Cryptography's Role In Securing The Information Society

                Appendix N   Continued

[N.1.6 commences p. 558.]
__________________________________________________________________


            N.1.6 Arms Export Control Act 
          (U.S. Code, Title 22, Chapter 39)


Sec. 2751. Need for international defense cooperation and military
export controls; Presidential waiver; report to Congress; arms
sales policy.

     As declared by the Congress in the Arms Control and
Disarmament Act (22 U.S.C. 2551 et seq.), an ultimate goal of the
United States continues to be a world which is free from the
scourge of war and the dangers and burdens of armaments; in which
the use of force has been subordinated to the rule of law; and in
which international adjustments to a changing world are achieved
peacefully. In furtherance of that goal, it remains the policy of
the United States to encourage regional arms control and
disarmament agreements and to discourage arms races.

     The Congress recognizes, however, that the United States and
other free and independent countries continue to have valid
requirements for effective and mutually beneficial defense
relationships in order to maintain and foster the environment of
international peace and security essential to social, economic,
and political progress. Because of the growing cost and complexity
of defense equipment, it is increasingly difficult and uneconomic
for any country, particularly a developing country, to fill all of
its legitimate defense requirements from its own design and
production base. The need for international defense cooperation
among the United States and those friendly countries to which it
is allied by mutual defense treaties is especially important,
since the effectiveness of their armed forces to act in concert to
deter or defeat aggression is directly related to the operational
compatibility of their defense equipment.

     Accordingly, it remains the policy of the United States to
facilitate the common defense by entering into international
arrangements with friendly countries which further the objective
of applying agreed resources of each country to programs and
projects of cooperative exchange of data, research, development,
production, procurement, and logistics support to achieve specific
national defense requirements and objectives of mutual concern. To
this end, this chapter authorizes sales by the United States
Government to friendly countries having sufficient wealth to
maintain and equip their own military forces at adequate strength,
or to assume progressively larger shares of the costs thereof,
without undue burden to their economies, in accordance with the
restraints and control measures specified herein and in
furtherance of the security objectives of the United States and of
the purposes and principles of the United Nations Charter.

     It is the sense of the Congress that all such sales be
approved only when they are consistent with the foreign policy
interests of the United States, the purposes of the foreign
assistance program of the United States as embodied in the Foreign
Assistance Act of 1961, as amended (22 U.S.C. 2151 et seq.), the
extent and character of the military requirement, and the economic
and financial capability of the recipient country, with particular
regard being given, where appropriate, to proper balance among
such sales, grant military assistance, and economic assistance as
well as to the impact of the sales on programs of social and
economic development and on existing or incipient arms races.

     It shall be the policy of the United States to exert
leadership in the world [559] community to bring about
arrangements for reducing the international trade in implements of
war and to lessen the danger of outbreak of regional conflict and
the burdens of armaments. United States programs for or procedures
governing the export, sale, and grant of defense articles and
defense services to foreign countries and international
organizations shall be administered in a manner which will carry
out this policy.

     It is the sense of the Congress that the President should
seek to initiate multilateral discussions for the purpose of
reaching agreements among the principal arms suppliers and arms
purchasers and other countries with respect to the control of the
international trade in armaments. It is further the sense of
Congress that the President should work actively with all nations
to check and control the international sale and distribution of
conventional weapons of death and destruction and to encourage
regional arms control arrangements. In furtherance of this policy,
the President should undertake a concerted effort to convene an
international conference of major arms-supplying and
arms-purchasing nations which shall consider measures to limit
conventional arms transfers in the interest of international peace
and stability.

     It is the sense of the Congress that the aggregate value of
defense articles and defense services--

(1) which are sold under section 2761 or section 2762 of this
title; or

(2) which are licensed or approved for export under section 2778
of this title to, for the use, or for benefit of the armed forces,
police, intelligence, or other internal security forces of a
foreign country or international organization under a commercial
sales contract;

in any fiscal year should not exceed current levels.

     It is the sense of the Congress that the President maintain
adherence to a policy of restraint in conventional arms transfers
and that, in implementing this policy worldwide, a balanced
approach should be taken and full regard given to the security
interests of the United States in all regions of the world and
that particular attention should be paid to controlling the flow
of conventional arms to the nations of the developing world. To
this end, the President is encouraged to continue discussions with
other arms suppliers in order to restrain the flow of conventional
arms to less developed countries.


Sec. 2752. Coordination with foreign policy.

     (a) Noninfringement of powers or functions of Secretary of
State. Nothing contained in this chapter shall be construed to
infringe upon the powers or functions of the Secretary of State.

     (b) Responsibility for supervision and direction of sales,
leases, financing, cooperative projects, and exports. Under the
direction of the President, the Secretary of State (taking into
account other United States activities abroad, such as military
assistance, economic assistance, and the food for peace program)
shall be [560] responsible for the continuous supervision and
general direction of sales, leases, financing, cooperative
projects, and exports under this chapter, including, but not
limited to, determining--

(1) whether there will be a sale to or financing for a country and
the amount thereof;

(2) whether there will be a lease to a country; 

(3) whether there will be a cooperative project and the scope
thereof; and

(4) whether there will be delivery or other performance under such
sale, lease, cooperative project, or export,

to the end that sales, financing, leases, cooperative projects,
and exports will be integrated with other United States activities
and to the end that the foreign policy of the United States would
be best served thereby.

     (c) Coordination among representatives of the United States.
The President shall prescribe appropriate procedures to assure
coordination among representatives of the United States Government
in each country, under the leadership of the Chief of the United
States Diplomatic Mission. The Chief of the diplomatic mission
shall make sure that recommendations of such representatives
pertaining to sales are coordinated with political and economic
considerations, and his comments shall accompany such
recommendations if he so desires.


Sec. 2753. Eligibility for defense services or defense articles.

     (a) Prerequisites for consent by President; report to
Congress.

No defense article or defense service shall be sold or leased by
the United States Government under this chapter to any country or
international organization, and no agreement shall be entered into
for a cooperative project (as defined in section 2767 of this
title), unless--

(1) the President finds that the furnishing of defense articles
and defense services to such country or international organization
will strengthen the security of the United States and promote
world peace;

(2) the country or international organization shall have agreed
not to transfer title to, or possession of, any defense article or
related training or other defense service so furnished to it, or
produced in a cooperative project (as defined in section 2767 of
this title), to anyone not an officer, employee, or agent of that
country or international organization (or the North Atlantic
Treaty Organization or the specified member countries (other than
the United States) in the case of a cooperative project) and not
to use or permit the use of such article or related training or
other defense service for purposes other than those for which
furnished unless the consent of the President has first been
obtained:

(3) the country or international organization shall have agreed
that it will maintain the security of such article or service and
will provide substantially the same degree of security protection
afforded to such article or service by the Unite~ States
Government; and [561]

(4) the country or international organization is otherwise
eligible to purchase or lease defense articles or defense
services.

     In considering a request for approval of any transfer of any
weapon, weapons system, munitions, aircraft, military boat,
military vessel, or other implement of war to another country, the
President shall not give his consent under paragraph (2) to the
transfer unless the United States itself would transfer the
defense article under consideration to that country. In addition,
the President shall not give his consent under paragraph (2) to
the transfer of any significant defense articles on the United
States Munitions List unless the foreign country requesting
consent to transfer agrees to demilitarize such defense articles
prior to transfer, or the proposed recipient foreign country
provides a commitment in writing to the United States Government
that it will not transfer such defense articles, if not
demilitarized, to any other foreign country or person without
first obtaining the consent of the President. The President shall
promptly submit a report to the Speaker of the House of
Representatives and to the Committee on Foreign Relations of the
Senate on the implementation of each agreement entered into
pursuant to clause (2) of this subsection....


Sec. 2754. Purposes for which military sales or leases by the
United States are authorized; report to Congress.

     Defense articles and defense services shall be sold or
leased by the United States Government under this chapter to
friendly countries solely for internal security, for legitimate
self-defense, to permit the recipient country to participate in
regional or collective arrangements or measures consistent with
the Charter of the United Nations, or otherwise to permit the
recipient country to participate in collective measures requested
by the United Nations for the purpose of maintaining or restoring
international peace and security, or for the purpose of enabling
foreign military forces in less developed friendly countries to
construct public works and to engage in other activities helpful
to the economic and social development of such friendly countries.
It is the sense of the Congress that such foreign military forces
should not be maintained or established solely for civic action
activities and that such civic action activities not significantly
detract from the capability of the military forces to perform
their military missions and be coordinated with and form part of
the total economic and social development effort: Provided, That
none of the funds contained in this authorization shall be used to
guarantee, or extend credit, or participate in an extension of
credit in connection with any sale of sophisticated weapons
systems, such as missile systems and jet aircraft for military
purposes, to any underdeveloped country other than Greece, Turkey,
Iran, Israel, the Republic of China, the Philippines and Korea
unless the President determines that such financing is important
to the national security of the United States and reports within
thirty days each such determination to the Congress.... [562]


Sec. 2770. General authority.

     (a) Sale of defense articles and services by the President
to United States companies; restriction on performance of
services; reimbursement credited to selling agency. Subject to the
conditions specified in subsection (b) of this section, the
President may, on a negotiated contract basis, under cash terms
(1) sell defense articles at not less than their estimated
replacement cost (or actual cost in the case of services), or (2)
procure or manufacture and sell defense articles at not less than
their contract or manufacturing cost to the United States
Government, to any United States company for incorporation into
end items (and for concurrent or follow-on support) to be sold by
such a company either (i) on a direct commercial basis to a
friendly foreign country or international organization pursuant to
an export license or approval under section 2778 of this title or
(ii) in the case of ammunition parts subject to subsection (b) of
this section, using commercial practices which restrict actual
delivery directly to a friendly foreign country or international
organization pursuant to approval under section 2778 of this
title. The President may also sell defense services in support of
such sales of defense articles, subject to the requirements of
this chapter: Provided, however, That such services may be
performed only in the United States. The amount of reimbursement
received from such sales shall be credited to the current
applicable appropriation, fund, or account of the selling agency
of the United States Government.

     (b) Conditions of sale. Defense articles and defense
services may be sold, procured and sold, or manufactured and sold,
pursuant to subsection (a) of this section only if (1) the end
item to which the articles apply is to be procured for the armed
forces of a friendly country or international organization, (2)
the articles would be supplied to the prime contractor as
government-furnished equipment or materials if the end item were
being procured for the use of the United States Armed Forces, and
(3) the articles and services are available only from United
States Government sources or are not available to the prime
contractor directly from United States commercial sources at such
times as may be required to meet the prime contractor's delivery
schedule.

     (c) 'Defense articles' and 'defense services' defined. For
the purpose of this section, the terms 'defense articles' and
'defense services' mean defense articles and defense services as
defined in section 2794(3) and (4) of this title....


Sec. 2778. Control of arms exports and imports.

     (a) Presidential control of exports and imports of defense
articles and services, guidance of policy, etc.; designation of
United States Munitions List; issuance of export licenses;
condition for export; negotiations information.

(1) In furtherance of world peace and the security and foreign
policy of the United States, the President is authorized to
control the import and the export of defense articles and defense
services and to provide foreign policy guidance to persons of the
United States involved in the export and import of such articles
and [563] services. The President is authorized to designate those
items which shall be considered as defense articles and defense
services for the purposes of this section and to promulgate
regulations for the import and export of such articles and
services. The items so designated shall constitute the United
States Munitions List.

(2) Decisions on issuing export licenses under this section shall
be made in coordination with the Director of the United States
Arms Control and Disarmament Agency and shall take into account
the Director's opinion as to whether the export of an article will
contribute to an arms race, support international terrorism,
increase the possibility of outbreak or escalation of conflict, or
prejudice the development of bilateral or multilateral arms
control arrangements.

(3) In exercising the authorities conferred by this section, the
President may require that any defense article or defense service
be sold under this chapter as a condition of its eligibility for
export, and may require that persons engaged in the negotiation
for the export of defense articles and services keep the President
fully and currently informed of the progress and future prospects
of such negotiations.

     (b) Registration and licensing requirements for
manufacturers, exporters, or importers of designated defense
articles and defense services.

(1)(A) As prescribed in regulations issued under this section,
every person (other than an officer or employee of the United
States Government acting in an official capacity) who engages in
the business of manufacturing, exporting, or importing any defense
articles or defense services designated by the President under
subsection (a)(1) of this section shall register with the United
States Government agency charged with the administration of this
section, and shall pay a registration fee which shall be
prescribed by such regulations. Such regulations shall prohibit
the return to the United States for sale in the United States
(other than for the Armed Forces of the United States and its
allies or for any State or local law enforcement agency) of any
military firearms or ammunition of United States manufacture
furnished to foreign governments by the United States under this
chapter or any other foreign assistance or sales program of the
United States, whether or not enhanced in value or improved in
condition in a foreign country. This prohibition shall not extend
to similar firearms that have been so substantially transformed as
to become, in effect, articles of foreign manufacture.

(B) The prohibition under such regulations required by the second
sentence of subparagraph (A) shall not extend to any military
firearms (or ammunition, components, parts, accessories, and
attachments for such firearms) of United States manufacture
furnished to any foreign government by the United States under
this chapter or any other foreign assistance or sales program of
the United States if-- 

(i) such firearms are among those firearms that the Secretary of
the Treasury is, or was at any time, required to authorize the
importation of by reason of the provisions of section 925(e) of
title 18 (including the requirement for the listing of such
firearms as curios or relics under section 921(a)(13) of that
title); and

(ii) such foreign government certifies to the United States
Government that such firearms are owned by such foreign
government.

(C) A copy of each registration made under this paragraph shall be
transmitted [564] to the Secretary of the Treasury for review
regarding law enforcement concerns. The Secretary shall report to
the President regarding such concerns as necessary. 

(2) Except as otherwise specifically provided in regulations
issued under subsection (a)(1) of this section, no defense
articles or defense services designated by the President under
subsection (a)(1) of this section may be exported or imported
without a license for such export or import, issued in accordance
with this chapter and regulations issued under this chapter,
except that no license shall be required for exports or imports
made by or for an agency of the United States Government 

(A) for official use by a department or agency of the United
States Government, or

(B) for carrying out any foreign assistance or sales program
authorized by law and subject to the control of the President by
other means.

(3)(A) For each of the fiscal years 1988 and 1989, $250,000 of
registration fees collected pursuant to paragraph (1) shall be
credited to a Department of State account, to be available without
fiscal year limitation. Fees credited to that account shall be
available only for the payment of expenses incurred for--

(i) contract personnel to assist in the evaluation of munitions
control license applications, reduce processing time for license
applications, and improve monitoring of compliance with the terms
of licenses; and

(ii) the automation of munitions control functions and the
processing of munitions control license applications, including
the development, procurement, and utilization of computer
equipment and related software.

(B) The authority of this paragraph may be exercised only to such
extent or in such amounts as are provided in advance in
appropriation Acts.

     (c) Criminal violations; punishment. Any person who
willfully violates any provision of this section or section 2779
of this title, or any rule or regulation issued under either
section, or who willfully, in a registration or license
application or required report, makes any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, shall upon conviction be fined for each violation not
more than $1,000,000 or imprisoned not more than ten years, or
both.

     (d) Repealed. Pub. L. 96-70, title III, Sec. 3303(a)(4),
Sept. 27,1979, 93 Stat. 499.

     (e) Enforcement powers of President. In carrying out
functions under this section with respect to the export of defense
articles and defense services, the President is authorized to
exercise the same powers concerning violations and enforcement
which are conferred upon departments, agencies and officials by
subsections (c), (d), (e), and (g) of section 11 of the Export
Administration Act of 1979 (50 App. U.S.C. 2410(c), (d), (e), and
(g)), and by subsections (a) and (c) of section 12 of such Act (50
App. U.S.C. 2411(a) and (c)), subject to the same terms and
conditions as are applicable to such powers under such Act (50
App. U.S.C. 2401 et seq.). Nothing in this subsection shall be
construed as authorizing the withholding of information from the
Congress. Notwithstanding section 11(c) of the Export
Administration Act of 1979, the civil penalty for each violation
involving controls imposed on the export of defense articles and
defense services under this section may not exceed $500,000. [565]

     (f) Periodic review of items on Munitions List. The
President shall periodically review the items on the United States
Munitions List to determine what items, if any, no longer warrant
export controls under this section. The results of such reviews
shall be reported to the Speaker of the House of Representatives
and to the Committee on Foreign Relations and the Committee on
Banking, Housing, and Urban Affairs of the Senate. Such a report
shall be submitted at least 30 days before any item is removed
from the Munitions List and shall describe the nature of any
controls to be imposed on that item under the Export
Administration Act of 1979 (50 App. U.S.C. 2401 et seq.).

     (g) Identification of persons convicted or subject to
indictment for violations of certain provisions.

(1) The President shall develop appropriate mechanisms to
identify, in connection with the export licensing process under
this section--

(A) persons who are the subject of an indictment for, or have been
convicted of, a violation under--

(i) this section, 

(ii) section 11 of the Export Administration Act of 1979 (50
U.S.C. App. 2410),

(iii) section 793, 794, or 798 of title 18 (relating to espionage
involving defense or classified information),

(iv) section 16 of the Trading with the Enemy Act (50 U.S.C. App.
16),

(v) section 206 of the International Emergency Economic Powers Act
(relating to foreign assets controls; 50 U.S.C. App. 1705) (50
U.S.C. 1705),

(vi) section 30A of the Securities Exchange Act of 1934 (15 U.S.C.
78dd-1) or section 104 of the Foreign Corrupt Practices Act (15
U.S.C. 78dd-2),

(vii) chapter 105 of title 18 (relating to sabotage),

(viii) section 4(b) of the Internal Security Act of 1950 (relating
to communication of classified information; 50 U.S.C. 783(b)),

(ix) section 57, 92,101,104, 222, 224, 225, or 226 of the Atomic
Energy Act of 1954 (42 U.S.C. 2077, 2122, 2131, 2134, 2272, 2274,
2275, and 2276),

(x) section 601 of the National Security Act of 1947 (relating to
intelligence identities protection; 50 U.S.C. 421), or

(xi) section 603(b) or (c) of the Comprehensive Anti-Apartheid Act
of 1986 (22 U.S.C. 5113(b) and (c));

(B) persons who are the subject of an indictment or have been
convicted under section 371 of title 18 for conspiracy to violate
any of the statutes cited in subparagraph (A); and

(C) persons who are ineligible 

(i) to contract with,

(ii) to receive a license or other form of authorization to export
from, or

(iii) to receive a license or other form of authorization to
import defense articles or defense services from,

any agency of the United States Government.

(2) The President shall require that each applicant for a license
to export an item on the United States Munitions List identify in
the application all consignees and freight forwarders involved in
the proposed export. [566]

(3) If the President determines--

(A) that an applicant for a license to export under this section
is the subject of an indictment for a violation of any of the
statutes cited in paragraph (1),

(B) that there is reasonable cause to believe that an applicant
for a license to export under this section has violated any of the
statutes cited in paragraph (1), or (C) that an applicant for a
license to export under this section is ineligible to contract
with, or to receive a license or other form of authorization to
import defense articles or defense services from, any agency of
the United States Government,

the President may disapprove the application. The President shall
consider requests by the Secretary of the Treasury to disapprove
any export license application based on these criteria.

(4) A license to export an item on the United States Munitions
List may not be issued to a person--

(A) if that person, or any party to the export, has been convicted
of violating a statute cited in paragraph (1), or

(B) if that person, or any party to the export, is at the time of
the license review ineligible to receive export licenses (or other
forms of authorization to export) from any agency of the United
States Government,

except as may be determined on a case-by-case basis by the
President, after consultation with the Secretary of the Treasury,
after a thorough review of the circumstances surrounding the
conviction or ineligibility to export and a finding by the
President that appropriate steps have been taken to mitigate any
law enforcement concerns.

(5) A license to export an item on the United States Munitions
List may not be issued to a foreign person (other than a foreign
government).

(6) The President may require a license (or other form of
authorization) before any item on the United States Munitions List
is sold or otherwise transferred to the control or possession of a
foreign person or a person acting on behalf of a foreign person.

(7) The President shall, in coordination with law enforcement and
national security agencies, develop standards for identifying
high-risk exports for regular end-use verification. These
standards shall be published in the Federal Register and the
initial standards shall be published not later than October
1,1988.

(8) Upon request of the Secretary of State, the Secretary of
Defense and the Secretary of the Treasury shall detail to the
office primarily responsible for export licensing functions under
this section, on a nonreimbursable basis, personnel with
appropriate expertise to assist in the initial screening of
applications for export licenses under this section in order to
determine the need for further review of those applications for
foreign policy, national security, and law enforcement concerns.

(9) For purposes of this subsection--

(A) the term 'foreign corporation' means a corporation that is not
incorporated in the United States;

(B) the term 'foreign government' includes any agency or
subdivision of a foreign government, including an official mission
of a foreign government;

(C) the term 'foreign person' means any person who is not a
citizen or national [567] of the United States or lawfully
admitted to the United States for permanent residence under the
Immigration and Nationality Act (8 U.S.C. 1101 et seq.), and
includes foreign corporations, international organizations, and
foreign governments;

(D) the term 'party to the export' means--

(i) the president, the chief executive officer, and other senior
officers of the license applicant;

(ii) the freight forwarders or designated exporting agent of the
license application; and

(iii) any consignee or end user of any item to be exported; and

(E) the term 'person' means a natural person as well as a
corporation, business association, partnership, society, trust, or
any other entity, organization, or group, including governmental
entities.

     (h) Judicial review of designation of items as defense
articles or services. The designation by the President (or by an
official to whom the President's functions under subsection (a) of
this section have been duly delegated), in regulations issued
under this section, of items as defense articles or defense
services for purposes of this section shall not be subject to
judicial review....


Sec. 2780. Transactions with countries supporting acts of
international terrorism.

     (a) Prohibited transactions by United States Government. The
following transactions by the United States Government are
prohibited:

(1) Exporting or otherwise providing (by sale, lease or loan,
grant, or other means), directly or indirectly, any munitions item
to a country described in subsection (d) of this section under the
authority of this chapter, the Foreign Assistance Act of 1961(22
U.S.C. 2151 et seq.), or any other law (except as provided in
subsection (h) of this section). In implementing this paragraph,
the United States Government--

(A) shall suspend delivery to such country of any such item
pursuant to any such transaction which has not been completed at
the time the Secretary of State makes the determination described
in subsection (d) of this section, and

(B) shall terminate any lease or loan to such country of any such
item which is in effect at the time the Secretary of State makes
that determination.

(2) Providing credits, guarantees, or other financial assistance
under the authority of this chapter, the Foreign Assistance Act of
1961(22 U.S.C. 2151 et seq.), or any other law (except as provided
in subsection (h) of this section), with respect to the
acquisition of any munitions item by a country described in
subsection (d) of this section. In implementing this paragraph,
the United States Government shall suspend expenditures pursuant
to any such assistance obligated before the Secretary of State
makes the determination described in subsection (d) of this
section. The President may authorize expenditures otherwise
required to be suspended pursuant to the preceding sentence if the
President has determined, and [568] reported to the Congress, that
suspension of those expenditures causes undue financial hardship
to a supplier, shipper, or similar person and allowing the
expenditure will not result in any munitions item being made
available for use by such country.

(3) Consenting under section 2753(a) of this title, under section
505(a) of the Foreign Assistance Act of 1961(22 U.S.C. 2314(a)),
under the regulations issued to carry out section 2778 of this
title, or under any other law (except as provided in subsection
(h) of this section), to any transfer of any munitions item to a
country described in subsection (d) of this section. In
implementing this paragraph, the United States Government shall
withdraw any such consent which is in effect at the time the
Secretary of State makes the determination described in subsection
(d) of this section, except that this sentence does not apply with
respect to any item that has already been transferred to such
country.

(4) Providing any license or other approval under section 2778 of
this title for any export or other transfer (including by means of
a technical assistance agreement, manufacturing licensing
agreement, or coproduction agreement) of any munitions item to a
country described in subsection (d) of this section. In
implementing this paragraph, the United States Government shall
suspend any such license or other approval which is in effect at
the time the Secretary of State makes the determination described
in subsection (d) of this section, except that this sentence does
not apply with respect to any item that has already been exported
or otherwise transferred to such country.

(5) Otherwise facilitating the acquisition of any munitions item
by a country described in subsection (d) of this section. This
paragraph applies with respect to activities undertaken--

(A) by any department, agency, or other instrumentality of the
Government,

(B) by any officer or employee of the Government (including
members of the United States Armed Forces), or

(C) by any other person at the request or on behalf of the
Government.

The Secretary of State may waive the requirements of the second
sentence of paragraph (1), the second sentence of paragraph (3),
and the second sentence of paragraph (4) to the extent that the
Secretary determines, after consultation with the Congress, that
unusual and compelling circumstances require that the United
States Government not take the actions specified in that sentence.

     (b) Prohibited transactions by United States persons.

(1) In general. A United States person may not take any of the
following actions:

(A) Exporting any munitions item to any country described in
subsection (d) of this section.

(B) Selling, leasing, loaning, granting, or otherwise providing
any munitions item to any country described in subsection (d) of
this section.

(C) Selling, leasing, loaning, granting, or otherwise providing
any munitions item to any recipient which is not the government of
or a person in a country described in subsection (d) of this
section if the United States person has reason to [569] know that
the munitions item will be made available to any country described
in subsection (d) of this section.

(D) Taking any other action which would facilitate the
acquisition, directly or indirectly, of any munitions item by the
government of any country described in subsection (d) of this
section, or any person acting on behalf of that government, if the
United States person has reason to know that that action will
facilitate the acquisition of that item by such a government or
person.

(2) Liability for actions of foreign subsidiaries, etc. A United
States person violates this subsection if a corporation or other
person that is controlled in fact by that United States person (as
determined under regulations, which the President shall issue)
takes an action described in paragraph (1) outside the United
States. (3) Applicability to actions outside the United States.
Paragraph (1) applies with respect to actions described in that
paragraph which are taken either within or outside the United
States by a United States person described in subsection (1)(3)(A)
or (B) of this section. To the extent provided in regulations
issued under subsection (1)(3)(D) of this section, paragraph (1)
applies with respect to actions described in that paragraph which
are taken outside the United States by a person designated as a
United States person in those regulations.

     (c) Transfers to governments and persons covered. This
section applies with respect to--

(1) the acquisition of munitions items by the government of a
country described in subsection (d) of this section; and

(2) the acquisition of munitions items by any individual, group,
or other person within a country described in subsection (d) of
this section, except to the extent that subparagraph (D) of
subsection (b)(1) of this section provides otherwise.

     (d) Countries covered by prohibition. The prohibitions
contained in this section apply with respect to a country if the
Secretary of State determines that the government of that country
has repeatedly provided support for acts of international
terrorism.

     (e) Publication of determinations. Each determination of the
Secretary of State under subsection (d) of this section shall be
published in the Federal Register. 

     (f) Rescission.

(1) A determination made by the Secretary of State under
subsection (d) of this section may not be rescinded unless the
President submits to the Speaker of the House of Representatives
and the chairman of the Committee on Foreign Relations of the
Senate--

(A) before the proposed rescission would take effect, a report
certifying that-- 

(i) there has been a fundamental change in the leadership and
policies of the government of the country concerned;

(ii) that government is not supporting acts of international
terrorism; and

(iii) that government has provided assurances that it will not
support acts of international terrorism in the future; or [570]

(B) at least 45 days before the proposed rescission would take
effect, a report justifying the rescission and certifying that--

(i) the government concerned has not provided any support for
international terrorism during the preceding 6-month period; and

(ii) the government concerned has provided assurances that it will
not support acts of international terrorism in the future.

(2)(A) No rescission under paragraph (1)(B) of a determination
under subsection (d) of this section may be made if the Congress,
within 45 days after receipt of a report under paragraph (1)(B),
enacts a joint resolution the matter after the resolving clause of
which is as follows: 'That the proposed rescission of the
determination under section 40(d) of the Arms Export Control Act
pursuant to the report submitted to the Congress on XXXXXXXXX is
hereby prohibited.', the blank to be completed with the
appropriate date.

(B) A joint resolution described in subparagraph (A) and
introduced within the appropriate 45-day period shall be
considered in the Senate and the House of Representatives in
accordance with paragraphs (3) through (7) of section 8066(c) of
the Department of Defense Appropriations Act (as contained in
Public Law 98473), except that references in such paragraphs to
the Committees on Appropriations of the House of Representatives
and the Senate shall be deemed to be references to the Committee
on Foreign Affairs of the House of Representatives and the
Committee on Foreign Relations of the Senate, respectively.

     (g) Waiver. The President may waive the prohibitions
contained in this section with respect to a specific transaction
if--

(1) the President determines that the transaction is essential to
the national security interests of the United States; and

(2) not less than 15 days prior to the proposed transaction, the
President--

(A) consults with the Committee on Foreign Affairs of the House of
Representatives and the Committee on Foreign Relations of the
Senate; and

(B) submits to the Speaker of the House of Representatives and the
chairman of the Committee on Foreign Relations of the Senate a
report containing--

(i) the name of any country involved in the proposed transaction,
the identity of any recipient of the items to be provided pursuant
to the proposed transaction, and the anticipated use of those
items;

(ii) a description of the munitions items involved in the proposed
transaction (including their market value) and the actual sale
price at each step in the transaction (or if the items are
transferred by other than sale, the manner in which the~,~ will be
provided);

(iii) the reasons why the proposed transaction is essential to the
national security interests of the United States and the
justification for such proposed transaction;

(iv) the date on which the proposed transaction is expected to
occur; and

(v) the name of every United States Government department, agency,
or other entity involved in the proposed transaction, every
foreign government involved in the proposed transaction, and every
private party with significant participation in the proposed
transaction. [571]

To the extent possible, the information specified in subparagraph
(B) of paragraph (2) shall be provided in unclassified form, with
any classified information provided in an addendum to the report.

     (h) Exemption for transactions subject to National Security
Act reporting requirements. The prohibitions contained in this
section do not apply with respect to any transaction subject to
reporting requirements under title V of the National Security Act
of 1947 (50 U.S.C. 413 et seq.; relating to congressional
oversight of intelligence activities).

     (i) Relation to other laws.

(1) In general. With regard to munitions items controlled pursuant
to this chapter, the provisions of this section shall apply
notwithstanding any other provision of law, other than section
614(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2364(a)) .

(2) Section 614(a) waiver authority. If the authority of section
614(a) of the Foreign Assistance Act of 1961(22 U.S.C. 2364(a)) is
used to permit a transaction under that Act (22 U.S.C. 2151 et
seq.) or this chapter which is otherwise prohibited by this
section, the written policy justification required by that section
shall include the information specified in subsection (g)(2)(B) of
this section.

     (j) Criminal penalty. Any person who willfully violates this
section shall be fined for each violation not more than
$1,000,000, imprisoned not more than 10 years. or both.

     (k) Civil penalties; enforcement. In the enforcement of this
section, the President is authorized to exercise the same powers
concerning violations and enforcement which are conferred upon
departments, agencies, and officials by sections 11(c), 11(e),
11(g), and 12(a) of the Export Administration Act of 1979 (50 App.
U.S.C. 2410(c), (e), (g), 2411(a)) (subject to the same terms and
conditions as are applicable to such powers under that Act (50
App. U.S.C. 2401 et seq.)), except that, notwithstanding section
11(c) of that Act, the civil penalty for each violation of this
section may not exceed $500.000.

     (l) Definitions. As used in this section--

(1) the term 'munitions item' means any item enumerated on the
United States Munitions List (without regard to whether the item
is imported into or exported from the United States);

(2) the term 'United States', when used geographically, means the
several States, the District of Columbia, the Commonwealth of
Puerto Rico, the Commonwealth of the Northern Mariana Islands, and
any territory or possession of the United States; and

(3) the term 'United States person' means-- 

(A) any citizen or permanent resident alien of the United States;

(B) any sole proprietorship, partnership, company, association, or
corporation having its principal place of business within the
United States or organized under the laws of the United States,
any State, the District of Columbia, the Commonwealth [572] of
Puerto Rico, the Commonwealth of the Northern Mariana Islands, or
any territory or possession of the United States; 

(C) any other person with respect to that person's actions while
in the United States; and 

(D) to the extent provided in regulations issued by the Secretary
of State, any person that is not described in subparagraph (A),
(B), or (C) but-- 

(i) is a foreign subsidiary or affiliate of a United States person
described in subparagraph (B) and is controlled in fact by that
United States person (as determined in accordance with those
regulations), or 

(ii) is otherwise subject to the jurisdiction of the United
States, with respect to that person's actions while outside the
United States....


Sec. 2794. Definitions.

     For purposes of this chapter, the term--

     (1) "excess defense article" has the meaning provided by
section 2403(g) of this title;

     (2) "value" means, in the case of an excess defense article,
except as otherwise provided in section 2761(a) of this title, not
less than the greater of--

(A) the gross cost incurred by the United States Government in
repairing, rehabilitating, or modifying such article, plus the
scrap value; or

(B) the market value, if ascertainable;

     (3) "defense article", except as provided in paragraph (7)
of this section, includes--

(A) any weapon, weapons system, munition, aircraft, vessel, boat,
or other implement of war,

(B) any property, installation, commodity, material, equipment,
supply, or goods used for the purposes of making military sales,

(C) any machinery, facility, tool, material, supply, or other item
necessary for the manufacture, production, processing, repair,
servicing, storage, construction, transportation, operation, or
use of any article listed in this paragraph, and

(D ) any component or part of any article listed in this
paragraph,

but does not include merchant vessels or (as defined by the Atomic
Energy Act of 1954 (42 U.S.C. 2011 et seq.)) source material
(except uranium depleted in the isotope 235 which is incorporated
in defense articles solely to take advantage of high density or
pyrophoric characteristics unrelated to radioactivity), byproduct
material, special nuclear material, production facilities,
utilization facilities, or atomic weapons or articles involving
Restricted Data;

     (4) "defense service'', except as provided in paragraph (7)
of this section, includes any service, test, inspection, repair,
training, publication, technical or other assistance, or defense
information (as defined in section 2403(e) of this title), [573]
used for the purposes of making military sales, but does not
include design and construction services under section 2769 of
this title;

     (5) "training" includes formal or informal instruction of
foreign students in the United States or overseas by officers or
employees of the United States, contract technicians, or
contractors (including instruction at civilian institutions), or
by correspondence courses, technical, educational, or information
publications and media of all kinds, training aid, orientation,
training exercise, and military advice to foreign military units
and forces;

     (6) "major defense equipment" means any item of significant
military equipment on the United States Munitions List having a
nonrecurring research and development cost of more than
$50,000,000 or a total production cost of more than $200,000,000;

     (7) "defense articles and defense services" means, with
respect to commercial exports subject to the provisions of section
2778 of this title, those items designated by the President
pursuant to subsection (a)(1) of such section; and

     (8) "design and construction services" means, with respect
to sales under section 2769 of this title, the design and
construction of real property facilities, including necessary
construction equipment and materials, engineering services,
construction contract management services relating thereto, and
technical advisory assistance in the operation and maintenance of
real property facilities provided or performed by any department
or agency of the Department of Defense or by a contractor pursuant
to a contract with such department or agency.


[End N.1]

