
          States.
Sec. 303. Science and technology centers.
Sec. 304. Trial transit program.
Sec. 305. Exception to authority to conduct inspections under the 
          Chemical Weapons Convention Implementation Act of 1998.

                   TITLE IV--ANTITERRORISM ASSISTANCE

Sec. 401. Authorization of appropriations.

            TITLE V--INTEGRATED SECURITY ASSISTANCE PLANNING

  Subtitle A--Establishment of a National Security Assistance Strategy

Sec. 501. National Security Assistance Strategy.

              Subtitle B--Allocations for Certain Countries

Sec. 511. Security assistance for new NATO members.
Sec. 512. Increased training assistance for Greece and Turkey.
Sec. 513. Assistance for Israel.
Sec. 514. Assistance for Egypt.
Sec. 515. Security assistance for certain countries.
Sec. 516. Border security and territorial independence.

                  TITLE VI--TRANSFERS OF NAVAL VESSELS

Sec. 601. Authority to transfer naval vessels to certain foreign 
          countries.
Sec. 602. Inapplicability of aggregate annual limitation on value of 
          transferred excess defense articles.
Sec. 603. Costs of transfers.
Sec. 604. Conditions relating to combined lease-sale transfers.
Sec. 605. Funding of certain costs of transfers.
Sec. 606. Repair and refurbishment in United States shipyards.
Sec. 607. Sense of Congress regarding transfer of naval vessels on a 
          grant basis.
Sec. 608. Expiration of authority.

                   TITLE VII--MISCELLANEOUS PROVISIONS

Sec. 701. Utilization of defense articles and defense services.
Sec. 702. Annual military assistance report.
Sec. 703. Report on government-to-government arms sales end-use 
          monitoring program.
Sec. 704. MTCR report transmittals.
Sec. 705. Stinger missiles in the Persian Gulf region.
Sec. 706. Sense of Congress regarding excess defense articles.
Sec. 707. Excess defense articles for Mongolia.
Sec. 708. Space cooperation with Russian persons.
Sec. 709. Sense of Congress relating to military equipment for the 
          Philippines.
Sec. 710. Waiver of certain costs.

SEC. 2. DEFINITION.

    In this Act, the term ``appropriate committees of 
Congress'' means the Committee on Foreign Relations of the 
Senate and the Committee on International Relations of the 
House of Representatives.

                TITLE I--MILITARY AND RELATED ASSISTANCE

      Subtitle A--Foreign Military Sales and Financing Authorities

SEC. 101. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated for grant 
assistance under section 23 of the Arms Export Control Act (22 
U.S.C. 2763) and for the subsidy cost, as defined in section 
502(5) of the Federal Credit Reform Act of 1990, of direct 
loans under such section $3,550,000,000 for fiscal year 2001 
and $3,627,000,000 for fiscal year 2002.

SEC. 102. REQUIREMENTS RELATING TO COUNTRY EXEMPTIONS FOR LICENSING OF 
                    DEFENSE ITEMS FOR EXPORT TO FOREIGN COUNTRIES.

    (a) Requirements of Exemption.--Section 38 of the Arms 
Export Control Act (22 U.S.C. 2778) is amended by adding at the 
end the following:
    ``(j) Requirements Relating to Country Exemptions for 
Licensing of Defense Items for Export to Foreign Countries.--
            ``(1) Requirement for bilateral agreement.--
                    ``(A) In general.--The President may 
                utilize the regulatory or other authority 
                pursuant to this Act to exempt a foreign 
                country from the licensing requirements of this 
                Act with respect to exports of defense items 
                only if the United States Government has 
                concluded a binding bilateral agreement with 
                the foreign country. Such agreement shall--
                            ``(i) meet the requirements set 
                        forth in paragraph (2); and
                            ``(ii) be implemented by the United 
                        States and the foreign country in a 
                        manner that is legally-binding under 
                        their domestic laws.
                    ``(B) Exception.--The requirement to 
                conclude a bilateral agreement in accordance 
                with subparagraph (A) shall not apply with 
                respect to an exemption for Canada from the 
                licensing requirements of this Act for the 
                export of defense items.
            ``(2) Requirements of bilateral agreement.--A 
        bilateral agreement referred to paragraph (1)--
                    ``(A) shall, at a minimum, require the 
                foreign country, as necessary, to revise its 
                policies and practices, and promulgate or enact 
                necessary modifications to its laws and 
                regulations to establish an export control 
                regime that is at least comparable to United 
                States law, regulation, and policy requiring--
                            ``(i) conditions on the handling of 
                        all United States-origin defense items 
                        exported to the foreign country, 
                        including prior written United States 
                        Government approval for any reexports 
                        to third countries;
                            ``(ii) end-use and retransfer 
                        control commitments, including securing 
                        binding end-use and retransfer control 
                        commitments from all end-users, 
                        including such documentation as is 
                        needed in order to ensure compliance 
                        and enforcement, with respect to such 
                        United States-origin defense items;
                            ``(iii) establishment of a 
                        procedure comparable to a `watchlist' 
                        (if such a watchlist does not exist) 
                        and full cooperation with United States 
                        Government law enforcement agencies to 
                        allow for sharing of export and import 
                        documentation and background 
                        information on foreign businesses and 
                        individuals employed by or otherwise 
                        connected to those businesses; and
                            ``(iv) establishment of a list of 
                        controlled defense items to ensure 
                        coverage of those items to be exported 
                        under the exemption; and
                    ``(B) should, at a minimum, require the 
                foreign country, as necessary, to revise its 
                policies and practices, and promulgate or enact 
                necessary modifications to its laws and 
                regulations to establish an export control 
                regime that is at least comparable to United 
                States law, regulation, and policy regarding--
                            ``(i) controls on the export of 
                        tangible or intangible technology, 
                        including via fax, phone, and 
                        electronic media;
                            ``(ii) appropriate controls on 
                        unclassified information relating to 
                        defense items exported to foreign 
                        nationals;
                            ``(iii) controls on international 
                        arms trafficking and brokering;
                            ``(iv) cooperation with United 
                        States Government agencies, including 
                        intelligence agencies, to combat 
                        efforts by third countries to acquire 
                        defense items, the export of which to 
                        such countries would not be authorized 
                        pursuant to the export control regimes 
                        of the foreign country and the United 
                        States; and
                            ``(v) violations of export control 
                        laws, and penalties for such 
                        violations.
            ``(3) Advance certification.--Not less than 30 days 
        before authorizing an exemption for a foreign country 
        from the licensing requirements of this Act for the 
        export of defense items, the President shall transmit 
        to the Committee on International Relations of the 
        House of Representatives and the Committee on Foreign 
        Relations of the Senate a certification that--
                    ``(A) the United States has entered into a 
                bilateral agreement with that foreign country 
                satisfying all requirements set forth in 
                paragraph (2);
                    ``(B) the foreign country has promulgated 
                or enacted all necessary modifications to its 
                laws and regulations to comply with its 
                obligations under the bilateral agreement with 
                the United States; and
                    ``(C) the appropriate congressional 
                committees will continue to receive 
                notifications pursuant to the authorities, 
                procedures, and practices of section 36 of this 
                Act for defense exports to a foreign country to 
                which that section would apply and without 
                regard to any form of defense export licensing 
                exemption otherwise available for that country.
            ``(4) Definitions.--In this section:
                    ``(A) Defense items.--The term `defense 
                items' means defense articles, defense 
                services, and related technical data.
                    ``(B) Appropriate congressional 
                committees.--The term `appropriate 
                congressional committees' means--
                            ``(i) the Committee on 
                        International Relations and the 
                        Committee on Appropriations of the 
                        House of Representatives; and
                            ``(ii) the Committee on Foreign 
                        Relations and the Committee on 
                        Appropriations of the Senate.''.
    (b) Notification of Exemption.--Section 38(f) of the Arms 
Export Control Act (22 U.S.C. 2778(f)) is amended--
            (1) by inserting ``(1)'' after ``(f)''; and
            (2) by adding at the end the following:
    ``(2) The President may not authorize an exemption for a 
foreign country from the licensing requirements of this Act for 
the export of defense items under subsection (j) or any other 
provision of this Act until 30 days after the date on which the 
President has transmitted to the Committee on International 
Relations of the House of Representatives and the Committee on 
Foreign Relations of the Senate a notification that includes--
            ``(A) a description of the scope of the exemption, 
        including a detailed summary of the defense articles, 
        defense services, and related technical data covered by 
        the exemption; and
            ``(B) a determination by the Attorney General that 
        the bilateral agreement concluded under subsection (j) 
        requires the compilation and maintenance of sufficient 
        documentation relating to the export of United States 
        defense articles, defense services, and related 
        technical data to facilitate law enforcement efforts to 
        detect, prevent, and prosecute criminal violations of 
        any provision of this Act, including the efforts on the 
        part of countries and factions engaged in international 
        terrorism to illicitly acquire sophisticated United 
        States defense items.
    ``(3) Paragraph (2) shall not apply with respect to an 
exemption for Canada from the licensing requirements of this 
Act for the export of defense items.''.
    (c) Exports of Commercial Communications Satellites.--
            (1) Amendment of the arms export control act.--
        Section 36(c)(2) of the Arms Export Control Act (22 
        U.S.C. 2776(c)(2)) is amended--
                    (A) by striking ``and'' at the end of 
                subparagraph (A);
                    (B) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (C) by inserting after subparagraph (A) the 
                following:
            ``(B) in the case of a license for an export of a 
        commercial communications satellite for launch from, 
        and by nationals of, the Russian Federation, Ukraine, 
        or Kazakhstan, shall not be issued until at least 15 
        calendar days after the Congress receives such 
        certification, and shall not be issued then if the 
        Congress, within that 15-day period, enacts a joint 
        resolution prohibiting the proposed export; and''.
            (2) Sense of congress.--It is the sense of Congress 
        that the appropriate committees of Congress and the 
        appropriate agencies of the United States Government 
        should review the commodity jurisdiction of United 
        States commercial communications satellites.
    (d) Sense of Congress on Submission to the Senate of 
Certain Agreements as Treaties.--It is the sense of Congress 
that, prior to amending the International Traffic in Arms 
Regulations, the Secretary of State should consult with the 
appropriate committees of Congress for the purpose of 
determining whether certain agreements regarding defense trade 
with the United Kingdom and Australia should be submitted to 
the Senate as treaties.

   Subtitle B--Stockpiling of Defense Articles for Foreign Countries

SEC. 111. ADDITIONS TO UNITED STATES WAR RESERVE STOCKPILES FOR ALLIES.

    Section 514(b)(2) of the Foreign Assistance Act of 1961 (22 
U.S.C. 2321h(b)(2)) is amended to read as follows:
    ``(2)(A) The value of such additions to stockpiles of 
defense articles in foreign countries shall not exceed 
$50,000,000 for fiscal year 2001.
    ``(B) Of the amount specified in subparagraph (A), not more 
than $50,000,000 may be made available for stockpiles in the 
Republic of Korea.''.

SEC. 112. TRANSFER OF CERTAIN OBSOLETE OR SURPLUS DEFENSE ARTICLES IN 
                    THE WAR RESERVE STOCKPILES FOR ALLIES TO ISRAEL.

    (a) Transfers to Israel.--
            (1) Authority.--Notwithstanding section 514 of the 
        Foreign Assistance Act of 1961 (22 U.S.C. 2321h), the 
        President is authorized to transfer to Israel, in 
        return for concessions to be negotiated by the 
        Secretary of Defense, with the concurrence of the 
        Secretary of State, any or all of the items described 
        in paragraph (2).
            (2) Items covered.--The items referred to in 
        paragraph (1) are munitions, equipment, and material 
        such as armor, artillery, automatic weapons ammunition, 
        and missiles that--
                    (A) are obsolete or surplus items;
                    (B) are in the inventory of the Department 
                of Defense;
                    (C) are intended for use as reserve stocks 
                for Israel; and
                    (D) as of the date of the enactment of this 
                Act, are located in a stockpile in Israel.
    (b) Concessions.--The value of concessions negotiated 
pursuant to subsection (a) shall be at least equal to the fair 
market value of the items transferred. The concessions may 
include cash compensation, services, waiver of charges 
otherwise payable by the United States, and other items of 
value.
    (c) Advance Notification of Transfer.--Not less than 30 
days before making a transfer under the authority of this 
section, the President shall transmit to the Committee on 
Foreign Relations of the Senate and the Committee on 
International Relations of the House of Representatives a 
notification of the proposed transfer. The notification shall 
identify the items to be transferred and the concessions to be 
received.
    (d) Expiration of Authority.--No transfer may be made under 
the authority of this section 3 years after the date of the 
enactment of this Act.

                      Subtitle C--Other Assistance

SEC. 121. DEFENSE DRAWDOWN SPECIAL AUTHORITIES.

    (a) Emergency Drawdown.--Section 506(a)(2)(B) of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2318(a)(2)(B)) is 
amended by striking ``$150,000,000'' and inserting 
``$200,000,000''.
    (b) Additional Drawdown.--Section 506(a)(2)(A)(i) of such 
Act (22 U.S.C. 2318(a)(2)(A)(i)) is amended--
            (1) by striking ``or'' at the end of subclause 
        (II); and
            (2) by striking subclause (III) and inserting the 
        following:
                                    ``(III) chapter 8 of part 
                                II (relating to antiterrorism 
                                assistance);
                                    ``(IV) chapter 9 of part II 
                                (relating to nonproliferation 
                                assistance); or
                                    ``(V) the Migration and 
                                Refugee Assistance Act of 1962; 
                                or''.

SEC. 122. INCREASED AUTHORITY FOR THE TRANSPORT OF EXCESS DEFENSE 
                    ARTICLES.

    Section 516(e)(2)(C) of the Foreign Assistance Act of 1961 
(22 U.S.C. 2321j(e)(2)(C)) is amended by striking ``25,000'' 
and inserting ``50,000''.

        TITLE II--INTERNATIONAL MILITARY EDUCATION AND TRAINING

SEC. 201. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the President 
$55,000,000 for fiscal year 2001 and $65,000,000 for fiscal 
year 2002 to carry out chapter 5 of part II of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2347 et seq.).

SEC. 202. ADDITIONAL REQUIREMENTS.

    Chapter 5 of part II of the Foreign Assistance Act of 1961 
(22 U.S.C. 2347 et seq.) is amended by adding at the end the 
following new sections:

``SEC. 547. CONSULTATION REQUIREMENT.

    ``The selection of foreign personnel for training under 
this chapter shall be made in consultation with the United 
States defense attache to the relevant country.

``SEC. 548. RECORDS REGARDING FOREIGN PARTICIPANTS.

    ``In order to contribute most effectively to the 
development of military professionalism in foreign countries, 
the Secretary of Defense shall develop and maintain a database 
containing records on each foreign military or defense ministry 
civilian participant in education and training activities 
conducted under this chapter after December 31, 2000. This 
record shall include the type of instruction received, the 
dates of such instruction, whether such instruction was 
completed successfully, and, to the extent practicable, a 
record of the person's subsequent military or defense ministry 
career and current position and location.''.

       TITLE III--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

SEC. 301. NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE.

    Part II of the Foreign Assistance Act of 1961 (22 U.S.C. 
2301 et seq.) is amended by adding at the end the following new 
chapter:

      ``CHAPTER 9--NONPROLIFERATION AND EXPORT CONTROL ASSISTANCE

``SEC. 581. PURPOSES.

    ``The purposes of assistance under this chapter are to halt 
the proliferation of nuclear, chemical, and biological weapons, 
and conventional weaponry, through support of activities 
designed--
            ``(1) to enhance the nonproliferation and export 
        control capabilities of friendly countries by providing 
        training and equipment to detect, deter, monitor, 
        interdict, and counter proliferation;
            ``(2) to strengthen the bilateral ties of the 
        United States with friendly governments by offering 
        concrete assistance in this area of vital national 
        security interest;
            ``(3) to accomplish the activities and objectives 
        set forth in sections 503 and 504 of the FREEDOM 
        Support Act (22 U.S.C. 5853, 5854), without regard to 
        the limitation of those sections to the independent 
        states of the former Soviet Union; and
            ``(4) to promote multilateral activities, including 
        cooperation with international organizations, relating 
        to nonproliferation.

``SEC. 582. AUTHORIZATION OF ASSISTANCE.

    ``Notwithstanding any other provision of law (other than 
section 502B or section 620A of this Act), the President is 
authorized to furnish, on such terms and conditions as the 
President may determine, assistance in order to carry out the 
purposes of this chapter. Such assistance may include training 
services and the provision of funds, equipment, and other 
commodities related to the detection, deterrence, monitoring, 
interdiction, and prevention or countering of proliferation, 
the establishment of effective nonproliferation laws and 
regulations, and the apprehension of those individuals involved 
in acts of proliferation of such weapons.

``SEC. 583. TRANSIT INTERDICTION.

    ``(a) Allocation of Funds.--In providing assistance under 
this chapter, the President should ensure that not less than 
one-quarter of the total of such assistance is expended for the 
purpose of enhancing the capabilities of friendly countries to 
detect and interdict proliferation-related shipments of cargo 
that originate from, and are destined for, other countries.
    ``(b) Priority to Certain Countries.--Priority shall be 
given in the apportionment of the assistance described under 
subsection (a) to any friendly country thathas been determined 
by the Secretary of State to be a country frequently transited by 
proliferation-related shipments of cargo.

``SEC. 584. LIMITATIONS.

    ``The limitations contained in section 573 (a) and (d) of 
this Act shall apply to this chapter.

``SEC. 585. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Authorization of Appropriations.--There are 
authorized to be appropriated to the President to carry out 
this chapter $129,000,000 for fiscal year 2001 and $142,000,000 
for fiscal year 2002.
    ``(b) Availability of Funds.--Funds made available under 
subsection (a) may be used notwithstanding any other provision 
of law (other than section 502B or 620A) and shall remain 
available until expended.''.
    ``(c) Treatment of Fiscal Year 2001 Appropriations.--
Amounts made available by the Foreign Operations, Export 
Financing, and Related Programs Appropriations Act, 2001, under 
`Nonproliferation, Antiterrorism, Demining, and Related 
Programs' and `Assistance for the Independent States of the 
Former Soviet Union' accounts for the activities described in 
subsection (d) shall be considered to be made available 
pursuant to this chapter.
    ``(d) Covered Activities.--The activities referred to in 
subsection (c) are--
            ``(1) assistance under the Nonproliferation and 
        Disarmament Fund;
            ``(2) assistance for science and technology centers 
        in the independent states of the former Soviet Union;
            ``(3) export control assistance; and
            ``(4) export control and border assistance under 
        chapter 11 of part I of the Foreign Assistance Act of 
        1961 (22 U.S.C. 2295 et seq.) or the FREEDOM Support 
        Act (22 U.S.C. 5801 et seq.).''.

SEC. 302. NONPROLIFERATION AND EXPORT CONTROL TRAINING IN THE UNITED 
                    STATES.

    Of the amounts made available for fiscal years 2001 and 
2002 under chapter 9 of part II of the Foreign Assistance Act 
of 1961, as added by section 301, $2,000,000 is authorized to 
be available each such fiscal year for the purpose of training 
and education of personnel from friendly countries in the 
United States.

SEC. 303. SCIENCE AND TECHNOLOGY CENTERS.

    (a) Availability of Funds.--Of the amounts made available 
for the fiscal years 2001 and 2002 under chapter 9 of part II 
of the Foreign Assistance Act of 1961, as added by section 301, 
$59,000,000 for fiscal year 2001 and $65,000,000 for fiscal 
year 2002 are authorized to be available for science and 
technology centers in the independent states of the former 
Soviet Union.
    (b) Sense of Congress.--It is the sense of Congress, taking 
into account section 1132 of H. R. 3427 of the One Hundred and 
Sixth Congress (as enacted by section 1000(a)(7) of Public Law 
106-113), that the practice of auditing entities receiving 
funds authorized under this section should be significantly 
expanded and that the burden of supplying auditors should be 
spread equitably within the United States Government.

SEC. 304. TRIAL TRANSIT PROGRAM.

    (a) Allocation of Funds.--Of the amount made available for 
fiscal year 2001 under chapter 9 of the Foreign Assistance Act 
of 1961, as added by section 301, $5,000,000 is authorized to 
be available to establish a static cargo x-ray facility in 
Malta, if the Secretary of State first certifies to the 
appropriate committees of Congress that the Government of Malta 
has provided adequate assurances that such a facility will be 
utilized in connection with random cargo inspections by Maltese 
customs officials of container traffic transiting through the 
Malta Freeport.
    (b) Requirement of Written Assessment.--In the event that a 
facility is established in Malta pursuant to subsection (a), 
the Secretary of State shall submit a written assessment to the 
appropriate committees of Congress not later than 270 days 
after such a facility commences operation detailing--
            (1) statistics on utilization of the facility by 
        Malta;
            (2) the contribution made by the facility to United 
        States nonproliferation and export control objectives; 
        and
            (3) the feasibility of establishing comparable 
        facilities in other countries identified by the 
        Secretary of State pursuant to section 583 of the 
        Foreign Assistance Act of 1961, as added by section 301.
    (c) Treatment of Assistance.--Assistance under this section 
shall be considered as assistance under section 583(a) of the 
Foreign Assistance Act of 1961 (relating to transit 
interdiction), as added by section 301.

SEC. 305. EXCEPTION TO AUTHORITY TO CONDUCT INSPECTIONS UNDER THE 
                    CHEMICAL WEAPONS CONVENTION IMPLEMENTATION ACT OF 
                    1998.

    Section 303 of the Chemical Weapons Convention 
Implementation Act of 1998 (22 U.S.C. 6723) is amended by 
adding at the end the following new subsection:
    ``(c) Exception.--The requirement under subsection 
(b)(2)(A) shall not apply to inspections of United States 
chemical weapons destruction facilities (as used within the 
meaning of part IV(C)(13) of the Verification Annex to the 
Convention).''.

                   TITLE IV--ANTITERRORISM ASSISTANCE

SEC. 401. AUTHORIZATION OF APPROPRIATIONS.

    Section 574(a) of the Foreign Assistance Act of 1961 (22 
U.S.C. 2349aa-4(a)) is amended by striking ``$9,840,000'' and 
all that follows through the period and inserting the 
following: ``$72,000,000 for fiscal year 2001 and $73,000,000 
for fiscal year 2002.''.

            TITLE V--INTEGRATED SECURITY ASSISTANCE PLANNING

  Subtitle A--Establishment of a National Security Assistance Strategy

SEC. 501. NATIONAL SECURITY ASSISTANCE STRATEGY.

    (a) Multiyear Plan.--Not later than 180 days after the date 
of enactment of this Act, and annually thereafter at the time 
of submission of the congressional presentation materials of 
the foreign operations appropriations budget request, the 
Secretary of State should submit to the appropriate committees 
of Congress a plan setting forth a National Security Assistance 
Strategy for the United States.
    (b) Elements of the Strategy.--The National Security 
Assistance Strategy should--
            (1) set forth a multi-year plan for security 
        assistance programs;
            (2) be consistent with the National Security 
        Strategy of the United States;
            (3) be coordinated with the Secretary of Defense 
        and the Chairman of the Joint Chiefs of Staff;
            (4) be prepared, in consultation with other 
        agencies, as appropriate;
            (5) identify overarching security assistance 
        objectives, including identification of the role that 
        specific security assistance programs will play in 
        achieving such objectives;
            (6) identify a primary security assistance 
        objective, as well as specific secondary objectives, 
        for individual countries;
            (7) identify, on a country-by-country basis, how 
        specific resources will be allocated to accomplish both 
        primary and secondary objectives;
            (8) discuss how specific types of assistance, such 
        as foreign military financing and international 
        military education and training, will be combined at 
        the country level to achieve United States objectives; 
        and
            (9) detail, with respect to each of the paragraphs 
        (1) through (8), how specific types of assistance 
        provided pursuant to the Arms Export Control Act and 
        the Foreign Assistance Act of 1961 are coordinated with 
        United States assistance programs managed by the 
        Department of Defense and other agencies.
    (c) Covered Assistance.--The National Security Assistance 
Strategy should cover assistance provided under--
            (1) section 23 of the Arms Export Control Act (22 
        U.S.C. 2763);
            (2) chapter 5 of part II of the Foreign Assistance 
        Act of 1961 (22 U.S.C. 2347 et seq.); and
            (3) section 516 of the Foreign Assistance Act of 
        1961 (22 U.S.C. 2321i).

             Subtitle B--Allocations for Certain Countries

SEC. 511. SECURITY ASSISTANCE FOR NEW NATO MEMBERS.

    (a) Foreign Military Financing.--Of the amounts made 
available for the fiscal years 2001 and 2002 under section 23 
of the Arms Export Control Act (22 U.S.C. 2763), $30,300,000 
for fiscal year 2001 and $35,000,000 for fiscal year 2002 are 
authorized to be available on a grant basis for all of the 
following countries: the Czech Republic, Hungary, and Poland.
    (b) Military Education and Training.--Of the amounts made 
available for the fiscal years 2001 and 2002 to carry out 
chapter 5 of part II of the Foreign Assistance Act of 1961 (22 
U.S.C. 2347 et seq.), $5,100,000 for fiscal year 2001 and 
$7,000,000 for fiscal year 2002 are authorized to be available 
for all of the following countries: the Czech Republic, 
Hungary, and Poland.
    (c) Select Priorities.--In providing assistance under this 
section, the President shall give priority to supporting 
activities that are consistent with the objectives set forth in 
the following conditions of the Senate resolution of 
ratification for the Protocols to the North Atlantic Treaty of 
1949 on the Accession of Poland, Hungary, and the Czech 
Republic:
            (1) Condition (1)(A)(v), (vi), and (vii), relating 
        to common threats, the core mission of NATO, and the 
        capacity to respond to common threats.
            (2) Condition (1)(B), relating to the fundamental 
        importance of collective defense.
            (3) Condition (1)(C), relating to defense planning, 
        command structures, and force goals.
            (4) Conditions (4)(B)(i) and (4)(B)(ii), relating 
        to intelligence matters.

SEC. 512. INCREASED TRAINING ASSISTANCE FOR GREECE AND TURKEY.

    (a) In General.--Of the amounts made available for the 
fiscal years 2001 and 2002 to carry out chapter 5 of part II of 
the Foreign Assistance Act of 1961 (22 U.S.C. 2347 et seq.)--
            (1) $1,000,000 for fiscal year 2001 and $1,000,000 
        for fiscal year 2002 are authorized to be available for 
        Greece; and
            (2) $2,500,000 for fiscal year 2001 and $2,500,000 
        for fiscal year 2002 are authorized to be available for 
        Turkey.
    (b) Use for Professional Military Education.--Of the 
amounts available under paragraphs (1) and (2) of subsection 
(a) for fiscal year 2002, $500,000 of each such amount should 
be available for purposes of professional military education.
    (c) Use for Joint Training.--It is the sense of Congress 
that, to the maximum extent practicable, amounts available 
under subsection (a) that are used in accordance with 
subsection (b) should be used for joint training of Greek and 
Turkish officers.

SEC. 513. ASSISTANCE FOR ISRAEL.

    (a) Definitions.--In this section:
            (1) ESF assistance.--The term ``ESF assistance'' 
        means assistance under chapter 4 of part II of the 
        Foreign Assistance Act of 1961 (22 U.S.C. 2346 et 
        seq.), relating to the economic support fund.
            (2) Foreign military financing program.--The term 
        ``Foreign Military Financing Program''means the program 
authorized by section 23 of the Arms Export Control Act (22 U.S.C. 
2763).
    (b) ESF Assistance.--
            (1) In general.--Of the amounts made available for 
        each of the fiscal years 2001 and 2002 for ESF 
        assistance, the amount specified in paragraph (2) for 
        each such fiscal year is authorized to be made 
        available for Israel.
            (2) Computation of amount.--Subject to subsection 
        (d), the amount referred to in paragraph (1) is equal 
        to--
                    (A) the amount made available for ESF 
                assistance for Israel for the preceding fiscal 
                year, minus
                    (B) $120,000,000.
    (c) FMF Program.--
            (1) In general.--Of the amount made available for 
        each of the fiscal years 2001 and 2002 for assistance 
        under the Foreign Military Financing Program, the 
        amount specified in paragraph (2) for each such fiscal 
        year is authorized to be made available for Israel.
            (2) Computation of amount.--Subject to subsection 
        (d), the amount referred to in paragraph (1) is equal 
        to--
                    (A) the amount made available for 
                assistance under the Foreign Military Financing 
                Program for Israel for the preceding fiscal 
                year, plus
                    (B) $60,000,000.
            (3) Disbursement of funds.--Funds authorized to be 
        available for Israel under paragraph (1) for fiscal 
        year 2001 shall be disbursed not later than 30 days 
        after the date of enactment of an Act making 
        appropriations for foreign operations, export 
        financing, and related programs for fiscal year 2001, 
        or October 31, 2000, whichever date is later.
            (4) Availability of funds for advanced weapons 
        systems.--To the extent the Government of Israel 
        requests that funds be used for such purposes, grants 
        made available for Israel out of funds authorized to be 
        available under paragraph (1) for Israel for fiscal 
        year 2001 shall, as agreed by Israel and the United 
        States, be available for advanced weapons systems, of 
        which not less than $520,000,000 shall be available for 
        the procurement in Israel of defense articles and 
        defense services, including research and development.
    (d) Exclusion of Rescissions and Supplemental 
Appropriations.--For purposes of this section, the computation 
of amounts made available for a fiscal year shall not take into 
account any amount rescinded by an Act or any amount 
appropriated by an Act making supplemental appropriations for a 
fiscal year.

SEC. 514. ASSISTANCE FOR EGYPT.

    (a) Definitions.--In this section:
            (1) ESF assistance.--The term ``ESF assistance'' 
        means assistance under chapter 4 of part II of the 
        Foreign Assistance Act of 1961 (22 U.S.C. 2346 et 
        seq.), relating to the economic support fund.
            (2) Foreign military financing program.--The term 
        ``Foreign Military Financing Program'' means the 
        program authorized by section 23 of the Arms Export 
        Control Act (22 U.S.C. 2763).
    (b) ESF Assistance.--
            (1) In general.--Of the amounts made available for 
        each of the fiscal years 2001 and 2002 for ESF 
        assistance, the amount specified in paragraph (2) for 
        each such fiscal year is authorized to be made 
        available for Egypt.
            (2) Computation of amount.--Subject to subsection 
        (d), the amount referred to in paragraph (1) is equal 
        to--
                    (A) the amount made available for ESF 
                assistance for Egypt during the preceding 
                fiscal year, minus
                    (B) $40,000,000.
    (c) FMF Program.--Of the amount made available for each of 
the fiscal years 2001 and 2002 for assistance under the Foreign 
Military Financing Program, $1,300,000,000 is authorized to be 
made available for Egypt.
    (d) Exclusion of Rescissions and Supplemental 
Appropriations.--For purposes of this section, the computation 
of amounts made available for a fiscal year shall not take into 
account any amount rescinded by an Act or any amount 
appropriated by an Act making supplemental appropriations for a 
fiscal year.
    (e) Disbursement of Funds.--Funds estimated to be outlayed 
for Egypt under subsection (c) during fiscal year 2001 shall be 
disbursed to an interest-bearing account for Egypt in the 
Federal Reserve Bank of New York within 30 days of the date of 
enactment of this Act, or by October 31, 2000, whichever is 
later, provided that--
            (1) withdrawal of funds from such account shall be 
        made only on authenticated instructions from the 
        Defense Finance and Accounting Service of the 
        Department of Defense;
            (2) in the event such account is closed, the 
        balance of the account shall be transferred promptly to 
        the appropriations account for the Foreign Military 
        Financing Program; and
            (3) none of the interest accrued by such account 
        should be obligated unless the Committee on 
        Appropriations and the Committee on Foreign Relations 
        of the Senate and the Committee on Appropriations and 
        the Committee on International Relations of the House 
        of Representatives are notified.

SEC. 515. SECURITY ASSISTANCE FOR CERTAIN COUNTRIES.

    (a) Foreign Military Financing.--Of the amounts made 
available for the fiscal years 2001 and 2002 under section 23 
of the Arms Export Control Act (22 U.S.C. 2763)--
            (1) $18,200,000 for fiscal year 2001 and 
        $20,500,000 for fiscal year 2002 are authorized to be 
        available on a grant basis for all of the following 
        countries: Estonia, Latvia, and Lithuania;
            (2) $2,000,000 for fiscal year 2001 and $5,000,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for the Philippines;
            (3) $4,500,000 for fiscal year 2001 and $5,000,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for Georgia;
            (4) $3,000,000 for fiscal year 2001 and $3,500,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for Malta;
            (5) $3,500,000 for fiscal year 2001 and $4,000,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for Slovenia;
            (6) $8,400,000 for fiscal year 2001 and $8,500,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for Slovakia;
            (7) $11,000,000 for fiscal year 2001 and 
        $11,100,000 for fiscal year 2002 are authorized to be 
        available on a grant basis for Romania;
            (8) $8,500,000 for fiscal year 2001 and $8,600,000 
        for fiscal year 2002 are authorized to be available on 
        a grant basis for Bulgaria; and
            (9) $100,000,000 for fiscal year 2001 and 
        $105,000,000 for fiscal year 2002 are authorized to be 
        available on a grant basis for Jordan.
    (b) IMET.--Of the amounts made available for the fiscal 
years 2001 and 2002 to carry out chapter 5 of part II of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2347 et seq.)--
            (1) $2,300,000 for fiscal year 2001 and $4,000,000 
        for fiscal year 2002 are authorized to be available for 
        all of the following countries: Estonia, Latvia, and 
        Lithuania;
            (2) $1,400,000 for fiscal year 2001 and $1,500,000 
        for fiscal year 2002 are authorized to be available for 
        the Philippines;
            (3) $475,000 for fiscal year 2001 and $1,000,000 
        for fiscal year 2002 are authorized to be available for 
        Georgia;
            (4) $200,000 for fiscal year 2001 and $1,000,000 
        for fiscal year 2002 are authorized to be available for 
        Malta;
            (5) $700,000 for fiscal year 2001 and $1,000,000 
        for fiscal year 2002 are authorized to be available for 
        Slovenia;
            (6) $700,000 for fiscal year 2001 and $1,000,000 
        for fiscal year 2002 are authorized to be available for 
        Slovakia;
            (7) $1,300,000 for fiscal year 2001 and $1,500,000 
        for fiscal year 2002 are authorized to be available for 
        Romania; and
            (8) $1,100,000 for fiscal year 2001 and $1,200,000 
        for fiscal year 2002 are authorized to be available for 
        Bulgaria.

SEC. 516. BORDER SECURITY AND TERRITORIAL INDEPENDENCE.

    (a) GUUAM Countries and Armenia.--For the purpose of 
carrying out section 499C of the Foreign Assistance Act of 1961 
and assisting GUUAM countries and Armenia to strengthen 
national control of their borders and to promote the 
independence and territorial sovereignty of such countries, the 
following amounts are authorized to be made available for 
fiscal years 2001 and 2002:
            (1) $5,000,000 for fiscal year 2001 and $20,000,000 
        for fiscal year 2002 are of the amounts made available 
        under section 23 of the Arms Export Control Act (22 
        U.S.C. 2763).
            (2) $2,000,000 for fiscal year 2001 and $10,000,000 
        for fiscal year 2002 of the amounts made available 
        under chapter 9 of part II of the Foreign Assistance 
        Act of 1961, as added by section 301.
            (3) $500,000 for fiscal year 2001 and $5,000,000 
        for fiscal year 2002 of the amounts made available to 
        carry out chapter 5 of part II of the Foreign 
        Assistance Act of 1961 (22 U.S.C. 2347 et seq.).
            (4) $1,000,000 for fiscal year 2001 and $2,000,000 
        for fiscal year 2002 of the amounts made available to 
        carry out chapter 8 of part II of the Foreign 
        Assistance Act.
    (b) GUUAM Countries Defined.--In this section, the term 
``GUUAM countries'' means the group of countries that signed a 
protocol on quadrilateral cooperation on November 25, 1997, 
together with Uzbekistan.

                  TITLE VI--TRANSFERS OF NAVAL VESSELS

SEC. 601. AUTHORITY TO TRANSFER NAVAL VESSELS TO CERTAIN FOREIGN 
                    COUNTRIES.

    (a) Brazil.--The President is authorized to transfer to the 
Government of Brazil two ``THOMASTON'' class dock landing ships 
ALAMO (LSD 33) and HERMITAGE (LSD 34), and four ``GARCIA'' 
class frigates BRADLEY (FF 1041), DAVIDSON (FF 1045), SAMPLE 
(FF 1048) and ALBERT DAVID (FF 1050). Such transfers shall be 
on a grant basis under section 516 of the Foreign Assistance 
Act of 1961 (22 U.S.C. 2321j).
    (b) Chile.--The President is authorized to transfer to the 
Government of Chile two ``OLIVER HAZARD PERRY'' class guided 
missile frigates WADSWORTH (FFG 9), and ESTOCIN (FFG 15). Such 
transfers shall be on a combined lease-sale basis under 
sections 61 and 21 of the Arms Export Control Act (22 U.S.C. 
2796, 2761).
    (c) Greece.--The President is authorized to transfer to the 
Government of Greece two ``KNOX'' class frigates VREELAND (FF 
1068), and TRIPPE (FF 1075). Such transfers shall be on a grant 
basis under section 516 of the Foreign Assistance Act of 1961 
(22 U.S.C. 2321j).
    (d) Turkey.--The President is authorized to transfer to the 
Government of Turkey two ``OLIVER HAZARD PERRY'' class guided 
missile frigates JOHN A. MOORE (FFG 19), and FLATLEY (FFG 21). 
Such transfers shall be on a combined lease-sale basis under 
sections 61 and 21 of the Arms Export Control Act (22 U.S.C. 
2796, 2761). The authority granted by this subsection is in 
addition to that granted under section 1018(a)(9) of Public Law 
106-65.

SEC. 602. INAPPLICABILITY OF AGGREGATE ANNUAL LIMITATION ON VALUE OF 
                    TRANSFERRED EXCESS DEFENSE ARTICLES.

    The value of naval vessels authorized under section 601 to 
be transferred on a grant basis under section 516 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321j) shall not be 
included in the aggregate annual value of transferred excess 
defense articles which is subject to the aggregate annual 
limitation set forth in section 516(g) of the Foreign 
Assistance Act of 1961 (22 U.S.C. 2321j(g)).

SEC. 603. COSTS OF TRANSFERS.

    Any expense of the United States in connection with a 
transfer authorized by this title shall be charged to the 
recipient.

SEC. 604. CONDITIONS RELATING TO COMBINED LEASE-SALE TRANSFERS.

    A transfer of a vessel on a combined lease-sale basis 
authorized by section 601 shall be made in accordance with the 
following requirements:
            (1) The President may initially transfer the vessel 
        by lease, with lease payments suspended for the term of 
        the lease, if the country entering into the lease for 
        the vessel simultaneously enters into a foreign 
        military sales agreement for the transfer of title to 
        the vessel.
            (2) The President may not deliver to the purchasing 
        country title to the vessel until the purchase price of 
        the vessel under such a foreign military sales 
        agreement is paid in full.
            (3) Upon payment of the purchase price in full 
        under such a sales agreement and delivery of title to 
        the recipient country, the President shall terminate 
        the lease.
            (4) If the purchasing country fails to make full 
        payment of the purchase price in accordance with the 
        sales agreement by the date required under the sales 
        agreement--
                    (A) the sales agreement shall be 
                immediately terminated;
                    (B) the suspension of lease payments under 
                the lease shall be vacated; and
                    (C) the United States shall be entitled to 
                retain all funds received on or before the date 
                of the termination under the sales agreement, 
                up to the amount of the lease payments due and 
                payable under the lease and all other costs 
                required by the lease to be paid to that date.
            (5) If a sales agreement is terminated pursuant to 
        paragraph (4), the United States shall not be required 
        to pay any interest to the recipient country on any 
        amount paid to the United States by the recipient 
        country under the sales agreement and not retained by 
        the United States under the lease.

SEC. 605. FUNDING OF CERTAIN COSTS OF TRANSFERS.

    There are authorized to be appropriated to the Defense 
Vessels Transfer Program Account such funds as may be necessary 
to cover the costs (as defined in section 502 of the 
Congressional Budget Act of 1974 (2 U.S.C. 661a)) of the lease-
sale transfers authorized by section 601. Funds authorized to 
be appropriated under the preceding sentence for the purpose 
described in that sentence may not be available for any other 
purpose.

SEC. 606. REPAIR AND REFURBISHMENT IN UNITED STATES SHIPYARDS.

    To the maximum extent practicable, the President shall 
require, as a condition of the transfer of a vessel under 
section 601, that the country to which the vessel is 
transferred will have such repair or refurbishment of the 
vessel as is needed, before the vessel joins the naval forces 
of that country, performed at a shipyard located in the United 
States, including a United States Navy shipyard.

SEC. 607. SENSE OF CONGRESS REGARDING TRANSFER OF NAVAL VESSELS ON A 
                    GRANT BASIS.

    It is the sense of Congress that naval vessels authorized 
under section 601 to be transferred to foreign countries on a 
grant basis under section 516 of the Foreign Assistance Act of 
1961 (22 U.S.C. 2321j) should be so transferred only if the 
United States receives appropriate benefits from such countries 
for transferring the vessel on a grant basis.

SEC. 608. EXPIRATION OF AUTHORITY.

    The authority granted by section 601 shall expire two years 
after the date of enactment of this Act.

                  TITLE VII--MISCELLANEOUS PROVISIONS

SEC. 701. UTILIZATION OF DEFENSE ARTICLES AND DEFENSE SERVICES.

    Section 502 of the Foreign Assistance Act of 1961 (22 
U.S.C. 2302) is amended in the first sentence by inserting 
``(including for antiterrorism and nonproliferation purposes)'' 
after ``internal security''.

SEC. 702. ANNUAL MILITARY ASSISTANCE REPORT.

    Section 655(b)(3) of the Foreign Assistance Act of 1961 (22 
U.S.C. 2415(b)(3)) is amended by inserting before the period at 
the end the following: ``and, if so, a specification of those 
defense articles that were exported during the fiscal year 
covered by the report''.

SEC. 703. REPORT ON GOVERNMENT-TO-GOVERNMENT ARMS SALES END-USE 
                    MONITORING PROGRAM.

    Not later than 180 days after the date of the enactment of 
this Act, the President shall prepare and transmit to the 
appropriate committees of Congress a report that contains a 
summary of the status of the efforts of the Defense Security 
Cooperation Agency to implement the End-Use Monitoring 
Enhancement Plan relating to government-to-government transfers 
of defense articles, defense services, and related 
technologies.

SEC. 704. MTCR REPORT TRANSMITTALS.

    For purposes of section 71(d) of the Arms Export Control 
Act (22 U.S.C. 2797(d)), the requirement that reports under 
that section shall be transmitted to the Congress shall be 
considered to be a requirement that such reports shall be 
transmitted to the Committee on International Relations of the 
House of Representatives and the Committee on Foreign Relations 
and the Committee on Banking, Housing and Urban Affairs of the 
Senate.

SEC. 705. STINGER MISSILES IN THE PERSIAN GULF REGION.

    (a) Prohibition.--Notwithstanding any other provision of 
law and except as provided in subsection (b), the United States 
may not sell or otherwise make available under the Arms Export 
Control Act or chapter 2 of part II of the Foreign Assistance 
Act of 1961 any Stinger ground-to-air missiles to any country 
bordering the Persian Gulf.
    (b) Additional Transfers Authorized.--In addition to other 
defense articles authorized to be transferred by section 581 of 
the Foreign Operations, Export Financing, and Related Programs 
Appropriation Act, 1990, the United States may sell or make 
available, under the Arms Export Control Act or chapter 2 of 
part II of the Foreign Assistance Act of 1961, Stinger ground-
to-air missiles to any country bordering the Persian Gulf in 
order to replace, on a one-for-one basis, Stinger missiles 
previously furnished to such country if the Stinger missiles to 
be replaced are nearing the scheduled expiration of their 
shelf-life.

SEC. 706. SENSE OF CONGRESS REGARDING EXCESS DEFENSE ARTICLES.

    It is the sense of Congress that the President should make 
expanded use of the authority provided under section 21(a) of 
the Arms Export Control Act to sell excess defense articles by 
utilizing the flexibility afforded by section 47 of such Act to 
ascertain the ``market value'' of excess defense articles.

SEC. 707. EXCESS DEFENSE ARTICLES FOR MONGOLIA.

    (a) Uses for Which Funds Are Available.--Notwithstanding 
section 516(e) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2321j(e)), during the fiscal years 2001 and 2002, funds 
available to the Department of Defense may be expended for 
crating, packing, handling, and transportation of excess 
defense articles transferred under the authority of section 516 
of that Act to Mongolia.
    (b) Content of Congressional Notification.--Each 
notification required to be submitted under section 516(f) of 
the Foreign Assistance Act of 1961 (22 U.S.C. 2321j(f)) with 
respect to a proposed transfer of a defense article described 
in subsection (a) shall include an estimateof the amount of 
funds to be expended under subsection (a) with respect to that 
transfer.

SEC. 708. SPACE COOPERATION WITH RUSSIAN PERSONS.

    (a) Annual Certification.--
            (1) Requirement.--The President shall submit each 
        year to the appropriate committees of Congress, with 
        respect to each Russian person described in paragraph 
        (2), a certification that the reports required to be 
        submitted to Congress during the preceding calendar 
        year under section 2 of the Iran Nonproliferation Act 
        of 2000 (Public Law 106-178) do not identify that 
        person on account of a transfer to Iran of goods, 
        services, or technology described in section 2(a)(1)(B) 
        of such Act.
            (2) Applicability.--The certification requirement 
        under paragraph (1) applies with respect to each 
        Russian person that, as of the date of the 
        certification, is a party to an agreement relating to 
        commercial cooperation on MTCR equipment or technology 
        with a United States person pursuant to an arms export 
        license that was issued at any time since January 1, 
        2000.
            (3) Exemption.--No activity or transfer which 
        specifically has been the subject of a Presidential 
        determination pursuant to section 5(a) (1), (2), or (3) 
        of the Iran Nonproliferation Act of 2000 (Public Law 
        106-178) shall cause a Russian person to be considered 
        as having been identified in the reports submitted 
        during the preceding calendar year under section 2 of 
        that act for the purposes of the certification required 
        under paragraph (1).
            (4) Commencement and termination of requirement.--
                    (A) Times for submission.--The President 
                shall submit--
                            (i) the first certification under 
                        paragraph (1) not later than 60 days 
                        after the date of the enactment of this 
                        Act; and
                            (ii) each annual certification 
                        thereafter on the anniversary of the 
                        first submission.
                    (B) Termination of requirement.--No 
                certification is required under paragraph (1) 
                after termination of cooperation under the 
                specific license, or five years after the date 
                on which the first certification is submitted, 
                whichever is the earlier date.
    (b) Termination of Existing Licenses.--If, at any time 
after the issuance of a license under section 36(c) of the Arms 
Export Control Act relating to the use, development, or co-
production of commercial rocket engine technology with a 
foreign person, the President determines that the foreign 
person has engaged in any action described in section 73(a)(1) 
of the Arms Export Control Act (22 U.S.C. 2797b(a)(1)) since 
the date the license was issued, the President may terminate 
the license.
    (c) Report on Export Licensing of MTCR Items under 
$50,000,000.--Section 71(d) of the Arms Export Control Act (22 
U.S.C. 2797(d)) is amended by striking ``Within 15 days'' and 
all that follows through ``MTCR Annex,'' and inserting ``Within 
15 days after the issuance of a license (including any 
brokering license) for the exportof items valued at less than 
$50,000,000 that are controlled under this Act pursuant to United 
States obligations under the Missile Technology Control Regime and are 
goods or services that are intended to support the design, utilization, 
development, or production of a space launch vehicle system listed in 
Category I of the MTCR Annex,''.
    (d) Definitions.--In this section:
            (1) Foreign person.--The term ``foreign person'' 
        has the meaning given the term in section 74(7) of the 
        Arms Export Control Act (22 U.S.C. 2797c(7)).
            (2) MTCR equipment or technology.--The term ``MTCR 
        equipment or technology'' has the meaning given the 
        term in section 74(5) of the Arms Export Control Act 
        (22 U.S.C. 2797c(5)).
            (3) Person.--The term ``person'' has the meaning 
        given the term in section 74(8) of the Arms Export 
        Control Act (22 U.S.C. 2797c(8)).
            (4) United states person.--The term ``United States 
        person'' has the meaning given the term in section 
        74(6) of the Arms Export Control Act (22 U.S.C. 
        2797c(6)).

SEC. 709. SENSE OF CONGRESS RELATING TO MILITARY EQUIPMENT FOR THE 
                    PHILIPPINES.

    (a) In General.--It is the sense of Congress that the 
United States Government should work with the Government of the 
Philippines to enable that Government to procure military 
equipment that can be used to upgrade the capabilities and to 
improve the quality of life of the armed forces of the 
Philippines.
    (b) Military Equipment.--Military equipment described in 
subsection (a) should include--
            (1) naval vessels, including amphibious landing 
        crafts, for patrol, search-and-rescue, and transport;
            (2) F-5 aircraft and other aircraft that can assist 
        with reconnaissance, search-and-rescue, and resupply;
            (3) attack, transport, and search-and-rescue 
        helicopters; and
            (4) vehicles and other personnel equipment.

SEC. 710. WAIVER OF CERTAIN COSTS.

    Notwithstanding any other provision of law, the President 
may waive the requirement to impose an appropriate charge for a 
proportionate amount of any nonrecurring costs of research, 
development, and production under section 21(e)(1)(B) of the 
Arms Export Control Act (22 U.S.C. 2761(e)(1)(B)) for the 
November 1999 sale of 5 UH-60L helicopters to the Republic of 
Colombia in support of counternarcotics activities.
      And the Senate agree to the same.

                                   Benjamin A. Gilman,
                                   Bill Goodling,
                                   Sam Gejdenson,
                                 Managers on the Part of the House.

                                   Jesse Helms,
                                   Richard G. Lugar,
                                   Chuck Hagel,
                                   Joe Biden,
                                   Paul S. Sarbanes,
                                Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

      The managers on the part of the House and the Senate at 
the conference on the disagreeing votes of the two Houses on 
the amendment of the Senate to the bill (H.R. 4919) to amend 
the Foreign Assistance Act of 1961 and the Arms Export Control 
Act to make improvements to certain defense and security 
assistance provisions under those Acts, to authorize the 
transfer of naval vessels to certain foreign countries, and for 
other purposes, submit the following joint statement to the 
House and the Senate in explanation of the effect of the action 
agreed upon by the managers and recommended in the accompanying 
conference report:

                    SECURITY ASSISTANCE ACT OF 2000

      The conferees note that, during the past 10 years, the 
pool of money available for security assistance to United 
States allies and partners has decreased dramatically. At the 
same time, the number of countries with which the United States 
needs to engage, whether to combat proliferation or terrorism 
or to bolster regional security, has steadily increased. For 
instance, three countries of the former Warsaw Pact are now 
NATO members and receive both Foreign Military Financing and 
International Military Education and Training from the United 
States. Other countries which were once part of the Soviet 
Union itself are now free and independent, and enjoy important 
security relationships with the United States. An even larger 
number of countries, now free from the Soviet orbit, are also 
free to pursue closer military relationships with the United 
States. Thus, for instance, this bill makes Mongolia eligible 
for Department of Defense expenditures relating to excess 
defense articles for the first time in history.
      The conferees are concerned that a steadily increasing 
number of countries are pursuing a relationship with the United 
States which is funded by a steadily decreasing amount of 
money. Additionally, 98 percent of the Foreign Military 
Financing (FMF) account is currently committed to just three 
countries as a result of various peace accord commitments. Even 
if the President's budget request is fully funded, only 
$18,200,000 in FMF would actually be available for the United 
States to build security ties to the rest of the world. This 
legislation seeks to arrest and reverse this decline. Section 
101 authorizes an increase in FY 2001 of $12,000,000 in grant 
Foreign Military Financing over the President's budget request, 
and in FY 2002, with an increase of $89,000,000, will bring the 
total amount of truly ``discretionary'' FMF spending to 
$272,200,000. Even so, this will not return security assistance 
to 1990 spending levels.
      Similarly, Section 201 fully funds the President's 
request for the International Military Education and Training 
program by authorizing $55,000,000 in FY 2001 and provides a 
$10,000,000 increase for FY 2002.
      Section 301, which establishes a new chapter in the 
Foreign Assistance Act, consolidates all nonproliferation 
funding, except for assistance to the International Atomic 
Energy Agency, under a single funding line. In so doing, it 
will protect nonproliferation assistance from numerous foreign 
aid restrictions that govern the current appropriations 
process.
      This legislation fully funds the President's request and 
authorizes funding for one additional, Congressionally-mandated 
nonproliferation and export control initiative in Malta. It 
also funds the International Science and Technology Centers 
(ISTC) program at maximum capacity. Moreover, this legislation 
will strengthen the hand of the newly-created Nonproliferation 
Bureau of the Department of State in shaping a coherent U.S. 
nonproliferation and export control policy. Likewise, the 
President's antiterrorism funding request is fully authorized, 
and the conferees have applied additional resources to ensure 
that the fledgling Terrorist Interdiction Program is funded in 
fiscal year 2001 at the same level as in fiscal year 2000.
      In total, this bill authorizes $38,806,000,000 in 
security assistance funding for fiscal year 2001. This is an 
increase of $30,800,000 over the President's budget request for 
fiscal year 2001. It further authorizes $3,907,000,000 for 
fiscal year 2002.

                Title I--Military and Related Assistance

       Subtitle A--Foreign Military Sales and Financing Authority

                    Authorization of Appropriations

      Section 101 of the conference agreement, which has been 
modified from the Senate proposal, authorizes $3,550,000,000 
for fiscal year 2001, and $3,627,000,000 for fiscal year 2002, 
for the Foreign Military Financing (FMF) Program. The 
administration request for fiscal year 2001 for FMF (grants and 
loans) is $3,538,200,000. The actual level of FMF funding for 
fiscal year 2000 is $3,420,000,000.

 Requirements Relating to Country Exemptions for Licensing of Defense 
                 Items for Export to Foreign Countries

      Section 102 of the conference agreement, which has been 
modified from the House proposal, codifies in statute 
requirements relating to country exemptions for licensing of 
defense items for export to foreign countries.
      On May 24, 2000, the Administration unveiled a major 
initiative--the Defense Trade Security Initiative--to improve 
transatlantic cooperation in the area of defense trade. The 
initiative was a package of seventeen separate proposals geared 
toward promoting U.S. defense exports of NATO countries, Japan 
and Australia. The Committees on Foreign Relations and 
International Relations, which were not consulted in a timely 
fashion on the Defense Trade Security Initiative, nevertheless 
welcome most of the proposed changes to the International 
Traffic in Arms Regulations (ITAR).
      The overall objective of DTSI is to improve transatlantic 
cooperation in defense trade, particularly as that may aid us 
in strengthening NATO, supporting the Defense Capabilities 
Initiative (DCI), improving the interoperability of our forces 
and contributing to the health and productivity of defense 
industries on both sides of the Atlantic.
      Most of the seventeen separate proposals deal with 
reforming the U.S. defense export control licensing process. 
They are noncontroversial. They include proposals to establish 
new procedures for U.S. industry to secure export license for 
arms sales to NATO countries and other friendly countries and 
the establishment of a robust common database. Indeed, several 
of the initiatives mirror recommendations made by the two 
committees at various times.
      Under Article 1, Section 8, of the United States 
Constitution, the Congress possesses sole constitutional 
authority to ``regulate Commerce with foreign Nations.'' The 
President may only engage in such an exercise to the extent he 
has been authorized to do so by the Congress. Most of the 
seventeen DTSI measures, which clearly relate to the regulation 
of commerce, have been implicitly authorized in advance by 
Congress. The Arms Export Control Act (AECA) requires the 
President to administer export controls for certain commodities 
and also contains a measure of flexibility, allowing the 
President to alter export control requirements through 
regulatory changes. Indeed, numerous regulatory modifications 
have been made using this authority. Thus the constitutionality 
of a regulatory change to implement many of the proposed 
initiatives is well established.
      The conferees remain concerned, however, with certain 
other of the proposals. The most important--and controversial--
initiative is entitled ``Extension of International Traffic in 
Arms Regulations (ITAR) Exemption to Qualified Countries''. 
Pursuant to this initiative, the Administration is prepared to 
establish new ITAR licensing exemptions for unclassified 
defense items to qualified companies in foreign countries with 
whom the United States signs a bilateral agreement and that 
adopt and demonstrate export controls that are comparable in 
effectiveness to those of the United States.
      For several years, the United States has, under Section 
38(b)(2) of the AECA, permitted unlicensed trade in defense 
articles and defense services with Canada. This practice, 
popularly called the ``Canada exemption,'' has been supported 
by Congress in light of the unique defense trade relationship 
between the United States and Canada. In a June 28, 2000, 
letter to Chairman Helms, the Secretary of Defense stated his 
intent ``to negotiate a Canada-style exemption to the ITAR with 
the U[nited] K[ingdom] and Australia.'' On March 16, 2000, in a 
letter to the Secretary of State, the Chairmen of the Senate 
Committee on Foreign Relations and the House Committee on 
International Relations--the two Congressional Committees with 
sole jurisdiction over the AECA and regulation of defense 
trade--expressed concern about expanding the Canadian 
exemption. The Canada exemption is a unique one, based on an 
intertwined defense industrial base, a close law enforcement 
relationship, and geographical considerations. These same 
considerations do not apply to either the United Kingdom or 
Australia (to say nothing of other countries), despite the 
close military, intelligence, and law enforcement relationships 
that the U.S. government has with the governments in London and 
Canberra. For instance, defense commodities being shipped 
between the United States and Canada are far less susceptible 
to diversion than items shipped longer distances on cargo 
vessels which must make multiple port calls before arriving in 
the final port of destination. Moreover, unlike the case in 
Canada, many major U.K. defense companies are now jointly 
partnered with other European firms.
      For these reasons and others, the Secretary of State and 
the Attorney General raised serious questions about how a 
Canada-like exemption would affect U.S. export controls and law 
enforcement efforts. Their concerns turned, in short, on the 
fact that elimination of a licensing requirement for various 
weapons and defense commodities would remove an important law 
enforcement capability for the United States, placing 
heightened reliance upon the United Kingdom and Australia to 
stop diversions of U.S. equipment and to provide the type of 
evidence needed to prosecute violations of the AECA.
      In his June 28, 2000 letter, the Secretary of Defense 
assured the Committee on Foreign Relations that the licensing 
exemption for certain countries would need to be accomplished 
through ``legally binding agreement to ensure their export 
control and technology security regimes are congruent to our 
own. In exchange for these ironclad arrangements, we are 
prepared to offer an exemption to the ITAR similar to that 
long-provided to Canada.''
      The conferees are pleased to note this emphasis on 
extending a broad ITAR exemption in a legally-binding agreement 
and, accordingly, are equally pleased to codify the requirement 
in statute. As the Department of State noted in connection with 
the START Treaty: ``An undertaking or commitment that is 
understood to be legally binding carries with it both the 
obligation to comply with the undertaking and the right each 
Party to enforce the obligation under international law.'' This 
right of enforcement is of singular importance in this case, 
because noncompliance with the undertaking presumably could 
result in the diversion of United States weaponry or 
technology.
      Essential to the initiative to provide license-free trade 
to various countries is the operation of domestic export 
control laws in such countries. Accordingly, the underlying 
rationale governing Section 102 is that the United States 
should not provide the benefit of an exemptionfrom licensing of 
U.S. defense exports unless a foreign country agrees to apply, in a 
legally-binding fashion and in accordance with a bilateral agreement 
with the United States, the full range of United States export control 
and laws, regulations, and policies appropriate to the sensitivity of 
defense items exported to a foreign country under the exemption.
      In that regard, the section requires that in order to 
provide an exemption from licensing of defense exports to a 
foreign country, the United States must negotiate a legally 
binding bilateral agreement including specific requirements. 
The President must then certify that the bilateral agreement 
meets those specific requirements and, importantly, that the 
foreign country has promulgated or enacted all necessary 
modifications to its laws and regulations to comply with its 
obligations under the bilateral agreement before implementing 
the exemption.
      The specific requirements include but are not limited to 
securing end-use and retransfer commitments from all end-users, 
controls on reexports to foreign countries including a 
requirement for prior written U.S. government approval for such 
reexports, and the establishment of a list of controlled 
defense items that will include those items covered by the 
exemption, which are required to be notified to the Congress 
under subsection (b) of this section.
      The conferees expect to exercise close oversight of any 
agreements reached with foreign nations that provide for 
unlicensed trade in defense articles and defense services. The 
conferees reserve judgment on whether any agreements 
contemplated with the United Kingdom or Australia in this area 
should be undertaken in executive agreements, or as treaties, 
subject to advice and consent of the Senate. The conferees 
expect, as stated in subsection (d), that the Secretary of 
State will consult with the two Committees as to whether the 
DTSI licensing exemption for various countries should be 
codified as a treaty. Were the Secretary of State to conclude 
bilateral treaties with the United Kingdom and Australia to 
achieve the objectives set forth under the DTSI initiative, the 
Senate conferees would support the earliest possible 
consideration of such important measures. Alternatively, the 
Congress has the option of amending Section 38(b)(2) of the 
AECA to limit the President's flexibility to approve unlicensed 
trade--with Canada or any other nation.
      Finally, the conferees address in subsection (c) the 
issue of exports of commercial communication satellites. 
Without prejudice to the outcome of a review, the conferees 
believe that both Congress and the Executive Branch should re-
evaluate the issue of the correct and appropriate commodity 
jurisdiction for export control of U.S. commercial 
communication satellites.

   Subtitle B--Stockpiling of Defense Articles for Foreign Countries

      additions to united states war reserve stockpiles for allies

      Section 111 was proposed by the House. Pursuant to 
Section 514 of the Foreign Assistance Act of 1961, as amended, 
the Department of Defense can make additions to the War Reserve 
Stockpiles for Allies stockpiles only as periodically provided 
for in legislation. For fiscal year 2000, the President 
requested authority to make additions to stockpiles in South 
Korea ($40,000,000) and Thailand ($20,000,000). The conferees 
provided this authority under Section 1231 of the ``Admiral 
James W. Nance and Meg Donovan Foreign Relations Authorization 
Act, Fiscal Years 2000 and 2001'' (P.L. 106-113). For fiscal 
year 2001 the Department of Defense has asked for an additional 
$50,000,000 authorization for the Korean program. Section 111 
provides this authority for fiscal year 2001.

  transfer of certain obsolete or surplus defense articles in the war 
                reserve stockpiles for allies to israel

      Section 112 has been modified from the House proposal. 
Periodically the Department of Defense requests authorization 
to transfer defense articles out of War Reserve Stockpiles to 
the host country in question. The defense articles are to be 
sold to the host nation, or to be transferred in exchange for 
other non-monetary concessions. The Committee provided similar 
authority to make such transfers to South Korea and Thailand 
pursuant to Section 1232 of the ``Admiral James W. Nance and 
Meg Donovan Foreign Relations Authorization Act, Fiscal Years 
2000 and 2001'' (P.L. 106-113).

                      Subtitle C--Other Assistance

                  defense drawdown special authorities

      Section 121, which has been modified from the Senate 
proposal, increases the special drawdown authorities of defense 
articles and services from defense stocks, and for military 
education and training, to assist foreign countries from $150 
million to $200 million.
      Current law grants the President the authority to draw 
down from existing stocks within the Department of Defense to 
assist in emergencies or when he determines it is in the 
national interest. This section expands the authority by making 
nonproliferation and antiterrorism activities eligible for the 
special drawdown authorities relating to defense articles and 
services, and to military education and training, to assist 
foreign countries. The increase in financial authority is meant 
to allow for incorporation of nonproliferation and 
antiterrorism objectives without sacrificing the President's 
flexibility to respond to unforeseen emergencies and foreign 
policy objectives relating to combating international 
narcotics, international disaster assistance, and migration and 
refugee assistance.

    increased authority for the transport of excess defense articles

      Section 122, proposed by the Senate, raises the space 
available weight limitation that is imposed on the 
transportation of excess defense articles (EDA) from 25,000 
pounds to 50,000 pounds. Currently, a variety of limitations 
are imposed on the use of Department of Defense funds to 
transfer excess defense articles to foreign nations and 
international organizations. Moreover, even when such an 
expenditure is authorized, free transportation of EDA may only 
be provided on a space available basis if it is in the U.S. 
national interest to do so, the recipient nation is a 
developing nation which receives less than $10,000,000 in FMF 
and IMET, and the weight of the items to be transferred does 
not exceed 25,000 pounds.
      In limiting the weight of defense articles to no more 
than 25,000 pounds, current law will preclude the 
transportation of a large number of United States Coast Guard 
``self-righting'' patrol craft which have recently been 
declared excess but which weigh approximately 33,000 pounds. 
Over the next four years, more than 50 of these vessels will be 
eligible for transfer to foreign nations under the EDA program. 
However, the current weight limitation will preclude shipmentof 
the vessels on a space available basis to foreign countries. This, in 
turn, will increase the cost of transfer of the defense article to 
would-be recipients, and likely would cause many nations to decline 
U.S. offers of these vessels. As a result, the Untied States Coast 
Guard could incur unnecessary expenses due to delays in finding foreign 
recipients of the craft, and possibly be forced to demilitarize vessels 
for whom a foreign customer could not be secured. Raising the weight 
limit to 50,000 pounds will obviate this problem.

        Title II--International Military Education and Training

                    Authorization of Appropriations

      Section 201, which has been modified from the Senate 
proposal, authorizes $55,000,000 for fiscal year 2001 and 
$65,000,000 for fiscal year 2002 to carry out international 
military education and training (IMET) of military and related 
civilian personnel of foreign countries. The administration 
request for fiscal year 2001 for IMET is $55,000,000. The 
actual level of IMET funding for fiscal year 2000 is 
$50,000,000. IMET is provided on a grant basis to students from 
allied and friendly nations, and is designed to expose foreign 
students to the U.S. professional military establishment and 
the American way of life, including the U.S. regard for 
democratic values, respect for individual and human rights and 
belief in the rule of law. Section 201 authorizes funding of 
the IMET program in 2002 at its maximum capacity. Funding 
beyond this level cannot be absorbed due to limitations in 
number of courses and classes.

 ADDITIONAL REQUIREMENTS RELATING TO INTERNATIONAL MILITARY EDUCATION 
                              AND TRAINING

      Section 202, proposed by the Senate, amends Chapter 5 of 
part I of the Foreign Assistance Act of 1961, relating to 
International Military Education and Training (IMET), by adding 
two new requirements. First, selection of foreign personnel for 
the IMET program will be done in consultation with United 
States defense attaches, who are uniquely positioned to 
recommend candidates. The conferees are concerned to note that 
defense attaches are, on occasion, excluded from this process. 
By mandating consultation, the conferees intend to secure the 
complete involvement of defense attaches in nominating 
individuals for the IMET program. Naturally, selection of 
foreign personnel, and overall management of the IMET program 
remain the responsibility of the Department of State.
      Section 202 also requires that the Secretary of Defense 
develop and maintain a database containing records on each 
foreign military or defense ministry civilian participant in 
education and training activities conducted under this chapter 
after December 31, 2000. This record shall include the type of 
instruction received, the dates of such instruction, whether it 
was completed successfully, and, to the extent practicable, a 
record of the person's subsequent military or defense ministry 
career and current position and location. The conferees expect 
that the record of a person's subsequent career will include 
positions held, reports of exceptional successes or failures in 
those positions, and any credible reports of involvement in 
criminal activity or human rights abuses. The conferees believe 
that such a database will improve the effectiveness of foreign 
military education and training activities by enabling the 
Department of Defense to better determine: what follow up 
training may be most appropriate for previously trained 
personnel; which courses are most effective in improving the 
performance of foreign military personnel; and where personnel 
are located in foreign defense establishments who, by virtue of 
their prior training, are most likely to understand U.S. modes 
of operation and share U.S. standards of military 
professionalism. This section does not require, however, that 
the Department of Defense institute dramatic new collection 
programs to gather information for the database.

       Title III--Nonproliferation and Export Control Assistance

             Nonproliferation and Export control Assistance

      Section 301 has been modified from the Senate proposal. 
Every major category of U.S. foreign assistance, except for 
nonproliferation and export control assistance, is governed 
under multiple sections, or entire chapters, of the Foreign 
Assistance Act of 1961 (FAA). The FAA contains chapters 
authorizing international narcotics control, military 
assistance, peacekeeping operations, antiterrorism assistance, 
IMET, development assistance, and funding for international 
organizations, to name a few. Although the President has 
declared a state of national emergency to combat the 
proliferation of weapons of mass destruction and associated 
delivery systems, the FAA does not contain a specific chapter 
to authorize and direct such a clearly important form of U.S. 
foreign aid. Funding for the nonproliferation and export 
control activities of the Department of State derives from a 
variety of disparate authorizations passed at various times. As 
a result, this category of funding does not enjoy the same 
status as other types of foreign assistance.
      Appropriation of funds for nonproliferation and export 
control activities is cobbled together annually by the 
Appropriations Committee under a catch-all account that also 
includes demining and contributions to certain international 
organizations. Thus the Department of State is invariably 
forced to make ``trade-offs'' between nonproliferation and 
export control funding and funding for other activities. 
Finally, other nonproliferation and export control funding is 
contained within the amounts appropriated for the ``newly 
independent'' states of the former Soviet Union, and is thus 
subject to restrictions if the President cannot certify that 
Russia is not proliferating technology to Iran (which he has, 
to date, been unable to do).
      By adding a new chapter to Part II of the FAA, the 
conferees intend U.S. nonproliferation and export control 
assistance to be given equal stature with other authorized 
activities. The conferees expect the Department of State, in 
the future, to consolidate all of its nonproliferation funding, 
except for funding for the International Atomic Energy Agency 
(which is governed by a separate authorization under the FAA), 
into a single, integrated request to be authorized under 
Chapter 9 of the FAA. The conferees further expect that the 
Nonproliferation Bureau of the Department of State will be 
given authority over the use of funds authorized by this 
chapter.
      The new chapter to the FAA incorporates existing 
authorities under Sections 503 and 504 of the FREEDOM Support 
Act (which are the principal extant authorities for 
nonproliferation and export control activities). The new 
sections 581 and 582 carry forward those authorities, but also 
emphasize the need for programs to bolster the indigenous 
capabilities of foreign countries to monitor and interdict 
proliferation shipments. Section 583 directs the President to 
ensure that sufficient funds are allocated to the transit 
interdiction effort. To this end, the section contains 
authority for the Secretary of State to establish a list of 
countries that should be given priority in U.S. transit 
interdiction funding. The conferees suggest that the initial 
designation of the transit country list include those countries 
mentioned in the fiscal year 1999 Congressional 
presentationdocument as ``key global transit points'' (e.g., the 
countries of Central Asia and the Caucasus, the Baltics, Central and 
Eastern Europe, Singapore, Hong Kong, Taiwan, Cyprus, Malta, Jordan, 
and the UAE).
      Section 584, which will be part of the new chapter of the 
FAA, makes clear that two of the same limitations which apply 
to antiterrorism assistance also apply to nonproliferation and 
export control assistance. Section 584 permits the use of 
unrelated accounts to furnish services and commodities 
consistent with, and in furtherance of, Chapter 9 of the FAA. 
However, it requires that the foreign nation receiving such 
services or commodities pay in advance for the item or service, 
and that the reimbursement be credited to the account from 
which the service or commodity is furnished or subsidized. 
Foreign Military Financing may not be used to make such 
payments. Section 584 also makes clear that Chapter 9 does not 
apply to information exchange activities conducted under other 
authorities of law.
      Section 585 authorizes $129,000,000 for fiscal year 2001, 
and $142,000,000 for fiscal year 2002, for activities conducted 
pursuant to Chapter 9 of the FAA. This amount captures several 
activities currently appropriated within the Nonproliferation, 
Anti-Terrorism, Demining, and Related Programs Account, and the 
FREEDOM Support Act Assistance for the New Independent States 
(NIS) of the Former Soviet Union. The covered programs, at the 
administration's requested levels of funding for FY2001, are: 
$15,000,000 for the Nonproliferation and Disarmament Fund; 
$14,000,000 for Export Control Assistance; $45,000,000 for the 
Science Centers; and $36,000,000 in NIS export control and 
border assistance funding. The administration request for 
fiscal year 2001 thus totals $110,000,000 for all Chapter 9 
authorized activities. The increase of $19,000,000 above the 
administration's requested levels is intended to support two 
initiatives contained in sections 303 and 304. Specifically, 
this increase supports funding of the International Science and 
Technology Centers at maximum capacity (which requires an 
additional $14,000,000) and establishment of a static cargo x-
ray facility in Malta as the first of the transit interdiction 
programs to be managed under the new authorities of the FAA (a 
$5,000,000 program).

   Nonproliferation and Export Control Training in the United States

      Section 302, which has been modified from the Senate 
proposal, authorizes the expenditure of $2,000,000 during both 
fiscal years 2001 and 2002 in nonproliferation and export 
control funding for the training and education of personnel 
from friendly countries in the United States. The Department of 
State already engages in a vigorous training program, and funds 
numerous activities which are implemented by Department of 
Commerce personnel. However, much of this training is conducted 
overseas. The conferees urge the Department of State to place 
emphasis on bringing a select group of officials from friendly 
governments back to the United States to engage in an intensive 
training program which draws upon the expertise of all relevant 
U.S. government agencies. This training should focus on those 
nonproliferation and export control activities which would most 
benefit from being conducted in the United States. Finally, the 
conferees are concerned with declining travel and training 
budgets of U.S. government agencies tasked with combating 
proliferation. The conferees hope this trend will be arrested, 
but urge the Department of State, in the interim, to seek to 
offset the effects of this decline using the funds authorized 
under this section.

                     Science and Technology Centers

      Section 303, which has been modified from the Senate 
proposal, authorizes $59,000,000 for fiscal year 2001, and 
$65,000,000 in fiscal year 2002, in nonproliferation and export 
control funding for the Department of State's international 
science and technology centers. The administration request for 
fiscal year 2001 is $45,000,000. The actual level of funding 
for fiscal year 2000 is $59,000,000. The conferees expect that 
this not only will fully fund all ongoing activities at these 
centers, but will allow a significant expansion in the number 
of research grants offered to Russian scientists formerly 
employed in the development of missiles and chemical and 
biological warfare programs.
      Section 303 also expresses the view of the conferees that 
frequent audits should be conducted of entities receiving ISTC 
funds. This will be necessary in light of the administration's 
interest in expanding the role of the ISTC to provide funds to 
redirect the expertise associated with the Soviet Union's 
biological warfare program. U.S. obligations under the Chemical 
and Biological Weapons Conventions, as well as under domestic 
law (e.g., P.L. 106-113), prohibit the furnishing of assistance 
to offensive biological warfare programs. It thus is essential 
that the United States audit entities that receive assistance 
to ensure that the United States is not contributing, albeit 
unknowingly, to an offensive biological warfare program (or to 
entities that are proliferating technology to rogue states). 
Moreover, the obligation to conduct audits should be spread 
equitably throughout the United States Government.

                         Trial Transit Program

      Section 304, proposed by the Senate, authorizes 
$5,000,000 in nonproliferation and export control funding to 
establish a static cargo x-ray facility in Malta, provided that 
the Government of Malta first gives satisfactory assurances 
that Maltese customs officials will engage in random cargo 
inspections of container traffic passing through the Malta 
Freeport, and will utilize the x-ray facility to examine random 
shipping containers.
      Malta is the ideal location for a trial transit 
interdiction program. The country's location, along one of the 
busiest trade routes in the world, has made it a crucial 
shipping center. The Malta Freeport is ideally situated as a 
redistribution point, linking trade between Europe, Africa, the 
Middle East, and Asia. For instance, direct shipments from the 
Black Sea to Malta take less than 15 days. From various ports 
in Europe, Russia, and Asia, large cargo vessels offload their 
containers into the Freeport. The containers are then stored 
temporarily and are reloaded onto smaller ``feeder'' vessels 
which service ports in North Africa, including Libya. The 
Freeport went into operation in April 1990. According to 
Maltese Freeport documents, that year alone, 231 vessels 
offloaded 94,500 containers. Since that time, the volume of 
activity at the port has steadily increased. In 1996, the 
number of ships calling at the Freeport reached 1,383. Nearly 
600,000 containers transited the facility that year. For 1999, 
according to a January 10, 2000 article in a Maltese daily 
newspaper, 1,464 container ships utilized the Freeport. At this 
time, estimates of container traffic are not available, but 
presumably the number will exceed half a million.
      The steadily rising level of container traffic in the 
Freeport is noteworthy. The volume can be expected to increase 
if plans to further expand the port's services are implemented, 
thereby making one of the world's largest deepwater ports all 
the more robust. The MaltaFreeport Act, which establishes the 
Freeport as a legally separate entity from Malta proper, creates 
specific proliferation concerns. Currently the Freeport has its own 
Minister, and customs functions have been conferred upon the Freeport 
Authority which he oversees. Maltese Customs does not receive 
information on transshipments, and may not operate in the Freeport 
without permission. While the Freeport has never refused such a 
request, the fundamental lack of transparency, and the inability of 
Maltese customs to conduct random inspections, means that effective 
export enforcement is impossible at this time.
      The conferees are concerned with this situation since 
Malta is undeniably being used as a transit point by various 
entities engaged in weapons proliferation. For example, in one 
instance of excellent cooperation between the Freeport and 
Maltese Customs officials, a shipment of chemical warfare 
precursor chemicals was seized. Similarly, the United Kingdom 
recently uncovered a massive shipment of missile parts slated 
for air delivery to Libya via Malta. While this latter incident 
did not involve the Freeport, it nevertheless is further 
evidence that various countries are seeking to use Malta as a 
transit point for deliveries of dangerous commodities to North 
Africa.
      The conferees note that Maltese-U.S. relations have 
steadily improved over the past several years. The Government 
of Malta has demonstrated a genuine commitment to 
nonproliferation and bolstering its export control capability. 
Therefore the conferees favor initiation of a trial transit 
program with Malta, provided that the Maltese Government takes 
the necessary steps to render this program viable (namely, by 
opening the Freeport to periodic, random inspections by Maltese 
Customs officials). The conferees hope that this program, if 
successful, might serve as a model for programs in other 
designated transit countries.

   exception to authority to conduct inspections under the chemical 
             weapons convention implementation act of 1998

      Section 305 was proposed by the Senate. The Chemical 
Weapons Convention, which was approved by the Senate in 1997, 
has an extensive inspection regime which allows potentially 
intrusive inspections of chemical companies in the United 
States. The Senate was concerned about the threat posed to 
business proprietary information during the course of an 
inspection. As a result, the Chemical Weapons Convention 
Implementation Act of 1998 imposes a requirement that a special 
agent of the Federal Bureau of Investigation (FBI) accompany 
every inspection conducted in the United States.
      However, there is minimal benefit to the FBI's monitoring 
of inspections at chemical destruction sites. Such inspections 
pose little risk to national security or trade secrets and--
because of their lengthy duration--a constant FBI presence 
would be expensive to maintain. This section gives the FBI an 
exemption from the requirement to be present at inspections of 
U.S. chemical destruction facilities.

                   Title IV--Antiterrorism Assistance

                    authorization of appropriations

      Section 401, which has been modified from the Senate 
proposal, authorizes $72,000,000 for fiscal year 2001 and 
$73,000,000 for fiscal year 2002 in antiterrorism assistance. 
The administration request for anti-terrorism assistance for 
fiscal year 2001 is $72,000,000 (including the request for the 
Terrorist Interdiction Program (TIP)). The actual level of 
funding for fiscal year 2000, including the TIP, is 
$38,000,0000.

            Title V--Integrated Security Assistance Planning

  Subtitle A--Establishment of a National Security Assistance Strategy

                 national security assistance strategy

      Section 501, which has been modified from the Senate 
proposal, strongly urges the annual preparation of a National 
Security Assistance Strategy (NSAS) to be submitted in 
connection with the annual foreign operations budget request. 
The purpose of the NSAS is to establish a clear and coherent 
multi-year plan, on a country by country basis, regarding U.S. 
security assistance programs. The current process utilized by 
the United States Government is entirely insufficient and is 
run, on an ad hoc basis. Seldom is a thoroughly researched, 
thoroughly justified proposal for security assistance put 
forward to Congress. This, in turn, has encouraged parallel 
Congressional initiatives and earmarks which often are put 
forward with a comparable level of foresight and planning. As a 
result, it seems that the Political-Military Affairs Bureau of 
the Department of State does not currently possess sufficient 
control over the allocation of security assistance funds, 
despite its clear mandate to manage these programs (except for 
nonproliferation assistance).
      Currently there is no clearly articulated organizing 
principle for U.S. military assistance. Nor is there a coherent 
set of benchmarks, or measurements, against which the success 
of individual programs with various countries can be measured. 
As a result, military assistance funding proposals are often 
vague and seemingly unjustified. For instance, the most recent 
Congressional presentation documents justify the provision of 
FMF for Southeast Europe as ``contributing to regional 
stability in Southeast Europe by promoting military reform.'' 
No further elaboration is given. It is hardly surprising, in 
light of this sort of justification, that the administration's 
security assistance requests seldom are fully funded by 
Congress.
      The conferees urge the Department of State to transform 
fundamentally the way that the United States conceptualizes 
security assistance. Utilizing a model more akin to the 
Department of Defense's planning process, the Department of 
State is encouraged to pull together a comprehensive multi-year 
plan, which will evolve on an annual basis, setting forth a 
specific programmatic objective for each country and explaining 
how the requested funds will accomplish that objective. 
Additional, secondary objectives should be added as necessary. 
The conferees believe that the plan for each country should be 
developed at the U.S. mission level, and should be coordinated 
by the Department of State with all relevant U.S. government 
agencies with a role in U.S. security assistance programs. The 
bottom-up document that results is then to be coordinated with 
the top-down policy guidance set forth in the National Security 
Strategy of the United States, and by the Secretary of State 
(in coordination with the Secretary of Defense and the Chairman 
of the Joint Chiefs of Staff, and in consultation with other 
relevant agencies, including the intelligence community).
      The conferees expect the resultant document to be a 
comprehensive National Security Assistance Strategy which 
provides a robust, detailed justification for security 
assistance fundingthat is requested. Rather than the current 
process, which yields unclear and unmeasurable objectives for U.S. 
security assistance programs, it is expected that the NSAS process will 
ensure that the type and amount of assistance given a country is 
determined programmatically. Progress can thus be measured by the 
administration and the Congress. In turn, the conferees anticipate that 
such an initiative, led by the Political-Military Affairs Bureau of the 
Department of State, will substantially improve Congressional 
understanding of the administration's initiatives and bolster 
Congressional support for the President's military assistance request.

             Subtitle B--Allocations for Certain Countries

                security assistance for new nato members

      Section 511, which has been modified from the Senate 
proposal, authorizes $30,300,000 for fiscal year 2001 and 
$35,000,000 for fiscal year 2002 in grant Foreign Military 
Financing for the Czech Republic, Hungary, and Poland. Section 
511 also authorizes $5,100,000 for fiscal year 2001 and 
$7,000,000 for fiscal year 2002 in IMET funding for these three 
new NATO members. The administration request for fiscal year 
2001 for these three countries is $30,300,000 in grant FMF and 
$5,100,000 in IMET funding. The actual level of grant FMF 
funding for the three for fiscal year 2000 is $22,000,000. The 
actual level for IMET funding for fiscal year 2000 is 
$4,570,000.
      Section 511 also directs the President to give priority 
to supporting the objectives set forth by the Senate in its 
resolution of ratification for the protocols adding the three 
new NATO members. Specifically, the conferees expect the 
administration to ensure that FMF and IMET funding is used to 
support the ability of Poland, Hungary, and the Czech Republic 
to fulfill their collective defense requirements under Article 
V of the Washington Treaty. The conferees also expect the 
administration to use the additional funds provided to expand 
U.S. efforts to improve the ability of these countries to 
protect themselves from hostile foreign intelligence services.

          increased training assistance for greece and turkey

      Section 512, which has been modified from the Senate 
proposal, authorizes $1,000,000 in IMET funding for Greece and 
$2,500,000 in IMET funding for Turkey for each of the fiscal 
years 2001 and 2002. The administration request for IMET for 
fiscal year 2001 is $25,000 for Greece and $1,600,000 for 
Turkey. The actual level of IMET funding for Greece for fiscal 
year 2000 is $25,000. For Turkey, the actual level of IMET 
funding for fiscal year 2000 is $1,500,000.
      The conferees are encouraged by numerous indications of a 
warming in Greek-Turkish relations. This improvement has 
manifested itself in several ways, ranging from Greek agreement 
to Turkish candidacy for membership in the European Union to 
the large number of bilateral agreements that have recently 
been signed during reciprocal visits of foreign ministers 
(including agreements on transportation, tourism, cultural 
heritage, and customs issues). In the interest of bolstering 
this process the conferees authorize a substantial increase in 
funds for International Military Education and Training (IMET). 
It is the conferees' expectation that the administration will 
use these additional funds to support the process of 
rapprochement between Greece and Turkey. Specifically, the 
conferees urge the administration to ensure that $1,000,000 of 
the additional resources, evenly divided between the two 
countries, is used for joint professional military education of 
Greek and Turkish officers. The conferees note that this type 
of training will build personal relationships between the 
militaries of these two important NATO allies, and will 
reinforce the process that is already underway.

                         assistance for israel

      Section 513, which has been modified from the Senate 
proposal, sets into place the formula for a phase-out of annual 
U.S. Economic Support Funds to Israel. Operating from a 
baseline of $1.2 billion ESF per annum, beginning in FY 1999, 
the United States and Israel agreed to a plan whereby Israel's 
annual economic assistance would be reduced in equal increments 
of 10 percent (equivalent to $120,000,000 per annum), resulting 
in the ultimate elimination of ESF for Israel. In order to 
ensure Israel's continued security in the face of the loss of 
annual economic support, Israel requested--and the United 
States agreed to--an annual increase in Foreign Military 
Finance equal to half the reduced ESF amount (or $60,000,000). 
Section 513 authorizes this process for both fiscal years 2001 
and 2002, and will result in an aggregate reduction in 
authorized foreign assistance of $120,000,000. Specifically, 
this section authorizes $1,980,000,000 for fiscal year 2001 and 
$2,040,000,000 for fiscal year 2002 in FMF. The 
administration's request for fiscal year 2001 is 
$1,980,000,000.
      The authorization provided by the section is without 
prejudice to any rescissions or supplemental appropriations 
which might be required. The conferees intend for this formula 
for the reduction of Israel's ESF be in place through fiscal 
year 2008, and intend to authorize accordingly in future Acts.
      In addition, this section directs that FMF funds for 
Israel for fiscal year 2001 be disbursed not later than 30 days 
after enactment of this Act or on October 31, 2000, whichever 
is later. To the extent that Israel makes a request, FMF funds 
shall, as agreed by Israel and the United States, be available 
for advanced weapons systems. Additionally, not less than 
$520,000,000 can be used for procurement in Israel of defense 
articles and defense services, including research and 
development. The conferees expect that Israel's annual aid 
package will be provided under the usual terms, including early 
disbursal of both ESF and FMF, offshore procurement, and that 
the aid will be provided in the form of a grant.
      The conferees will view favorably additional requests for 
authority required in the event of a peace agreement in the 
Middle East.

                          assistance for egypt

      Section 514, which has been modified from the Senate 
proposal, provides a similar formula for Egypt as that applied 
under Section 513. In providing an authorization for ESF to 
Egypt for fiscal years 2001 and 2002, Section 514 sets in place 
the phase-out of Economic Support Funds for Egypt at a rate of 
$40,000,000 per year. This section, which also contains a two-
year authorization for FMF, will result in an aggregate 
reduction of $80,000,000 in ESF. The authorization provided by 
the section is without prejudice to any rescissions or 
supplemental appropriations which might be required.
      Further, the section directs that FMF estimated to be 
outlayed during fiscal year 2001 shall be disbursed to an 
interest bearing account for Egypt in the Federal Reserve Bank 
of New York. However, withdrawal offunds from the account can 
be made only on authenticated instructions from the Defense Finance and 
Accounting Service and, in the event that the interest bearing account 
is closed, the balance of the account is to be transferred promptly to 
the appropriations account for Foreign Military Financing. The 
conferees urge that before any of the interest accrued by the account 
is obligated, the Committees on Appropriations and Foreign Relations of 
the Senate, and the Committees on Appropriations and International 
Relations of the House, be notified.

                security assistance for certain counties

      Section 515, which has been modified from the Senate 
proposal, provides individual authorizations for fiscal years 
2001 and 2002 of grant FMF and IMET funding for various 
countries.

              border security and territorial independence

      Section 516, which has been modified from the Senate 
proposal, provides an integrated authorization of security 
assistance funds for the GUUAM countries (e.g., Georgia, 
Ukraine, Uzbekistan, Azerbaijan, and Moldova) and Armenia. 
Specifically, for fiscal year 2001, Section 516 authorizes a 
package of $5,000,000 in grant FMF, $2,000,000 in 
nonproliferation and export control assistance, $500,000 in 
IMET funding, and $1,000,000 in antiterrorism assistance. For 
fiscal year 2002, that package is: $20,000,000 in grant FMF, 
$10,000,000 in nonproliferation and export control assistance, 
$5,000,000 in IMET funding, and $2,000,000 in antiterrorism 
assistance. These funds must be expended in accordance with the 
individual requirements of their respective accounts. Thus, for 
instance, the grant FMF may only be utilized for activities 
authorized in connection with the FMF program. Likewise, 
nonproliferation and export control funds must be spent on the 
objectives set forth under Chapter 9 of the Foreign Assistance 
Act of 1961. Similar restrictions apply to the other authorized 
forms of security assistance. Thus, as assistance to Azerbaijan 
under this section is still subject to section 907 of the 
FREEDOM Support Act, such assistance may be provided only for 
antiterrorism or nonproliferation and export control purposes.
      The funds authorized under Section 516 must be spent for 
the purpose of assisting the GUUAM countries and Armenia in 
strengthening control of their borders, and for the purpose of 
promoting the independence and territorial sovereignty of these 
countries. These funds also are specifically authorized, 
pursuant to Section 499C of the Foreign Assistance Act of 1961, 
for the purpose of enhancing the abilities of the national 
border guards, coast guard, and customs officials of the GUUAM 
countries and Armenia to secure their borders against narcotics 
trafficking, proliferation, and transnational organized crime. 
The conferees intend that funds authorized by this section be 
used in Uzbekistan solely for nonproliferation purposes. 
Finally, it bears emphasizing that the conferees strongly 
support the cooperation on political, security, and economic 
matters promoted and facilitated through the GUUAM group. The 
United States should promote these endeavors as part of its 
strategy to help these states consolidate their independence 
and strengthen their sovereignty, to help resolve and prevent 
conflicts in their respective regions, and to promote democracy 
and human rights. In addition, the conferees strongly support 
political, security, and economic cooperation between the 
United States and Armenia.
      Finally, the conferees note the successes of the 
Department of Defense's two international counterproliferation 
programs--the DOD/FBI Counterproliferation Program and the DOD/
Customs Counterproliferation Program. With minimal funding, and 
through excellent management, these programs are contributing 
to efforts to halt the spread of dangerous technology across 
the borders of the former Soviet Union, Eastern and Central 
Europe, and the Baltic states. The conferees hope that the 
Department of Defense will continue to support these programs 
and recommend that the Department of State coordinate closely 
with the Department of Defense on proliferation matters.

                  Title VI--Transfers of Naval Vessels

    authority to transfer naval vessels to certain foreign countries

      Section 601 of the conference agreement, similar in the 
House and Senate proposals, provides authority to the President 
to transfer twelve naval vessels to Brazil, Chile, Greece, and 
Turkey. These naval vessels either displace in excess of 3,000 
tons, or are less than 20 years of age. Therefore statutory 
approval for the transfers is required under 10 U.S.C. 7307(a). 
The two PERRY class frigates proposed for transfer to Turkey 
under lease/sale authority were approved by Congress to be 
transferred to Turkey by sale in the fiscal year 2000 shop 
transfer legislation. Because of Turkish financial 
uncertainties caused by recent natural disasters, however, this 
proposal, which is in addition to the sale authority previously 
granted, is needed to give Turkey some flexibility in 
determining the most appropriate means to acquire the ships. 
Two KNOX class frigates are proposed in this section to be 
transferred to Greece on a grant basis.

inapplicability of aggregate annual limitation on value of transferred 
                        excess defense articles

      Section 602 of the conference agreement, similar in the 
House and Senate proposals, ensures that the value of naval 
vessels authorized for transfer by grant by this Act will not 
be included in determining the aggregate value of transferred 
excess defense articles.

                           Costs of Transfers

      Section 603 of the conference agreement, identical in the 
House and Senate proposals, provides that all costs are to be 
borne by the foreign recipients, including fleet turnover 
costs, maintenance, repairs, and training.

          conditions relating to combined lease-sale transfers

      Section 604 of the conference agreement, identical in the 
House and Senate proposals, authorizes the transfer of high 
value ships on a combined lease-sale basis under Section 61 and 
21 of the Arms Export Control Act (22 U.S.C. 2796 and 2761 
respectively).

                 funding of certain costs of transfers

      Section 605 of the conference agreement, identical in the 
House and Senate proposals,provides authorization for the 
appropriation of funds that may be necessary for the costs of the 
combined lease-sale transfers in order to satisfy the requirements of 2 
U.S.C. 661c. These funds are authorized to be appropriated into the 
Defense Vessels Transfer Program Account, which was established in the 
fiscal year 1999 transfer legislation.

          Repair and Refurbishment in United States Shipyards

      Section 606 of the conference agreement, proposed by the 
House, requires the President, to the maximum extent 
practicable, to ensure that repair and refurbishment of naval 
vessels authorized for transfer under this title is performed 
in U.S. shipyards, including U.S. Navy shipyards.

 Sense of Congress Regarding Transfer of Naval Vessels on a Grant Basis

      Section 607 of the conference agreement, proposed by the 
House, expresses the sense of Congress that naval vessels 
authorized for transfer to foreign countries on a grant basis 
under section 516 of the Foreign Assistance Act should be 
transferred only if the U.S. receives appropriate benefits from 
such countries.

                        Expiration of Authority

      Section 608 of the conference agreement, identical in the 
House and Senate proposals, provides that the transfers 
authorized by this Act must be executed within two years of the 
date of enactment. This allows a reasonable opportunity for 
agreement on terms and for execution of the transfer.

                  Title VII--Miscellaneous Provisions

              Utilization of Defense Articles and Services

      Section 701, proposed by the Senate, amends Section 502 
of the Foreign Assistance Act of 1961 to make clear that 
defense articles and services may be furnished by the United 
States to foreign nations for antiterrorism or nonproliferation 
purposes (in addition to other currently authorized purposes).

                   Annual Military Assistance Report

      Section 702 of the conference agreement, proposed by the 
House, requires the State Department to include information in 
the annual military assistance report required by section 655 
of the Foreign Assistance Act which identifies the quantity of 
exports of weapons furnished on a direct commercial sales 
basis. The so-called ``655 report'' provides a timely and 
comprehensive account of U.S. arms transfers. This provision 
will close a long-standing gap by ensuring that the State 
Department provides information not only on the quantity of 
approved licenses for Direct Commercial Sales (DCS) but also on 
the quantity of actual deliveries of weapons exported pursuant 
to the DCS authority during the fiscal year covered by the 
report, specifying, if necessary, whether such deliveries were 
licensed in preceding fiscal year.

   Report on Government-to-Government Arms Sales End-Use Monitoring 
                                Program

      Section 703 of the conference agreement, proposed by the 
House, requires the President to submit a report on the status 
of efforts by the Defense Security Cooperation Agency (DSCA) to 
implement its plan to enhance end-use monitoring on government-
to-government arms transfers to foreign countries.
      The conferees direct the State Department to provide DSCA 
complete copies of all end-use violation and prior consent 
reports required under section 3 of the Arms Export Control 
Act.

                        MTCR Report Transmittals

      Section 704 includes the Senate Committee on Banking in 
an infrequent report required under the Arms Export Control 
Act.

              Stinger Missiles in the Persian Gulf Region

      Section 705, proposed by the Senate, permits the 
replacement, on a one-for-one basis, of Stinger missiles 
possessed by Bahrain and Saudi Arabia that are nearing the 
scheduled expiration of their shelf-life.

          Sense of Congress Regarding Excess Defense Articles

      Section 706, proposed by the Senate, calls on the 
President to sell more defense articles, rather than merely 
give them away, using the authority provided under Section 21 
of the Arms Export Control Act. It urges the President to use 
the flexibility afforded by Section 47 of that Act to determine 
that ``market value'' of Excess Defense Articles and to sell 
such items at a price that can be negotiated. When the 
Department of Defense uses too rigid a definition of ``market 
value,'' and that price cannot be commanded, the item is 
instead transferred on a ``grant'' basis pursuant to Section 
516 of the Foreign Assistance Act of 1961, thereby forgoing 
revenues. This section encourages the Department of Defense to 
ascertain the ``market value'' on the basis of local market 
conditions rather than solely on the basis of a generic formula 
applied by the Department of Defense for accounting purposes.

                  Excess Defense Articles for Mongolia

      Section 707 of the conference agreement, which has been 
modified from the House proposal, provides authority to furnish 
grant excess defense articles (EDA) and services to Mongolia 
for fiscal years 2001 and 2002. Unfortunately, given the weak 
nature of its national economy, which has led to difficulty in 
funding its military budget, Mongolia cannot afford the cost of 
packing, crating, handling, and transportation of EDA, even if 
the EDA itself is provided at no cost. Section 707 provides the 
Department of Defense with the authority to absorb thecosts of 
transporting EDA to Mongolia, thereby allowing the receipt of much 
needed equipment. However, the Committee intends to continue the 
practice of requiring from the Department of Defense a detailed 
description of such costs in each proposed transfer. Were such costs to 
grow beyond a reasonable level, the Committee's continued support for 
such authorities would be jeopardized.

                 Space Cooperation with Russian Persons

      Section 708 has been modified from the Senate proposal. 
This section amends the Arms Export Control Act, provides for 
increased reporting and certification to Congress, and expands 
the ability of the President to regulate missile-related 
cooperation by providing him with the discretionary authority 
to terminate contracts in the event that he determines that a 
violation of the MTCR sanctions law (Section 13(a)(1) of the 
Arms Export Control Act) has occurred.
      Currently, Chapter 7 of the Arms Export Control Act 
imposes mandatory sanctions on proliferating entities. However, 
those sanctions apply only to prospective licenses and 
contracts. The authority does not exist, within Chapter 7, to 
terminate an existing license in the event that an individual 
has been discovered to have proliferated missile technology 
subsequent to the granting of the license. This deficiency 
became apparent in discussions with the administration 
regarding the proposed co-production arrangement between 
Lockheed Martin and a Russian rocket-engine firm, NPO 
Energomash. Section 708 provides that missing authority to the 
President, should he choose to utilize it. It is important to 
underscore that this authority is completely discretionary.
      Section 708 also requires the President to make an annual 
certification to the Committee that various Russian space and 
missile entities doing business with the United States are not 
identified in the report required pursuant to the Iran 
Nonproliferation Act of 2000. These certifications must be made 
annually for the first five years of a license between a U.S. 
firm and a Russian entity (or for the life of the license, if 
less than five years). However, there is no penalty in the 
event that a certification cannot be made (presumably because 
the person or entity has been listed in the report). The MTCR 
sanctions law only operates in the event that the President 
makes a formal determination that a transfer, or a conspiracy 
to transfer, occurred. While the certification required under 
Section 708 does not go beyond the annual report that the 
President is required to submit to Congress under the Iran 
Nonproliferation Act of 2000, it is nevertheless useful because 
it will ensure that the Department of State continues to focus 
on Russian entities doing business with the United States. This 
provision is also intended to encourage U.S. companies working 
with Russian space entities to maintain pressure on their 
counterparts not to proliferate technology to Iran.
      Finally, Section 708 rectifies an unintended reporting 
loophole in the Arms Export Control Act that resulted from 
amendments to integrate the Arms Control and Disarmament Agency 
within the Department of State and a subsequent decision by the 
Department of State on licensing technical exchanges and 
brokering services under Section 36 of the AECA. Specifically, 
for MTCR-related transfers governed under Section 36(b) and (c) 
which fall below the Congressional notification threshold, the 
administration currently must nevertheless submit a report to 
the Committee explaining the consistency of such a transfer 
with U.S. MTCR policy. However, MTCR-related licenses covered 
by Section 36(d) which fall below the notification threshold 
are not captured fully by this reporting requirement. Section 
708 rectifies this problem.

  sense of Congress Relating to Military Equipment for the Philippines

      Section 709 of the conference agreement, proposed by the 
House, expresses the sense of the Congress that the U.S. should 
work with the Government of the Philippines to enable them to 
procure certain military equipment to upgrade the capabilities 
and improve the quality of life of the armed forces of the 
Philippines.

                        Waiver of Certain Costs

      Section 710 of the conference agreement, proposed by the 
House, waives the requirement to collect certain nonrecurring 
charges associated with the government-to-government sale of 5 
UH-60L helicopters to Colombia in November of 1999.

                                   Benjamin A. Gilman,
                                   Bill Goodling,
                                   Sam Gejdenson,
                                 Managers on the Part of the House.

                                   Jesse Helms,
                                   Richard G. Lugar,
                                   Chuck Hagel,
                                   Joe Biden,
                                   Paul S. Sarbanes,
                                Managers on the Part of the Senate.

                                  
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