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[House Report 110-626]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     110-626

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

 
     SECURITY ASSISTANCE AND ARMS EXPORT CONTROL REFORM ACT OF 2008

                                _______
                                

  May 12, 2008.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Berman, from the Committee on Foreign Affairs, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 5916]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Foreign Affairs, to whom was referred the 
bill (H.R. 5916) to reform the administration of the Arms 
Export Control Act, and for other purposes, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill as amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     2
Summary..........................................................    19
Background and Purpose for the Legislation.......................    20
Hearings.........................................................    22
Committee Consideration..........................................    22
Votes of the Committee...........................................    22
Committee Oversight Findings.....................................    22
New Budget Authority and Tax Expenditures........................    22
Congressional Budget Office Cost Estimate........................    22
Performance Goals and Objectives.................................    28
Constitutional Authority Statement...............................    28
New Advisory Committees..........................................    28
Congressional Accountability Act.................................    28
Earmark Identification...........................................    28
Section-by-Section Analysis and Discussion.......................    28
Changes in Existing Law Made by the Bill, as Reported............    43
Exchange of Letters--Armed Services Committee and Foreign Affairs 
  Committee......................................................    62

                             The Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Security Assistance 
and Arms Export Control Reform Act of 2008''.
  (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.

           TITLE I--REFORM OF ARMS EXPORT CONTROL PROCEDURES

 Subtitle A--Defense Trade Controls Performance Improvement Act of 2008

Sec. 101.  Short title.
Sec. 102.  Findings.
Sec. 103. Strategic review and assessment of the United States export 
controls system.
Sec. 104. Performance goals for processing of applications for licenses 
to export items on USML.
Sec. 105. Requirement to ensure adequate staff and resources for DDTC 
of the Department of State.
Sec. 106. Audit by Inspector General of the Department of State.
Sec. 107. Increased flexibility for use of defense trade controls 
registration fees.
Sec. 108. Review of ITAR and USML.
Sec. 109. Special licensing authorization for certain exports to NATO 
member states, Australia, Japan, and New Zealand.
Sec. 110. Availability of information on the status of license 
applications under chapter 3 of the Arms Export Control Act.
Sec. 111. Sense of Congress.
Sec. 112. Definitions.
Sec. 113. Authorization of appropriations.

                  Subtitle B--Miscellaneous Provisions

Sec. 121. Report on self-financing options for export licensing 
functions of DDTC of the Department of State.
Sec. 122. Expediting congressional defense export review period for 
South Korea and Israel.
Sec. 123. Availability to Congress of Presidential directives regarding 
United States arms export policies, practices, and regulations.
Sec. 124. Increase in congressional notification thresholds and 
expediting congressional review for South Korea and Israel.
Sec. 125. Diplomatic efforts to strengthen national and international 
arms export controls.
Sec. 126. Reporting requirement for unlicensed exports.
Sec. 127. Report on value of major defense equipment and defense 
articles exported under section 38 of the Arms Export Control Act.
Sec. 128. Report on satellite export controls.
Sec. 129. Definition.

      TITLE II--SECURITY ASSISTANCE AND RELATED SUPPORT FOR ISRAEL

Sec. 201. Assessment of Israel's qualitative military edge over 
military threats.
Sec. 202. Report on United States' commitments to the security of 
Israel.
Sec. 203. War Reserves Stockpile.
Sec. 204. Implementation of Memorandum of Understanding with Israel.
Sec. 205. Definitions.

 TITLE III--WAIVER OF CERTAIN SANCTIONS TO FACILITATE DENUCLEARIZATION 
                       ACTIVITIES IN NORTH KOREA

Sec. 301. Waiver authority and exceptions.
Sec. 302. Certification regarding waiver of certain sanctions.
Sec. 303. Congressional notification and report.
Sec. 304. Termination of waiver authority.
Sec. 305. Expiration of waiver authority.
Sec. 306. Continuation of restrictions against the Government of North 
Korea.
Sec. 307. Report on verification measures relating to North Korea's 
nuclear programs.
Sec. 308. Definitions.

                   TITLE IV--MISCELLANEOUS PROVISIONS

Sec. 401. Authority to build the capacity of foreign military forces.
Sec. 402. Maintenance of European Union arms embargo against China.
Sec. 403. Reimbursement of salaries of members of the reserve 
components in support of security cooperation missions.
Sec. 404. Foreign Military Sales Stockpile Fund.
Sec. 405. Congressional notification requirements under the Arms Export 
Control Act.
Sec. 406. Sense of Congress.

              TITLE V--AUTHORITY TO TRANSFER NAVAL VESSELS

Sec. 501. Authority to transfer naval vessels to certain foreign 
recipients.

           TITLE I--REFORM OF ARMS EXPORT CONTROL PROCEDURES

 Subtitle A--Defense Trade Controls Performance Improvement Act of 2008

SEC. 101. SHORT TITLE.

  This subtitle may be cited as the ``Defense Trade Controls 
Performance Improvement Act of 2008''.

SEC. 102. FINDINGS.

  Congress finds the following:
          (1) In a time of international terrorist threats and a 
        dynamic global economic and security environment, United States 
        policy with regard to export controls is in urgent need of a 
        comprehensive review in order to ensure such controls are 
        protecting the national security and foreign policy interests 
        of the United States.
          (2) In January 2007, the Government Accountability Office 
        designated the effective identification and protection of 
        critical technologies as a government-wide, high-risk area, 
        warranting a strategic reexamination of existing programs, 
        including programs relating to arms export controls.
          (3) Federal Government agencies must review licenses for 
        export of munitions in a thorough and timely manner to ensure 
        that the United States is able to assist United States allies 
        and to prevent nuclear and conventional weapons from getting 
        into the hands of enemies of the United States.
          (4) Both staffing and funding that relate to the Department 
        of State's arms export control responsibilities have not kept 
        pace with the increased workload relating to such 
        responsibilities, especially over the last five years.
          (5) Outsourcing and off-shoring of defense production and the 
        policy of many United States trading partners to require 
        offsets for major sales of defense and aerospace articles 
        present a potential threat to United States national security 
        and economic well-being and serve to weaken the defense 
        industrial base.
          (6) Export control policies can have a negative impact on 
        United States employment, nonproliferation goals, and the 
        health of the defense industrial base, particularly when 
        facilitating the overseas transfer of technology or production 
        and other forms of outsourcing, such as offsets (direct and 
        indirect), co-production, subcontracts, overseas investment and 
        joint ventures in defense and commercial industries. Federal 
        Government agencies must develop new and effective procedures 
        for ensuring that export control systems address these problems 
        and the threat they pose to national security.
          (7) In the report to Congress required by the Conference 
        Report (Report 109-272) accompanying the bill, H.R. 2862 (the 
        Science, State, Justice, Commerce and Related Agencies 
        Appropriations Act, 2006; Public Law 109-108), the Department 
        of State concluded that--
                  (A) defense trade licensing has become much more 
                complex in recent years as a consequence of the 
                increasing globalization of the defense industry;
                  (B) the most important challenge to the Department of 
                State's licensing process has been the sheer growth in 
                volume of applicants for licenses and agreements, 
                without the corresponding increase in licensing 
                officers;
                  (C) fiscal year 2005 marked the third straight year 
                of roughly 8 percent annual increases in licensing 
                volume;
                  (D) although an 8 percent increase in workload 
                equates to a requirement for three additional licensing 
                officers per year, there has been no increase in 
                licensing officers during this period; and
                  (E) the increase in licensing volume without a 
                corresponding increase in trained and experienced 
                personnel has resulted in delays and increased 
                processing times.
          (8) In 2006, the Department of State processed over three 
        times as many licensing applications as the Department of 
        Commerce with about a fifth of the staff of the Department of 
        Commerce.
          (9) On July 27, 2007, in testimony delivered to the 
        Subcommittee on Terrorism, Nonproliferation and Trade of the 
        House Committee on Foreign Affairs to examine the effectiveness 
        of the United States export control regime, the Government 
        Accountability Office found that--
                  (A) the United States Government needs to conduct 
                assessments to determine its overall effectiveness in 
                the area of arms export control; and
                  (B) the processing times of the Department of State 
                doubled over the period from 2002 to 2006.
          (10) Although the current number of unprocessed applications 
        for licenses to export defense items is less than 3,800 
        applications, due to the extraordinary efforts of the personnel 
        and management of the Department of State's Directorate of 
        Defense Trade Controls, at the end of 2006, the Department of 
        State's backlog of such unprocessed applications reached its 
        highest level at more than 10,000 unprocessed applications. 
        This resulted in major management and personnel challenges for 
        the Directorate of Defense Trade Controls.
          (11)(A) Allowing a continuation of the status quo in 
        resources for defense trade licensing could ultimately harm the 
        United States defense industrial base. The 2007 Institute for 
        Defense Analysis report entitled ``Export Controls and the U.S. 
        Defense Industrial Base'' found that the large backlog and long 
        processing times by the Department of State for applications 
        for licenses to export defense items led to an impairment of 
        United States firms in some sectors to conduct global business 
        relative to foreign competitors.
          (B) Additionally, the report found that United States 
        commercial firms have been reluctant to engage in research and 
        development activities for the Department of Defense because 
        this raises the future prospects that the products based on 
        this research and development, even if intrinsically 
        commercial, will be saddled by Department of State munitions 
        controls due to the link to that research.
          (12) According to the Department of State's fiscal year 2008 
        budget justification to Congress, commercial exports licensed 
        or approved under the Arms Export Control Act exceeded 
        $30,000,000,000, with nearly eighty percent of these items 
        exported to United States NATO allies and other major non-NATO 
        allies.
          (13) A Government Accountability Office report of October 9, 
        2001 (GAO-02-120), documented ambiguous export control 
        jurisdiction affecting 25 percent of the items that the United 
        States Government agreed to control as part of its commitments 
        to the Missile Technology Control Regime. The United States 
        Government has not clearly determined which department has 
        jurisdiction over these items, which increases the risk that 
        these items will fall into the wrong hands. During both the 
        108th and 109th Congresses, the House of Representatives passed 
        legislation mandating that the Administration clarify this 
        issue.

SEC. 103. STRATEGIC REVIEW AND ASSESSMENT OF THE UNITED STATES EXPORT 
                    CONTROLS SYSTEM.

  (a) Review and Assessment.--
          (1) In general.--Not later than March 31, 2009, the President 
        shall 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.
          (2) Elements.--The review and assessment required under 
        paragraph (1) shall--
                  (A) determine the overall effectiveness of the United 
                States arms export controls system in order to, where 
                appropriate, strengthen controls, improve efficiency, 
                and reduce unnecessary redundancies across Federal 
                Government agencies, through administrative actions, 
                including regulations, and to formulate legislative 
                proposals for new authorities that are needed;
                  (B) develop processes to ensure better coordination 
                of arms export control activities of the Department of 
                State with activities of other departments and agencies 
                of the United States that are responsible for enforcing 
                United States arms export control laws;
                  (C) ensure that all items on the Missile Technology 
                Control Regime Annex are subject to stringent control 
                by the United States Government;
                  (D) determine the overall effect of arms export 
                controls on counterterrorism, law enforcement, and 
                infrastructure protection missions of the Department of 
                Homeland Security;
                  (E) contain a detailed summary of known attempts by 
                unauthorized end-users (such as international arms 
                traffickers, foreign intelligence agencies, and foreign 
                terrorist organizations) to acquire items on the United 
                States Munitions List, including--
                          (i) data on--
                                  (I) commodities sought, such as M-4 
                                rifles, night vision devices, F-14 
                                spare parts;
                                  (II) parties involved, such as the 
                                intended end-users, brokers, 
                                consignees, and shippers;
                                  (III) destination countries and 
                                transit countries;
                                  (IV) modes of transport;
                                  (V) trafficking methods, such as use 
                                of false documentation and front 
                                companies registered under flags of 
                                convenience;
                                  (VI) whether the attempted illicit 
                                transfer was successful; and
                                  (VII) any administrative or criminal 
                                enforcement actions taken by the United 
                                States and any other government in 
                                relation to the attempted illicit 
                                transfer;
                          (ii) a thorough evaluation of the Blue 
                        Lantern Program, including the adequacy of 
                        current staffing and funding levels;
                          (iii) a detailed analysis of licensing 
                        exemptions and their successful exploitation by 
                        unauthorized end-users; and
                          (iv) an examination of the extent to which 
                        the increased tendency toward outsourcing and 
                        off-shoring of defense production harm United 
                        States national security and weaken the defense 
                        industrial base, including direct and indirect 
                        impact on employment, and formulate policies to 
                        address these trends as well as the policy of 
                        some United States trading partners to require 
                        offsets for major sales of defense articles; 
                        and
                  (F) assess the extent to which export control 
                policies and practices under the Arms Export Control 
                Act promote the protection of basic human rights.
  (b) Congressional Briefings.--The President shall provide periodic 
briefings to the appropriate congressional committees on the progress 
of the review and assessment conducted under subsection (a). The 
requirement to provide congressional briefings under this subsection 
shall terminate on the date on which the President transmits to the 
appropriate congressional committees the report required under 
subsection (c).
  (c) Report.--Not later than 18 months after the date of the enactment 
of this Act, the President shall transmit to the appropriate 
congressional committees a report that contains the results of the 
review and assessment conducted under subsection (a). The report 
required by this subsection shall contain a certification that the 
requirement of subsection (a)(2)(C) has been met, or if the requirement 
has not been met, the reasons therefor. The report required by this 
subsection shall be submitted in unclassified form, but may contain a 
classified annex, if necessary.

SEC. 104. PERFORMANCE GOALS FOR PROCESSING OF APPLICATIONS FOR LICENSES 
                    TO EXPORT ITEMS ON USML.

  (a) In General.--The Secretary of State, acting through the head of 
the Directorate of Defense Trade Controls of the Department of State, 
shall establish the following goals:
          (1) The processing time for review of each application for a 
        license to export items on the United States Munitions List 
        (other than applications for approval of agreements under part 
        124 of title 22, Code of Federal Regulations (or successor 
        regulations)) shall be not more than 60 days from the date of 
        receipt of the application.
          (2) The processing time for review of each application for a 
        commodity jurisdiction determination shall be not more than 60 
        days from the date of receipt of the application.
          (3) The total number of applications described in paragraph 
        (1) that are unprocessed shall be not more than 7 percent of 
        the total number of such applications submitted in the 
        preceding calendar year.
  (b) Additional Review.--(1) If an application described in paragraph 
(1) or (2) of subsection (a) is not processed within the time period 
described in the respective paragraph of such subsection, then the 
Managing Director of the Directorate of Defense Trade Controls or the 
Deputy Assistant Secretary for Defense Trade and Regional Security of 
the Department of State, as appropriate, shall review the status of the 
application to determine if further action is required to process the 
application.
  (2) If an application described in paragraph (1) or (2) of subsection 
(a) is not processed within 90 days from the date of receipt of the 
application, then the Assistant Secretary for Political-Military 
Affairs of the Department of State shall--
          (A) review the status of the application to determine if 
        further action is required to process the application; and
          (B) submit to the appropriate congressional committees a 
        notification of the review conducted under subparagraph (A), 
        including a description of the application, the reason for 
        delay in processing the application, and a proposal for further 
        action to process the application.
  (3) For each calendar year, the Managing Director of the Directorate 
of Defense Trade Controls shall review not less than 2 percent of the 
total number of applications described in paragraphs (1) and (2) of 
subsection (a) to ensure that the processing of such applications, 
including decisions to approve, deny, or return without action, is 
consistent with both policy and regulatory requirements of the 
Department of State.
  (c) United States Allies.--Congress states that--
          (1) it shall be the policy of the Directorate of Defense 
        Trade Controls of the Department of State to ensure that, to 
        the maximum extent practicable, the processing time for review 
        of applications described in subsection (a)(1) to export items 
        that are not subject to the requirements of section 36(b) or 
        (c) of the Arms Export Control Act (22 U.S.C. 2776(b) or (c)) 
        to United States allies in direct support of combat operations 
        or peacekeeping or humanitarian operations with United States 
        Armed Forces is not more than 7 days from the date of receipt 
        of the application; and
          (2) it shall be the goal, as appropriate, of the Directorate 
        of Defense Trade Controls to ensure that, to the maximum extent 
        practicable, the processing time for review of applications 
        described in subsection (a)(1) to export items that are not 
        subject to the requirements of section 36(b) or (c) of the Arms 
        Export Control Act to government security agencies of United 
        States NATO allies, Australia, New Zealand, Japan, South Korea, 
        Israel, and, as appropriate, other major non-NATO allies for 
        any purpose other than the purpose described in paragraph (1) 
        is not more than 30 days from the date of receipt of the 
        application.
  (d) Report.--Not later than December 31, 2010, and December 31, 2011, 
the Secretary of State shall submit to the appropriate congressional 
committees a report that contains a detailed description of--
          (1)(A) the average processing time for and number of 
        applications described in subsection (a)(1) to--
                  (i) United States NATO allies, Australia, New 
                Zealand, Japan, South Korea, and Israel;
                  (ii) other major non-NATO allies; and
                  (iii) all other countries; and
          (B) to the extent practicable, the average processing time 
        for and number of applications described in subsection (b)(1) 
        by item category;
          (2) the average processing time for and number of 
        applications described in subsection (a)(2);
          (3) the average processing time for and number of 
        applications for agreements described in part 124 of title 22, 
        Code of Federal Regulations (relating to the International 
        Traffic in Arms Regulations);
          (4) any management decisions of the Directorate of Defense 
        Trade Controls of the Department of State that have been made 
        in response to data contained in paragraphs (1) through (3); 
        and
          (5) any advances in technology that will allow the time-
        frames described in subsection (a)(1) to be substantially 
        reduced.
  (e) Congressional Briefings.--If, at the end of any month beginning 
after the date of the enactment of this Act, the total number of 
applications described in subsection (a)(1) that are unprocessed is 
more than 7 percent of the total number of such applications submitted 
in the preceding calendar year, then the Secretary of State, acting 
through the Under Secretary for Arms Control and International 
Security, the Assistant Secretary for Political-Military Affairs, or 
the Deputy Assistant Secretary for Defense Trade and Regional Security 
of the Department of State, as appropriate, shall brief the appropriate 
congressional committees on such matters and the corrective measures 
that the Directorate of Defense Trade Controls will take to comply with 
the requirements of subsection (a).
  (f) Transparency of Commodity Jurisdiction Determinations.--
          (1) Declaration of policy.--Congress declares that the 
        complete confidentiality surrounding several hundred commodity 
        jurisdiction determinations made each year by the Department of 
        State pursuant to the International Traffic in Arms Regulations 
        is not necessary to protect legitimate proprietary interests of 
        persons or their prices and customers, is not in the best 
        security and foreign policy interests of the United States, is 
        inconsistent with the need to ensure a level playing field for 
        United States exporters, and detracts from United States 
        efforts to promote greater transparency and responsibility by 
        other countries in their export control systems.
          (2) Publication on internet website.--The Secretary of State 
        shall--
                  (A) upon making a commodity jurisdiction 
                determination referred to in paragraph (1) publish on 
                the Internet website of the Department of State not 
                later than 30 days after the date of the 
                determination--
                          (i) the name of the manufacturer of the item;
                          (ii) a brief general description of the item;
                          (iii) the model or part number of the item; 
                        and
                          (iv) the United States Munitions List 
                        designation under which the item has been 
                        designated, except that--
                                  (I) the name of the person or 
                                business organization that sought the 
                                commodity jurisdiction determination 
                                shall not be published if the person or 
                                business organization is not the 
                                manufacturer of the item; and
                                  (II) the names of the customers, the 
                                price of the item, and any proprietary 
                                information relating to the item 
                                indicated by the person or business 
                                organization that sought the commodity 
                                jurisdiction determination shall not be 
                                published; and
                  (B) maintain on the Internet website of the 
                Department of State an archive, that is accessible to 
                the general public and other departments and agencies 
                of the United States, of the information published 
                under subparagraph (A).
  (g) Rule of Construction.--Nothing in this section shall be construed 
to prohibit the President or Congress from undertaking a thorough 
review of the national security and foreign policy implications of a 
proposed export of items on the United States Munitions List.

SEC. 105. REQUIREMENT TO ENSURE ADEQUATE STAFF AND RESOURCES FOR DDTC 
                    OF THE DEPARTMENT OF STATE.

  (a) Requirement.--The Secretary of State shall ensure that the 
Directorate of Defense Trade Controls of the Department of State has 
the necessary staff and resources to carry out this subtitle and the 
amendments made by this subtitle.
  (b) Minimum Number of Licensing Officers.--For fiscal year 2010 and 
each subsequent fiscal year, the Secretary of State shall ensure that 
the Directorate of Defense Trade Controls has at least 1 licensing 
officer for every 1,250 applications for licenses and other 
authorizations to export items on the United States Munitions List by 
not later than the third quarter of such fiscal year, based on the 
number of licenses and other authorizations expected to be received 
during such fiscal year. The Secretary shall ensure that in meeting the 
requirement of this subsection, the performance of other functions of 
the Directorate of Defense Trade Controls is maintained and adequate 
staff is provided for those functions.
  (c) Minimum Number of Staff for Commodity Jurisdiction 
Determinations.--For each of the fiscal years 2009 through 2011, the 
Secretary of State shall ensure that the Directorate of Defense Trade 
Controls has, to the extent practicable, not less than three 
individuals assigned to review applications for commodity jurisdiction 
determinations.
  (d) Enforcement Resources.--In accordance with section 127.4 of title 
22, Code of Federal Regulations, U.S. Immigration and Customs 
Enforcement is authorized to investigate violations of the 
International Traffic in Arms Regulations on behalf of the Directorate 
of Defense Trade Controls of the Department of State. The Secretary of 
State shall ensure that the Directorate of Defense Trade Controls has 
adequate staffing for enforcement of the International Traffic in Arms 
Regulations.

SEC. 106. AUDIT BY INSPECTOR GENERAL OF THE DEPARTMENT OF STATE.

  (a) Audit.--Not later than the end of each of the fiscal years 2010 
and 2011, the Inspector General of the Department of State shall 
conduct an independent audit to determine the extent to which the 
Department of State is meeting the requirements of sections 104 and 105 
of this Act.
  (b) Report.--The Inspector General shall submit to the appropriate 
congressional committees a report that contains the result of each 
audit conducted under subsection (a).

SEC. 107. INCREASED FLEXIBILITY FOR USE OF DEFENSE TRADE CONTROLS 
                    REGISTRATION FEES.

  (a) In General.--Section 45 of the State Department Basic Authorities 
Act of 1956 (22 U.S.C. 2717) is amended--
          (1) in the first sentence--
                  (A) by striking ``For'' and inserting ``(a) In 
                General.--For''; and
                  (B) by striking ``Office'' and inserting 
                ``Directorate'';
          (2) by amending the second sentence to read as follows:
  ``(b) Availability of Fees.--Fees credited to the account referred to 
in subsection (a) shall be available only for payment of expenses 
incurred for--
          ``(1) management,
          ``(2) licensing (in order to meet the requirements of section 
        105 of the Defense Trade Controls Performance Improvement Act 
        of 2008 (relating to adequate staff and resources of the 
        Directorate of Defense Trade Controls)),
          ``(3) compliance,
          ``(4) policy activities, and
          ``(5) facilities,
of defense trade controls functions.''; and
          (3) by adding at the end the following:
  ``(c) Allocation of Fees.--In allocating fees for payment of expenses 
described in subsection (b), the Secretary of State shall accord the 
highest priority to payment of expenses incurred for personnel and 
equipment of the Directorate of Defense Trade Controls, including 
payment of expenses incurred to meet the requirements of section 105 of 
the Defense Trade Controls Performance Improvement Act of 2008.''.
  (b) Conforming Amendment.--Section 38(b)(3)(A) of the Arms Export 
Control Act (22 U.S.C. 2778(b)(3)(A)) is amended to read as follows:
  ``(3)(A) For each fiscal year, 100 percent of registration fees 
collected pursuant to paragraph (1) shall be credited to a Department 
of State account, to be available without fiscal year limitation. Fees 
credited to that account shall be available only for the payment of 
expenses incurred for--
          ``(i) management,
          ``(ii) licensing (in order to meet the requirements of 
        section 105 of the Defense Trade Controls Performance 
        Improvement Act of 2008 (relating to adequate staff and 
        resources of the Directorate of Defense Trade Controls)),
          ``(iii) compliance,
          ``(iv) policy activities, and
          ``(v) facilities,
of defense trade controls functions.''.
  (c) Use of Civil Penalties.--Not more than $10,000,000 of the amount 
of civil penalties collected in each of fiscal years 2008, 2009, 2010, 
2011 and 2012 pursuant to section 38(e) of the Arms Export Control Act 
(22 U.S.C. 2778(e)) shall be made available for the expenses of the 
Directorate of Defense Trade Controls of the Department of State.

SEC. 108. REVIEW OF ITAR AND USML.

  (a) In General.--The Secretary of State shall review, with the 
assistance of United States manufacturers and other interested parties 
described in section 111(2) of this Act, the International Traffic in 
Arms Regulations and the United States Munitions List to determine 
those technologies and goods that warrant different or additional 
controls.
  (b) Conduct of Review.--In carrying out the review required under 
subsection (a), the Secretary of State shall review not less than 20 
percent of the technologies and goods on the International Traffic in 
Arms Regulations and the United States Munitions List in each calendar 
year so that for the 5-year period beginning with calendar year 2009, 
and for each subsequent 5-year period, the International Traffic in 
Arms Regulations and the United States Munitions List will be reviewed 
in their entirety.
  (c) Report.--The Secretary of State shall submit to the appropriate 
congressional committees an annual report on the results of the review 
carried out under this section.

SEC. 109. SPECIAL LICENSING AUTHORIZATION FOR CERTAIN EXPORTS TO NATO 
                    MEMBER STATES, AUSTRALIA, JAPAN, AND NEW ZEALAND.

  (a) In General.--Section 38 of the Arms Export Control Act (22 U.S.C. 
2778) is amended by adding at the end the following:
  ``(k) Special Licensing Authorization for Certain Exports to NATO 
Member States, Australia, Japan, New Zealand, Israel, and South 
Korea.--
          ``(1) Authorization.--(A) The President may provide for 
        special licensing authorization for exports of United States-
        manufactured spare and replacement parts or components listed 
        in an application for such special licensing authorization in 
        connection with defense items previously exported to NATO 
        member states, Australia, Japan, New Zealand, Israel, and South 
        Korea. A special licensing authorization issued pursuant to 
        this clause shall be effective for a period not to exceed 5 
        years.
          ``(B) An authorization may be issued under subparagraph (A) 
        only if the applicable government of the country described in 
        subparagraph (A), acting through the applicant for the 
        authorization, certifies that--
                  ``(i) the export of spare and replacement parts or 
                components supports a defense item previously lawfully 
                exported;
                  ``(ii) the spare and replacement parts or components 
                will be transferred to a defense agency of a country 
                described in subparagraph (A) that is a previously 
                approved end-user of the defense items and not to a 
                distributor or a foreign consignee of such defense 
                items;
                  ``(iii) the spare and replacement parts or components 
                will not to be used to materially enhance, optimize, or 
                otherwise modify or upgrade the capability of the 
                defense items;
                  ``(iv) the spare and replacement parts or components 
                relate to a defense item that is owned, operated, and 
                in the inventory of the armed forces a country 
                described in subparagraph (A);
                  ``(v) the export of spare and replacement parts or 
                components will be effected using the freight forwarder 
                designated by the purchasing country's diplomatic 
                mission as responsible for handling transfers under 
                chapter 2 of this Act as required under regulations; 
                and
                  ``(vi) the spare and replacement parts or components 
                to be exported under the special licensing 
                authorization are specifically identified in the 
                application.
          ``(C) An authorization may not be issued under subparagraph 
        (A) for purposes of establishing offshore procurement 
        arrangements or producing defense articles offshore.
          ``(D)(i) For purposes of this subsection, the term `United 
        States-manufactured spare and replacement parts or components' 
        means   spare and replacement parts or components--
                  ``(I) with respect to which--
                          ``(aa) United States-origin content costs 
                        constitute at least 85 percent of the total 
                        content costs;
                          ``(bb) United States manufacturing costs 
                        constitute at least 85 percent of the total 
                        manufacturing costs; and
                          ``(cc) foreign content, if any, is limited to 
                        content from countries eligible to receive 
                        exports of items on the United States Munitions 
                        List under the International Traffic in Arms 
                        Regulations (other than de minimis foreign 
                        content); and
                  ``(II) that were last substantially transformed in 
                the United States.
          ``(ii) For purposes of clause (i)(I)(aa) and (bb), the costs 
        of non-United States-origin content shall be determined using 
        the final price or final cost associated with the non-United 
        States-origin content.
          ``(2) Inapplicability provisions.--(A) The provisions of this 
        subsection shall not apply with respect to re-exports or re-
        transfers of spare and replacement parts or components and 
        related services of defense items described in paragraph (1).
          ``(B) The congressional notification requirements contained 
        in section 36(c) of this Act shall not apply with respect to an 
        authorization issued under paragraph (1).''.
  (b) Effective Date.--The President shall issue regulations to 
implement amendments made by subsection (a) not later than 180 days 
after the date of the enactment of this Act.

SEC. 110. AVAILABILITY OF INFORMATION ON THE STATUS OF LICENSE 
                    APPLICATIONS UNDER CHAPTER 3 OF THE ARMS EXPORT 
                    CONTROL ACT.

  Chapter 3 of the Arms Export Control Act (22 U.S.C. 2771 et seq.) is 
amended by inserting after section 38 the following new section:

``SEC. 38A. AVAILABILITY OF INFORMATION ON THE STATUS OF LICENSE 
                    APPLICATIONS UNDER THIS CHAPTER.

  ``(a) Availability of Information.--Not later than one year after the 
date of the enactment of the Defense Trade Controls Performance 
Improvement Act of 2008, the President shall make available to persons 
who have pending license applications under this chapter and the 
committees of jurisdiction the ability to access electronically current 
information on the status of each license application required to be 
submitted under this chapter.
  ``(b) Matters To Be Included.--The information referred to in 
subsection (a) shall be limited to the following:
          ``(1) The case number of the license application.
          ``(2) The date on which the license application is received 
        by the Department of State and becomes an `open application'.
          ``(3) The date on which the Directorate of Defense Trade 
        Controls makes a determination with respect to the license 
        application or transmits it for interagency review, if 
        required.
          ``(4) The date on which the interagency review process for 
        the license application is completed, if such a review process 
        is required.
          ``(5) The date on which the Department of State begins 
        consultations with the congressional committees of jurisdiction 
        with respect to the license application.
          ``(6) The date on which the license application is sent to 
        the congressional committees of jurisdiction.''.

SEC. 111. SENSE OF CONGRESS.

  It is the sense of Congress that--
          (1)(A) the advice provided to the Secretary of State by the 
        Defense Trade Advisory Group (DTAG) supports the regulation of 
        defense trade and helps ensure that United States national 
        security and foreign policy interests continue to be protected 
        and advanced while helping to reduce unnecessary impediments to 
        legitimate exports in order to support the defense requirements 
        of United States friends and allies; and
          (B) therefore, the Secretary of State should share 
        significant planned rules and policy shifts with DTAG for 
        comment; and
          (2) recognizing the constraints imposed on the Department of 
        State by the nature of a voluntary organization such as DTAG, 
        the Secretary of State is encouraged to ensure that members of 
        DTAG are drawn from a representative cross-section of subject 
        matter experts from the United States defense industry, 
        relevant trade and labor associations, academic, and foundation 
        personnel.

SEC. 112. DEFINITIONS.

  In this subtitle:
          (1) Appropriate congressional committees.--The term 
        ``appropriate congressional committees'' means the Committee on 
        Foreign Affairs of the House of Representatives and the 
        Committee on Foreign Relations of the Senate.
          (2) International traffic in arms regulations; itar.--The 
        term ``International Traffic in Arms Regulations'' or ``ITAR'' 
        means those regulations contained in parts 120 through 130 of 
        title 22, Code of Federal Regulations (or successor 
        regulations).
          (3) Major non-nato ally.--The term ``major non-NATO ally'' 
        means a country that is designated in accordance with section 
        517 of the Foreign Assistance Act of 1961 (22 U.S.C. 2321k) as 
        a major non-NATO ally for purposes of the Foreign Assistance 
        Act of 1961 (22 U.S.C. 2151 et seq.) and the Arms Export 
        Control Act (22 U.S.C. 2751 et seq.).
          (4) Missile technology control regime; mtcr.--The term 
        ``Missile Technology Control Regime'' or ``MTCR'' has the 
        meaning given the term in section 11B(c)(2) of the Export 
        Administration Act of 1979 (50 U.S.C. App. 2401b(c)(2)).
          (5) Missile technology control regime annex; mtcr annex.--The 
        term ``Missile Technology Control Regime Annex'' or ``MTCR 
        Annex'' has the meaning given the term in section 11B(c)(4) of 
        the Export Administration Act of 1979 (50 U.S.C. App. 
        2401b(c)(4)).
          (6) Offsets.--The term ``offsets'' includes compensation 
        practices required of purchase in either government-to-
        government or commercial sales of defense articles or defense 
        services under the Arms Export Control Act (22 U.S.C. 2751 et 
        seq.) and the International Traffic in Arms Regulations.
          (7) United states munitions list; usml.--The term ``United 
        States Munitions List'' or ``USML'' means the list referred to 
        in section 38(a)(1) of the Arms Export Control Act (22 U.S.C. 
        2778(a)(1)).

SEC. 113. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated such sums as may be necessary 
for fiscal year 2009 and each subsequent fiscal year to carry out this 
subtitle and the amendments made by this subtitle.

                  Subtitle B--Miscellaneous Provisions

SEC. 121. REPORT ON SELF-FINANCING OPTIONS FOR EXPORT LICENSING 
                    FUNCTIONS OF DDTC OF THE DEPARTMENT OF STATE.

  Not later than 90 days after the date of the enactment of this Act, 
the Secretary of State shall submit to the appropriate congressional 
committees a report on possible mechanisms to place the export 
licensing functions of the Directorate of Defense Trade Controls of the 
Department of State on a 100 percent self-financing basis.

SEC. 122. EXPEDITING CONGRESSIONAL DEFENSE EXPORT REVIEW PERIOD FOR 
                    SOUTH KOREA AND ISRAEL.

  The Arms Export Control Act (22 U.S.C. 2751 et seq.) is amended--
          (1) in sections 3(d)(2)(B), 3(d)(3)(A)(i), 3(d)(5), 
        21(e)(2)(A), 36(b)(2), 36(c)(2)(A), 36(d)(2)(A), 62(c)(1), and 
        63(a)(2) by inserting ``the Republic of Korea, Israel,'' before 
        ``or New Zealand'';
          (2) in section 3(b)(2) by inserting ``the Government of the 
        Republic of Korea,'' before ``or the Government of New 
        Zealand''; and
          (3) in section 21(h)(1)(A), by inserting ``the Republic of 
        Korea,'' before ``or Israel''.

SEC. 123. AVAILABILITY TO CONGRESS OF PRESIDENTIAL DIRECTIVES REGARDING 
                    UNITED STATES ARMS EXPORT POLICIES, PRACTICES, AND 
                    REGULATIONS.

  (a) In General.--The President shall make available to the 
appropriate congressional committees the text of each Presidential 
directive regarding United States export policies, practices, and 
regulations relating to the implementation of the Arms Export Control 
Act (22 U.S.C. 2751 et seq.) not later than 15 days after the date on 
which the directive has been signed or authorized by the President.
  (b) Transition Provision.--Any Presidential directive described in 
subsection (a) that is signed or authorized by the President on or 
after January 1, 2008, and before the date of the enactment of this Act 
shall be made available to the appropriate congressional committees not 
later than 90 days after the date of the enactment of this Act.
  (c) Form.--To the maximum extent practicable, the Presidential 
directives required to be made available to the appropriate 
congressional committees under this section shall be made available on 
an unclassified basis.

SEC. 124. INCREASE IN CONGRESSIONAL NOTIFICATION THRESHOLDS AND 
                    EXPEDITING CONGRESSIONAL REVIEW FOR SOUTH KOREA AND 
                    ISRAEL.

  (a) Foreign Military Sales.--
          (1) In general.--Subsection (b) of section 36 of the Arms 
        Export Control Act (22 U.S.C. 2776) is amended--
                  (A) by redesignating paragraphs (2) through (6) as 
                paragraphs (3) through (7), respectively; and
                  (B) by striking ``The letter of offer shall not be 
                issued'' and all that follows through ``enacts a joint 
                resolution'' and inserting the following:
          ``(2) The letter of offer shall not be issued--
                  ``(A) with respect to a proposed sale of any defense 
                articles or defense services under this Act for 
                $200,000,000 or more, any design and construction 
                services for $300,000,000 or more, or any major defense 
                equipment for $75,000,000 or more, to the North 
                Atlantic Treaty Organization (NATO), any member country 
                of NATO, Japan, Australia, the Republic of Korea, 
                Israel, or New Zealand, if Congress, within 15 calendar 
                days after receiving such certification, or
                  ``(B) with respect to a proposed sale of any defense 
                articles or services under this Act for $100,000,000 or 
                more, any design and construction services for 
                $200,000,000 or more, or any major defense equipment 
                for $50,000,000 or more, to any other country or 
                organization, if Congress, within 30 calendar days 
                after receiving such certification,
        enacts a joint resolution''.
          (2) Technical and conforming amendments.--Such section is 
        further amended--
                  (A) in subsection (b)--
                          (i) in paragraph (6)(C), as redesignated, by 
                        striking ``Subject to paragraph (6), if'' and 
                        inserting ``If''; and
                          (ii) by striking paragraph (7), as 
                        redesignated; and
                  (B) in subsection (c)(4), by striking ``subsection 
                (b)(5)'' each place it appears and inserting 
                ``subsection (b)(6)''.
  (b) Commercial Sales.--Subsection (c) of such section is amended--
          (1) in paragraph (2)--
                  (A) in subparagraph (A)--
                          (i) by inserting after ``for an export'' the 
                        following: ``of any major defense equipment 
                        sold under a contract in the amount of 
                        $75,000,000 or more or of defense articles or 
                        defense services sold under a contract in the 
                        amount of $200,000,000 or more, (or, in the 
                        case of a defense article that is a firearm 
                        controlled under category I of the United 
                        States Munitions List, $1,000,000 or more)''; 
                        and
                          (ii) by striking ``Organization,'' and 
                        inserting ``Organization (NATO),'' and by 
                        further striking ``that Organization'' and 
                        inserting ``NATO''; and
                  (B) in subparagraph (C), by inserting after 
                ``license'' the following: ``for an export of any major 
                defense equipment sold under a contract in the amount 
                of $50,000,000 or more or of defense articles or 
                defense services sold under a contract in the amount of 
                $100,000,000 or more, (or, in the case of a defense 
                article that is a firearm controlled under category I 
                of the United States Munitions List, $1,000,000 or 
                more)''; and
          (2) by striking paragraph (5).

SEC. 125. DIPLOMATIC EFFORTS TO STRENGTHEN NATIONAL AND INTERNATIONAL 
                    ARMS EXPORT CONTROLS.

  (a) Sense of Congress.--It is the sense of Congress that the 
President should redouble United States diplomatic efforts to 
strengthen national and international arms export controls by 
establishing a senior-level initiative to ensure that such arms export 
controls are comparable to and supportive of United States arms export 
controls, particularly with respect to countries of concern to the 
United States.
  (b) Report.--No later than one year after the date of the enactment 
of this Act, and annually thereafter for four years, the President 
shall transmit to the appropriate committees of Congress a report on 
United States diplomatic efforts described in subsection (a).

SEC. 126. REPORTING REQUIREMENT FOR UNLICENSED EXPORTS.

  Section 655(b) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2415(b)) is amended--
          (1) in paragraph (2), by striking ``or'' at the end;
          (2) in paragraph (3), by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(4) were exported without a license under section 38 of the 
        Arms Export Control Act (22 U.S.C. 2778) pursuant to an 
        exemption established under the International Traffic in Arms 
        Regulations, other than defense articles exported in 
        furtherance of a letter of offer and acceptance under the 
        Foreign Military Sales program or a technical assistance or 
        manufacturing license agreement, including the specific 
        exemption provision in the regulation under which the export 
        was made.''.

SEC. 127. REPORT ON VALUE OF MAJOR DEFENSE EQUIPMENT AND DEFENSE 
                    ARTICLES EXPORTED UNDER SECTION 38 OF THE ARMS 
                    EXPORT CONTROL ACT.

  Section 38 of the Arms Export Control Act (22 U.S.C. 2778) is amended 
by adding at the end the following:
  ``(l) Report.--
          ``(1) In general.--The President shall transmit to the 
        appropriate congressional committees a report that contains a 
        detailed listing, by country and by international organization, 
        of the total dollar value of major defense equipment and 
        defense articles exported pursuant to licenses authorized under 
        this section for the previous fiscal year.
          ``(2) Inclusion in annual budget.--The report required by 
        this subsection shall be included in the supporting information 
        of the annual budget of the United States Government required 
        to be submitted to Congress under section 1105 of title 31, 
        United States Code.
          ``(3) Appropriate congressional committees defined.--In this 
        subsection, the term `appropriate congressional committees' 
        means the Committee on Foreign Affairs of the House of 
        Representatives and the Committee on Foreign Relations of the 
        Senate.''.

SEC. 128. REPORT ON SATELLITE EXPORT CONTROLS.

  (a) Report.--The President shall report to the appropriate committees 
of the Congress, not later than 180 days after the date of the 
enactment of this Act regarding--
          (1) the extent to which current United States export controls 
        on satellites and related items under the Arms Export Control 
        Act are successfully preventing the transfer of militarily-
        sensitive technologies to countries of concern, especially the 
        People's Republic of China;
          (2) the extent to which comparable satellites and related 
        items are available from foreign sources without comparable 
        export controls; and
          (3) whether the current export controls on satellites and 
        related items should be altered and in what manner, including 
        whether other incentives or disincentives should also be 
        employed to discourage exports of satellites and related items 
        to the People's Republic of China by any country.
  (b) Definitions.--In this section, the terms ``satellite'' and 
``related items'' mean satellites and all specifically designed or 
modified systems or subsystems, components, parts, accessories, 
attachments, and associated equipment for satellites as covered under 
category XV of the International Traffic in Arms Regulations (as in 
effect on the date of the enactment of this Act).

SEC. 129. DEFINITION.

  In this subtitle, the term ``appropriate congressional committees'' 
means the Committee on Foreign Affairs of the House of Representatives 
and the Committee on Foreign Relations of the Senate.

      TITLE II--SECURITY ASSISTANCE AND RELATED SUPPORT FOR ISRAEL

SEC. 201. ASSESSMENT OF ISRAEL'S QUALITATIVE MILITARY EDGE OVER 
                    MILITARY THREATS.

  (a) Assessment Required.--The President shall carry out an empirical 
and qualitative assessment on an ongoing basis of the extent to which 
Israel possesses a qualitative military edge over military threats to 
Israel. The assessment required under this subsection shall be 
sufficiently robust so as to facilitate comparability of data over 
concurrent years.
  (b) Use of Assessment.--The President shall ensure that the 
assessment required under subsection (a) is used to inform the review 
by the United States of applications to sell defense articles and 
defense services under the Arms Export Control Act (22 U.S.C. 2751 et 
seq.) to countries in the Middle East.
  (c) Reports.--
          (1) Initial report.--Not later than 180 days after the date 
        of the enactment of this Act, the President shall transmit to 
        the appropriate congressional committees a report on the 
        initial assessment required under subsection (a).
          (2) Quadrennial report.--Not later than four years after the 
        date on which the President transmits the initial report under 
        paragraph (1), and every four years thereafter, the President 
        shall transmit to the appropriate congressional committees a 
        report on the most recent assessment required under subsection 
        (a).
  (d) Certification.--Section 36 of the Arms Export Control Act (22 
U.S.C. 2776) is amended by adding at the end the following:
  ``(h) Certification Requirement Relating Israel's Qualitative 
Military Edge.--
          ``(1) In general.--Any certification relating to a proposed 
        sale or export of defense articles or defense services under 
        this section to any country in the Middle East other than 
        Israel shall include a determination that the sale or export of 
        the defense articles or defense services will not adversely 
        affect Israel's qualitative military edge over military threats 
        to Israel.
          ``(2) Definition.--In this subsection, the term `qualitative 
        military edge' has the meaning given the term in section 205 of 
        the Security Assistance and Arms Export Control Reform Act of 
        2008.''.

SEC. 202. REPORT ON UNITED STATES' COMMITMENTS TO THE SECURITY OF 
                    ISRAEL.

  (a) Initial Report.--Not later than 30 days after the date of the 
enactment of this Act, the President shall transmit to the appropriate 
congressional committees a report that contains--
          (1) a complete, unedited, and unredacted copy of each 
        assurance made by United States Government officials to 
        officials of the Government of Israel regarding Israel's 
        security and maintenance of Israel's qualitative military edge, 
        as well as any other assurance regarding Israel's security and 
        maintenance of Israel's qualitative military edge provided in 
        conjunction with exports under the Arms Export Control Act (22 
        U.S.C. 2751 et seq.), for the period beginning on January 1, 
        1975, and ending on the date of the enactment of this Act; and
          (2) an analysis of the extent to which, and by what means, 
        each such assurance has been and is continuing to be fulfilled.
  (b) Subsequent Reports.--
          (1) New assurances and revisions.--The President shall 
        transmit to the appropriate congressional committees a report 
        that contains the information required under subsection (a) 
        with respect to--
                  (A) each assurance described in subsection (a) made 
                on or after the date of the enactment of this Act, or
                  (B) revisions to any assurance described in 
                subsection (a) or subparagraph (A) of this paragraph,
        within 15 days of the new assurance or revision being conveyed.
          (2) 5-year reports.--Not later than 5 years after the date of 
        the enactment of this Act, and every 5 years thereafter, the 
        President shall transmit to the appropriate congressional 
        committees a report that contains the information required 
        under subsection (a) with respect to each assurance described 
        in subsection (a) or paragraph (1)(A) of this subsection and 
        revisions to any assurance described in subsection (a) or 
        paragraph (1)(A) of this subsection during the preceding 5-year 
        period.
  (c) Form.--Each report required by this section shall be transmitted 
in unclassified form, but may contain a classified annex, if necessary.

SEC. 203. WAR RESERVES STOCKPILE.

  (a) Department of Defense Appropriations Act, 2005.--Section 12001(d) 
of the Department of Defense Appropriations Act, 2005 (Public Law 108-
287; 118 Stat. 1011), is amended by striking ``4'' and inserting ``6''.
  (b) Foreign Assistance Act of 1961.--Section 514(b)(2)(A) of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321h(b)(2)(A)) is amended by 
striking ``fiscal years 2007 and 2008'' and inserting ``fiscal years 
2009 and 2010''.
  (c) Effective Date.--The amendment made by subsection (a) takes 
effect on August 5, 2008.

SEC. 204. IMPLEMENTATION OF MEMORANDUM OF UNDERSTANDING WITH ISRAEL.

  (a) In General.--Of the amount made available for fiscal year 2009 
for assistance under the program authorized by section 23 of the Arms 
Export Control Act (22 U.S.C. 2763) (commonly referred to as the 
``Foreign Military Financing Program''), the amount specified in 
subsection (b) is authorized to be made available on a grant basis for 
Israel.
  (b) Computation of Amount.--The amount referred to in subsection (a) 
is the amount equal to--
          (1) the amount specified under the heading ``Foreign Military 
        Financing Program'' for Israel for fiscal year 2008; plus
          (2) $150,000,000.

SEC. 205. DEFINITIONS.

  In this subtitle--
          (1) the term ``appropriate congressional committees'' means 
        the Committee on Foreign Affairs of the House of 
        Representatives and the Committee on Foreign Relations of the 
        Senate; and
          (2) the term ``qualitative military edge'' means the ability 
        to counter and defeat any credible conventional military threat 
        from any individual state or possible coalition of states or 
        from non-state actors, while sustaining minimal damages and 
        casualties, through the use of superior military means, 
        possessed in sufficient quantity, including weapons, command, 
        control, communication, intelligence, surveillance, and 
        reconnaissance capabilities that in their technical 
        characteristics are superior in capability to those of such 
        other individual or possible coalition of states or non-state 
        actors.

 TITLE III--WAIVER OF CERTAIN SANCTIONS TO FACILITATE DENUCLEARIZATION 
                       ACTIVITIES IN NORTH KOREA

SEC. 301. WAIVER AUTHORITY AND EXCEPTIONS.

  (a) Waiver Authority.--Except as provided in subsection (b), the 
President may waive, in whole or in part, the application of any 
sanction contained in subparagraph (A), (B), (D), or (G) of section 
102(b)(2) of the Arms Export Control Act (22 U.S.C. 2799aa-1(b)(2)) 
with respect to North Korea in order to provide material, direct, and 
necessary assistance for disablement, dismantlement, verification, and 
physical removal activities in the implementation of the commitment of 
North Korea, undertaken in the Joint Statement of September 19, 2005, 
``to abandoning all nuclear weapons and existing nuclear programs'' as 
part of the verifiable denuclearization of the Korean Peninsula.
  (b) Exceptions.--The waiver authority under subsection (a) may not be 
exercised with respect to the following:
          (1) Any export of lethal defense articles that would be 
        prevented by the application of section 102(b)(2)(B) of the 
        Arms Export Control Act.
          (2) Any sanction relating to credit or credit guarantees 
        contained in section 102(b)(2)(D) of the Arms Export Control 
        Act.

SEC. 302. CERTIFICATION REGARDING WAIVER OF CERTAIN SANCTIONS.

  Assistance described in subparagraph (B) or (G) of section 102(b)(2) 
of the Arms Export Control Act (22 U.S.C. 2799aa-1(b)(2)) may be 
provided with respect to North Korea by reason of the exercise of the 
waiver authority under section 301 only if the President first 
determines and certifies to the appropriate congressional committees 
that--
          (1) all necessary steps will be taken to ensure that the 
        assistance will not be used to improve the military 
        capabilities of the armed forces of North Korea; and
          (2) the exercise of the waiver authority is in the national 
        security interests of the United States.

SEC. 303. CONGRESSIONAL NOTIFICATION AND REPORT.

  (a) Notification.--The President shall notify the appropriate 
congressional committees in writing not later than 15 days before 
exercising the waiver authority under section 301.
  (b) Report.--Not later than 60 days after the date of the enactment 
of this Act, and annually thereafter for such time during which the 
exercise of the waiver authority under section 301 remains in effect, 
the President shall transmit to the appropriate congressional 
committees a report that--
          (1) describes in detail the progress that is being made in 
        the implementation of the commitment of North Korea described 
        in section 301;
          (2) describes in detail any failures, shortcomings, or 
        obstruction by North Korea with respect to the implementation 
        of the commitment of North Korea described in section 301;
          (3) describes in detail the progress or lack thereof in the 
        preceding 12-month period of all other programs promoting the 
        elimination of North Korea's capability to develop, deploy, 
        transfer, or maintain weapons of mass destruction or their 
        delivery systems; and
          (4) beginning with the second report required by this 
        subsection, a justification for the continuation of the waiver 
        exercised under section 301 and, if applicable, section 302, 
        for the fiscal year in which the report is submitted.

SEC. 304. TERMINATION OF WAIVER AUTHORITY.

  Any waiver in effect by reason of the exercise of the waiver 
authority under section 301 shall terminate if the President determines 
that North Korea--
          (1)(A) on or after September 19, 2005, transferred to a non-
        nuclear-weapon state, or received, a nuclear explosive device; 
        or
          (B) on or after October 10, 2006, detonated a nuclear 
        explosive device; or
          (2) on or after September 19, 2005--
                  (A) transferred to a non-nuclear-weapon state any 
                design information or component which is determined by 
                the President to be important to, and known by North 
                Korea to be intended by the recipient state for use in, 
                the development or manufacture of any nuclear explosive 
                device, or
                  (B) sought and received any design information or 
                component which is determined by the President to be 
                important to, and intended by North Korea for use in, 
                the development or manufacture of any nuclear explosive 
                device,
        unless the President determines and certifies to the 
        appropriate congressional committees that such waiver is vital 
        to the national security interests of the United States.

SEC. 305. EXPIRATION OF WAIVER AUTHORITY.

  Any waiver in effect by reason of the exercise of the waiver 
authority under section 301 shall terminate on the date that is 4 years 
after the date of the enactment of this Act. The waiver authority under 
section 301 may not be exercised beginning on the date that is 3 years 
after the date of the enactment of this Act.

SEC. 306. CONTINUATION OF RESTRICTIONS AGAINST THE GOVERNMENT OF NORTH 
                    KOREA.

  (a) In General.--Except as provided in section 301(a), restrictions 
against the Government of North Korea that were imposed by reason of a 
determination of the Secretary of State that North Korea is a state 
sponsor of terrorism shall remain in effect, and shall not be lifted 
pursuant to the provisions of law under which the determination was 
made, unless the President certifies to the appropriate congressional 
committees that--
          (1) the Government of North Korea is no longer engaged in the 
        transfer of technology related to the acquisition or 
        development of nuclear weapons, particularly to the Governments 
        of Iran, Syria, or any other country that is a state sponsor of 
        terrorism;
          (2) in accordance with the Six-Party Talks Agreement of 
        February 13, 2007, the Government of North Korea has ``provided 
        a complete and correct declaration of all its nuclear 
        programs,'' and there are measures to effectively verify this 
        declaration by the United States which, ``[a]t the request of 
        the other Parties,'' is leading ``disablement activities'' and 
        ``provid[ing] the funding for those activities''; and
          (3) the Government of North Korea has agreed to the 
        participation of the International Atomic Energy Agency in the 
        monitoring and verification of the shutdown and sealing of the 
        Yongbyon nuclear facility.
  (b) State Sponsor of Terrorism Defined.--In this section, the term 
``state sponsor of terrorism'' means a country the government of which 
the Secretary of State has determined, for purposes of section 6(j) of 
the Export Administration Act of 1979 (as continued in effect pursuant 
to the International Emergency Economic Powers Act), section 40 of the 
Arms Export Control Act, section 620A of the Foreign Assistance Act of 
1961, or any other provision of law, is a government that has 
repeatedly provided support for acts of international terrorism.

SEC. 307. REPORT ON VERIFICATION MEASURES RELATING TO NORTH KOREA'S 
                    NUCLEAR PROGRAMS.

  (a) In General.--Not later than 15 days after the date of enactment 
of this Act, the Secretary of State shall submit to the appropriate 
congressional committees a report on verification measures relating to 
North Korea's nuclear programs under the Six-Party Talks Agreement of 
February 13, 2007, with specific focus on how such verification 
measures are defined under the Six-Party Talks Agreement and understood 
by the United States Government.
  (b) Matters to Be Included.--The report required under subsection (a) 
shall include, among other elements, a detailed description of--
          (1) the methods to be utilized to confirm that North Korea 
        has ``provided a complete and correct declaration of all of its 
        nuclear programs'';
          (2) the specific actions to be taken in North Korea and 
        elsewhere to ensure a high and ongoing level of confidence that 
        North Korea has fully met the terms of the Six-Party Talks 
        Agreement relating to its nuclear programs;
          (3) any formal or informal agreement with North Korea 
        regarding verification measures relating to North Korea's 
        nuclear programs under the Six-Party Talks Agreement; and
          (4) any disagreement expressed by North Korea regarding 
        verification measures relating to North Korea's nuclear 
        programs under the Six-Party Talks Agreement.
  (c) Form.--The report required under subsection (a) shall be 
submitted in unclassified form, but may include a classified annex.

SEC. 308. DEFINITIONS.

  In this title--
          (1) the term ``appropriate congressional committees'' means--
                  (A) the Committee on Foreign Affairs and the 
                Committee on Appropriations of the House of 
                Representatives; and
                  (B) the Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate;
          (2) the terms ``non-nuclear-weapon state'', ``design 
        information'', and ``component'' have the meanings given such 
        terms in section 102 of the Arms Export Control Act (22 U.S.C. 
        2799aa-1); and
          (3) the term ``Six-Party Talks Agreement of February 13, 
        2007'' or ``Six-Party Talks Agreement'' means the action plan 
        released on February 13, 2007, of the Third Session of the 
        Fifth Round of the Six-Party Talks held in Beijing among the 
        People's Republic of China, the Democratic People's Republic of 
        Korea (North Korea), Japan, the Republic of Korea (South 
        Korea), the Russian Federation, and the United States relating 
        to the denuclearization of the Korean Peninsula, normalization 
        of relations between the North Korea and the United States, 
        normalization of relations between North Korea and Japan, 
        economy and energy cooperation, and matters relating to the 
        Northeast Asia Peace and Security Mechanism.

                   TITLE IV--MISCELLANEOUS PROVISIONS

SEC. 401. AUTHORITY TO BUILD THE CAPACITY OF FOREIGN MILITARY FORCES.

  (a) Authority.--The Secretary of State is authorized to conduct a 
program to respond to contingencies in foreign countries or regions by 
providing training, procurement, and capacity-building of a foreign 
country's national military forces and dedicated counter-terrorism 
forces in order for that country to--
          (1) conduct counterterrorist operations; or
          (2) participate in or support military and stability 
        operations in which the United States is a participant.
  (b) Types of Capacity-Building.--The program authorized under 
subsection (a) may include the provision of equipment, supplies, and 
training.
  (c) Limitations.--
          (1) Annual funding limitation.--The Secretary of State may 
        use up to $25,000,000 of funds available under the Foreign 
        Military Financing program for each of the fiscal years 2009 
        and 2010 to conduct the program authorized under subsection 
        (a).
          (2) Assistance otherwise prohibited by law.--The Secretary of 
        State may not use the authority in subsection (a) to provide 
        any type of assistance described in subsection (b) that is 
        otherwise prohibited by any provision of law.
          (3) Limitation on eligible countries.--The Secretary of State 
        may not use the authority in subsection (a) to provide 
        assistance described in subsection (b) to any foreign country 
        that is otherwise prohibited from receiving such type of 
        assistance under any other provision of law.
  (d) Formulation and Execution of Activities.--The Secretary of State 
is authorized to coordinate with the head of any other appropriate 
department or agency in the formulation and execution of the program 
authorized under subsection (a).
  (e) Congressional Notification.--
          (1) Activities in a country.--Not less than 15 days before 
        obligating funds for activities in any country under the 
        program authorized under subsection (a), the Secretary of State 
        shall submit to the congressional committees specified in 
        paragraph (3) a notice of the following:
                  (A) The country whose capacity to engage in 
                activities in subsection (a) will be assisted.
                  (B) The budget, implementation timeline with 
                milestones, and completion date for completing the 
                activities.
          (2) Specified congressional committees.--The congressional 
        committees specified in this paragraph are the following:
                  (A) The Committee on Foreign Affairs and the 
                Committee on Appropriations of the House of 
                Representatives.
                  (B) The Committee on Foreign Relations and the 
                Committee on Appropriations of the Senate.

SEC. 402. MAINTENANCE OF EUROPEAN UNION ARMS EMBARGO AGAINST CHINA.

  (a) Findings.--Congress makes the following findings:
          (1) Congress has previously expressed its strong concerns in 
        House Resolution 57 of February 2, 2005, and Senate Resolution 
        91 of March 17, 2005, with the transfer of armaments and 
        related technology to the People's Republic of China by member 
        states of the European Union, which increased eightfold from 
        2001 to 2003, and with plans to terminate in the near future 
        the arms embargo they imposed in 1989 following the Tiananmen 
        Square massacre.
          (2) The deferral of a decision by the European Council to 
        terminate its arms embargo following adoption of the 
        resolutions specified in paragraph (1), the visit by the 
        President of the United States to Europe, and growing concern 
        among countries in the regions and the general public on both 
        sides of the Atlantic, was welcomed by the Congress.
          (3) The decision by the European Parliament on April 14, 
        2005, by a vote of 421 to 85, to oppose the lifting of the 
        European Union's arms embargo on the People's Republic of 
        China, and resolutions issued by a number of elected 
        parliamentary bodies in Europe also opposing the lifting of the 
        arms embargo, was also welcomed by the Congress as a 
        reassurance that its European friends and allies understood the 
        gravity of prematurely lifting the embargo.
          (4) The onset of a strategic dialogue between the European 
        Commission and the Government of the United States on the 
        security situation in East Asia holds out the hope that a 
        greater understanding will emerge of the consequences of 
        European assistance to the military buildup of the People's 
        Republic of China for peace and stability in that region, to 
        the security interests of the United States and its friends and 
        allies in the region, and, in particular, to the safety of 
        United States Armed Forces whose presence in the region has 
        been a decisive factor in ensuring peace and prosperity since 
        the end of World War II.
          (5) A more intensive dialogue with Europe on this matter will 
        clarify for United States' friends and allies in Europe how 
        their ``non-lethal'' arms transfers improve the force 
        projection of the People's Republic of China, are far from 
        benign, and enhance the prospects for the threat or use of 
        force in resolving the status of Taiwan.
          (6) This dialogue may result in an important new consensus 
        between the United States and its European partners on the need 
        for coordinated policies that encourage the development of 
        democracy in the People's Republic of China and which 
        discourage, not assist, China's unjustified military buildup 
        and pursuit of weapons that threaten its neighbors.
          (7) However, the statement by the President of France in 
        Beijing in November 2007 that the European Union arms embargo 
        should be lifted is troubling, especially since France will 
        assume the six-month presidency of the European Union in July 
        2008.
          (8) There continues to be wide-spread concerns regarding the 
        lack of any significant progress by the Government of the 
        People's Republic of China in respecting the civil and 
        political rights of the Chinese people.
  (b) Statement of Policy.--It shall be the policy of the United States 
Government to oppose any diminution or termination of the arms embargo 
that was established by the Declaration of the European Council of June 
26, 1989, and to take whatever diplomatic and other measures that are 
appropriate to convince the Member States of the European Union, 
individually and collectively, to continue to observe this embargo in 
principle and in practice. Appropriate measures should include 
prohibitions on entering into defense procurement contracts or defense-
related research and development arrangements with European Union 
Member States that do not observe such an embargo in practice.
  (c) Report.--Not later than 180 days after the date of the enactment 
of this Act, and every six months thereafter until December 31, 2010, 
the President shall transmit to the Committee on Foreign Affairs and 
Committee on Armed Services of the House of Representatives and the 
Committee on Foreign Relations and the Committee on Armed Services of 
the Senate a report on all efforts and activities of the United States 
Government to ensure the success of the policy declared in subsection 
(b).

SEC. 403. REIMBURSEMENT OF SALARIES OF MEMBERS OF THE RESERVE 
                    COMPONENTS IN SUPPORT OF SECURITY COOPERATION 
                    MISSIONS.

   Section 632(d) of the Foreign Assistance Act of 1961 (22 U.S.C. 
2392(d)) is amended--
          (1) by striking ``(d) Except as otherwise provided'' and 
        inserting ``(d)(1) Except as otherwise provided''; and
          (2) by adding at the end the following:
  ``(2) Notwithstanding provisions concerning the exclusion of the 
costs of salaries of members of the Armed Forces in section 503(a) of 
this Act and paragraph (1) of this subsection, the full cost of 
salaries of members of the reserve components of the Armed Forces 
(specified in section 10101 of title 10, United States Code) may, 
during each of fiscal years 2009 and 2010, be included in calculating 
pricing or value for reimbursement charged under section 503(a) of this 
Act and paragraph (1) of this subsection, respectively.''.

SEC. 404. FOREIGN MILITARY SALES STOCKPILE FUND.

  (a) In General.--Subsection (a) of section 51 of the Arms Export 
Control Act (22 U.S.C. 2795) is amended--
          (1) in paragraph (1), by striking ``Special Defense 
        Acquisition Fund'' and inserting ``Foreign Military Sales 
        Stockpile Fund''; and
          (2) in paragraph (4), by inserting ``building the capacity of 
        recipient countries and'' before ``narcotics control 
        purposes''.
  (b) Contents of Fund.--Subsection (b) of such section is amended--
          (1) in paragraph (2), by striking ``and'' at the end;
          (2) in paragraph (3), by inserting ``and'' at the end; and
          (3) by inserting after paragraph (3) the following:
          ``(4) collections from leases made pursuant to section 61 of 
        this Act,''.
  (c) Availability.--Subsection (c)(2) of such section is amended to 
read as follows:
  ``(2) Amounts credited to the Fund under subsection (b) shall remain 
available until expended.''.
  (d) Conforming Amendments.--(1) The heading of such section is 
amended by striking ``Special Defense Acquisition Fund'' and inserting 
``Foreign Military Sales Stockpile Fund''.
  (2) The heading of chapter 5 of the Arms Export Control Act is 
amended by striking ``SPECIAL DEFENSE ACQUISITION FUND'' and inserting 
``FOREIGN MILITARY SALES STOCKPILE FUND''.

SEC. 405. CONGRESSIONAL NOTIFICATION REQUIREMENTS UNDER THE ARMS EXPORT 
                    CONTROL ACT.

  The Arms Export Control Act (22 U.S.C. 2751 et seq.) is amended--
          (1) by striking ``Speaker of the House of Representatives and 
        the Committee on Foreign Relations of the Senate'' each place 
        it appears and inserting ``Committee on Foreign Affairs of the 
        House of Representatives and the Committee on Foreign Relations 
        of the Senate'';
          (2) by striking ``Speaker of the House of Representatives and 
        the Chairman of the Committee on Foreign Relations of the 
        Senate'' and ``Speaker of the House of Representatives and the 
        chairman of the Committee on Foreign Relations of the Senate'' 
        each place they appear and inserting ``Chairman of the 
        Committee on Foreign Affairs of the House of Representatives 
        and the Chairman of the Committee on Foreign Relations of the 
        Senate'';
          (3) by striking ``Speaker of the House of Representatives and 
        to the chairman of the Committee on Foreign Relations'' each 
        place it appears and inserting ``Chairman of the Committee on 
        Foreign Affairs of the House of Representatives and to the 
        Chairman of the Committee on Foreign Relations'';
          (4) by striking ``Speaker of the House of Representatives and 
        the Committees on Armed Services and Foreign Relations of the 
        Senate'' each place it appears and inserting ``Committees on 
        Foreign Affairs and Armed Services of the House of 
        Representatives and the Committees on Foreign Relations and 
        Armed Services of the Senate'';
          (5) by striking ``Speaker of the House of Representatives, 
        the chairman of the Committee on Foreign Relations of the 
        Senate, and the chairman of the Committee on Armed Services of 
        the Senate'' each place it appears and inserting ``Chairmen of 
        the Committees on Foreign Affairs and Armed Services of the 
        House of Representatives and the Chairmen of the Committees on 
        Foreign Relations and Armed Services of the Senate''; and
          (6) by striking ``Speaker of the House of Representatives, 
        and to the chairman of the Committee on Foreign Relations'' 
        each place it appears and inserting ``Chairman of the Committee 
        on Foreign Affairs of the House of Representatives and to the 
        Chairman of the Committee on Foreign Relations'' each place it 
        appears.

SEC. 406. SENSE OF CONGRESS.

  It is the sense of Congress that the United States should not provide 
security assistance or arms exports to nations contributing to massive, 
widespread, and systematic violations of human rights or acts of 
genocide, particularly with respect to Darfur, Sudan.

              TITLE V--AUTHORITY TO TRANSFER NAVAL VESSELS

SEC. 501. AUTHORITY TO TRANSFER NAVAL VESSELS TO CERTAIN FOREIGN 
                    RECIPIENTS.

  (a) Transfers by Grant.--The President is authorized to transfer 
vessels to foreign countries on a grant basis under section 516 of the 
Foreign Assistance Act of 1961 (22 U.S.C. 2321j), as follows:
          (1) Pakistan.--To the Government of Pakistan, the OLIVER 
        HAZARD PERRY class guided missile frigate MCINERNEY (FFG-8).
          (2) Greece.--To the Government of Greece, the OSPREY class 
        minehunter coastal ships OSPREY (MHC-51) and ROBIN (MHC-54).
          (3) Chile.--To the Government of Chile, the KAISER class 
        oiler ANDREW J. HIGGINS (AO-190).
          (4) Peru.--To the Government of Peru, the NEWPORT class 
        amphibious tank landing ships FRESNO (LST-1182) and RACINE 
        (LST-1191).
  (b) Grants Not Counted in Annual Total of Transferred Excess Defense 
Articles.--The value of a vessel transferred to a recipient on a grant 
basis pursuant to authority provided by subsection (a) shall not be 
counted against the aggregate value of excess defense articles 
transferred in any fiscal year under section 516(g) of the Foreign 
Assistance Act of 1961.
  (c) Costs of Transfers.--Any expense incurred by the United States in 
connection with a transfer authorized by this section shall be charged 
to the recipient.
  (d) Repair and Refurbishment in United States Shipyards.--To the 
maximum extent practicable, the President shall require, as a condition 
of the transfer of a vessel under this section, that the recipient to 
which the vessel is transferred have such repair or refurbishment of 
the vessel as is needed before the vessel joins the naval forces of the 
recipient performed at a shipyard located in the United States, 
including a United States Navy shipyard.
  (e) Expiration of Authority.--The authority to transfer a vessel 
under this section shall expire at the end of the 2-year period 
beginning on the date of the enactment of this Act.

                                Summary

    H.R. 5916, the Security Assistance and Arms Export Control 
Reform Act of 2008 makes various reforms to streamline and 
increase Congressional oversight over the U.S. arms export 
licensing process and adds South Korea and Israel to countries 
receiving expedited Congressional review for arms exports. It 
also makes a number of reforms to U.S. security assistance 
programs, including requiring objective analysis of Israel's 
military capability vis-a-vis conventional and unconventional 
threats, increasing oversight over the U.S.-Israeli security 
relationship and authorizing the first year of the U.S.-Israel 
Memorandum of Understanding regarding security assistance. The 
bill grants a limited waiver to the Arms Export Control Act 
(AECA) to facilitate U.S. denuclearization activities in North 
Korea; requires the President to certify that North Korea has 
met certain conditions for the President to exercise this 
waiver, and requires a report on verification of North Korea's 
nuclear declaration.

               Background and Purpose for the Legislation

    This bill provides for a number of important measures to 
strengthen and reform the U.S. security assistance and defense 
trade licensing and review process, a principal area of 
jurisdiction for the Committee on Foreign Affairs.
    The Department of State, through the Directorate of Defense 
Trade Controls (DDTC), has primary responsibility to ensure 
that arms exports fully comport with U.S. foreign policy and 
security objectives. That process has been in disarray for at 
least a decade, with the system in recent years verging on 
becoming dysfunctional. The Department of State had so badly 
managed the process that in November 2006 there was an 
extraordinary backlog of some 10,000 unprocessed and unreviewed 
applications to export defense items or services. Multiple 
reports by the Government Accountability Office (GAO), and the 
long-standing experience of this Committee, confirm that DDTC 
was significantly mismanaged and overwhelmed by the demands 
placed upon it. At the same time, DDTC was also not accorded 
the necessary resources by the Department of State to 
administer the licensing process in a timely manner while 
appropriately safeguarding U.S. national security. The concern 
with management shortcomings extend beyond the challenge of 
expeditious processing of license applications; process 
breakdowns can also threaten U.S. security by diverting 
attention from careful consideration of the national security 
risk in approving a license to the urgent need to clear massive 
backlogs of applications. Severe stress in the licensing system 
can also fundamentally undermine support within the 
Administration, Congress and Industry for a robust export 
control system.
    This legislation builds on recent management reforms 
initiated by new leadership at the DDTC to begin the process of 
reforming U.S. defense trade policies and practices, in 
particular by ensuring a more effective arms export licensing 
process. In particular, H.R. 5916 incorporates the bipartisan 
work of the Chairman of the Subcommittee on Terrorism, 
Nonproliferation, and Trade, and the Ranking Member of the 
Subcommittee on Asia, the Pacific, and the Global Environment, 
by incorporating the ``Defense Trade Controls Performance 
Improvement Act of 2008''.
    This bill also strengthens the vital security relationship 
with our close friends and allies, South Korea and Israel. It 
includes provisions of H.R. 5443, introduced by the Ranking 
Member of the Subcommittee on Terrorism, Nonproliferation, and 
Trade, adding South Korea to the list of countries in the AECA 
that receive expedited Congressional review of 15 instead of 30 
days, along with NATO, Australia, New Zealand and Japan. This 
is a significant symbolic recognition of the critical 
importance of South Korea to U.S. national security and to 
peace and stability throughout East Asia.
    H.R. 5916 also grants Israel the same recognition, for the 
same reasons. This bill authorizes the initial phase-in of the 
Foreign Military Financing (FMF) formula that was recently 
agreed to by the United States and Israel under the Memorandum 
of Understanding signed on August 16, 2007.
    In addition, H.R. 5916 increases Congressional oversight 
over the security assurances and guarantees given Israel by the 
United States since 1975, as well as to the revisions that are 
sometimes made to those assurances. Finally, it requires the 
Administration to empirically assess on an ongoing basis the 
state of Israel's ``Qualitative Military Edge'' (QME) against 
conventional or non-conventional security threats, to report 
that assessment to Congress every 4 years, and to use that 
assessment when reviewing arms exports to other countries in 
the Middle East.
    This Act also grants the Administration's request for a 
waiver from current restrictions limiting the expenditure of 
U.S. funds in North Korea that is needed to enhance its ability 
to carry out activities to disable and dismantle North Korea's 
nuclear programs, including facilities, as provided for in 
agreements reached in the Six-Party Talks. With this waiver, 
the Administration will be able to use Department of Energy 
funds for these activities instead of having to rely on the 
limited resources of the State Department's Nonproliferation 
and Disarmament Fund, thereby allowing the latter to focus on 
other high-priority demands.
    This waiver narrows the Administration's proposal for the 
removal of virtually all existing statutory restrictions on the 
use of funds and resources regarding North Korea. Instead it 
provides sufficient authority to the Administration to carry 
out its current activities in North Korea more effectively, as 
well as to prepare for and implement more extensive programs 
that are contemplated under the phased approach of the Six-
Party Talks. Sufficient authority is also provided to implement 
effective verification measures to ensure that North Korea is 
adhering to its denuclearization commitments.
    The legislation also specifies that the statutory 
restrictions regarding North Korea resulting from its 
designation by the State Department as a state sponsor of 
terrorism may not be lifted until the President certifies that 
North Korea is not proliferating nuclear-related technology or 
materials to other countries, especially to other state 
sponsors of terrorism; has provided a complete and correct 
declaration of all of its nuclear programs and that there are 
means to effectively verify this declaration; and has agreed to 
participation by the International Atomic Energy Agency in the 
disabling of the Yongbyon nuclear facility.
    The legislation requires the Secretary of State to submit a 
report on verification measures that specifies the methods to 
be used, the actions to be taken, any formal or informal 
agreement with North Korea on this subject, and any significant 
disagreement expressed by North Korea regarding the 
verification measures. The report is unclassified but may 
include a classified annex.
    This Act also grants to the Secretary of State the 
authority to train and equip foreign military forces to better 
cooperate with our forces and engage in counter-terrorism 
operations, using unobligated FMF funds.
    Finally, this Act declares it to be U.S. policy to oppose 
the lifting of the E.U. arms embargo on China and to take 
whatever diplomatic and economic steps to convince E.U. Member 
States from taking that step. It requires the President to 
report to the Congress on all efforts the U.S. is taking to 
accomplish this goal.

                                Hearings

    The Subcommittee on Terrorism, Nonproliferation, and Trade 
held a hearing on defense and dual-use export controls on July 
26, 2007, entitled ``Exports Controls: Are We Protecting 
Security and Facilitating Exports?''

                        Committee Consideration

    The Committee considered H.R. 5916 on April 30, 2008, and 
reported the bill favorably to the House, as amended, by voice 
vote, a quorum being present.

                         Votes of the Committee

    There were no recorded votes during consideration of H.R. 
5916.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    The legislation authorizes $2.55 billion in Foreign 
Military Financing (FMF) for Israel for FY 2009.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 8, 2008.
Hon. Howard L. Berman, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5916, the Security 
Assistance and Arms Export Control Reform Act of 2008.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte, who can be reached at 226-2840.
            Sincerely,
                                           Peter R. Orszag.
Enclosure

cc:
        Honorable Ileana Ros-Lehtinen
        Ranking Member
H.R. 5916--Security Assistance and Arms Export Control Reform Act of 
        2008.

                                SUMMARY

    H.R. 5916 would authorize security assistance for Israel 
and other countries, and assistance to North Korea in 
dismantling its nuclear facilities. In addition, the bill would 
require the Department of State to improve the review and 
processing of export licenses for defense articles, and would 
authorize the appropriation of such sums as may be necessary in 
2009 and future years for that purpose. CBO estimates that 
enacting H.R. 5916 would increase discretionary spending by 
$3.2 billion over the 2009-2013 period, assuming appropriation 
of the estimated amounts. Implementing the bill would increase 
direct spending by $500 million over the 2009-2018 period, 
primarily by allowing a Department of Defense (DoD) revolving 
fund to spend balances without appropriations action. 
Implementing the bill would not affect revenues.
    H.R. 5916 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 5916 is shown in 
Table 1. The costs of this legislation fall within budget 
functions 050 (national defense) and 150 (international 
affairs).

   TABLE 1. BUDGETARY IMPACT OF H.R. 5916, THE SECURITY ASSISTANCE AND ARMS EXPORT CONTROL REFORM ACT OF 2008
----------------------------------------------------------------------------------------------------------------
                                                                        By Fiscal Year, in Millions of Dollars
                                                                    --------------------------------------------
                                                                       2009     2010     2011     2012     2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Foreign Military Financing Program                                     2,575       25        0        0        0
  Estimated Authorization Level
  Estimated Outlays                                                    2,559       20       14        4        1

Assistance to Dismantle Nuclear Facilities in North Korea                300      200       50       25        0
  Estimated Authorization Level
  Estimated Outlays                                                      165      200      133       59       15

Export Licenses for Defense Articles                                       8        7        7        7        8
  Estimated Authorization Level
  Estimated Outlays                                                        7        7        7        7        7

  Total Changes                                                        2,883      232       57       32        8
  Estimated Authorization Level
  Estimated Outlays                                                    2,731      227      153       70       24

CHANGES IN DIRECT SPENDING

Estimated Budget Authority                                                55       55       55       55       55
Estimated Outlays                                                         54       55       55       55       55
----------------------------------------------------------------------------------------------------------------

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that H.R. 5916 will be 
enacted before the end of fiscal year 2008, that the estimated 
authorization amounts will be appropriated near the start of 
each fiscal year, and that outlays will follow historical 
spending patterns for similar programs.
Spending Subject to Appropriation
    H.R. 5916 would authorize the Department of State to 
provide security assistance to Israel and other foreign 
countries. Title III would authorize the President to lift 
certain sanctions against North Korea, thereby enabling the 
Department of Energy (DOE) to assist the government of North 
Korea in disabling and dismantling its nuclear facilities. 
Finally, title I would require the Department of State to 
improve the review and processing of export licenses for 
defense goods. In total, CBO estimates that implementing those 
provisions would cost $3.2 billion over the 2009-2013 period, 
assuming appropriation of the necessary amounts.
    Foreign Military Financing Program. Section 204 would 
authorize the State Department to provide security assistance 
in the form of a grant to Israel in 2009, and specifies that 
the amount provided should be an increase of $150 million over 
the level of assistance specified for the Foreign Military 
Financing Program for Israel in the 2008 appropriations act. 
CBO estimates that the grant would total $2.55 billion in 2009, 
assuming appropriation of the estimated amount. Section 401 
would authorize the appropriation of up to $25 million a year 
in 2009 and 2010 for security assistance to foreign countries. 
Those funds would be used for training, procurement, and 
building the capacity of their military forces. CBO estimates 
that implementing both sections would cost almost $2.6 billion 
over the 2009-2013 period, assuming appropriation of the 
estimated amounts.
    Assistance to Dismantle Nuclear Facilities in North Korea. 
Title III of H.R. 5916 would authorize the President to waive 
certain sanctions that were imposed against North Korea after 
it tested a nuclear device in 2006. Specifically, the bill 
would allow the United States to assist North Korea over the 
2009-2012 period to dismantle three nuclear facilities at 
Yongbyon: the reactor, the nearby plant that fabricates natural 
uranium into fuel for the reactor core, and the chemical 
reprocessing plant where plutonium is separated from the spent 
fuel rods.
    Under an agreement with the United States, South Korea, 
Japan, China, and Russia, North Korea has started to disable 
the Yongbyon facilities. All three facilities are scheduled to 
be disabled by the end of 2008, allowing the process of 
dismantling the facilities and removing the control rods from 
North Korea to begin in 2009. Based on information from the 
State Department and DOE, CBO estimates that the costs of 
dismantling the nuclear reactor and the nearby fabrication and 
reprocessing plants, as well as the costs for transporting and 
reprocessing the spent fuel outside of North Korea, would total 
about $570 million over the 2009-2013 period, assuming 
appropriation of the estimated amounts, and contingent on North 
Korea allowing the facilities to be dismantled.
    Export Licenses for Defense Articles. Title I would require 
the Department of State to institute specified performance 
goals at its Directorate of Defense Trade Controls to improve 
the review and processing of applications for export licenses 
(particularly for major allies such as Israel, South Korea, 
Japan, Australia, New Zealand, and members of the North 
Atlantic Treaty Organization) and would authorize such sums as 
may be necessary in 2009 and future years for staffing and 
resources to meet that objective.
    In 2007, the directorate processed approximately 85,000 
applications for export licenses and 400 requests on commodity 
jurisdiction (some items for export fall within the 
jurisdiction of the Department of Commerce), with a staff of 
about 47 people. The bill would require the directorate to have 
three staff members dedicated to requests on commodity 
jurisdiction and one licensing officer for every 1,250 license 
applications. Title I also would require expedited reviews for 
exports to major allies, increased review and enforcement of 
federal laws and regulations governing arms exports, and 
increased oversight and management of the licensing process.
    Based on information from the Department of State, CBO 
expects the department would need an additional 55 employees to 
meet the requirements of the bill: 35 licensing officers, five 
staff members to review commodity jurisdiction, four staff 
members to oversee and review processing goals, one person to 
review regulations and the U.S. Munitions List, and 10 staff 
members for compliance and enforcement of export controls. CBO 
estimates that hiring those personnel would cost an average of 
$110,000 per person and that the department would require 
additional appropriations of $6 million in 2009 and $31 million 
over the 2009-2013 period, after adjusting for inflation.
    In addition, section 103 would require the President to 
conduct a thorough review and assessment of the nation's arms 
export controls. Based on information from the Department of 
State, CBO estimates this provision would cost $1 million in 
2009, assuming appropriation of the estimated amounts.
    Finally, other sections of title I would require the 
Department of State to review and assess current programs, make 
periodic reports to the Congress, and strengthen diplomatic 
efforts to improve controls on the international arms trade; 
CBO estimates the department would require additional 
appropriations of $1 million a year to implement those 
provisions. In total, after adjusting for inflation, CBO 
estimates that implementing title I would cost $36 million over 
the 2009-2013 period, assuming appropriation of the estimated 
amounts.
    Reimbursement for Salaries of Reservists. Section 403 would 
allow the Department of State to reimburse DoD for the salaries 
of members of the reserves who participate in international 
peacekeeping missions or other programs of the Department of 
State. Under current law, those costs are borne by DoD. While 
CBO expects that this provision could increase the number of 
reservists who are called up to active duty, we estimate those 
numbers would be small, and this provision would have an 
insignificant effect on spending subject to appropriation.
Direct Spending
    CBO estimates that enacting H.R. 5916 would increase direct 
spending by $500 million over the 2009-2018 period (see table 
2), by allowing amounts in a DoD revolving fund to be available 
for spending without prior appropriation and by authorizing the 
Department of State to spend certain civil penalties.
    Foreign Military Sales Stockpile Fund. Section 404 would 
rename the Special Defense Acquisition Fund, allow the deposit 
of certain lease payments into the fund, and delete a 
requirement under current law that restricts spending of fund 
balances to only those amounts provided in advance in 
appropriations acts. Under current law, DoD may deposit into 
the fund the proceeds from selling military equipment not 
intended to be replaced and other defense articles from the 
fund's inventory. The Defense Security Cooperation Agency 
(DSCA) has indicated that the fund is moribund and has no 
balances left, but that it would use the authorities provided 
under the bill to replenish the fund with sales proceeds and 
lease payments, and use the fund to purchase defense articles 
for use by U.S. allies.
    Based on sales proceeds from recent years and information 
from DSCA, CBO estimates that deposits into the fund would 
begin in 2009 with sales proceeds and lease payments worth 
about $45 million a year, and that the agency would spend 
roughly the same amount each year over the 2009-2018 period.
    Civil Penalties and Fees. Section 107 would authorize the 
Department of State to spend up to $10 million in civil 
penalties collected each year over the 2008-2012 period for the 
expenses of its Directorate of Defense Trade Controls. Under 
current law, the department enforces certain laws and 
regulations governing exports of defense articles and has the 
authority to assess civil penalties of up to $500,000 for each 
noncriminal violation. Civil penalties are deposited into the 
Treasury as revenues. Collections from civil penalties assessed 
by the department totaled $23 million in 2007. CBO estimates 
that collections would become available in the year after they 
were collected and that implementing this provision would 
increase direct spending by $50 million over the 2009-2018 
period.
    The section also would allow registration fees collected by 
the directorate to be used for new expenses that are prohibited 
under current law. Recent data for collections and spending 
indicate that the directorate collects and spends about $8 
million in any given year; thus, CBO estimates that this 
provision would have no significant effect.

                            TABLE 2. ESTIMATED IMPACT OF H.R. 5916 ON DIRECT SPENDING
----------------------------------------------------------------------------------------------------------------
                                                     By Fiscal Year, in Millions of Dollars
                               ---------------------------------------------------------------------------------
                                                                                              Total      Total
                                2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  2009-2013  2009-2018
----------------------------------------------------------------------------------------------------------------
                                                         CHANGES IN DIRECT SPENDING
Foreign Military Sales Stockpile Fund
  Estimated Budget               45    45    45    45    45    45    45    45    45    45      225        450
  Authority
  Estimated Outlays              45    45    45    45    45    45    45    45    45    45      225        450

Civil Penalties and Fees         10    10    10    10    10     0     0     0     0     0       50         50
  Estimated Budget
  Authority
  Estimated Outlays               9    10    10    10    10     1     *     *     0     0       49         50

Total                            55    55    55    55    55    45    45    45    45    45      275        500
  Estimated Budget
  Authority
  Estimated Outlays              54    55    55    55    55    46    45    45    45    45      274        500
----------------------------------------------------------------------------------------------------------------
Note: *=less than $500,000.

    Transfer of Defense Articles in the U.S. War Reserve 
Stockpile for Allies (USWRSA). Section 203 would amend the 
President's authority to transfer to Israel obsolete or surplus 
defense articles in the USWRSA in Israel in return for 
concessions to be negotiated by the Secretary of Defense. The 
bill would raise the cap on the maximum amount that could be 
transferred from $100 million to $200 million in 2009 and 2010. 
Under current law, the authority to make transfers to Israel 
expires in August 2008; therefore this section would have no 
effect.
    Even if the transfer authority were extended, CBO estimates 
this provision would not affect direct spending. The 
concessions negotiated by DoD may include cash, services, 
waiver of charges otherwise payable by the United States, or 
other items of value. Although the authority provided by 
section 203 could be used to negotiate noncash concessions 
instead of selling the articles, DSCA has indicated that the 
existing authority has not been used for Israel in the past, 
and CBO expects it is unlikely to be used in the next few 
years.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 5916 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
state, local, or tribal governments.

                         ESTIMATE PREPARED BY:

Federal Costs:
  Assistance to Dismantle Nuclear Facilities in North Korea--
        Raymond Hall (226-2840)
  Other Federal Costs--Sunita D'Monte (226-2840)
Impact on State, Local, and Tribal Governments: Neil Hood (225-
        3220)
Impact on the Private Sector: MarDestinee Perez (226-2940)

                         ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    This Act seeks to significantly improve the performance of 
the U.S. defense trade exports licensing system through setting 
performance goals for licensing processes, increasing 
Congressional oversight of the export process and expediting 
Congressional license review periods, all in the interest of 
improving the U.S. defense industry's global competitiveness 
while safeguarding U.S. national security. This Act also 
supports the U.S.-South Korea and Israel relationship by 
expediting defense export licensing review for these countries, 
and also mandates the U.S. create an objective measure of 
Israel's military capabilities relative to those of its 
neighbors to better inform U.S. licensing decisions for future 
arms sales to other countries in the Middle East.

                   Constitutional Authority Statement

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

                        New Advisory Committees

    H.R. 5916 does not establish or authorize any new advisory 
committees.

                    Congressional Accountability Act

    H.R. 5916 in general does not apply to the legislative 
branch, except in Sec. 124, which increases the value threshold 
for the Congressional review period for proposed arms sales.

                         Earmark Identification

    H.R. 5916 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9(d), 9(e), or 9(f) of rule XXI.

               Section-by-Section Analysis and Discussion

Sec. 1. Short Title and Table of Contents.
    Subsection (a) provides that this Act may be cited as the 
``Security Assistance and Arms Export Control Reform Act of 
2008.''
    Subsection (b) provides for a table of contents.

           TITLE I: REFORM OF ARMS EXPORT CONTROL PROCEDURES

 SUBTITLE A: DEFENSE TRADE CONTROLS PERFORMANCE IMPROVEMENT ACT OF 2008

Sec. 101. Short Title.
    Section 101 provides the short title for Title I, Subtitle 
A, the Defense Trade Controls Improvement Act of 2008. This 
subtitle was originally introduced by Reps. Brad Sherman and 
Don Manzullo as H.R. 4246.
Sec. 102. Findings.
    Section 102 contains various findings that detail past 
performance problems and staffing shortfalls at the Directorate 
of Defense Trade Controls (DDTC), the State Department agency 
responsible for adjudicating licenses for commercial arms 
sales; notes the importance of this function to national 
security; describes the growth in the volume and complexity of 
licensing applications; notes with concern the increased 
tendency toward offshoring and outsourcing in the defense 
industry; and notes the need to update export control policies 
to address these trends.
Sec. 103. Strategic review and assessment of the United States export 
        controls system.
    Section 103 requires that the President conduct an 18-month 
strategic review of defense trade controls beginning in 2009 to 
determine the effectiveness of the current export control 
regime, and make improvements where necessary. The review would 
also seek to identify ways to make the system more efficient 
and seek to improve coordination across government agencies 
responsible for export controls and enforcement. The President 
will be required to review known attempts to circumvent export 
controls with a view to improving enforcement. The review will 
also examine offshoring and outsourcing in the defense industry 
as well as the policy of U.S. trade partners to require 
``offsets'' for arms sales. The section requires that the 
President report on the results of the review.
    The Committee requires this review in response to the 
January 2007 decision by the GAO to designate the protection of 
high technology critical to U.S. national security as a ``high 
risk'' area. GAO found that export control policies and 
procedures were in need of assessment for both effectiveness 
and efficiency. Given the changing nature of the security 
threats facing the United States from terrorism and nuclear 
proliferation, rapid advances in defense technology, and the 
continued efforts by state and non-state actors to evade U.S. 
export controls, the Committee believes that a high-level 
government-wide review of arms export control and enforcement 
policies is necessary.
    GAO also found that coordination between the various 
agencies involved in export control and enforcement policies is 
lacking. Therefore, the strategic review should focus on ways 
that interagency cooperation and coordination can be improved. 
This is intended to be a government-wide review, and should not 
be limited to the DDTC's policies and procedures.
    The review should thoroughly examine all known attempts--
successful and unsuccessful--to circumvent U.S. export controls 
and enforcement mechanisms. The United States, as the leader in 
defense technology development and defense production, is a 
target for criminal proliferation rings and foreign security 
and intelligence agencies. The damage done when a group or 
state agent is able to circumvent export controls is not 
limited to the potential use of U.S. hardware by an adversary. 
Ineffective export controls and enforcement policies can 
seriously erode U.S. supremacy in critical military 
technologies and lead to the development of technology that can 
defeat U.S. defense systems.
    In conducting this review, the Administration should also 
devote significant attention to how export control policy 
facilitates the movement of technology and defense production 
overseas, and the national security implications of off-shoring 
and outsourcing in defense production. Defense cooperation with 
allies is essential; however, the Committee is concerned that 
the defense industrial base has been harmed by the growing 
trend to offshore defense production, and that the spread of 
defense technology and production capacity to foreign 
countries, especially those with inadequate export controls, 
may harm American security. Protecting the defense industrial 
base and American technological supremacy need to be top 
priorities for arms export control policy.
    Section 103 requires that the Administration periodically 
brief relevant Congressional committees on the progress of the 
review. This requirement is included to ensure Congressional 
oversight over the conduct of the strategic review while it is 
ongoing and to help ensure that the final product is fully 
responsive to Congressional concerns.
Sec. 104. Performance goals for processing of applications for licenses 
        to export items on USML.
    Section 104 sets a goal of 60 days for the DDTC to process 
licenses to export defense hardware to U.S. friends and allies. 
It also sets the goal at 30 days for applications to export 
defense hardware to NATO and major non-NATO allies. It further 
sets a goal of 7 days in cases where the hardware is to be 
supplied to an ally operating with the United States in a 
combat, peacekeeping or humanitarian deployment. It requires 
that applications which have not been processed within 60 days 
be reviewed by the top political or civil servants at DDTC; 
applications older than 90 days would require review by the 
relevant Assistant Secretary. It requires reporting on the 
average processing times for various categories of license. 
Section 104 also sets a goal for processing commodity 
jurisdiction (CJ) requests in 60 days, and requires increased 
transparency of those decisions (exporters seek CJs to 
determine if an item is on the U.S. Munitions List and thus 
subject to State Department licensing requirements).
    Section 104 essentially codifies Presidential Directives 
issued in January 2008 that set a ``soft'' deadline of 60 days 
for the processing of applications for licenses to export items 
on the U.S. Munitions List. Nothing in this section or in the 
Presidential Directives requires that a decision on any 
specific application be made within 60 days. The Committee 
recognizes that additional time may be needed to review an 
application to ensure that the export is consistent with U.S. 
national security. The presidential directives identify five 
factors that would require more than 60 days to adjudicate a 
license application. Section 104 does not alter the 
Administration policy.
    Nevertheless, U.S. exporters should have reasonable 
assurance that their licenses will be adjudicated in a fairly 
predictable timeframe. Unnecessary delays in adjudication can 
cause U.S. suppliers to be viewed as unreliable, and U.S. firms 
are made less competitive. Defense trade business may 
increasingly go to foreign competitors if there are long delays 
in licensing decisions. In late 2006, the DDTC was found to 
have a backlog of some 10,000 open applications. As a result, 
applications were left to languish, sometimes for months. While 
the current management of DDTC has eliminated a number of the 
factors that led to that backlog and the resulting processing 
delays, the Committee believes that codified goals for 
processing times are essential to ensure predictability for 
U.S. exporters, and for internal resource planning at the DDTC. 
Section 104 also requires that DDTC management brief relevant 
congressional committees on the steps they will implement to 
address any significant backlog that arises in the future to 
ensure that growing backlogs and proposed remedial measures 
come to the attention of Congress in a timely fashion.
    The goals for license processing times contained in Section 
104 do not cover agreements under Part 124 of the International 
Traffic in Arms Regulations (ITAR) for defense services. These 
include technical assistance agreements and manufacturing 
agreements, which are needed to convey technical know-how and 
permission to produce USML items overseas. These agreements are 
often of greater complexity and have potentially greater 
impacts on national security, including by weakening the 
defense industrial base. As noted, the Committee is concerned 
about the increased tendency to offshore production of defense 
items. DDTC should place the highest priority on processing 
license applications that provide for the export of U.S. 
hardware to allies, and should generally give manufacturing and 
technical assistance agreements a significantly higher level of 
scrutiny. Furthermore, consistent with U.S. national security, 
licensing resources should be allocated first and foremost to 
ensuring that the processing goals of section 104 are generally 
being met.
    The Committee believes that the goals established by this 
section reflect the priority that the Department should be 
giving to the respective categories. The Committee believes 
that DDTC should therefore give the highest priority to 
processing of applications that are in direct support of combat 
operations or peacekeeping or humanitarian operations with 
United States Armed Forces; followed by giving the next highest 
priority to processing of applications to government security 
agencies of United States NATO allies, Australia, New Zealand, 
Japan, South Korea, Israel, and as appropriate, other major 
non-NATO allies; and other applications will be prioritized in 
addition in a manner determined by the Director.''
    Section 104 also includes a requirement that the managing 
director of the DDTC review a small percentage of the 
applications received by the agency to ensure that the 
decisions in those cases were consistent with applicable 
statute, regulations and DDTC policies. This requirement will 
serve to ensure that senior management determine whether the 
decisions of licensing officers are being made consistent with 
U.S. export control policy and practice. It will also allow for 
the identification and rectification of common mistakes, and to 
ensure that the ``return-without-action'' device is not used 
excessively to clear or effectively restart the clock on 
difficult cases.
    Section 104 also requires that the Secretary submit a 
report to Congress in 2010 and 2011 on average processing times 
for various categories of license across different categories 
of allied or friendly country, and any management decisions 
taken to address trends in the data. This reporting requirement 
responds to GAO criticism of DDTC for not seeking to analyze 
trends in licensing data when setting policies and allocating 
the resources of the agency.
    Section 104 requires the Secretary to make the results of 
commodity jurisdiction (CJ) decisions public via the Internet. 
This requirement responds to concerns raised by U.S. 
manufacturers and NGOs that the lack of transparency in the CJ 
process has led to a lack of consistency in CJ decisions, is 
unfair to some exporters, and does not provide for meaningful 
criticism of CJ decisions, which are essentially secret. This 
provision is tailored to ensure that only the minimum amount of 
information necessary to provide meaningful disclosure is 
released; to the greatest extent possible, the proprietary 
information of the CJ applicant is protected.
Sec. 105. Requirement to ensure adequate staff and resources for DDTC 
        of the Department of State.
    Section 105 requires that the Secretary ensure adequate 
staffing of the DDTC and mandates that there be one licensing 
officer on staff for every 1250 applications that the agency is 
estimated to receive in a given year. DDTC currently has only 
roughly 40 licensing officers to process approximately 85,000 
applications per year.
    The Committee believes that many of the past performance 
problems at DDTC relate to understaffing. As noted, while the 
licensing caseload has increased significantly, the number of 
licensing personnel at DDTC has not. The requirement that DDTC 
have at least one licensing officer for every 1,250 
applications expected for a given fiscal year does not place a 
limit on the number of cases any one licensing officer may 
handle in a given year. Not all applications require the same 
level of staff attention, and officers who handle relatively 
uncomplicated applications will presumably handle more than 
those handling more complicated cases.
    The State Department will have until the third quarter of 
2010 to comply with this increased staffing requirement to 
allow for recruitment and training of additional licensing 
officers. Rather than prescribe a specific number of officers, 
the Committee decided to mandate a staff-to-application ratio 
to ensure that staffing increases are made if applications 
continue to increase over successive years.
    Section 105's staffing mandates are necessary not only to 
provide for the efficiency of the agency, but to ensure its 
national security function is met. Applications are not only 
increasing in number, they are becoming more complicated. 
Leaving aside efficiency and processing speed, a staffing 
increase is necessary to ensure that DDTC's licensing decisions 
are consistent with American national security and foreign 
policy goals.
    Section 105 requires that the Secretary maintain staffing 
levels in other areas of DDTC responsibility, especially 
including policy and enforcement. In order to meet the mandates 
of Section 105, the DDTC has to hire more people and sustain 
adequate staff in all of its functions throughout any given 
year. The requirement for licensing officers should not be met 
by merely pulling personnel off other functions and making them 
licensing officers. Nor should DDTC use temporary assignments 
or other schemes to merely move personnel around the DDTC to 
fulfill the licensing officer mandate.
Sec. 106. Audit by Inspector General of the Department of State.
    Section 106 requires that State's IG conduct an audit in 
2010 and 2011 to determine whether DDTC is meeting the goals 
set out in sections 104 and 105.
Sec. 107. Increased flexibility for use of defense trade controls 
        registration fees.
    Section 107 provides DDTC with the ability to use the fees 
that it collects from arms manufacturers and exporters for all 
expenses associated with the agency. Provides that no more than 
$10 million in enforcement fines collected for violations of 
the Arms Export Control Act may be made available to pay for 
the expenses of the agency.
    The committee recognizes that allowing an agency to in 
effect keep enforcement penalties can be a perverse incentive, 
leading to overzealous enforcement. The DDTC has collected $20 
million or more in fines over the last several years. By 
capping the amount available to the agency at an amount well 
below anticipated collections, there should be no incentive for 
improper and overzealous enforcement actions against exporters. 
Also, assuming that the State Department would like to see this 
authority subsequently extended beyond the 5 years provided in 
this legislation, the expiration of the provision in 2012 
should also deter such improper enforcement actions. 
Nonetheless, the committee intends to conduct vigorous 
oversight over the Department's exercise of this authority.
Sec. 108. Review of ITAR and USML.
    Section 108 requires that the Secretary review 20 percent 
of the USML every year, with input from U.S. defense 
manufacturers, NGOs, and labor and small business 
organizations, to determine if controls on various items should 
be relaxed or strengthened.
    This section will also ensure that the entire USML is 
reviewed every 5 years.
    Section 108 provides that the USML and the wider ITAR 
should be reviewed in their entirety every 5 years to ensure 
that export controls keep up with advances in defense 
technology. The Commerce Department generally conducts a 
similar 5-year review of its Control List. The 20-percent-per-
year review requirement should be a floor, not a ceiling for 
the Administration, however. The Secretary also should not wait 
to place a section of the USML under review where technological 
advances warrant an immediate review simply because it is not 
yet that section's ``turn'' in the 5-year rotation. In 
coordination with other relevant government agencies that 
review the USML, including the Department of Defense, the 
Secretary should ensure that a broad cross-section of the 
defense industry is represented in the conduct of the review, 
including small- and medium-size domestic enterprises that 
serve as suppliers for the large defense companies. The 
committee believes that it is critical to include labor and 
arms control groups in these consultations in order to ensure a 
balanced review.
Sec. 109. Special licensing authorization for Certain Exports to NATO 
        Member States, Australia, Japan, and New Zealand.
    Section 109 provides for a special, 5-year blanket license 
for the export of spare parts and components for specific USML 
items previously exported to U.S. allies. The previously-
exported equipment would have to be in inventory of a security 
agency of a close U.S. ally and the spare parts and components 
would be limited to relatively non-sensitive items (no 
Significant Military Equipment). The spare parts and components 
would have to be made in the US in order to qualify for 
licensing under this special type of license.
    Exporters have expressed concern about the need to obtain 
multiple licenses for spare parts and components for defense 
systems that have been previously exported. Section 109 
provides for a special licensing procedure for spare parts and 
components that meet the criteria set out in the section. The 
special licensing authorization provided for by this section is 
in effect a blanket license for the export of multiple spare 
parts and components for defense items in the inventory of an 
allied country. Section 109 sets out a number of limitations 
and conditions on the use of this special license, including: 
The spare parts and components must be shipped to and used by a 
security agency of the allied country for an item in its 
inventory; they may not be used to enhance the performance of 
the previously exported defense items; and the freight 
forwarder utilized for shipment must be the one designated by 
the recipient country for the Foreign Military Sales program. 
These conditions are designed to ensure maximum security 
against misuse and diversion.
    The licensing procedure provided for by section 109 does 
not replace, amend or eliminate any other license or exemption 
provided for by current law or regulations, including the 
exemption for the temporary import and subsequent export of 
defense items serviced or repaired in the United States 
provided for in Section 123.4 of the ITAR.
    The provision is limited to parts and components with a 
high U.S. content that have been manufactured in the United 
States. A part or component must include 85 percent American 
content on a total content basis--inclusive of all costs, 
including raw materials, but exclusive of costs associated with 
research and development, intellectual property and legal 
services. Eighty-five percent of the costs associated with the 
manufacturing of a spare part or component must also be 
attributable to work done in the United States in order for a 
part or component to qualify for licensing under this 
provision. The requirement that the last substantial 
modification be done in the United States is designed to 
exclude from this licensing procedure any part or component 
whose final assembly is done abroad. The requirement that any 
foreign content value be calculated based on the final price or 
final cost paid of the foreign item or service precludes an 
applicant from calculating foreign content using a price paid 
for that foreign content by an agent or middleman that is not 
reflective of the actual, final cost to the applicant. Foreign 
content, if any, is limited, content from countries that are 
eligible to receive exports of USML items, save for de minimis 
amounts. The Committee appreciates that it may be impossible 
for an applicant to trace the origin of every screw, washer and 
nut. However, all significant parts and processing that go into 
the product must be of U.S. or eligible foreign origin.
Sec. 110. Availability of information on the Status of License 
        Applications Under Chapter 3 of the Arms Export Control Act.
    Section 110 requires that information on the status of 
applications be made available electronically to the applicant 
and relevant Congressional committees.
Sec. 111. Sense of Congress.
    The Defense Trade Advisory Group (DTAG) is an advisory 
committee that consults with the State Department on export 
control issues. Section 111 calls on the State Department to 
make its membership more diverse by including labor, NGOs, and 
academics, in addition to the defense industry itself.
Sec. 112. Definitions.
    Section 112 provides various definitions that are necessary 
for the Act.
Sec. 113. Authorization of Appropriations.
    Section 113 provides ``such sums'' authorization for FY2009 
and every subsequent fiscal year.

                  SUBTITLE B: MISCELLANEOUS PROVISIONS

Sec. 121. Report on Self-Financing Options for Export Licensing 
        Functions of DDTC of the Department of State.
    Section 121 requires the Secretary of State to report 90 
days after enactment of this Act to the Committees on Foreign 
Affairs and Foreign Relations on possible mechanisms to place 
the Department of State defense trade licensing functions on a 
100% self-financing basis.
    Currently, the licensing agency that processes Foreign 
Military Sales operates on a 100% self-financing basis, and is 
able to adapt to its changing needs without the need for annual 
appropriations. It would be useful to have State's licensing 
functions on a similar basis, for similar reasons. This report 
will force the Department of State to seriously consider this 
possibility and inform the oversight committees as we legislate 
on these issues in the future.
Sec. 122. Expediting Congressional Defense Export Review Period for 
        South Korea and Israel.
    This section adds South Korea and Israel to the ``NATO+3'' 
(NATO countries plus Australia, Japan, New Zealand) list in 
various Arms Export Control Act provisions for special 
treatment regarding the export of U.S. defense items and 
services, including a 15-day Congressional review instead of 30 
days.
    Sec. 122 strengthens the vital security relationship with 
our close friends and allies, South Korea and Israel. It adds 
South Korea and Israel to the list of countries in the AECA 
that receive expedited Congressional review of 15 instead of 30 
days, along with NATO, Australia, New Zealand and Japan, as 
well as other similar privileges. This is a significant and 
symbolic recognition of the critical importance of South Korea 
and Israel to U.S. national security and to peace and stability 
throughout East Asia and the Middle East.
Sec. 123. Availability to Congress of Presidential Directives Regarding 
        United States Arms Export Policies, Practices and Regulations.
    Section 123 requires the President to make all Presidential 
Directives regarding U.S. export policies available to the 
Congressional Committees on Foreign Affairs and Foreign 
Relations, the committees of jurisdiction over arms exports. 
Ideally, the President should provide copies of such directives 
to the Committees.
    In January 2008, the President issued two ``directives'' 
with specific changes and taskings relating to our export 
control system. Unfortunately, the Administration has refused 
to allow representatives from the House Committee on Foreign 
Affairs or the Senate Foreign Relations Committee to even read 
these directives, much less provide copies. This provision is 
to ensure that the Committees of jurisdiction and oversight 
over arms export control policies are able to see the content 
of U.S. arms export policies.
Sec. 124. Increase in Congressional Notification Thresholds and 
        Expediting Congressional Review for South Korea and Israel.
    Section 124 increases monetary thresholds for Congressional 
review periods of FMS and commercial arms sales:

         LFor NATO+5--from $25 to $75 million for 
        Significant Military Equipment (SME), $100 million to 
        $200 million for total contract value.

         LFor all other countries--from $15 to $50 
        Million for SME, $50 to $100 Million for total contract 
        value.

    This provision increases the threshold level for the 
Congressional 15/30-day resolution-of-disapproval review 
period. However, it also retains existing statutory threshold 
levels for notification of the export to Congress.
    The result is that the Committees on Foreign Affairs and 
Foreign Relations, the committees of jurisdiction over U.S. 
arms exports, will still see and evaluate arms exports to all 
parties at existing levels, thereby ensuring that Congressional 
oversight is retained. This occurs through a longstanding, 
informal ``preconsultation'' process that this and previous 
Administrations engage in with the Committee, through which 
questions and concerns are addressed, and alterations made. 
This preconsultation process will continue at the current 
threshold notification levels.
    For defense exports below the new, higher formal 15/30-day 
Congressional review threshold that this bill will establish, 
export licenses can be awarded 2-4 weeks faster, thereby 
increasing U.S. defense exports' competitiveness. As such, this 
is a ``win-win'' outcome: Congressional oversight for national 
security is preserved, but defense exporters are able to be 
more competitive.
Sec. 125. Diplomatic Efforts to Strengthen National and International 
        Arms Export Controls.
    Section 125 states the Sense of Congress that the President 
should increase efforts to strengthen multilateral export 
control regimes, with a 5-year annual report on U.S. efforts to 
do so.
Sec. 126. Reporting Requirement for Unlicensed Exports.
    Section 126 adds a requirement to report on exempted 
commercial arms sales to an existing annual report. This 
provision was previously approved by the House in the 109th 
Congress.
Sec. 127. Reporting on Value of Major Defense Equipment and Defense 
        Articles Exported Under Section 38 of the Arms Export Control 
        Act.
    Section 127 requires an annual listing of the value of 
actual arms deliveries by country as part of the annual 
Congressional Budget Justification to improve the transparency 
of the U.S. arms export process and facilitate Congressional 
oversight.
Sec. 128. Report on Satellite Export Controls.
    Section 128 requires a report 180 days after enactment on 
the efficacy of current satellite export controls, especially 
regarding China, and whether any changes need to be made.
    It has been 9 years since the Congress, in reaction to the 
revelations of the Cox Commission on U.S. companies sharing 
sensitive space technology with China during an investigation 
over a Chinese launch failure, mandated that the licensing of 
all satellites and related components be moved from the 
Commerce Control List at the Department of Commerce to the U.S. 
Munitions List at the Department of State. It is appropriate at 
this point that the record of bringing U.S. satellite exports 
under the more rigorous USML licensing system be reviewed.
    The Committee is especially concerned over reports that a 
subsidiary of a European defense company, Thales/Alenia, is 
actively engaged in selling satellites that are allegedly free 
of any U.S-origin or U.S.-derived component to China and 
others. The sales to China directly undermine U.S. export 
controls on China. Sales of such satellites to other recipients 
would allow those recipients to utilize the cut-rate Chinese 
``Long March'' space launch vehicle; buyers of satellites with 
U.S. components cannot do likewise, since any such launch can 
only occur with the consent of the United States Government.
    Utilization of Chinese launchers also undermine U.S. export 
controls in that greater commercial use garners China greater 
experience and therefore greater expertise in space launch 
operations and technology, which is directly applicable to its 
military ballistic missile program.
    The Committee requests that the President devote particular 
attention to this troubling development by Thales/Alenia in the 
report required by this section, and report on what actions the 
United States will take to address and rectify this matter.
Sec. 129. Definition.
    Section 129 defines ``appropriate congressional 
committees'' as used in this subtitle to mean the Committees on 
Foreign Affairs and Foreign Relations.

      TITLE II: SECURITY ASSISTANCE AND RELATED SUPPORT FOR ISRAEL

Sec. 201. Assessment of Israel's Qualitative Military Edge over 
        Military Threats.
    Section 201 requires the President to create a mechanism to 
empirically evaluate on an ongoing basis the extent to which 
Israel has a qualitative military edge (hereinafter referred to 
as ``QME'') over all possible military threats from any 
national source, both individually or collectively, and to use 
such mechanism when reviewing arms sales to the Middle East.
    It has become clear to the Committee that the 
Administration uses a subjective judgment when evaluating 
Israel's QME. State and Defense officials have admitted that 
there is no objective, empirical method of evaluating this 
critical measure of whether Israel maintains a qualitative 
superiority over potential threats to its security.
    It is also clear that such subjective evaluations are 
performed sale-by-sale, country-by-country, without clear 
overall consideration of the balance of capabilities possessed 
throughout the region that could conceivably affect Israel's 
security.
    This provision would remedy this glaring lack of a robust 
mechanism to make critical security and export decisions that 
could undermine the security of one of the most important 
friends and ally that we have in the Middle East.
    Section 201 also requires an initial report no later than 
180 days after enactment, and quadrennially thereafter. It also 
requires that any arms sale to a Middle Eastern country that 
must be notified to Congress for review include a determination 
that such sale will not materially affect Israel's QME.
Sec. 202. Report on United States Commitments to the Security of 
        Israel.
    Section 202 requires the President to provide copies of all 
U.S. assurances made to Israel regarding its security since 
1975 and on an ongoing basis, including revisions of past 
assurances, to the Committees on Foreign Affairs and Foreign 
Relations, to enable Congressional oversight over the U.S.-
Israel security relationship.
    The United States has made numerous assurances to Israel 
over the years regarding its security, especially regarding 
conditions under which the U.S. would sell arms to Israel's 
neighbors. There have been subsequent revisions and revocations 
of these assurances.
    The Congress does not have access to these assurances and 
revisions, and is therefore limited in its ability to conduct 
real oversight over this critical U.S. security relationship, 
and in its ability to judge for itself the extent to which such 
assurances are being fulfilled.
Sec. 203. War Reserves Stockpile.
    This provision extends the dates and amounts of U.S. excess 
equipment that can be transferred to Israel from regional 
stockpiles.
Sec. 204. Implementation of Memorandum of Understanding with Israel.
    This section authorizes for Fiscal Year 2009 Foreign 
Military Financing (FMF) assistance for Israel pursuant to the 
Memorandum of Understanding (MOU) between the United States and 
Israel. In August, 2007, the United States and Israel entered 
into a memorandum of understanding ``reflecting the unshakeable 
commitment of the United States to Israel's security.'' Under 
the MOU, the United States agreed to increase levels of U.S. 
FMF to Israel over a 10-year period beginning in Fiscal Year 
2009, with an initial increase of $150 million for that fiscal 
year, and additional increases through Fiscal Year 2013, 
leveling off at $3.1 billion per year from Fiscal Year 2013 to 
Fiscal Year 2018. The MOU also provides that Offshore 
Procurement should be maintained at 26.3 percent of the yearly 
FMF grant. The Committee strongly supports the full and 
complete implementation of the MOU through Fiscal Year 2018, 
and section 204 represents an authorization of the first year 
of the MOU.
    The Committee notes that the formula contained in section 
204 starts from the baseline of $2,400,000,000 specified under 
the heading ``Foreign Military Financing'' in the Department of 
State, Foreign Operations and Related Programs Appropriations 
Act, 2008, adds $150,000,000 for a total of $2,550,000,000.
Sec. 205. Definitions.
    This provision defines ``Qualitative Military Edge'' as 
used in this Title, and that the term ``appropriate 
congressional committees'' means the Committee on Foreign 
Affairs of the House, and the Committee on Foreign Relations of 
the Senate.

 TITLE III: WAIVER OF CERTAIN SANCTIONS TO FACILITATE DENUCLEARIZATION 
                       ACTIVITIES IN NORTH KOREA

Sec. 301. Waiver Authority and Exceptions.
    This section provides the President the authority to waive 
four sanctions under Sec. 102 of the Arms Export Control Act 
(the ``Glenn Amendment'') to provide ``material, direct, and 
necessary assistance'' to nuclear disablement or dismantlement 
activities in North Korea, including verification of 
denuclearization and removal of nuclear equipment and material 
from North Korea. Financial assistance that may be directly 
necessary, such as payment for North Korean workers who are 
currently dismantling the Yongbyon reactor, is permitted, as 
are non-lethal items that are controlled on the U.S. Munitions 
List and Commerce Control (dual-use) List. It limits the export 
of any equipment or services that are controlled on the U.S. 
Munitions List that may be necessary to non-lethal equipment 
and services only, so as not to benefit North Korean military 
capabilities, and prevents any credit or credit guarantees from 
being provided.
    Because of AECA restrictions triggered by North Korea's 
nuclear test of October 9, 2006, the United States has had to 
fund disablement activities through the use of the 
Nonproliferation and Disarmament Fund (NDF), which has the 
statutory authority to conduct nonproliferation activities in 
countries that may nevertheless be subject to U.S. sanctions 
and restrictions on U.S. assistance. The NDF is a relatively 
small fund, which is already stressed by the Department of 
Energy's disablement activities in North Korea; it would be 
incapable of funding the larger ``Phase III'' dismantlement and 
removal programs that are contemplated, and worthy urgent 
nonproliferation opportunities in other countries could be 
missed if the NDF is depleted. It is therefore necessary to 
waive the AECA restrictions so that the United States can fully 
fund its obligations under the Six-Party Talks and proceed with 
the disablement, dismantlement and removal of North Korea's 
nuclear capabilities, and verification of its denuclearization, 
which is manifestly in the vital U.S. national interest.
Sec. 302. Certification Regarding Waiver of Certain Sanctions.
    The President must certify to the Congress that, before any 
non-lethal exports of articles or services on the U.S. 
Munitions List or Commerce Control List can occur, that all 
necessary steps will be taken to ensure that such exports will 
not improve the military capabilities of North Korea's armed 
forces, and that such exports are in the national security 
interests of the United States. Section 302 does not allow the 
export of any item described in Section 301(b).
Sec. 303. Congressional Notification and Report.
    The President must notify the foreign affairs and 
appropriations committees 15 days in advance of using the 
waiver authority, and must report annually on the progress, or 
lack thereof, in the verifiable denuclearization activities in 
North Korea.
Sec. 304. Termination of Waiver Authority.
    The waiver authority in Sec. 401 terminates if North Korea 
conducts another nuclear test after October 10, 2006 (the day 
after North Korea's last nuclear test) or transfers to or 
receives from another state a nuclear explosive device after 
September 19, 2005 (the date after North Korea agreed to 
denuclearization). If North Korea transfers nuclear weapon-
related design information or component, according to the 
standards of the Glenn Amendment, or sought or received same, 
after September 19, 2005, the waiver authority in Sec. 401 
terminates unless the President certifies to the Congress that 
the continuation of such waiver is vital to the national 
security interests of the United States.
Sec. 305. Expiration of Waiver Authority.
    This authority will terminate 4 years from enactment.
Sec. 306. Continuation of Restrictions against the Government of North 
        Korea.
    Section 306 provides that restrictions against the 
Government of North Korea because of its designation as a state 
sponsor of terrorism shall remain in effect, and shall not be 
lifted pursuant to the provisions of law under which the 
determination was made, unless the President certifies to the 
appropriate congressional committees that (1) the Government of 
North Korea is no longer engaged in the transfer of technology 
related to the acquisition or development of nuclear weapons, 
particularly to the Governments of Iran, Syria, or any other 
country that is a state sponsor of terrorism; (2) in accordance 
with the Six-Party Talks Agreement of February 13, 2007, the 
Government of North Korea has `provided a complete and correct 
declaration of all its nuclear programs,' and there are 
measures to effectively verify this declaration by the United 
States which, `[a]t the request of the other Parties,' is 
leading `disablement activities' and `provid[ing] the funding 
for those activities'; and (3) the Government of North Korea 
has agreed to the participation of the International Atomic 
Energy Agency in the monitoring and verification of the 
shutdown and sealing of the Yongbyon nuclear facility.
    The Committee believes that these requirements are fully 
consistent with the agreements of February and October, 2007, 
related to the Six-Party Talks and how the President's 
representatives have explained these agreements will be 
implemented.
Sec. 307. Report on Verification Measures Relating to North Korea's 
        Nuclear Programs.
    Subsection (a) of this section provides that not later than 
15 days after the date of enactment of this Act, the Secretary 
of State shall submit to the appropriate congressional 
committees a report on verification measures relating to North 
Korea's nuclear programs under the Six-Party Talks Agreement of 
February 13, 2007, with specific focus on how such verification 
measures are defined under the Six-Party Talks Agreement and 
understood by the United States Government.
    Subsection (b) provides that the report required under 
subsection (a) shall include, among other elements, a detailed 
description of: (1) the methods to be utilized to confirm that 
North Korea has `provided a complete and correct declaration of 
all of its nuclear programs'; (2) the specific actions to be 
taken in North Korea and elsewhere to ensure a high and ongoing 
level of confidence that North Korea has fully met the terms of 
the Six-Party Talks Agreement relating to its nuclear programs; 
(3) any formal or informal agreement with North Korea regarding 
verification measures relating to North Korea's nuclear 
programs under the Six-Party Talks Agreement; and (4) any 
disagreement expressed by North Korea regarding verification 
measures relating to North Korea's nuclear programs under the 
Six-Party Talks Agreement.
    Subsection (c) provides that the report required under 
subsection (a) shall be submitted in unclassified form, but may 
include a classified annex.
Sec. 308. Definitions.
    This provision contains definitions applicable to this 
title.

                  TITLE IV: MISCELLANEOUS PROVISIONS.

Sec. 401. Authority to Build the Capacity of Foreign Military Forces.
    This section grants the Secretary of State train-and-equip 
authority, authorized up to $25,000,000 in unobligated FMF 
funds for the Fiscal Years 2009 and 2010, to respond to 
contingencies in foreign countries or regions with training, 
procurement and capacity-building of a foreign country's 
national military forces.
    This authority is necessary for the Department of State to 
directly provide assistance to train and equip foreign military 
forces to support U.S. security operations and to better engage 
in counterterrorism operations.
    The National Defense Authorization Act of 2006 authorized 
the use of DoD funds to build the capacity of a foreign 
country's national military forces in order for that country to 
conduct counterterrorist operations or participate in or 
support military or stability operations in which U.S. Armed 
Forces are a participant. Since FY 2006, the State Department 
and Defense Department have been working to jointly develop and 
implement programs under 1206 authority. The Department of 
State maintains that longstanding security assistance 
authorities and resources should be supplemented to be capable 
of meeting today's U.S. strategic requirements. Existing 
authorities exercised by the Department of State for the 
provision of security assistance include the Foreign Military 
Financing (FMF), International Military Education and Training 
(IMET), and Peacekeeping Operations (PKO) accounts authorized 
by the Foreign Assistance Act of 1961, as amended (FAA), and 
the Arms Export Control Act (AECA). While the committee concurs 
with the Administration that new security assistance tools need 
to be developed in order to meet the security challenges of the 
21st century, we are also concerned by the apparent migration 
of security assistance authorities from the Department of State 
to the Department of Defense. This provision intends to address 
that trend by designating certain funds for the Secretary of 
State to use the full flexibility under existing law to provide 
training and equipment for foreign militaries when such 
assistance meets U.S. foreign policy objectives. It draws on 
unobligated FMF balances for funding. During the last fiscal 
year, the Department of State had almost $4 million in 
unobligated funds, which could be useful for financing this 
program authority. The Committee intends to review the 
management of U.S. security assistance during the remainder of 
this Congress and the next.
Sec. 402. Maintenance of European Union Arms Embargo against China.
    Sec. 402 states U.S. policy to oppose the lifting of the 
E.U. arms embargo and to take whatever diplomatic and economic 
steps necessary to convince E.U. Member States from taking that 
step. This section also requires the President to report to the 
Congress on all efforts the U.S. is taking to accomplish this 
goal.
    Last November, President Sarkozy of France declared during 
his visit to Beijing that he wanted to lift this embargo. 
France will assume the Presidency of the EU in July, and would 
presumably broach this issue with the other Member States of 
the EU. It is important for the Congress to again send a clear 
message of opposition to lifting the embargo.
Sec. 403. Reimbursement of Salaries of Members of the Reserve 
        Components in Support of Security Cooperation Missions.
    This section provides an authority for the costs of certain 
transfers to include the certain personnel costs involved in 
the transfers.
    In general, the salaries of members of the National Guard 
and Reserve who are performing security cooperation missions 
outside the U.S. cannot be reimbursed as part of an FMS 
contract for security cooperation, such as training. This 
section would allow the Department of Defense to use other 
funds to pay Reserve members to perform missions that build 
global partnerships and help win the war on terror.
Sec. 404. Foreign Military Sales Stockpile Fund.
    This section responds to a DoD request to update the 
moribund ``Special Defense Acquisition Fund'' in Sec. 51 of the 
AECA by adding ``building partner capacity'' as a purpose of 
the Fund, allowing proceeds from the lease of defense items 
under Sec. 61 of the AECA to go to the Fund, and allowing 
amounts in the Fund to remain available until expended.
Sec. 405. Congressional Notification Requirements Under the Arms Export 
        Control Act.
    This provision replaces ``the Speaker'' with the ``Chairman 
of the Committee on Foreign Affairs'' or the ``Committee on 
Foreign Affairs,'' as appropriate, throughout the AECA, to 
match the reporting requirements to the Committee on Foreign 
Relations of the Senate.
Sec. 406. Sense of Congress.
    Sec. 406 states the sense of Congress that the United 
States should not provide security assistance or export arms to 
nations contributing to massive, widespread, and systematic 
violations of human rights or acts of genocide, particularly 
with respect to Darfur, Sudan.

              TITLE V: AUTHORITY TO TRANSFER NAVAL VESSELS

Sec. 501. Authority to Transfer of Naval Vessels to Certain Foreign 
        Recipients.
    This section authorizes the grant of surplus U.S. naval 
vessels to Peru, Chile, Greece and Pakistan. Transfers of naval 
vessels must satisfy certain statutory requirements, which 
stipulate that naval vessels larger than 3,000 tons or less 
than 20 years old may not be transferred to another nation 
unless approved by law.
    According to the Secretary of the Navy, these proposed 
transfers would improve U.S. political and military 
relationships with close allies. They would support strategic 
engagement goals and regional security cooperation objectives. 
The U.S. would incur no costs in transferring these naval 
vessels. The recipients would be responsible for all costs 
associated with the transfers, including maintenance, repairs, 
training, and fleet turnover costs.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

    SECTION 45 OF THE STATE DEPARTMENT BASIC AUTHORITIES ACT OF 1956

                defense trade controls registration fees

  Sec. 45. [For] (a) In General.--For each fiscal year, 100 
percent of the registration fees collected by the [Office] 
Directorate of Defense Trade Controls of the Department of 
State shall be credited to a Department of State account, to be 
available without fiscal year limitation. [Fees credited to 
that account shall be available only for payment of expenses 
incurred for--
          [(1) contract personnel to assist in the evaluation 
        of defense trade controls license applications, 
        reduction in processing time for license applications, 
        and improved monitoring of compliance with the terms of 
        licenses;
          [(2) the automation of defense trade control 
        functions, including compliance and enforcement 
        activities, and the processing of defense trade control 
        license applications, including the development, 
        procurement, and utilization of computer equipment and 
        related software; and
          [(3) the enhancement of defense trade export 
        compliance and enforcement activities, including 
        compliance audits of United States and foreign parties, 
        the conduct of administrative proceedings, monitoring 
        of end-uses in cases of direct commercial arms sales or 
        other transfers, and cooperation in proceedings for 
        enforcement of criminal laws related to defense trade 
        export controls.]
  (b) Availability of Fees.--Fees credited to the account 
referred to in subsection (a) shall be available only for 
payment of expenses incurred for--
          (1) management,
          (2) licensing (in order to meet the requirements of 
        section 105 of the Defense Trade Controls Performance 
        Improvement Act of 2008 (relating to adequate staff and 
        resources of the Directorate of Defense Trade 
        Controls)),
          (3) compliance,
          (4) policy activities, and
          (5) facilities,
of defense trade controls functions.
  (c) Allocation of Fees.--In allocating fees for payment of 
expenses described in subsection (b), the Secretary of State 
shall accord the highest priority to payment of expenses 
incurred for personnel and equipment of the Directorate of 
Defense Trade Controls, including payment of expenses incurred 
to meet the requirements of section 105 of the Defense Trade 
Controls Performance Improvement Act of 2008.

           *       *       *       *       *       *       *

                              ----------                              

                        ARMS EXPORT CONTROL ACT

           *       *       *       *       *       *       *
    Chapter 1.--FOREIGN AND NATIONAL SECURITY POLICY OBJECTIVES AND 
RESTRAINTS

           *       *       *       *       *       *       *

  Sec. 3. Eligibility.--(a) * * *
  (b) The consent of the President under paragraph (2) of 
subsection (a) or under paragraph (1) of section 505(a) of the 
Foreign Assistance Act of 1961 (as it relates to subparagraph 
(B) of such paragraph) shall not be required for the transfer 
by a foreign country or international organization of defense 
articles sold by the United States under this Act if--
          (1) * * *
          (2) the recipient is the government of a member 
        country of the North Atlantic Treaty Organization, the 
        Government of Australia, the Government of Japan, the 
        Government of the Republic of Korea, or the Government 
        of New Zealand;

           *       *       *       *       *       *       *

  (d)(1) Subject to paragraph (5), the President may not give 
his consent under paragraph (2) of subsection (a) or under the 
third sentence of such subsection, or under section 505(a)(1) 
or 505(a)(4) of the Foreign Assistance Act of 1961, to a 
transfer of any major defense equipment valued (in terms of its 
original acquisition cost) at $14,000,000 or more, or any 
defense article or related training or other defense service 
valued (in terms of its original acquisition cost) at 
$50,000,000 or more, unless the President submits to the 
[Speaker of the House of Representatives and the Committee on 
Foreign Relations of the Senate] Committee on Foreign Affairs 
of the House of Representatives and the Committee on Foreign 
Relations of the Senate a written certification with respect to 
such proposed transfer containing--
          (A) * * *

           *       *       *       *       *       *       *

  (2)(A) * * *
  (B) In the case of a proposed transfer to the North Atlantic 
Treaty Organization, or any member country of such 
Organization, Japan, Australia, the Republic of Korea, Israel, 
or New Zealand, unless the President states in the 
certification submitted pursuant to paragraph (1) of this 
subsection that an emergency exists which requires that consent 
to the proposed transfer become effective immediately in the 
national security interests of the United States, such consent 
shall not become effective until fifteen calendar days after 
the date of such submission and such consent shall become 
effective then only if the Congress does not enact, within such 
fifteen-day period, a joint resolution prohibiting the proposed 
transfer.

           *       *       *       *       *       *       *

  (3)(A) Subject to paragraph (5), the President may not give 
his consent to the transfer of any major defense equipment 
valued (in terms of its original acquisition cost) at 
$14,000,000 or more, or of any defense article or defense 
service valued (in terms of its original acquisition cost) at 
$50,000,000 or more, the export of which has been licensed or 
approved under section 38 of this Act, unless before giving 
such consent the President submits to the [Speaker of the House 
of Representatives and the Chairman of the Committee on Foreign 
Relations of the Senate] Chairman of the Committee on Foreign 
Affairs of the House of Representatives and the Chairman of the 
Committee on Foreign Relations of the Senate a certification 
containing the information specified in subparagraphs (A) 
through (E) of paragraph (1). Such certification shall be 
submitted--
          (i) at least 15 calendar days before such consent is 
        given in the case of a transfer to a country which is a 
        member of the North Atlantic Treaty Organization or 
        Australia, Japan, the Republic of Korea, Israel, or New 
        Zealand; and

           *       *       *       *       *       *       *

  (5) In the case of a transfer to a member country of the 
North Atlantic Treaty Organization (NATO) or Australia, Japan, 
the Republic of Korea, Israel, or New Zealand that does not 
authorize a new sales territory that includes any country other 
than such countries, the limitations on consent of the 
President set forth in paragraphs (1) and (3)(A) shall apply 
only if the transfer is--
          (A) * * *

           *       *       *       *       *       *       *

  (e) If the President receives any information that a transfer 
of any defense article, or related training or other defense 
service, has been made without his consent as required under 
this section or under section 505 of the Foreign Assistance Act 
of 1961, he shall report such information immediately to the 
[Speaker of the House of Representatives and the Committee on 
Foreign Relations of the Senate] Committee on Foreign Affairs 
of the House of Representatives and the Committee on Foreign 
Relations of the Senate.

           *       *       *       *       *       *       *

  Sec. 5. Prohibition Against Discrimination.--(a) * * *

           *       *       *       *       *       *       *

  (c) The President shall promptly transmit reports to the 
[Speaker of the House of Representatives and the chairman of 
the Committee on Foreign Relations of the Senate] Chairman of 
the Committee on Foreign Affairs of the House of 
Representatives and the Chairman of the Committee on Foreign 
Relations of the Senate concerning any instance in which any 
United States person (as defined in section 7701(a)(30) of the 
Internal Revenue Code of 1954) is prevented by a foreign 
government on the basis of race, religion, national origin, or 
sex, from participating in the performance of any sale or 
licensed transaction under this Act. Such reports shall include 
(1) a description of the facts and circumstances of any such 
discrimination, (2) the response thereto on the part of the 
United States or any agency or employee thereof, and (3) the 
result of such response, if any.

           *       *       *       *       *       *       *

  Sec. 6. Foreign Intimidation and Harassment of Individuals in 
the United States.--No letters of offer may be issued, no 
credits or guarantees may be extended, and no export licenses 
may be issued under this Act with respect to any country 
determined by the President to be engaged in a consistent 
pattern of acts of intimidation or harassment directed against 
individuals in the United States. The President shall report 
any such determination promptly to the [Speaker of the House of 
Representatives and to the chairman of the Committee on Foreign 
Relations] Chairman of the Committee on Foreign Affairs of the 
House of Representatives and to the Chairman of the Committee 
on Foreign Relations of the Senate.

           *       *       *       *       *       *       *

           Chapter 2.--FOREIGN MILITARY SALES AUTHORIZATIONS

  Sec. 21. Sales From Stocks.--(a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *
  (2)(A) The President may reduce or waive the charge or 
charges which would otherwise be considered appropriate under 
paragraph (1)(B) for particular sales that would, if made, 
significantly advance United States GovernmentArms Export 
interests in North Atlantic Treaty Organization 
standardization, standardization with the Armed Forces of 
Japan, Australia, the Republic of Korea, Israel, or New Zealand 
in furtherance of the mutual defense treaties between the 
United States and those countries, or foreign procurement in 
the United States under coproduction arrangements.

           *       *       *       *       *       *       *

  (h)(1) The President is authorized to provide (without 
charge) quality assurance, inspection, contract administration 
services, and contract audit defense services under this 
section--
          (A) in connection with the placement or 
        administration of any contract or subcontract for 
        defense articles, defense services, or design and 
        construction services entered into after the date of 
        enactment of this subsection by, or under this Act on 
        behalf of, a foreign government which is a member of 
        the North Atlantic Treaty Organization or the 
        Governments of Australia, New Zealand, Japan, the 
        Republic of Korea, or Israel, if such government 
        provides such services in accordance with an agreement 
        on a reciprocal basis, without charge, to the United 
        States Government; or

           *       *       *       *       *       *       *

  (i)(1) Sales of defense articles and defense services which 
could have significant adverse effect on the combat readiness 
of the Armed Forces of the United States shall be kept to an 
absolute minimum. The President shall transmit to the [Speaker 
of the House of Representatives and the Committees on Armed 
Services and Foreign Relations of the Senate] Committees on 
Foreign Affairs and Armed Services of the House of 
Representatives and the Committees on Foreign Relations and 
Armed Services of the Senate on the same day a written 
statement giving a complete explanation with respect to any 
proposal to sell, under this section or under authority of 
chapter 2B, any defense articles or defense services if such 
sale could have a significant adverse effect on the combat 
readiness of the Armed Forces of the United States. Each such 
statement shall be unclassified except to the extent that 
public disclosure of any item of information contained therein 
would be clearly detrimental to the security of the United 
States. Any necessarily classified information shall be 
confined to a supplemental report. Each such statement shall 
include an explanation relating to only one such proposal to 
sell and shall set forth--
          (A) * * *

           *       *       *       *       *       *       *

  Sec. 27. Authority of President to Enter into Cooperative 
Projects with Friendly Foreign Countries.--(a) * * *

           *       *       *       *       *       *       *

  (f) Not less than 30 days before a cooperative project 
agreement is signed on behalf of the United States, the 
President shall transmit to the [Speaker of the House of 
Representatives, the chairman of the Committee on Foreign 
Relations of the Senate, and the chairman of the Committee on 
Armed Services of the Senate] Chairmen of the Committees on 
Foreign Affairs and Armed Services of the House of 
Representatives and the Chairmen of the Committees on Foreign 
Relations and Armed Services of the Senate, a numbered 
certification with respect to such proposed agreement, setting 
forth--
          (1) * * *

           *       *       *       *       *       *       *

Chapter 3.--MILITARY EXPORT CONTROLS

           *       *       *       *       *       *       *

  Sec. 36. Reports on Commercial and Governmental Military 
Exports; Congressional Action.--(a) The President shall 
transmit to the [Speaker of the House of Representatives and to 
the chairman of the Committee on Foreign Relations] Chairman of 
the Committee on Foreign Affairs of the House of 
Representatives and to the Chairman of the Committee on Foreign 
Relations of the Senate not more than sixty days after the end 
of each quarter an unclassified report (except that any 
material which was transmitted in classified form under 
subsection (b)(1) or (c)(1) of this section may be contained in 
a classified addendum to such report, and any letter of offer 
referred to in paragraph (1) of this subsection may be listed 
in such addendum unless such letter of offer has been the 
subject of an unclassified certification pursuant to subsection 
(b)(1) of this section, and any information provided under 
paragraph (11) of this subsection may also be provided in a 
classified addendum) containing--
  (1) * * *

           *       *       *       *       *       *       *

  (b)(1) Subject to paragraph (6), in the case of any letter of 
offer to sell any defense articles or services under this Act 
for $50,000,000 or more, any design and construction services 
for $200,000,000 or more, or any major defense equipment for 
$14,000,000 or more, before such letter of offer is issued, the 
President shall submit to the [Speaker of the House of 
Representatives and to the chairman of the Committee on Foreign 
Relations] Chairman of the Committee on Foreign Affairs of the 
House of Representatives and to the Chairman of the Committee 
on Foreign Relations of the Senate a numbered certification 
with respect to such offer to sell containing the information 
specified in clauses (i) through (iv) of subsection (a), or (in 
the case of a sale of design and construction services) the 
information specified in clauses (A) through (D) of paragraph 
(9) of subsection (a), and a description, containing the 
information specified in paragraph (8) of subsection (a), of 
any contribution, gift, commission, or fee paid or offered or 
agreed to be paid in order to solicit, promote, or otherwise to 
secure such letter of offer. Such numbered certifications shall 
also contain an item, classified if necessary, identifying the 
sensitivity of technology contained in the defense articles, 
defense services, or design and construction services proposed 
to be sold, and a detailed justification of the reasons 
necessitating the sale of such articles or services in view of 
the sensitivity of such technology. In a case in which such 
articles or services listed on the Missile Technology Control 
Regime Annex are intended to support the design, development, 
or production of a Category I space launch vehicle system (as 
defined in section 74), such report shall include a description 
of the proposed export and rationale for approving such export, 
including the consistency of such export with United States 
missile nonproliferation policy. Each such numbered 
certification shall contain an item indicating whether any 
offset agreement is proposed to be entered into in connection 
with such letter of offer to sell (if known on the date of 
transmittal of such certification). In addition, the President 
shall, upon the request of such committee or the Committee on 
Foreign Affairs of the House of Representatives, transmit 
promptly to both such committees a statement setting forth, to 
the extent specified in such request--
          (A) * * *

           *       *       *       *       *       *       *

A certification transmitted pursuant to this subsection shall 
be unclassified, except that the information specified in 
clause (ii) and the details of the description specified in 
clause (iii) of subsection (a) may be classified if the public 
disclosure thereof would be clearly detrimental to the security 
of the United States, in which case the information shall be 
accompanied by a description of the damage to the national 
security that could be expected to result from public 
disclosure of the information. [The letter of offer shall not 
be issued, with respect to a proposed sale to the North 
Atlantic Treaty Organization, any member country of such 
Organization, Japan, Australia, or New Zealand, if the 
Congress, within fifteen calendar days after receiving such 
certification, or with respect to a proposed sale to any other 
country or organization, if the Congress within thirty calendar 
days after receiving such certification, enacts a joint 
resolution]
  (2) The letter of offer shall not be issued--
          (A) with respect to a proposed sale of any defense 
        articles or defense services under this Act for 
        $200,000,000 or more, any design and construction 
        services for $300,000,000 or more, or any major defense 
        equipment for $75,000,000 or more, to the North 
        Atlantic Treaty Organization (NATO), any member country 
        of NATO, Japan, Australia, the Republic of Korea, 
        Israel, or New Zealand, if Congress, within 15 calendar 
        days after receiving such certification, or
          (B) with respect to a proposed sale of any defense 
        articles or services under this Act for $100,000,000 or 
        more, any design and construction services for 
        $200,000,000 or more, or any major defense equipment 
        for $50,000,000 or more, to any other country or 
        organization, if Congress, within 30 calendar days 
        after receiving such certification,
enacts a joint resolution prohibiting the proposed sale, unless 
the President states in his certification that an emergency 
exists which requires such sale in the national security 
interests of the United States. If the President states in his 
certification that an emergency exists which requires the 
proposed sale in the national security interest of the United 
States, thus waiving the congressional review requirements of 
this subsection, he shall set forth in the certification a 
detailed justification for his determination, including a 
description of the emergency circumstances which necessitate 
the immediate issuance of the letter of offer and a discussion 
of the national security interests involved.
  [(2)] (3) Any such joint resolution shall be considered in 
the Senate in accordance with the provisions of section 601(b) 
of the International Security Assistance and Arms Export 
Control Act of 1976, except that for purposes of consideration 
of any joint resolution with respect to the North Atlantic 
Treaty Organization, any member country of such Organization, 
Japan, Australia, the Republic of Korea, Israel, or New 
Zealand, it shall be in order in the Senate to move to 
discharge a committee to which such joint resolution was 
referred if such committee has not reported such joint 
resolution at the end of five calendar days after its 
introduction.
  [(3)] (4) For the purpose of expediting the consideration and 
enactment of joint resolutions under this subsection, a motion 
to proceed to the consideration of any such joint resolution 
after it has been reported by the appropriate committee shall 
be treated as highly privileged in the House of 
Representatives.
  [(4)] (5) In addition to the other information required to be 
contained in a certification submitted to the Congress under 
this subsection, each such certification shall cite any 
quarterly report submitted pursuant to section 28 of this Act 
which listed a price and availability estimate, or a request 
for the issuance of a letter of offer, which was a basis for 
the proposed sale which is the subject of such certification.
  [(5)] (6)(A) * * *

           *       *       *       *       *       *       *

  (C) [Subject to paragraph (6), if] If the enhancement or 
upgrade in the sensitivity of technology or the capability of 
major defense equipment, defense articles, defense services, or 
design and construction services described in a numbered 
certification submitted under this subsection costs $14,000,000 
or more in the case of any major defense equipment, $50,000,000 
or more in the case of defense articles or defense services, or 
$200,000,000 or more in the case of design or construction 
services, then the President shall submit to the [Speaker of 
the House of Representatives and the chairman of the Committee 
on Foreign Relations of the Senate] Chairman of the Committee 
on Foreign Affairs of the House of Representatives and the 
Chairman of the Committee on Foreign Relations of the Senate a 
new numbered certification which relates to such enhancement or 
upgrade and which shall be considered for purposes of this 
subsection as if it were a separate letter of offer to sell 
defense equipment, articles, or services, subject to all of the 
requirements, restrictions, and conditions set forth in this 
subsection. For purposes of this subparagraph, references in 
this subsection to sales shall be deemed to be references to 
enhancements or upgrades in the sensitivity of technology or 
the capability of major defense equipment, articles, or 
services, as the case may be.

           *       *       *       *       *       *       *

  [(6) The limitation in paragraph (1) and the requirement in 
paragraph (5)(C) shall apply in the case of a letter of offer 
to sell to a member country of the North Atlantic Treaty 
Organization (NATO) or Australia, Japan, or New Zealand that 
does not authorize a new sales territory that includes any 
country other than such countries only if the letter of offer 
involves--
          [(A) the sale of major defense equipment under this 
        Act for, or the enhancement or upgrade of major defense 
        equipment at a cost of, $25,000,000 or more, as the 
        case may be; and
          [(B) the sale of defense articles or services for, or 
        the enhancement or upgrade of defense articles or 
        services at a cost of, $100,000,000 or more, as the 
        case may be; or
          [(C) the sale of design and construction services 
        for, or the enhancement or upgrade of design and 
        construction services at a cost of, $300,000,000 or 
        more, as the case may be.]
  (c)(1) Subject to paragraph (5), in the case of an 
application by a person (other than with regard to a sale under 
section 21 or section 22 of this Act) for a license for the 
export of any major defense equipment sold under a contract in 
the amount of $14,000,000 or more or of defense articles or 
defense services sold under a contract in the amount of 
$50,000,000 or more (or, in the case of a defense article that 
is a firearm controlled under category I of the United States 
Munitions List, $1,000,000 or more), before issuing such 
license the President shall transmit to the [Speaker of the 
House of Representatives and to the chairman of the Committee 
on Foreign Relations] Chairman of the Committee on Foreign 
Affairs of the House of Representatives and to the Chairman of 
the Committee on Foreign Relations of the Senate an 
unclassified numbered certification with respect to such 
application specifying (A) the foreign country or international 
organization to which such export will be made, (B) the dollar 
amount of the items to be exported, and (C) a description of 
the items to be exported. Each such numbered certification 
shall also contain an item indicating whether any offset 
agreement is proposed to be entered into in connection with 
such export and a description of any such offset agreement. In 
addition, the President shall, upon the request of such 
committee or the Committee on Foreign Affairs of the House of 
Representatives, transmit promptly to both such committees a 
statement setting forth, to the extent specified in such 
request a description of the capabilities of the items to be 
exported, an estimate of the total number of United States 
personnel expected to be needed in the foreign country 
concerned in connection with the items to be exported and an 
analysis of the arms control impact pertinent to such 
application, prepared in consultation with the Secretary of 
Defense. In a case in which such articles or services listed on 
the Missile Technology Control Regime Annex are intended to 
support the design, development, or production of a Category I 
space launch vehicle system (as defined in section 74), such 
report shall include a description of the proposed export and 
rationale for approving such export, including the consistency 
of such export with United States missile nonproliferation 
policy. A certification transmitted pursuant to this subsection 
shall be unclassified, except that the information specified in 
clause (B) and the details of the description specified in 
clause (C) may be classified if the public disclosure thereof 
would be clearly detrimental to the security of the United 
States, in which case the information shall be accompanied by a 
description of the damage to the national security that could 
be expected to result from public disclosure of the 
information.
  (2) Unless the President states in his certification that an 
emergency exists which requires the proposed export in the 
national security interests of the United States, a license for 
export described in paragraph (1)--
          (A) in the case of a license for an export of any 
        major defense equipment sold under a contract in the 
        amount of $75,000,000 or more or of defense articles or 
        defense services sold under a contract in the amount of 
        $200,000,000 or more, (or, in the case of a defense 
        article that is a firearm controlled under category I 
        of the United States Munitions List, $1,000,000 or 
        more) to the North Atlantic Treaty [Organization,] 
        Organization (NATO), any member country of [that 
        Organization] NATO or Australia, Japan, the Republic of 
        Korea, Israel, or New Zealand, shall not be issued 
        until at least 15 calendar days after the Congress 
        receives such certification, and shall not be issued 
        then if the Congress, within that 15-day period, enacts 
        a joint resolution prohibiting the proposed export;

           *       *       *       *       *       *       *

          (C) in the case of any other license for an export of 
        any major defense equipment sold under a contract in 
        the amount of $50,000,000 or more or of defense 
        articles or defense services sold under a contract in 
        the amount of $100,000,000 or more, (or, in the case of 
        a defense article that is a firearm controlled under 
        category I of the United States Munitions List, 
        $1,000,000 or more), shall not be issued until at least 
        30 calendar days after the Congress receives such 
        certification, and shall not be issued then if the 
        Congress, within that 30-day period, enacts a joint 
        resolution prohibiting the proposed export.

           *       *       *       *       *       *       *

  (4) The provisions of [subsection (b)(5)] subsection (b)(6) 
shall apply to any equipment, article, or service for which a 
numbered certification has been transmitted to Congress 
pursuant to paragraph (1) in the same manner and to the same 
extent as that subsection applies to any equipment, article, or 
service for which a numbered certification has been transmitted 
to Congress pursuant to subsection (b)(1). For purposes of such 
application, any reference in [subsection (b)(5)] subsection 
(b)(6) to ``a letter of offer'' or ``an offer'' shall be deemed 
to be a reference to ``a contract''.
  [(5) In the case of an application by a person (other than 
with regard to a sale under section 21 or 22 of this Act) for a 
license for the export to a member country of the North 
Atlantic Treaty Organization (NATO) or Australia, Japan, or New 
Zealand that does not authorize a new sales territory that 
includes any country other than such countries, the limitations 
on the issuance of the license set forth in paragraph (1) shall 
apply only if the license is for export of--
          [(A) major defense equipment sold under a contract in 
        the amount of $25,000,000 or more; or
          [(B) defense articles or defense services sold under 
        a contract in the amount of $100,000,000 or more.]
  (d)(1) * * *
  (2) A certification under this subsection shall be 
submitted--
          (A) at least 15 days before approval is given in the 
        case of an agreement for or in a country which is a 
        member of the North Atlantic Treaty Organization or 
        Australia, Japan, the Republic of Korea, Israel, or New 
        Zealand; and

           *       *       *       *       *       *       *

  (f) The President shall cause to be published in a timely 
manner in the Federal Register, upon transmittal to the 
[Speaker of the House of Representatives and to the chairman of 
the Committee on Foreign Relations] Chairman of the Committee 
on Foreign Affairs of the House of Representatives and to the 
Chairman of the Committee on Foreign Relations of the Senate, 
the full unclassified text of--
          (1) * * *

           *       *       *       *       *       *       *

  (h) Certification Requirement Relating Israel's Qualitative 
Military Edge.--
          (1) In general.--Any certification relating to a 
        proposed sale or export of defense articles or defense 
        services under this section to any country in the 
        Middle East other than Israel shall include a 
        determination that the sale or export of the defense 
        articles or defense services will not adversely affect 
        Israel's qualitative military edge over military 
        threats to Israel.
          (2) Definition.--In this subsection, the term 
        ``qualitative military edge'' has the meaning given the 
        term in section 205 of the Security Assistance and Arms 
        Export Control Reform Act of 2008.

           *       *       *       *       *       *       *

  Sec. 38. Control of Arms Exports and Imports.--(a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  [(3)(A) For each of the fiscal years 1988 and 1989, $250,000 
of registration fees collected pursuant to paragraph (1) shall 
be credited to a Department of State account, to be available 
without fiscal year limitation. Fees credited to that account 
shall be available only for the payment of expenses incurred 
for--
          [(i) contract personnel to assist in the evaluation 
        of munitions control license applications, reduce 
        processing time for license applications, and improve 
        monitoring of compliance with the terms of licenses; 
        and
          [(ii) the automation of munitions control functions 
        and the processing of munitions control license 
        applications, including the development, procurement, 
        and utilization of computer equipment and related 
        software.]
  (3)(A) For each fiscal year, 100 percent of registration fees 
collected pursuant to paragraph (1) shall be credited to a 
Department of State account, to be available without fiscal 
year limitation. Fees credited to that account shall be 
available only for the payment of expenses incurred for--
          (i) management,
          (ii) licensing (in order to meet the requirements of 
        section 105 of the Defense Trade Controls Performance 
        Improvement Act of 2008 (relating to adequate staff and 
        resources of the Directorate of Defense Trade 
        Controls)),
          (iii) compliance,
          (iv) policy activities, and
          (v) facilities,
of defense trade controls functions.

           *       *       *       *       *       *       *

  (k) Special Licensing Authorization for Certain Exports to 
NATO Member States, Australia, Japan, New Zealand, Israel, and 
South Korea.--
          (1) Authorization.--(A) The President may provide for 
        special licensing authorization for exports of United 
        States-manufactured spare and replacement parts or 
        components listed in an application for such special 
        licensing authorization in connection with defense 
        items previously exported to NATO member states, 
        Australia, Japan, New Zealand, Israel, and South Korea. 
        A special licensing authorization issued pursuant to 
        this clause shall be effective for a period not to 
        exceed 5 years.
          (B) An authorization may be issued under subparagraph 
        (A) only if the applicable government of the country 
        described in subparagraph (A), acting through the 
        applicant for the authorization, certifies that--
                  (i) the export of spare and replacement parts 
                or components supports a defense item 
                previously lawfully exported;
                  (ii) the spare and replacement parts or 
                components will be transferred to a defense 
                agency of a country described in subparagraph 
                (A) that is a previously approved end-user of 
                the defense items and not to a distributor or a 
                foreign consignee of such defense items;
                  (iii) the spare and replacement parts or 
                components will not to be used to materially 
                enhance, optimize, or otherwise modify or 
                upgrade the capability of the defense items;
                  (iv) the spare and replacement parts or 
                components relate to a defense item that is 
                owned, operated, and in the inventory of the 
                armed forces a country described in 
                subparagraph (A);
                  (v) the export of spare and replacement parts 
                or components will be effected using the 
                freight forwarder designated by the purchasing 
                country's diplomatic mission as responsible for 
                handling transfers under chapter 2 of this Act 
                as required under regulations; and
                  (vi) the spare and replacement parts or 
                components to be exported under the special 
                licensing authorization are specifically 
                identified in the application.
          (C) An authorization may not be issued under 
        subparagraph (A) for purposes of establishing offshore 
        procurement arrangements or producing defense articles 
        offshore.
          (D)(i) For purposes of this subsection, the term 
        ``United States-manufactured spare and replacement 
        parts or components'' means A spare and replacement 
        parts or components--
                  (I) with respect to which--
                          (aa) United States-origin content 
                        costs constitute at least 85 percent of 
                        the total content costs;
                          (bb) United States manufacturing 
                        costs constitute at least 85 percent of 
                        the total manufacturing costs; and
                          (cc) foreign content, if any, is 
                        limited to content from countries 
                        eligible to receive exports of items on 
                        the United States Munitions List under 
                        the International Traffic in Arms 
                        Regulations (other than de minimis 
                        foreign content); and
                  (II) that were last substantially transformed 
                in the United States.
          (ii) For purposes of clause (i)(I)(aa) and (bb), the 
        costs of non-United States-origin content shall be 
        determined using the final price or final cost 
        associated with the non-United States-origin content.
          (2) Inapplicability provisions.--(A) The provisions 
        of this subsection shall not apply with respect to re-
        exports or re-transfers of spare and replacement parts 
        or components and related services of defense items 
        described in paragraph (1).
          (B) The congressional notification requirements 
        contained in section 36(c) of this Act shall not apply 
        with respect to an authorization issued under paragraph 
        (1).
  (l) Report.--
          (1) In general.--The President shall transmit to the 
        appropriate congressional committees a report that 
        contains a detailed listing, by country and by 
        international organization, of the total dollar value 
        of major defense equipment and defense articles 
        exported pursuant to licenses authorized under this 
        section for the previous fiscal year.
          (2) Inclusion in annual budget.--The report required 
        by this subsection shall be included in the supporting 
        information of the annual budget of the United States 
        Government required to be submitted to Congress under 
        section 1105 of title 31, United States Code.
          (3) Appropriate congressional committees defined.--In 
        this subsection, the term ``appropriate congressional 
        committees'' means the Committee on Foreign Affairs of 
        the House of Representatives and the Committee on 
        Foreign Relations of the Senate.

SEC. 38A. AVAILABILITY OF INFORMATION ON THE STATUS OF LICENSE 
                    APPLICATIONS UNDER THIS CHAPTER.

  (a) Availability of Information.--Not later than one year 
after the date of the enactment of the Defense Trade Controls 
Performance Improvement Act of 2008, the President shall make 
available to persons who have pending license applications 
under this chapter and the committees of jurisdiction the 
ability to access electronically current information on the 
status of each license application required to be submitted 
under this chapter.
  (b) Matters To be Included.--The information referred to in 
subsection (a) shall be limited to the following:
          (1) The case number of the license application.
          (2) The date on which the license application is 
        received by the Department of State and becomes an 
        ``open application''.
          (3) The date on which the Directorate of Defense 
        Trade Controls makes a determination with respect to 
        the license application or transmits it for interagency 
        review, if required.
          (4) The date on which the interagency review process 
        for the license application is completed, if such a 
        review process is required.
          (5) The date on which the Department of State begins 
        consultations with the congressional committees of 
        jurisdiction with respect to the license application.
          (6) The date on which the license application is sent 
        to the congressional committees of jurisdiction.

           *       *       *       *       *       *       *

  Sec. 40. Transactions with Countries Supporting Acts of 
International Terrorism.
  (a) * * *

           *       *       *       *       *       *       *

  (f) Rescission.--(1) A determination made by the Secretary of 
State under subsection (d) may not be rescinded unless the 
President submits to the [Speaker of the House of 
Representatives and the chairman of the Committee on Foreign 
Relations of the Senate] Chairman of the Committee on Foreign 
Affairs of the House of Representatives and the Chairman of the 
Committee on Foreign Relations of the Senate--
          (A) * * *

           *       *       *       *       *       *       *

  (g) Waiver.--The President may waive the prohibitions 
contained in this section with respect to a specific 
transaction if--
          (1) * * *
          (2) not less than 15 days prior to the proposed 
        transaction, the President--
                  (A) * * *
                  (B) submits to the [Speaker of the House of 
                Representatives and the chairman of the 
                Committee on Foreign Relations of the Senate] 
                Chairman of the Committee on Foreign Affairs of 
                the House of Representatives and the Chairman 
                of the Committee on Foreign Relations of the 
                Senate a report containing--
                          (i) * * *

           *       *       *       *       *       *       *

 CHAPTER 5--[SPECIAL DEFENSE ACQUISITION FUND] FOREIGN MILITARY SALES 
                             STOCKPILE FUND

  Sec. 51. [Special Defense Acquisition Fund] Foreign Military 
Sales Stockpile Fund.--(a)(1) Under the direction of the 
President and in consultation with the Secretary of State, the 
Secretary of Defense shall establish a [Special Defense 
Acquisition Fund] Foreign Military Sales Stockpile Fund 
(hereafter in this chapter referred to as the ``Fund''), to be 
used as a revolving fund separate from other accounts, under 
the control of the Department of Defense, to finance the 
acquisition of defense articles and defense service in 
anticipation of their transfer pursuant to this Act, the 
Foreign Assistance Act of 1961, or as otherwise authorized by 
law, to eligible foreign countries and international 
organizations, and may acquire such articles and services with 
the funds in the Fund as he may determine. Acquisition under 
this chapter of items for which the initial issue quantity 
requirements for United States Armed Forces have not been 
fulfilled and are not under current procurement contract shall 
be emphasized when compatible with security assistance 
requirements for the transfer of such items.

           *       *       *       *       *       *       *

  (4) The Fund shall also be used to acquire defense articles 
that are particularly suited for use for building the capacity 
of recipient countries and narcotics control purposes and are 
appropriate to the needs of recipient countries, such as small 
boats, planes (including helicopters), and communications 
equipment.
  (b) The Fund shall consist of--
          (1) * * *
          (2) collections from sales representing the value of 
        asset use charges (including contractor rental payments 
        for United States Government-owned plant and production 
        equipment) and charges for the proportionate recoupment 
        of nonrecurring research, development, and production 
        costs, [and]
          (3) collections from sales made under letters of 
        offer (or transfers made under the Foreign Assistance 
        Act of 1961) of defense articles and defense services 
        acquired under this chapter, representing the value of 
        such items calculated in accordance with subparagraph 
        (B) or (C) of section 21(a)(1) or section 22 of this 
        Act or section 644(m) of the Foreign Assistance Act of 
        1961, as appropriate, and
          (4) collections from leases made pursuant to section 
        61 of this Act,
together with such funds as may be authorized and appropriated 
or otherwise made available for the purposes of the Fund.
  (c)(1) * * *
  [(2) Amounts in the Fund shall be available for obligation in 
any fiscal year only to such extent or in such amounts as are 
provided in advance in appropriation Acts.]
  (2) Amounts credited to the Fund under subsection (b) shall 
remain available until expended.

           *       *       *       *       *       *       *

     CHAPTER 6--LEASES OF DEFENSE ARTICLES AND LOAN AUTHORITY FOR 
COOPERATIVE RESEARCH AND DEVELOPMENT PURPOSES

           *       *       *       *       *       *       *

  Sec. 62. Reports to the Congress.--(a) Before entering into 
or renewing any agreement with a foreign country or 
international organization to lease any defense article under 
this chapter, or to loan any defense article under chapter 2 of 
part II of the Foreign Assistance Act of 1961, for a period of 
one year or longer, the President shall transmit to the 
[Speaker of the House of Representatives, and to the chairman 
of the Committee on Foreign Relations] Chairman of the 
Committee on Foreign Affairs of the House of Representatives 
and to the Chairman of the Committee on Foreign Relations of 
the Senate and the chairman of the Committee on Armed Services 
of the Senate, a written certification which specifies--
          (1) * * *

           *       *       *       *       *       *       *

  (c) The certification required by subsection (a) shall be 
transmitted--
          (1) not less than 15 calendar days before the 
        agreement is entered into or renewed in the case of an 
        agreement with the North Atlantic Treaty Organization, 
        any member country of that Organization or Australia, 
        Japan, the Republic of Korea, Israel, or New Zealand; 
        and

           *       *       *       *       *       *       *

  Sec. 63. Legislative Review.--(a)(1) * * *
  (2) In the case of an agreement described in paragraph (1) 
that is entered into with a member country of the North 
Atlantic Treaty Organization (NATO) or Australia, Japan, the 
Republic of Korea, Israel, or New Zealand, the limitations in 
paragraph (1) shall apply only if the agreement involves a 
lease or loan of--
          (A) * * *

           *       *       *       *       *       *       *

             CHAPTER 10--NUCLEAR NONPROLIFERATION CONTROLS

SEC. 101. NUCLEAR ENRICHMENT TRANSFERS.

  (a) * * *

           *       *       *       *       *       *       *

  (b) Certification by President of Necessity of Continued 
Assistance; Disapproval by Congress.--(1) Notwithstanding 
subsection (a) of this section, the President may furnish 
assistance which would otherwise be prohibited under such 
subsection if he determines and certifies in writing to the 
[Speaker of the House of Representatives and the Committee on 
Foreign Relations of the Senate] Committee on Foreign Affairs 
of the House of Representatives and the Committee on Foreign 
Relations of the Senate that--
          (A) * * *

           *       *       *       *       *       *       *

SEC. 102. NUCLEAR REPROCESSING TRANSFERS, ILLEGAL EXPORTS FOR NUCLEAR 
                    EXPLOSIVE DEVICES, TRANSFERS OF NUCLEAR EXPLOSIVE 
                    DEVICES, AND NUCLEAR DETONATIONS.

  (a) Prohibitions on Assistance to Countries Involved in 
Transfer of Nuclear Reprocessing Equipment, Materials, or 
Technology; Exceptions; Procedures Applicable.--(1) * * *

           *       *       *       *       *       *       *

  (2) Notwithstanding paragraph (1) of this subsection, the 
President in any fiscal year may furnish assistance which would 
otherwise be prohibited under that paragraph if he determines 
and certifies in writing during that fiscal year to the 
[Speaker of the House of Representatives and the Committee on 
Foreign Relations of the Senate] Committee on Foreign Affairs 
of the House of Representatives and the Committee on Foreign 
Relations of the Senate that the termination of such assistance 
would be seriously prejudicial to the achievement of United 
States nonproliferation objectives or otherwise jeopardize the 
common defense and security. The President shall transmit with 
such certification a statement setting forth the specific 
reasons therefor.

           *       *       *       *       *       *       *

  (b) Prohibitions on Assistance to Countries Involved in 
Transfer or Use of Nuclear Explosive Devices; Exceptions; 
Procedures Applicable.--(1) * * *

           *       *       *       *       *       *       *

  (4)(A) Notwithstanding paragraph (1) of this subsection, the 
President may, for a period of not more than 30 days of 
continuous session, delay the imposition of sanctions which 
would otherwise be required under paragraph (1)(A) or (1)(B) of 
this subsection if the President first transmits to the 
[Speaker of the House of Representatives, and to the chairman 
of the Committee on Foreign Relations] Chairman of the 
Committee on Foreign Affairs of the House of Representatives 
and to the Chairman of the Committee on Foreign Relations of 
the Senate, a certification that he has determined that an 
immediate imposition of sanctions on that country would be 
detrimental to the national security of the United States. Not 
more than one such certification may be transmitted for a 
country with respect to the same detonation, transfer, or 
receipt of a nuclear explosive device.

           *       *       *       *       *       *       *

  (5) Notwithstanding paragraph (1) of this subsection, if the 
Congress enacts a joint resolution under paragraph (4) of this 
subsection, the President may waive any sanction which would 
otherwise be required under paragraph (1)(A) or (1)(B) if he 
determines and certifies in writing to the [Speaker of the 
House of Representatives and the Committee on Foreign Relations 
of the Senate] Committee on Foreign Affairs of the House of 
Representatives and the Committee on Foreign Relations of the 
Senate that the imposition of such sanction would be seriously 
prejudicial to the achievement of United States 
nonproliferation objectives or otherwise jeopardize the common 
defense and security. The President shall transmit with such 
certification a statement setting forth the specific reasons 
therefor.

           *       *       *       *       *       *       *

                              ----------                              

                     FOREIGN ASSISTANCE ACT OF 1961

           *       *       *       *       *       *       *
TITLE XII--FAMINE PREVENTION AND FREEDOM FROM HUNGER

           *       *       *       *       *       *       *

PART II

           *       *       *       *       *       *       *

Chapter 2--Military Assistance

           *       *       *       *       *       *       *

  Sec. 514. Stockpiling of Defense Articles for Foreign 
Countries.--(a) * * *
  (b)(1) * * *
  (2)(A) The value of such additions to stockpiles of defense 
articles in foreign countries shall not exceed $200,000,000 for 
each of fiscal years [2007 and 2008] 2009 and 2010.

           *       *       *       *       *       *       *

PART III

           *       *       *       *       *       *       *

Chapter 2--Administrative Provisions

           *       *       *       *       *       *       *

  Sec. 632. Allocation and Reimbursement Among Agencies.--(a) * 
* *

           *       *       *       *       *       *       *

  (d)(1) Except as otherwise provided in section 506, 
reimbursement shall be made to any United States Government 
agency, from funds available for use under part II, for any 
assistance furnished under part II from, by, or through such 
agency. Such reimbursement shall be in an amount equal to the 
value (as defined in section 644(m)) of the defense articles or 
of the defense services (other than salaries of members of the 
Armed Forces of the United States), or other assistance 
furnished, plus expenses arising from or incident to operations 
under part II (other than salaries of the Armed Forces of the 
United States and unfunded estimated costs of civilian 
retirement and other benefits). The amount of such 
reimbursement shall be credited to the current applicable 
appropriations, funds, or accounts of such agency.
  (2) Notwithstanding provisions concerning the exclusion of 
the costs of salaries of members of the Armed Forces in section 
503(a) of this Act and paragraph (1) of this subsection, the 
full cost of salaries of members of the reserve components of 
the Armed Forces (specified in section 10101 of title 10, 
United States Code) may, during each of fiscal years 2009 and 
2010, be included in calculating pricing or value for 
reimbursement charged under section 503(a) of this Act and 
paragraph (1) of this subsection, respectively.

           *       *       *       *       *       *       *

Chapter 3--Miscellaneous Provisions

           *       *       *       *       *       *       *

SEC. 655. ANNUAL MILITARY ASSISTANCE REPORT.

  (a) * * *
  (b) Information Relating to Military Assistance and Military 
Exports.--Each such report shall show the aggregate dollar 
value and quantity of defense articles (including excess 
defense articles), defense services, and international military 
education and training activities authorized by the United 
States and of such articles, services, and activities provided 
by the United States, excluding any activity that is reportable 
under title V of the National Security Act of 1947, to each 
foreign country and international organization. The report 
shall specify, by category, whether such defense articles--
          (1) * * *
          (2) were furnished with the financial assistance of 
        the United States Government, including through loans 
        and guarantees; [or]
          (3) were licensed for export under section 38 of the 
        Arms Export Control Act and, if so, a specification of 
        those defense articles that were exported during the 
        fiscal year covered by the report, including, in the 
        case of defense articles that are firearms controlled 
        under category I of the United States Munitions List, a 
        statement of the aggregate dollar value and quantity of 
        semiautomatic assault weapons, or spare parts for such 
        weapons, the manufacture, transfer, or possession of 
        which is unlawful under section 922 of title 18, United 
        States Code, that were licensed for export during the 
        period covered by the report[.]; or
          (4) were exported without a license under section 38 
        of the Arms Export Control Act (22 U.S.C. 2778) 
        pursuant to an exemption established under the 
        International Traffic in Arms Regulations, other than 
        defense articles exported in furtherance of a letter of 
        offer and acceptance under the Foreign Military Sales 
        program or a technical assistance or manufacturing 
        license agreement, including the specific exemption 
        provision in the regulation under which the export was 
        made.

           *       *       *       *       *       *       *

                              ----------                              

  SECTION 12001 OF THE DEPARTMENT OF DEFENSE APPROPRIATIONS ACT, 2005

                    General Provisions, This Chapter

  Sec. 12001. (a) * * *

           *       *       *       *       *       *       *

  (d) No transfer may be made under the authority of this 
section more than [4] 6 years after the date of the enactment 
of this Act.

           *       *       *       *       *       *       *

   Exchange of Letters--Armed Services Committee and Foreign Affairs 
                               Committee

                               Committee on Armed Services,
                                      Washington, DC, May 12, 2008.

The Honorable Howard L. Berman, Chairman,
Committee on Foreign Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: I write to confirm our mutual 
understanding regarding H.R. 5916, ``To reform the 
administration of the Arms Export Control Act, and for other 
purposes.'' This legislation contains subject matter within the 
jurisdiction of the House Committee on Armed Services.
    Our Committee recognizes the importance of H.R. 5916 and 
the need for the legislation to move expeditiously. Therefore, 
while we have a valid claim to jurisdiction over this 
legislation, the Committee on Armed Services will waive further 
consideration of H.R. 5916. I do so with the understanding that 
by waiving further consideration of the bill, the Committee 
does not waive any future jurisdictional claims over similar 
measures. In the event of a conference with the Senate on this 
bill, the Committee on Armed Services reserves the right to 
seek the appointment of conferees.
    I would appreciate the inclusion of this letter and a copy 
of the response in your Committee's report on H.R. 5916 and in 
the Congressional Record during consideration of the measure on 
the House floor.

            Very truly yours,
                                     Ike Skelton, Chairman.

IS:jfh

cc:
        Honorable Nancy Pelosi
        Honorable Duncan Hunter
        Honorable Ileana Ros-Lehtinen
        Honorable John V. Sullivan
                              ----------                              

      
                              Committee on Foreign Affairs,
                                      Washington, DC, May 12, 2008.

The Honorable Ike Skelton, Chairman,
Committee on Armed Services,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: Thank you for your letter regarding H.R. 
5916, the Security Assistance and Arms Export Control Reform 
Act of 2008.
    I appreciate your willingness to work cooperatively on this 
legislation. I recognize that the bill contains provisions that 
fall within the jurisdiction of the Committee on Armed 
Services. I agree that the inaction of your Committee with 
respect to the bill does not in any way prejudice the Armed 
Services Committee's jurisdictional interests and prerogatives 
regarding this bill or similar legislation.
    Further, as to any House-Senate conference on the bill, I 
understand that your Committee reserves the right to seek the 
appointment of conferees for consideration of portions of the 
bill that are within the Committee's jurisdiction.
    I will ensure that our exchange of letters is included in 
my Committee's report on the bill and in the Congressional 
Record during consideration on the House floor. I look forward 
to working with you on this important legislation. If you wish 
to discuss this matter further, please contact me or have your 
staff contact my staff.

            Cordially,
                                Howard L. Berman, Chairman.

HLB:da/mco

                                  
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