CONTENTS Page Kramer, Hon. Ken, a Representative from Colorado... Sharfman, Dr. Peter J., Program Manager, International Security and Com- Bonker, Hon. Don, a Representative from Washington: Statement..... Written statement. Zschau, Hon. Edwin V. W., a Representative from California: Statement..... Written statement. Page 271 276 285 286 TECHNOLOGY TRANSFER HOUSE OF REPRESENTATIVES, TECHNOLOGY TRANSFER PANEL, Washington, D.C., Thursday, June 9, 1983. The panel met, pursuant to call, at 10:24 a.m., in room 2216, Rayburn House Office Building, Hon. Earl Hutto (chairman of the panel) presiding. OPENING STATEMENT OF HON. EARL HUTTO, A REPRESENTATIVE FROM FLORIDA, CHAIRMAN, TECHNOLOGY TRANSFER PANEL Mr. HUTTO. The panel will please come to order. I would like to welcome all the members of the Technology Transfer Panel to our first formal meeting. I believe that the hearings that we begin today will provide an opportunity to evaluate the situation of the extreme importance to the defense of the Nation, and an opportunity to make significant recommendations to the full Armed Services Committee. Our task is to consider the issue of technology transfer and, in particular, the impact of this transfer to the Soviet Union and other Warsaw Pact nations. The panel must make its recommendations to the full committee by September. In order to carry out this function, I would like to suggest a series of several hearings devoted to the general subject of technology transfer. I would envision a number of witnesses from a wide variety of sources to assist us in gaining a more detailed understanding of this very complex issue. Many of our witnesses will come from the various agencies of the executive branch of Government. However, I would also hope to hear in some detail from the business community. Now, that perspective will be most helpful in our efforts to evaluate properly the balance between controls and trade. In our later hearings, and depending on the information gained initially, we may wish to focus more specifically on particular facets of this issue. I think it is important to outline at the beginning of these hearings some of the major issues that we may face. Hopefully, the witnesses today, and in the future, will be able to focus their comments on these issues. Let me highlight just a few. I would hope we could obtain information that would help us understand the magnitude of technology transfer, and the process by which this transfer is accomplished. (1) We have seen numerous statements in the news media referring to the "hemorrhage of technology." We must have an understanding of how large this "hemorrhage" is and how it is accomplished in order to understand fully its impact. Certainly, our major concern is directed toward the effect of technology transfer on the U.S. defense effort. Our R&D budget for fiscal year 1984 is about $23 billion. In part, these resources permit the United States to maintain a technological lead over the Soviet Union. However, to the extent that the Soviets are able to benefit from our research and development efforts through technology transfer, we must devote more resources in the future in order to stay ahead. In addition, technology transfer permits the Soviets to develop countermeasures to our systems at the same time as these systems are being deployed in the field. Critical to any efforts to control technology transfer is the ability to delineate a list of controlled items. Difficulties arise because of numerous technical problems. For example, developments in the civilian sector often are initially difficult to relate directly to military utility. Only after these developments have been available for some time is their usefulness in military systems apparent. In addition, technology exhibits, exponential growth, the ability to monitor the state of the art, in any one field is difficult. The problem is compounded when its full scope is considered. At the other end of the spectrum, once an item is placed on a control list, it must be monitored carefully to determine when the military utility is no longer significant relative to the economic benefits of greater trade, to warrant further control. The development and usefulness of list is also made difficult because of the requirement to secure agreement on the contents by the various actors involved. Currently, we face significant problems in agreeing on the list, even within the executive branch of our Government. This is only a small manifestation of our problem of when agreements may be achieved among nations. In summary, we need to evaluate the effectiveness of controls, both current and proposed within the context of these issues. OPENING STATEMENT OF HON. EARL HUTTO I would like to welcome the members of the Technology Transfer Panel to our first formal meeting. I believe the hearings that we begin today will provide us an opportunity to evaluate a situation of extreme importance to the defense of the Nation and an opportunity to make significant recommendations to the full committee. Our task is to consider the issue of technology transfer, and in particular, the impact of this transfer to the Soviet Union and other Warsaw Pact nations. The panel must make its recommendations to the full committee by September. In order to carry out our function, I would like to suggest a series of several hearings devoted to the general subject of technology transfer. I would envision a number of witnesses from a wide variety of sources to assist us in gaining a more detailed understanding of this complex issue. Many of our witnesses will come from the various agencies of the Executive Branch. However, I would also hope to hear in some detail from the business community. That perspective will be most helpful in our efforts to evaluate properly the balance between controls and trade. In our later hearings and depending on the information gained initially, we may wish to focus more specifically on particular facets of this issue. I think it is important to outline at the beginning of these hearings some of the major issues that we may face. Hopefully, the witnesses today and in the future will be able to focus their comments on these issues. Let me highlight just a few. I would hope we could obtain information that would help us understand the magnitude of technology transfer and the process by which this transfer is accomplished. We have seen numerous statements in the news media referring to a hemorrhage of technology. We must have an understanding of how large this hemorrhage is and how it is accomplished in order to understand fully its impact. Certainly, our major concern is directed toward the effect of technology transfer on the U.S. defense effort. Our R&D budget for fiscal year 1984 is about $25 billion. In part, these resources permit the United States to maintain a technological lead over the Soviet Union. However, to the extent that the Soviets are able to benefit from our research and development efforts through technology transfer, we must devote more resources in the future in order to stay ahead. In addition, technology transfer permits the Soviets to develop counter measures to our systems at the same time as these systems are being deployed to the field. Critical to any efforts to control technology transfer is the ability to delineate a list of controlled items. Difficulties arise because of numerous technical problems. For example, developments in the civilian sector often are initially difficult to relate directly to military utility. Only after these developments have been available for some time is their usefulness in military systems apparent. In addition, technology exhibits exponential growth. The ability to monitor the state-of-the-art in any one field is difficult; the problem is compounded when its full scope is considered. At the other end of the spectrum, once an item is placed on a control list, it must be monitored carefully to determine when its military utility is no longer significant (relative to the economic benefits of greater trade) to warrant further control. The development and usefulness of lists is also made difficult because of the requirement to secure agreement on the contents by the various actors involved. Currently, we face significant problems in agreeing on lists-even within the Executive Branch of our own government-and this is only a small manifestation of the problem we face when agreements must be achieved among nations. In summary, we need to evaluate the effectiveness of controls-both current and proposed within the context of these issues. Mr. HUTTO. At this point, I would like to recognize Mr. Kramer for any statement that he might have to make. Mr. Kramer. STATEMENT OF HON. KEN KRAMER, A REPRESENTATIVE FROM COLORADO Mr. KRAMER. Thank you, Mr. Chairman. I will try to rise to the occasion, having been drafted because of my colleague, Mr. Courter, being detained beyond the point where he thought he would be detained. Let me first express my appreciation to you for holding these hearings on a very vital issue, one that impacts not only, of course, on the military, and national defense capability of the country, but on our economy and our ability to do business abroad as well. I think, without taking too much time from the more important job of this panel in hearing and evaluating witness testimony, and having the background of all the necessary issues raised, that the task of this panel is to attempt to improve a situation where we know that some very important technologies and information that is vital to keeping us militarily prepared is indeed, through technology transfer, getting into hands that threaten the national defense capability in this country. While at the same time, there are a number of items that ought to be duly exported, that can improve the economy, and balance the trade of this country; and yet because of governmental redtape we are not doing all that could in having a positive economic impact accrue to this co |