MEMORANDUM TO: OPINION LEADERS

FROM: DAN McKIVERGAN, Deputy Director

SUBJECT: Export Administration Act

I would like to draw your attention to an issue that relates directly to the crucial issue of proliferation of weapons to terrorist states. Today, the House Armed Services Committee heard important testimony from Gary Milhollin, the director of the Wisconsin Project on Nuclear Arms Control, on the reauthorization of the Export Administration Act (EAA). There is, unfortunately, a bipartisan push underway to pass the EAA before Congress adjourns for the year, but Congress should consider Mr. Milhollin's testimony and the serious questions he raises as to whether the pending EAA will put U.S. national security at further risk in the years ahead. As Milhollin says, the EAA "would authorize the Commerce Department to drop export controls on the very items that our enemies would most like to use against us."

On September 6, Senators Jon Kyl (R-AZ), Jesse Helms (R-NC), John McCain (R-AZ), Richard Shelby (R-AL), and Fred Thompson (R-TN) sent the attached letter to President Bush urging him to "reconsider the administration's position on the Export Administration Act in its current form" because of serious concern at the prospect "of further weakening the U.S. export-control process" through its passage. As Congress considers authorizing the use of force to deal with the urgent threat of Saddam and his weapons of mass destruction, the last thing the government should be doing is inadvertently making it easier for others to obtain such capabilities.

September 6, 2002

The Honorable George W. Bush
The President
The White House
Washington, DC 20500

Dear Mr. President:

Recent developments illustrate the danger posed by lax controls over the export of dual-use technology and prompt us to urge you to reconsider the administration's position on the Export Administration Act (EAA) in its current form.

The Congress recently received two rather alarming reports about developments in the People's Republic of China. The first, the Defense Department's report on PRC military power, warns that China is using legally acquired U.S. dual-use technology to modernize its military. For example, the report discusses China's pursuit of electronic warfare capabilities, "accomplished mainly through cooperation with Western companies and by reverse engineering."

This fact alone should lead us to tighten U.S. controls on technology exports to China. But there is more. The second report, produced by the U.S.-China Security Review Commission, documents that China is acquiring dual-use and military technology legally through joint ventures, the establishment of U.S. high-tech plants in China, Western investments, and approved exports. Furthermore, it states that China is using its access to U.S. commercial technology to develop advanced systems with a goal of attaining military capabilities equal to or exceeding those of the United States.

These two disturbing reports follow on the heels of two rather troubling GAO reports. The first, released in April, addressed China's success in closing the gap with the U.S. in semiconductor technology. The GAO stated that, in the past five years, U.S. officials in China responsible for monitoring end-use of semiconductors have not conducted any of these checks.

The second, released in August, addressed the administration's January 2002 decision to raise the control threshold for high performance computers exported to tier-3 countries, such as China. The GAO concluded that the President's report justifying that change neglected to address several of the statutory requirements, including the potential military uses of the computers and the impact of those uses on U.S. national security. Furthermore, GAO stated that, while the administration's report predicted that computers capable of performing at the new threshold would be widely available through foreign and domestic companies by early 2002, only one of 10 companies cited in the report produces computers with that capability.

Finally, it is important to note that Beijing continues to transfer dual-use technology to states that support international terror networks. For example, Chinese companies have exported substantial dual-use telecommunications equipment and technology to Iraq.

Mr. President, we are seriously concerned at the prospect of further weakening the U.S. export-control process through the passage of the Export Administration Act. As currently drafted, the Senate version of the bill would decontrol a number of items by giving them "mass market" or "foreign availability" status. And while many of the provisions in the House International Relations Committee version of the bill and in the House Armed Services Committee version are steps in the right direction, we remain concerned that the baseline bill is fundamentally flawed.

We therefore respectfully request that, rather than seeking action on S. 149 at this late stage in the congressional session, you review the situation with these new reports in mind and ask all interested parties to work with you in the next Congress to develop a new EAA that strikes the right balance between national security and trade, and can be quickly passed by both Houses. Further congressional consideration at this time would only invite serious, public divisions among strong supporters of your administration at a time when cohesiveness is an absolute necessity. We fully support any efforts during the next session of Congress to pass an Export Administration Act that the House, Senate, and the administration can embrace.

We appreciate your consideration of this request and look forward to working with you this fall on a range of issues vital to our nation's security.