failure by the ability of the country against when they are directed to obtain the goods or technologies under control from other sources.

Not to be overlooked too as a reason against imposing foreign policy export controls in a unilateral fashion is the havoc they wreak with the efforts of the United States to obtain the adherence of its allies and major trading partners to common rules to guide international trade and investment. Procedures And Conditions Under Which Controls Are Imposed

While some have suggested that the President be denied the option of export controls as a foreign policy tool, this may be too drastic a step to be taken. However, ECAT members see the need for the establishment of specific procedures to be followed by the Executive before foreign policy export controls can be imposed.

Specifically, ECAT believes that the Executive should be required to notify the Congress of his intention to impose foreign policy export controls not less than forty-five (45) days before the day on which he would impose them as well as to provide an opportunity for any interested party to comment with respect to the proposed controls during the 45-day period. There is no such requirement in the current statute.

ECAT recognizes, however, that this procedure should not restrict the ability of the President to impose foreign policy controls in order to fulfill obligations of the United States pursuant to treaties or other international agreements to which the United States is a party.

Furthermore, we recommend that additional conditions would have to be met before the President could impose, expand, or extend unilateral foreign policy export controls. If the recommended conditions cannot be met, the presumption is that the President should not impose the controls. contrasts with the current statute in which the criteria set out for imposition of foreign policy export controls are only to be considered by the President.

This

ECAT's recommendations would require the President to

determine that:

--reasonable efforts have been made to achieve the purposes of the controls through negotiations or other alternative means;

--the proposed controls are compatible with the foreign policy objectives of the United States and with overall United States policy toward the country which is the proposed target of controls;

--the reaction of other countries to the imposition or expansion of such export controls by the United States has been taken into account;

--such controls are likely to achieve the intended foreign policy purpose;

--like goods or technology or directly competitive goods or technology are not available from uncontrolled sources;

--all feasible steps have been taken to initiate and conclude negotiations with appropriate foreign governments for the purpose of securing their cooperation in imposing the same controls as those proposed by the United States;

--evaluations must be made as to the likely effects, including economic impacts, of the proposed controls on the export performance of the United States, on the competitive position of the United States in the international economy, on the international reputation of the United States as a supplier of goods and technologies, and on individual United States companies and their employees and communities; and

--the foreign policy consequences of imposing or not imposing such controls have been evaluated.

In a report to Congress, the President should be required to report in detail how these conditions have been met. His report should also respond to comments received from interested parties on the proposed controls.

Foreign Availability

The foreign availability provision in the statute has been narrowly interpreted by the Executive. Goods and technologies made subject to controls have been determined not to be available abroad because the foreign goods and technologies are not precisely "comparable." ECAT believes that the concept of foreign availability needs to be clarified to indicate that comparability covers not only like goods and but also "directly competitive" goods and tech

technologies
nologies.

Extraterritorial Application

ECAT members believe that foreign policy controls should not have extraterritorial application, i.e., they should not apply to U.S. foreign subsidiaries, branches, or licensees.

In the case of multilateral controls, activities of these U.S. foreign subsidiaries, branches, and licensees would be controlled by the governments of the countries in ECAT members think this is appropwhich they are located.

riate.

Sanctity of Contract

Foreign policy export controls imposed by the United States should be made compatible with the internationally recognized concept of the sanctity of contracts, a concept important to the long-term commercial and security interests The Act should be amended to allow of the United States. only the prospective application of foreign policy export controls.

We specifically recommend that foreign policy controls should not be imposed on goods or technologies which are exported from the United States to a given country in performance of a binding contract when that contract was entered into before, or under an export license issued before, the date on which the Executive notifies the Congress of his intention to impose controls on exports to that country. Exclusion For Medicines and Medical Supplies

ECAT supports the exclusion currently in the statute that foreign policy controls not be imposed on the export of goods or technologies required to meet basic human needs abroad.

Expiry of Export Controls

The current statute provides for the expiry of unilaterally imposed foreign policy controls one year after ECAT believes that more frequent and their imposition. careful review of foreign policy export controls is This can be achieved by establishing that (a) necessary. such controls expire six months after the date on which they are imposed and (b) their extension or expansion requires the Executive to recomply with the conditions met at the time of their original imposition.

IMPLEMENTATION OF THE EAA

ECAT is of the view that day-to-day implementation of Implementation reexport controls needs to be improved. quires greater clarity and consistency.

Administrative Rulings

One feasible way for obtaining improvements in the Department of Commerce's administration of the EAA would be for the Department to publish export control rulings analo

gous to the rulings published by the Department of the Treasury in the tax area. A ruling on a proposed export transaction would be issued by the Department of Commerce at the request of an exporter and would be required to be issued by the Department in a timely fashion. The ruling would provide a definitive interpretation of applicable law and would bind the Secretary of Commerce with respect to the transaction in question as well as to identical subsequent transactions.

Resources

The resources available to the Department of Commerce in the area of export controls need to be strengthened. ECAT sees a need for improvement in Commerce Department personnel working in the export control area as regards their general level of expertise and their professional training.

Independent Agency

ECAT members are opposed to a proposal for the establishment of an Office of Strategic Trade that would have transferred to it the export control staff and export control functions of the Commerce Department together with similar transfers from the Defense Department and other interested agencies. There is a great concern that such a reorganization by removing or diluting the business perspective that the Commerce Department brings to its deliberations on export control matters could result in inappropriate control of U.S. exports.

New Licenses

ECAT supports the development of new forms of licenses covering numerous export transactions of militarily critical technologies and equipment to CoCom countries. One form of license might be based on defined relationships among specific parties, e.g., transfers between parent companies and subsidiaries.

Judicial Review

ECAT members are concerned that the conditions and procedures for imposition of foreign policy export controls be consistently followed by the Executive. Their experience with the EAA suggests that the criteria and procedures for foreign policy export controls which are currently in the Act have been breached in their spirit and their letter by the Executive. Accordingly, ECAT supports the addition of a judicial review provision to help ensure that EAA conditions and procedures be followed precisely.

The provision would provide for judicial review in those situations in which (1) an interested party believes that an action required to be taken under the Act has not been taken and (2) a person believes that a civil penalty or an administrative action is unsupported by substantial evidence on the record or is not otherwise in accordance with law.

ATTACHMENT 2-STATEMENT OF THE BUSINESS ROUNDTABLE

EXECUTIVE SUMMARY

The Export Administration Act (EAA) of 1979, the principal authority for controlling exports, expires on September 30, 1983. This paper presents the views of the Business Roundtable Task Force on International Trade and Investment on the Executive Branch's authority under the EAA to impose foreign policy controls and national security controls, and on the administration of export controls established pursuant to the EAA. It does not address issues related to short supply controls, the antiboycott provisions of the EAA, or the President's international emergency economic powers.

Exports are critical to the health of our domestic

economy.

Yet, the United States' share of world exports has
That decline is in large part due to

been steadily declining.

the capriciousness of United States export control policies which brand American businesses as unreliable suppliers,

investors and licensors.

The problems are most acute with respect to foreign policy The need for flexibility and the broadest export controls. possible array of options require that the President possess the power to impose export controls for foreign policy

purposes.

Yet, the dubious effectiveness of foreign policy export controls, concern regarding the disproportional harm they inflict on American economic interests, and the

availability of more effective and less damaging options argue