IIA
104TH CONGRESS
2D SESSION
H. R. 3121
IN THE SENATE OF THE UNITED STATES
APRIL 17, 1996
Received; read twice and referred to the Committee on Foreign Relations
AN ACT
To amend the Foreign Assistance Act of 1961 and the Arms
Export Control Act to make improvements to certain
defense and security assistance provisions under those
Acts, to authorize the transfer of naval vessels to certain
foreign countries, and for other purposes.
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Table of contents.
TITLE I—DEFENSE AND SECURITY ASSISTANCE
CHAPTER 1—MILITARY AND RELATED ASSISTANCE
Sec. 101. Terms of loans under the Foreign Military Financing program.
Sec. 102. Additional requirements under the Foreign Military Financing pro-
gram.
Sec. 103. Drawdown special authorities.
Sec. 104. Transfer of excess defense articles.
Sec. 105. Excess defense articles for certain European countries.
CHAPTER 2—INTERNATIONAL MILITARY EDUCATION AND TRAINING
Sec. 111. Assistance for Indonesia.
Sec. 112. Additional requirements.
CHAPTER 3—ANTITERRORISM ASSISTANCE
Sec. 121. Antiterrorism training assistance.
Sec. 122. Research and development expenses.
CHAPTER 4—NARCOTICS CONTROL ASSISTANCE
Sec. 131. Additional requirements.
Sec. 132. Notification requirement.
Sec. 133. Waiver of restrictions for narcotics-related economic assistance.
CHAPTER 5—OTHER PROVISIONS
Sec. 141. Standardization of congressional review procedures for arms trans-
fers.
Sec. 142. Standardization of third country transfers of defense articles.
Sec. 143. Increased standardization, rationalization, and interoperability of as-
sistance and sales programs.
Sec. 144. Definition of significant military equipment.
Sec. 145. Elimination of annual reporting requirement relating to the Special
Defense Acquisition Fund.
Sec. 146. Cost of leased defense articles that have been lost or destroyed.
Sec. 147. Designation of major non-NATO allies.
Sec. 148. Certification thresholds.
Sec. 149. Depleted uranium ammunition.
Sec. 150. End-use monitoring of defense articles and defense services.
Sec. 151. Brokering activities relating to commercial sales of defense articles
and services.
Sec. 152. Return and exchanges of defense articles previously transferred pur-
suant to the arms export control act.
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Sec. 153. National security interest determination to waive reimbursement of
depreciation for leased defense articles.
Sec. 154. Eligibility of Panama under Arms Export Control Act.
TITLE II—TRANSFER OF NAVAL VESSELS TO CERTAIN FOREIGN
COUNTRIES
Sec. 201. Authority to transfer naval vessels.
Sec. 202. Costs of transfers.
Sec. 203. Expiration of authority.
Sec. 204. Repair and refurbishment of vessels in United States shipyards.
TITLE I—DEFENSE AND
SECURITY ASSISTANCE
CHAPTER 1—MILITARY AND RELATED
ASSISTANCE
SEC. 101. TERMS OF LOANS UNDER THE FOREIGN MILI-
TARY FINANCING PROGRAM.
Section 31(c) of the Arms Export Control Act (22
U.S.C. 2771(c)) is amended to read as follows:
‘‘(c) Loans available under section 23 shall be pro-
vided at rates of interest that are not less than the current
average market yield on outstanding marketable obliga-
tions of the United States of comparable maturities.’’.
SEC. 102. ADDITIONAL REQUIREMENTS UNDER THE FOR-
EIGN MILITARY FINANCING PROGRAM.
(a) AUDIT OF CERTAIN PRIVATE FIRMS.—Section 23
of the Arms Export Control Act (22 U.S.C. 2763) is
amended by adding at the end the following new sub-
section:
‘‘(f) For each fiscal year, the Secretary of Defense,
as requested by the Director of the Defense Security As-
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sistance 
Agency, 
shall 
conduct 
audits 
on 
a
nonreimbursable basis of private firms that have entered
into contracts with foreign governments under which de-
fense articles, defense services, or design and construction
services are to be procured by such firms for such govern-
ments from financing under this section.’’.
(b) NOTIFICATION REQUIREMENT WITH RESPECT
TO CASH FLOW FINANCING.—Section 23 of such Act (22
U.S.C. 2763), as amended by this Act, is further amended
by adding at the end the following new subsection:
‘‘(g)(1) For each country and international organiza-
tion that has been approved for cash flow financing under
this section, any letter of offer and acceptance or other
purchase agreement, or any amendment thereto, for a pro-
curement of defense articles, defense services, or design
and construction services in excess of $100,000,000 that
is to be financed in whole or in part with funds made avail-
able under this Act or the Foreign Assistance Act of 1961
shall be submitted to the congressional committees speci-
fied in section 634A(a) of the Foreign Assistance Act of
1961 in accordance with the procedures applicable to
reprogramming notifications under that section.
‘‘(2) For purposes of this subsection, the term ‘cash
flow financing’ has the meaning given such term in the
second subsection (d) of section 25.’’.
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(c) LIMITATIONS ON USE OF FUNDS FOR DIRECT
COMMERCIAL CONTRACTS.—Section 23 of such Act (22
U.S.C. 2763), as amended by this Act, is further amended
by adding at the end the following new subsection:
‘‘(h) Of the amounts made available for a fiscal year
to carry out this section, not more than $100,000,000 for
such fiscal year may be made available for countries other
than Israel and Egypt for the purpose of financing the
procurement of defense articles, defense services, and de-
sign and construction services that are not sold by the
United States Government under this Act.’’.
(d) ANNUAL ESTIMATE
AND JUSTIFICATION
FOR
SALES PROGRAM.—Section 25(a) of such Act (22 U.S.C.
2765(a)) is amended—
(1) by striking the ‘‘and’’ at the end of para-
graph (11);
(2) by redesignating paragraph (12) as para-
graph (13); and
(3) by inserting after paragraph (11) the fol-
lowing new paragraph:
‘‘(12)(A) a detailed accounting of all articles,
services, credits, guarantees, or any other form of
assistance furnished by the United States to each
country and international organization, including
payments to the United Nations, during the preced-
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ing fiscal year for the detection and clearance of
landmines, including activities relating to the fur-
nishing of education, training, and technical assist-
ance for the detection and clearance of landmines;
and
‘‘(B) for each provision of law making funds
available or authorizing appropriations for demining
activities described in subparagraph (A), an analysis
and description of the objectives and activities un-
dertaken during the preceding fiscal year, including
the number of personnel involved in performing such
activities; and’’.
SEC. 103. DRAWDOWN SPECIAL AUTHORITIES.
(a) UNFORESEEN EMERGENCY DRAWDOWN.—Sec-
tion 506(a)(1) of the Foreign Assistance Act of 1961 (22
U.S.C. 2318(a)(1)) is amended by striking ‘‘$75,000,000’’
and inserting ‘‘$100,000,000’’.
(b) ADDITIONAL DRAWDOWN.—Section 506 of such
Act (22 U.S.C. 2318) is amended—
(1) in subsection (a)(2)(A), by striking ‘‘defense
articles from the stocks’’ and all that follows and in-
serting the following: ‘‘articles and services from the
inventory and resources of any agency of the United
States Government and military education and
training from the Department of Defense, the Presi-
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dent may direct the drawdown of such articles, serv-
ices, and military education and training—
‘‘(i) for the purposes and under the au-
thorities of—
‘‘(I) chapter 8 of part I (relating to
international narcotics control assistance);
‘‘(II) chapter 9 of part I (relating to
international disaster assistance); or
‘‘(III) the Migration and Refugee As-
sistance Act of 1962; or
‘‘(ii) for the purpose of providing such arti-
cles, services, and military education and train-
ing to Vietnam, Cambodia, and Laos as the
President determines are necessary—
‘‘(I) to support cooperative efforts to
locate and repatriate members of the Unit-
ed States Armed Forces and civilians em-
ployed directly or indirectly by the United
States Government who remain unac-
counted for from the Vietnam War; and
‘‘(II) to ensure the safety of United
States Government personnel engaged in
such cooperative efforts and to support De-
partment of Defense-sponsored humani-
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tarian projects associated with such ef-
forts.’’;
(2) 
in 
subsection 
(a)(2)(B), 
by 
striking
‘‘$75,000,000’’ and all that follows and inserting
‘‘$150,000,000 in any fiscal year of such articles,
services, and military education and training may be
provided pursuant to subparagraph (A) of this para-
graph—
‘‘(i) not more than $75,000,000 of which
may be provided from the drawdown from the
inventory and resources of the Department of
Defense;
‘‘(ii) not more than $75,000,000 of which
may be provided pursuant to clause (i)(I) of
such subparagraph; and
‘‘(iii) not more than $15,000,000 of which
may be provided to Vietnam, Cambodia, and
Laos pursuant to clause (ii) of such subpara-
graph.’’; and
(3) in subsection (b)(1), by adding at the end
the following: ‘‘In the case of drawdowns authorized
by 
subclauses 
(I) 
and 
(III) 
of 
subsection
(a)(2)(A)(i), notifications shall be provided to those
committees at least 15 days in advance of the
drawdowns in accordance with the procedures appli-
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cable to reprogramming notifications under section
634A.’’.
(c) NOTICE TO CONGRESS OF EXERCISE OF SPECIAL
AUTHORITIES.—Section 652 of such Act (22 U.S.C.
2411) is amended by striking ‘‘prior to the date’’ and in-
serting ‘‘before’’.
SEC. 104. TRANSFER OF EXCESS DEFENSE ARTICLES.
(a) IN GENERAL.—Section 516 of the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2321j) is amended to read
as follows:
‘‘SEC. 516. AUTHORITY TO TRANSFER EXCESS DEFENSE AR-
TICLES.
‘‘(a) AUTHORIZATION.—The President is authorized
to transfer excess defense articles under this section to
countries for which receipt of such articles was justified
pursuant to the annual congressional presentation docu-
ments for military assistance programs, or for programs
under chapter 8 of part I of this Act, submitted under
section 634 of this Act, or for which receipt of such arti-
cles was separately justified to the Congress, for the fiscal
year in which the transfer is authorized.
‘‘(b) LIMITATIONS ON TRANSFERS.—The President
may transfer excess defense articles under this section
only if—
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‘‘(1) such articles are drawn from existing
stocks of the Department of Defense;
‘‘(2) funds available to the Department of De-
fense for the procurement of defense equipment are
not expended in connection with the transfer;
‘‘(3) the transfer of such articles will not have
an adverse impact on the military readiness of the
United States;
‘‘(4) with respect to a proposed transfer of such
articles on a grant basis, such a transfer is pref-
erable to a transfer on a sales basis, after taking
into account the potential proceeds from, and likeli-
hood of, such sales, and the comparative foreign pol-
icy benefits that may accrue to the United States as
the result of a transfer on either a grant or sales
basis;
‘‘(5) the President determines that the transfer
of such articles will not have an adverse impact on
the national technology and industrial base and, par-
ticularly, will not reduce the opportunities of entities
in the national technology and industrial base to sell
new or used equipment to the countries to which
such articles are transferred; and
‘‘(6) the transfer of such articles is consistent
with the policy framework for the Eastern Medi-
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terranean established under section 620C of this
Act.
‘‘(c) TERMS OF TRANSFERS.—
‘‘(1) NO COST TO RECIPIENT COUNTRY.—Ex-
cess defense articles may be transferred under this
section without cost to the recipient country.
‘‘(2) PRIORITY.—Notwithstanding any other
provision of law, the delivery of excess defense arti-
cles under this section to member countries of the
North Atlantic Treaty Organization (NATO) on the
southern and southeastern flank of NATO and to
major non-NATO allies on such southern and south-
eastern flank shall be given priority to the maximum
extent feasible over the delivery of such excess de-
fense articles to other countries.
‘‘(d) WAIVER OF REQUIREMENT FOR REIMBURSE-
MENT OF DEPARTMENT OF DEFENSE EXPENSES.—Sec-
tion 632(d) shall not apply with respect to transfers of
excess defense articles (including transportation and relat-
ed costs) under this section.
‘‘(e) TRANSPORTATION AND RELATED COSTS.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), funds available to the Department of De-
fense may not be expended for crating, packing,
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handling, and transportation of excess defense arti-
cles transferred under the authority of this section.
‘‘(2) EXCEPTION.—The President may provide
for the transportation of excess defense articles with-
out charge to a country for the costs of such trans-
portation if—
‘‘(A) it is determined that it is in the na-
tional interest of the United States to do so;
‘‘(B) the recipient is a developing country
receiving less than $10,000,000 of assistance
under chapter 5 of part II of this Act (relating
to international military education and train-
ing) or section 23 of the Arms Export Control
Act (22 U.S.C. 2763; relating to the Foreign
Military Financing program) in the fiscal year
in which the transportation is provided;
‘‘(C) the total weight of the transfer does
not exceed 25,000 pounds; and
‘‘(D) such transportation is accomplished
on a space available basis.
‘‘(f) ADVANCE NOTIFICATION
TO CONGRESS
FOR
TRANSFER OF CERTAIN EXCESS DEFENSE ARTICLES.—
‘‘(1) IN
GENERAL.—The President may not
transfer excess defense articles that are significant
military equipment (as defined in section 47(9) of
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the Arms Export Control Act) or excess defense arti-
cles valued (in terms of original acquisition cost) at
$7,000,000 or more, under this section or under the
Arms Export Control Act (22 U.S.C. 2751 et seq.)
until 15 days after the date on which the President
has provided notice of the proposed transfer to the
congressional 
committees 
specified 
in 
section
634A(a) in accordance with procedures applicable to
reprogramming notifications under that section.
‘‘(2) CONTENTS.—Such notification shall in-
clude—
‘‘(A) a statement outlining the purposes
for which the article is being provided to the
country, including whether such article has
been previously provided to such country;
‘‘(B) an assessment of the impact of the
transfer on the military readiness of the United
States;
‘‘(C) an assessment of the impact of the
transfer on the national technology and indus-
trial base and, particularly, the impact on op-
portunities of entities in the national technology
and industrial base to sell new or used equip-
ment to the countries to which such articles are
to be transferred; and
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‘‘(D) a statement describing the current
value of such article and the value of such arti-
cle at acquisition.
‘‘(g) AGGREGATE ANNUAL LIMITATION.—
‘‘(1) IN GENERAL.—The aggregate value of ex-
cess defense articles transferred to countries under
this section in any fiscal year may not exceed
$350,000,000.
‘‘(2) EFFECTIVE
DATE.—The limitation con-
tained in paragraph (1) shall apply only with respect
to fiscal years beginning after fiscal year 1996.
‘‘(h) 
CONGRESSIONAL
PRESENTATION
DOCU-
MENTS.—Documents described in subsection (a) justifying
the transfer of excess defense articles shall include an ex-
planation of the general purposes of providing excess de-
fense articles as well as a table which provides an aggre-
gate annual total of transfers of excess defense articles
in the preceding year by country in terms of offers and
actual deliveries and in terms of acquisition cost and cur-
rent value. Such table shall indicate whether such excess
defense articles were provided on a grant or sale basis.
‘‘(i) EXCESS COAST GUARD PROPERTY.—For pur-
poses of this section, the term ‘excess defense articles’
shall be deemed to include excess property of the Coast
Guard, and the term ‘Department of Defense’ shall be
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deemed, with respect to such excess property, to include
the Coast Guard.’’.
(b) CONFORMING AMENDMENTS.—
(1) ARMS
EXPORT
CONTROL
ACT.—Section
21(k) of the Arms Export Control Act (22 U.S.C.
2761(k)) is amended by striking ‘‘the President
shall’’ and all that follows and inserting the follow-
ing: ‘‘the President shall determine that the sale of
such articles will not have an adverse impact on the
national technology and industrial base and, particu-
larly, will not reduce the opportunities of entities in
the national technology and industrial base to sell
new or used equipment to the countries to which
such articles are transferred.’’.
(2) REPEALS.—The following provisions of law
are hereby repealed:
(A) Section 502A of the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2303).
(B) Sections 517 through 520 of the For-
eign Assistance Act of 1961 (22 U.S.C. 2321k
through 2321n).
(C) Section 31(d) of the Arms Export Con-
trol Act (22 U.S.C. 2771(d)).
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SEC. 105. EXCESS DEFENSE ARTICLES FOR CERTAIN EURO-
PEAN COUNTRIES.
Notwithstanding section 516(e) of the Foreign As-
sistance Act of 1961, during each of the fiscal years 1996
and 1997, funds available to the Department of Defense
may be expended for crating, packing, handling, and
transportation of excess defense articles transferred under
the authority of section 516 of such Act to countries that
are eligible to participate in the Partnership for Peace and
that are eligible for assistance under the Support for East
European Democracy (SEED) Act of 1989.
CHAPTER 2—INTERNATIONAL MILITARY
EDUCATION AND TRAINING
SEC. 111. ASSISTANCE FOR INDONESIA.
Funds made available for fiscal years 1996 and 1997
to carry out chapter 5 of part II of the Foreign Assistance
Act of 1961 (22 U.S.C. 2347 et seq.) may be obligated
for Indonesia only for expanded military and education
training that meets the requirements of clauses (i)
through (iv) of the second sentence of section 541 of such
Act (22 U.S.C. 2347).
SEC. 112. ADDITIONAL REQUIREMENTS.
(a) GENERAL AUTHORITY.—Section 541 of the For-
eign Assistance Act of 1961 (22 U.S.C. 2347) is amended
in the second sentence in the matter preceding clause (i)
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by inserting ‘‘and individuals who are not members of the
government’’ after ‘‘legislators’’.
(b) EXCHANGE TRAINING.—Section 544 of such Act
(22 U.S.C. 2347c) is amended—
(1) by striking ‘‘In carrying out this chapter’’
and inserting ‘‘(a) In carrying out this chapter’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) The President may provide for the attendance
of foreign military and civilian defense personnel at flight
training schools and programs (including test pilot
schools) in the United States without charge, and without
charge to funds available to carry out this chapter (not-
withstanding section 632(d) of this Act), if such attend-
ance is pursuant to an agreement providing for the ex-
change of students on a one-for-one basis each fiscal year
between those United States flight training schools and
programs (including test pilot schools) and comparable
flight training schools and programs of foreign coun-
tries.’’.
(c) ASSISTANCE FOR CERTAIN HIGH-INCOME FOR-
EIGN COUNTRIES.—
(1) AMENDMENT TO THE FOREIGN ASSISTANCE
ACT OF 1961.—Chapter 5 of part II of such Act (22
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U.S.C. 2347 et seq.) is amended by adding at the
end the following new section:
‘‘SEC. 546. PROHIBITION ON GRANT ASSISTANCE FOR CER-
TAIN HIGH INCOME FOREIGN COUNTRIES.
‘‘(a) IN GENERAL.—None of the funds made avail-
able for a fiscal year for assistance under this chapter may
be made available for assistance on a grant basis for any
of the high-income foreign countries described in sub-
section (b) for military education and training of military
and related civilian personnel of such country.
‘‘(b) HIGH-INCOME
FOREIGN
COUNTRIES
DE-
SCRIBED.—The high-income foreign countries described in
this subsection are Austria, Finland, the Republic of
Korea, Singapore, and Spain.’’.
(2) AMENDMENT TO THE ARMS EXPORT CON-
TROL ACT.—Section 21(a)(1)(C) of the Arms Export
Control Act (22 U.S.C. 2761) is amended by insert-
ing ‘‘or to any high-income foreign country (as de-
scribed in that chapter)’’ after ‘‘Foreign Assistance
Act of 1961’’.
CHAPTER 3—ANTITERRORISM
ASSISTANCE
SEC. 121. ANTITERRORISM TRAINING ASSISTANCE.
(a) IN GENERAL.—Section 571 of the Foreign Assist-
ance Act of 1961 (22 U.S.C. 2349aa) is amended by strik-
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ing ‘‘Subject to the provisions of this chapter’’ and insert-
ing ‘‘Notwithstanding any other provision of law that re-
stricts assistance to foreign countries (other than sections
502B and 620A of this Act)’’.
(b) LIMITATIONS.—Section 573 of such Act (22
U.S.C. 2349aa–2) is amended—
(1) in the heading, by striking ‘‘SPECIFIC AU-
THORITIES AND’’;
(2) by striking subsection (a);
(3) by redesignating subsections (b) through (f)
as subsections (a) through (e), respectively; and
(4) in subsection (c) (as redesignated)—
(A) by striking paragraphs (1) and (2);
(B) 
by 
redesignating 
paragraphs 
(3)
through (5) as paragraphs (1) through (3), re-
spectively; and
(C) by amending paragraph (2) (as redes-
ignated) to read as follows:
‘‘(2)(A) Except as provided in subparagraph (B),
funds made available to carry out this chapter shall not
be made available for the procurement of weapons and am-
munition.
‘‘(B) Subparagraph (A) shall not apply to small arms
and ammunition in categories I and III of the United
States Munitions List that are integrally and directly re-