II 

Calendar No. 388

108TH CONGRESS 

1ST SESSION S. 1862

To provide certain exceptions from requirements for bilateral agreements 

with Australia and the United Kingdom for exemptions from the International Traffic in Arms Regulations. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 14 (legislative day, NOVEMBER 12), 2003

Mr. LUGAR introduced the following bill; which was read the first time 

NOVEMBER 17, 2003

Read the second time and placed on the calendar 

A BILL

To provide certain exceptions from requirements for bilateral 

agreements with Australia and the United Kingdom for 

exemptions from the International Traffic in Arms Regulations.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Defense Trade Co5 operation Act of 2003’’. 
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1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) Close defense cooperation between the 

4 United States and each of the United Kingdom and 

5 Australia requires interoperability among the armed 

6 forces. 

7 (2) The need for interoperability must be bal8 anced with the need for the appropriate and effective 

9 regulation of trade in defense articles and defense 

10 services. 

11 (3) The Arms Export Control Act (22 U.S.C. 

12 2751 et seq.) represents a delegation to the execu13 tive branch of the constitutional power of Congress 

14 to regulate commerce with foreign nations. 

15 (4) Agreements to gain exemption from the 

16 International Traffic in Arms Regulations must be 

17 submitted to Congress for review. 

18 SEC. 3. DEFINITIONS. 

19 In this Act—

20 (1) the term ‘‘appropriate congressional com21 mittees’’ means the Committee on International Re22 lations of the House of Representatives and the 

23 Committee on Foreign Relations of the Senate; 

24 (2) the term ‘‘defense articles’’ has the meaning 

25 given the term in section 47 of the Arms Export 

26 Control Act (22 U.S.C. 2794); 
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1 (3) the term ‘‘defense services’’ has the mean2 ing given the term in section 47 of the Arms Export 

3 Control Act (22 U.S.C. 2794); and 

4 (4) the term ‘‘International Traffic in Arms 

5 Regulations’’ means the regulations maintained 

6 under sections 120 through 130 of title 22, Code of 

7 Federal Regulations, or any successor regulations. 

8 SEC. 4. EXCEPTIONS TO BILATERAL AGREEMENT REQUIRE9 MENTS FOR AUSTRALIA AND THE UNITED 

10 KINGDOM. 

11 (a) EXCEPTIONS.—Subsection (j) of section 38 of the 

12 Arms Export Control Act (22 U.S.C. 2778) is amended—

13 (1) by redesignating paragraph (4) as para14 graph (5); and 

15 (2) by inserting after paragraph (3) the fol16 lowing new paragraph (4): 

17 ‘‘(4) EXCEPTIONS FROM BILATERAL AGREE18 MENT REQUIREMENTS.—

19 ‘‘(A) AUSTRALIA.—Subject to the provi20 sions of the Defense Trade Cooperation Act of 

21 2003, the requirements for a bilateral agree22 ment described in paragraph (2)(A) shall not 

23 apply to such a bilateral agreement between the 

24 United States Government and the Government 

25 of Australia with respect to transfers or 
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1 changes in end use within Australia of defense 

2 items that will remain subject to the licensing 

3 requirements of this Act after such agreement 

4 enters into force. 

5 ‘‘(B) UNITED KINGDOM.—Subject to the 

6 provisions of the Defense Trade Cooperation 

7 Act of 2003, the requirements for a bilateral 

8 agreement described in paragraphs (1)(A)(ii), 

9 (2)(A)(i), and (2)(A)(ii) shall not apply to such 

10 a bilateral agreement between the United 

11 States Government and the Government of the 

12 United Kingdom for an exemption from the li13 censing requirements of this Act.’’. 

14 (b) CONFORMING AMENDMENT.—Paragraph (2) of 

15 such subsection is amended in the matter preceding sub16 paragraph (A) by striking ‘‘A bilateral agreement’’ and 

17 inserting ‘‘Except as provided in paragraph (4), a bilateral 

18 agreement’’. 

19 SEC. 5. CERTIFICATIONS FOR THE UNITED KINGDOM AND 

20 AUSTRALIA. 

21 Not later than 30 days before authorizing an exemp22 tion from the licensing requirements of the International 

23 Traffic in Arms Regulations in accordance with any bilat24 eral agreement entered into with the United Kingdom or 

25 Australia under section 38(j) of the Arms Export Control 
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1 Act (22 U.S.C. 2778(j)), as amended by section 4 of this 

2 Act, the President shall certify to the appropriate congres3 sional committees that such agreement—

4 (1) is in the national interest of the United 

5 States and will not in any way affect the goals and 

6 policy of the United States as outlined in section 1 

7 of the Arms Export Control Act (22 U.S.C. 2751); 

8 (2) does not adversely affect the ability of the 

9 International Traffic in Arms Regulations to provide 

10 consistent and adequate controls for licensed exports 

11 of United States defense items; and 

12 (3) will not adversely affect the duties or re13 quirements of the Secretary of State under the Arms 

14 Export Control Act. 

15 SEC. 6. NOTIFICATION OF REGULATIONS PERMITTING BI16 LATERAL LICENSING EXEMPTIONS. 

17 Not later than 30 days before authorizing an exemp18 tion from the licensing requirements of the International 

19 Traffic in Arms Regulations in accordance with any bilat20 eral agreement entered into with the United Kingdom or 

21 Australia under section 38(j) of the Arms Export Control 

22 Act (22 U.S.C. 2778(j)), as amended by section 4 of this 

23 Act, the President shall submit to the appropriate congres24 sional committees the text of the regulations that author25 ize such a licensing exemption.
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1 SEC. 7. REPORT ON ISSUES RAISED IN CONSULTATIONS 

2 PURSUANT TO BILATERAL AGREEMENTS 

3 WITH AUSTRALIA AND THE UNITED KING4 DOM. 

5 Not later than one year after the date of the enact6 ment of this Act and annually thereafter for each of the 

7 following 5 years, the President shall submit to the appro8 priate congressional committees a report on issues raised 

9 during the previous year in consultations conducted under 

10 the terms of any bilateral agreement with Australia, or 

11 under the terms of any bilateral agreement with the 

12 United Kingdom, for exemption from the licensing re13 quirements of the Arms Export Control Act (22 U.S.C. 

14 2751 et seq.). Each report shall contain detailed informa15 tion—

16 (1) on any notifications or consultations be17 tween the United States and the United Kingdom 

18 under the terms of any agreement with the United 

19 Kingdom, or between the United States and Aus20 tralia under the terms of any agreement with Aus21 tralia, concerning the modification, deletion, or addi22 tion of defense items on the United States Munitions 

23 List, the United Kingdom Military List, or the Aus24 tralian Defense and Strategic Goods List; 

25 (2) listing all United Kingdom or Australia per26 sons and entities that have been designated as quali-
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1 fied persons eligible to receive United States origin 

2 defense items exempt from the licensing require3 ments of the Arms Export Control Act under the 

4 terms of such agreements, and listing any modifica5 tion, deletion, or addition to such lists, pursuant to 

6 the requirements of any agreement with the United 

7 Kingdom or any agreement with Australia; 

8 (3) on consultations or steps taken pursuant to 

9 any agreement with the United Kingdom or any 

10 agreement with Australia concerning cooperation 

11 and consultation with either government on the ef12 fectiveness of the defense trade control systems of 

13 such government; 

14 (4) on provisions and procedures undertaken 

15 pursuant to—

16 (A) any agreement with the United King17 dom with respect to the handling of United 

18 States origin defense items exempt from the li19 censing requirements of the Arms Export Con20 trol Act by persons and entities qualified to re21 ceive such items in the United Kingdom; and 

22 (B) any agreement with Australia with re23 spect to the handling of United States origin 

24 defense items exempt from the licensing re25 quirements of the Arms Export Control Act by 
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1 persons and entities qualified to receive such 

2 items in Australia; 

3 (5) on any new understandings, including the 

4 text of such understandings, between the United 

5 States and the United Kingdom concerning re6 transfer of United States origin defense items made 

7 pursuant to any agreement with the United King8 dom to gain exemption from the licensing require9 ments of the Arms Export Control Act; 

10 (6) on consultations with the Government of the 

11 United Kingdom or the Government of Australia 

12 concerning the legal enforcement of any such agree13 ments; 

14 (7) on United States origin defense items with 

15 respect to which the United States has provided an 

16 exception under the Memorandum of Understanding 

17 between the United States and the United Kingdom 

18 and any agreement between the United States and 

19 Australia from the requirement for United States 

20 Government re-export consent that was not provided 

21 for under United States laws and regulations in ef22 fect on the date of the enactment of this Act; and 

23 (8) on any significant concerns that have arisen 

24 between the Government of Australia or the Govern25 ment of the United Kingdom and the United States 
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1 Government concerning any aspect of any bilateral 

2 agreement between such country and the United 

3 States to gain exemption from the licensing require4 ments of the Arms Export Control Act. 

5 SEC. 8. SPECIAL REPORTS ON UNAUTHORIZED END-USE OR 

6 DIVERSION. 

7 The Secretary of State shall notify the appropriate 

8 congressional committees, in a manner consistent with on9 going efforts to investigate and bring civil or criminal 

10 charges regarding such matters, not later than 90 days 

11 after receiving any credible information regarding the un12 authorized end-use or diversion of United States exports 

13 made pursuant to any agreement with a country to gain 

14 exemption from the licensing requirements of the Arms 

15 Export Control Act. Such notification may be made in 

16 classified or unclassified form and shall include—

17 (1) a description of the good or service; 

18 (2) the United States origin of the good or 

19 service; 

20 (3) the authorized recipient of the good or serv21 ice; 

22 (4) a detailed description of the unauthorized 

23 end-use or diversion of the good or service, including 

24 any knowledge by the United States exporter of such 

25 unauthorized end-use or diversion; 
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1 (5) any enforcement action taken by the Gov2 ernment of the United States; and 

3 (6) any enforcement action taken by the gov4 ernment of the recipient nation.

Calendar No. 388

108TH CONGRESS 

1ST SESSION S. 1862

A BILL

To provide certain exceptions from requirements for 

bilateral agreements with Australia and the United Kingdom for exemptions from the International Traffic in Arms Regulations. 

NOVEMBER 17, 2003

Read the second time and placed on the calendar