gence assessments of technology diversion problems in specific areas, and has encouraged increased attention to the improvement of U.S. extradition and legal assistance treaties with other countries to strengthen export control enforcement. It has also initiated bilateral discussion with specific non-Cocom governments and a review of the training of U.S. officials involved in export control matters. Let me touch briefly on some other State Department export control matters. First is short supply. Under the provisions of the Export Administration Act, the State Department also participates in a consultative capacity with regard to the short supply export controls to ensure that adequate consideration is given to foreign policy factors as well as bilateral relations with other States. Section 6 of the Export Administration Act of 1979 also gives the State Department a major consultative role with regard to foreign policy export controls. While export licensing issuance authority is vested in the Department of Commerce, the Secretary of State is provided the right to review any relevant export license application. In closing, I would like to add that Department of State personnel abroad also provide operational assistance to other elements of the export control community in carrying out the purposes of the Export Administration Act, by providing information on overseas consignees and checking out the use made of exports from the United States. I hope that my remarks have given some insight into the many aspects of the Department's involvement in this complex area of export control. Thank you, Mr. Chairman. [Mr. Schneider's prepared statement follows:] PREPARED STATEMENT OF HON. WILLIAM SCHNEIDER, JR., UNDER SECRETARY FOR SECURITY ASSISTANCE, SCIENCE AND TECHNOLOGY, DEPARTMENT OF STATE MR. CHAIRMAN: AS PART OF YOUR SURCOMMITTEE'S REVIEW OF THE EXPORT ADMINISTRATION ACT OF 1979, YOU HAVE ASKED ME TO OUTLINE STATE'S RESPONSIBILITIES UNDER THIS ACT. I SHALL ALSO DESCRIBE SOME OF OUR NEGOTIATIONS WITH OUR ALLIFS TO STRENGTHEN THE MULTILATERAL SYSTEM OF NATIONAL SECURITY EXPORT CONTROLS KNOWN AS COCOM. I AM PARTICULARLY PLEASED TO HAVE THIS OPPORTUNITY SINCE THE ADMINISTRATION HAS UNDERTAKEN VIGOROUS EFFORTS IN WORKING WITH OUR ALLIES TO REDUCE THE TRANSFER OF MILITARILY SIGNIFICANT TECHNOLOGY AND EQUIPMENT TO THE SOVIET UNION AND THE WARSAW PACT. WE KNOW THAT THE DEVELOPMENT OF SOPHISTICATED WEAPONS IS BASED ON A MYRIAD OF ADVANCED SUPPORTING TECHNOLOGIES THAT ARE NOT INNATELY RESTRICTED TO MILITARY VERSUS CIVILIAN APPLICATIONS. CONSEQUENTLY, IT PECOMES INCREASINGLY MORE DIFFICULT TO IDENTIFY AND CONTROL COMMERCIAL TRANSACTIONS THAT CAN SUPPORT MILITARY PRODUCTION, AND THAT COULD CONSTITUTE A THREAT TO OUR NATIONAL SECURITY. THIS UNDERSCORES THE NEED FOR INCREASING WESTERN EFFORTS TO DEVELOP STRONGER AND MORE EFFECTIVE CONTROLS ON THE TRANSFER OF TECHNOLOGY FROM THE WEST TO THE EAST. THE USSR, FOR EXAMPLE, HAS RELIED ON WESTERN HIGH TECHNOLOGY EXPORTS IN ITS MILITARY BUILD-UP, AND WE KNOW THAT WESTERN TECHNOLOGY HAS BEEN A SIGNIFICANT FACTOR IN THE SOVIET DEVELOPMENT OF ADVANCED MISSILES AS WELL AS IN THE ADVANCEMENT OF INDUSTRY THAT SUPPORTS THE SOVIET WAR-MAKING CAPABILITY. CURRENT CONTROLS ARE BASED ON THE IMPORTANCE OF ADVANCED TECHNOLOGY IN MILITARY FORCES AND ITS SUPPOPTING INDUSTRIAL SECTORS AND THE EXISTENCE, PARTLY DUE TO GOVERNMENT SPONSORED RESEARCH AND DEVELOPMENT AND PAPTLY DUE TO DIFFERENCES IN INDUSTRIAL CAPABILITIES, OF A TECHNOLOGY GAP BETWEEN THE U.S. AND THE SOVIET UNION. A TECHNOLOGICAL GAP IN OUR FAVOR IS ALSO A MEANS OF REDUCING THE RISK OF TECHNOLOGICAL SURPRISE. TECHNOLOGICAL BREAKTHROUGHS GIVEN THE CURRENT RATE OF TECHNOLOGICAL CHANGE IS A REAL POSSIBILITY AND A REAL DANGER TO OUR SECURITY IN THAT A PARTICULAR TECHNOLOGICAL DEVELOPMENT COULD GIVE THE DISCOVERER A DECISIVE ADVANTAGE. CONSEQUENTLY, ONE OF THE MAJOR MEANS OF PREVENTING WAR IS TO AVOID TECHNOLOGICAL SURPRISE. THE SOVIETS OPTAIN WESTERN TECHNOLOGY ILLEGALLY THROUGH THEIR INTELLIGENCE SERVICES USING CLASSICAL ESPIONAGE AS ILLUSTRATED BY THE RECENT SPY CASES IN GERMANY AND ITALY. THEY ALSO EVACE EXPORT CONTROLS THROUGH DIVERSION, RETRANSFER, AND DUMMY COMPANIES. UNE LEGAL WAY TECHNOLOGY IS PASSED TO THE EAST IS THROUGH A KIND OF PUY-PACK PROJECT IN WHICH WESTERN COMPANIES CONTRACT WITH EASTERN STATES TO EXPORT FACTORY EQUIPMENT AND THE PLANS FOR BUILDING THE PLANT ON CREDIT. IT IS ESTIMATED THAT THESE PROJECTS INVOLVED AN EXCHANGE OF SOME TFN BILLION DOLLARS BETWEEN THE EAST AND THE WEST IN 1980. THE WEST IN RETURN FOR ITS EXPORTS RECEIVES A SHARE OF THE PRODUCTS AS PART PAYMENT. AN EXAMPLE OF THIS IS THE SIBERIAN GAS PIPELINE IN WHICH PIPELINE EQUIPMENT IS BEING POUGHT FROM THE WEST AND THE FUEL IS SOLD TO WESTERN EUROPEAN UPON COMPLETION OF THE PIPELINE. THE KAMA RIVER TRUCK PLANT WAS BUILT WITH THE HELP OF U.S. COMPANIES USING WESTERN TECHNOLOGY AND U.S. EXPORT LICENSES. THE PLANT HAS PEEN USED TO SUPPLY TRUCKS FOR THE TRANSPORT OF TROOPS TO AFGHANISTAN AND THE SUPPORT OF SOVIET CONVENTIONAL MILITARY NEEDS. THE CRITICAL TODAY, THERE CONTINUES TO BE A SERIOUS THREAT TO OUR NATIONAL SECURITY FROM SOVIFT TECHNOLOGY PIRACY, IN WHICH AN INCREASING ONE-WAY STREAM OF U.S. TECHNOLOGY IS MOVING TO THE SOVIET UNION. NEARLY ALL NEW TECHNOLOGICAL DEVELOPMENTS HAVE DIRECT OR INDIRECT MILITARY APPLICATION. IMPORTANCE OF OUR TECHNOLOGY LOSS MAY BE EMPHASIZED BY THE EXAMPLE OF THE SOVIET INTERCONTINENTAL-RANGE MISSILES ACHIEVING IMPROVED ACCURACY THROUGH BETTER GYROSCOPE SYSTEMS. THE SOVIET GYROSCOPES WERE DEVELOPED USING PRECISION PEARINGS PRODUCED WITH ADVANCED GRINDING MACHINES OBTAINED FROM THE WEST IN THE 1970's. OTHEP EXAMPLES INCLUDE: U.S. DEVELOPED LASER OPTICAL MIRRORS WITH DIRECT MILITARY APPLICATION HAVE BEEN SMUGGLED TO THE USSR. ADVANCE AMERICAN COMPUTERIZED DRAFTING EQUIPMENT WAS DIVERTED TO THE SOVIETS THROUGH A FOREIGN CORPORATION. THE SOVIETS ILLEGALLY ACQUIRED IRM 360 AND 370 MAINFRAME COMPUTERS FROM THE WEST IN 1972. WE HAVE NOTED TO OUR DESPAIR THAT THE SOVIET RYAD COMPUTER SERIES USES THE SAME REPAIR MANUALS AS THE IRM COMPUTERS. THE SOVIET TECHNOLOGICAL GAINS OPTAINED THROUGH A CAREFULLY CRAFTED ACQUISITION PROGRAM APF PROVIDING THEM WITH: - SIGNIFICANT SAVINGS IN TIME AND MONEY IN THE IR IA CLOSING OF GAPS BETWEEN OUR WEAPONS SYSTEMS AND THEIRS; THE RAPID DEVELOPMENT OF NEUTRALIZING COUNTER A FREEING OF CAPITAL TO PE USED IN MORE DIRECT BEFORE MOVING TO OUR CURRENT NEGOTIATIONS WITH OUR ALLIES, I WOULD LIKE TO REVIEW A FEW FACTS ABOUT COCOM. THE COORDINATING COMMITTEE WAS ESTABLISHED AS A VOLUNTARY ORGANIZATION IN 1950. ITS PRESENT MEMBERSHIP INCLUDES JAPAN AND ALL THE NATO COUNTRIES, EXCEPT ICELAND AND SPAIN. BUT IT HAS NO FORMAL RELATIONSHIP TO NATO OR TO ANY OTHER ORGANIZATION. IT IS NOT PASED ON ANY TREATY OR EXECUTIVE AGREEMENT. THE MEMBERS THFPEFORE HAVE NO LEGAL OBLIGATION AS SUCH TO PARTICIPATE IN COCOM OR TO ABIDE BY COMMITMENTS MADE THERE. ON THE OTHER HAND, OVER ITS MORF |