[DOCID: f:hr582.105]
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105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-582
_______________________________________________________________________


    TO ESTABLISH THE SELECT COMMITTEE ON U.S. NATIONAL SECURITY AND
    MILITARY/COMMERCIAL CONCERNS WITH THE PEOPLE'S REPUBLIC OF CHINA
                                _______


   June 16, 1998.--Referred to the House calendar and ordered to be
                                printed

_______________________________________________________________________

   Mr. Solomon, from the Committee on Rules, submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                       [To accompany H. Res. 463]

    The Committee on Rules, to whom was referred the resolution
(H. Res. 463) To establish the Select Committee on U.S.
National Security and Military/Commercial Concerns With the
People's Republic of China, having considered the same, report
favorably thereon with an amendment and recommend that the
resolution as amended be agreed to.
  The amendment is as follows:
  Strike all after the resolving clause and insert the
following:

SECTION 1. ESTABLISHMENT.

  There is hereby created the Select Committee on U.S. National
Security and Military/Commercial Concerns With the People's Republic of
China, (hereafter in this resolution referred to as the ``Select
Committee''). The Select Committee may sit and act during the present
Congress at such times and places within the United States, including
any Commonwealth or possession thereof, or in any other country,
whether the House is in session, has recessed, or has adjourned, as it
shall deem appropriate for the completion of its work.

SEC. 2. JURISDICTION.

  (a) In General.--The Select Committee shall conduct a full and
complete inquiry regarding the following matters and report such
findings and recommendations, including those concerning the amendment
of existing law or the enactment of new law, to the House as it
considers appropriate:
          (1) The transfer of technology, information, advice, goods,
        or services that may have contributed to the enhancement of the
        accuracy, reliability, or capability of nuclear-armed
        intercontinental ballistic missiles or other weapons of the
        People's Republic of China, or that may have contributed to the
        enhancement of the intelligence capabilities of the People's
        Republic of China.
          (2) The transfer of technology, information, advice, goods,
        or services that may have contributed to the manufacture of
        weapons of mass destruction, missiles, or other weapons or
        armaments by the People's Republic of China.
          (3) The effect of any transfer or enhancement referred to in
        paragraphs (1) or (2) on regional security and the national
        security of the United States.
          (4) The conduct of the executive branch of the United States
        Government with respect to the transfers or enhancements
        referred to in paragraphs (1) or (2), and the effect of that
        conduct on regional security and the national security of the
        United States.
          (5) The conduct of defense contractors, weapons
        manufacturers, satellite manufacturers, and other private or
        government-owned commercial firms with respect to the transfers
        or enhancements referred to in paragraphs (1) or (2).
          (6) The enforcement of United States law, including statutes,
        regulations, or executive orders, with respect to the transfers
        or enhancements referred to in paragraphs (1) or (2).
          (7) Any effort by the Government of the People's Republic of
        China or any other person or entity to influence any of the
        foregoing matters through political contributions, commercial
        arrangements, or bribery, influence-peddling, or other illegal
        activities.
          (8) Decision-making within the executive branch of the United
        States Government with respect to any of the foregoing matters.
          (9) Any effort to conceal or withhold information or
        documents relevant to any of the foregoing matters or to
        obstruct justice, or to obstruct the work of the Select
        Committee or any other committee of the House of
        Representatives in connection with those matters.
          (10) All matters relating directly or indirectly to any of
        the foregoing matters.
  (b) Permitting Reports To Be Made to House in Secret Session.--Any
report to the House pursuant to this section may, in the Select
Committee's discretion, be made under the provisions of rule XXIX of
the Rules of the House of Representatives.

SEC. 3. COMPOSITION; VACANCIES.

  (a) Composition.--The Select Committee shall be composed of 9 or
fewer Members of the House to be appointed by the Speaker of the House
of Representatives, one of whom he shall designate as Chairman. Service
on the Select Committee shall not count against the limitations on
committee service in clause 6(b)(2) of rule X.
  (b) Vacancies.--Any vacancy occurring in the membership of the Select
Committee shall be filled in the same manner in which the original
appointment was made.

SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

  (a) Quorum.--One-third of the members of the Select Committee shall
constitute a quorum for the transaction of business other than the
reporting of a matter, which shall require a majority of the committee
to be actually present, except that the Select Committee may designate
a lesser number, but not less than 2, as a quorum for the purpose of
holding hearings to take testimony and receive evidence.
  (b) Applicability of House Rules.--The Rules of the House of
Representatives applicable to standing committees shall govern the
Select Committee where not inconsistent with this resolution.
  (c) Rules of Select Committee.--The Select Committee shall adopt
additional written rules, which shall be public, to govern its
procedures, which shall not be inconsistent with this resolution or the
Rules of the House of Representatives.

SEC. 5. CLASSIFIED INFORMATION.

  No employee of the Select Committee or any person engaged by contract
or otherwise to perform services for or at the request of such
committee shall be given access to any classified information by such
committee unless such employee or person has--
          (1) agreed in writing and under oath to be bound by the rules
        of the House (including the jurisdiction of the Committee on
        Standards of Official Conduct and of the Select Committee as to
        the security of such information during and after the period of
        his employment or contractual agreement with the Select
        Committee); and
          (2) received an appropriate security clearance as determined
        by the Select Committee in consultation with the Director of
        Central Intelligence.
The type of security clearance to be required in the case of any such
employee or person shall, within the determination of the Select
Committee in consultation with the Director of Central Intelligence, be
commensurate with the sensitivity of the classified information to
which such employee or person will be given access by such committee.

SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

  The Select Committee shall formulate and carry out such rules and
procedures as it deems necessary to prevent the disclosure, without the
consent of the person or persons concerned, of information in the
possession of such committee which unduly infringes upon the privacy or
which violates the constitutional rights of such person or persons.
Nothing herein shall be construed to prevent such committee from
publicly disclosing any such information in any case in which such
committee determines that national interest in the disclosure of such
information clearly outweighs any infringement on the privacy of any
person or persons.

SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

  (a) The Select Committee may, subject to the provisions of this
section, disclose publicly any information in the possession of such
committee after a determination by such committee that the public
interest would be served by such disclosure. Whenever committee action
is required to disclose any information under this section, the
committee shall meet to vote on the matter within five days after any
member of the committee requests such a vote. No member of the Select
Committee shall disclose any information, the disclosure of which
requires a committee vote, prior to a vote by the committee on the
question of the disclosure of such information or after such vote
except in accordance with this section. In any case in which the Select
Committee votes to disclose publicly any information, which has been
classified under established security procedures, which has been
submitted to it by the executive branch, and which the executive branch
requests be kept secret, the Select Committee shall submit such
classified information to the Permanent Select Committee on
Intelligence.
  (b)(1) As set forth in clause 7(b) of rule XLVIII, in any case in
which the Permanent Select Committee on Intelligence votes to disclose
publicly any information submitted pursuant to subsection (a), which
has been classified under established security procedures, which has
been submitted to the Select Committee by the executive branch, and
which the executive branch has requested be kept secret, the Permanent
Select Committee on Intelligence shall notify the President of such
vote.
  (2) The Permanent Select Committee on Intelligence may disclose
publicly such information after the expiration of a five-day period
following the day on which notice of such vote is transmitted to the
President, unless, prior to the expiration of such five-day period, the
President, personally in writing, notifies the Permanent Select
Committee on Intelligence that he objects to the disclosure of such
information, provides his reasons therefor, and certifies that the
threat to the national interest of the United States posed by such
disclosure is of such gravity that it outweighs any public interest in
the disclosure.
  (3) If the President, personally, in writing, notifies the Permanent
Select Committee on Intelligence of his objections to the disclosure of
such information as provided in paragraph (2), the Permanent Select
Committee on Intelligence may, by majority vote, refer the question of
this disclosure of such information with a recommendation thereon to
the House for consideration. The PermanentSelect Committee on
Intelligence shall not publicly disclose such information without leave
of the House.
  (4) Whenever the Permanent Select Committee on Intelligence votes to
refer the question of disclosure of any information to the House under
paragraph (3), the chairman of the Permanent Select Committee on
Intelligence shall, not later than the first day on which the House is
in session following the day on which the vote occurs, report the
matter to the House for its consideration.
  (5) If within four calendar days on which the House is in session,
after such recommendation is reported, no motion has been made by the
chairman of the Permanent Select Committee on Intelligence to consider,
in closed session, the matter reported under paragraph (4), then such a
motion will be deemed privileged and may be made by any Member. The
motion under this paragraph shall not be subject to debate or
amendment. When made, it shall be decided without intervening motion,
except one motion to adjourn.
  (6) If the House adopts a motion to resolve into closed session, the
Speaker shall then be authorized to declare a recess subject to the
call of the Chair. At the expiration of such recess, the pending
question, in closed session, shall be, ``Shall the House approve the
recommendation of the Permanent Select Committee on Intelligence?''
  (7) After not more than two hours of debate on the motion, such
debate to be equally divided and controlled by the chairman and ranking
minority member of the Permanent Select Committee on Intelligence, or
their designees, the previous question shall be considered as ordered
and the House, without intervening motion except one motion to adjourn,
shall immediately vote on the question, in open sessionbut without
divulging the information with respect to which the vote is being
taken. If the recommendation of the Permanent Select Committee on
Intelligence is not agreed to, the question shall be deemed recommitted
to the Permanent Select Committee on Intelligence for further
recommendation.
  (c)(1) No information in the possession of the Select Committee
relating to the lawful intelligence or intelligence-related activities
of any department or agency of the United States which has been
classified under established security procedures and which the Select
Committee, the Permanent Select Committee on Intelligence, or the House
pursuant to this section, has determined should not be disclosed shall
be made available to any person by a Member, officer, or employee of
the House except as provided in paragraph (2).
  (2) The Select Committee shall, under such regulations as the
committee shall prescribe, make any information described in paragraph
(1) available to any other committee or any other Member of the House
and permit any other Member of the House to attend any hearing of the
committee which is closed to the public. Whenever the Select Committee
makes such information available (other than to the Speaker), the
committee shall keep a written record showing, in the case of any
particular information, which committee or which Members of the House
received such information. No Member of the House who, and no committee
which, receives any information under this paragraph, shall disclose
such information except in a closed session of the House.
  (d) The Committee on Standards of Official Conduct shall investigate
any unauthorized disclosure of intelligence or intelligence-related
information by a Member, officer, or employee of the House in violation
of subsection (c) and report to the House concerning any allegation
which it finds to be substantiated.
  (e) Upon the request of any person who is subject to any such
investigation, the Committee on Standards of Official Conduct shall
release to such individual at the conclusion of its investigation a
summary of its investigation, together with its findings. If, at the
conclusion of its investigation, the Committee on Standards of Official
Conduct determines that there has been a significant breach of
confidentiality or unauthorized disclosure by a Member, officer, or
employee of the House, it shall report its findings to the House and
recommend appropriate action such as censure, removal from committee
membership, or expulsion from the House, in the case of a Member, or
removal from office or employment or punishment for contempt, in the
case of an officer or employee.

SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

    Any committee of the House of Representatives having custody of
records, data, charts, and files concerning subjects within the
jurisdiction of the Select Committee shall furnish the originals or
copies of such materials to the Select Committee. In the case of the
Permanent Select Committee on Intelligence, such materials shall be
made available pursuant to clause 7(c)(2) of rule XLVIII.

SEC. 9. INFORMATION GATHERING.

    (a) In General.--The Select Committee is authorized to require, by
subpoena or otherwise, the attendance and testimony of such witnesses,
the furnishing of such information by interrogatory, and the production
of such books, records, correspondence, memoranda, papers, documents,
calendars, recordings, electronic communications, data compilations
from which information can be obtained, tangible objects, and other
things and information of any kind as it deems necessary, including all
intelligence materials however classified, White House materials, and
materials pertaining to unvouchered expenditures or concerning
communications interceptions or surveillance.
  (b) Subpoenas, Depositions and Interrogatories.--Unless otherwise
determined by the Select Committee, the Chairman, upon consultation
with the ranking minority member, or the Select Committee may--
          (1) authorize and issue subpoenas;
          (2) order the taking of depositions, interrogatories, or
        affidavits under oath or otherwise; and
          (3) designate a member or staff of the Select Committee to
        conduct any deposition.
  (c) International Authorities.--Unless otherwise determined by the
Select Committee, the Chairman of the Select Committee, upon
consultation with the ranking minority member of the Select Committee,
or the Select Committee may--
          (1) authorize the taking of depositions and other testimony,
        under oath or otherwise, anywhere outside the United States;
        and
          (2) make application for issuance of letters rogatory, and
        request through appropriate channels, other means of
        international assistance, as appropriate.
  (d) Handling of Information.--Information obtained under the
authority of this section shall be--
          (1) considered as taken by the Select Committee in the
        District of Columbia, as well as the location actually taken;
        and
          (2) considered to be taken in executive session.

SEC. 10. TAX RETURNS.

    Pursuant to sections 6103(f)(3) and 6104(a)(2) of the Internal
Revenue Code of 1986, for the purpose of investigating the subjects set
forth in this resolution and since information necessary for this
investigation cannot reasonably be obtained from any other source, the
Select Committee shall be specially authorized to inspect and receive
for the tax years 1988 through 1998 any tax return, return information,
or other tax-related material, held by the Secretary of the Treasury,
related to individuals and entities named by the Select Committee as
possible participants, beneficiaries, or intermediaries in the
transactions under investigation. As specified by section 6103(f)(3) of
the Internal Revenue Code of 1986, such materials and information shall
be furnished in closed executive session.

SEC. 11. ACCESS TO INFORMATION OF THE SELECT COMMITTEE.

    The Select Committee shall provide other committees and Members of
the House with access to information and proceedings, consistent with
clause 7(c)(2) of rule XLVIII, except that the Select Committee may
direct that particular matters or classes of matter shall not be made
available to any person by its members, staff, or others, or may impose
any other restriction. The Select Committee may require its staff to
enter nondisclosure agreements, and its chairman, in consultation with
the ranking minority member, may require others, such as counsel for
witnesses, to do so. The Committee on Standards of Official Conduct may
investigate any unauthorized disclosure of such classified information
by a Member, officer, or employee of the House or other covered person
upon request of the Select Committee. If, at the conclusion of its
investigation, the Committee on Standards of Official Conduct
determines that there has been a significant unauthorized disclosure,
it shall report its findings to the House and recommend appropriate
sanctions for the Member, officer, employee, or other covered person
consistent with clause 7(e) of rule XLVIII and any committee
restriction, including nondisclosure agreements. The Select Committee
shall, as appropriate, provide access to information and proceedings to
the Speaker and the minority leader and an appropriately cleared and
designated member of each staff.

SEC. 12. COOPERATION OF OTHER ENTITIES.

    (a) Cooperation of Other Committees.--The Select Committee may
submit to any standing committee specific matters within its
jurisdiction and may request that such committees pursue such matters
further.
  (b) Cooperation of Other Federal Entities.--The Chairman of the
Select Committee, upon consultation with the ranking minority member,
or the Select Committee may request investigations, reports, and other
assistance from any agency of the executive, legislative, and judicial
branches of the Federal Government.

SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

    In addition to any applications to court in response to judicial
process that may be made in behalf of the House by its counsel, the
Select Committee shall be authorized to respond to any judicial or
other process, or to make any applications to court, upon consultation
with the Speaker consistent with rule L.

SEC. 14. ADMINISTRATIVE MATTERS.

    (a) Personnel.--The Chairman, upon consultation with the ranking
minority member, may employ and fix the compensation of such clerks,
experts, consultants, technicians, attorneys, investigators, clerical
and stenographic assistants, and other appropriate staff as the
Chairman considers necessary to carry out the purposes of this
resolution. Detailees from the executive branch or staff of the House
or a joint committee, upon the request of the Chairman of the Select
Committee, upon consultation with the ranking minority member, shall be
deemed staff of the Select Committee to the extent necessary to carry
out the purposes of this resolution.
  (b) Payment of Expenses.--(1) The Select Committee may reimburse the
members of its staff for travel, subsistence, and other necessary
expenses incurred by them in the performance of the duties vested in
the Select Committee.
  (2) Not more than $2,500,000 are authorized for expenses of the
Select Committee for investigations and studies, including for the
procurement of the services of individual consultants or organizations
thereof, and for training of staff, to be paid out of the applicable
accounts of the House of Representatives upon vouchers signed by the
Chairman and approved in the manner directed by the Committee on House
Oversight.

SEC. 15. APPLICABILITY OF OTHER LAWS TO SELECT COMMITTEE.

    The Select Committee shall be deemed a committee of the House for
all purposes of the rules of the House of Representatives and shall be
deemed a committee for all purposes of law, including, but not limited
to, section 202(f) of the Legislative Reorganization Act of 1946 (2
U.S.C. 72a(f)), sections 102 and 104 of the Revised Statutes (2 U.S.C.
192 and 194), sections 1001, 1505, 1621, 6002, and 6005 of title 18,
United States Code, section 502(b)(1)(B)(ii) of the Mutual Security Act
of 1954 (22 U.S.C. 1754(b)(1)(B)(ii)), and section 734 of title 31,
United States Code.

SEC. 16. DISPOSITION OF RECORDS.

    At the conclusion of the existence of the Select Committee, all
records of the Select Committee shall be transferred to other
committees, or stored by the Clerk of the House, as directed by the
Select Committee, consistent with applicable rules and law concerning
classified information.

                       purpose of the resolution

    The purpose of H. Res. 463 is to establish the Select
Committee on U.S. National Security and Military/Commercial
Concerns With the People's Republic of China.

                       summary of the resolution

    H. Res. 463 creates a select committee in the House to
investigate U.S. National Security and Military/Commercial
Concerns With the People's Republic of China and delineates the
scope of the inquiry. The resolution allows the Speaker to
appoint 9 or fewer Members of the Select Committee, and states
that service on the Select Committee shall not count against
the Member committee assignment limits contained in clause
6(b)(2) of House rule X.
    The resolution allows a \1/3\ quorum requirement for all
business except reporting a matter, and provides the option for
the Select Committee to designate a quorum of not less than 2
Members for hearings to take testimony and receive evidence.
The resolution requires the Select Committee to adopt its own
written rules, and makes the Select Committee a standing
committee for all applicable House rules.
    H. Res. 463 contains provisions providing for the
protection of classified information including non-disclosure
agreements with a referral to the Committee on Standards of
Official Conduct in the case of a violation. It allows the
Select Committee to vote to submit classified information to
the House Permanent Select Committee on Intelligence for its
consideration pursuant to House rule XLVIII, the House
Intelligence Committee rule.
    The resolution authorizes the chairman to issue subpoenas
in consultation with the ranking member. It provides the
chairman of the Select Committee the ability to order a
deposition by a single Member or staff of the Select Committee.
It also provides for certain international evidence-gathering
techniques.
    The resolution additionally authorizes the Select Committee
to inspect and receive tax information for tax years 1988
through 1998, pursuant to current authority contained in the
Tax Code for the House Ways and Means Committee, the Senate
Finance Committee, and the Joint Committee on Taxation.
    The resolution also allows the Select Committee to respond
to any judicial process and make applications to court, upon
consultation with the Speaker and consistent with Rule L,
procedure for response to subpoenas.
    Finally, the resolution authorizes not more than $2.5
million for the expenses of the Select Committee.

                        committee consideration

    H. Res. 463 was introduced by Rules Chairman Solomon on
June 9, 1998 and referred to the Committee on Rules.
    On Tuesday, June 16, the Committee held a General
Accounting Office briefing on the subject of export controls
related to commercial communications satellites. Presenters
were Katherine Schinasi, Associate Director for Defense
Acquisitions, National Security and International Affairs
Division; and David Trimble, Senior Evaluator, National
Security and International Affairs Division.
    On Tuesday, June 16, the Committee held a hearing H. Res.
463 and received testimony from: Hon. Christopher Cox,
Chairman-designate of the Select Committee on U.S. National
Security and Military/Commercial Concerns With the People's
Republic of China; Hon. Norman Dicks, Ranking Minority Member-
designate of the Select Committee; Hon. William Thomas,
Chairman, Committee on House Oversight; James Woolsey, former
Director of Central Intelligence; and Richard Allen, former
National Security Advisor to President Reagan; Dr. Paul
Freedenberg, International Trade Consultant, Baker & Botts;
Joel Johnson, Vice-President, Aerospace Industries Association
of America, Inc.; John Pike, Director of the Space Policy
Project, Federation of American Scientists.
    On Tuesday, June 16, the Committee held a mark-up of the
resolution. During the mark-up, an amendment to the amendment
in the nature of a substitute was agreed to by voice vote and
subsequently the amendment in the nature of a substitute was
agreed to by voice vote. The Committee then favorably reported
H. Res. 463, as amended, by voice vote with a quorum present.

                  background developments on the issue

    Since the late 1980s, United States companies have been
using Chinese launch services for satellites. This situation
arose after the Challenger disaster of 1986, which created
concerns over U.S. launch capabilities. Subsequent to the
Tiananmen Square massacre in June 1989, the United States
imposed a variety of sanctions on China in the Foreign
Relations Act for Fiscal Year 1990 and 1991 (P.L. 101-246). In
addition to other sanctions, this law included a suspension on
the export of satellites. In 1991, President Bush imposed
further sanctions on China, including a bar on satellite
exports, due to a determination that China had transferred M-11
missile technology to Pakistan.
    Since that time, thirteen waivers of the sanctions have
been issued (three by President Bush and ten by President
Clinton) covering twenty satellite launch projects in China
(nine under President Bush and eleven under President Clinton).
In February 1996, a Chinese launch carrying a Loral company
satellite failed, destroying the satellite. In April 1996,
Loral and Hughes, Inc. led a commission to study the cause of
the launch failure.
    On April 4, 1998, the New York Times reported that a
federal grand jury was investigating whether, during the
investigation of the 1996 launch failure, Loral and Hughes
provided any information to the Chinese without State
Department approval which may have advanced Chinese ballistic
missile capabilities. On April 13, the New York Times reported
further than in May 1997, the Pentagon issued a classified
report which concluded that Loral and Hughes had provided
information that ``significantly improved'' China's missile
capabilities.
    On February 18, 1998, while the Justice Department
investigation of Loral was ongoing, President Clinton issued
another waiver for Loral to export a satellite to China.
According to the April 4 New York Times article, some
administration officials claimed that the February waiver
undermined the investigation, since this proposed export
involved the transfer of the same kind of expertise that
prompted the Justice Department to investigate in the first
place. In fact, the Justice Department made these very concerns
known to the White House prior to the February 1998 waiver.
    According to a June 1, 1998 New York Times article, the
State Department also advised the White House, prior to the
waiver, that Loral's actions in 1996 appeared to be
``criminal'' and ``knowing,'' and that U.S. law might prohibit
satellite exports to China in any event due to China's recent
transfers of missile technology to Iran. The June 1 article
also reports that the administration was well aware of the
Defense Department's concerns over possibly aiding China's
missile program, citing a February 12 memorandum to the
President from National Security Advisor Samuel Berger. Also
according to the June 1 article, and again citing internal
White House and State Department memoranda, the National
Security Advisor and the President were made well aware of the
fact that Loral supposedly stood to lose the contract and $20
million if the waiver were not granted by January 20, 1998.
Although the waiver was not issued until a month after the
supposed deadline, the launch project is still on schedule for
November and Loral has not incurred any penalties from the
Chinese.
    Press accounts have indicated that the CEO of Loral,
Bernard Schwartz, is a close personal friend of the President's
and was the largest single donor to the Democratic Party in
1996. Additional press accounts have asserted that a Chinese
military officer, Lt. Col. Liu Chao-Ying, funneled nearly
$300,000 to Democratic party fund-raiser Johnny Chung, while
Chung was in turn funneling tens of thousands of dollars to the
Democratic party during the 1996 election cycle. Liu Chao-Ying
is a vice-president of China Aerospace Corporation, a company
that is integrally involved in China's satellite launching
program. Liu Chao-Ying was previously an executive with China
Great Wall Industry Corporation and China Precision Machinery
Import Export Corporation, the manufacturers and sellers of M-
11 missile components to Pakistan.
    During this period, several other related developments have
aroused concern or raised questions regarding the
Administration's export policies, especially toward China. On
March 14, 1996, President Clinton decided to transfer ultimate
control of satellite exports from the State Department to the
Commerce Department, which is bureaucratically disposed to
favoring looser export restrictions in order to aid U.S.
business. A General Accounting Office official testified before
the Senate Intelligence Committee on June 10, 1998, that the
decision has diminished the ability of the Defense Department
to block satellite exports, as DOD was routinely deferred to by
State, but now must garner a majority of agencies to agree to
block an export. It has been reported in the media that then-
Secretary of State Warren Christopher issued a memorandum
opposing this policy change in October 1995.
    Other press accounts have indicated that at the same time,
the Administration also transferred control of so-called ``hot
section'' technology to the Commerce Department. Hot section
technology enhances the performance of fighter aircraft, and
according to former Reagan administration official Steve Bryen
(who was the first head of the Defense Technology Security
Administration, the Pentagon agency in charge of export
reviews), is so sensitive that it previously had not even been
shared with close U.S. allies.
    Press accounts have also reported that the Clinton
Administration plans to abolish the Defense Technology Security
Administration and transfer its responsibilities to an
acquisitions department that is seen as more amenable to looser
export controls. In testimony before the Rules Committee,
former Director of Central Intelligence in the Clinton
Administration James Woolsey said ``The Defense Technology
Security Administration has been the most effective watchdog
[over] technology transfer in the government but has been
effectively cut back and banished from the Pentagon.''
    The Clinton Administration has also loosened controls on
the export of supercomputers, which can be used to enhance the
capability and reliability of nuclear weapons. In testimony
before Congress last year, Commerce Department official William
Reinsch acknowledged that forty-seven supercomputers had been
sold to China, and that the U.S. government was unsure of their
whereabouts.
    The administration has also proposed to trade a blanket
waiver of all Tiananmen Square sanctions and the speeding up of
missile technology exports to China for an agreement by China
to join the Missile Technology Control Regime (MTCR), which
bars exports of certain missile technologies to non-members.
The proposal was rejected by the Chinese, who have frequently
violated the parameters of the MTCR.
    All of these developments and reports give rise to a number
of unanswered questions that will be the object of the Select
Committee's focus:
    Did the transfer of technology, information, advice, goods
or services contribute to the enhancement of the accuracy,
reliability, or capability of nuclear armed intercontinental
ballistic missiles or other weapons of the People's Republic of
China? Or did such transfers contribute to the enhancement of
the intelligence capabilities of the PRC?
    Did such transfers contribute to the manufacture of weapons
of mass destruction, missiles or other weapons or armaments by
the PRC?
    What effect, if any, did such transfers or enhancements
have on regional security and the national security of the
United States?
    What was the conduct of the executive branch of the U.S.
government with respect to such transfers or enhancements, and
what was the effect of that conduct on the national security of
the United States?
    What was the conduct of defense contractors, weapons
manufacturers, satellite manufacturers and other private or
government-owned commercial firms with respect to such
transfers or enhancements?
    Was United States law, including statutes, regulations or
executive orders, enforced with respect to such transfers or
enhancements?
    Was there any effort by the government of the PRC or any
other person or entity to influence any of the above matters
through political contributions, commercial arrangements or
bribery, influence peddling or other illegal activity?
    What was the decision-making process within the executive
branch of the U.S. government with respect to any of the above
matters?
    Was there any effort to conceal or withhold information or
documents relevant to any of the above matters or to obstruct
justice or to obstruct the work of the Select Committee or any
other committee of the House of Representatives in connection
with those matters?
    In sum, the Select Committee is being created to ascertain
what happened, how did it happen, and what impact it has had on
U.S. national security and interests. The Rules Committee
concurs with the assessment made by Woolsey in his testimony
that ``[I can think of] no subject [that] more clearly would
require a careful and thorough investigation by a select
committee of the Congress, and I could think of few that would
even be in the same league.''

                 background and need for the resolution

    The standing rules of the House provide authority for the
committees of the House to conduct investigations and inquiries
relating to their general oversight jurisdiction. Provisions
governing the investigative procedures for House committees can
be found in House rule XI, which establishes quorum
requirements, contains guidelines for the conduct of hearings,
authorizes committees to sit and act if the House has recessed
or adjourned, grants authority to committees for the collegial
issuance of subpoenas, and allows committees some flexibility
in promulgating their own rules to govern such proceedings.
    For the most part, these existing provisions of House rules
have proven adequate and effective in ensuring that the
legitimate oversight function of House committees may be
pursued. However, at various times in recent history, the House
has chosen to supplement its standing rules by granting
additional authorities to existing committees, or by creating
select committees, subcommittees, or task forces, for the
conduct of a specific inquiry. In those instances, the House
has determined that the gravity and special characteristics of
the issues and policies under review dictated the need for
establishment of a special entity and for expanded procedures
beyond those provided in House rules. Particularly in cases
where crucial questions have been raised about U.S. national
security and adherence to the laws and regulations intended to
safeguard national security, the House has, in several
instances, opted to empower a special panel to conduct a
focused review.
    The Committee on Rules believes that the allegations raised
in this case warrant the creation of a select committee in the
House for several reasons: the issue is one of a threat to U.S.
national security and the investigation cannot be efficiently
conducted in the current standing committee system. The scope,
methods, duration, and costs are clearly spelled out in the
resolution creating the Select Committee.
    The Select Committee proposed by H. Res. 463 deals with an
extremely significant and major issue. The Select Committee, as
outlined in the jurisdiction section of the resolution and in
the background section above, will examine profound issues of
U.S. national security. The issues and questions raised by this
matter affect the peace and security of American citizens, and
are, in the judgment of the Rules Committee, of grave
importance.
    The House has, on several occasions in the recent past,
opted to create a special panel to investigate matters relating
to major foreign policy or national security issues. In the
cases involving covert arms transactions to Iran and diversion
of funds to the Nicaraguan Contras, the so-called ``October
Surprise'' inquiry into allegations relating to American
hostages in Iran, and the investigation of the so-called
``green light'' policy involving arms transfers from Iran to
Croatia and Bosnia, the House has determined that the need for
a focused and timely accounting to the American people
justified establishment of a select committee, task force or
select subcommittee.
    On prior occasions, there has been bipartisan support for
developing a special oversight mechanism to provide answers
when serious national security questions regarding specific
policies and circumstances have been raised. There has been
similar bipartisan commentary in Congress and in our public
debate asserting the need for such a mechanism in the current
case involving technology transfers to China.
    The Rules Committee believes that the important national
security and foreign policy questions raised in the case that
is now before the House are comparable in significance and
scope to those of past inquiries involving select panels.
Currently, there are potentially eight standing or select
committees of the House with jurisdictional claims over pieces
of this inquiry, a situation of jurisdictional overlap which
could lead to confusion, duplication or delay inbringing this
investigation to a conclusion. It is clear that the broad range of
national security and foreign policy topics that arise in this instance
can best be studied, considered, analyzed, and assessed by a single
panel, whose sole focus is to conduct this inquiry and report its
findings to the House and to the American people.
    The American people want answers to the questions of how
U.S. policy in this area has been determined and managed, and
how decisions relating to technology transfers with China have
impacted upon U.S. national security. The Rules Committee
believes the House has an obligation to respond to those
questions as expeditiously and thoroughly as possible. Creation
of a select committee is the best means to accomplish that end.
    In addition to creating this Select Committee, the Rules
Committee believes it should be empowered with certain tools
currently not envisioned by the standing rules of the House.
    The issues before the Select Committee created by H. Res.
463 are among the most serious and difficult of oversight
matters--chiefly the safeguarding of U.S. national security--
and therefore the Rules Committee has provided the Select
Committee with single member or staff deposition authority and
international evidence gathering authorities.
    In addition, based on a careful review of the issues to be
addressed in this inquiry, the Rules Committee has researched
prior precedents and has provided the Select Committee with
several additional authorities and guidelines.
    The Rules Committee recognizes the likelihood that
significant portions of the Select Committee's work will deal
with sensitive and classified national security information. As
a result, the Rules Committee has incorporated into H. Res. 463
provisions of House rules (specifically rule XLVIII) governing
the conduct of the House Permanent Select Committee on
Intelligence (HPSCI) and provisions of the HPSCI rules, to
ensure that the gravity of protecting sensitive material is
understood by the House, the members of the Select Committee,
its staff, and all witnesses or other individuals with whom the
Select Committee works.
    In H. Res. 463, the Rules Committee is attempting to ensure
that the Select Committee has sufficient authorities to conduct
and conclude a thorough inquiry, while remaining within the
bounds of precedent and House practice. The Rules Committee has
examined prior House resolutions of this nature closely.
    In prior cases, as in this instance, the Rules Committee
and the House have taken special care to ensure that the
resolutions granting committees additional investigative
authorities have been specifically tailored for the particular
investigation at hand and have been drafted to conform to the
standing rules of the House.
    H. Res. 463 tracks closely the language employed in H. Res.
12 (the 100th Congress), which established the Select Committee
to Investigate Covert Arms Transactions with Iran, and which
offers the most recent precedent for the creation of a select
committee for a specific inquiry. In addition, the Rules
Committee notes that similar language was employed in the 102nd
Congress, for the establishment of the Task Force to
Investigate Allegations Concerning the Holding of Americans as
Hostages by Iran (H. Res. 258, regarding the so-called
``October Surprise'' allegations). In the 104th Congress, the
House agreed to H. Res. 416, a resolution Establishing a Select
Subcommittee of the Committee on International Relations to
Investigate the United States role in Iranian Arms Transfers to
Croatia and Bosnia (the so-called ``Green Light''
investigation), which employs authorities similar to H. Res.
463.
    The Rules Committee recognizes that the charter of the
Select Committee is ambitious and will require extraordinary
effort on the part of the members and staff involved. Likewise,
the Rules Committee expects that the Administration will
cooperate fully with this important inquiry. The Select
Committee, like all House Committees, will be bound by the time
constraints inherent in the schedule for the 105th Congress,
and therefore will have to organize rapidly. H. Res. 463 was
drafted in close consultation with the House Oversight
Committee. In addition, the resolution offers flexibility for
the chairman of the Select Committee, in consultation with the
ranking minority member, to employ the necessary staff to get
the job of the Select Committee done.
    In each instance in which the Rules Committee has provided
such special authorities, the Committee has continually
underscored its view that the standing rules of the House
remain a sound basis for most congressional inquiries and are
not in need of general revision. H. Res. 463 is brought forward
for the consideration of the House in the same spirit.

             section-by-section analysis of the resolution

    Section 1 creates the Select Committee on U.S. National
Security and Military/Commercial Concerns With the People's
Republic of China (hereafter referred to as the ``Select
Committee'') in the House of Representatives for the remainder
of the 105th Congress. This section authorizes the Select
Committee to sit and act within the United States or in any
other country whether the House is in session, has recessed, or
has adjourned.
    Section 2 sets forth the jurisdiction of the inquiry to be
conducted by the Select Committee. The resolution does not
confer any legislative jurisdiction to the Select Committee.
    This section also requires the Select Committee to report
its findings to the House as it considers appropriate. It
further permits such a report to be made under the provisions
of House rule XXIX, relating to secret session of the House.
    Section 3 sets the size of the Select Committee at 9 or
fewer Members of the House to be appointed by the Speaker. It
further provides that service on the Select Committee shall not
count against the Member committee assignment limits contained
in clause 6(b)(2) of House rule X, which limit Members to
service on two standing committees and 4 subcommittees.
    Section 4 establishes a quorum requirement of \1/3\ of the
Members of the SelectCommittee for the transaction of business
other than reporting a matter. It further provides that the Select
Committee may designate a lesser number but not less than two as a
quorum for the purpose of holding hearings to take testimony and
receive evidence.
    This section applies the rules of the House applicable to
standing committees to the Select Committee where not
inconsistent with the resolution. It also requires the Select
Committee to adopt written rules to govern its proceedings and
which shall not be inconsistent with this resolution or the
rules of the House. The Rules Committee encourages the Select
Committee to develop rules governing the conduct of depositions
and other committee procedures.
    Section 5 prohibits employees of the Select Committee or
persons engaged by contract to perform services for the Select
Committee from gaining access to any classified information
unless that person has agreed in writing and under oath to be
bound by the rules of the House including the Committee on
Standards of Official Conduct; and has received an appropriate
security clearance as determined by the Select Committee in
consultation with the Director of Central Intelligence.
    Section 6 states that the Select Committee shall formulate
and carry out rules to prevent the disclosure of information
which unduly infringes upon the privacy or violates the
constitutional rights of persons.
    Section 7 relates to the procedures for handling classified
information. Subsections (a) and (b) give the Select Committee
the ability to vote to disclose publicly any classified
information, which has been submitted by the executive branch
or requested by the executive branch to be kept secret. Such
information shall then be submitted to the House Permanent
Select Committee on Intelligence, which may then employ the
procedures contained in clause 7(b) of House rule XLVIII, to
vote to disclose publicly information and make a recommendation
in that regard to the House.
    This process would only be utilized in those instances
where the Select Committee finds that there is public interest
in the disclosure of otherwise classified information, but
which the Administration refuses to declassify. Currently, the
only committee of the House that has recourse to this procedure
is the Permanent Select Committee on Intelligence (HPSCI). In
order to maintain the relationship between the House and the
Intelligence Community, which is vital to the conduct of
meaningful oversight of U.S. intelligence activities and the
protection of sources and methods, it is necessary to refer any
adversarial declassification issues to the HPSCI for further
proceedings consistent with clause 7 of rule XLVIII. In this
way, the HPSCI will be allowed to weigh in on any decision to
force the Administration to disclose information and make an
independent determination of the risk to sources or methods if
the information is declassified.
    Subsections (c), (d), and (e) relate to the treatment of
classified information by the Select Committee, and closely
resemble provisions contained in House rule XLVIII for the
Permanent Select Committee on Intelligence.
    Section 8 provides that committees of the House having
custody of records, data, charts, and files on subjects in the
Select Committee's jurisdiction shall furnish such information
to the Select Committee. The Committee acknowledges that
memoranda, notes, indexes, analysis, or staff work product are
not committee records.
    The issues raised in this inquiry fall within the
jurisdiction of several standing and permanent select
committees of the House, several of which have already begun
pursuing related inquiries and gathering relevant material. The
Rules Committee believes that this resolution provides for
appropriate and properly managed cooperation between the Select
Committee and the relevant House committees. The Rules
Committee notes that this provision is consistent with previous
resolutions creating select committees or task forces and is
consistent with House practice.
    Section 9 grants the Select Committee the authority to
require by subpoena the testimony of a witness, at a hearing or
in a deposition, or the furnishing of information.
    This section further authorizes the chairman of the Select
Committee, upon consultation with the ranking minority member,
to authorize and issue subpoenas.
    It also authorizes the chairman, upon consultation with the
ranking minority member, to order the taking of depositions,
interrogatories, or affidavits under oath by a single Member or
majority and minority staff of the Select Committee.
    This section also authorizes the chairman of the Select
Committee, upon consultation with the ranking minority member,
to order the taking of depositions and other testimony under
oath anywhere outside the United States and make application
for letters rogatory and request, through appropriate channels,
other means of international assistance.
    Given the breadth and complexity of some of the
investigations undertaken by the House in recent years, members
have recognized the value of allowing the chairman of a
committee, in consultation with the ranking member, to
authorize a single member or designated staff to take
depositions. The constraints on members' time, as well as the
reality that depositions in some of these cases can often take
hours or even days to complete, make this enhanced flexibility
important to the timely and thorough completion of an
investigation.
    Additionally, the international aspects of certain
inquiries have at times created the need for committees to seek
testimony and other information beyond the borders of the
United States. For this reason, the House has on several
occasions granted international evidence gathering authorities,
including the ability to take depositions and other testimony
anywhere outside the United States, to make application for
issuance of letters rogatory, and to request, through
appropriate channels, other means of international assistance.
    The Committee on Rules is aware that letters of request are
quite properly honored on the basis of international comity
between governments or courts and understands that cooperation
and assistance from the Department of State and foreign
governments will be critical to securing evidence and testimony
overseas. The Committee on Rules strongly encourages the
executive branch to assist the Select Committee in this regard.
    In its report accompanying H. Res. 167 (House Report 105-
139), a resolution providing special investigative authorities
for the Committee on Government Reform and Oversight, the Rules
Committee traced the recent legislative history for this type
of action by the House and incorporated a detailed appendix
outlining 11 cases in which the House had provided similar
special authorities for single member or staff deposition
authority and international evidence gathering, dating back to
the 93rd Congress (see pages 27-32 of that report).
    Finally, this section considers information obtained under
its authority as taken by the Select Committee in the District
of Columbia as well as the location actually taken and
considers such information as taken in executive session. The
Committee on Rules intends that such information, taken in
executive session, should not be released or used in public
sessions without the consent of the select committee, as
provided in clause 2(k)(7) of House rule XI.
    Section 10 authorizes the Select Committee to inspect and
receive tax information for tax years 1988 through 1998. The
Committee believes that the Select Committee needs this
authority to obtain a full and comprehensive understanding of
this matter. The Committee on Rules intends that the Select
Committee exercise caution and due diligence in ensuring that
such information is handled in the most judicious and
appropriate manner. The Committee further notes that the U.S.
Tax Code contains criminal penalties for unauthorized
disclosure of this information. The Rules Committee intends
that the authority granted by Section 10 extends to the Select
Committee acting collegially.
    Section 11 allows the Select Committee to provide other
committees and Members of the House access to information
consistent with clause 7(c)(2) of House rule XLVIII, relating
to the House Permanent Select Committee on Intelligence. The
Rules Committee notes that the Committee on Standards of
Official Conduct may investigate pursuant to its authority
contained in the standing rules of the House.
    Section 12 provides that the Select Committee may request
that other standing committees pursue matters within the Select
Committee's jurisdiction, and states that the chairman, upon
consultation with the ranking minority member, may request
information and assistance from the Executive Branch.
    Section 13 authorizes the Select Committee the ability to
respond to judicial or other process, and to make applications
to court, upon consultation with the Speaker and consistent
with House rule L, procedures for response to subpoenas.
    The Rules Committee envisions that this authority will
supplement the existing provisions in House rules which provide
for the House Counsel to take such action on behalf of the
House.
    Section 14 allows the chairman, upon consultation with the
ranking minority member, to hire staff for the Select
Committee, It further deems detailees from the executive branch
as staff of the Select Committee, upon request of the chairman
of the Select Committee and upon consultation with the ranking
minority member.
    This section authorizes not more than $2.5 million for
expenses of the Select Committee to be paid out of applicable
accounts of the House upon vouchers signed by the chairman and
approved in the manner directed by the Committee on House
Oversight.
    Section 15 deems the Select Committee a committee of the
House for all purposes of the rules of the House and all
purposes of law.
    Section 16 provides for the proper disposition of records
of the Select Committee at the conclusion of its existence.

                 congressional budget office estimates

    Clause 2(l)(3)(C) of rule XI requires each committee to
include a cost estimate prepared by the Director of the
Congressional Budget Office, pursuant to section 403 of the
Congressional Budget Act of 1974, if the cost estimate is
timely submitted. No cost estimate was received from the
Congressional Budget Office.

                           oversight findings

    Clause 2(l)(3)(A) of rule XI requires each committee report
to contain oversight findings and recommendations required
pursuant to clause 2(b)(1) of rule X. The Committee has no
oversight findings.

 oversight findings and recommendations of the Committee on Government
                          Reform and Oversight

    Clause 2(l)(3)(D) of rule XI requires each committee report
to contain a summary of the oversight findings and
recommendations made by the Government Reform and Oversight
Committee pursuant to clause 4(c)(2) of rule X, whenever such
findings have been timely submitted. The Committee on Rules has
received no such findings or recommendations from the Committee
on Government Reform and Oversight.

                       views of committee members

    Clause 2(l)(5) of rule XI requires each committee to afford
a two day opportunity for members of the committee to file
additional, minority, or dissenting views and to include the
views in its report. Although this requirement does not apply
to the Committee, the Committee always makes the maximum effort
to provide its members with such an opportunity. The following
views were submitted:

                             MINORITY VIEWS

    Numerous allegations have appeared in the press recently
that licensing the launch of U.S. commercial satellites by
China resulted in a transfer of technology that threatens U.S.
security and that campaign contributions played a role in the
issuance of such licensing. We agree that these allegations are
serious and should be adequately investigated. However, we are
not convinced that a select committee should be the response.
If we find that the House has the ability through its normal
committee structure to carry out any investigation necessary, a
select committee seems wasteful and duplicative. In fact, at
least four of the committees with jurisdiction in this matter
are presently conducting their own investigations.
    In drafting a resolution to establish the Select Committee,
the Majority chose the Iran-Contra Select Committee as a model
for this Select Committee. This particular model bestows
extraordinary powers on the Chairman of the Select Committee.
We are hopeful that the manner in which the Select Committee
conducts its business will also follow the Iran-Contra model.
The Iran-Contra Committee under the bipartisan leadership of
Chairman Lee Hamilton and Ranking Republican Richard Cheney,
along with their Senate counterparts Senators Daniel Inouye and
Warren Rudman, made decisions jointly on all matters of
procedural issues. In fact, Representative Hamilton stated in a
letter to Representative Henry Waxman, dated June 16, 1997,
that ``I do not recall a single instance in which the majority
acted unilaterally.'' It is our belief that if a committee does
not conduct itself in a professional, fair, and bipartisan
manner, then its findings, no matter how earth-shattering, are
tainted and damaged. It is for that reason that we hope that
this committee will conduct its proceedings in the most serious
bipartisan manner.
    Even though we approach the establishment of the Select
Committee with the hope that fair-mindedness will prevail, we
find it difficult to support establishing the Select Committee
without assurances that the minority will be included on an
equal footing in the decision making process. The Rules
Committee report states that the resolution has been ``drafted
to conform with the standing rules of the House.'' This is not
a fair statement. The resolution grants extraordinary authority
to the chairman of the Select Committee which, in fact, weakens
the rights of the minority and of witnesses. Our fears of abuse
of this power are not groundless. One need look no further than
the recent campaign finance investigations conducted by the
Committee on Government Reform and Oversight. Chairman Burton's
conduct during that investigation demonstrated the dangers of
granting such unilateral powers with no limitations. Chairman
Burton gave the members of the Government Reform and Oversight
Committee, as well as the Rules Committee, assurances that he
would not abuse the unilateral authorities granted by the
Committee and by the House. In spite of these assurances, the
Burton investigation is filled with examples of abuses of the
extraordinary grant given him. As the Burton investigation has
proven, the investigation has proven, the process only works if
the chairman does not abuse his power and seeks to include the
minority.
    Throughout the hearing and mark-up process we were
constantly told by the majority, including the designated
chairman of the Select Committee, Representative Cox, that
every effort would be made to guarantee the rights of the
minority in the investigative process and to include the
minority in all aspects of the investigation. We hope the
chairman and ranking minority member will have a good working
relationship. It is our responsibility, as the Committee on
Rules, to make sure the rules of the Select Committee are fair.
However, our concern, based on experience in this Congress, is
that these rules will permit abuses by the majority party, if
that party chooses that route. We have many reservations about
this process and will explain below why we remain uneasy with
the resolution.
    There are a number of unilateral authorities granted to the
chairman of the Select Committee by this resolution that cause
us concern. The most important concerns are the provisions of
section 9(b) of the resolution which grant the chairman, ``upon
consultation with the ranking minority member,'' the authority
to authorize and issue subpoenas. This unilateral subpoena
authority is problematic in that merely requiring the chairman
to consult with the ranking minority member before authorizing
or issuing subpoenas does not require the chairman to include
the minority in the investigative process. At the Government
Reform and Oversight Committee, Chairman Burton unilaterally
issued over 1000 information requests, including subpoenas,
depositions, and document requests with neither a vote of the
committee nor the concurrence of the ranking minority member.
Our hopes are that this kind of abuse of power does not occur
in the Select Committee.
    The resolution also allows the chairman, after consulting
with the ranking minority member, to take depositions anywhere
in the world and authorizes a variety of mechanisms to obtain
international assistance in gathering information. This
authority has been granted in other major congressional
investigations, and we do not necessarily object to its
inclusion in this resolution. We would add a note of caution,
however. The most recent example of the use of this authority
was by the Government Reform Committee. As stated earlier, that
investigation has been marked by partisanship, harassment of
witnesses, misrepresentation and misleading statements,
information leaks by staff, and disregard for the right of the
minority to participate in this process. This does not instill
confidence that international working relationships can be
achieved. The ability to gain access to and information from
foreign sources depends almost totally upon the willingness of
the host country to allow it. This requires comity and clarity.
We urge the Committee to engage in the kind of cooperative,
bipartisan working arrangements which have enabled other
congressional investigations to succeed.
    Section 10 of the resolution grants the Select Committee
the authority to receive and examine any tax return related to
individuals and entities named by the Select Committee as
possible participants, beneficiaries, or intermediaries in the
transactionsunder investigation. Virtually unfettered access to
the tax records of individuals and others is a very risky venture and
must be pursued with the utmost responsibility and respect for the
privacy of those individuals. We urge the Select Committee to use the
greatest of care in exercising this authority. We support the inclusion
of language in the report that directs the Select Committee to vote to
obtain these records.
    Section 11 of the resolution grants the chairman the
authority to impose a ``gag rule'' on individuals associated
with the investigation, including witnesses and their
attorneys. The numerous abuses of witnesses before the
Government Reform Committee are well documented. It is
extremely perilous to allow staff, in a closed session, to have
virtually unlimited questioning of a witness with little or no
rights given to the individual being deposed. There is ample
opportunity for staff to intimidate and harass witnesses. These
interrogatory sessions are not trials or courts of law and do
not afford the same protections. If individuals giving
depositions are deprived of the protections that are generally
available to those giving statements under oath and are treated
unfairly, these individuals, along with their counsels, would
be prevented by these ``gag rules'' from coming forward to
report such abuses or other inappropriate actions taken by the
Select Committee or its staff. This is a troubling provision,
and we urge the Select Committee to use this power in only the
most judicious fashion.
    Section 12 of the resolution states that ``the Select
Committee may submit to any standing committee specific matters
within its jurisdiction and may request that such committees
pursue such matters further.'' This language is not clear in
its intent. We believe that any jurisdictional referral by the
Select Committee of its recommendations should be based on the
jurisdiction of the standing committees as stated in the Rules
of the House. The jurisdiction of the Select Committee is a
temporary grant of authority by the House and should not
prejudice the jurisdictions of the standing committees.
Therefore in the interest of the precedents of the House,
referrals should be based on the jurisdictions of the standing
committees.
    Section 14 authorizes $2.5 million for the Select Committee
to conduct an investigation which will last no longer than 6
months. There are only three standing committees of the House
that are expected to spend more over the next 6 months. At this
rate of spending, this will become the most expensive select
committee in the history of the House. Our hope is that this
will not be a waste of taxpayers' money to duplicate much of
the investigation already being carried on by other committees
of the House.
    It is our hope that as the Select Committee develops and
adopts its rules, it will do so in a manner that protects
minority rights. We urge the Select Committee to include in its
rules provisions to provide for concurrence and advance notice
to the minority when issuing subpoenas, scheduling witness
interviews, and authorizing travel of staff inside and outside
the U.S. to conduct those interviews. Also, we believe that any
database which the Select Committee may develop itself or any
databases which it may receive from other standing committees
under section 8 of this resolution be shared with the minority.
    We clearly recognize and fully support the right of
Congress through its committee structure to conduct
investigations and we recognize there are serious issues to be
investigated. We are including with these views: an article by
current National Security Advisor Samuel R. Berger which
appeared in the Wall Street Journal on June 3, 1998; an article
by Secretary of Commerce William M. Daley which appeared in the
New York Times on June 5, 1998; an article by former National
Security Advisor Brent Scowcroft and Arnold Kanter of the Forum
for International Policy which appeared in the Washington Times
on June 5, 1998; an article by former Secretary of State Warren
Christopher which appeared in the Los Angeles Times on June 7,
1998; and a document created by the National Security Council
with input and clearance from the Department of State,
Department of Defense, Department of Commerce, and the Arms
Control and Disarmament Agency. We believe that these articles
and document which address the core issues will clear up some
of the confusion surrounding allegations reported in the press.
    In conclusion, we have reservations about the resolution
and we believe that the Select Committee may be redundant in
light of other ongoing investigations. In fact, the
investigation could be properly carried out by an existing
committee, most likely the Intelligence Committee which has at
its disposal all the necessary powers and expertise to conduct
this investigation. But if the majority insists on having a
select committee, we hope that its investigations will be done
in the fairest, most bipartisan manner possible. Anything less
will cast doubt on the integrity of the investigation.
    Finally, there is a real danger that this type of
resolution is now becoming a routine tool to circumvent the
traditional committee process. It should be used rarely, only
when warranted by extraordinary circumstances. The regular
hearing route coupled with informal staff interviews should
always be the preferred means for conducting investigations, as
it is for the other standing committees of the House. We should
not be in the habit of making this type of resolution a routine
occurrence.

                                   Joe Moakley.
                                   Tony P. Hall.
                                   Martin Frost.
                                   Louise M. Slaughter.

              [From the Wall Street Journal, June 3, 1998]

           Launching Satellites in China Is Good for the U.S.

                         (By Samuel R. Berger)

    If you watched the Winter Olympics on television, there's a
good chance the images of figure skating or downhill racing
came to you from Japan via an American-made satellite that was
launched by a Chinese rocket. That's a reflection of U.S.
leadership in satellite technology--the demand for American
satellites exceeds our domestic launch capacity. As a result,
the government licenses U.S. companies to have their satellites
launched abroad, allowing people on every continent--through
television, telephones, pagers and other electronic means--to
share ideas, information and images.
    In a reaction to reports misleading linking Democratic
Party campaign fundraising to Clinton administration decisions
affecting our national security, members of Congress voted
recently to ban U.S. companies from using Chinese rockets to
launch satellites into orbit. If enacted into law, this
legislation would harm our national interest.
    A ban would endanger American leadership in the global
satellite business. More importantly, it would do great harm to
our relationship with China--a relationship that is vital to
our security interests in Asia and around the world, as vividly
illustrated by events in the past few weeks: nuclear testing by
India and Pakistan, political change in Indonesia and financial
challenge throughout Asia. In each of these areas, China has
the potential to promote or to undermine U.S. national
interests. Given the stakes, it is time the facts catch up with
the emotions.
    In 1988, President Reagan approved the export of U.S.
satellites for launch by Chinese rockets, a policy that has
enjoyed broad bipartisan support ever since. It serves
important national interests: creating incentives for China to
help us stop the spread of missile technology, improving
American competitiveness in the global satellite business and
helping broadcast Western ideas and values into China.
    Since 1989, approval of license applications for commercial
satellite launches on Chinese rockets has required a
presidential wavier of the sanctions imposed following the
Tiananmen Square massacre. The Bush administration issued
waivers for nine satellite programs in three years. The Clinton
administration has issued waivers for 11 programs over five
years. Each was carefully scrutinized by the Department of
Defense, the State Department and the Arms Control and
Disarmament Agency. And each was reported to Congress.
    The satellites exported to China for launch are not used
for military purposes, not do they result in the transfer of
missile technology. All are subject to strict controls and
safeguards developed by the Department of Defense to prevent
the transfer of technology that would improve China's missile
capabilities.
    In 1992, President Bush granted the Loral Corp. permission
to launch a satellite on a Chinese rocket. The launch took
place in February 1996, but the rocket exploded and destroyed
the satellite. Loral allegedly worked with the Chinese to
review why the explosion occurred and to prevent it from
happening again. The Justice Department is investigating
whether in that review--not in the launch--technology or know-
how may have been provided improperly to the Chinese.
    When President Clinton granted Loral a waiver in February
1998 for another launch, he did not ``overrule'' or ``ignore''
Justice Department views. The State Department's recommendation
for that waiver noted that the 1996 incident was under
investigation. The White House took the added, prudent step of
asking the Justice Department of its view on the request, even
though it normally has no role in the licensing or waiver
process. The Justice Department raised concerns about the
impact of the waiver on a potential prosecution if the facts
lead in that direction. These objections were not related to
national security concerns about the 198 waiver and associated
licenses.
    The Justice Department's concern was factored into the
president's decision to grant a waiver, which also took into
account four supporting factors. The State Department
determined that the waiver would be in the national interest
and would in no way compromise U.S. national security, and the
Defense Department and the Arms Control and Disarmament Agency
concurred in that judgment. The licensing request was for a
commercial satellite, not for the kind of activity (launch-
failure analysis) for which Loral was being investigated. The
State Department has a longstanding practice of not
presumptively barring applicants under investigation--as
opposed to prosecution--from receiving a license. And if the
investigation ripened into a prosecution, the license could be
revoked and other serious penalties imposed.
    Mr. Clinton's decision in March 1996 to give the Commerce
Department the lead in licensing commercial satellites did not
relax our controls over the export of satellites, nor did it
allow the transfer of sensitive technology. Under the approach
adopted, the Defense and State departments and the Arms Control
and Disarmament Agency still review all proposed commercial
satellite licenses to ensure that they are consistent with U.S.
national security. If any agency disagrees with a proposed
license, it can block the license and put the issue into a
dispute resolution process that can ultimately rise to the
president.
    The decision to transfer lead responsibility to the
Commerce Department followed an intensive six-month review,
which led to an inclusive process that protected national
security and was approved by both the State and Defense
departments. It was part of a broader, bipartisan effort, and
supported by the Reagan and Bush administrations, both to
streamline the process for licensing essentially commercial
products and to make the process more transparent to exporters.
    The shift of jurisdiction also was supported by majorities
in both houses of Congress. Beginning in 1990, both houses
repeatedly passed bills specifically mandating the shift of
commercial satellite licensing to Commerce, one of which was
pending at the time of the president's decision. Mr. Clinton's
decision followed the intent of that legislation while adding
national security safeguards--such as a strengthened role for
Defense and State--that were not included in the legislative
proposals.
    In every waiver case the decision-making process flows from
the bottom up--a request for a license is made by the company
to the relevant government agency (State or Commerce), which
then solicits the views of other relevant agencies on the
pending license application, Once these agencies agree that the
license application may be granted, a recommendation for a
waiver ``in the national interest'' is made to the president.
Each waiver approved by President Clinton was based on a
recommendation from the State Department or the Commerce
Department. And each license under these waivers had the
concurrences of the Department of Defense and the Department of
State. At no time did campaign contributions have any effect on
U.S. policy or national security.
    The record speaks for itself: The policy initiated by
President Reagan and continued by Presidents Bush and Clinton
is good for our country. We should focus on the facts--and on
our national interest.
                                ------

                [From The New York Times, June 5, 1998]

                        Commerce Can Do the Job

                         (By William M. Daley)

    The Senate Intelligence Committee began its hearings this
week on the American satellites launched by Chinese rockets.
Among the issues are whether our export control laws were
violated and whether private companies committed illegal acts
in the aftermath of the 1996 Loral rocket launch in China.
Those specific charges should be investigated thoroughly, and
if there was any wrongdoing it should be punished.
    But it is simply untrue to suggest that the 1996 transfer
of jurisdiction over communications satellites to the Commerce
Department from the State Department jeopardized national
security. In fact, that transfer completed a process begun by
President George Bush in 1990 and encouraged by Congress. In
1990 and 1992, Congress passed legislation that would have
transferred this jurisdiction, but the bills failed to become
law because of other controversial provisions.
    The transfer brought the United States into line with the
licensing approach used by every other satellite producer in
the world. Every satellite license the Commerce Department
approved has had the unanimous approval of the reviewing
agencies--the State and Defense Departments as well as the Arms
Control and Disarmament Agency--and has been subject to the
same level of technology safeguards as satellites licensed at
the State Department. It has been made clear to exporters that
under the license they could not transfer any rocket technology
to a foreign country. Any such transfer still requires a
license from the State Department.
    Beginning in 1990, the Bush Administration reviewed items
on the Munitions List, which required a State Department export
license, to see if they should be moved to the Commodity
Control List, which required a Commerce Department license. In
President Bush's words, he wanted to make ``export license
decisions more predictable and timely.''
    The differences between the two are procedural. The
Commerce Department must meet firmer deadlines for decisions on
``dual use'' items (those with commercial as well as military
applications) and must include all relevant Federal agencies.
    Yes, economic considerations play a role. Exports bring in
billions of dollars and account for millions of American jobs,
and the strength of our technology industries is critical to
national security.
    But contrary to what some have asserted, the Commerce
Department's method of licensing is every bit as thorough and
careful as that used by the State Department to regulate
munitions. Satellite exports are governed by an executive order
issued by President Clinton in December 1995, which gives these
agencies the right to participate in the decision on any
license application.
    If there is disagreement, then cases move quickly to a
committee of senior officials from these departments and
agencies, which votes on the application. If the Pentagon, say,
is unhappy with the outcome, it can take the case to the
President--although such an appeal has never happened. Today,
reviews of dual use licenses are more thorough and more careful
than at any time in the past.
    The broader issue is how our Government should regulate
exports of high-technology goods. The most important issue is,
as it should be, our national security.
    But imposing the tightest possible restrictions on high-
tech exports is not necessarily the best way to protect our
security. In fact, our current policy--developed under the
Reagan and Bush Administrations--recognizes that we must
consider various factors in controlling high-technology
exports.
    The United States has a monopoly over very few
technologies. Therefore, rigid export controls would not
protect national security in a growing number of situations
because the same products can be obtained readily from foreign
sources.
    Indeed, such controls would harm American security. Our
high-tech companies would become less competitive globally,
making them less able to produce the innovative products that
our military and private businesses depend on. And to avoid
export controls, some companies would undoutedly move their
research and manufacturing outside of the United States.
    Take high-performance computers. These machines are
essential to a modern military, but the Pentagon and American
businesses do not buy enough of them to maintain a thriving
domestic industry.
    Without exports, the industry would be crippled, and in the
long term, it would be unable to plow profits back into
developing the next generation of even more powerful computers.
    In short, we must consider the full ramifications of our
decisions--including the costs of ill-reasoned controls that
damage our technology base without protecting national
security.
                                ------

               [From the Washington Times, June 5, 1998]

                   What Technology Went Where and Why

                 (By Brent Scowcroft and Arnold Kanter)

    The last few weeks have seen an avalanche of melodramatic
charges about American ``technology transfers'' to China and
claims that these actions have enhanced the capabilities of
nuclear missiles aimed at the United States. In combination
with confusing--and confused--media reporting and inept
responses by the Clinton administration, these accusations
threaten both to do needless damage to important U.S. national
security interests and to impede the investigation of serious
allegations of wrongdoing.
    A great deal hangs in the balance. The consequences, if
these allegations are proven, would be substantial. But the
costs of accusations which turn out to be ill-founded--if not
reckless--also can be great. Nowhere is this more clear than in
the case of our relations with China. Not only is the character
of our strategic relationship with China of fundamental
importance to U.S. national security, but that relationship
also is at an unusually critical and formative stage both
bilaterally and with respect to larger issues ranging from
North Korea to South Asia.
    The investigative congressional committees that are being
established will have the responsibility for sorting out this
complicated affair. Meanwhile, however, the protagonists in
this controversy need to cool the rhetoric, get some basic
facts straight and identify the real issues before more harm is
done to U.S. security, political and economic interests.
    Much of the confusion arises from the fact that four
different issues are being lumped together:
    U.S. government waivers to permit American commercial
satellites to be launched on Chinese space boosters.
    The unauthorized transfer to China of technical information
by two U.S. satellite manufacturers, Loral and Hughes.
    Large campaign contributions to the Democratic Party by
Loral's chairman, Bernard Schwartz.
    Alleged contributions to the Democratic Party by Chinese
citizens withties both to the Chinese military and the Chinese
company that launches American commercial satellites.
    Satellite waivers. The current controversy has its roots in
the 1986 Challenger disaster. There was serious concern that
the loss of U.S. launch capability that resulted from the
ensuing moratorium on shuttle flights would jeopardize
America's pre-eminence in space. The Reagan administration
responded by adopting a policy that opened the way for U.S.
commercial satellites to be launched on Chinese space boosters
on a case-by-case basis. The sanctions imposed by the Bush
administration following the Tiananmen Square massacre in June
1989 blocked satellite launches by the Chinese but included a
provision for case-by-case presidential waivers.
    Last February, the State and Defense Departments
recommended, and President Clinton approved, such a waiver to
allow a commercial communications satellite built by Loral to
be launched into orbit by a Chinese booster. This was the
eighth waiver--covering eleven launches--approved by the
Clinton administration. Previously, the Bush administration
approved three waivers covering the launch of nine satellites.
    The satellites in question are civilian, not military. More
important, ``no technology transfer'' is permitted in
connection with these satellite launches, which are the space-
age equivalent of having Federal Express deliver a package
across the country. On the contrary, there are strict
safeguards designed to confine Chinese access to the most basic
information about the U.S. payload these rockets carry--for
example, size, weight and other mating data needed to ensure
that the satellite will fit on top of the rocket and can be
boosted into the correct orbit. (The waivers in question relate
to the application of Tiananmen sanctions--which are designed
to punish the Chinese for human rights abuses--not the
safeguards against technology transfer.)
    In principle, these safeguards mean that the Chinese learn
no more about the ``package'' they are launching than FedEx
knows about the package it is shipping, and that no information
is provided which would improve the capabilities of their
civilian space boosters, much less their nuclear-armed
missiles. The March 1996 transfer of responsibility for
licensing commercial satellite exports from the State
Department to the Commerce Department likewise should not have
had any effect on the strictness or application of the
safeguards because a separate State Department license
typically is still required to permit the Chinese to launch
U.S. satellites, and the Defense Department continues to review
all proposed waivers to ensure they are in the national
security interest of the U.S.
    Assistance to the Chinese Rocket Program. The Justice
Department is investigating the unauthorized transfer of
information to China by Loral and Hughes in connection with a
1996 review of the explosion of a Long March rocket launching a
U.S. satellite. Because of the virtual identity between these
Chinese ``space boosters'' and military missiles, assistance to
the former could lead to improvements in the latter.
    Experts from Loral, Hughes and other companies became
involved in this review at the insistence of the international
insurance industry, which refused to insure more Long March
launches until an ``outside'' team reviewed the Chinese
analysis of, and remedies for, the malfunctions their rockets
had been experiencing. Ironically, the Chinese initially
resisted this proposal, andallowed the international team of
experts to conduct their review only when they became convinced that
these insurance problems would jeopardize their commercial space launch
business.
    According to news reports, a Pentagon agency has determine
that the information which Loral and Hughes transferred to the
Chinese caused ``harm'' to U.S. national security, but the
nature and extent of whatever harm was done is not yet clear.
The congressional investigating committees will try to get the
answers to that question. What does seem clear at this point is
that the Chinese government never requested information or
other assistance from our government to improve the space
boosters they use to launch satellites. What is even more clear
is that in 1996 the U.S. government did not provide, or approve
Loral and Hughes providing, information which would improve
Chinese space launch or missile capabilities.
    Indeed, Loral and Hughes are under investigation for
unauthorized transfers of information. The Justice Department's
reservations about the February 1998 satellite waiver stemmed
not from the waiver itself, but from a concern about how it
might affect a jury's psychology should Justice decide to
prosecute these two satellite manufacturers for what they may
have done in connection with their review of the 1996 Long
March rocket failure.
    Loral Campaign Contributions. According to news reports,
Mr. Schwartz--Loral's chairman and CEO--is the largest single
contributor to the Democratic Party. Loral also was the
beneficiary of the waiver which President Clinton approved in
February. In addition, Loral successfully sought (along with
other U.S. satellite manufacturers) presidential approval for
the transfer of authority over the licensing process from the
State Department to the Commerce Department. Many have
suggested a relationship between the Schwartz campaign
contributions and these Clinton decisions.
    The question not only is legitimate, but goes to the heart
of the larger issue of the impact of campaign fundraising and
contributions on the American political process. But even if
suspicions prove correct, the fact remains that no ``technology
transfer'' is authorized when Loral (or any other American)
satellites are launched by Chinese rockets. Moreover, there is
no current indication that any of the laws, policies and other
safeguards against such technology transfers were relaxed as a
result of campaign contributions. The issue of whether campaign
contributions influenced president decisions in this case is of
profound seriousness and should be pursued by the congressional
investigative committees, but appears at this point to be
essentially unrelated to the issue of technology transfer to
China.
    Chinese Campaign Contributions. Democratic fundraiser
Johnny Chung reportedly has told investigators that he served
as a conduit for political contributions from the Chinese
government. Specifically, he claims that Liu Chaoying, who is
an officer in the Chinese army and an executive in the Chinese
company which (among its many business enterprises) launches
satellites, gave him money with instructions to donate a
portion of those funds to the Democratic Party.
    If substantiated, these assertions could have serious
implications. That said, it also should be noted that, provided
the safeguards described above do their job, even if a quid pro
quo were sought and given, a satellite waiver might work to the
commercial advantage of Liu's company, but would not
havecontributed to China's military capabilities.
    In sum, several of the issues being raised in the current
controversy are real and serious. Others, particularly those
related to charges that satellite launch waivers somehow
enhanced Chinese missile capabilities, may be based on
fundamentally mistaken premises. Key to making that
determination is an assessment of the practical effectiveness
of the safeguards policies and practices that apply to these
satellite launches.
    If careful analysis determines that these safeguards have
substantially achieved their objectives, then the imposition of
blanket prohibitions on satellite launches by China would
largely miss the point. On the one hand, it would not deal with
concerns about how campaign contributions--from Americans, to
say nothing of Chinese--might influence government decisions in
ways which produce commercial advantage. On the other hand, it
could prove to be worse than redundant with the safeguards
already in place, because it would both place American industry
at a competitive disadvantage and do needless damage to our
critically important relationship with China.
    One fact, however, already is abundantly clear. A great
deal is at stake in the answers to the questions being raised
in the current controversy. It therefore is essential that we
get it right--that all of the charges be thoroughly
investigated, that penalties be levied where appropriate, and
that remedial actions be taken where required. But we should
let the congressional committees do their jobs before a rush to
judgment that may harm rather than advance our interests.
    Brent Scowcroft, president of the Forum for International
Policy, was national security advisor under Presidents Ford and
Bush. Arnold Kanter, a senior fellow at the Forum for
International Policy, served as under secretary of state for
Political Affairs from 1991 to 1993.
                                ------

               [From the Los Angeles Times, June 8, 1998]

                Satellite Exports: Nobody Was Overruled

                        (By Warren Christopher)

    In March 1996, President Clinton announced a decision to
transfer responsibility from the State Department to the
Commerce Department for licensing the export of commercial
satellites. My role in that decision has become the subject of
extensive media discussion, much of it confusing and
misleading. Hence, I think it is important to look at the
facts.
    In October 1995, I was presented with the question of
whether to agree to eliminate completely State Department
licensing authority over commercial satellites by transferring
it to the Commerce Department or, as had been recommended by an
interagency committee, to retain State's licensing role over a
category of commercial satellites employing more advanced
technologies. I chose the latter option.
    Whether State or Commerce should have licensing
jurisdiction over commercial satellites is an issue that goes
back to the Reagan and Bush administrations. Competing views on
the matter rest on the differences between the missions and
export regulatory regimes of each department.
    Under the authority provided in the Arms Export Control
Act, State has export licensing authority for items that are
designed, developed or modified for military applications.
Under the Export Administration Act, Commerce licenses most
dual-use items--items with both commercial and military uses.
    The objective of the two systems differ. The Arms Export
Control Act gives State the authority to use regulatory export
controls primarily to protect U.S. national security. Under the
Export Administration Act, on the other hand, Commerce weighs
economic and trade interests along with national security and
foreign policy concerns.
    The Commerce Department objected to my conclusion that
certain satellites should remain under State Department
licensing jurisdiction and sought presidential review. The
National Security Council then began--as it should have--a
comprehensive interagency review aimed at developing a
resolution. At the end of this process, I was satisfied that
State would continue to play a significant role in commercial
satellite licensing decisions and would have an opportunity to
raise national security concerns to the highest level,
notwithstanding that it would not be the licensing authority.
My conclusion was based upon the recommendation was based upon
the recommendation of Lynn Davis, the highly regarded
undersecretary of State for arms control and international
security affairs, and senior Defense officials.
    As the situation now stands, the Commerce Department cannot
act unilaterally on an application to export a commercial
communications satellite. Instead, every such export
application requires evaluation for national security concerns
by the State and Defense departments and by the Arms Control
and Disarmament Agency. If any of these reviewing authorities
objects to a commercial satellite export proposed by Commerce,
it can initiate a process that ultimately will bring
conflicting views to the president.
    When President Clinton decided to move the licensing
authority to the Commerce Department, he did so with agreement
by the interested parties, including the State Department. No
one was overruled. The president's decision represented a
melding of national security and business interests, a result
advocated by the Bush administration as well as by American
manufacturers involved in the satellite business.
                                ------

  The Facts About the Administration's Commercial Satellite Licensing
                                 Policy

    The globalization of the commercial satellite industry is a
positive and powerful development at the dawn of a new century.
Satellites launched from the United States, Europe, Russia and
China allow people everywhere--through television, telephones,
paging and many other electronic means--to share ideas,
information and aspirations. They are powerful multipliers of
free speech and thought. The United States is the world leader
in satellite technology. But we lack the launch capacity to
meet the demand for our satellites. And other nations can
launch them more inexpensively. In 1988, President Reagan
approved the export of U.S. satellites for launch by Chinese
rockets--a policy that has enjoyed broad bipartisan support.
Since 1989, approval of license applications for commercial
satellite launches on Chinese rockets has required a
Presidential waiver of the Tiananmen Square sanctions. The Bush
Administration issued three waivers in three years for nine
satellites. The Clinton Administration has issued ten waivers
over five years for eleven satellite programs. Each of these
waivers was scrutinized to ensure consistency with our
nonproliferation goals and each was reported to Congress.
    The benefits of licensing commercial satellite launches by
China are clear. This program enhances American competitiveness
by increasing our launch capacity and lowering the cost of
launches while bringing tremendous benefits to consumers
(greater cell phone, pager and satellite television capacity.)
It furthers our efforts to stop the transfer of missile
technology to third countries by providing incentives for China
to observe non-proliferation norms. It can beam objective
sources of information and democratic values into China--some
of the very satellites China sends into space send back CNN and
other western television programming. And more broadly, it
serves our policy of engagement with China, which is expanding
our cooperation in areas important to the national interest
(such as stability in Asia; preventing the spread of weapons of
mass destruction; combating international crime and drug
trafficking; protecting the environment; promoting trade and
creating jobs) while giving us opportunities to deal
forthrightly with our differences (such as human rights.)
    Misleading news reports and misinformation now surround the
policy of licensing the launch of U.S. commercial satellites on
Chinese rockets. To set the record straight, here are the
facts:

                         the licensing program

1. Allegation: Licensing the launch of U.S. commercial satellites by
        China results in a transfer of technology that threatens U.S.
        security

    The Facts: None of the satellite licenses or waivers
authorizes the transfer of sensitive missile technology to
China. All are for commercial satellites, the licenses are
subject to careful inter-agency scrutiny by the Department of
Defense, the Department of State, the Arms Control and
Disarmament Agency (ACDA) and the Department of Commerce and
are subject to strict controls and safeguards. The current
safeguards include a detailed plan for shipping the satellite,
a detailed operational security plan for the satellite while in
China awaiting launch, and approved procedures for the
supervised mating of the satellite to the launch vehicle. In
addition, the plan includes Defense Department monitoring of
technical meetings between the U.S. company and Chinese launch
officials, and of the launch itself. The conditions imposed on
companies that use Chinese rockets for satellite launches
require that there be no improvement in China's missile
capabilities.

2. Allegation: U.S. policy regarding the export of satellites to China
        has put U.S. cities at risk from Chinese ICBMs

    The Facts: China's Inter Continental Ballistic Missiles
(ICBMs) have had the range and accuracy to reach U.S. cities
since they were first deployed in the early 1980s. Thus, this
capability existed before President Reagan approved the first
exports of satellites to China in 1988.

                           the loral license

3. Allegation: The waiver granted to Loral subsequent to the start of a
        Justice Department investigation into whether Loral illegally
        transferred technology to China was granted over the opposition
        of Justice and compromised U.S. national security

    The Facts: The Clinton Administration did not ``overrule''
or ``ignore'' Justice Department views, nor has granting the
license compromised U.S. national security.
    In 1992, President Bush granted a waiver which permitted
the Loral Corporation to launch a commercial communications
satellite on a Chinese rocket. The launch took place in
February 1996, but the rocket exploded and destroyed the
satellite. Loral and another U.S. company allegedly worked with
the Chinese to determine why the explosion occurred and how to
prevent such accidents in the future. Any analysis of a launch
failure would have to be separately authorized by State and is
not authorized in State or Commerce licenses for the launch of
commercial communications satellites. The Justice Department is
investigating whether, in any such review technology or know-
how may have been illegally given to the Chinese.
    When the State Department recommended a waiver for another
Loral satellite in 1998, it noted that an investigation of
Loral was under way. The White House therefore took the added
step of asking Justice for its views on the request. The
Justice Department raised concerns about the potential impact
of the waiver on its ability to persuade a jury to convict
Loral in the event that the incident warrants prosecution.
    The Justice Department views were weighed carefully by the
President against factors which supported a waiver: (i) the
State Department recommended that the waiver would be in the
national interest, and State and the Department of Defense
found that the license referenced in the waiver contained the
safeguards necessary to protect the national security; (ii) the
licensing request was for a commercial satellite export, not
for the kind of activity (launch-failure analysis) for which
Loral was being investigated; (iii) the State Department has a
long-standing practice of considering license applications on a
case-by-case basis in accordance with normal procedures for
individuals who may be subject to criminal investigations but
have not been indicted; and (iv) if an investigation leads to
indictment license revocation and other serious penalties may
be imposed. In balancing all these factors, the President
decided to approve the waiver.
    This is how decisions in government are made--balancing the
views of all relevant agencies and then making a broader
judgment based on overall national interests. The process was
transparent and open. Agencies responsible for our national
security reviewed and supported the request, the White House
took the additional step of asking Justice for its views and
agency considerations were reflected in a memorandum for the
President.

                    transfer from state to commerce

4. Allegation: The State Department opposed the 1996 transfer of
        licensing jurisdiction for commercial satellites to the
        Commerce Department

    The Facts: President Clinton's decision to transfer
licensing jurisdiction over commercial satellites to Commerce
came at the end of a 6-month process. It ultimately enjoyed the
consensus of Commerce, State and Defense because it provided
for continued State licensing of technical data and assistance
related to launch vehicles, and because of additional
procedural protections added to the Commerce licensing process.
    Under the approach adopted in 1996, Defense, State, Energy
and ACDA review all proposed commercial satellite exports to
ensure that they are consistent with U.S. national security. If
any of these agencies disagrees with a proposed export, it can
block the license and put the issue into a dispute resolution
process that can ultimately rise to the President.
    The decision to transfer jurisdiction was part of a
broader, bipartisan effort supported by the Reagan and Bush
Administrations to move primary authority for licensing
essentially commercial items to Commerce in order both to
streamline the process and make it more transparent to
exporters, and where such transfers could be made in a manner
fully consistent with national security interests. Commerce
applies stricter deadlines that are better suited for
commercial products.
    The shift of jurisdiction from State to Commerce was also
supported by majorities in both Houses of Congress. Beginning
in 1990, both Houses repeatedly passed bills specifically
mandating the shift of jurisdiction over commercial satellites
to Commerce (although none of those bills became law.) Indeed,
the President's decision in 1996 was directly responsive to
legislative language that would have transferred jurisdiction.
The President followed the intent of such legislation, while
adding national security safeguards--such as a strengthened
role for Defense and State--that were not included in the
legislative proposals.
    Prior to and independent of the shifting of commercial
satellite jurisdiction to Commerce, the President in December
1995 issued an Executive Order expanding the right of the
Departments of State, Defense, Energy and ACDA to review all
dual-use export license applications, including commercial
satellites. Previously, these agencies reviewed only certain
dual-use applications. The President took this action to ensure
that all relevant agencies would have the opportunity to review
all license applications for their national security and
foreign policy implications.
    It is also worth noting that in the case of the 1998 Loral
waiver, as in the case of most commercial satellite exports to
China, a separate State Department license was still required
because the exporter proposed to transfer technology controlled
by State regarding the integration of the satellite to the
rocket.
    It is well know that the State Department initially opposed
the transfer of jurisdiction to the Commerce Department.
Congress has been briefed on this issue, and the General
Accounting Office report on the subject refers to State's
initial objections.
    However, subsequent to the initial decision by the State
Department, a number of measures were developed to deal with
the concerns identified by the Defense and State Departments
regarding the jurisdictional transfer. These additional
measures, approved by the President, formed a basis of
subsequent concurrence by the State Department for the transfer
of jurisdiction to the Commerce Department for commercial
communications satellites.
    These measures include:
          suspending rules normally available to the Commerce
        Department which require approval of U.S. licenses
        based on a similar technology available from other
        exporting countries (``foreign availability'');
          requiring that any satellite with U.S. contents be
        subject to jurisdiction, even if the U.S. content is
        extremely small (the ``de minimis requirement'') and;
          adding a new control at the Commerce Department which
        would allow the denial of applications for national
        security and foreign policy reasons to any foreign
        destination.
    These new controls were notified to Congress and published
by the State Department at the time of the transfer of
jurisdiction of licensing functions in 1996. When State briefed
Congress about the transfer in jurisdiction, it explained its
view that the new controls made it possible for State to
support the jurisdiction change.

5. Allegation: The 1996 transfer of licensing jurisdiction from State
        to Commerce created a national security sieve because the
        Commerce Department has inadequate safeguards to prevent the
        diversion of dual-use technology

    The Facts: The President's decision in March, 1996 to give
the Commerce Department jurisdiction over commercial satellite
exports did not decontrol or weaken the export of satellites
nor allow the transfer of sensitive satellite technology to
anyone.
    The Department of Defense, the State Department, Energy and
ACDA review proposed exports to ensure they are consistent with
U.S. national security and foreign policy interests. The same
strict safeguards are now required for Commerce-licensed
commercial satellites as were required for satellites licensed
by the State Department. The safeguards include a detailed plan
for shipping the satellite, a detailed operational security
plan for the satellite while in China awaiting launch, and
approved procedures for the supervised mating of the satellite
to the launch vehicle. In addition, the plan includes Defense
Department monitoring of technical meetings between the U.S.
company and Chinese launch officials, and of the launch itself.
The conditions imposed on companies that use Chinese rockets
for satellites launches require that there be no improvement in
China's missile capabilities.
    As previously noted, the President's decision was the
culmination of a long inter-agency process in which national
security concerns of all agencies were addressed, leading to
their concurrence in the final decision. The impetus for the
jurisdiction change dated to the Bush Administration and was
reflected in repeated votes by Congress to mandate such a
change. President Clinton's decision effectuated the change
only after procedures were agreed upon to ensure consistency
with national security interests.

                         CAMPAIGn CONTRIBUTIONS

6 Allegation: Loral's campaign contributions influenced the President's
        decision to grant it export waivers, including the waiver
        subsequent to the start of the Justice Department
        investigation, and also influenced the President's decision to
        transfer licensing jurisdiction from State to Commerce

    The Facts: No campaign contributions affected decision-
making on U.S. foreign policy or national security.
    The policy of licensing U.S. commercial satellites to be
launched by Chinese rockets is bipartisan and pre-dates the
Clinton Administration. It was instituted by President Reagan
and further implemented by the Bush Administration. The Bush
Administration approved three waivers over three years for nine
U.S. satellites to be launched from China, the Clinton
administration has approved ten waivers over five years
covering eleven satellite programs.
    Each waiver approved by President Clinton was based on a
recommendation from the State Department or the Commerce
Department. Each license under these waivers was approved after
careful interagency review that including State, Defense and
ACDA. The decision-making process flows from the bottom up--a
request for a license is made by the company to the relevant
government agency (State or Commerce), which then solicits the
views of the other relevant agencies on the pending license
application. Once the interagency review process is completed
and the license is ready for approval, a recommendation is made
to the White House concerning whether a waiver of Tiananmen
sanctions is in the ``national interest.''
    Similarly, as detailed above, the decision to transfer
jurisdiction over commercial satellites from State to Commerce
was the product of an intensive six month inter-agency review
process and was preceded by similar efforts in the Bush
Administration and in Congress. During the decision-making
process, the satellite industry strongly supported the change
in jurisdiction, as it had done for a number of years.
    There is absolutely no connection between any campaign
contributions and U.S. policy. There is no evidence of such a
nexus, nor has it been alleged on the basis of any facts. It
simply did not occur.

7. Allegation: Intra-government e-mails and memoranda regarding the
        1998 Loral licensing request convey a sense of urgency that was
        based on Loral's pleas for a quick decision and suggest
        political pressure.

    The Facts: Loral's interest in prompt action on its 1998
licensing request had no effect on the substance of the
Administration's licensing process or any effect on national
security.
    American companies that need U.S. government approvals for
business transactions should be able to expect an expeditious
response, especially if they are operating under a specific
deadline. They are not entitled to a positive response, but to
a timely one.
    In the case of the 1998 Loral request, the Administration
was aware of a deadline with important commercial implications
and so tried to be responsive. But the decision whether or not
to grant the waiver was based on the judgments of the agencies
involved in reviewing the license and recommending the waiver.
In fact, the Administration's decision occurred after the
commercial deadlines identified by the company had passed, as
government officials continued to gather the information needed
to make an informed, judicious decision.

    A History of Bipartisan Support for Commercial Satellite Waivers

    1. Granting Waivers for U.S. Commercial Satellite Launches
On Chinese Rockets Has Been Found To Be ``In The National
Interest'' 20 Times By President's Reagan, Bush and Clinton.
    President Reagan: On September 9, 1988, President Reagan
approved a plan to allow the export of U.S. made communications
satellites to China for launching on Chinese rockets. Reagan's
State Department spokesman Charles Redman noted that the plan
would ``protect legitimate U.S. national security interests . .
.'' [Washington Post, 9/10/98]
    President Bush: President Bush, on 3 separate occasions
over 4 years, granted waivers to allow the export of a total of
9 separate commercial satellites for launch on Chinese rockets.
On each of those occasions the President specifically reported
to Congress that the waivers were ``in the national interest.''
[Public Papers of the President's, 1989 (Book II, p. 1721);
1991 (Book I, p. 446); 1992 (Book II, p. 1546)]
    President Clinton: President Clinton, over 6 years, has
granted waivers to allow the export of a total of 11 separate
commercial satellites for launch on Chinese rockets. Each and
every time, the President has notified the Congress that the
waivers were ``in the national interest.''
    As well as
    Colin Powell (1988): In an October 20, 1988 letter to then
House Foreign Affairs Committee Chairman Dante Fascell, then
National Security Adviser Colin Powell wrote: ``Legislation may
be offered to prohibit or delay issuance of licenses
authorizing the export of U.S. satellites . . . for launch on
Chinese vehicles. This would be a serious mistake. . . . I
request your assistance in forestalling any last minute actions
in Congress that could jeopardize the important commercial and
national security interests we are seeking to advance in our
approach.'' [House Foreign Affairs Cmte. Hearing on Proposed
Sale and Launch of United States Satellites on Chinese
Missiles, 9/28/88 (p. 100-101)]
    Frank Carlucci (1988): Also in an October 20, 1988 letter
to Chairman Fascell, Reagan Defense Secretary Frank Carlucci
wrote: ``I remain concerned that another attempt may be made to
block the export of these satellites. . . . Your support for
this important national security issue can make a difference. I
strongly urge you to support the administration's initiative to
license these satellites to the Chinese.'' [House Foreign
Affairs Cmte. Hearing on Proposed Sale and Launch of United
States Satellites on Chinese Missiles, 9/28/88 (p. 122-123)]
    Gov. Pete Wilson (1993): In a November 16, 1993 letter to
Secretary of State Warren Christopher, Wilson wrote: ``I urge
you to use your waiver authority under the law to allow the
satellite sales to the PRC to proceed. These sales are
important to the California economy and in themselves are no
threat to further missile proliferation.''
    Reps. Rohrabacher, Thomas, Gallegly, Dreier, et al (1993):
In an October 27, 1993 letter to Secretary of State Warren
Christopher, 30 members of Congress--including 16 Republicans--
wrote that while they supported ``the objective of controlling
missile proliferation'' they were concerned that sanctions did
not ``allow communications satellites to be launched from
China''--specifically satellites owned by Hughes Aircraft
Company. The letter concludes: ``We believe that national
policy objectives can be met without placing sanctions on
communications satellites, and we ask you to direct that these
satellites be excluded from any list of sanctionable items.''
The letter was signed by 30 Representatives (16 Republicans and
14 Democrats) including Reps. Dana Rohrabacher, William Thomas,
Elton Gallegly, David Dreier. [Letter to Warren Christopher,
10/27/93]
    2. Transfer Of Authority To Grant Waivers From The State
Department To The Commerce Department Was A Policy Decision
Supported By Both Democrats And Republicans.
    President Bush (1992): In a September 25, 1992 ``Message to
Congress,'' President Bush noted ``the transfer from the State
Department to the Commerce Department of licensing
jurisdiction'' over certain civil aircraft equipment and added
that ``this transfer of items formerly included in the State
Department's United States Munitions List (USML) to the
[Commerce Control List] CCL is ongoing.'' President Bush also
predicted that: ``In the future, certain commercial
telecommunications satellites, imaging technologies, and
navigational technologies will be removed from the USML and
added to the CCL.'' [Public Papers of the President's, 1992
(Book II, p. 1651; emphasis added)]
    Frm. Congressman Roth (1993-1996): Former Rep. Toby Roth
(R-WI) served as the ranking member and Chairman (1995-96) of
the House Foreign Affairs Committee's Subcommittee on Economic
Policy, Trade and Environment. Roth was an adamant proponent of
shifting jurisdiction for commercial satellite exports from the
State Department to the Commerce Department. Roth sponsored a
1995 bill (HR. 316) which--in its original form--included
language stating that ``the export of commercial communications
satellites . . . may be regulated only by the Secretary of
Commerce.'' Roth also co-authored a July 18, 1994 New York
Times op-ed with Rep. Gejdensen which was critical of
``prohibit[ing] American companies from selling communications
satellites to China . . .'' [HR 361, 104th Congress, 1/11/95
(version 1)]
    Congressman Gallegly (1994): On May 17, 1994, Rep. Elton
Gallegly (R-CA) signed up as a cosponsor on HR 4276 sponsored
by Rep. Jane Harman. The legislation function was ``to amend
the Arms Export Control Act and Export Administration Act of
1979 to require that the export of certain commercial
communications satellites and associated equipment be regulated
solely by the Secretary of Commerce . . .'' Introducing her
bill on April 21, 1994, Harman noted the bill ``completes a
process that was initiated by the Bush Administration by
shifting jurisdiction over these licenses from the State
Department to the Commerce Department.'' Other cosponsors were
Democratic Rep. Berman (CA); Beilenson (CA) and Edwards (CA).
[Bill Tracking Report HR. 4276, 103rd Congress (Lexis/Nexis);
Congressional Record, 4/21/94 (emphasis added)]
    Congressman Gilman, Roth, Burton, Rohrabacher, et al: In
1994, the House Foreign Affairs Committee (May 18th) and its
Subcommittee on Economic Policy, Trade, and Environment (March
10th) both passed by voice vote Legislation stating that) ``the
export of commercial communications satellites . . . may be
regulated only by the Secretary of Commerce.'' Members of the
Subcommittee at the time of the March 10, 1994 voice vote
included: Reps. Toby Roth, Dana Rohrabacher, Don Manzullo, Doug
Bereuter, Jan Myers, and Cass Ballenger. And, in addition to
those listed above, the members of the full committee at the
time of May 18, 1994 voice vote included: Reps. Ben Gilman, Dan
Burton, James Leach, Elton Gallegly, Chris Smith and eight
other Republications. [103rd Congress, House Rep. 103-531, 5/
25/94]
    3. Both President Bush And President Clinton Granted
Waivers For Chinese Launch Of Loral Made Commercial Satellites.
National Security Was The Controlling Factor In Both Decisions.
    President Bush: In a letter informing Congress of his
decision to grant a waiver to Loral for its Intelsat VIIA
project, Bush wrote that ``it is in the national interest of
the United States to waive the restrictions'' on exporting to
China. [``Message to the Congress on trade with China,'' Public
Papers of the Presidents: George Bush, Book II, p. 1546]
    President Clinton: On February 6, 1996 and February 18,
1998, President Clinton also told Congress that ``it is in the
national interest of the United States to waive'' restrictions
on exporting to China for Loral's Mubuhay and Chinasat 8
projects. [``Message to Congress on Satellite Exports to
China,'' Public Paper of the Presidents: Bill Clinton, Book I,
p. 177; Congressional Record, 2/24/98, p. H573]
    Note: The satellite launched as a result of President
Bush's 1992 waiver exploded at launch in 1996--leading to the
controversial ``industry review'' and subsequent Justice
Department investigation.

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