I 113th CONGRESS 1st Session H. R. 3470 IN THE HOUSE OF REPRESENTATIVES November 13, 2013 Mr. Royce (for himself and Mr. Engel ) introduced the following bill; which was referred to the Committee on Foreign Affairs A BILL To provide for the transfer of naval vessels to certain foreign countries, and for other purposes.

1. Short title and table of contents (a) Short title This Act may be cited as the Naval Vessel Transfer and Arms Export Control Amendments Act of 2013 . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title and table of contents. Title I—Transfer of naval vessels to certain foreign recipients Sec. 101. Transfer of naval vessels to certain foreign recipients. Title II—Arms Export Control Act amendments Sec. 201. Increase in congressional notification thresholds. Sec. 202. Licensing of certain commerce-controlled items. Sec. 203. Amendments relating to removal of items from the United States Munitions List. Sec. 204. Amendment to definition of security assistance under the Foreign Assistance Act of 1961. Sec. 205. Amendments to definitions of defense article and defense service under the Arms Export Control Act. Sec. 206. Revision of statutory references to former NATO support organizations and related NATO agreements. Sec. 207. Technical amendments. I Transfer of naval vessels to certain foreign recipients 101. Transfer of 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) Mexico To the Government of Mexico, the OLIVER HAZARD PERRY class guided missile frigates USS CURTS (FFG–38) and USS MCCLUSKY (FFG–41). (2) Thailand To the Government of Thailand, the OLIVER HAZARD PERRY class guided missile frigates USS RENTZ (FFG–46) and USS VANDEGRIFT (FFG–48). (b) Transfer by sale The President is authorized to transfer the OLIVER HAZARD PERRY class guided missile frigates USS TAYLOR (FFG–50), USS GARY (FFG–51), USS CARR (FFG–52), and USS ELROD (FFG–55) to the Taipei Economic and Cultural Representative Office of the United States (which is the Taiwan instrumentality designated pursuant to section 10(a) of the Taiwan Relations Act ( 22 U.S.C. 3309(a) )) on a sale basis under section 21 of the Arms Export Control Act ( 22 U.S.C. 2761 ). (c) Alternative transfer authority Notwithstanding the authority provided in subsections (a) and (b) to transfer specific vessels to specific countries, the President is authorized, subject to the same conditions that would apply for such country under this Act, to transfer any vessel named in this Act to any country named in this Act such that the total number of vessels transferred to such country does not exceed the total number of vessels authorized for transfer to such country by this Act. (d) Grants not counted in annual total of transferred excess defense articles The value of a vessel transferred to another country on a grant basis pursuant to authority provided by subsection (a) or (c) shall not be counted against the aggregate value of excess defense articles transferred in any fiscal year under section 516 of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2321j ). (e) 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 notwithstanding section 516(e) of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2321j(e) ). (f) 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 that recipient, performed at a shipyard located in the United States, including a United States Navy shipyard. (g) Expiration of authority The authority to transfer a vessel under this section shall expire at the end of the 3-year period beginning on the date of the enactment of this Act. II Arms Export Control Act amendments 201. Increase in congressional notification thresholds (a) Foreign military sales (1) In general Section 36(b)(1) of the Arms Export Control Act ( 22 U.S.C. 2776(b)(1) ) is amended— (A) in the matter preceding subparagraph (A)— (i) by striking $50,000,000 and inserting $100,000,000 ; (ii) by striking $200,000,000 and inserting $300,000,000 ; and (iii) by striking $14,000,000 and inserting $25,000,000 ; and (B) in the matter following subparagraph (P)— (i) by inserting 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, after The letter of offer shall not be issued, with respect to a proposed sale ; and (ii) by inserting 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, after or with respect to a proposed sale . (2) Technical and conforming amendments Section 36(b) of the Arms Export Control Act ( 22 U.S.C. 2776(b) ) is amended— (A) in paragraph (1), by striking Subject to paragraph (6), in and inserting In ; (B) in paragraph (5)(C), by striking Subject to paragraph (6), if and inserting If ; and (C) by striking paragraph (6). (b) Commercial sales Section 36(c) of the Arms Export Control Act ( 22 U.S.C. 2776(c) ) is amended— (1) in paragraph (1)— (A) by striking Subject to paragraph (5), in and inserting In ; (B) by striking $14,000,000 and inserting $25,000,000 ; and (C) by striking $50,000,000 and inserting $100,000,000 ; (2) in paragraph (2)— (A) in subparagraph (A), 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 (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) ; (3) by striking paragraph (5); and (4) by redesignating paragraph (6) as paragraph (5). 202. Licensing of certain commerce-controlled items Section 38 of the Arms Export Control Act ( 22 U.S.C. 2778 ) is amended by adding at the end the following new subsection: (k) Licensing of certain commerce-Controlled items (1) In general A license or other approval from the Department of State granted in accordance with this section may also authorize the export of items subject to the Export Administration Regulations if such items are to be used in or with defense articles controlled on the United States Munitions List. (2) Other requirements The following requirements shall apply with respect to a license or other approval to authorize the export of items subject to the Export Administration Regulations under paragraph (1): (A) Separate approval from the Department of Commerce shall not be required for such items if such items are approved for export under a Department of State license or other approval. (B) Such items subject to the Export Administration Regulations that are exported pursuant to a Department of State license or other approval would remain under the jurisdiction of the Department of Commerce with respect to any subsequent transactions. (C) The inclusion of the term subject to the EAR or any similar term on a Department of State license or approval shall not affect the jurisdiction with respect to such items. (3) Definition In this subsection, the term Export Administration Regulations means— (A) the Export Administration Regulations as maintained and amended under the authority of the International Emergency Economic Powers Act ( 50 U.S.C. 1701 et seq. ); or (B) any successor regulations. . 203. Amendments relating to removal of items from the United States Munitions List (a) Requirements for removal of major defense equipment and significant military equipment from the united states munitions list Section 38(f) of the Arms Export Control Act ( 22 U.S.C. 2778(f) ) is amended by adding at the end the following: (5) (A) Except as provided in subparagraph (B), the President shall take such actions as may be necessary to ensure that any major defense equipment or significant military equipment that is removed from the United States Munitions List and transferred to the Commerce Control List for purposes of commercial export is not subsequently modified so as to transform such equipment into a defense article. (B) The President may authorize the transformation of major defense equipment or significant military equipment that is removed from the United States Munitions List and transferred to the Commerce Control List for purposes of commercial export into a defense article if the President— (i) determines that such transformation is appropriate and in the national interests of the United States; and (ii) provides notice of such transformation to the chairman of the Committee on Foreign Affairs of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate consistent with the notification requirements of section 36(b)(5)(A) of this Act. (C) In this paragraph— (i) the term Commerce Control List means— (I) items transferred from the United States Munitions List to the Commerce Control List and designated as 600 series items on the Commerce Control List under the Export Administration Regulations, as proposed by the Bureau of Industry and Security of the Department of Commerce on July 15, 2011 (76 Fed. Reg. 41958); or (II) any successor regulations; and (ii) the term defense article means an item designated by the President pursuant to subsection (a)(1). . (b) Notification and reporting requirements for major defense equipment and significant military equipment removed from the united states munitions list Section 38(f) of the Arms Export Control Act ( 22 U.S.C. 2778(f) ), as amended by this section, is further amended by adding at the end the following: (6) The President shall ensure that any item that is major defense equipment or significant military equipment and is removed from the United States Munitions List shall continue to be subject to the notification and reporting requirements of the following provisions of law: (A) Section 516(f) of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2321j(f) ). (B) Section 655 of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2415 ). (C) Section 3(d)(3)(A) of this Act. (D) Section 25 of this Act. (E) Sections 36(b), (c), and (d) of this Act. . 204. Amendment to definition of security assistance under the Foreign Assistance Act of 1961 Section 502B(d) of the Foreign Assistance Act of 1961 ( 22 U.S.C. 2304(d) ) is amended— (1) in paragraph (1), by striking and at the end; (2) in paragraph (2)(C) to read as follows: (C) any license in effect with respect to the export to or for the armed forces, police, intelligence, or other internal security forces of a foreign country of— (i) defense articles or defense services under section 38 of the Armed Export Control Act; or (ii) 600 series items on the Commerce Control List under the Export Administration Regulations, as proposed by the Bureau of Industry and Security of the Department of Commerce on July 15, 2011 (76 Fed. Reg. 41958), or any successor regulations; ; and (3) by adding at the end the following new paragraphs: (3) the term Commerce Control List means— (A) items transferred from the United States Munitions List to the Commerce Control List and designated as ‘600 series’ items on the Commerce Control List under the Export Administration Regulations, as proposed by the Bureau of Industry and Security of the Department of Commerce on July 15, 2011 (76 Fed. Reg. 41958); or (B) any successor regulations; and (4) the term Export Administration Regulations means— (A) the Export Administration Regulations as maintained and amended under the authority of the International Emergency Economic Powers Act ( 50 U.S.C. 1701 et seq. ); or (B) any successor regulations. . 205. Amendments to definitions of defense article and defense service under the Arms Export Control Act Section 47 of the Arms Export Control Act ( 22 U.S.C. 2794 ) is amended— (1) in the matter preceding subparagraph (A) of paragraph (3), by striking includes and inserting means, with respect to a sale or transfer by the United States under the authority of this Act or any other foreign assistance or sales program of the United States ; and (2) in paragraph (4), by striking includes and inserting means, with respect to a sale or transfer by the United States under the authority of this Act or any other foreign assistance or sales program of the United States, . 206. Revision of statutory references to former NATO support organizations and related NATO agreements Section 21(e)(3) of the Arms Export Control Act ( 22 U.S.C. 2761(e)(3) ) is amended— (1) in subparagraphs (A) and (C)(i), by striking Maintenance and Supply Agency of the North Atlantic Treaty Organization and inserting North Atlantic Treaty Organization (NATO) Support Organization and its executive agencies ; and (2) in subparagraph (C)(i)(II), by striking a specific weapon system and inserting activities . 207. Technical amendments The Arms Export Control Act ( 22 U.S.C. 2751 et seq. ) is amended— (1) in sections 3(a), 3(d)(1), 3(d)(3)(A), 3(e), 5(c), 6, 21(g), 36(a), 36(b)(1), 36(b)(5)(C), 36(c)(1), 36(f), 38(f)(1), 40(f)(1), 40(g)(2)(B), 101(b), and 102(a)(2), by striking the Speaker of the House of Representatives and each place it appears and inserting the Speaker of the House of Representatives, the Committee on Foreign Affairs of the House of Representatives, and ; (2) in section 21(i)(1) by inserting after the Speaker of the House of Representatives the following , the Committees on Foreign Affairs and Armed Services of the House of Representatives, ; (3) in sections 25(e), 38(f)(2), 38(j)(3), and 38(j)(4)(B), by striking International Relations each place it appears and inserting Foreign Affairs ; (4) in sections 27(f) and 62(a), by inserting after the Speaker of the House of Representatives, each place it appears the following: the Committee on Foreign Affairs of the House of Representatives, ; and (5) in section 73(e)(2), by striking the Committee on National Security and the Committee on International Relations of the House of Representatives and inserting the Committee on Armed Services and the Committee on Foreign Affairs of the House of Representatives .