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47–610PS 2009

IMPACTS OF U.S. EXPORT CONTROL

POLICIES ON SCIENCE AND TECHNOLOGY

ACTIVITIES AND COMPETITIVENESS

HEARING

BEFORE THE

COMMITTEE ON SCIENCE AND

TECHNOLOGY

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

FEBRUARY 25, 2009

Serial No. 111– 4

Printed for the use of the Committee on Science and Technology

(

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

(II)

COMMITTEE ON SCIENCE AND TECHNOLOGY

HON. BART GORDON, Tennessee, Chair

JERRY F. COSTELLO, Illinois

EDDIE BERNICE JOHNSON, Texas

LYNN C. WOOLSEY, California

DAVID WU, Oregon

BRIAN BAIRD, Washington

BRAD MILLER, North Carolina

DANIEL LIPINSKI, Illinois

GABRIELLE GIFFORDS, Arizona

DONNA F. EDWARDS, Maryland

MARCIA L. FUDGE, Ohio

BEN R. LUJA ́ N, New Mexico

PAUL D. TONKO, New York

PARKER GRIFFITH, Alabama

STEVEN R. ROTHMAN, New Jersey

JIM MATHESON, Utah

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

RUSS CARNAHAN, Missouri

BARON P. HILL, Indiana

HARRY E. MITCHELL, Arizona

CHARLES A. WILSON, Ohio

KATHLEEN DAHLKEMPER, Pennsylvania

ALAN GRAYSON, Florida

SUZANNE M. KOSMAS, Florida

GARY C. PETERS, Michigan

VACANCY

RALPH M. HALL, Texas

F. JAMES SENSENBRENNER JR.,

Wisconsin

LAMAR S. SMITH, Texas

DANA ROHRABACHER, California

ROSCOE G. BARTLETT, Maryland

VERNON J. EHLERS, Michigan

FRANK D. LUCAS, Oklahoma

JUDY BIGGERT, Illinois

W. TODD AKIN, Missouri

RANDY NEUGEBAUER, Texas

BOB INGLIS, South Carolina

MICHAEL T. MCCAUL, Texas

MARIO DIAZ-BALART, Florida

BRIAN P. BILBRAY, California

ADRIAN SMITH, Nebraska

PAUL C. BROUN, Georgia

PETE OLSON, Texas

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C O N T E N T S

February 25, 2009

Page

Witness List ............................................................................................................. 2

Hearing Charter ...................................................................................................... 3

Opening Statements

Statement by Representative Bart Gordon, Chairman, Committee on Science

and Technology, U.S. House of Representatives ............................................... 22

Written Statement ............................................................................................ 23

Statement by Representative Ralph M. Hall, Minority Ranking Member,

Committee on Science and Technology, U.S. House of Representatives ......... 24

Written Statement ............................................................................................ 25

Prepared Statement by Representative Jerry F. Costello, Member, Committee

on Science and Technology, U.S. House of Representatives ............................. 28

Prepared Statement by Representative Eddie Bernice Johnson, Member, Committee on Science and Technology, U.S. House of Representatives ................. 28

Prepared Statement by Representative Gabrielle Giffords, Member, Committee on Science and Technology, U.S. House of Representatives ................. 29

Prepared Statement by Representative Harry E. Mitchell, Member, Committee on Science and Technology, U.S. House of Representatives ................. 29

Statement by Representative Dana Rohrabacher, Member, Committee on

Science and Technology, U.S. House of Representatives .................................. 26

Written Statement ............................................................................................ 27

Witnesses:

Lieutenant General Brent Scowcroft (USAF, Ret.), President and Founder,

The Scowcroft Group

Oral Statement ................................................................................................. 30

Written Statement ............................................................................................ 32

Biography .......................................................................................................... 34

Mr. A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-Chair, Center

for Strategic and International Studies (CSIS), Working Group on the

Health of the U.S. Space Industrial Base and the Impact of Export Controls

Oral Statement ................................................................................................. 34

Written Statement ............................................................................................ 35

Biography .......................................................................................................... 38

Dr. Claude R. Canizares, Vice President for Research and Associate Provost,

Bruno Rossi Professor of Physics, Massachusetts Institute of Technology

Oral Statement ................................................................................................. 39

Written Statement ............................................................................................ 40

Biography .......................................................................................................... 42

Major General Robert S. Dickman, Executive Director, American Institute

of Aeronautics and Astronautics

Oral Statement ................................................................................................. 43

Written Statement ............................................................................................ 44

Biography .......................................................................................................... 49

Discussion

Executive Order Relating to Relief for Universities .......................................... 50

International Dual-use Technology Balance ...................................................... 51

Differentiating Military Weapons and Dual-use Technology ........................... 52

Page

IV

Dual-track Export Control Systems ................................................................... 53

Export Control Dangers With the Chinese ........................................................ 54

Conclusion of Hearing .......................................................................................... 55

Appendix 1: Answers to Post-Hearing Questions

Lieutenant General Brent Scowcroft (USAF, Ret.), President and Founder,

The Scowcroft Group ............................................................................................ 58

Mr. A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-Chair, Center

for Strategic and International Studies (CSIS), Working Group on the

Health of the U.S. Space Industrial Base and the Impact of Export Controls ....................................................................................................................... 62

Dr. Claude R. Canizares, Vice President for Research and Associate Provost,

Bruno Rossi Professor of Physics, Massachusetts Institute of Technology ..... 65

Major General Robert S. Dickman, Executive Director, American Institute

of Aeronautics and Astronautics ......................................................................... 69

Appendix 2: Additional Material for the Record

Briefing of the Working Group on the Health of the U.S. Space Industrial

Base and the Impact of Export Controls, Center for Strategic & International Studies, February 2008 ........................................................................ 76

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IMPACTS OF U.S. EXPORT CONTROL POLICIES

ON SCIENCE AND TECHNOLOGY ACTIVITIES

AND COMPETITIVENESS

WEDNESDAY, FEBRUARY 25, 2009

HOUSE OF REPRESENTATIVES, COMMITTEE ON SCIENCE AND TECHNOLOGY, Washington, DC.

The Committee met, pursuant to call, at 10:09 a.m., in Room

2318 of the Rayburn House Office Building, Hon. Bart Gordon

[Chair of the Committee] presiding.

2

3

HEARING CHARTER

COMMITTEE ON SCIENCE AND TECHNOLOGY

U.S. HOUSE OF REPRESENTATIVES

Impacts of U.S. Export Control

Policies on Science and Technology

Activities and Competitiveness

WEDNESDAY, FEBRUARY 25, 2009

10:00 A.M.–12:00 P.M.

2318 RAYBURN HOUSE OFFICE BUILDING

Purpose

On Wednesday, February 25, 2009 at 10:00 a.m. in Room 2318, Rayburn House

Office Building, the Committee on Science and Technology will hold a hearing to

review the impacts of current export control policies on U.S. science and technology

activities and competitiveness and to examine the findings and recommendations of

the National Academies study, Beyond ‘‘Fortress America’’: National Security Controls on Science and Technology in a Globalized World.

Witnesses

Lt. General Brent Scowcroft (Ret.), Co-Chair, National Academies Committee on

Science, Security and Prosperity, and President and Founder, The Scowcroft Group

Mr. A. Thomas Young, Co-Chair, Center for Strategic and International Studies

Working Group on the Health of the U.S. Space Industrial Base and the Impact of

Export Controls, and Lockheed Martin Corporation (Ret.)

Dr. Claude R. Canizares, Vice President for Research and Associate Provost, Massachusetts Institute of Technology

Maj. General Robert Dickman (Ret.), Executive Director, American Institute of

Aeronautics and Astronautics

Issues

Some of the issues the hearing will explore include:

• What are the implications and unintended consequences of current export

control policies for the conduct of United States Government and commercial

science and technology activities and national security?

• How does U.S. export control policy affect U.S. scientific and technological

competitiveness?

• What are the principal findings and recommendations of the National Academies report, Beyond ‘‘Fortress America’’: National Security Controls on

Science and Technology in a Globalized World, as they relate to the conduct

of U.S. Government and commercial science and technology activities and

U.S. global science and technology competitiveness?

• What is required to implement the National Academies’ report recommendations and what are the most significant challenges in doing so?

• U.S. export control policies have an impact on the conduct of the U.S. commercial space industry and government civil space activities. What particular

issues and unintended consequences do the current export control policies

present for U.S. civil and commercial space activities, including space-based

research and human space flight activities? How serious are those issues and

what must be done to address the unintended consequences?

• What are the most critical issues relevant to U.S. civil government and commercial space activities that should be considered in any potential review of

U.S. export control policies?

• What effect, if any, do the unintended consequences of U.S. export control

policies have on U.S. leadership in space in the near-term and long-term?

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INTRODUCTION

The Cold War sparked the United States to make historic investments in scientific research and development that could serve our national security needs, including the support of university, government, and industrial research institutions.

Those Cold War investments created a robust science and engineering workforce,

drove innovation, fueled economic growth, and established the United States’ preeminence in science and technology.

The Soviets, however, sought access to U.S. technologies for potential military applications. In response, the U.S. instituted mechanisms aimed at preventing the

transfer of certain U.S.-developed components, systems, and information to the Soviet Union and other adversaries. These national security controls include the classification system, export controls, limitations on the transfer of knowledge about technologies, visa controls, and measures to restrict the dissemination of certain government-funded research that could threaten national security.

Export controls, which are the focus of this hearing, are directed by the Arms Export Control Act of 1968 and the Export Administration Act of 1979. The Arms Export Control Act governs the export of components and systems that are listed as

defense articles; the Department of State administers the International Traffic in

Arms Regulations (ITAR), which are the regulations to implement the Act. The U.S.

Munitions List (USML) comprises the list of defense articles regulated under the

ITAR; and that list includes such categories of items as tanks and military vehicles,

aircraft and associated equipment, military electronics, optical and guidance and

control equipment, toxicological agents, and spacecraft systems and associated

equipment. ITAR also controls technical data, including data for the design and development of defense articles, and defense services, which are ‘‘The furnishing of assistance (including training) to foreign persons, whether in the United States or

abroad in the design, development, engineering, manufacture, production, assembly,

testing, repair, maintenance, modification, operation, demilitarization, destruction,

processing or use of defense articles’’ [International Traffic in Arms Regulations, Section 120.9(a)(1)].

The Export Administration Act governs the export of dual-use items—those that

have military and as well commercial applications—including software and technology. The Act is implemented through the Export Administration Regulations

(EAR), which are administered by the Department of Commerce. The EAR controls

the export of dual-use items on the Commerce Control List, including software,

hardware, and other systems subject to the EAR. The EAR also controls ‘‘Any release of technology or source code subject to the EAR to a foreign nation. Such release

is deemed to be an export to the home country or countries of the foreign national.’’

[EAR Part 734] These ‘‘deemed exports’’ include technology or software released

through

‘‘(i) visual inspection by foreign nationals of U.S.-origin equipment and facilities;

(ii) oral exchanges of information in the United States and abroad; or

(iii) the application to situations abroad of personal knowledge or technical experience acquired in the United States.’’ [EAR Part 734]

The Export Administration Act has ‘‘lapsed several times,’’ according to the National Academies report, Beyond ‘‘Fortress America,’’ and presidential authorities

have sustained EAR requirements by using the International Economic Emergency

Powers Act of 1977, ‘‘on the grounds that the expiration of the act poses an ‘unusual

and extraordinary threat to the national security, foreign policy and economy of the

United States’,’’ according to the report.

What these controls mean in practice is that an institution such as a company

or university may need to apply for an export control license to export controlled

hardware or software (for example as part of an international space research mission or sale of a product or components abroad). The institution may also need to

obtain a license to share designs, conduct training related to the controlled item, or

discuss information about the item with a non-U.S. citizen who is abroad or working

in the U.S. Export control licenses, especially ITAR licenses, require a significant

review and interagency approval process that may take months.

During the late 1990s, the implementation of export control policies tightened in

response to findings about the unintentional transfer of controlled defense technologies and information to China. Since those changes, the time required to approve ITAR licenses, in particular, has put stress on the federal agency systems for

processing licenses and on the applicants for those licenses. In 2007, the Government Accountability Office (GAO) commented that the time required for processing

export licenses ‘‘increased from a median of 13 days in 2002 to 26 days in 2006.’’

And by late 2006, ‘‘State’s backlog of applications reached its highest level of more

5

than 10,000 open cases.’’ The time involved in obtaining Technical Assistance Agreements (TAAs), which are required to discuss ITAR-controlled technologies, has also

increased.

These delays mean that commercial companies may lose the opportunity to respond to a bid while waiting for a license, and that government projects may be delayed and incur cost increases. Other impacts of export controls pertain to researchers who may not be able to discuss ideas or research equipment with foreign colleagues at an international conference for fear of inadvertently transmitting controlled information. Failure to comply with the ITAR and EAR can carry fines and

criminal penalties. The later sections of this charter provide additional examples of

the unintended consequences of the policies and the challenges in implementing

them.

A large number of organizations have made statements, released positions, led

studies, and issued recommendations for improvements to the export control system.

Some of those institutions include The Aerospace Industries Association, the Space

Enterprise Council of the U.S. Chamber of Commerce, the Universities Space Research Association [an association of 102 universities], the Space Foundation, the

Association of American Universities, the Council on Governmental Relations, the

Center for Strategic and International Studies, and the Coalition for Security and

Competitiveness [which includes the Aerospace Industries Association, American

Association of Exporters and Importers, American Electronics Association, The Association for Manufacturing Technology, Business Roundtable, Chamber of Commerce

Space Enterprise Council, Coalition for Employment Through Exports, Electronic

Industries Alliance, General Aviation Manufacturing Association, Government Electronics and Information Technology Association, Industrial Fasteners Institute, Information Technology Industry Council, National Association of Manufacturers, National Defense Industrial Association, National Foreign Trade Council, Satellite Industries Association, Space Foundation and U.S. Chamber of Commerce.]

The Department of State has taken some steps to increase the efficiency of processing export control licenses. However, a 2007 GAO report commented that ‘‘Despite efforts to improve efficiency, State’s median processing times of license applications have been increasing since 2003.’’ In January 2008, the Bush Administration

issued U.S. Export Control Reform Directives to ‘‘ensure the United States’ export

control policies and practices support the National Security Strategy of 2006, while

facilitating the United States’ continued international economic and technological

leadership,’’ according to a release issued by the White House Office of the Press

Secretary. A fact sheet released by the State Department’s Bureau of Political-Military Affairs noted that the directives included making additional resources available

to handle defense trade licenses, upgrading an electronic licensing system, and improving dispute resolution and enforcement.

During the 110th Congress, the House passed H.R. 5916, the Security Assistance

and Arms Export Control Reform Act, which directed the President ‘‘to conduct a

comprehensive and systematic review and assessment of the United States arms export controls system in the context of the national security interests and strategic foreign policy objectives of the United States,’’ among other provisions. However, the bill

never became law. During the 110th Congress, the House also passed H.R. 6063,

the NASA Authorization Act of 2008, which was introduced by Rep. Mark Udall,

chairman of the Subcommittee on Space and Aeronautics, Committee on Science

and Technology. H.R. 6063 directed the Office of Science and Technology Policy to

carry out a study of export control policies related to civil and commercial space activities. The House-passed provision did not make it into law. Other legislation on

export controls was introduced during the 110th Congress but was not acted upon.

In addition, during his campaign, then-candidate Barack Obama issued a white

paper, ‘‘Advancing the Frontiers of Space Exploration,’’ in which he stated that he

would ‘‘direct a review of the ITAR to reevaluate restrictions imposed on American

companies, with a special focus on space hardware that is currently restricted from

commercial export.’’ His paper also stated that he would revise the licensing process,

without impact to American national security, to ensure that American aerospace

supplier companies are competitive in the global market.

THE CHANGING ENVIRONMENT

The geopolitical landscape has changed dramatically since national security controls were put into place. Advances in communications technologies have facilitated

the growth of a global marketplace of goods and ideas. In addition, science and technology, which is increasingly international, has become a primary agent of the Nation’s national and economic security. Recently, studies sponsored by both government and non-government institutions have called for reexamining national security

6

controls in light of their impacts on our global scientific, technological, and economic

competitiveness.

In its January 2007 report, the GAO identified the export control system as a new

high risk area. In July 2007 the GAO released a report in which it found that

‘‘Given the importance of the system in protecting U.S. national security, foreign policy, and economic interests, it is necessary to assess and rethink what type of system

is needed to best protect these interests in a changing environment.’’ And in January

2009 the GAO reported on the status of the government’s progress in implementing

GAO recommendations. Their report, Ensuring the Effective Protection of Technologies Critical to U.S. National Security Interests, found that

‘‘Over the years, GAO has identified weaknesses in the effectiveness and efficiency

of government programs designed to protect critical technologies while advancing

U.S. interests. Since this area was designated high risk in 2007, the agencies responsible for administering these programs, including the Departments of Commerce, Defense, Justice, State and the Treasury, have made improvements in several areas. However, vulnerabilities continue to exist, and agencies have yet to

take action to address GAO’s major underlying concern, which is the need for

a fundamental re-examination of current government programs to determine how

they can collectively achieve their mission and to evaluate the need for alternative approaches.’’

The need for new approaches to the export control system was the thrust of the

recently released National Academies report, Beyond ‘‘Fortress America’’: National

Security Controls on Science and Technology in a Globalized World. The report considered the multiple dimensions of national security controls including ‘‘the changing requirements of national security from the Cold War era, the impact of economic

globalization on the U.S. economy, the impact of the globalization of science and

technology on the U.S. economy and on its S&T leadership . . ..’’

The National Academies report took a broad look at dual-use export controls—

those technologies that may have both commercial and military applications—and

science and technology competitiveness. The National Academies committee also

considered visa policies given the importance, as discussed in the report, of the U.S.

being engaged in science and technology internationally and learning from the best

and brightest outside the U.S. The report did not address the classification system,

existing statutes, or policies that may prohibit technology transfers to a particular

nation. In addition, the committee did not make recommendations on multilateral

export control regimes or consider how individual agencies manage and administer

export control regulations. The report specifically focused on issues that could be addressed through Executive authority.

In general, the report recommends significant changes to foster ‘‘openness and engagement’’ and that would require the government to provide a ‘‘rational basis’’ for

restrictions on dual-use items planned to be exported. The report recommends that

the President make some structural and policy changes by issuing an Executive

Order under the authority of the International Economic Emergency Powers Act of

1977. According to the report, the Act allows the President to ‘‘structure the regulatory framework of the dual-use export controls system.’’

The National Academies committee, co-chaired by John L. Hennessy, President,

Stanford University and Lt. General Brent Scowcroft (ret.),former National Security

Advisor, concluded:

‘‘As a nation, we cannot, and should not abandon well-conceived efforts to keep

dangerous technology and scientific know-how out of the hands of those who

would use this knowledge to create weapons of mass destruction and other,

equally dangerous military systems. However, these represent a very narrow and

limited set of goods, technology, and knowledge. Our former unilateral strategy

of containment and isolation of our adversaries is, under current conditions, a

self-destructive strategy for obsolescence and declining economic competitiveness.

A strategy of international engagement is a path to prosperity that can be coupled with a smarter approach to security using an adaptive system of government regulation and incentives. The committee recommends the issuance of an

Executive Order that implements the recommendations it has outlined as one of

the first orders of business in January 2009.’’

Some of the elements of the Order would include:

• Establishing a process for removing every item on a control list after 12

months unless there is a strong case for keeping it;

7

• An economic competitiveness exemption that ‘‘eliminates export controls on

dual-use technologies where they, or their functional equivalents, are available

without restriction in open markets outside the United States’’;

• Establishing a coordinating center for export controls that would receive license applications, determine the appropriate jurisdiction for those licenses

(i.e., Commerce or State), ensure the efficient processing of licenses, and manage an appeals process;

• Creating an independent export license appeals panel; and

• Ensuring support for excluding fundamental research from export controls.

The complete list of report recommendations is included in Attachment A and a

list of the members of the study committee is provided in Attachment B.

While the National Academies report addressed the broad and interrelated issues

of national security controls, economic security, and science and technology competitiveness, certain sectors of scientific research and commercial activity are particularly affected by the export control system. All satellites are export-controlled by the

ITAR, and the implications of the regulations has been a matter of concern for the

industries, universities, and other institutions that are involved in commercial and

civil space activities. A number of studies have examined the unintended consequences of export controls on the U.S. civil and commercial space sectors, and the

results of those studies and the issues they raise are detailed in later sections of

this charter.

Questions related to the National Academies report include such things

as what, in specific terms, would be involved in implementing the National

Academies’ recommendations? At what point after an Executive Order is in

place should we expect to see improvements in the export control system?

What, specifically, does the recommended Executive Order address? What,

if anything, is missing from the Order? What areas does Congress need to

address? How would implementing the recommendations mitigate the impacts raised in specific sectors such as civil and commercial space? What

is the outlook if the National Academies’ recommendations are not implemented?

NATIONAL SECURITY

The National Academies report, ‘‘Beyond ‘‘Fortress America’’: National Security

Controls on Science and Technology in a Globalized World,’’ stated in the first finding of the report:

‘‘Designed for the Cold War when the U.S. had global dominance in most areas

of science and technology, the current system of export controls now harms our

national and homeland security, as well as our ability to compete economically.’’

The report also states:

‘‘. . . the export control system enforced in the U.S. today has failed to evolve

with changing global conditions, and now produces significant harm to U.S.

military capability, to homeland security, and to the Nation’s economic competitiveness.’’

The Department of Defense (DOD) examined the impact of export control policies

on the health of the U.S. space industrial base and issued a report in 2007. The

report, Defense Industrial Base Assessment: U.S. Space Industry Final Report, which

will be discussed in later sections of this charter, states that ‘‘The National Security

Space Industrial Base (NSSIB) is critical to U.S. success in developing and deploying national security space assets.’’ As part of the conclusions, the report states that:

‘‘To maintain and enhance the U.S. competitive position in the global market, ITAR

processes need to be frequently reviewed and adjusted, as appropriate.’’

In response to direction in P.L. 109–364, the John Warner National Defense Authorization Act for Fiscal Year 2007, the Institute for Defense Analyses produced a

report, Leadership, Management, and Organization for National Security Space. The

report, which was prepared by an Independent Assessment Panel chaired by Mr. A.

Thomas Young, was accompanied by a letter to the Honorable Carl Levin, Chairman, Senate Committee on Armed Services that in part stated:

‘‘Today, U.S. leadership in space provides a vital national advantage across the

scientific, commercial, and national security realms. In particular, space is of

critical importance to our national intelligence and war-fighting capabilities.

The panel members nevertheless are unanimous in our conviction that, without

significant improvements in the leadership and management of NSS [national

8

security space] programs, U.S. space preeminence will erode to the extent that

space ceases to provide a competitive national security advantage.’’

The Independent Assessment Panel (IAP) referenced a study by the Center for

Strategic and International Studies (CSIS) on the health of the U.S. space industrial

base, and noted that ‘‘The IAP supports the recommendations of the CSIS panel to

revisit the ITAR and relax those aspects that are counterproductive to U.S. competitiveness.’’ The findings of the CSIS study are discussed in later sections of this charter.

CONTROVERSIES ABOUT EXPORT CONTROL REFORM

According to the Congressional Research Service report, The Export Administration Act: Evolution, Provisions, and Debate, as updated on January 15, 2009, debate

on export administration legislation tends to involve a conflict between national security and commercial concerns:

‘‘These concerns are not mutually exclusive . . .. For example, nearly everyone

favors reform of the current system, yet no one considers themselves opposed to

national security. Generally, however, many who favor reform of the current export control accept the business perspective that such reform would assist U.S.

business to compete in the global marketplace. Others view the issue more from

a national security perspective. To this group, reform should be concerned less

with the abilities of U.S. industry to export and more with the effective controls

placed on potential exports to countries that threaten the security of the United

States, terrorists, violators of human rights, and proliferators of weapons of

mass destruction. From these different perspectives, controversies arise regarding

the controllability of technology, the effectiveness of multinational regimes, the

bureaucratic structure of the licensing process and the impact of export controls

on the U.S. economy.’’

ISSUES AND UNINTENDED CONSEQUENCES RELATED TO SCIENCE

AND TECHNOLOGY COMPETITIVENESS

Overarching Findings of National Academies Report

The National Academies report identifies a number of specific findings that argue

for revamping the current export control systems:

• ‘‘U.S. national security, including the protection of the homeland, is not well

served by the current controls.

• The single technology base that today supports both U.S. commercial and military capabilities is constrained from expanding into new fields and from applying new scientific developments.

• Entire international markets are denied to U.S. companies because they are

forbidden to ship their technologically sophisticated products to foreign countries.

• Obsolete lists of controlled components prevent U.S. companies from exporting

products built from prior generation technologies not likely to harm national

security.

• U.S. scientists are hobbled by rules that prevent them from working with

world-class foreign scientists and with advanced laboratories located overseas,

making it less likely that valuable discoveries and inventions will occur in the

U.S.

• The government’s rules are driving jobs abroad—knowledge-intensive jobs critical to the future of the U.S. economy.

• The government’s rules are accelerating the development of technologies in capable research centers outside the U.S.’’

Impeding the Exchange of People and Ideas

The health of the U.S. science and technology depends on the free exchange and

transport of ‘‘people, ideas, materials, and equipment,’’ as described in the National

Academies report. Increasingly, science and technology competitiveness is dependent

on having the ability to draw on the talent and capabilities of non-U.S. persons.

According to the report,

• ‘‘. . . with increasing frequency, important discoveries are made by scientists

who work in teams and who have access to the best work going on in scientific

centers around the world and state-of-the-art instrumentation.’’

9

• ‘‘Similarly, in a world in which breakthroughs can happen anywhere, being

competitive requires being aware of—and capitalizing on—developments in

other places . . .’’

• ‘‘A new scientific breakthrough, or a newly developed technological capability,

can stimulate additional research in laboratories around the world. Although

science does depend on the ability of researchers to validate previously published results, the scientific reward system—and the allocation of competitively

awarded resources—strongly favors the first to publish. Speed is equally critical in bringing high-technology products to market.’’

U.S. visa policy governs our ability to benefit from non-U.S. scientific talent. The

policy uses lists that identify certain areas of academic research, particular countries of concern, and specific research activities that require applicants to undergo

special review. Visa policies were tightened after 9–11. Although ‘‘the most draconian rules affecting graduate students were ameliorated’’ the report notes, ‘‘significant barriers still remain for scholars and researchers seeking visas to attend conferences or for other short-term professional trips in the United States.’’

In light of the challenges and implications of export control and visa policies for

carrying out fundamental research, the National Academies report finds that:

‘‘The best practices that underpin successful competition in research and technology advancement [freedom of inquiry, freedom to pursue knowledge at the

scientist’s own discretion, freedom to collaborate without limitation, pluralistic

and meritocratic support of science, and freedom to publish] are undermined by

government regulation that restricts the flow of information and people participating in fundamental research.’’

These impediments can have negative effects on the competitiveness of the U.S.

scientific infrastructure within the global environment. For instance, the report

notes that:

• ‘‘Breakthrough discoveries in science often come when supporting advancements in related fields have occurred in sufficient numbers or new types of instrumentation have become available. If one researcher or laboratory ‘misses’

a new advance, it is likely that a competitive researcher elsewhere will make

the discovery soon thereafter.’’

• ‘‘. . . export controls and ‘deemed export’ rules make U.S. universities less able

to attract the most capable foreign researchers or to retain some of the most

creative faculty members. Important discoveries may be hindered, or may simply occur elsewhere.’’

• ‘‘Licensing requirements inevitably lead to delays, and they may deter or even

eliminate the spontaneous discoveries that arise from serendipitous interactions and spur-of-the moment collaborations, most of which are impossible

under ‘deemed export’ rules.’’

• ‘‘The best foreign universities now have the research equipment and infrastructure to compete with the best U.S. research universities for students and researchers. Where limitations exist on foreigners studying or working in the

U.S. system, foreign universities are well positioned to extend competing offers.’’

Implications for America COMPETES Act

The issues noted above have implications for the Nation’s innovation and competitiveness and the types of actions directed in the America COMPETES Act [P.L. 110–

69], which has as its three primary goals: 1) increasing research investment, 2)

strengthening educational opportunities in science, technology, engineering, and

mathematics; and 3) developing an innovation infrastructure. The National Academies report, Rising Above the Gathering Storm, which provided the basis for the

Act, recognized the impacts of export controls and recommended that the current

system of ‘‘deemed exports’’ be reformed:

‘‘The new system should provide international students and researchers engaged

in fundamental research in the United States with access to information and research equipment in U.S. industrial, academic, and national laboratories comparable with the access provided to U.S. citizens and permanent residents in a

similar status . . . In addition, the effect of deemed export regulations on the

education and fundamental research work of international students and scholars

should be limited . . ..’’

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Using Lists to Control Exports

Using lists such as the Commerce Control List and the U.S. Munitions Control

List, according to the National Academies report, are ineffective ways to control

technology transfer because the technologies and information on the lists are, in

many cases, available for sale on the open market from non-U.S. sources. The lists

can also have the effect of advancing indigenous science and technology capabilities

and competitiveness elsewhere. For example, the report notes that foreign nations

may use the lists to prioritize research and development investments, because they

anticipate that U.S. companies and institutions may face challenges in exporting

those controlled technologies abroad. The case of U.S. commercial communications

satellite development exemplifies this point. As a result of ITAR hurdles, Europe

began to develop satellite components itself and to produce satellites that do not use

U.S.-developed technologies rather than purchase the components, which are ITARcontrolled, from the U.S.

The lists also affect how U.S. researchers make decisions on the type of research

they pursue. The National Academies report notes that ‘‘Some avoid research in

areas that are affected by federal controls out of an apprehension that significant

work may not be published or that students or researchers needed for first-rate laboratories will not be available. Breakthroughs will thereby be thwarted.’’

The recommendation from the National Academies is to: ‘‘Apply ‘sunset’

requirements to all items on export control lists that are controlled unilaterally by the U.S., and require findings to be made every 12 months that

removing controls on an item would present a substantial risk to national

security.’’

Fundamental Research Exemptions

In 1985, President Reagan issued National Security Decision Directive (NSDD)

189, which recognizes that ‘‘our leadership position in science and technology is an

essential element in our economic and physical security’’ and ‘‘The strength of American science requires a research environment conducive to creativity, an environment

in which the free exchange of ideas is a vital component.’’ To that end, NSDD 189

states:

‘‘It is the policy of this Administration that, to the maximum extent possible, the

products of fundamental research remain unrestricted. It is also the policy of this

Administration that, where the national security requires control, the mechanism

for control of information generated during federally-funded fundamental research in science, technology and engineering at colleges, universities and laboratories is classification.’’

During the late 1990s, however, the implementation of export control policies

tightened in response to findings about the unintentional transfer of controlled defense technologies and information to China, and those changes raised questions

about the fundamental research protections under NSDD 189.

In 2001, former National Security Advisor Condoleezza Rice reaffirmed the Directive, and in 2002 the State Department modified the ITAR as it applies to defense

articles developed at U.S. universities for use in fundamental research. Section

123.16(10) of the ITAR states that:

‘‘Port Directors of U.S. Customs and Border Protection shall permit, without a

license, the permanent export, and temporary export and return to the United

States, by accredited U.S. institutions of higher learning of articles fabricated

only for fundamental research purposes.’’

The exemption includes several conditions, including:

• ‘‘The export is to an accredited institution of higher learning, a governmental

research center or an established government funded private research center located within countries of the North Atlantic Treaty Organization’’ or that have

been designated as a non-NATO ally.

• ‘‘All of the information about the article(s), including its design, and all of the

resulting information obtained through fundamental research involving the article will be published and shared broadly within the scientific community,

and is not restricted for proprietary reasons or specific U.S. Government access

and dissemination controls or other restrictions accepted by the institutions or

its researchers on publication of scientific and technical information resulting

from the project or activity . . ..’’

Despite the attempts to address the matter, the fundamental research exclusion

‘‘has not had the effect of precluding all such restrictions’’ according to the National

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Academies report. The Council on Governmental Relations and the Association of

American Universities has conducted surveys of U.S. research universities to gauge

the problem of restrictive clauses on research. According to their report, Restrictions

on Research Awards: Troublesome Clauses 2007/2008, issued in July 2008,

‘‘. . . federal agencies are expanding the type of controls they impose in award

terms and conditions and are using more sophisticated (and varying) technical

language and approaches for implementing restrictions that affect university research projects. Particularly alarming is the spread of restrictive award terms

by federal agencies beyond contracts to federal assistance mechanisms, such as

grants.’’

Universities maintain that the export control regulations are confusing with respect to fundamental research, especially given that research usually involves participation by non-U.S. persons in American universities or abroad, and interactions

with them may be considered exports.

The National Academies committee ‘‘recommends that the Fundamental

Research Exemption be maintained, adhered to, and properly implemented. Universities and other research institutions have worked under

this regime successfully and have in place the necessary mechanisms to

comply with the exemption.’’

ISSUES AND UNINTENDED CONSEQUENCES FOR U.S. GOVERNMENT

CIVIL AND COMMERCIAL SPACE ACTIVITIES

Commercial and civil space activities make significant contributions to the economy and the Nation’s science and technology capabilities. In 2008, global sales for

U.S. aerospace companies totaled $204 billion of which $33 billion was for the U.S.

sales of space systems, according to the Aerospace Industries Association. Universities, federal laboratories, research institutions, along with private industry, conduct the Nation’s space-based research activities. These commercial and research activities help engage and train the next generation of scientists and engineers and

develop innovative technologies that contribute to our economic competitiveness.

The aerospace industry, especially the satellite manufacturing industry, has long

maintained that export controls have led to decreasing competitiveness and loss of

market share in the global market. In addition, space science researchers have identified unintended consequences of the ITAR on fundamental space research. Government officials have also questioned whether export controls are affecting the health

of the space and defense industry. Recent studies have examined the impacts of export controls on these space sectors.

In 2007, the DOD completed a study, Defense Industrial Base Assessment: U.S.

Space Industry Final Report, which involved gathering quantitative data on the U.S.

space industrial base and reviewing whether export controls were affecting the industry. The study involved a survey of companies and business units that included

prime contractors that sell products to commercial and/or government institutions

(Tier 1), subcontractors that provide major components and systems to prime contractors (Tier 2), and lower tier companies that sell subassemblies, structures, materials and less complex components as well as engineering and other services (Tier

3). The DOD Industrial Base Assessment found that ITAR is having an impact on

industry sales and competitiveness; examples of these impacts are provided in the

sections below.

In 2008, the CSIS issued a Briefing of the Working Group on the Health of the

U.S. Space Industrial Base and the Impact of Export Controls, which reviewed the

results of the 2007 DOD Defense Industrial Base Assessment, interviewed and collected data from across the government, industry, and other experts, and examined

the findings of other reports on export controls. The findings of the CSIS study echo

many of the issues affecting the broader areas of science and technology that were

raised in the National Academies report. The CSIS report concludes, for example,

that:

• U.S. policies are not controlling the rapid proliferation of non-U.S. space capabilities and in some cases the policies are encouraging them;

• U.S. preeminence in space is being challenged;

• Current export control policies are restricting U.S. international space activities and partnerships; they have led to separation between U.S. and emerging

non-U.S. space actors;

• Certain elements of export controls are in variance with U.S. National Space

Policy; and

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• U.S. market share in foreign space markets is declining and it is harder for

U.S. companies to compete in non-U.S. markets, particularly for the lower tier

companies.

The implications of these conclusions are described further in the sections below.

The National Academies held a workshop on the implications of the ITAR and

space science. In 2008, the Academies released, Space Science and the International

Traffic in Arms Regulations: Summary of a Workshop. The workshop summary

pointed to the disconnect between the ITAR regulations, the fundamental research

exemption, and the way in which space-based research is conducted. The ambiguities and uncertainties in the interpretation of and application of the ITAR requirements are leading academic institutions to be overly conservative in their actions.

This results in concerns over loss of competitiveness in scientific research and education at U.S. institutions of higher learning, according to the report.

Increasing Foreign Capability and Diminished U.S. Leadership in Space

The CSIS report found that ‘‘United States preeminence in space in under challenge in many areas.’’ Export controls have not thwarted the increasing capabilities

of foreign space programs.

• According to the CSIS report, Chinese and Indian space programs have continued to make considerable progress including the launching of indigenous

high resolution imaging satellites, lunar probes, and China’s successful

launch of a human into outer space and the successful execution of its first

human space-walk activity.

• The report also notes that the number of nations with their own space-based

positioning and navigation systems has tripled since 1999; the number of

countries possessing earth observation and reconnaissance satellites has doubled since 1999; at least twelve nations are capable of launching their own

satellites; and 38 countries can control the operations of their own communication satellites.

• According to CSIS, the capabilities of non-U.S. space countries participating

in the commercial market has also grown. Non-U.S. companies are now capable of producing commercial communications satellites that are on par with

those of the U.S.

Æ As noted in the CSIS report, ‘‘Since 1998, European and Asian manufacturers of satellites have gone from delivering satellites that were smaller,

had fewer transponders, lesser payload power and shorter lives to manufacturing satellites of equal weight, number of transponders, payload

power and lifespan.’’

Æ Europe has developed ITAR-free components and systems.

Æ According to a news item of the European Space Agency, the European

Commission, the European Space Agency, and the European Defense

Agency ‘‘have agreed to join forces in order to develop critical space technologies in Europe. The aim is to ensure that Europe can rely on a technical and industrial capacity for accessing space, in particular in the area

of the manufacturing of satellites and launchers.’’

• Foreign innovation and human capital are important to U.S. leadership in

space but are increasingly harder to access. The U.S. has benefited from foreign innovation and talent. Foreign students obtain more than half of the

Ph.D.s in science, technology, and engineering and workers born outside of

the U.S. account for more than a quarter of the science and technology workforce in the U.S., according to the CSIS report. Export controls make it more

difficult to take advantage of this talent pool, as noted in the CSIS report.

Conflicts with Objectives of U.S. National Space Policy

In 1996, the Clinton Administration issued a National Space Policy in which the

policy’s commercial space guidelines stated:

‘‘The fundamental goal of U.S. commercial space policy is to support and enhance U.S. economic competitiveness in space activities while protecting U.S. national security and foreign policy interests. Expanding U.S. commercial space activities will generate economic benefits for the Nation and provide the U.S. Government with an increasing range of space goods and services.’’

In 2006, the Bush Administration issued a U.S. National Space Policy, which superseded the 1996 policy, and states that:

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‘‘The United States Government will pursue, as appropriate, and consistent with

U.S. national security interests, international cooperation with foreign nations

and/or consortia on space activities that are of mutual benefit and that further

the peaceful exploration and use of space.’’

The 2006 Policy also supports the use of effective export policies and states that

‘‘space-related exports that are currently available or are planned to be available in

the global marketplace shall be considered favorably.’’

The goals of the space policy include:

• ‘‘Strengthen the Nation’s space leadership and ensure that space capabilities

are available in time to further U.S. national security, homeland security, and

foreign policy objectives;’’

• ‘‘Enable a dynamic, globally competitive domestic commercial space sector in

order to promote innovation, strengthen U.S. leadership, and protect national,

homeland, and economic security;’’

• ‘‘Encourage international cooperation with foreign nations and/or consortia on

space activities that are of mutual benefit and that further the peaceful exploration and use of space, as well as to advance national security, homeland security, and foreign policy objectives.’’

The CSIS report found that aspects of current export control policies and regulations are at variance with the national space policy. For instance, the export control

system does not enable cooperation while also denying capabilities to adversaries.

Placing satellites on the USML has encouraged the development of non-U.S. space

capabilities, and ITAR regulations have had negative impacts for U.S. industry.

CSIS also notes that export controls have interfered with a legacy of beneficial collaboration with foreigners and have made it difficult for international partners to

resolve anomalies in collaborative space activities.

Issues for Fundamental Research Using Space-Based Hardware

In response to concerns about the transfer of export controlled hardware and information to China during the 1990s, the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 [P.L. 105–261] transferred ‘‘all satellites and related items that are on the Commerce Control List of dual-use items . . . to the

United States Munitions List and controlled under section 38 of the Arms Export

Control Act . . ..’’

In 2002, the Department of State revised the ITAR language concerning scientific

satellites for fundamental research. ITAR licenses are not required for scientific research satellites when specific conditions are met. Space researchers, however, report confusion about the application of that exemption to space research projects.

The summary report of the National Academies workshop on space science and

ITAR noted that regulations are applied differently to institutions involved in a single space project—national labs, universities, industry, and government. In addition,

researchers are unclear about the type of information that can be placed in the public domain, including in the classroom. Moreover, the fundamental research exclusion in the ITAR applies only to ‘‘accredited U.S. institutions of higher learning.’’

There is also a lack of clarity about involving foreign students and researchers in

space research projects that may use ITAR-controlled technology. Researchers are

also unclear about what information regarding a satellite project they can share

with non-U.S. individuals or students in an academic environment.

In the absence of clarity, universities and researchers interpret regulations conservatively and may add burdens that are not necessary and lead to decisions that

affect university engagement in space research. For example, according to the National Academies’ workshop summary, universities and researchers may make decisions not to pursue projects requiring ITAR licenses or to allow non-U.S. researchers

and students to participate in space research projects. In addition, the report says

that ‘‘uncertainties are leading some professors to ‘dumb down’ course content rather

than risk ITAR violations by discussing their research in the classroom setting.’’

The workshop summary on space science and ITAR also notes that compliance

‘‘creates a significant unfunded mandate for universities, because they operate with

capped overhead costs . . ..’’ In addition, universities bear the costs of educating faculty and contracting and grants officers, maintaining documentation, handling negotiations with the State Department, and ‘‘the substantial costs of delays in securing

approvals for activities that fall under ITAR,’’ according to the report.

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Reduced Competitiveness of Space Industry

Both the CSIS study and the Defense Industrial Base Assessment make findings

about the increasing challenges that U.S. space companies face in being competitive

in foreign markets. According to the results of the DOD-initiated space industrial

survey, ‘‘Defense Industrial Base Assessment: U.S. Space Industry Final Report,’’

several companies voluntarily commented that ITAR was an issue in being competitive in foreign space markets. For example, the Assessment notes that:

‘‘Over two-thirds of the survey respondents felt strongly enough to add narrative

comments with over a quarter of those encountering difficulties in export markets. Some companies have self-eliminated from foreign markets to focus on the

domestic only market.’’

‘‘There have been a number of firms in all tiers that have not applied for export

licenses (half of the companies surveyed) due to real or perceived problems with

navigating the licensing process.’’

One company commented that it chose to forgo space business because that business has not been profitable and some foreign customers will not procure items that

require ITAR licenses.

Æ Of the companies that participated in the survey for the DOD Assessment, 58

percent listed export controls as the number one barrier to entry when attempting to market products abroad.

Æ According to the DOD Assessment, ‘‘Companies reported $2.35B of ITAR-related potential sales lost due to the licensing process from 2003–2006, an average of $588M annually. This loss represents about one percent of total U.S.

space revenues.’’ [Note that the $588M figure is a best estimate and does not

include opportunities that were not pursued or that were lost due to ITAR.

It may also involve some double-counting among competitors.]

Æ The cost of managing compliance with export controls is another challenge.

‘‘Space industry-wide compliance costs averaged $49M per year in 2003–2006,’’

according to the DOD Assessment, and created a significant financial burden,

especially for smaller companies.

The CSIS recommendation is to ‘‘Remove from the Munitions List commercial communications satellite systems, dedicated subsystems, and components specifically designed for commercial use; provide safeguards by

having Defense Department identify critical space components and technologies that should always require licensing and referral. Have the appropriate executive departments conduct a study to see if other space technologies should be removed from the list.’’

Pronounced Impacts on Competitiveness of Smaller and New Commercial Space

Companies

The Assessment and the CSIS report found, in particular, that the burden of

ITAR is ‘‘more pronounced’’ for smaller companies (the lower tiers) in terms of compliance costs and exports to foreign systems for example. It is the lower tier companies that are often the sources of innovation. The CSIS study found that ‘‘Export

controls are adversely affecting U.S. companies’ ability to compete for foreign space

business, particularly the second and third tier. And it is the 2nd/3rd tier of the industry that is the source of much innovation, and is normally the most engaged in

the global market place in the aerospace/defense sector.’’ In addition, the President

and CEO of the General Aviation Manufacturers Association (GAMA) stated at a

March 2008 forum on export controls that ‘‘small companies where much of the innovation takes place [are] leary of participating in a program that could put them in

a position of inadvertently violating export control rules.’’

One space company that is aiming to sell access to a commercial space habitat

found that the modular inflatable technology that forms the basis of its space habitat is export controlled. The company also ran into ITAR problems with a basic technical stand. As the company President, Robert Bigelow, reported in a February 2008

article in Space News, ‘‘A wonderful example of the irrationality of the current regime is the ’technical stand’ from our Genesis campaigns. This simple aluminum

stand is composed of a circular base with several legs sticking out. If you were to

turn the stand upside down it would literally be indistinguishable from a common

coffee table. However, under the current export control regime, the stand was considered ‘ITAR hardware’ and we were required to have two security officers guarding

the stand on a 24/7 basis while at our launch base in Russia.’’

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Lost Revenue in Satellite Manufacturing Market

The CSIS report notes that ‘‘Study after study shows the same results, an erosion

of U.S. share of the global commercial satellite market since the late 1990s.’’

In addition, the DOD Assessment, shows that, based on Satellite Industry Association reports in 2004 and 2006,

Æ ‘‘The U.S. share of global satellite manufacturing has decreased since the

ITAR changes were implemented in 1999.’’

Æ ‘‘U.S. market share dropped from 63 percent in 1996–1998 to 52 percent in

1999–2001 and 42 percent in 2002–2006.’’

Æ ‘‘Revenues dropped in real terms as well from an average of $6.6B in the first

period, to $5.5B in the transition period, and $4.2B in the most recent period

of the data.’’

Æ ‘‘U.S. share of GEO [geostationary] commercial communications satellites

manufactured has decreased 10 percent since 1998.’’

Challenges for Government-Sponsored International Space Activities

Much of the Nation’s civil space activities are international given the global nature of the marketplace, the benefits of commercial strategic partnerships, and the

legacy of cooperation in NASA’s space-based scientific research and human exploration mission programs. Export controls hinder these activities and may introduce

safety concerns. The NASA director for export control noted at a March 2008 Aerospace States Association forum on Export Controls that:

‘‘Unfortunately, certain provisos requiring separate and specific government review and approval for any collaborative anomaly resolution activity may impede

the ability of NASA’s contractors to expeditiously take action to assure operations

safety and mission success, including during real-time operations, where an

anomaly could be encountered.’’ He said ‘‘Rendezvous and docking of the European Automated Transfer Vehicle (ATV) and Japanese H–II Transfer Vehicle

(HTV) with the International Space Station are time-critical operations that require timely exchange of information for effective operations. In the event of an

on-orbit problem, for the safety of the Space Station and its crew, ATV and HTV

engineers must be able to quickly and easily share technical data—in real-time—

with U.S. engineers . . ..’’

Along those same lines, a 2007 report of the International Space Station Independent Safety Task Force (IISTF) explained that ‘‘Currently the ITAR restrictions

and the IP’s objections to signing technical assistance agreements are a threat to the

safe and successful integration and operations of the Station.’’ The study recommended that the State Department grant relief to NASA contractors working directly with the International Space Station (ISS) international partners and their

contractors to enable engineering and safety reviews, program management interactions, and to handle anomaly resolution among other specific activities and that

the ‘‘Executive and Legislative Branches of the government should conduct a comprehensive and thorough review of government policies and procedures related to

ITAR and related export controls as soon as practical.’’

The CSIS recommendation on anomaly resolution is that: ‘‘The Secretary of Defense and NASA Administrator, in addition to the Secretary of State, should have

the authority to grant real-time, case-by-case, specific time period exemptions for

anomaly resolutions deemed to be in the national interest based on criteria from the

National Space Policy.’’

The NASA export control director also commented that the State Department has

‘‘advised NASA to seek legislative authority as a prerequisite to the Department’s promulgation of an exemption to facilitate the implementation of NASA’s programs, including the U.S. Space Exploration Policy.’’ The Bush Administration did not send

any proposed legislation to Congress regarding this export control matter.

A significant portion of NASA’s science missions involve international cooperation

in which export controls apply. At a hearing of the House Committee on Science and

Technology, Subcommittee on Space and Aeronautics, held in March 2008 to examine NASA’s science programs, Dr. Jack Burns, a professor from the University of

Colorado noted: ‘‘. . . we need to be looking at more international cooperation because sharing the costs and the risks associated with these large projects in astrophysics . . . The ITAR restrictions are making it more difficult than they need to

be.’’ Another witness at the hearing, Dr. Steven Squyres of Cornell University, the

Principal Investigator for the Mars Exploration Rovers (Spirit and Opportunity),

testified that ‘‘many talented students come and want to work on the mission. These

are students and post-docs from Denmark and Canada, and we have had to turn

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away people because of the restrictions on ITAR. And these are people who can materially advance a U.S. space mission and make it a better mission.’’

In addition, the National Academies workshop summary on space science and

ITAR raised concern over the ability to continue international collaborations, especially as projects become increasingly more complicated. The workshop summary

notes that:

‘‘The costs and delays imposed by ITAR processing requirements coupled with

other nations’ reluctance to be made subject to restrictions derived from U.S. law

and regulations, are making the United States less and less desirable as a partner to its foreign collaborations. The implications for continued international collaboration are grave.’’ The workshop summary also said that ‘‘International participants in the workshop went so far as to speculate that without high-level U.S.

Government relief on ITAR, the development of highly integrated infrastructure

programs, such as those envisioned for human space exploration, will be impossible.’’

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ATTACHMENT A

National Academies, Beyond ‘‘Fortress America’’: National

Security Controls on Science and Technology in a

Globalized World, 2009

Excerpt from the Executive Summary

‘‘Recommendations

The committee structured its recommendations into three areas: reforming the export control process, ensuring scientific and technological competitiveness, and improving the non-immigrant visa system that regulates the entry into the United

States of foreign science and engineering students, scholars, and professionals.

In the committee’s view, it is important to act immediately, within the boundaries

of the President’s authority to ameliorate the policy logjam that is the unintended

consequence of Congress’s inaction over dual-use export controls. The new President

needs to make the changes that will stem a serious decline affecting broad areas of

the Nation’s security and economy.

Recommendation 1. The President should restructure the export control process

within the federal government so that the balancing of interests can be achieved more

efficiently and harm can be prevented to the Nation’s security and technology base;

in addition to promoting U.S. economic competitiveness.

Restructuring the export control process does not involve abandoning all export

controls. Rather, the committee recommends that two policy changes and two structural changes be made to retain needed export controls while shedding the largest

obstacles to an efficient system. With these changes implemented in an expedient

manner, the United States will stem the loss of technological and economic competitiveness and begin to benefit from carefully targeted and calibrated controls that reflect and meet current challenges that the country faces in protecting both our national security and our economic well-being.

Action Items

A. Recognize the interdependence of national security and economic competitiveness

factors in making export control decisions with respect to individual requests for licenses through a principle-based system.

When the licensing agency applies principles to decisions about export controls, the

focus will stay on why items should or should not continue to be controlled, rather

than on adding to otherwise static lists of controlled items. This kind of governance

system can assess each decision in terms of whether an item should be controlled

against the governing principles that have been established within the system. Doing

so can ensure that the remaining controlled items are relevant to rapidly changing

global conditions. It can also help ensure that decisions are made in a timely manner. The following are the principles that the committee recommends:

1. Maintain the value of protecting traditional U.S. national security in export

control policy.

2. Recognize that today this value must be balanced against the equally important value of maintaining and enhancing the scientific and technological competitiveness of the United States.

3. Allow openness and engagement to prevail unless a compelling case can be

made for restrictions.

4. Articulate a rational basis for each restriction. Restrictions on unclassified

technology should be implemented only when:

a. The U.S. alone, or the U.S. and cooperating allies, possess technology

that leads not only to identifiable military advantage, but to an advantage that is likely to persist for a significant period of time (i.e., the time

needed to field a system based on that technology);

b. The U.S., or the U.S. acting together with allies, control the technology

such that they can prevent it from moving into the hands of possible adversaries;

c. The restrictions do not impose costs and inefficiencies that are disproportionate to the restrictions’ security benefits; and

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d. Restrictions are re-examined and re-adjusted periodically to ensure they

remain appropriate.

5. Protect the capability to ‘‘run faster.’’

6. Treat weapons separately—but define them narrowly and precisely.

7. Recognize the ‘‘global public good’’ nature of health-related technologies.

B. Apply ‘‘sunset’’ requirements to all items on export control lists that are controlled

unilaterally by the U.S., and require findings to be made every 12 months that removing controls on an item would present a substantial risk to national security. No

version of the current control system should survive without an effective method for

pruning items from the control lists when they no longer serve a significant definable

national security interest.

C. Establish as a new administrative entity a coordinating center for export controls,

with responsibilities for coordinating all interfaces with persons or entities seeking

export licenses and expediting agency processes with respect to the granting or denial

of export licenses.

This small coordinating entity would be responsible for:

• Receiving all applications for export licenses;

• Determining whether the Department of Commerce or the Department of State

should handle the license application and dispatch the application to the appropriate agency for a decision;

• Maintaining timetables for decision-making on license applications so that applications do not languish;

• Receiving decisions on applications from the designated agencies and distributing these decisions to applicants;

• Receiving appeals of licensing decisions and petitions for review of sunset decisions, and delivering these to the appellate panel (see description below);

• Maintaining timetables for decisions on appeal;

• Receiving decisions on appeals and distributing these decisions to applicants;

• Providing administrative support to the appellate panel (see description

below); and

• Monitoring and oversight of the sunset process.

D. Establish an independent export license appeals panel to hear and decide disputes

about whether export licenses are required, whether particular decisions to grant or

deny licenses were made properly, and whether sunset requirements have been carried out properly. An independent, neutral decision-making authority is required to

break the logjams in the system caused by philosophical differences and varying interpretations of statutory, regulatory, and executive order language. Two kinds of

issues can be resolved quickly and effectively using an appellate decision-making

panel:

• First, if the agency makes a decision (either requiring or not requiring a license), and a party or a government agency believes the matter was wrongly

decided, there is an avenue to resolve these differences.

• Second, if the agency fails to remove an item or category of items from the control list under the sunset requirement, or does not act at all within the oneyear time period for review of each item on the list, an affected party could

appeal either to reverse the agency’s determination, or to require the agency to

act in a timely way to make the necessary determination.

The committee recommends that an independent export license appeals panel be

constituted, appointed by the President or the National Security Advisor Panel members would serve a five-year term. [NB: It is at times difficult to get presidential action on appointments in a timely way, particularly at the beginning of an administration when there are many competing concerns. For that reason, the President’s

Executive Order would allow 90 days from the date of issuance of the Order for the

appointments to be made through the presidential processes, and after that, the appointments would be made by the Chief Judge of the Federal Court of Appeals for

the District of Columbia Circuit within 30 days. Replacement judges would be selected in the same way. No Senate confirmation would be required because this is

not a ‘‘court’’; it is an administrative panel assembled by the President to assist

agencies in carrying out their responsibilities. This panel makes decisions among

competing interests of agencies the same way the National Security Council’s staff

makes decisions about the competing interests of the Departments of State and Defense.] The panel would be co-located with the coordinating center and would be

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housed, for administrative purposes, under the same organizational umbrella. Appeals panels such as this one are not ‘‘directed’’ by an administrative authority. This

kind of panel acts independently and neutrally to resolve disputes. It has no operational responsibility other than to hear disputes and issue opinions.

The best organizational home for the proposed coordinating center and the export

license appeals panel would be within the National Security Council structure, with

the coordinating center’s director reporting directly to the National Security Adviser.

This placement in the White House structure will ensure the coordinating center’s

independence and will establish its relationship to the President. The coordinating

center and the export license appeals panel would not necessarily be co-located with

the NSC. This would not be required for an effective exercise of its powers under the

Executive Order.

The committee weighed several options before making the recommendation for a

new coordinating center and an export license appeals panel and locating them within the NSC. The option to create an interagency group was rejected because experience supports the conclusion that this would devolve into just another debating society and would not constitute a practical means to improve the present export control

system. The option to use a group made up of private sector members was rejected

because that alternative would not be acceptable to the government agencies involved.

The option to place this responsibility with the Department of Defense was rejected,

because the department, through its management of the Militarily Critical Technologies List, is an important player in the export control regime. Similarly, any

placement within any other cabinet-level department involved in licensing would also

compromise the independence of the proposed center. The option to place these administrative functions in the Office of Management and Budget was also considered.

Although neither the National Security Council nor the Office of Management and

Budget is an operational agency, the committee thinks that the NSC provides the better fit, because of its focus on national security and economic policy. In addition, the

chain of command would have the coordinating center’s director reporting directly

to the National Security Advisor. This would not only signify the importance of these

issues, in terms of both national security and economic policy, it would also serves

as a brake on the director in terms of choosing his or her battles carefully.

Recommendation 2. The President should direct that executive authorities under

the Arms Export Control Act and the Export Administration Act be administered to

assure the scientific and technological competitiveness of the United States, which is

a prerequisite for both national security and economic prosperity.

Action Items

A. Maintain the Fundamental Research Exemption that protects unclassified research, as provided by National Security Decision Directive 189, and ensure that it

is properly implemented.

B. Create an economic competitiveness exemption that eliminates export controls on

dual-use technologies where they, or their functional equivalents, are available without restriction in open markets outside the United States.

Recommendation 3. The President should maintain and enhance access to the reservoir of human talent from foreign sources to strengthen the U.S. science and technology base. Traditionally, the United States had to worry about science and technology flowing out of the country. In today’s conditions, the U.S. must make sure that

advanced science and technology will continue to flow into the country. For this reason, the U.S. visa regulations as applied to credentialed foreign scientists should ensure that the U.S. has access to the best talent. Science and engineering degree holders who prefer, after graduation, to work in the U.S. should have ready access to permission for long-term stays. Granting this access for highly trained technical and scientific personnel is an important way of augmenting a critical segment of the workforce. The U.S. cannot protect U.S. jobs by denying entry to foreign professionals; jobs

will simply go abroad. It is important for both the national security and economic

prosperity to maintain the flow of human talent into the United States.

Action Items

A. Streamline the visa process for credentialed short-term visitors in science and

technology fields.

The committee recommends the President’s Executive Order require that a non-immigrant visa applicant who is a graduate student, researcher, or professional in any

field of science or technology and whose application is supported by a qualified university, scientific body, or corporation should receive a determination on his or her

20

visa application within 30 days. This will allow access for credentialed academic researchers to work with U.S.-based colleagues and in U.S.-based programs, and will

facilitate work done in U.S. science laboratories.

B. Extend the duration of stay for science and engineering graduates with advanced

degrees.

The committee recommends the President’s Executive Order provide a one-year

automatic visa extension to international students to remain in the United States to

seek employment or acceptance into further advanced study on receipt of advanced

degrees in science, technology, engineering, mathematics, or other fields of national

need at qualified U.S. institutions. If these students are offered jobs by U.S.-based

employers and pass security screening measures, they should be provided automatic

work permits and expedited residence status. If students are unable to obtain employment within one year, their visas would expire.

C. Include expert vouching by qualified U.S. scientists in the non-immigrant visa

process for well known scholars and researchers.

The committee recommends that the President’s Executive Order allow qualified

U.S. scientists, as part of the visa application process, to vouch for the technical

credibility and legitimacy of visa applicants who are in the same or in a similar

field. A more interactive application review procedure would permit those with expertise in relevant scientific and technology fields (and personal knowledge of the expertise of the individual whose application is being reviewed) to aid consular officials

in accurately and efficiently determining the existence of a real security threat.

D. Institute skills-based preferential processing with respect to visa applications.

The committee recommends that the President’s Executive Order institute a new

skills-based, preferential processing with respect to visa applications. The visa applications of scientists and engineers should be given priority. Graduate-level education

and science and engineering skills should substantially raise an applicant’s chances

and confer priority in obtaining residence permits and U.S. citizenship.

In Conclusion

As a nation, we cannot, and should not abandon well-conceived efforts to keep dangerous technology and scientific know-how out of the hands of those who would use

this knowledge to create weapons of mass destruction and other, equally dangerous

military systems. However, these represent a very narrow and limited set of goods,

technology, and knowledge. Our former unilateral strategy of containment and isolation of our adversaries is, under current conditions, a self-destructive strategy for obsolescence and declining economic competitiveness. A strategy of international engagement is a path to prosperity that can be coupled with a smarter approach to security using an adaptive system of government regulation and incentives. The committee recommends the issuance of an Executive Order that implements the recommendations it has outlined as one of the first orders of business in January 2009.’’

21

ATTACHMENT B

Members of National Academies

Committee on Science, Security and Prosperity

John L. Hennessy (Co-Chair), President, Stanford University, Palo Alto, CA

Brent Scowcroft (Co-Chair), President and founder, The Scowcroft Group, Washington, DC

Ronald Atlas, Professor of Biology and Public Health, and Co-Director of the Center

for Health Hazards Preparedness, University of Louisville, Louisville, KY

William F. Ballhaus, Jr., Retired, President and CEO, The Aerospace Corporation,

El Segundo, CA

Alfred R. Berkeley, III, Chairman, Pipeline Trading, New York, NY

Claude R. Canizares, Vice President for Research and Associate Provost, Massachusetts Institute of Technology, Cambridge, MA

Gail H. Cassell, Vice President, Scientific Affairs and Distinguished Lilly Research

Scholar for Infectious Diseases, Eli Lilly and Company, Indianapolis, IN

France A. Co ́rdova, President, Purdue University, West Lafayette, IN

Ruth A. David, President and Chief Executive Officer, Analytic Services Inc., Arlington, VA

Gerald L. Epstein, Senior Fellow for Science and Security, Homeland Security Program, Center for Strategic and International Studies, Washington, DC

John Gage, Partner, Kleiner, Perkins, Caufield & Byers, Menlo Park, CA

B.R. Inman, LBJ Centennial Chair in National Policy, University of Texas, Austin,

TX

Anita Jones, Lawrence R. Quarles Professor of Engineering and Applied Science,

School of Engineering and Applied Science, University of Virginia, Charlottesville, VA

Judith A. Miller, Sr. Vice President & General Counsel, Bechtel Group, Inc., San

Francisco, CA

Norman P. Neureiter, Director, Center for Science, Technology and Security Policy,

American Association for the Advancement of Science, Washington, DC

Elizabeth Rindskopf Parker, Dean, McGeorge School of Law, University of the Pacific, Sacramento, CA

John S. Parker, Senior Vice President, Science Applications International Corp., Alexandria, VA

Suzanne D. Patrick, Independent Consultant, Washington, DC

Deanne Siemer, Managing Director, Wilsie Co. LLC, Washington, DC

Mitchel B. Wallerstein, Dean, The Maxwell School, Syracuse University, Syracuse,

NY

22

Chair GORDON. This hearing will come to order, and good morning. Welcome to today’s hearing entitled the Impacts of U.S. Export

Control Policies on Science Technology Activity and Competitiveness. I would like to begin by welcoming our panel of distinguished

witnesses and look forward to your testimony. And let me just put

everyone on notice that General Scowcroft, who is an important

part of this panel, is immortal and he got stuck in the long lines.

And we tried to in respect to those folks who are here on time, get

started on time, and as he comes in, he will join us welcomely and

discreetly. And so we will just let everyone know that.

The Nation’s export controls system and the related International Traffic in Arms Regulations, also known as ITAR, were

put into place to help protect America’s sensitive technologies from

falling into the hands of those who might do harm to this nation.

In short, the export controls were supposed to strengthen our national security.

However, in recent years there has been a growing chorus of concern about some of the unintended consequences of the current system of export controls for both the Nation’s competitiveness in the

global economy and for the Nation’s science and technology enterprise.

Equally troubling, there are also increasing expressions of concern from experts in the national security industry and academic

communities to the effect that the current system of export controls

is actually weakening our national security, not strengthening it,

while undermining the health of our science and technology enterprise.

In that regard, let me quote from the recent National Academies

report authored by a distinguished panel under the co-chairmanship of Gen. Scowcroft, one of witnesses at today’s hearing, and I

quote: ‘‘The national security controls that regulate access to and

export of science and technology are broken. As currently structured, many of these controls undermine our national and homeland security and stifle American engagement in the global economy, and in science and technology. Fixing these controls does not

mean putting an end to them, but implementing reforms based on

the realities of the risks and opportunities of today’s threats to our

nation.’’

The panel then goes on to make an equally sobering statement,

and once again I quote: ‘‘The export controls and visa regulations

that were crafted to meet conditions the United States faced over

five decades ago now quietly undermine our national security and

our national economic well-being.’’

Those are very serious statements from a group of very knowledgeable individuals, and I think that they warrant our close consideration.

In addition, there have been a growing number of reports that

have focused on the impact of the current export controls regime

on America’s civil and commercial space programs and space research activities.

Those reports have also reached some of the same troubling conclusions.

For example, the Center for Strategic and International Studies

Working Group on the Health of the U.S. Space Industrial Base

23

and the Impact of Export Controls, which was co-chaired by another one of our witnesses today, Thomas Young, quoted, and again

I will quote: ‘‘The current export control policy is constricting U.S.

engagement and partnerships with the rest of the global space

community, and is feeding a growing separation between the U.S.

space community and an emerging non-U.S. space community.’’

And they go further to say, ‘‘Export controls are adversely affecting U.S. companies’ ability to compete for foreign space business,

particularly the second and third tier. And it is the second and

third tier of the industry that is the source of much innovation, and

is normally the most engaged in the global market place in the

aerospace/defense sector.’’

Findings such as those led this committee last year to include a

provision in the House-passed NASA Authorization Act of 2008 directing the Director of the Office of Science and Technology Policy

to carry out a comprehensive study of the impact of current export

control policies on our civil and commercial aerospace enterprise.

While that provision did not make it into the final public law, I

am encouraged that President Obama called for a similar review

during his Presidential campaign, and I am optimistic that such a

study will be initiated and I will be in written contact with the Administration making that request.

In closing, I think that it is time for Congress to take another

look at the Nation’s export controls regime to ensure that it is

working effectively and without unintended adverse impacts.

As part of that look, we want to understand any negative effects

that the current export controls regime may be having on our efforts to stimulate the economy and promote long-term growth

through the investment of science and technology.

This committee is starting the process with today’s hearing, and

I hope and anticipate that other committees will be following up in

the coming weeks and months with further oversight of other aspects of the export controls issue.

With that, I again welcome our witnesses, and I will now turn

to my friend, Mr. Hall, for any opening remarks that he cares to

make.

[The prepared statement of Chair Gordon follows:]

PREPARED STATEMENT OF CHAIR BART GORDON

I would like to begin by welcoming our panel of witnesses to this morning’s hearing. We look forward to your testimony.

The Nation’s export controls system and the related International Traffic in Arms

Regulations—also known as ITAR—were put into place to help protect America’s

sensitive technologies from falling into the hands of those who might do harm to

this nation.

In short, export controls were supposed to help strengthen our national security.

However, in recent years there has been a growing chorus of concern about some

of the unintended consequences of the current system of export controls for both the

Nation’s competitiveness in the global economy and for the Nation’s science and

technology enterprise.

Equally troubling, there are also increasing expressions of concern from experts

in the national security, industrial, and academic communities to the effect that the

current system of export controls is actually weakening our national security—not

strengthening it—while undermining the health of our science and technology enterprise.

In that regard, let me quote from the recent National Academies report authored

by a distinguished panel under the co-chairmanship of Gen. Scowcroft, one of witnesses at today’s hearing:

24

‘‘The national security controls that regulate access to and export of science and

technology are broken. As currently structured, many of these controls undermine

our national and homeland security and stifle American engagement in the global economy, and in science and technology.

Fixing these controls does not mean putting an end to them, but implementing

reforms based on the realities of the risks and opportunities of today’s threats

to the Nation.’’

The panel then goes on to make an equally sobering statement:

‘‘The export controls and visa regulations that were crafted to meet conditions

the United States faced over five decades ago now quietly undermine our national security and our national economic well-being.’’

Those are serious statements from a group of very knowledgeable individuals, and

I thus think that they warrant our close attention.

In addition, there have been a growing number of reports that have focused on

the impact of the current export controls regime on America’s civil and commercial

space programs and space research activities.

Those reports have also reached some troubling conclusions.

For example, the Center for Strategic and International Studies Working Group

on the Health of the U.S. Space Industrial Base and the Impact of Export Controls,

which was co-chaired by another of today’s witnesses, Thomas Young, found that:

‘‘The current export control policy is constricting U.S. engagement and partnership with the rest of the global space community, and is feeding a growing separation between the U.S. space community and an emerging non-U.S. space community.’’

And

‘‘Export controls are adversely affecting U.S. companies’ ability to compete for

foreign space business, particularly the second and third tier. And it is the second/third tier of the industry that is the source of much innovation, and is normally the most engaged in the global market place in the aerospace/defense sector.’’

Findings such as those led this committee last year to include a provision in the

House-passed NASA Authorization Act of 2008 directing the Director of the Office

of Science and Technology Policy to carry out a comprehensive study of the impact

of current export control policies on our civil and commercial aerospace activities.

While that provision did not make it into the final public law, I am encouraged

that President Obama called for a similar review during his Presidential campaign

and I am thus optimistic that such a study will be initiated.

In closing, I think that it is time for Congress to take another look at the Nation’s

export controls regime to ensure that it is working effectively and without unintended adverse impacts.

As part of that look, we want to understand any negative effects that the current

export controls regime may be having on our efforts to stimulate the economy and

promote long-term growth through investments in science and technology.

This committee is starting the process with today’s hearing on the current export

controls’ impacts on science and technology, and I hope and anticipate that other

committees will be following up in the coming weeks and months with further oversight of other aspects of the export controls issue.

With that, I again want to welcome our witnesses, and I will now turn to Mr. Hall

for any opening remarks he would care to make.

Mr. HALL. Mr. Chair, thank you. I will skip over the paragraph

where I brag on you for a couple of three minutes, and also I won’t

need to thank the distinguished panel. You have done a good job

of that, but I just want to say that export controls are crucial and

necessary to prevent the proliferation of militarily-useful technologies from falling into the wrong hands, and it is critically important that we continue, to the best of our abilities, to deny the

transfer of these technologies to our adversaries.

In today’s global marketplace, as our witnesses will soon point

out, it is equally important that export control regulations recognize technologies that are no longer ours alone to control, and to

25

permit the rapid sharing of emerging R&D technologies with our

friends and allies. Based on a number of scholarly studies, including the National Academies’ Beyond Fortress America report, it is

clear to me that the current export control regime fails I think to

meet these standards.

Industry and academia endure enormous costs in an effort to

comply with ITAR. The price of direct compliance is fairly easy to

calculate, but the more difficult cost is the self-imposed conservatism put into place by industry and academia because they do not

understand what is and what is not a violation of clear and evolving standards. Technology is constantly shifting the landscape.

What is cutting edge today may be outmoded in six months or a

year from now. So too are the threats posed by our adversaries,

and for that matter, the adversaries themselves.

As a consequence of these uncertainties and the lack of transparency within the exporting licensing bureaus, industry and academia are shying away from bringing products and ideas into the

international arena or collaborating with our friends and allies.

This result is less business and less engagement with leading researchers the entire world over. It is, in essence, a system that is

designed to slowly erode our technological superiority which we

don’t want.

The current system has no transparency, and as a result, export

licensing is bogging down the very same R&D enterprise that made

our economy the largest in the world.

And as I stated just a moment ago, we have to continue to deny

our adversaries access to emerging technologies, but I am convinced the current export control regime is working against our

own national self-interest.

So I am anxious to hear from these gentlemen who put long

hours in taking their time to come before us. I yield back my time.

Yes, I am sorry, Mr. Chair. I yield to the gentleman from California

the remaining time I have which is three or four minutes.

[The prepared statement of Mr. Hall follows:]

PREPARED STATEMENT OF REPRESENTATIVE RALPH M. HALL

Thank you, Mr. Chairman, for calling today’s hearing on the implementation of

the International Traffic in Arms Regulations (ITAR) program, and the serious, unanticipated consequences it has imposed on our industry, academia, national security, and technological readiness.

First I want to thank our distinguished panel of witnesses for taking time out of

their busy schedules to appear before the Committee. I know you have put in long

hours to prepare for your appearance this morning, and we are grateful for the wisdom and insights you bring to today’s discussion.

Mr. Chairman, export controls are crucial and necessary to prevent the proliferation of militarily-useful technologies from falling into the wrong hands, and it’s critically important that we continue, to the best of our abilities, to deny the transfer

of these technologies to our adversaries.

In today’s global marketplace, as our witnesses will soon point out, it’s equally

important that export control regulations recognize technologies that are no longer

ours alone to control, and to permit the rapid sharing of emerging R&D technologies

with our friends and allies. Based on a number of scholarly studies, including the

National Academies’ Beyond Fortress America report, it is clear to me that the current export control regime fails to meet these standards.

Industry and academia endure enormous costs in an effort to comply with ITAR.

The price of direct compliance is easy to calculate, but the more difficult cost is the

self-imposed conservatism put into place by industry and academia, because they do

not understand what is—and is not—a violation of unclear and evolving standards.

Technology is a constantly shifting landscape; what is cutting-edge today may be

26

outmoded six months or a year from now. So too are the threats posed by our adversaries, and for the matter, the adversaries themselves.

As a consequence of these uncertainties and the lack of transparency within the

export licensing bureaus, industry and academia are shying away from bringing

products and ideas into the international arena—or collaborating with our friends

and allies. The result is less business and less engagement with leading researchers

the world over. It is, in essence, a system that is designed to slowly erode our technological superiority.

The current system has no transparency, and as a result, export licensing is bogging down the very same R&D enterprise that made our economy the largest in the

world.

As I stated a moment ago, we must continue to deny our adversaries access to

emerging technologies, but I am convinced the current export control regime is

working against our own national self-interest.

Thank you, Mr. Chairman.

Mr. ROHRABACHER. Thank you very much, Mr. Chair, and Ranking Member Hall. Clearly, America needs to nurture its aerospace

and—we are going to welcome General Scowcroft here. America

needs to nurture its aerospace and space technology-related industries. This is vital to the security of our country to have these industries on the cutting edge of technology but also to be competitive with their competition overseas. And everyone understands

that there is a big problem and has been a big problem for a long

time with the ITAR regulations. And everyone agrees that reform

is needed. But we, when discussing this issue, need to make sure

that our high-tech exports, again, number one, the regulations are

not strangling the industry but at the same time, these high-tech

exports are not going to potential enemies of the United States, are

not going to countries which proliferate weapons of mass destruction in a way that would be detrimental to our security and the security of other western democracies.

We know exactly who the nations are that are proliferators. We

also have a good understanding about which nations pose a potential threat to the United States, who are our potential enemies

versus who are not our potential enemies. So whatever changes

that we enact into ITAR and other export regulations should basically differentiate between the scofflaw and rogue nations or potential enemies on one hand and those countries that pose no threat

to us and in fact, the largest numbers of countries that are just

wishing to be trading partners. But let us note, there is a difference between the People’s Republic of China, which is the

world’s worst human rights abuser and also a potential enemy of

the United States, versus countries like Brazil or Belgium or any

number of other countries that we could name. North Korea is not

equivalent to The Netherlands. Well, neither is the People’s Republic of China equivalent to India.

Ten years ago the Cox Report clearly demonstrated that U.S.

technology transfers to the People’s Republic of China helped improve and enhance the efficiency of China’s arsenal of missiles that

are aimed at the United States. As a consequence, we passed the

Strom Thurmond Act which established requirements that before

any satellite technology could be exported to China, the President

of the United States had to first certify to Congress that the tech

transfer was not against our national security interests or our domestic launch for satellite industries. Since the Strom Thurmond

Act became law 10 years ago, not a single such certification by the

President of the United States has been made, and as a conVerDate 11-MAY-2000 10:00 May 16, 2009 Jkt 047610 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 C:\DWORK\FULL09\022509\47610 SCIENCE1 PsN: SCIENCE1
27

sequence, no western satellite payloads have been flown in Chinese

rockets. Let us note that when we see the progress that is very

clearly now evident in the Chinese rockets and missiles, that could

probably be traced back to the transfer of technology from the

United States. Ironically, perhaps even worse, tragically, that

money that was taken from the American taxpayer’s pocket for research and missile technology has now ended up in the hands of

not only our competitors, but a potential enemy that aims missiles

at the United States of America.

So just as our Secretary of State Hillary Clinton was visiting the

People’s Republic of China, let us note that European satellite operator, Eutelsat, was cutting a deal with Beijing to launch a satellite on a Long March rocket. Again, a Long March rocket system

that benefited greatly in its development from the technology

transfer from the United States two decades ago.

Incidentally, the Eutel Satellite Corporation, these satellites also

make millions of dollars worth of profit from selling satellite services to the United States Government through defense contracts.

These things are vitally important, but Mr. Chair, as we discuss

this issue, I hope that we keep in mind the history of this issue

as well as the potential problems that lie ahead and not simply

look about the aerospace industry and technology today but where

America will be in the future. Thank you very much.

[The prepared statement of Mr. Rohrabacher follows:]

PREPARED STATEMENT OF REPRESENTATIVE DANA ROHRABACHER

Mr. Chairman:

America needs a vibrant Aerospace and Space Technology industry. Everyone

agrees ITAR reform needs to happen. We need to make sure that our high tech experts aren’t strangled by regulations. On the other hand, we need to remain vigilant

that our advanced technology doesn’t end up in the hands of potential enemies or

nations which proliferate weapons of mass destruction. We know exactly which nations these are, and we must make absolutely sure that whatever changes we enact

to ITAR and other export regulations, that these scofflaw and rogue nations are

barred from receiving our high tech systems. Chief among them is the Peoples Republic of China.

Ten years ago, the Cox Report clearly demonstrated that U.S. technology transfers

to the Peoples Republic of China helped to improve and enhance the efficiency of

China’s arsenal of missiles that were aimed at us. As a consequence, we passed the

Strom Thurmond Act, which established the requirement that before any satellite

technology could be exported to China, the President of the United States had to

first certify to Congress that the tech transfer was not inimical to our national security or our domestic launch or satellite industries. Since the Strom Thurmond Act

became law 10 years ago, not a single such certification has been made by any Administration, and as a consequence no Western satellite payload has flown on a Chinese rocket.

But the resolve of the Obama Administration is now being tested in this area.

Just as our Secretary of State, Hillary Clinton was visiting the Peoples Republic of

China, European satellite operator Eutelsat was cutting a deal with Beijing for a

launch on a Long March rocket. Incidentally, Eutelsat sells tens of millions of dollars worth of satellite services to the U.S. Government through DISA contracts.

Clearly, this is the beginning of a game of chicken between Eutelsat and the Obama

Administration. If the Obama Administration does nothing, the message is clear:

transferring technology to proliferators of weapons of mass destruction like the Peoples Republic of China is a perfectly acceptable business model. Surely we can make

sensible changes to ITAR and other export regulations, but we must not go so far

as to make them at the expense of our national security. Let us reward our friends

with openness in trade; and conversely let us be as single-minded as possible in

stopping items from the United States Munitions List—like Eutelsat payloads—

from falling into the hands of the Peoples Republic of China and other proliferators.

28

Chair GORDON. Thank you. If there are Members who wish to

submit additional opening statements, including Mr. Rohrabacher,

your statements will be added to the record at this point.

[The prepared statement of Mr. Costello follows:]

PREPARED STATEMENT OF REPRESENTATIVE JERRY F. COSTELLO

Thank you, Chairman Gordon, for convening this hearing on U.S. export control

policies and continuing to keep this committee’s focus on our nation’s technological

competitiveness in a global market.

This committee has held numerous hearings on global competitiveness in the

science and technology fields and recently spent a great deal of effort on the COMPETES Act, which commits a renewed investment into our children’s education in

math and science. During the last session of Congress, this committee heard from

Bill Gates, Chairman of the Microsoft Corporation, on the many obstacles that face

a hi-tech giant due to this country’s falling position in the global competitive market.

Despite the work of this committee to pass the COMPETES Act and other federal

investments in research and development initiatives, our national security controls

on science and technology remain so antiquated that they severely restrict commercial and academic innovation in these fields. If our scientists cannot share information, cannot receive licenses, cannot expand their field of research because of government restrictions in the name of national security, no amount of investment dollars will allow this country to regain its competitive edge in the global marketplace.

I look forward to a constructive dialogue on this issue and the recently released

report, Beyond ‘‘Fortress America’’: National Security Controls on Science and Technology in a Globalized World. Thank you, Mr. Chairman for your leadership of this

committee and for my time, I yield back.

[The prepared statement of Ms. Johnson follows:]

PREPARED STATEMENT OF REPRESENTATIVE EDDIE BERNICE JOHNSON

Good morning, Mr. Chairman and Ranking Member.

Today’s hearing on exports controls has significant impacts on the space and defense industries.

As you know, the space and aeronautics industry is an important economic driver

in Texas.

Johnson Space Center and NASA contractors provide jobs and facilitate innovation in our state and around the Nation.

Investments in human space exploration and development have been responsible

for valuable new technologies, and at the center of many of these innovations is the

Johnson Space Center.

Johnson Space Center’s combined workforce in the Bay Area of Houston alone accounts for more than 16,000 jobs.

When the economic multiplier effect of these jobs is considered, the total impact

from the space center and Texas exceeds more than 26,000 employees with personal

incomes of more than $2.5 billion; and total spending exceeds $3.5 billion.

Truly, the space and aeronautics industries have dynamic and broad based impacts on the economic, educational and quality of life on the entire State of Texas.

NASA provides $72 million for grants and contracts to Texas universities and colleges as well as $44 million to Texas non-profit organizations.

NASA is so important for our nation and the State of Texas.

Since the Cold War, investments in NASA and other agencies have created a robust science and engineering workforce, driven innovation, fueled economic growth,

and established the United States’ preeminence in science and technology.

Mr. Chairman, I will be interested to know whether America’s friends and allies

perceive a climate of export controls that is conducive for long-term international

collaborations to expand human and robotic presence in the solar system.

I would like to welcome all of today’s witnesses.

It is my hope that they can help the Committee assess the implications and unintended consequences of current export control policies for the conduct of United

States Government science and technology activities.

Thank you, Mr. Chairman. I yield back the balance of my time.

[The prepared statement of Ms. Giffords follows:]

29

PREPARED STATEMENT OF REPRESENTATIVE GABRIELLE GIFFORDS

I want to thank our distinguished witnesses for appearing here today to share

their insights on a very important topic—the impacts of our export control system

on U.S. science and technology activities and competitiveness. Export control is not

a subject that Americans discuss at the dinner table, but it is something that affects

every American, because the intent of the policies is to help protect the Nation from

harm.

Today, our witnesses will shed light on the importance of science and technology

to our economic and national security and on the need to ensure that the Nation’s

export control policies and procedures do not inadvertently undermine that security

as well as weaken our competitiveness in science and technology in a very challenging global economy. In that regard, I am especially interested our witnesses’

perspectives on the implications of current U.S. export control policies for our nation’s civil and commercial space activities, because many of the technologies and

information involved in space activities are regulated by export control policies.

Space is increasingly a global undertaking, with new space-faring nations emerging that will provide both competition and opportunities for cooperation in the coming years. As a study of the Center for Strategic and International Studies noted,

‘‘Other space-faring nations continue to make strides whether they have access to

U.S. technology or not’’ and ‘‘United States preeminence in space is under challenge

in many areas.’’ We need to make sure that our export control policies are structured to enable us to meet that challenge while still protecting our legitimate security needs.

I am particularly concerned about the challenges that current export control policies present to the effective conduct of fundamental space research. According to a

National Academies workshop summary on space science and the International

Traffic in Arms Regulations (ITAR), some researchers report that ITAR makes it

difficult to develop space research projects, which are typically conducted in partnership with industry, government labs, and international institutions. Some researchers are also uncertain about whether they can discuss their research in a university

classroom that includes non-U.S. students. Our universities are a significant source

of innovation for our science and technology enterprise, for our space program, and

for our economic strength. I think it is important that we look carefully at the impacts of current U.S. export controls policies on our universities and take whatever

steps are appropriate to mitigate the unintended consequences.

In closing, I am pleased that the Science and Technology Committee is taking the

lead in addressing these important issues. I hope that this hearing will be the first

step in a thorough review of our current export control system by Congress, including the House Armed Services and House Foreign Affairs Committees on which I

also serve and which have important oversight and legislative roles to play with regard to these issues.

[The prepared statement of Mr. Mitchell follows:]

PREPARED STATEMENT OF REPRESENTATIVE HARRY E. MITCHELL

Thank you, Mr. Chairman.

Today we will review the impacts of current export control policies on U.S. science

and technology activities and competitiveness.

As we addressed last year with the America COMPETES Act, it is critical to ensure that our nation is prepared to lead in science and technology in an increasingly

globalized economy.

However, export control policies, which were established decades ago, fail to consider the present-day realities of a global economy.

As the National Academies report, Beyond ‘‘Fortress America’’: National Security

Controls on Science and Technology in a Globalized World states, ‘‘the export control

system enforced in the U.S. today has failed to evolve with changing global conditions and now produces significant harm to U.S. military capability, to homeland

security, and to the Nation’s economic competitiveness.’’

While we work to establish export control policies that reflect present day realities, we must also be careful to ensure that these policies continue to protect U.S.

national security.

I look forward to hearing more from our witnesses on the commercial and national

security concerns related current export control policies.

Chair GORDON. At this time, I would like to introduce our witnesses. First up we have Lieutenant General Brent Scowcroft who

is the Co-Chair of the National Academies Committee on Science

30

Security and Prosperity and former National Security Advisor for

Presidents Gerald Ford and George H. W. Bush. And General

Scowcroft, I had a sick daughter and got caught in traffic this

morning, so I was late for my first meeting. They couldn’t start

without me, but we could start without you. And so we didn’t think

you would mind. Mr. Thomas Young is the Co-Chair of the Center

for Strategic and International Studies Working Group on the

health of the U.S. Space Industrial Base and the Impact of Export

Controls. Dr. Claude Canizares is the Vice President for Research

and Associate Provost and the Bruno Rossi Professor of Physics at

the Massachusetts Institute of Technology, MIT. And finally, we

have Major General Robert Dickman who is the Executive Director

for the American Institute of Aeronautics and Astronautics.

As our witnesses should know, you each have five minutes for

your spoken testimony. Your written testimony will be included in

the record for the hearing, and when you have completed your spoken testimony, we will begin our questions. Each Member then will

have five minutes for their questions. As the former Chair Sherry

Boehlert used to frequently say, although we have five minutes,

this is a very important issue and we do not want you to feel that

you have to cut off mid-sentence. So we do want to hear from you.

So we will start with Lieutenant General Scowcroft.

STATEMENT OF LIEUTENANT GENERAL BRENT SCOWCROFT

(USAF, RET.), PRESIDENT AND FOUNDER, THE SCOWCROFT

GROUP

Lieutenant General SCOWCROFT. Thank you very much, Mr.

Chair, Mr. Hall, Members of the Committee. I appreciate the opportunity to appear before you as a Co-Chair of the National Research Council’s Committee on Science, Security and Prosperity.

The study we have done on export controls and technology in a

globalized world concludes that the national security controls on

science and technology are broken. They harm our national security and reduce our economic competitiveness. These controls which

were established during the Cold War work well as long as three

conditions prevail. The U.S. science and technology establishment

has only one significant competitor, the Soviet Union, and that was

a weak competitor. Two, military research and development production took place separately from the commercial sector and generally led it by a great degree. And third, a common sense of purpose existed among the United States and its allies regarding the

nature of the threat.

These three conditions no longer obtain. First, the United States

has competition in most areas of advanced research and development, including military-related science and technology. The number of access points to advanced science and technology has grown

considerably and perhaps more to the point, outside the control of

the United States.

Second, most military production in the United States is now

commercially based, thus blurring the distinction between commercial grade and weapons grade for thousands of so-called dual-use

goods and technologies. And third, the alliance has lost its Cold

War consensus. As a result, we are not hurting ourselves both in

terms of science and technology and economic competitiveness.

31

The Fortress America approach of current controls cuts us off

from information and technologies that we need for our national security.

There is clearly a better way to manage the application of American science and technology abroad that protects our national security and our competitiveness. We need to change the mindset, and

we need an agile system of security controls that can adapt quickly

to the changing political and technological landscapes. Our mindset

is now negative. Don’t let anything out which might be of use

abroad or don’t let any H–1 visa applicants in who might be a problem. We need to turn to an open mindset. Export unless there is

a reason not to. Let H–1 visa applicants in unless there is a reason

not to. And to improve our ability, the committee recommends the

establishment of two administrative entities, perhaps within the

National Security Council. The first would be a coordinating center

for export controls that would be a one-stop shop for people seeking

export licenses. This would determine whether the Commerce Department or the State Department should handle the application.

Now, the applicant has to decide, and if he guesses wrong, there

is months of delay in determining it. The second entity is an appeals panel that would hear and decide disputes about whether export licenses are required and whether particular decisions to grant

or deny those licenses were properly made and also hear appeals

on sunset requirements and how they are being carried out. Our

committee proposes that sunset requirements be applied to all

items on the export control list and reviewed annually.

Another recommendation dealing with the mindset proposes the

administration of existing export control statutes should assure the

science and technological competitiveness of the United States as

a prerequisite to both national security and economic prosperity. To

assure the conditions for scientific and technological competitiveness, the committee has recommended that the fundamental research exemption, also known as NSDD–189 should be maintained

and properly implemented.

The committee also proposes the establishment of an economic

competitiveness exemption that eliminates export controls on dualuse technologies where they or their functional equivalent are

available without restriction in open markets outside the United

States.

The final recommendation addresses the need to maintain and

enhance access to the reservoir of human talent from foreign

sources through H–1 visas to strengthen the U.S. science and technology base. The committee recommends that the President issue

an executive order to put these provisions into effect. This order

would not and cannot contravene current law, rather it would govern the exercise of Presidential authorities established under existing law. The executive order would not affect anything that is protected by the national security classification system, nor would it

address export controls that the State Department imposes strictly

on foreign policy grounds. As a first step in overhauling the overall

system of controls, putting these provisions into effect would create

a record and experience base that the Congress can evaluate and

modify as it sees fit at such time as new export control legislation

can be successfully addressed.

32

Perhaps the most significant challenge to implementing these

recommendations is to help the relevant agencies understand that

these reforms will not micro-manage their own licensing procedures

or challenge agency expertise.

In closing, I am grateful for the interest that the Committee on

Science and Technology has taken in this report and hope that

your Members will continue to be involved in this issue. Thank

you, Mr. Chair.

[The prepared statement of Lieutenant General Scowcroft follows:]

PREPARED STATEMENT OF LIEUTENANT GENERAL BRENT SCOWCROFT

Chairman Gordon, Ranking Member Hall, and other Members of the Committee

on Science and Technology, thank you for this opportunity to appear before you this

morning to discuss the effects of U.S. export control policies on science and technology activities and competitiveness.

I am President of the Scowcroft Group, an international business advisory firm.

I speak before you today as Co-Chair of the National Research Council’s Committee

on Science, Security and Prosperity. I am here to discuss the findings and recommendations of this committee’s report, Beyond ‘‘Fortress America’’: National Security Controls on Science and Technology in a Globalized World.

The national security controls on science and technology are broken. They were

established during the Cold War to help maintain the United States’ superiority in

military-related science and technology. These controls worked fairly well as long as

the following three conditions held:

(1) The U.S. S&T establishment had only one significant competitor—and we knew

that they had a weak R&D base. This meant that we did not have to look much

beyond ourselves to find the most advanced S&T. (2) Military research, development

and production took place separately from the commercial sector. Thus denying the

transfer of military goods did not affect the commercial economy. (3) A common

sense of purpose existed among the United States and its allies regarding the nature of the threat and the means to manage it; thus the West was largely unified

about denying weapons-grade materials and technologies to its adversaries.

These three conditions no longer obtain. First, today the United States has competition in most areas of advanced research and development, including military-related S&T. Advances in science and technology now occur throughout Europe, in

Russia and Japan, and also in the developing economies of China, India and Brazil.

Thus the number of access points to advanced science and technology have grown

considerably and perhaps more to the point, outside the control of the United States.

Second, most military production in the U.S. is now commercially based, thus blurring the distinction between commercial grade and weapons grade for thousands of

so called ‘‘dual-use’’ goods and technologies. And third, the Western alliance has lost

its Cold War consensus; NATO member countries and Japan no longer agree on

what countries need to be controlled, what items should be controlled, and what

kinds of controls are needed. Together, these changes make it much more difficult

for the United States to successfully control the transfer of goods and technologies

that have both commercial and military applications. As a result, many national security controls on science and technology no longer work in the ways they were intended. We endanger our own national security in thinking that unilaterally controlling dual-use items here prevents others from obtaining them elsewhere.

Because science and technology research, development and production have become a global enterprise, the ‘‘Fortress America’’ approach of current controls cuts

us off from information and technologies that we need for our national security. If

we sustain these export control and visa barriers, we will increasingly lose touch

with the cutting edge of science and technology, and we risk missing emerging national security threats.

Following are just a few of the unintended consequences that the inappropriate

application of export controls have on our national security and our economic competitiveness:

• At a time when battlefield inter-operability is increasingly the norm, the licensing process can prevent repair at facilities closest to the theater of operation.

33

• Export controls constrain both U.S. commercial and military capabilities from

expanding into new fields and from applying new scientific developments.

• The government’s rules are accelerating the development of technologies in

capable research centers outside the United States.

• As foreign companies and governments fill these competitive gaps, valuable

technical developments occur outside the U.S. to which the U.S. military and

intelligence agencies then have no access.

• U.S. scientists are hobbled by rules that prevent them from working with

world-class foreign scientists and laboratories located overseas, making it less

likely that valuable discoveries and inventions will occur in the U.S.

• The government’s rules are driving jobs abroad-knowledge-intensive jobs that

are critical to the U.S. economy.

There is clearly a better way to manage the application of American science and

technology abroad that protects our national security and our competitiveness. This

report articulates the need for the U.S. S&T sector to ‘‘run faster’’ by anticipating

and capitalizing on research breakthroughs more quickly than those who would use

these advances to harm us or compete against us economically, and by developing

qualitatively better products and services with the best talent available. In policy

terms, running faster means having an agile system of national security controls

that can adapt quickly to the changing geopolitical and technological landscapes.

The first recommendation proposes the establishment of two administrative entities, possibly within the National Security Council. The first is a coordinating center

for export controls that will constitute a ‘‘one-stop-shop’’ for all export-license applications. The chief role of this small coordinating center is to determine whether the

Department of Commerce or the Department of State should handle the license application and then dispatch the application to the appropriate place for decision.

The second entity is an appeals panel, possibly composed of retired federal judges,

that will hear and decide disputes about whether export licenses are required, and

whether particular decisions to grant or deny licenses were made properly. This

panel will also hear appeals on whether ‘‘sunset’’ requirements have been carried

out properly. The committee proposes that ‘‘sunset’’ requirements be applied to all

items on U.S. export control lists, and it would require findings to be made every

12 months that removing controls on an item would present a substantial risk to

national security.

The second recommendation proposes that the administration of existing export

control statutes—the Arms Export Control Act and the Export Administration Act—

should assure the scientific and technological competitiveness of the United States

as a prerequisite for both national security and economic prosperity. To assure the

conditions for scientific and technological competitiveness, the committee has recommended that the Fundamental Research Exemption (also known as National Security Decision Directive 189), which has been in effect since 1985 and reaffirmed

by then National Security Advisor, Condoleezza Rice in November 2001, be maintained and properly implemented.

In addition, the committee proposes the establishment of an economic competitiveness exemption that eliminates export controls on dual-use technologies where they,

or their functional equivalents, are available without restriction in open markets

outside the United States. Just as NSDD–189 precludes the conduct and reporting

of unclassified information from being restricted, the economic competitiveness exemption would preclude the export of so called ‘‘dual-use’’ items that are, or soon

will be, legally available in open markets overseas, from being restricted.

The third recommendation addresses the need to maintain and enhance access to

the reservoir of human talent from foreign sources to strengthen the U.S. science

and technology base. Put simply, this will help ensure that the United States remains the destination of choice for the world’s ‘‘best and brightest.’’

These innovations can help to bring transparency, efficiency and consistency to a

system that is now lacking all three of these qualities. They will help to protect

what needs to be protected without harming the economy or our scientific leadership. The committee recommends that the President sign an Executive Order in

early 2009 that will put these provisions into effect ninety days hence.

This Executive Order will be fully consistent with existing legislation. It would

not and cannot contravene current law, but rather would govern the exercise of

Presidential authorities established under existing law. The Executive Order would

not affect anything that is protected by national security classification, which is addressed by a separate Executive Order, nor would it address export controls that

the State Department imposes strictly on foreign policy grounds. The Executive

Order signifies that the President will bring discipline into a process over which he

34

already has primary authority. As a first step in overhauling the national security

controls over science and technology, putting these provisions into effect will create

a record and experience base that Congress can evaluate—and modify as it sees

fit—at such time as export control legislation can be successfully addressed.

Perhaps the most significant challenge to implementing these recommendations

is to help the relevant agencies understand that these reforms will not micro-manage their own licensing procedures or challenge agency expertise. They will, however, bring consistency and efficiency to the application process, and transparency

to the agencies’ decisions.

If these reforms are not implemented, the system will continue to bog down, with

multiplying negative effects to our national security and competitiveness. There will

be nothing to prevent the continued erosion of our defense industrial base; the loss

of market-share globally in advanced technologies; the off-shoring of knowledge intensive jobs; the bureaucratic wrangling among the agencies to name a few.

In closing, I am grateful for the interest that the Committee on Science and Technology has taken in this report and hope that your Members will remain involved

in these efforts, particularly in helping to assure the scientific and technological

competitiveness of the United States.

BIOGRAPHY FOR BRENT SCOWCROFT

As President and founder of The Scowcroft Group and one of the country’s leading

experts on international policy, Brent Scowcroft provides Group clients with unparalleled strategic advice and assistance in dealing in the international arena.

Brent Scowcroft has served as the National Security Advisor to both Presidents

Gerald Ford and George H.W. Bush. From 1982 to 1989, he was Vice Chairman of

Kissinger Associates, Inc., an international consulting firm. In this capacity, he advised and assisted a wide range of U.S. and foreign corporate leaders on global joint

venture opportunities, strategic planning, and risk assessment.

His prior extraordinary twenty-nine-year military career began with graduation

from West Point and concluded at the rank of Lieutenant General following service

as the Deputy National Security Advisor. His Air Force service included Professor

of Russian History at West Point; Assistant Air Attache ́ in Belgrade, Yugoslavia;

Head of the Political Science Department at the Air Force Academy; Air Force Long

Range Plans; Office of the Secretary of Defense International Security Assistance;

Special Assistant to the Director of the Joint Chiefs of Staff; and Military Assistant

to President Nixon.

Out of uniform, he continued in a public policy capacity by serving on the President’s Advisory Committee on Arms Control, the Commission on Strategic Forces,

and the President’s Special Review Board, also known as the Tower Commission.

He currently serves on numerous corporate and nonprofit boards. He earned his

Master’s and doctorate in international relations from Columbia University.

Chair GORDON. Mr. Young, you are recognized for five minutes.

STATEMENT OF MR. A. THOMAS YOUNG, LOCKHEED MARTIN

CORPORATION (RET.); CO-CHAIR, CENTER FOR STRATEGIC

AND INTERNATIONAL STUDIES (CSIS), WORKING GROUP ON

THE HEALTH OF THE U.S. SPACE INDUSTRIAL BASE AND

THE IMPACT OF EXPORT CONTROLS

Mr. YOUNG. Thank you, Mr. Chair, Mr. Hall, Committee Members, I greatly appreciate the opportunity to provide the views of

the committee I co-chair on the impact of export controls on our

space endeavors.

One of the things we highlighted is that we strongly support the

United States’ need for export controls that really do two things,

one, protect technologies that are critical to our national security

and two, maximize the opportunity to maintain our leadership in

critical areas. It is our overarching view that our current export

controls have an adverse impact on our national security, a negative impact on our industrial base, particularly at the second and

third tier of the base and they complicate the relationships necessary to mutually-beneficial, international cooperative endeavors.

35

These deficiencies are both serious and correctable. We found

that we are controlling technologies that are not critical to our national security and are readily available in the global marketplace.

The most obvious are commercial communications satellite systems

which are a globally available commodity today. The result of this

over-control is that our space industry loses international sales,

second and third level suppliers which depend upon the international market have questionable viability, other countries have

determined that it is in their best interest to develop indigenous

capabilities rather than be dependent upon the United States as a

supplier. For cooperative endeavors, the United States ceases to be

the partner of choice. Our access to international innovation is

greatly diminished. This is extraordinarily important because the

United States has always been a technology vacuum cleaner. We

are incredibly good at taking technology no matter where it comes

from and turning it to our military and our economic benefit. And

we are cutting ourselves off from having access to some of the

world’s best human capital.

In summary, this over control by our current export control policies and procedures have accelerated the development of an international space community resulting in the United States’ preeminence being challenged in many areas. It has resulted in us becoming somewhat insular which always results in a technological

decline. Our national security and our space community have been

adversely impacted. Without change, our export control policies and

regulations for space will continue to erode as both a national security and an economic advantage.

The recommendations in the report that General Scowcroft

talked about, Fortress America, are consistent with the recommendations in our report and they would help to mitigate the

adverse impact of export controls on the space sector.

Our current export controls need major correction by both the

Administration and the Congress to reconcile the strategic intent.

Items that are globally available such as commercial communication satellite systems should be removed from the controls. The

process of implementation of the controls should be user-friendly

for both the public and the private sectors. The process and procedures must be structured in a manner that allows access to international technology and human capital with minimum restrictions.

We must change the policies and procedures that affect the way we

treat our partners in international cooperative programs. Such programs allow us to be a full participant in the international space

community resulting in knowing what is going on, having access to

technology, and builds relationships with some of the world’s best

minds.

Thank you.

[The prepared statement of Mr. Young follows:]

PREPARED STATEMENT OF A. THOMAS YOUNG

Chairman Gordon and Mr. Hall,

It is a privilege to appear before this distinguished committee to present the findings and recommendations of an independent Working Group from the Center on

Strategic and International Studies (CSIS) on the Health of the U.S. Space Industrial Base and the Impact of Export Controls.

36

It was my honor to co-chair this expert study group with Dr. William Ballhaus,

The Aerospace Corporation, and Mr. Pierre Chao, Senior Associate, CSIS. The other

distinguished members of our Working Group were:

Richard Albrecht, Moog

Jeffrey Bialos, Johns Hopkins

Lincoln Bloomfield Jr., Palmer Coates

David Danzillio, Emcore Photovoltaics

John Douglas, Aerospace Industries Association

Paul Kaminski, Technovation

John Klineberg, Consultant

Lon Levin, SkySeven Ventures

Tom Marsh, Lockheed Martin, retired

Tom Moorman, Booz, Allen Hamilton

J.R. Thompson, Orbital Sciences

John Tilelli, Cypress International

Robert Walker, Wexler & Walker Public Policy Associates

Our task was as follows:

• 1) Review previous and ongoing studies on export-controls and the U.S. spaceindustrial base and 2) assess the health of the U.S. space-industrial base and

determine if there is any adverse impact from export controls, particularly on

the lower-tier contractors.

• Review the results of the economic survey of the U.S. space industrial base

conducted by the Department of Commerce and analyzed by the Air Force Research Laboratory (AFRL).

• Integrate the findings of the study group with the result of the AFRL/Department of Commerce survey to determine overall conclusions and recommendations regarding the impact of export controls on the U.S. space-industrial

base.

The methodology we used to meet this task was:

• Leverage a broad set of interviews and data from:

Æ the U.S. Government

• Department of State, Department of Defense (OSD/Policy, OSD/

AT&L, DTSA, STRATCOM, General Council{??}), NRO, Department

of Commerce, NASA, FAA, and GAO

• the U.S. Congress

Æ Foreign Governments and agencies (Asia and Europe)

Æ U.S. industry

• Boeing, Lockheed Martin, Northrop Grumman, ATK, Moog, Swales,

GeoEye and SES Americom

Æ Other experts

• IDA, Aerospace Corporation, Booz Allen Hamilton, Satellite Industry

Association, Space Foundation, U.S. Chamber of Commerce, CSIS,

and Aviation Week

• Leverage the comprehensive survey of space-industrial base undertaken by

AFRL/Department of Commerce

In doing this study, we were guided by the following set of principles:

• Space is critically important to U.S. national security

• Global leadership in space is a national imperative

• Similarly, sustaining technological superiority in space is a U.S. national interest

• Given the interdependence between the defense, intelligence, civil and commercial sectors of space, U.S. leadership in all four is important

• A strong space-industrial base is important

• A prudent export control policy is necessary to control sensitive technologies,

and

• The U.S. must have unimpeded access to the technologies (global and domestic) needed for national space systems

37

Mr. Chairman and distinguished Members of the Committee, the Working Group

recognizes that the United States must have export controls that protect technologies critical to our national security and maximize the opportunity to maintain

our leadership in critical areas. However, it was the overarching conclusion of our

study that our current export controls have had an adverse impact on our national

security, a negative impact on our industrial base, most particularly at the second

and third tiers of the industry, and has complicated the relationships necessary for

mutually-beneficial, international cooperative endeavors.

It is our view though that all of the deficiencies in our export control processes

can be corrected without an adverse impact on our national security. It is also our

view that correcting these deficiencies will have a positive impact on our national

security.

We found not only that the intent of current export controls was not being realized, but it was also having an adverse impact on the health of the space-industrial

base. Specifically, we are controlling technologies that are not critical to our national security and are readily available in the global marketplace. Most obvious are

commercial communications satellite systems that are a widely available commodity

today. There are clearly others, such as some aspects of weather satellites. The result of this over-control is that our space industry loses international sales; other

countries conclude it is more advantageous to develop indigenous capabilities rather

than be subject to our export control requirements; and countries that throughout

the space age have been our partners in space exploration no longer consider the

U.S. the partner of choice.

Instead of maintaining our leadership, this over-control has been a catalyst for

other nations to develop their own capabilities. An example is India. Clearly, U.S.

export controls have been a motivation for their current most impressive development of a comprehensive national space program. In the last decade, the space community has grown from a very exclusive Club X into a very broad array of countries

with substantial space capabilities. As an example, a dozen nations are able to

launch their own satellites, and 38 countries have operational control over their own

communications satellites. Although this expansion of space capabilities would have

eventually occurred, U.S. export controls have caused it to accelerate to the degree

that today, the U.S. does not control its proliferation, and U.S. preeminence in space

is under challenge in many areas. Other unintended consequences of our over-control are that we have become insular, meaning we are not a full player in international space, and consequently we have somewhat diminished our access to foreign innovation and human capital.

Our report presents 13 findings and nine recommendations, which are summarized below.

Finding 1: Overall financial health of the top-tier manufacturers in the space industrial base is ‘‘good,’’ but there are areas of concern within the broader health of

the industry.

Finding 2: As earlier studies have documented, the ability of the government and

industry to meet program-execution commitments remains inadequate.

Finding 3: The U.S. space-industrial base is largely dependent on the U.S. defense/

national security budget.

Finding 4: There are rapidly emerging foreign space capabilities, and the U.S. does

not control their proliferation.

Finding 5: U.S. preeminence in space is under challenge in many areas.

Finding 6: The current export-control policy has not prevented the rise of foreign

space capabilities and in some cases has encouraged it (International Traffic in

Arms Regulations (ITAR)-free space products).

Finding 7: U.S. leadership in space benefits significantly from access to foreign innovation and human capital. That access is becoming increasingly difficult.

Finding 8: The current export control policy is constricting U.S. engagement and

partnership with the rest of the global space community and is feeding a growing

separation between the U.S. space community and an emerging, non-U.S. space

community.

Finding 9: Some elements of the export-control laws are in conflict with the U.S.

National Space Policy, which has as one of its goals to ‘‘encourage international cooperation with foreign nations on space activities that are of mutual benefit’’ and

states that ‘‘space-related exports that are currently available or are planned to be

available in the global marketplace shall be considered favorably.’’

38

Finding 10: The U.S. share of the global space markets is steadily declining, and

U.S. companies are finding it increasingly difficult to participate in foreign space

markets.

Finding 11: Export controls are adversely affecting U.S. companies’ ability to compete for foreign space business, particularly the second and third tiers. And it is the

second and third tiers of industry that is the source of much innovation, and is normally the most engaged in the global marketplace in the aerospace/defense sector.

Finding 12: A U.S. export-control policy that protects sensitive security space capabilities is important.

Finding 13: There is unanimous agreement that the export-control process can be

improved without adversely affecting national security.

Working Group Recommendations

1. The Administration and Congress should review and reconcile the strategic

intent of space export controls.

2. Critical space technologies should be identified and should remain on the

Munitions List and under the State Department ITAR process.

3. Remove from the Munitions List commercial communications satellite systems, dedicated subsystems, and components specifically designed for commercial use; provide safeguards by having the Department of Defense identify critical space components and technologies that should always require licensing and referral. Have the appropriate Executive branch departments

conduct a study to see if other space technologies should be removed from

the Munitions List (e.g., weather satellites).

4. Annually review the appropriateness of designating specific satellite and

other space systems, components, and capabilities as Munitions List items

based on criticality of items and on their availability outside the U.S.

5. Additionally, Congress could amend the legislation related to satellite export

licensing and adopt some of the best practices being used in other processes—set timelines, technology thresholds, de minimus rules, and special licensing vehicles.

6. The Secretary of Defense and NASA Administrator, in addition to the Secretary of State, should have the authority to grant real-time, case-by-case,

specific time period exemptions for anomaly resolutions deemed to be in the

national interest based on criteria from the National Space Policy.

7. Create a special program authority to permit timely engagement of U.S. participants in multinational space projects.

8. Increase the dollar threshold for satellite exports, increase Congressional notification and establish a mechanism to enable the threshold to adjust with

inflation.

9. Relevant space-related government agencies should collaboratively undertake an annual assessment of their industrial base.

Mr. Chairman, I have attached a copy of the Working Group’s full report [see Appendix 2: Additional Material for the Record] and I look forward to your questions.

BIOGRAPHY FOR A. THOMAS YOUNG

Mr. Young retired from Lockheed Martin Corp. in 1995 after having served as an

executive vice president from March 1995 to July 1995.

Prior to its merger with Lockheed Corporation, Young served as the President and

Chief Operating Officer of Martin Marietta Corp. from 1990 to 1995.

Mr. Young is on the Board of Directors of the Goodrich Corporation and Science

Applications International Corporation.

Chair GORDON. Thank you. Professor Canizares.

39

STATEMENT OF DR. CLAUDE R. CANIZARES, VICE PRESIDENT

FOR RESEARCH AND ASSOCIATE PROVOST, BRUNO ROSSI

PROFESSOR OF PHYSICS, MASSACHUSETTS INSTITUTE OF

TECHNOLOGY

Dr. CANIZARES. Thank you, Mr. Chair, Mr. Hall, and distinguished Members. I greatly appreciate the opportunity to appear

before you today.

Allow me to begin by quoting one sentence: ‘‘The strength of

American science requires a research environment conducive to creativity, an environment in which the free exchange of ideas is a

vital component.’’

This sentence comes from President Ronald Reagan’s National

Security Decision Directive NSDD–189 which establishes as national policy, and I quote, ‘‘that, to the maximum extent possible,

the products of fundamental research remain unrestricted.’’ Promulgated in 1985 and still in force today, the directive provides the

basis for the so-called Fundamental Research Exclusion that is embodied in current export control regulations.

Our report described by General Scowcroft, Beyond Fortress

America, finds that freedom of scientific inquiry and the free exchange of technical information are even much more important now

than they were in 1985. He alluded to this, and I will cite four reasons.

First, whatever dominance we might have enjoyed in our scientific leadership in 1985, we are now clearly one among many

international players in nearly every technical field.

Second, even within our borders, a significant fraction of our scientific and engineering workforce is international. By the year

2000, nearly a quarter of the science and engineering workers in

the U.S. were foreign nationals. I imagine it was considerably higher today. Two-thirds of the post-doctoral researchers in the United

States are international.

Third, thanks to the Internet, both the pace of scientific communications is now instantaneous and geography is global. The Internet does not have national boundaries.

And fourth, in the present national security and economic climate, a vigorous and innovative research community is more much

important than ever. Universities are the prime performers of basic

research in the U.S., and they are also the source of our future scientific and technical workforce, both of which are essential for both

national security and for economic prosperity of our country.

As one measure of economic impact from my own institution,

MIT, a Kauffman Foundation report released just last week estimates that approximately 26,000 currently active companies were

founded by MIT alumni employing over three million workers with

annual world revenues over $2 trillion.

For universities, the primary area of concern regarding export

controls involves restrictions on the sharing of technical information about controlled items with non-U.S. persons within the

United States often referred to as deemed exports. The scope of

regulated technologies is broad and includes many that are available outside the U.S. as my colleagues have already mentioned.

Despite a Presidential directive protecting fundamental research,

export controls continue to inhibit, retard or eliminate university

40

research projects, and there are hundreds of stories of sand in the

gears because of export controls.

While several positive actions have been taken in recent years by

the Department of Commerce and the Department of Defense, our

report suggests that a more systematic and fundamental change is

required, to move from a philosophy of containment and retrenchment to one of prudent engagement. Specifically, the report recommends as General Scowcroft has mentioned, this Fundamental

Research Exemption be maintained but also that it be properly implemented which has not always been the case.

We also recommend an Economic Competitiveness Exemption

and the adjustment of visa policies to access the reservoir of human

talent in science and technology.

Because you asked, Mr. Chair, for specific recommendation for

this committee, allow me personally to respectfully suggest that

this committee, through its oversight of key science agencies, could

play a very important role by endorsing the change in philosophy

that was recommended in our report as well as the detailed recommendations and by maintaining that each federal agency under

your oversight must implement a plan and periodically report how

it is addressing these issues.

Thank you for your attention.

[The prepared statement of Dr. Canizares follows:]

PREPARED STATEMENT OF CLAUDE R. CANIZARES

Mr. Chairman and distinguished Members, thank you for taking up this very important topic and for your invitation. I am honored to be sitting with two very distinguished co-panelists, Gen. Scowcroft and Mr. Young.

I am Vice President for Research at MIT and a space scientist. For over 35 years

I have designed, built and used space instrumentation for scientific research. Although I represent the university community on this panel, I also have experience

with matters of national security. I have served on the Scientific Advisory Board of

the U.S. Air Force, and I currently oversee MIT’s Lincoln Laboratory, a facility that

does classified national security research. I am also a Director of L–3 Communications, a Fortune 200 corporation. And I was privileged to contribute to the recently

released National Academies’ report ‘‘Beyond Fortress America,’’ summarized by

Gen. Scowcroft. My testimony is based in part on that report.

Allow me to begin by quoting one sentence: ‘‘The strength of American science requires a research environment conducive to creativity, an environment in which the

free exchange of ideas is a vital component.’’ [National Security Decision Directive

189, 1985]

This sentence comes from President Ronald Reagan’s National Security Decision

Directive 189. NSDD 189 establishes as national policy ‘‘that, to the maximum extent possible, the products of fundamental research remain unrestricted.’’

Reagan’s NSDD 189 was promulgated in 1985, reaffirmed in 2001, and is still in

force today. It provides the basis for the so-called Fundamental Research Exclusion

embodied in current export control regulations in order to protect the enormous benefits derived from the ‘‘free exchange of ideas.’’

Our report finds that freedom of scientific inquiry and the free exchange of technical information are even much more important now than they were over 20 years

ago when President Reagan signed his directive.

Let me cite four points:

First, whatever dominance we might have enjoyed in our scientific leadership in

1985, we are now one among many international players in nearly every technical

field. In my own discipline of physics, both the world’s biggest fusion energy facility,

ITER, and the most powerful particle accelerator, the Large Hadron Collider, are

located abroad. In our own, U.S. Physics journals in 2006, 70 percent of the publications now come from international authors—ten years ago it was 50 percent. In

2006 international inventors accounted for one half of the patents filed with the

U.S. Patent Office [Beyond Fortress America, p. 30]. No doubt both figures are higher now.

41

Second, even within our borders, a significant fraction of our scientific and engineering workforce comes from overseas. ‘‘The percentage of science and engineering

workers in the U.S. who are foreign nationals increased from 14 percent to 22 percent from 1990–2000. In 2006 more than half the doctorate-level graduating engineers in the United States were foreign-born, as were 45 percent of the Ph.D. recipients in the physical sciences, computer sciences, and life sciences’’ [Beyond Fortress

America, p. 34].

Universities, like MIT, are international melting pots. Roughly one-third of MIT’s

current faculty were born outside the U.S. Forty percent of MIT’s 6,000 graduate

students are international, and each year approximately 1,600 international scholars bring their skills to MIT.

Third, thanks to the Internet, both the pace and geography of scientific communications have exploded since 1985—the pace is now instantaneous and the geography is global. This rapid and pervasive interchange of ideas and innovation fuels

remarkable advances. For example, the information technology revolution of the

1990’s was a significant factor in fueling a remarkable three percent annual growth

in U.S. productivity.

My fourth point is to suggest that, in the present national security and economic

climate, a vigorous and innovative research community is more important than ever.

Universities are the primary performers of basic research in the U.S., and they

are also the source of our future scientific and technical workforce. This human and

intellectual capital is essential contributors to the national security and economic

prosperity of the United States.

As a measure of economic impact, MIT research results in roughly 125 licenses

for new technology and spawns 20–25 new start-up companies each year. A great

many more companies, nearly 1,000, are founded each year by MIT alumni. A

Kauffman Foundation report on MIT Entrepreneurship released last week gives a

conservative estimate that if a nation were formed from the active companies founded by MIT alumni, it would have the 17th largest economy in the world. The real

number is plausibly higher: 26,000 MIT alumni-founded companies employing over

three million workers with annual world revenues over $2 trillion, comparable to

the 11th largest Nation’s economy. Interestingly, half the companies formed by our

non-U.S.-citizen alumni are located in the U.S., employing over 100,000 people [Roberts & Eesley, Entrepreneurial Impact: The Role of MIT, Kauffman Foundation,

2009]. Nationwide, roughly two-thirds of internationals receiving Ph.D.s in the U.S.

stay in our country [Nature Vol. 457, p. 522, 2009].

For universities, the primary area of concern regarding export controls involves

restrictions on the sharing of technical data and information about controlled items

with non-U.S. persons within the U.S. or abroad. These are often referred to as

‘‘deemed exports.’’ There has always been considerable ambiguity around how or

when NSDD 189’s protection of fundamental research applies and whether—despite

clear language to that effect in NSDD 189—it covers the conduct as well as the

products of research. Moreover, because the exclusion applies to universities, it does

not facilitate interactions between universities and industry or national laboratories.

So, despite a Presidential directive protecting fundamental research, export controls continue to inhibit, retard or eliminate research projects that do not involve

militarily relevant technology. Just last year one MIT research group abandoned a

fruitful international space astronomy mission because of export-control impediments. The foreign partners are proceeding with out us, thereby leaving us out of

the advances in science and technology they will be making on their own. Many

more projects have been delayed by many months as control issues are sorted out.

One colleague, leader of a major NASA mission, had to wait 18 months for a Technical Assistance Agreement so her French graduate student could access Mars data

from a NASA computer system. There are hundreds of such stories of ‘‘sand in the

gears’’ from export controls [e.g., see Space Science and the International Traffic in

Arms Regulations: A Workshop, National Academies Press, 2008; The Deemed Export Rule in the Era of Globalization, Department of Commerce, 2007; Science and

Security in a Post 9/11 World, National Academies Press 2007].

A major difficulty is the broad scope of the export control regulations. For example, the State Department controls virtually all spacecraft systems, associated

equipment and data, regardless of their actual military utility. And both State and

Commerce often control technologies that are widely available outside the U.S. For

many categories of the Commerce Control List, one-third to one-half of the items

are controlled only by the U.S. [Beyond Fortress America, p. 34, p. 86]. And most

importantly, none of the other countries has a provision comparable to our deemed

export regulation [The Deemed Export Rule in the Era of Globalization, Department

of Commerce, 2007, p. 6].

42

Several positive actions have been taken in recent years. The Department of Commerce formed the Deemed Export Advisory Committee (DEAC) and the Emerging

Technology and Research Advisory Committee (ETRAC), on which I serve. And last

June, Undersecretary of Defense John Young reaffirmed the fundamental research

exclusion in DOD sponsored activities. But when I recently asked a senior Pentagon

official if the John Young letter was having an effect, he replied that it was ‘‘too

soon to tell.’’

Our report suggests that a more systematic and fundamental change is required,

to move from a philosophy of containment and retrenchment to one of prudent engagement.

As Gen. Scowcroft describes, Beyond Fortress America recommends maintenance

and proper implementation of the Fundamental Research Exemption. Proper implementation is critical, as numerous forces continue to eviscerate the spirit and letter

of Reagan’s NSDD 189. We also recommend the creation of an Economic Competitiveness Exemption to eliminate controls on dual-use technologies that are readily

available outside the U.S. And we recommend steps for adjusting visa policies that

will enhance our access to the reservoir of human talent in science and technology

from foreign sources.

Your invitation, Mr. Chairman, asked me what your committee might do to address the negative effects of export controls. Allow me to respectfully suggest that

this committee, through its oversight of key science agencies, could play a very important role by endorsing the change in philosophy as well as the detailed recommendations in our report, and by mandating that each federal agency under your

oversight must formulate, implement a plan to carry them out and report to you

on its progress.

Thank you for your attention.

BIOGRAPHY FOR CLAUDE R. CANIZARES

Professor Canizares is the Vice President for Research and Associate Provost and

the Bruno Rossi Professor of Physics at MIT. He has overall responsibility for research activity and policy at the Institute. He oversees more than a dozen interdisciplinary research laboratories and centers, including the MIT Lincoln Laboratory, the Broad Institute, the Plasma Science and Fusion Center, the Research Laboratory of Electronics, the Institute for Soldier Nanotechnology, the Singapore-MIT

Alliance for Research & Technology, the Francis Bitter Magnet Laboratory,the Haystack Observatory and the Division of Health Sciences and Technology. The Technology Licensing Office, the International Scholars Office and the Division of Comparative Medicine, among others, report to Professor Canizares. He also has policy

oversight for the Office of Sponsored Programs. In addition, Professor Canizares is

a member of several MIT committees: Academic Council and the Academic Appointments committee, the Committee for Renovation and Space Planning, the Conflict

of Interest Management Group, and the Research Policy Committee.

Professor Canizares earned his BA, MA and Ph.D. in physics from Harvard University. He came to MIT as a postdoctoral fellow in the Physics Department in 1971

and joined the faculty as an Assistant Professor of Physics in 1974. He progressed

to an Associate Professor of Physics in 1978, to a Professor of Physics in 1984, and

to his current position as the Bruno Rossi Professor of Experimental Physics in

1997. From 1988 to 1992 he was the Head of the Astrophysics Division in the Physics Department; from 1990 to 2002 he was the Director of the Center for Space Research (since named the Kavli Institute for Astrophysics and Space Research); and

from 2001 to 2006 he was Associate Provost. Professor Canizares is currently the

Associate Director of the Chandra X-ray Observatory Center and a principal investigator on NASA’s Chandra X-ray Observatory, having led the development of the

Chandra High Resolution Transmission Grating Spectrometer. He has also worked

on several other space astronomy missions, including as Co-investigator on the Einstein Observatory (HEAO–2). Professor Canizares’ main research interests are high

resolution x-ray spectroscopy and plasma diagnostics of supernova remnants and

clusters of galaxies, X-ray studies of dark matter, X-ray properties of quasars and

active galactic nuclei, and observational cosmology. He is author or co-author of

more than 218 scientific papers.

His service outside MIT includes the Department of Commerce’s Emerging Technology and Research Advisory Committee and the National Research Council (NRC)

committees on Science Engineering and Public Policy and on Science Communication and National Security. His past service includes the National Academy of

Sciences Governing Council, the Air Force Scientific Advisory Board, the NASA Advisory Council, chair of the Space Studies Board of the NRC and of NASA’s Space

Science Advisory Committee. He is a member of the of L–3 Communications, Inc.,

43

Board of Directors and he served on the Board of Trustees of the Associated Universities Inc. Professor Canizares is a member of the National Academy of Sciences and

the International Academy of Astronautics and is a fellow of the American Academy

of Arts & Sciences, the American Physical Society, and the American Association

for the Advancement of Science. Professor Canizares has also received several

awards including decoration for Meritorious Civilian Service to the United States

Air Force, a NASA Public Service Medal for his service to the NASA Advisory Council, a NASA Public Service Medal for his contributions to the Chandra X-ray Observatory, and the Goddard Medal of the American Astronautical Society.

Chair GORDON. Thank you, sir. General Dickman.

STATEMENT OF MAJOR GENERAL ROBERT S. DICKMAN, EXECUTIVE DIRECTOR, AMERICAN INSTITUTE OF AERONAUTICS

AND ASTRONAUTICS

Major General DICKMAN. Mr. Chair, Mr. Hall, Members of the

Committee, I thank you for the opportunity to be with you today

to represent our members as we address this extremely important

issue.

Each year many of AIAA’s 30,000 professional and 6,000 student

members visit the Congress to express our views on issues important to the aerospace profession. Last year for the first time the

subject of export controls had become such an important concern to

our individual members that it was on our key issue list, along

with such topics as the overall level of R&D funding and creating

an integrated aerospace workforce development strategy. It is

again on the list that we will address when we are back for our

2009 visit three weeks from today.

My words about whom I represent are carefully chosen. General

Scowcroft, Mr. Young, and Dr. Canizares have drawn an enormous

amount of information from government, industry and academic

sources. There is little I can add to what they say, but what I do

have to add reflects the views expressed by aerospace professionals.

AIAA is the largest technical society in the world serving the global

aerospace workforce. The vast majority of our members are scientists and engineers who are involved day to day in designing, developing, and building the miraculous systems that fly in air and

space, serving commercial travelers, scientific research and national security. Export controls are a major concern to this workforce.

Almost continually since the dawn of man’s space flight and certainly shortly after the beginning of the space age, the United

States has enjoyed global technological leadership in air and space

systems. Even today in many areas of space capabilities, our competencies are unmatched. However, as you have heard, that leadership is being challenged in many areas and has been lost in some.

There isn’t a single class of space systems, launch vehicles, imaging

and signals intelligence collection, position navigation and timing,

mobile and fixed communications, environmental sensing, tactical

warning, and even space tourism where there isn’t a qualified foreign competitor. All of these systems have national security implications, and all are available for purchase on the global market.

Not only are there competitors, one of the attributes often touted

by foreign suppliers is that they have no U.S. components. They

don’t phrase it quite that way, though. What they say is they are

ITAR free. Our arms control regulations as applied to space sysVerDate 11-MAY-2000 10:00 May 16, 2009 Jkt 047610 PO 00000 Frm 00047 Fmt 6633 Sfmt 6601 C:\DWORK\FULL09\022509\47610 SCIENCE1 PsN: SCIENCE1
44

tems not only have failed to meet the goals of slowing proliferation

of technologies with national security application, they fostered the

international development of comparable technologies and severely

impacted the ability of U.S. firms to sell commercial products on

the world market.

Each year AIAA administers about 25 technical conferences

across the whole spectrum of aerospace. In 2008 over 5,300 technical papers were published in our conference proceedings. Every

one of these conferences has a requirement, that all papers comply

with ITAR. How much collaboration, how much information wasn’t

exchanged because of that limitation? On the one hand you could

say that the authors were appropriately protecting information important to our national security, and in many cases, I am sure that

was correct. On the other hand, we also weren’t getting insight into

what is being done overseas. When our companies can’t sell to overseas manufacturers, we will lose understanding of what else is in

those foreign systems. When a company or individual is reluctant

to even discuss the design of a simple commercial component in a

spacecraft and enter into technical dialogue with an international

colleague because of the very real criminal penalties associated

with ITAR, we lose a source of information that simply isn’t available any other way.

As you have heard, our export policies also ripple directly into

the workforce, into our ability to hire foreign nationals to work on

U.S. space systems. Let there be no doubt that these individuals

are still receiving the best aerospace education in the world at universities around the United States, including that of my distinguished colleague. However, unlike several decades ago when many

of the best and brightest stayed in the United States because the

work was more interesting and compensation was better, now most

have no choice but to return home. We will train them, but we

can’t put them to work on our most challenging problems, not while

they are graduate students and not while they can enter the workforce later, either. In a very real sense, we the American taxpayer,

are subsidizing the development of a technical workforce that is

building the systems that are taking business away from U.S. companies and threatening our security.

I am not an advocate for protectionist policies. However, we obviously should restrict access to technologies, software and hardware,

that are critical to national security. On the other hand, I think we

are doing far more harm than good with a blanket approach to export control to space systems that is in place today.

We at AIAA know this is a busy time for the Congress, and we

appreciate you holding this hearing. We look forward to your questions and offer our help in any way we can serve.

[The prepared statement of Major General Dickman follows:]

PREPARED STATEMENT OF MAJOR GENERAL ROBERT S. DICKMAN

Chairman Gordon, Representative Hall, Members of the Committee, I want to

thank you for this opportunity to address this extremely important issue today. This

is a timely and necessary discussion, and I applaud your willingness to address the

topic.

U.S. trade and visa policies put in place to provide additional layers of national

security are having severe and long-term effects on advanced systems technology

sectors and the professional workforce that serve them. As a result industries are

45

faltering, innovation is stifled, competencies are withering, and the technology workforce is becoming less competitive in the global marketplace.

As Executive Director of the American Institute of Aeronautics and Astronautics,

I represent a constituency of nearly 30,000 aerospace professionals, located in all

fifty states and in 80 countries internationally. These are the men and women who

are ‘‘in the trenches’’ and see first hand everyday the effects of export controls policies and International Trafficking in Arms Restrictions (ITAR). This is an area of

great concern for our members.

I also sit before you as a retired military officer with 37 years of service to our

nation and am deeply committed to its security. I have seen the effects that these

policies have had from the acquisitions side as well. I understand the need to protect our current advantages in capabilities.

We all understand the reasons why our export control policies were put in place.

We have enjoyed technical superiority from decades of investment in education and

RDT&E, and from producing and attracting generations of the best intellectual talent pool the world has ever seen. To maintain that superiority, these policies were

established to insulate our advantages from the rest of the world, and specifically

from regimes that maintain a different and adversarial world view from our own.

However, we need to make a realistic evaluation of how these policies are being

implemented, and what effects they are having. We need to be willing to act if these

policies are falling short, if these policies have become detrimental to our goals.

Today, the reality is that these policies are counterproductive to their stated objectives.

We need to begin corrective steps so that we do not continue to exacerbate the

crisis the current policies have created that are actually harming our national security as key vendors in our technology sectors go out of business due to lack of export

opportunities thus denying us the very technology we are trying to protect. We need

to make certain that we develop and implement integrated policies and holistic

strategies that enable us to remain technologically superior to threats against our

national security, embrace participation in the international science community, and

regain competitiveness in the global marketplace.

There are things we can begin to do in the current regimen that will reestablish

some faith in the system and that will enable us to adapt rather than start from

scratch with an entirely new set of policies. At the very least this will enable us

to correct some of the more detrimental aspects of the current policy while developing the next generation of export policies.

As a point of departure, we need to reevaluate the technologies and their components listed that we believe provide us with a distinct advantage in the national

security arena. This needs to be done on a regular basis so that the list can keep

up with changes and advances in technologies and capabilities. One problem with

the current lists is that they have not been examined comprehensively since their

inception. What we now have are broad lists of components with little rationale for

why many of these items were originally restricted and whether that rationale is

still correct. There is also a lack of explanation for how a component is evaluated

for export release and how decisions are made in the certification process. It is frustrating to both venders and purchasers to have so many unknowns up-front in the

process.

Recommendation 1 in the National Academies’ ‘‘Fortress America’’ report focuses

on balancing interests and objectives. Several of the action items included in the

recommendation revolve around this idea of evaluating the components on the lists,

individually justifying inclusion both on a basis of what makes the item unique in

capability and in what way its export would present a substantial national security

risk. In other words, technologies and components would be restricted from export

on a ‘‘by exemption’’ basis, rather than the current approval for export on an individual basis. This recommendation also stresses the need to regularly examine these

lists, and goes so far as to recommend ‘‘sunsetting’’ the list and starting over as

often as every 12 months.

At AIAA, we are performing an independent evaluation of satellite components

similar to the suggestions in the ‘‘Fortress America’’ report. We have drawn on subject matter experts for this evaluation, and have created a process to analyze components based on several criteria. Our objective is to produce a survey, and a welldeveloped process that will be helpful in developing a regular evaluation of listed

components.

The first step is to re-evaluate whether these components are truly commercial

use, dual use, or exclusively military use. This will mean developing a definition of

what each of these categories involves, and then providing a compelling national interest for listing components within these categories. I think we would all agree that

those components that fall into that last category should remain restricted, and a

46

number of the components that fall into that second category should also remain

restricted. A major part of the problem today is that many dual-use items with little

or no unique military value are controlled. However, because the state-of-the-art

changes, and the evolution of the commercial marketplace, we must continually reevaluate whether each component remains correctly categorized. This is really a

process that should take place within the national security community as an honest

discussion, not a protectionist blanket.

Second, we need to examine whether the manufacturing capacity, either domestic

or foreign, offers some strategic advantage. By this I mean we should examine

whether the ability to produce a component or system provides some military advantage, and then determine which other nations have that capability. This is to provide a criterion for determining whether the ability to produce a particular component merits greater security restrictions than would just the capabilities of that

component.

These first two steps should help us to narrow the list of components that are

subject to the third step, which is to evaluate the performance of those components

on this shortened list, and compare them to the capabilities of foreign manufacturers. In some of the recent reports and studies on this issue some examples have

been provided of foreign technology far out-pacing its U.S. counterpart and have revealed the absurdity of applying ITAR restrictions unilaterally on all satellite components. These include instances where the performance of multiple foreign designed and manufactured components’ performance exceed the capabilities of the

U.S. equivalent, and are readily available in the global marketplace. However, while

the U.S. product may enjoy some economically competitive advantages such as costs

associated with the manufacturing process, the U.S. product is put at a disadvantage in this marketplace because it remains subject to ITAR and the export control

licensing process. The ‘‘Fortress America’’ report well describes this in the following

terms: ‘‘(t)he artificial limitations on trade imposed by lists of controlled technologies

have had predictable results with respect to the U.S. position in global markets.

With U.S. companies prevented by export controls from competing in certain markets, foreign competitors . . . spring to fill these competitive gaps. As these competitors have proliferated, U.S. companies have suffered challenges in the marketplace

that would not have been present but for export controls.’’

Fourth, we need to evaluate the trends in capabilities of foreign components.

While we may still maintain the state-of-the-art capabilities, we need to examine

how far equivalent components’ capabilities have come and project when we may expect those capabilities to surpass our own.

I understand that there are practical constraints that limit this process. I know

that the licensing office within the Department of State has been streamlined, and

that they have become much more efficient in processing licensing applications.

However, they are still limited in the human capital available to perform these evaluations, and I understand it would be placing an unrealistic burden upon that staff

to complete periodic comprehensive evaluations of the components that they may

not possess the expertise to perform, and while still maintaining their workload. To

make the problem manageable, the list must be shortened carefully but quickly. I

also believe that the Directorate of Defense Trade Controls can be instrumental in

working with policy-makers to develop a defined standard that is used in the evaluation of applications, and I do think that it would be very helpful for both the

venders and the purchasers to understand the standard when assessing the utility

of moving forward with a licensing application.

CONCLUSION

There are some encouraging signs. Just five years ago nobody was having this

conversation in the public forum even though the problem clearly existed. Our policy-makers did not seem ready to accept the realities of the effects of current export

control policies, and they certainly did not want to open up the possibility of loosening restrictions on sensitive technologies during these uncertain and unsettling

times. Industry leaders were concerned with drawing further scrutiny on their applications, were reluctant to be seen as badgering their largest customer, the U.S.

Government, and were frankly timid on this issue because they did not want to be

accused of putting their bottom line before national security. Now, however, there

is widespread agreement that the time has come to fully address these issues, and

I believe this is in large part attributable to these studies that have been mentioned, as well as other reports that have also discussed the direct decline in national security caused by these and other restrictive national policies on export of

technologies.

The effects we are seeing are troubling. It is a multi-faceted issue, and the current

state in each of these areas is alarming. Early on, we noticed the economic impacts

47

of ITAR and export controls. The belief at the time was that we should endure the

economic costs to preserve national security. Nobody can fault the philosophy of putting national security before economics. However, this is clearly a situation where

it was not an either/or dynamic. The policies that we have put in place are having

severe impacts on both.

In recent years, this committee has focused on America’s ability to compete as the

world continues its transformation into the information age. How we approach educating and developing our workforce is just as important as the approach we take

to global trade. We need to increase and improve our investments into RDT&E to

ensure that these programs continue to attract the best minds, capture the imagination and creativity of the next generation, and provide the technological return on

investment that we are enjoying by the foresight put in our investments in these

areas 20 to 30 years ago and longer.

While these are not irreversible trends, further inaction will put us dangerously

close to the point were it may well be. Our course moving forward must be

proactive. We must change the process and the philosophy that we used in restricting technology sales. We should look beyond technology restrictions, and improve

the intellectual discourse in R&D in our universities, our industry programs, and

our federal research facilities. We should focus on preparing the next generation

workforce to compete in advanced technology industry. This includes loosening visa

constraints, and encouraging the worlds’ brightest minds to come to the U.S. We

must also be willing to make long-term investments in R&D and the infrastructure

that supports it.

QUESTIONS POSED BY THE HOUSE COMMITTEE ON SCIENCE AND

TECHNOLOGY

1. What are the implications and unintended consequences of current export control policies and regulations on U.S. science and technology

competitiveness, including its space research activities?

I believe some of the more obvious include the reverse ‘‘brain drain,’’ the loss of

institutional knowledge, the stifling of industrial advantages and entrepreneurial

success, and the strengthening of foreign industrial competitors with the direct reduction in our own industrial capacity. For example, I think you are also seeing U.S.

industrial space research become even more risk averse because of the reduction of

profit margins for

U.S. technologies caused by the increased competition and reduction of foreign

markets for U.S. products.

In 2008, the Center for Strategic and International Studies released Health of the

U.S. Space Industrial Base and the Impact of Export Controls, which reported the

findings of a study specifically focused on this topic. I know Tom Young co-chaired

this study. That working group did an outstanding job of examining the many implications that export controls have had on the space industry. The conclusions of this

study were startling. The study also identified seven principles, or truths about the

role of space science and technology, and the national space industrial base as they

apply to our national security.

This committee, the Congress and the Administration must consider what is happening to the U.S. industrial base and look at it from more than the economic perspective, which in itself have been detrimental. It really needs to be viewed from

a more inclusive holistic view of our national security perspective. Do our export

control policies help or hinder our ability to design and build the capabilities that

we would need to defend ourselves, no matter the adversary?

I think it is important that our national security goals should also ensure a robust

and sustainable aerospace sciences, technology, and industrial base. When you examine those principles defined in the CSIS study, you cannot help but to realize

how imperative this point is. We must stop looking at these issues from a standpoint of what it will cost, or what we will lose control of. Instead, it must become

a matter of what it will cost to not to take bold action, and what will we have left

to maintain.

Whether we are talking about creating this change of course in months, or over

the next several years, the one thing that is clear is that it serves us no good to

do this piecemeal. There has to be some real strategy with a defined intended outcome.

2. The National Academies recently issued a report, Beyond ‘‘Fortress

America’’: National Security Controls on Science and Technology in a

Globalized World. To what extent would action on the report’s recommendations help mitigate the unintended consequences of export

48

controls on trade, and research and education, including space research?

I don’t want to go into a long discussion about visa policy since that is not the

focus of this hearing. However, that is a conversation this committee needs to continue having. I bring it up because of the influence of these federal policies on foreign technology professionals and the adverse effects these policies have had on our

science and engineering research base. I sincerely believe that for changes to either

technology or the human capital associated with technology to be successful, you

must also make modifications to the both. The 2007 National Academies report, Rising Above the Gathering Storm, that study group made several recommendations to

improve national visa policy that would increase the flow of intellectual talent coming to and remaining in the U.S. to train, work, and teach. If we are going to regain

our role as the recognized leader in research and development then we must reverse

the barriers to foreign technology professionals thriving in the U.S. to create the advantage of the international ‘‘brain drain’’ from overseas that we enjoyed from the

1940s through the 1970s.

In Recommendation 3 of the ‘‘Fortress America’’ report, the authors specified action items that mirror those earlier recommendations from the Gathering Storm report. We need to provide the opportunities for foreign talent to come and stay in

the U.S. as part of our R&D strategy, and we must ensure that there is a pathway

for them to enter and remain to take advantage of these opportunities.

I believe the recommendations in this report to be sound, and a good foundation

for the fundamental changes that we must adopt if the U.S. is to remain competitive. As I mentioned earlier, I believe that the correct approach will consist of adopting changes in several areas of federal policy including trade, RDT&E investment,

and visa policies. That approach must be integrated, and we must be willing to

make long-term investments of time and funding to ensure that these policies bring

about those intended objectives for national security and economic stability. I think

we have a lot of supporting documentation, and the real task before us is incorporating many of these recommendations into a cohesive comprehensive strategy.

3. In your view, what are the most critical issues regarding the export control system that the Committee on Science and Technology should consider as part of its oversight responsibilities for the Nation’s civil and

commercial space programs? What actions, if any, would you expect the

Committee to take?

I realize there are limitations due to oversight jurisdictions placed on this committee and by jurisdiction given to other congressional committees, and that not all

of the changes that are needed can originate here. But given the role that this committee fills and comparing that especially to ‘‘Fortress America,’’ but also with the

Rising Above the Gathering Storm report, I would recommend starting in four areas.

These are not in order of importance, but more in order with what is practical and

can be implemented more rapidly.

First, we need to make certain that we are committed to the ideals of initiatives

such as the America COMPETES Act, and really invest in our education system and

workforce. We need to create and support programs and facilities that captivate our

students at a young age with hands-on instruction and training, so that we are developing a home-grown workforce that is enthusiastic and capable in science, technology, engineering, and mathematics. They will be the foundation for our nation’s

ability to compete and excel in an evermore-competitive global marketplace. We

must ensure that future generations of the U.S. technology workforce are able to

sustain and build upon the advances that our nation has achieved.

Next, I believe this committee can encourage global engagement in science and

technology. We need to once again invest in our research & test facilities to make

them attractive to international collaborators and researchers. We need to develop

policies that allow and encourage U.S. researchers to talk and share ideas, findings,

and recommendations without a fear of violating U.S. trade policy. We need to make

certain that the U.S. is once again considered a valued and necessary research partner in international collaborations.

Third, I believe that the Committee can support appropriate changes to current

visa policies to promote access and inclusion of international students and researchers into U.S. colleges and universities, industry research programs, and federal research programs and facilities. This will help us to insure that the talent pool participating in U.S. research continues to be drawn from among the brightest in the

world, so as to reduce the capable talent available to foreign competitors, and challenge the perspectives and paradigms of American-produced scientists and engineers, improving the overall quality of their research.

49

Finally, and most directly related to the export control system, I think the Committee can be instrumental in prescribing a process by which the Administration

can review and update technology and their components lists on a regular basis,

streamline the several lists for some uniformity, and standardize licensing considerations and requirements. I agree with the report’s recommendation that this needs

to be done with a focus on understanding why items should or should not continue

to be controlled, rather than on adding components to an increasingly restrictive

and misunderstood list.

4. In the absence of any changes to export control policies and regulations,

what is the outlook for the competitiveness of our space industry, our

ability to execute U.S. Government-funded space programs, and our

overall leadership in space over the next five years?

Without a change of course, we will certainly witness dramatic changes in our

competitiveness and level of superiority. We are really talking about generational

effects, well beyond five years.

When the European Union brokered an agreement on aerospace R&D, European

Vision 2020 was designed with the goal of developing an aerospace sector that

would be unrivaled even by the U.S. Their partnerships and collaborative agreements have allowed Europeans access to state-of-the-art facilities where world-class

research is being conducted. When this was first brokered, American aerospace executives believed their hold on aerospace markets to be too great to be concerned

by the Europeans’ aspirations. It took a decade from their original declaration for

Airbus to surpass Boeing in annual global sales.

‘‘ITAR-free’’ marketing is designed specifically to compete with U.S. systems and

components with contracts that have much less regulation, and can be completed

in a much shorter timeline. These are policies developed specifically to make the European manufacturers a more attractive alternative to U.S. industry and the marketing has been very successful, even for almost purely commercial products. The

effect has been a dwindling U.S. industrial base largely dependent on government

contracts to keep production lines open.

The policies we have implemented that have sent us on this path were not established for a five-year course. As we have ceded superiority in space technologies, we

have seen growth of competencies around the world increase significantly. While it

has taken some of these federal policies 20 and in some cases 40 years to take their

real toll, now that we are at this point, we are now seeing rapid technology gains

around the world and more rapid deterioration within our own industrial base. Nations and companies no longer need to come to the U.S. for our knowledge, facilities,

or technology because our restrictions and their own advancing technology. As they

continue to institutionalize their education, research, and manufacturing capacity,

they will gain a greater edge. To be direct, we will be noticeably less competitive

in five years without a change in course and far more so in ten, 15, 20 years and

beyond. The issue is whether the U.S. is willing to invest in regaining that superiority or whether we will continue to shield our eyes from this glaring problem, and

see our capacity and capabilities continue to whither.

BIOGRAPHY FOR ROBERT S. DICKMAN

Bob Dickman is the Executive Director of the American Institute of Aeronautics

and Astronautics, a professional membership technical society with more than

36,000 members in 80 countries.

Mr. Dickman was born in Brooklyn, N.Y., grew up in New Jersey and entered the

Air Force in 1966 as a distinguished graduate of the ROTC program at Union College, Schenectady, N.Y. His military career spans the space business from basic research in particle physics to command of the 45th Space Wing and Director of the

Eastern Range at Cape Canaveral, FL. He served as the Air Force’s Director of

Space Programs, the Department of Defense Space Architect and the senior military

officer at the National Reconnaissance Office. He retired from active duty in 2000

as a major general. From 2002 to 2005, he was the Under Secretary of the Air

Force’s Deputy for Military Space.

Mr. Dickman has graduate degrees in Space Physics and Management and is a

distinguished graduate of the Air Command and Staff College and the Naval War

College.

He is a member of the Air Force Scientific Advisory Board and the DOT Commercial Space Transportation Advisory Committee. He has been recognized by Union

College with its Nott Medal, was the National Space Club’s Astronautics Engineer

of the Year, was selected as one of Space News ‘‘100 Who Made a Difference’’ and

is a Fellow of the American Institute of Aeronautics and Astronautics.

50

Bob, his wife Barbara and their son, Tad, live in Springfield, Virginia.

DISCUSSION

Chair GORDON. Thank you, General Dickman. Unfortunately, we

are going to be having a series of votes coming up soon, and this

is a very, very important hearing. But I am going to try to expedite

things for everybody’s convenience. So I had my say, although I

have some questions, but I am going to skip myself now and move

to Ms. Giffords and recognize her for first questions.

EXECUTIVE ORDER RELATING TO RELIEF FOR UNIVERSITIES

Ms. GIFFORDS. Thank you, Mr. Chair. I appreciate your bringing

such a distinguished panel of speakers today on this incredibly important topic. I know that export controls is not the subject that

most Americans are having around their dining room table every

night. However, they probably should be because as the testimony

from the gentlemen today really indicated, this is an incredibly important aspect of our economy, our national security, and the way

we became as prosperous as a nation because of its focus on space

and exploration and certainly science and technology.

My first question is for Dr. Canizares. In terms of the National

Academy report that identified several challenges that export controls present for universities in carrying out the fundamental research and education for the next generation, if President Obama

implements the recommendations of the National Academy’s report, can you talk about how much relief will actually be provided

to the universities?

Dr. CANIZARES. Thank you for the question. I think that the recommendations in the report would be a very important step. However, the real issue with the implementation of the fundamental research exclusion is how it gets implemented over and over and over

again in numerous contracts, awards, technical interchanges. And

one of the difficulties has been that with the philosophy, as General Scowcroft indicated, of primarily sort of trying to contain everything, we have managed to do what was described in the report

that Norm Augustine put out recently from the Department of

Commerce who quoted George Bundy saying if you protect your

diamonds and your toothbrushes with equal zeal, you will lose

fewer toothbrushes but more diamonds. And I think in that sense,

unfortunately, that is largely what has happened. And so in the

case of ITAR, we have many space projects where technical information simply on, you know, where to put the screw holes to attach

your scientific instruments to a satellite is ITAR-controlled and not

available to a graduate student who would be normally be drilling

the holes.

And therefore, I think the real key will be to have a change in

mindset that encourages all the contracting officers, all the agencies, to really implement with proper attention the intent of keeping as much open as can be kept open. That will be a difficult, long

process, but with the attention of this committee and we hope of

many others in the government, it is achievable but it will take

some time.

51

INTERNATIONAL DUAL-USE TECHNOLOGY BALANCE

Ms. GIFFORDS. Following that for members of the panel, I know

that we will not be able to take a go-it-alone approach when it

comes to space initiatives that we plan to pursue, including the

human exploration of the moon, beyond obviously the Mars sample

return, global climate change. I am curious about the balance of

our desire to cooperate with emerging space-faring nations like

China and perhaps India on specific projects against concerns

about that dual-use nature of some of those nations’ activities. And

certainly we have seen other countries, specifically Iran for example, launch a satellite, and we know that the quest of those who

control the skies control the battlefields. If members of the panel

could talk about that balance?

Mr. YOUNG. I will try and then others may want to comment. I

think in my opening remarks, there are things that need to be controlled, and so I don’t want to leave the impression that, you know,

we are advocating abolishing controls. But the advantages of international cooperation are enormous, not only technologically but

above and beyond as a policy, part of our foreign policy. I think if

we go back and take a look at even at the height of the Cold War,

as General Scowcroft was talking about, our cooperative arrangements with the Soviet Union on things like Apollo-Soyuz and other

programs were extraordinarily mutually beneficial. And I think

that, you know, we gave us a stronger appreciation of some of the

things that were going on with their programs and vice versa without compromising our national security. So I think relative to adversaries, I personally am an advocate that we cooperate there but

we do it in a very thoughtful manner which is what you are suggesting.

But equally important is—our current controls have really an adverse impact on cooperating with our friends, and I will give you,

you know, a few examples. One is that if we sat down today and

developed a relationship with the most friendly of countries for a

space program and after we had reached all the conclusions, then

we give this country a raft of documents, I guess technical assistant agreements. And if you scan through them, you know, they

sure don’t communicate that this partner is a true partner. And

they sign away an awful lot. You know, partners say why in the

world after I have reached all these agreements, you know, do I

need to go through that aspect of it?

Let me give you one more example. Today on the Atlas 5, we use

a Russian engine called the RD–180. The people who were doing

that program selected it because they concluded it was one of the

world’s best engines. You might say it fit my earlier comment of

being a technology vacuum cleaner in that regard. But if we have

a launch problem, we cannot sit down—this is a Russian-developed,

Russian-produced engine, we cannot sit down with them and have

a discussion as to what the problem is without having a new license to establish it. It goes even further if I may just add one

other. Tommy Holloway who many of you know who managed both

the shuttle program and the International Space Station program,

chaired a study recently and said that this inability to do problem

resolution in a real-time fashion added enormously to the risk assoVerDate 11-MAY-2000 10:00 May 16, 2009 Jkt 047610 PO 00000 Frm 00055 Fmt 6633 Sfmt 6601 C:\DWORK\FULL09\022509\47610 SCIENCE1 PsN: SCIENCE1
52

ciated with flying on the International Space Station. I could go on

and on.

Chair GORDON. Yes, well, thank you, Mr. Young. We were going

to try to beat the bells. Mr. Hall, you are recognized for five minutes.

DIFFERENTIATING MILITARY WEAPONS AND DUAL-USE

TECHNOLOGY

Mr. HALL. Thank you, Mr. Chair. I want to ask some of you

about the military components. The Fortress America report recommends that export controls, ‘‘treat weapons separately but define

them narrowly and precisely.’’ I guess my question is how does this

process distinguish between a weapons system and a component

that might be integral to the system? I remember somehow about

the CAT scan and when it came aboard. Medical production and

medical people and maybe some folks that think different to others

of us that don’t recognize barters. They want to share breakthroughs like that with the nations of the world because it is medical and it helps everybody in the world. But I believe I remember

and either you generals might remember or you other men, when

the CAT scan came on, we didn’t share that with anyone because

about 15 percent of the technology there was involved in the M–

1 bomb or the M–2 bomb or whatever it was that was powerful at

that time. It is shared with the world now, but that is just the kind

of thing I am asking about, how this might distinguish between a

weapons system and any components that might be integral to the

system like that part of the CAT scan was. General, do you want

to give that——

Lieutenant General SCOWCROFT. Well, Mr. Hall, let me take a

crack at it.

Mr. HALL. I remember it, and I remember Phil Barnaro, too——

Lieutenant General SCOWCROFT. What our study is dealing with

is not items that are under the military classification system, a

weapons system or essential component parts, if it is a screw that

holds things together. That is something else, but only those dualuse items where they have a commercial use and they have a valid

military use. And our tendency now is not to let anything out.

Mr. HALL. That describes the CAT scan.

Lieutenant General SCOWCROFT. Well, it does describe the CAT

scan.

Mr. HALL. But we found a way, or someone found a way to share

that with the world, and I don’t object to that because I think the

secrecy of the type bomb mechanism is outside our borders, too.

Lieutenant General SCOWCROFT. Look, we are not going to solve

all of these problems, and there are problems to distinguish. What

we are saying is let us try to make those distinctions clear and

more apparent and not simply say we put the blanket over everything and we don’t let everything go unless you can

demonstrate——

Mr. HALL. General, thank you. Thank you, sir.

Lieutenant General SCOWCROFT.—where it should go.

Mr. HALL. I have used three minutes. Could I yield my two minutes to Mr. Rohrabacher? He is hurting.

Chair GORDON. Sure.

53

Mr. ROHRABACHER. Thank you very much, and thank you both,

the Chair and the Ranking Member, for this very important hearing and the courtesy they have displayed to me to let me have a

chance to ask a couple questions and to give an opening statement.

DUAL-TRACK EXPORT CONTROL SYSTEMS

First and foremost, let me just note I represent a district that is

very rich in aerospace technology, and I take the employment of my

constituents very seriously. And I realize the issues that you

brought up today are risking—we are putting at risk our aerospace

industry and the jobs of all of my people by having an irrational

ITAR regulation system. We understand that. What direction are

we going to go, how do we get out of it is a whole other issue and

quite frankly, I believe that we have had these restrictions because

there was a transfer of technology 20 years ago during the 1990’s

to a potential enemy of the United States, China. And all of your

suggestions about how we need to work with the people overseas

is absolutely correct for the health of our industry. But I take it

that none of you believe that the United States should be working

and having this possibility of transferring technology in order to

get a contract or to build your industries at the expense of building

up the capabilities of Iran or North Korea or some enemy like that

which is clearly an enemy of the United States. But with China,

no one wants to face that. Let me just ask down the line, would

you be willing to try, in order to open up trade, high-tech industries and the type of business that we need to do to keep our aerospace industry and other high-tech industries competitive. Would

you be willing to have a dual-track system which places heavier restrictions on trade with non-democratic countries like China, and

including China, versus having just the idea that we have to open

up and loosen up the controls for everybody?

Chair GORDON. Mr. Hall’s time is up, so if you would, I think

that deserves an answer but if you could move forward maybe with

an answer.

Mr. ROHRABACHER. Could I just have a yes or no from the panel?

Would you be willing to have tougher controls on China and other

potential enemies versus ITAR that would have to be opened, just

overall change?

Lieutenant General SCOWCROFT. I don’t want to answer yes or no

because I think it is a more complicated question.

Mr. ROHRABACHER. Okay. I don’t think it is, General. I am sorry.

What would be your answer? This is not a complicated issue. Why

don’t we have tighter controls on an issue that poses a potential

danger to our country than we do with democratic countries?

Dr. CANIZARES. Yes, I believe we should, and certainly all the export regulations have that, and in fact the recommendations of our

report also allow for it.

Mr. ROHRABACHER. So we should still have controls——

Dr. CANIZARES. I will not decide which countries—it is not at all

appropriate for me to decide which countries should be on the list.

However——

Mr. ROHRABACHER. All right. So the answer is yes, we should

have a dual system.

Dr. CANIZARES. Yes.

54

Mr. ROHRABACHER. Mr. Young.

Mr. YOUNG. Yes, I think we should have a dual system, but like

General Scowcroft, it is more involved in the answer——

EXPORT CONTROL DANGERS WITH THE CHINESE

Mr. ROHRABACHER. Nobody wants to say China. The bottom line

is our major industries are making billions of dollars off of trade

with China that could potentially cause damage to our national security. When our businessmen acknowledge that, we are going to

have some progress on this. Until then, we are going to have controls because the American people can’t count on our big businessmen to watch out for the security interests of our country over temporary and short-term profit.

Mr. HALL. I yield back my time.

Mr. ROHRABACHER. That is what this is all about.

Lieutenant General SCOWCROFT. Mr. Rohrabacher, if the Chinese

can get the same product from the British or the French that they

could get from us, then we don’t solve your problem but we injure

the American economic competitiveness. That is why it is a complicated answer.

Mr. ROHRABACHER. I will tell you——

Chair GORDON. Mr. Rohrabacher, if you would yield, it is really

a——

Mr. ROHRABACHER.—in aiding Adolf Hitler because the French

have been aiding Adolf Hitler——

Chair GORDON. Thank you, Mr. Rohrabacher. There are a lot of

nuances to this, and it is unfortunate that we are under this gun

because this does need to be discussed more. But we are going to

try to keep some regular order.

Ms. Dahlkemper, did you have a question that you wanted to—

okay. Mr. Smith, did you have a—well, Mr. Rohrabacher, would

you like to rant just a little bit longer?

Mr. ROHRABACHER. Listen, again, my people are aerospace employees, and I am very concerned about the issues they brought up.

Chair GORDON. Why don’t you—okay. Why don’t we—Mr. Young?

Mr. YOUNG. Yeah, I would like to respond because I think the

comments are quite good. I really want to highlight the fact that

the reason, the primary reason in my view for making the changes

we are talking about, is not American industry, it is national security. And our concern, when we really got into this, and it is no

matter what country we are dealing with, the way we are currently

implementing our export controls is having a detrimental effect on

our national security. In other words, I think if we make a mistake,

I would be in favor of making a mistake on the conservative side

relative to not harming national security. But what alarmed us,

when we really got into this, is that the way we are currently going

about it, including even with adversaries, is we are doing it in a

manner that has a negative impact on our national security. If I

could just add one item, not an adversary, but we had various foreign governments come in and talk to us. Indian government came

in and talked to us. They said the best thing that ever happened

to them was ITAR, that it accelerated their program beyond what

would have ever been possible if it had not been for U.S. export

55

controls. The reason I point that out is that that really is a broad

way that it is being implemented.

Chair GORDON. Thank you, Mr. Young.

Mr. ROHRABACHER. But don’t you think——

Chair GORDON. Mr. Rohrabacher, if I could just——

Mr. ROHRABACHER. I thought I was going to rant some more.

CONCLUSION OF HEARING

Chair GORDON. Well, you had your opportunity. We only have

four minutes and 45 seconds to go. As I said earlier, this really is

just not fair. I mean, this is such an important question. There are

lots of nuances. As we stated earlier, though, this is sort of the

opening, and I am glad that hopefully we can, this committee hearing, has put it on the table. There needs to be other hearings. This

needs to be something that is talked about. I am going to contact

the President and ask him to—once again, as we sit in this, in our

earlier to our authorization last year is that they need to take a

quick look at this, or not a quick look, I mean they need to quickly

start to take a serious look at this. But as today, I am afraid that

we are going to have to come to conclusion. The record will remain

open for two weeks for additional statements for Members and for

answers to any of the follow-up questions the Committee might

ask. And Mr. Rohrabacher, the witnesses would welcome you to go

down and have a conversation as we continue with going to vote.

Mr. ROHRABACHER. All right.

Chair GORDON. And again, I thank all of you. The witnesses are

excused.

[Whereupon, at 11:05 a.m., the Committee was adjourned.]

(57)

Appendix 1:

ANSWERS TO POST-HEARING QUESTIONS

58

ANSWERS TO POST-HEARING QUESTIONS

Responses by Lieutenant General Brent Scowcroft (USAF, Ret.), President and

Founder, The Scowcroft Group

Questions submitted by Chair Bart Gordon

Q1. In discussing the Presidential Executive Order recommended by your committee,

the report states: ‘‘Not only will these reforms support economic vitality and promote national security, but they will create a track record and experience base

that Congress can evaluate—and modify as it sees fit.’’ What should Congress

look for in evaluating the effectiveness of changes to the export control system

directed in such an Executive Order, should the President decide to issue one?

a. At what point after the proposed Order is put into effect should Congress expect to see improvements?

A1. The changes that the report proposes are intended to make the export licensing

system easier to navigate because the ‘‘one-stop-shop’’ coordinating center will reduce the bureaucratic ambiguity that both industry and the agencies currently experience. Over time, these should lead to such quantifiable improvements as shorter

license-processing times, increased defense industry cooperation among allies, and

up-to-date controls lists (both the CCL and the USML). The report does not specify

when improvements should become evident; however, in my view, nine-months from

the time that the system is fully operational should be sufficient to begin to see

positive changes.

Q2. Your prepared statement notes that ‘‘the most significant challenge to implementing these [National Academies] recommendations is to help the relevant

agencies understand that these reforms will not micro-manage their own licensing procedures or challenge agency expertise.’’ Do you have any specific suggestions on how to address this challenge?

A2. Although the report does not address this issue, members of the committee are

conducting briefings throughout the relevant agencies to explain that the new processes do not change how each agency conducts its own licensing reviews. This explanation should be included in any materials that accompany the launch of the coordinating center and licensing appeals panel.

Q3. Dr. Canizares’ testimony suggests that some of the actions our committee could

take to address the impacts of export controls include 1) endorsing the recommendations in the National Academies report and 2) requiring that each

agency under our jurisdiction develop and implement a plan to execute the recommendations and report to Congress on their progress. Do you agree with Dr.

Canizares’ suggestions? Are there other actions this committee could take, within

its jurisdiction, to address the impacts of export controls on science and technology competitiveness and to ensure America’s leadership in space?

A3. It would certainly be beneficial for this committee to endorse these recommendations.

Dr. Canizares has explained what he meant by the part of his testimony that

would require ‘‘each agency under our jurisdiction [to] develop and implement a

plan to execute the recommendations and report to Congress on their progress.’’ He

was not referring to agencies that administer and enforce export controls, but rather

to those that conduct and support research (at universities and industry). He gave

as an example, the 2008 John Young Memo that reaffirmed ‘‘free scientific exchanges and dissemination of research results to the maximum extent possible.’’ He

would like to see agencies being asked to explicitly meet our recommendation for

reaffirming the Fundamental Research Exemption (NSDD 189). I think this is a

very good idea.

Q4. Your committee’s report recommends that sunset requirements be applied to all

items on export control lists that are controlled unilaterally by the U.S. Who did

the committee think should review the lists to be in compliance with the report’s

recommendation for sunsetting?

a. Does this recommendation for sunsetting apply only to the Commerce Control

List or does it also apply to the ITAR?

b. Would satellites be covered under the sunset requirements? If not, did the

Committee consider what actions are necessary to assess the effectiveness of

export controls for satellites and satellite components?

59

A4. The report proposes that the coordinating committee should have oversight of

the ‘‘sunset’’ process but does not get more specific than that regarding who ought

to participate in the process. In my view, the technical expertise of those who are

directly involved in research (from university, national and commercial laboratories)

is an essential component of this process. While the report is not specific as to who

should participate, it discusses an approach that includes several of the principles

listed in Recommendation #1 and the proposed Economic Competitiveness Exemption.

The sunset process is intended to be applied to both the Commerce Control List

and the International Traffic in Arms Regulations. The report does not discuss satellites per se because they are covered by statute, but in my own view, yes, they

should be included under sunset requirements.

Q5. The National Academies report recommends the creation of a Coordinating Center for Export Controls to receive applications, determine agency jurisdiction,

maintain timetables on license application processing, and managing the appeals process, for example. How big of an operation would this be? What is required for the Center to be successful?

a. If both the federal agencies that administer export control regulations and the

export control license applicants can appeal decisions on licenses and on

whether sunset requirements have been properly implemented, what measures

are in place to ensure that the appeals process recommended in the report

does not become overly burdened and time-consuming?

A5. Although it is not discussed in the report, the committee recommends that the

coordinating center should be a small administrative office. In order for the coordinating center to be successful, the report specifies that the coordinating center’s director should have binding authority (1) to determine which agency—Commerce or

State—will review a particular application, and (2) to establish default-to-decision

orders with respect to licensing decision timetables and sunsetting timetables.

The report does not discuss in detail how to prevent the appeals process from becoming over-burdened. However, the committee believes that the establishment of

an appeals process that does not reside in Commerce, State or Defense and does

reside in the National Security Council will dampen the tendency to abuse the appeals process.

Q6. During the hearing, Congressman Rohrabacher stated that ‘‘the American people can’t count on our big businessmen to watch out for the security interests

of our country over temporary and short-term profit.’’ How, if at all, would implementation of the recommendations in your report address this concern?

A6. The report does not recommend an end to export controls, but to implement ‘‘reforms based on the realities of the risks and opportunities of today’s threats to the

Nation.’’ Nor does the report recommend putting industrial stakeholders in charge

of any aspect of the export control process. Indeed, the recommendations proposed

in the report would not make it any easier for American businessmen to ignore or

undermine export control policy. In fact, the system would very likely close some

loopholes that currently exist because of the multi-agency application process. Also,

many businesses would no longer be compelled to build research laboratories outside

the United States in order to get around export controls.

Q7. To what extent do current American export controls prevent China from gaining

access to advanced technologies?

a. How would the approach recommended in Beyond ‘‘Fortress America’’ protect

U.S. technologies from being exploited by China?

A7. The United States and its allies do not see eye-to-eye on selling advanced ‘‘dualuse’’ goods and technologies to China. For example, as stated in the report: ‘‘despite

U.S. protests on the transfer of dual-use technology, the European Union signed an

agreement with China in 2003 that allowed China to invest 230 million Euros in

the European Union’s satellite navigation system.’’ Furthermore, China is able to

buy U.S. products from third country manufacturers who are the original legal buyers; there are no international legal restraints to prevent this. Thus it is a mistake

to think that withholding U.S. products from the Chinese actually prevents them

from getting the same advanced ‘‘dual-use’’ goods elsewhere.

The report does not deal specifically with China’s efforts to gain access to American advanced technologies that could have a military purpose. However, it articulates the need to redesign the multi-lateral regimes, such as the Wassenaar Arrangement, in ways that will better respond to today’s globalized and threat-diffuse

world.

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Questions submitted by Representative Gabrielle Giffords

Q1. Your testimony states that ‘‘If we sustain these export control and visa barriers,

we will increasingly lose touch with the cutting edge of science and technology,

and we risk missing emerging national security threats.’’ Could you elaborate

on this point, especially with respect to emerging national security threats?

A1. The emerging threats in my statement refer to technological advances taking

place elsewhere that could weaken America’s position in the battlefield, and to technologies that could have catastrophic consequences if unleashed on the American

population. As the report states, ‘‘[w]hile the United States remains a world leader

in advanced science and technology, it no longer dominates; it is now among the

leaders. We are increasingly interdependent with the rest of the world.’’ Therefore

advanced science and technology will develop in the United States, but also, for example, in China, Germany, India, and Russia. If export controls prevent foreign scientists from coming here to study, or from collaborating with American scientists,

the United States will lose vital information about what is going on elsewhere.

Q2. The State Department maintains a Technology Alert List (TAL) which establishes a list of major fields of technology transfer concern. That list expanded

greatly after 9/11, and some have argued that it is too exhaustive. As a result,

consular officers with little or no scientific training of their own will request an

additional review, called a Visa Mantis review, for the overwhelming majority

of visa applicants with advanced science and engineering degrees. However,

what is being recommended in the National Academies report seems to be the

opposite approach: preferential treatment for those with advanced STEM degrees, with no discussion at all of security concerns or of how to achieve improvements within the current system. Can you elaborate on how you approached your recommendations with respect to visas?

A2. With all due respect, the question is a mischaracterization of the committee’s

recommendations with regard to visas. The report does not seek in any way to end

the screening process, but to make it more rational, so that ‘‘legitimate and qualified

students and researchers’’ (emphasis added) can attend school, attend conferences,

and ultimately seek employment. For example, see Recommendation 4 which states

that ‘‘The committee recommends the President’s Executive Order require that a

non-immigrant visa applicant who is a graduate student, researcher, or professional

in any field of science or technology, and whose application is supported by a qualified university, scientific body, or corporation receive a determination on the visa application within 30 days’’ (emphasis added). The recommendation also affirms that

graduates should be eligible for employment only after the ‘‘pass security screening

measures.’’ The vouching process that is recommended is not meant to replace

screening measures, but to augment them.

As has been the case throughout its history, ‘‘It is important to both the national

security and to our country’s economic prosperity to maintain the flow of human talent into the United States.’’

Q3. One of the visa recommendations in the National Academies report calls for an

executive order requiring determination on visa applications for scientists and

engineers within 30 days provided the application is supported by a U.S. university, scientific body, or corporation. In the report, it is noted that this is already

common practice and few reviews slip beyond 30 days. If that is the case, are

there more specific recommendations to the relevant agencies to mitigate those

few delays that do still occur?

A3. The current system works for 95 percent of visa applications; however, the difficult five percent is precisely the population with which the report is concerned—

scientific students, researchers and professionals. The report does not specify actions

that the relevant agencies need to take.

Questions submitted by Representative Ralph M. Hall

Q1. You state that the export control system is ‘‘broken,’’ that it is slowly wiping

away any technological advantages we may have once had, and is crippling our

ability to maintain superiority. The Fortress America report proposes changes

that could be implemented using existing Executive authorities to improve the

export license process. If the Administration were to embrace the report’s recommendations, from the applicants’ perspective, what improvements would likely result?

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A1. The changes recommended in the report will bring about greater transparency,

openness, consistency and agility, all of which are lacking in the current system.

The ‘‘one-stop-shop’’ will reduce licensing timetables and therefore promote consistency and agility. The appeals process, which recommends publication of decisions,

will promote transparency and openness. A process that applies principled and consistent sunset requirements will be able to bring about consistency and rationality.

The Economic Competitiveness Exemption will make the system more realistic because it takes into account the fact that the U.S. gains no significant protection by

prohibiting legitimate U.S. companies from exporting dual-use items that are, or

soon will be, legally available in open markets overseas.

Q2. What would be the best approach to conduct the first round of ‘sunset’ reviews

for items currently on export control lists? Presumably, it would be a massive

undertaking. Who should populate such a review committee?

A2. The report does not address the specifics for how to manage the first round of

‘‘sunset’’ reviews, although the committee members agree that the initial pruning

of the list will be ‘‘arduous.’’

Technical experts currently working in their fields (see the answer to Chairman

Gordon’s fourth question) will be essential. Per my colleague, Claude Canizares’ answer to Ranking Member Hall’s first question, ‘‘the Emerging Technology and Research Advisory Committee (ETRAC) recently established by the Department of

Commerce’s is currently working to define a methodology that may well be relevant

to reviewing the Commerce Control List and possibly also sections of the Munitions

Control List.’’ I would propose consideration of their recommendation as it becomes

available.

Q3. Foreign satellite builders have been openly marketing satellites as being ‘‘ITARfree.’’ What has been the record of their marketing efforts? Is there any evidence

that they are taking away sales from U.S. builders? Technologically, how do

their satellites compare to ours?

A3. I would like to refer you to the 2008 CSIS report, ‘‘Health of the U.S. Space

Industrial Base and the Impact of Export Controls.’’

Q4. Since imposition of export controls decades ago, is there a public record of opinions on licenses that would give industry and academia roadmaps about what

is acceptable, and what isn’t. How transparent and consistent is the licensing

process? To what degree can applicants cite previous license approvals to gain

quick consideration of similar, pending applications?

A4. It is unlikely that such a record exists. The current system is anything but

transparent. Because technologies are in a constant state of change, precedents are

not necessarily a useful guide.

Questions submitted by Representative Pete Olson

Q1. What are examples of capabilities in satellite and launch systems where the U.S.

excels and should hold tight to the underlying technologies?

A1. This issue is not dealt with directly in the report, nor are satellites my area

of expertise. This is a question that is best put to space scientists.

Q2. In statements presented during the hearing, several witnesses cited difficulties

engaging in collaborative space research missions, given that all U.S. satellites

are controlled by the State Department’s munitions list. Yet the State Department claims they have streamlined the licensing process. From your vantage

point, has the Department made real improvements, or is the system still

weighed down with too many uncertainties, making future science collaborations

a difficult proposition?

A2. The State Department has made some changes in response to President Bush’s

January 2008 Presidential Directives designed to streamline and improve export

control policies and procedures. These include moving to an online application system and correcting the severe backlog of applications from 2006–7. However, their

efforts have not addressed either the lack of transparency or ‘‘commodity jurisdiction’’ issues—issues that are dealt with in the committee’s recommendations. Thus

while the improvements are real and necessary, they are not sufficient.

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ANSWERS TO POST-HEARING QUESTIONS

Responses by A. Thomas Young, Lockheed Martin Corporation (Ret.); Co-Chair, Center for Strategic and International Studies (CSIS), Working Group on the Health

of the U.S. Space Industrial Base and the Impact of Export Controls

Questions submitted by Chair Bart Gordon

Q1. Dr. Canizares’ testimony suggests that some of the actions our committee could

take to address the impacts of export controls include 1) endorsing the recommendations in the National Academies report and 2) requiring that each

agency under our jurisdiction develop and implement a plan to execute the recommendations and report to Congress on their progress. Do you agree with Dr.

Canizares’ suggestions? Are there other actions this committee could take, within

its jurisdiction, to address the impacts of export controls on science and technology competitiveness and to ensure America’s leadership in space?

A1. I agree with Dr. Canizares’ recommendations.

Q2. The first recommendation of the CSIS working group is: ‘‘The Administration

and Congress should review and reconcile the strategic intent of space export

controls.’’ What specifically do you think needs to occur in such a.strategic review and what entity should lead that effort? Does the strategic intent of space

export controls need to be resolved before any structural changes to the export

control system are put into place, such as those recommended by the National

Academies?

A2. Our view is that the strategic intent of space export controls should be uniquely

to protect the national security of the U.S. Current controls are so broad and

unfocused that the net result is an erosion of our national security. The administration and Congress should together make the changes to space export controls to assure the objective stated above is accomplished.

While it would be useful, this issue does not have to be resolved before other important structural changes are implemented.

Q3. What specifically does the CSIS recommend to address concerns about the impact of export controls on the commercial sale and use of satellites for research

purposes?

A3. Specifically, the law that makes satellites controlled items should be repealed

and only those elements of satellites that are critical to our national security should

be controlled.

Q4. The CSIS study, as noted in your testimony, refers to the negative impact of export controls on the second and third tiers of the aerospace industry, which is

where much of the innovation and global engagement in the industry occurs.

How serious are the impacts to innovation at this level of industry? What does

CSIS recommend to mitigate these impacts?

a. Do you have a perspective on whether any weaknesses in our supplier base

are causing U.S. companies to increase dependencies on non-U.S. suppliers?

A4. The impact on second and third tier companies is severe. These companies require both domestic and international sales to be viable and to be able to invest in

innovation. Today, we are becoming dependent on, non-U.S. suppliers in areas such

as traveling wave tubes and batteries.

Q5. One of the recommendations of the CSIS study is for relevant space-related government agencies to collaborate on conducting an assessment of the space industrial base on an annual basis. Could you elaborate on why an annual assessment is needed? How would this information be used in informing export control

regulations? How feasible would it be to carry out such assessments every year?

A5. The CSIS study had a dual objective to assess the health of the space industrial

base and the impact of export controls. A conclusion of the study is that government

funding directly defines the health of the base. Periodic assessments are necessary

to assure the base continues to be healthy at the prime contractor level and that

appropriate corrective action is being effective at the second and third times.

Q6. The CSIS working group recommended that ‘‘a special program authority to

permit timely engagement of U.S. participants in multinational space projects’’

be created. Could you please elaborate on the nature of such a program authorVerDate 11-MAY-2000 10:00 May 16, 2009 Jkt 047610 PO 00000 Frm 00066 Fmt 6601 Sfmt 6621 C:\DWORK\FULL09\022509\47610 SCIENCE1 PsN: SCIENCE1
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ity and how, in practice, it would work? How broad or narrow should the special

program authority be?

A6. When the U.S. participates in a multinational space project export controls

have a chilling effect on the partnership. International partners are required to approve onerous documents above and beyond the international agreements that define the project. Anomaly resolution cannot take place without further approvals.

Meetings and meeting attendees are affected. These are some examples of the adverse impact of space export controls that cause potential international partners to

no longer consider the U.S. as the partner of choice.

A solution would be to include export controls that are critical to the U.S. national

security, as well as those of our partners, in the project defining documents with

implementing responsibility assigned to the U.S. organization lead for the project.

Questions submitted by Representative Gabrielle Giffords

Q1. The CSIS study on export controls that you co-chaired noted concerns regarding

the negative impact of export controls on selected areas of the space supplier base

such as solar cell and solar cell substrate technologies. These would appear to

be space technologies that could have applications for the development of advanced renewable energy technologies for civil applications. Can you elaborate

on the basis of those concerns?

a. Are you aware of any broader implications of export controls for achieving the

Nation’s objectives to invest in ‘‘green technologies’’ and renewable energies?

A1. We did not examine the impact of space export controls on ‘‘green technologies’’

and renewable energies; thus, I cannot elaborate on these concerns.

Questions submitted by Representative Ralph M. Hall

Q1. What would be the best approach to conduct the first round of ‘sunset’ reviews

for items currently on export control lists? Presumably, it would be a massive

undertaking. Who should populate such a review committee?

A1. The conduct of the first round of ‘‘sunset’’ reviews would be a massive undertaking but critical to our national security. It should include those organizations responsible for implementing space export controls, such as the Department of State,

and those organizations with the capability of assessing technologies critical to our

national security, such as DOD and the NRO.

Q2. Foreign satellite builders have been openly marketing satellites,as being ‘‘ITARfree.’’ What has been the record of their marketing efforts? Is there any evidence

that they are taking away sales from U.S. builders? Technologically, how do

their satellites compare to ours?

A2. Foreign commercial communication satellites today have comparable capability

to U.S. satellites. Foreign sales have grown at the expense of U.S. builders.

Q3. Since imposition of export controls decades ago, is there a public record of opinions on licenses that would give industry and academia roadmaps about what

is acceptable, and what isn’t: How transparent and consistent is the licensing

process? To what degree can applicants cite previous license approval to gain

quick consideration of similar, pending applications?

A3. The licensing process is not very transparent, is very time consuming, and

while the reported approval rate is very high most approvals come with required

change. Large companies have learned to deal with these difficulties and consider

the associated impacts as a ‘‘cost of doing business.’’ Again, the critical impact is

to second and third tier companies.

Questions submitted by Representative Pete Olson

Q1. What are examples of capabilities in satellite and launch systems where the U.S.

excels and should hold tight to the underlying technologies?

A1. Capabilities that are critical to our national security should be determined by

our defense and intelligence organizations.

Q2. In statements presented during the hearing, several witnesses cited difficulties

engaging in collaborative space research missions, given that all U.S. satellites

are controlled by the State Department’s munitions list. Yet the State DepartVerDate 11-MAY-2000 10:00 May 16, 2009 Jkt 047610 PO 00000 Frm 00067 Fmt 6601 Sfmt 6621 C:\DWORK\FULL09\022509\47610 SCIENCE1 PsN: SCIENCE1
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ment claims they have streamlined the licensing process. From your vantage

point, has the Department made real improvements, or is the system still

weighed down with too many uncertainties, making future science collaborations

a difficult proposition?

A2. The State Department has made progress; however, when we conducted our review the process continued to be very onerous.

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ANSWERS TO POST-HEARING QUESTIONS

Responses by Claude R. Canizares, Vice President for Research and Associate Provost, Bruno Rossi Professor of Physics, Massachusetts Institute of Technology

Questions submitted by Chair Bart Gordon

Q1. Your testimony identifies ‘‘deemed exports’’ as particularly problematic for the

academic environment. What types of impacts have ‘‘deemed exports’’ had in the

university environment?

a. Does National Academies study recommend any actions to mitigate these effects? If so, please discuss them.

Q2. Your testimony notes that ‘‘Despite a Presidential directive protecting fundamental research, export controls continue to inhibit, retard or eliminate university research projects.’’ Can you provide examples of the negative impacts to

clarify the extent of the problem?

a. The National Academies report recommends that the Fundamental Research

Exemption be maintained and implemented properly. Your testimony refers to

the need for a ‘‘change in mindset that encourages all the contracting officers,

all the agencies, to really implement with proper attention the intent of

keeping as much open as can be kept open.’’ What are your thoughts on any

specific actions that could be taken to help change the mindset?

A1, 2. Because of the similarity of Questions 1 and 2, I believe it would be appropriate to provide a single answer that attempts to address all the issues raised in

both questions.

First, allow me to note that I use the term ‘‘deemed export’’ in its generic sense

to encompass both the Department of Commerce Export Administration Regulations

(EAR) and the Department of State International Traffic in Arms Regulations

(ITAR). In ITAR, transfer of technical information to a non-U.S. person within or

outside the U.S. is referred to as a ‘‘defense service.’’

While there has never been a systematic study of the impacts of deemed exports

on universities, university researchers have reported serious negative impacts in numerous workshops and other informal venues. For example, see ‘‘Space Science and

the International Traffic in Arms Regulations’’ [National Academies Press, 2008].

That workshop report lists, for example, the following categories of impact in the

space science arena alone (pp. 16ff): (i) Controls at odds with international character

of science; (ii) Diminishing U.S. access to foreign expertise; (iii) Handicaps on effective space-mission designs; (iv) compromising the quality of student experience; (v)

effects of regulatory uncertainties on faculty and staff; (vi) costs and administrative

burden; In fact, many of these same factors also apply to other areas of deemed export controls (such as the control of ‘‘use technology’’ by the EAR). Item (v) above

deserves special mention: The ‘‘chilly climate’’ engendered by deemed export controls

dissuades researchers and students from undertaking forefront research projects

that might otherwise yield important results for the Nation. I gave one such example in my testimony, involving a putative space mission to detect extra-solar planets

that was not conducted because of ITAR’s perceived impediments. In that sense, a

significant part of the impact resembles Sherlock Holmes’ ‘‘dog not barking in the

night.’’ It is true that these impacts are not easily quantifiable, but all of us in the

research university community who deal with this issue are convinced that the aggregate impacts are substantial.

The potential impact of a stricter application of deemed export regulations by the

Department of Commerce is even more problematic, as it could cover hundreds to

thousands of pieces of equipment on university campuses and require thousands of

licenses. This impact was chronicled in hundreds of comments received by DOC in

response to a Notice of Public Rule Making several years ago. This response led

DOC to form the Deemed Export Advisory Committee, and more recently the

Emerging Technology and Research Advisory Committee. As a member of ETRAC,

I am hopeful that some of the potentially very negative effects that had been foreseen might be mitigated by actions that DOC can undertake to simplify and limit

the application of deemed export rules.

Our report, ‘‘Beyond Fortress America,’’ recommends maintaining the ‘‘Fundamental Research Exemption (FRE)’’ which has permitted universities to operate

with relative freedom, and ‘‘ensur[ing] that it is properly implemented.’’ As I noted

in my testimony, that last phrase is essential. There is a natural tendency for individual contracting officers to always take the most conservative interpretation of

any situation and to find reasons why the FRE should NOT apply, rather than the

66

other way around. An example is the continual struggle that all universities have

had with funding agencies, particularly those in the Department of Defense and

NASA, to apply ‘‘inappropriate contract clauses’’ to research activities that do not

contain any classified components. This practice has been described in several reports of the American Association of Universities and the Council on Government

Relations. In my personal opinion proper implementation of the FRE will require

each cognizant agency to issue appropriate direction to all contracting officers, and

establish a process of review and, if necessary, appeal of their actions. In this regard, the letter issued last June by the Undersecretary of Defense (AT&L), Mr. John

Young, appears to be a positive step.

Q3. Satellites are directed by law to be regulated as exports under the ITAR. What

particular challenges does this designation of satellites as defense articles have

for conducting fundamental space research? What would you recommend be

done to mitigate those challenges?

A3. Our report did not focus on this issue, although it certainly constitutes one of

the significant areas of concern for research universities. Some of the points in the

previous answer also apply here, so I will not repeat them (see the referenced National Academies workshop report). A major concern for universities has been

ITAR’s overly broad categorization of virtually all spacecraft systems, associated

equipment and data as subject to control, regardless of their actual military utility

or their widespread availability outside the U.S. This is particularly problematic

when, as is usually the case, universities must work together with industry in order

to accommodate a space science instrument on a research satellite. Even the dimension of the screws used to attach a piece of hardware will generally be marked

‘‘ITAR Controlled.’’ Fundamental science data is also affected, as I noted in the example in my testimony of the 18 months it took a French graduate student to gain

access to data about Mars.

Our report’s recommendation regarding the Fundamental Research Exclusion, if

properly implemented, could mitigate some of the negative effects of ITAR on space

research. In the future, a more systematic approach to addressing this matter could

be undertaken by Congress and the Department of State.

One personal suggestion would be for the Department of State to provide a ‘‘carveout’’ for scientific instruments developed in an open university setting, and which

extends to the necessary interface information required to accommodate such scientific instruments on a spacecraft. I understand that the Department’s Directorate

of Defense Trade Controls is indeed considering new definitions that might accomplish such a carve-out. DTC’s Defense Trade Advisory Committee has been tasked

to undertake a review of ITAR definitions.

Questions submitted by Representative Gabrielle Giffords

Q1. Your prepared statement as well as various reports and materials note that export controls may be hurting or preventing the U.S. from participating in international collaborations on space research and encouraging other nations to seek

partnerships that do not include the U.S. Could you give us some examples of

how export controls have affected existing or potential space research collaborations?

a. If universities, companies or other institutions lose opportunities for international space activities, are not invited to participate, or opt out of collaborative projects, what are the broad consequences?

b. Are there any national security impacts?

A1. Please see answer #1 to the questions posed by Chairman Gordon, which I believe addresses the first part of this question. As to the consequences, the most extreme result is the exclusion of U.S. researchers from forefront research areas that

are instead advanced by other, international partners. The U.S. has long attempted

to retain a position of significant leadership across the spectrum of the sciences and

engineering. As a result of globalization, as our report states, we may no longer be

the sole leader in some fields, but our economic, social and political strength requires us to at least maintain our position at the forefront along with a small number of other advanced nations. Keeping that place is by no means easy nor is it assured. To voluntarily cede that place in return for no apparent gain, as we are doing

by overly strict application of export controls, is unwise and counterproductive. Because the technical information involved does not deal explicitly with national security information, I believe that our security will actually be improved by following

the recommendations of our report.

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Q2. How might qualified U.S. scientists go about vouching for the credentials of foreign scientists seeking visas, as recommended in the National Academies report?

Is it sufficient for any U.S. university professor to send a letter to the appropriate consulate on behalf of an applicant?

a. Does it make sense to set up a more formal process through a single credible

institution such as the National Academies or some other entity? Was the

panel able to explore possible mechanisms for implementing this recommendation?

A2. Our panel chose not make a more detailed recommendation about about how

best to implement the proposed vouching for foreign scientists. We believe that the

implementation details should be defined jointly by the appropriate government

agencies working together with scientific representatives. Those representatives

could well be organized through the National Academies, as you suggest, as well as

several other national professional scientific associations and societies.

Questions submitted by Representative Ralph M. Hall

Q1. What would be the best approach to conduct the first round of ‘sunset’ reviews

for items currently on export control lists? Presumably, it would be a massive

undertaking. Who should populate such a review committee?

A1. Our panel did not attempt to specify a mechanism for carrying out such a review, but I note that the Emerging Technology and Research Advisory Committee

(ETRAC) recently established by the Department of Commerce is currently working

to define a methodology that may well be relevant to reviewing the Commerce Control List and possibly also sections of the Munitions Control List. It is important

that any review committee include appropriate technical expertise and representatives from several stakeholders, including universities. It would also be important

that the charge to such a committee reflect the concept of a ‘‘culture of openness

and engagement,’’ as articulated in our report, rather than the ‘‘culture of containment’’ represented by our current export control regime.

Q2. Since imposition of export controls decades ago, is there a public record of opinions on licenses that would give industry and academia roadmaps about what

is acceptable, and what isn’t? How transparent and consistent is the licensing

process? To what degree can applicants cite previous license approvals to gain

quick consideration of similar, pending applications?

A2. With all respect, I believe that these questions should really be answered by

the appropriate offices in the Departments of Commerce and State. Both agencies

have indeed made attempts to reach out to their constituencies in order to facilitate

the licensing process. And both have attempted to shorten the time for review and

approval of licenses. However, the primary problem for universities is Deemed Export. If licenses were routinely required even for so-called ‘‘use technology,’’ thousands of licenses would be needed to accommodate the large number of international

students and the thousands of pieces of equipment on the campuses of our research

universities. The administrative burden on both the universities and the federal

agencies would be substantial, with little or no gain in national security.

Questions submitted by Representative Pete Olson

Q1. What are examples of capabilities in satellite and launch systems where the U.S.

excels and should hold tight to the underlying technologies?

A1. I do not feel qualified to identify specific capabilities, but feel confident that an

appropriately composed panel of industry, academic and government experts would

be able to do so.

Q2. In statements presented during the hearing, several witnesses cited difficulties

engaging in collaborative space research missions, given that all U.S. satellites

are controlled by the State Department’s munitions list. Yet the State Department claims they have streamlined the licensing process. From your vantage

point, has the Department made real improvements, or is the system still

weighed down with too many uncertainties, making future science collaborations

a difficult proposition?

A2. I do believe that the State Department, like the Commerce Department, has

made good faith efforts to streamline the licensing process. However, there are still

many stories of excessive delays (such as the one I mentioned in my testimony, in

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which it took 18 months for a graduate student to get permission to download Mars

data). Furthermore, while expedited licensing might make sense for the physical export of a piece of hardware, it is generally not practical for the implied ‘‘deemed export’’ or ‘‘defense service’’ associated with the transfer of technical information. The

major difficulty is that scientific research is normally conducted in an open environment with a diverse population of students, visiting scientists, and often with international collaborators. It is simply impractical to obtain large numbers of licenses

nor is it even known which license might be needed at which time. Finally, one

might ask why we should go through such a licensing process in the first place if

the technology in question is, in fact, of no national security importance or widely

available outside the U.S.

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ANSWERS TO POST-HEARING QUESTIONS

Responses by Major General Robert S. Dickman, Executive Director, American Institute of Aeronautics and Astronautics

Questions submitted by Chair Bart Gordon

Q1. Dr. Canizares’ testimony suggests that some of the actions our committee could

take to address the impacts of export controls include 1) endorsing the recommendations in the National Academies report and 2) requiring that each

agency under our jurisdiction develop and implement a plan to execute the recommendations and report to Congress on their progress. Do you agree with Dr.

Canizares’ suggestions? Are there other actions this committee could take, within

its jurisdiction, to address the impacts of export controls on science and technology competitiveness and to ensure America’s leadership in space?

A1. I believe Dr. Canizares is correct to endorse the recommendations of the ‘‘Fortress America’’ report. These recommendations are designed to provide more consistency to the regimen, account for changes in the marketplace, encourage ingenuity,

and ensure strategic competitiveness. I also agree that Congress should place accountability on federal agencies that impact, and that are impacted by export control policies. This is necessary to gauge the effectiveness of any changes in policy

and evaluate whether agencies are implementing the kinds of changes Congress

may call for. It may also help to indicate when and where future changes are needed.

There are other areas within the jurisdiction of the House Science Committee

where actions can be taken to address the impacts of export controls. With its oversight responsibilities over federal scientific research, development, and demonstration, there are opportunities to examine, adjust and affect policies that restrict collaborative research and access to research. As I mentioned in my testimony before

the Committee, I believe the House Science Committee possesses the jurisdiction to

encourage global engagement in science and technology. We need to invest in our

research & test facilities to ensure that we maintain the state-of-the-art in capabilities in those areas. If visa policies are indeed changed to provide more access for

foreign scientist and students, we must make certain that we have the infrastructure and programs in place that capture their passions and imaginations once they

are here so as to increase our available talent pool at the expense of the talent pool

foreign competitors have to draw from.

I certainly would not want to see the Committee limited to these suggestions. I

believe that as new policies are put in place, more obvious opportunities will also

present themselves for the Committee to examine and enact. The first step is taking

the first step, and I believe that the Committee has already committed to that

through its efforts to examine where improvements can be made in the current export control regimens.

Q2. Your testimony states that ‘‘We need to make certain that we develop and implement integrated policies and holistic strategies that enable us to remain

technologically superior to threats against our national security, embrace participation in the international science community, and regain competitiveness

in the global marketplace.’’ That sounds like a pretty challenging task. How in

practical terms should we go about doing that? What entity should be involved

in leading the development and implementation of an integrated policy and

strategy?

A2. While the challenge is not insignificant, it simply proposes is that we regain

a position we held for many decades—that we do the things that got us there in

the first place. The process should begin with defining core principles that serve as

a foundation for policies and programs that are developed. Whether in government,

academia, or industry, it is a common business practice to define a core mission and

goals and then develop a strategic plan around those defining principles. Over the

course of time, it is necessary to step back and evaluate what you are doing strategically, moving towards evolving opportunities, and retiring outdated pursuits. The

key is having that core mission and associated values to act as an axis for the strategic plan and its subsequent evolutions to revolve around.

I believe that this needs to take place at a sufficiently high level so as to have

the authority to provide coordination and cohesion among the many departments,

agencies and offices involved. The National Security Council (NSC) comes to mind

because of the level of the office and its ability to coordinate policies and initiatives

through the Office of Science and Technology Policy, the Office of the United States

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Trade Representative, and the President’s Intelligence Advisory Board and Intelligence Oversight Board.

Of course, policies have little practical effect without the support of implementing

authorization and appropriation.

Q3. What specifically does the AIAA recommend for addressing concerns about the

impact of export controls on the commercial sale and use of satellites for research purposes?

A3. As I elaborated upon in my testimony before the Committee, I believe we need

to take on the task of evaluating why we are protecting capabilities, and then examine those capabilities that are currently restricted to ensure that we are not building

the fence higher than is necessary to protect national security at the expense of the

innovation and industrial base we are depending on to provide those national security capabilities. I think it is important that our national security goals should also

ensure a robust and sustainable aerospace sciences, technology and industrial base.

Once that bar has been set, the same constraints should apply to specific components of research satellites as are applicable to commercial service satellites (e.g.,

communications satellites). Once the components are in foreign hands, there is really no further control regarding their application.

Q4. You testified that the AIAA is undertaking an independent effort to create a

process for evaluating the list of controlled satellite components on a regular

basis. Could you please elaborate on the process you envision creating? What is

the timetable for AIAA to complete its work? Who should conduct those regular

evaluations?

A4. AIAA has a cataloguing effort underway that is analyzing components of the

communications satellite. What we are currently examining is just a start of what

is necessary, and it will have its limitations. To begin with, we understand that

Congress will need to provide authority to someone within the executive branch to

make determinations on how to use the findings of an examination such as what

belongs on which list, and to what degree a component should be subjected to restrictions. We also are working with unclassified data. Certainly there are going to

be directorates and offices within our national security agencies that have control

of data that is not and should not be publicly available. That can include anything

from alloy characteristics and structural traits to capabilities and manufacturing

technologies that would give a domestic component a national security-designated

advantage.

For our purposes, we started with just the satellite bus, and broke it down by

component. We then worked throughout our membership to identify appropriate

subject matter experts (SMEs) who could examine those components in a comparison with commercially available foreign designed and manufactured components.

We use a series of criteria that include metric for performance, analyze the range

of U.S. suppliers, compare against the best non-U.S. component, and make a determination of whether or not a competitive advantage exist for the U.S. component.

Finally, we analyze whether there is a discriminating value between military and

non-military applications. Once an SME has completed, documented and submitted

a survey, it is then subjected to a peer review process that evaluates both the conclusion of the survey, and the process and support provided by the SME in making

these determinations.

Our timeline for this process is to complete this initial examination and have a

compilation of surveys completed by early summer. This will not be a formal report,

and is only intended to provide supporting data for a much larger process.

I would suggest that the cataloguing process and the determinations on which

control list components should be placed should reside somewhere within the national security community where there is access to current classified data on components, capabilities and uses, both domestic and foreign. That office must consist of

a highly-technical, highly-competent workforce, and the staff should be rotated regularly to maintain an appropriate mix of individuals from government, industry and

academia who have a strong familiarity with current research, technology and capabilities in this area. The review committee should include relevant discipline experts

from a number of different organizational entities to provide a balanced perspective

and should include at least the Department of Defense, NASA, the National Security Agency, the Department of Commerce, the National Security Space Office

(NSSO), National Reconnaissance Office (NRO), the Office of the Director of National Intelligence (ODNI), and some recognized non-governmental organizations

with resident experts on applicable technologies.

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Q5. In your prepared statement, you recommend that ‘‘we need to evaluate the

trends in capabilities of foreign components . . . examine how far equivalent

components’ capabilities have come and project when we may expect those capabilities to surpass U.S. components to inform periodic reevaluation of technologies.’’ Could you please discuss this evaluation process? Is the data on foreign component capabilities available to allow an evaluation of foreign capabilities? Who should have responsibility for regular evaluations of foreign capabilities?

A5. Once a systematic evaluation survey process is established with qualified and

confirmed data and SMEs capable of executing those evaluations with sufficient

peer review, the goal of this recommendation becomes institutionalized. As part of

that survey, we should be evaluating the progression in foreign capabilities perhaps

building a timeline that shows that progression that corresponds with the surveys.

A ratio between the metric that measures the capability with correlating timeline

that competitors have achieved progressing levels of capability would illustrate

those trends. That is much easier said than done, but it is not so difficult that we

cannot complete this initial step in a reasonable timeframe.

After that point, it is a matter of continuing to invest resources and maintaining

oversight so that this survey office does not develop a culture similar to other parts

of the export control sector where decisions can be arbitrary and become unnecessarily conservative in their approach to moving technologies and services off the

most rigid control lists, or, conversely, overly aggressive in removing sensitive technologies off those same lists. It really becomes a balancing act at that level, and

the key will be sufficient oversight from Congress and upper levels within the Administration.

I would refer to my response for Question 4 on much of this. I believe that the

U.S. national security community has and does collect much of this data, however,

I am not able to venture a guess on whether a centralized clearinghouse for this

type of highly sensitive classified information exists, or whether it would involve

several individual collections of data housed among several agencies and offices. For

the sake of consistency in the process, the same individuals charged with examining

the U.S. capabilities should probably examine those foreign capabilities and progression trends.

Questions submitted by Representative Gabrielle Giffords

Q1. The CSIS study on export controls noted concerns regarding the negative impact

of export controls on selected areas of the space supplier base such as solar cell

and solar cell substrate technologies. These would appear to be space technologies for civil applications. From your AIAA perspective, are you aware of any

implications of export controls on our ability to achieve the Nation’s objectives

to invest in ‘‘green technologies’’ and renewable energy capabilities?

A1. Excluding nuclear power sources and perhaps state-of-the-art high efficiency,

space-qualified solar cells, I know of no reason why satellite power system technologies should be sufficiently sensitive from a national security perspective to be

on the ITAR list. To the extent that these technologies can contribute to cost-effective means for supplying renewable energy, it is in the national interest to assure

they get maximum use. Achieving the maximum potential to reduce greenhouse gas

emissions globally using space-derived renewable energy technologies can only be

realized with minimum restriction on their export. Applying the ITAR regimen to

these technologies will inhibit realization of that objective.

An example of the effects of export controls have had in limiting the ability of

technology, though not a green technology, would be Magnetic Resonance Imaging

(MRI) medical equipment. While this technology has shown great benefit to the

medical community, it was slow to gain exclusion from export controls because of

its advanced technology systems that were subject to those controls. It is a medical

technology that has improved the human condition worldwide. However, it has only

become widely available after an exclusion was included in Category 3 of the Commercial Control list.

As has long been the case with aerospace and aerospace systems technologies, we

are bound to discover civil and commercial ‘‘green technology’’ uses well beyond the

original design intent through technology transfers as we look to reduce our consumption of carbon-based fuels. In that process, it should be expected that there will

be export control obstacles. The hope is that as innovation progresses, we will be

able to overcome many of those hurdles and bring those technologies to bear in our

efforts to reduce our carbon footprint.

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Q2. Stories have appeared in the foreign press regarding the possible repatriation of

foreign-born scientist and engineers being lured by the promise of expanding

space programs in their native countries. From your position in AIAA, what does

this mean for the workforce of agencies such as NASA and for the U.S. aerospace industry? What types of incentives do foreign scientists and engineers educated or working in the U.S. have for staying in the U.S. as opposed to taking

their talent and experience overseas?

A2. The U.S. remains the leader in many science, technology and engineering research disciplines. In many instances, there remains considerable esteem for being

a part of U.S. research and development, in U.S. innovation. About 15 percent of

the membership of AIAA is made up of foreign aerospace professionals. There are

measurable benefits that they receive for that membership, but first and foremost

they come to us for the esteem of being a part of the American Institute of Aeronautics and Astronautics.

For all the faults that ‘experts’ find in U.S. science and technology policy and programs, we are a stable base for innovation and research. Many foreign scientist and

students continue to come to the U.S. to be apart of that. What often gets lost in

the budget discussions is that, while the percentages of our federal budget designated for research and development has waned, we are still investing more in this

area than any other single country in the world. That investment goes a long way

in influencing foreign scientist and students to be apart of the U.S. system.

Questions submitted by Representative Ralph M. Hall

Q1. What would be the best approach to conduct the first round of ‘sunset’ reviews

for items currently on export control lists? Presumably, it would be a massive

undertaking. Who should populate such a review committee?

A1. We must first examine the principles for why we restrict technologies and build

a sound strategy for examining and listing the technologies based on those principles. As I’ve previously mentioned, once a systematic evaluation survey process is

established with qualified and confirmed data and SMEs capable of executing those

evaluations with sufficient peer review, the goal of this recommendation becomes institutionalized. As part of that survey, we should be evaluating the progression in

foreign capabilities, building a timeline that shows the progression that corresponds

with the surveys.

I don’t believe that we should have the same people who evaluate the applications

also performing this technical analysis of the capabilities of technologies and services. I would suggest that the cataloguing process and the determinations on which

control list components should be place should reside somewhere within the national

security community where there is access to current highly classified data on components, capabilities and uses, both domestic and foreign. That office must consist of

a highly-technical, highly-competent workforce, and the staff should be rotated regularly to maintain an appropriate mix of individuals from government. industry and

academia who have strong familiarity with current research, technology and capabilities in this area. The review committee should include relevant discipline experts

from a number of different organizational entities to provide a balanced perspective

and should include at least the Department of Defense, NASA, the National Security Agency, the Department of Commerce, the National Security Space Office

(NSSO), National Reconnaissance Office (NRO), the Office of the Director of National Intelligence (ODNI), and some recognized non-governmental organizations

with resident experts on applicable technologies.

Q2. Foreign satellite builders have been openly marketing satellites as being ‘‘ITARfree.’’ What has been the record of their marketing efforts? Is there any evidence

that they are taking away sales from U.S. builders? Technologically, how do

their satellites compare to ours?

A2. I believe there are six specific cases where the stated determining factor in the

decision to use a foreign manufactured satellite was ‘‘ITAR-free’’ marketing. However, the real impact is being felt downstream in the second and third tier companies who design, manufacture and sell satellite and launch components and services.

This is where satellite manufacturers have become very vocal about their intent to

seek ‘‘ITAR-free’’ components, and this is where the U.S. is beginning to see a real

consolidation and reduction in the industrial base. Our primes are still delivering

enough hardware to the U.S. Government, that they have been able to sustain market share losses in other markets due to ITAR and other export control regulations

up to this point.

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Unfortunately, much of the innovation that drives this sector of the economy

comes from these second and third tier companies. As these areas fade away, so

does the culture that is willing to take on risk in their research, design, & development, and that is able to adapt to changes and challenges in the marketplace at

the fastest pace.

I believe that in most instances, U.S. satellites still lead the world in design and

capability. However, where we are losing footing is in the components that make

up those satellites. As this happens, it is only a matter of time before we begin to

see the playing field in the satellites begin to level.

Q3. Since imposition of export controls decades ago, is there a public record of opinions on licenses that would give industry and academia roadmaps about what

is acceptable, and what isn’t? How transparent and consistent is the licensing

process? To what degree can applicants cite previous license approvals to gain

quick consideration of similar, pending applications?

A3. The roadmap question is an interesting one. In the National Academies report,

Recommendation 1.a states, ‘‘(The President should) Recognize the interdependence

of national security and economic competitiveness factors in making export control

decisions with respect to individual requests for licenses through a principle-based

system.’’ Recommendation 1.c continues, ‘‘(The President should) Establish as a new

administrative entity, a coordinating center for export controls, with responsibilities

for coordinating all interfaces with persons or entities seeking export licenses and

expediting agency processes with respect to the granting or denial of export licenses.’’ Recommendation 1.d concludes, ‘‘ (The President should) Establish an independent export license appeals panel to hear and decide disputes about whether export licenses are required, whether particular decisions to grant or deny licenses

were made properly, and whether sunset requirements have been carried out properly.

From the book United States Export Controls, Fifth Edition, which appears in Appendix F of the ‘‘Fortress America’’ report, Table 1–1 lists the U.S. Government entities with statutory authority to control exports. This table lists 16 departments and

agencies, under 35 different regulations, many with similar areas of controlling authority. Further, Table 1–3 shows the decision tree for determining agency jurisdiction. This table shows 17 steps, many with several substeps to use in determining

whether an export is subject to a control regimen, and, if so, where. Much of the

delay in the application process is a matter of figuring out under just exactly which

jurisdiction a particular product or service falls. These two tables well illustrate the

lack of transparency and clarity in the current process. If Recommendation 1.c is

enacted establishing a central clearinghouse, much of this confusion in the front end

of the process would be removed, and businesses could have a single source to seek

information on what controlling authority exists for a given product or service, and

to which their application is filed.

Recommendations 1.a and 1.d both address the question about the citation of previous applications in the consideration of similar pending applications. Currently, no

standards or precedence exist that are used in processing applications. Each new

application is viewed in a vacuum that creates much of the uncertainty of the process. By creating a principled-based system that uses standards and precedence in

the certification process, we can remove much of the current ambiguity in the process, and reduce the time spent in the evaluation of the applications. It further

streamlines the process for appeals with a governing entity to hear those appeals

using guiding principles to do so.

Questions submitted by Representative Pete Olson

Q1. What are examples of capabilities in satellite and launch systems where the U.S.

excels and should hold tight to the underlying technologies?

A1. The list of what falls in this category is getting shorter all the time as other

nations independently make advances to achieve the same technical prowess we

have been trying to protect. While probably not limited to these, the following are

some specific areas where we still selectively excel and may therefore want to restrict export for national security reasons:

• Some very specific features of engines and fuel containment systems for the

following:

1. LH2-based propulsion

2. Hypergolic propulsion

3. Solid propellant propulsion

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4. Advanced electric and magnetohydrodynamic propulsion

• Precision inertial navigation systems

• Re-entry guidance and control algorithms

• Communication encryption systems

• Advanced data processing, reduction, and compression algorithms

• Advanced observation devices

• Optical wave-front control technologies

• High slew-rate momentum transfer devices

Q2. In statements presented during the hearing, several witnesses cited difficulties

engaging in collaborative space research missions, given that all U.S. satellites

are controlled by the State Department’s munitions list. Yet the State Department claims they have streamlined the licensing process. From your vantage

point, has the Department made real improvements, or is the system still

weighed down with too many uncertainties, making future sciences collaborations a difficult proposition?

A2. The fact is that the Department of State has been able to reduce processing

times and reduce the pending caseload for certification licenses. However, I don’t believe that they have improved the lot of the applicants. The approval rate for applications has historically been relatively high assuming the correct application was

completed and filed to the correct oversight agency. However, under the previous

system, applications could sit for months before any review took place. Once the appropriate jurisdiction had been established, it could take several more weeks or possibly months before an evaluation of the application was completed and a determination made.

Under the new system, the application processing times have been greatly reduced, and most reviews are completed in weeks or just a few months. Now, however, companies are reporting that most applications return with qualifying language that place more uncertainty than was experienced under the previous system.

So while the State Department has streamlined its processes, these caveats often

place reporting and verification obligations on the companies that they have no ability to satisfy, and the certification is for naught, leaving the companies in no better

position than they were under the longer waiting periods.

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Appendix 2:

ADDITIONAL MATERIAL FOR THE RECORD

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