Under the Export Administration Act of 1979 as amended and the implementing Export Administration Regulations, Commerce is authorized to require firms to seek licenses for exports of dual-use technologies that pose national security or foreign policy concerns. Such technologies could be used by countries of concern to upgrade their military capabilities. The Commerce Control List identifies technologies that must be licensed before they can be exported to specific countries, including technologies associated with certain nuclear materials, facilities, and equipment; chemicals, “microorganisms” and toxins; materials processing; electronics; computers; telecommunications and information security; lasers and sensors; navigation and avionics; marine systems; and propulsion systems and space vehicles. Violators may face administrative or criminal penalties, including fines, denial of export privileges, and imprisonment. The act defines exports to include transfers of technology within the United States to (1) affiliates of controlled countries or (2) persons with the knowledge or intent to transfer the technology to unauthorized parties. According to Commerce regulations, a transfer of technology within the United States to a foreign national who is not a permanent resident of the United States is deemed to be an export. Such a “deemed export” may occur when a foreign national visits or works in the United States and accesses controlled dual-use technology. Access can include opportunities to review written materials or discussions about controlled technologies. In 2000, Commerce’s Inspector General concluded that compliance with deemed export licensing regulations appeared lax. The Inspector General pointed out that the number of foreign workers authorized to enter the United States using certain specialty employment visas was far larger than the number of deemed export license applications received by Commerce in fiscal year 1999. Export Administration Regulations, part 734.2(b)(1). Part 772 of the Export Administration Regulations defines “technology” as specific information necessary for the “development,” “production,” or “use” of a product. Congress is currently considering legislation that would, among other things, (1) define an export to be the release of an item—i.e., any good, technology, or service--to a foreign national within or outside the United States and (2) require the Secretary of Commerce, in concurrence with the Secretaries of State and Defense to issue regulations governing such exports (H.R. 2581, section 2(9)(iii) and 601(c)(3)). To work with controlled dual-use technology in the United States, foreign nationals and the firms that employ or sponsor them must comply with U.S. export control and visa regulations. Commerce, in consultation with other departments, is responsible for issuing deemed export licenses to firms that employ or host foreign nationals. While the Department of State is responsible for issuing visas to foreign nationals outside the United States, INS is responsible for approving requests from foreign nationals in the United States seeking to change their immigration status. The review process for a deemed export license application parallels the review process for an application for a license to export commodities or technologies overseas. Under U.S. export control regulations, a firm is required to seek a deemed export license if the export of the technology to the foreign national’s country of citizenship would require a license. If a license is required, the exporter must submit a license application to Commerce identifying the technology, the reason it is controlled, the proposed destination, and the intended end user. In the case of deemed export license applications, firms must also provide the foreign national’s resume, visa type, and a list of his or her publications. An application for a deemed export license may list more than one foreign national. Under Executive Order 12981, the departments of State, Defense, and Energy have the authority to review license applications (unless they decline) to help Commerce determine whether a license would be in the best interests of the United States. Based on their review, an application may be rejected, approved, approved with conditions, or returned without action. Commerce officials stated that they consider evidence of the foreign national’s intent to remain in the United States in assessing deemed export license applications. For example, they asserted that they consider the presence of family members in the United States or a stated intention to apply for permanent residency in the United States as a factor in granting a license. Deemed export licenses are generally valid for 2 years. Almost 10 percent of all export licenses approved by Commerce authorize deemed exports. The U.S. government requires foreign nationals from most countries to obtain visas before entering the country. Requirements for obtaining a visa vary, depending on the purpose of the trip and the nationality of the person seeking the visa. Typically, a foreign national begins the process by submitting a visa application to the Department of State, generally through a U.S. overseas post. The application requires, among other items, information regarding his or her nationality, education, employment history, purpose of visit, and if seeking employment, the sponsor. The Department of State is responsible for determining the applicant’s eligibility and issuing the visa. State personnel at U.S. embassies and consulates overseas may interview applicants to determine their eligibility to enter the United States. According to the Department of State, in fiscal year 2001, it adjudicated 10.6 million nonimmigrant visa applications at 196 posts and issued 7.6 million visas. Many foreign nationals seeking to work in the United States apply for H-1B specialty employment visas. An H-1B visa allows a U.S. employer to temporarily fill specialty occupations (such as those requiring electrical or software engineers) with foreign workers. A foreign national overseas may obtain an H-1B visa from the Department of State, if INS determines that an employer may import the foreign national as a temporary worker (see fig. 1). A foreign national already in the United States may have his or her immigration status changed to H-1B by INS. For example, an employer seeking to hire a foreign student who has graduated from a U.S. college or university could petition INS to change the foreign national’s immigration status from student to H-1B. INS is solely responsible for approving and issuing such changes in status. In fiscal year 2001, Commerce approved 822 deemed export license applications and rejected 3. Each license authorized one or more foreign nationals to access controlled dual-use technology. Our analysis of Commerce’s licensing data found that most licenses approved in fiscal year 2001 involved countries of concern. As shown in figure 2, China accounted for 73 percent of licenses approved in fiscal year 2001. Seven other countries of concern--Russia, Iran, India, Syria, Israel, Iraq, and Pakistan—accounted for another 14 percent. The remaining 13 percent involved 29 other countries, including the United Kingdom, Germany, Bulgaria, Romania, and Ukraine. About 90 percent of the licenses approved in fiscal year 2001 authorized foreign nationals to work with advanced electronics, computer, or telecommunications and information security technologies (see fig. 3). Electronics technologies constituted the largest single share at 46 percent. Telecommunications and information security technologies accounted for another 24 percent. Computer technologies were included in 20 percent of the licenses approved. The most common country-technology combination for deemed export licenses involved China and electronics technologies. About 44 percent of all licenses approved in fiscal year 2001 authorized citizens of China to work with electronics technologies, including semiconductor technology. Not all domestic transfers of technology to foreign nationals require a deemed export license. For example, one exception allows technology and software controlled only for national security purposes to be accessed without a license by foreign nationals from countries of concern such as India, Pakistan, and Israel. Under this exception, a firm employing an Indian software engineer would not need a deemed export license to allow him or her access to controlled dual-use technology. The exception does not apply to technology and software that are also controlled for other reasons, such as antiterrorism or nuclear nonproliferation. Also, foreign nationals who engage in research that is or will be publicly available are exempted from export controls. For example, a U.S. university would not need a deemed export license to allow a Chinese graduate student to engage in technological research if the results of that research are to be published in a professional journal. A U.S. firm that hired the same Chinese national to engage in proprietary research to develop a new commercial product would not qualify for this exception. To better direct its efforts to detect possible unlicensed deemed exports, Commerce screens applications for H-1B and other types of visas submitted overseas and develops potential cases for enforcement staff in the field. However, it does not screen H-1B change-of-status applications submitted domestically to INS for foreign nationals already in the United States. Also, Commerce cannot readily track the disposition of potential cases referred to the field. To identify potential unlicensed deemed exports and opportunities to educate firms about deemed export licensing requirements, Commerce screens visa applications it receives from U.S. posts overseas. In fiscal year 2001, Commerce analysts reviewed about 54,000 such applications for various visa types. According to Commerce guidance, the analysts consulted Commerce’s enforcement database, DOD comments on rejected license applications, and other sources of information to detect linkages between foreign entities of concern and visa applicants. Commerce does not screen data on foreign nationals already in the United States who change their immigration status to H-1B specialty employment. Commerce and INS officials stated that Commerce does not obtain information on foreign nationals who seek a change in immigration status. INS has data available on foreign nationals who change their status to H- 1B. Our analysis of INS’s H-1B data indicates that during fiscal year 2001 at least 15,000 foreign nationals from countries of concern potentially subject to deemed export licensing requirements changed their immigration status to H-1B specialty employment. Our estimation of 15,000 individuals only includes foreign nationals who sought H-1B status for employment related to science and technology. It does not include other nonsensitive H-1B fields, such as fashion modeling, architecture, and accounting. In fiscal year 2001, Commerce analysts screened about 54,000 visa applications received from overseas posts.