COMPREHENSIVE OPERATIONS LICENSE The Comprehensive Operations License (COL) would be available only to applicants engaged in the export of militarily critical technology. For these applicants, the COL would cover the export to approved consignees of items that otherwise would be subject to individual validated license requirements. The COL would authorize multiple exports and re-exports to eligible countries and consignees over an extended period. Approval of the license would depend upon the adequacy of the internal control system of the applicant. Eligible Countries Country Groups T and V (including COCOM, Australia and New Zealand). Country Groups P, Q, S, W, Y, and Z would be ineligible. The Country Groups listing is set out at 15 C.F.R. S 370 Supp.1, and establishes eight groups of countries for export control purposes. Eligible Items Militarily critical technical data, keystone equipment, keystone materials, and such other commodities and materials that may otherwise be subject to validated export license requirements with certain exceptions such as for nuclear or communication intercept devices. Eligible Consignees Consignees could be branch, subsidiary, affiliate, parent, licensee, joint venturer, supplier, vendor or subcontractor. Term Two years, renewable every two years. Supporting Documentation - - Export license application. Broad description by class, without detailed commodity lists and technical data specifications, of items subject to license. Description of applicant's internal control system over items subject to license. Operating agreement between applicant and consignees that restricts disclosure or transfer of items subject to license. Supporting statement from foreign consignees. License Requirements - Licensed items subject to applicant's internal Contractual obligation between applicant and consignees not to disclose or transfer items subject to license. Semi-annual requirement to report by broad description the export during previous six months of items subject to the license. Transition Rule - No interference with applicant's existing contractual obligations to export technical data if such contractual obligations complied with Export Administration Regulations as they existed prior to imposition of validated license requirements on export of militarily-critical technology. Mr. BONKER. Mr. Ragosine. STATEMENT OF VICTOR E. RAGOSINE, RETIRED VICE PRESIDENT AND GENERAL MANAGER OF AMPEX CORP., REPRESENTING THE AMERICAN ELECTRONICS ASSOCIATION Mr. RAGOSINE. I am Victor Ragosine, retired vice president of Ampex Corp. I am appearing before you today on behalf of the American Electronics Association, whose international committee I have been a member of and past chairman. AEA is a trade association of more than 2,000 electronic companies in 43 states. Our members manufacture electronic components and systems of supply products and services in the information processing industries. Our member companies are mostly small, rapidly growing businesses currently employing fewer than 500 people. AEA member companies have a vital stake in exports and national trade. In some of the larger companies half of their sales are to overseas companies. Electronics companies contribute a favorable balance of trade as a partial offset to an unfavorable balance incurred by oil and other imports. In 1981, electronics products produced a favorable balance of over $5 billion. Electronic industrial products contributed a payroll balance in excess of $10 million. In addition, the technologies developed by the electronics industry very often form the basis for military assistance. MULTILATERAL CONTROLS The major focus of my testimony today will be with respect to multilateral controls. AEA endorses the application of controls to restrict the export of goods and technology that will make a significant contribution to the military potential of adversaries and would thus prove detrimental to the national security of the United States. The challenge which we all face is how to focus national security controls mechanisms so that only those goods and technologies that need to be controlled for purposes of national security are controlled, while permitting the flow of goods and data essential to the economic well-being of the electronics industry of the country. The present system of national security controls does not provide this critical focus. The list of controlled items includes some technical data and products which are militarily insignificant. Many of these are also avialable from foreign competitors. An effective national security controls system requires multilateral agreement with our allies and other nonadversary countries. In many instances security controls have broad multilateral recognition and support by our allies. The Coordinating Committee on Export Controls [Cocom] develops lists of nuclear, military and other strategic items which have been agreed upon and should not be exported to Communist countries. The United States must continue to strongly support Cocom and negotiate on a priority basis the strengthening of Cocom. This could be done by raising it to treaty status. Cocom is now an informal organization, a gentleman's agreement organization. It has no treaty. Serious consideration should be given to increasing the Cocom budget, for providing simultaneous translation services. The United States should also seek agreements with non-Cocom countries that follow Cocom levels as closely as possible. FOREIGN AVAILABILITY Under section 5(f) of the Export Administration Act of 1979 the Department of Commerce is prohibited from requiring validated licenses for goods and technologies available in sufficient quantity and quality that the requirement of validated license would be ineffective to achieve its intended purpose unless the President determines that the absence of export controls under this section would prove detrimental to the national security of the United States. The fact is that today the United States simply does not have a monopoly on sophisticated products and technologies. Despite Congress' clear direction to adjust the export control system to take into account this foreign availability, this provision has been narrowly interpreted by the executive branch. We strongly feel that foreign availability should be considered. Many foreign firms possess equivalent products and technologies. These firms are not just located in Cocom countries with which the United States cooperates in multilateral control schemes, but in countries in which the United States and Cocom exercise no control. Except among Cocom countries United States exercises controls over more items, imposes control mechanisms that are broader and more burdensome than its Cocom partners. Our key policy objective is to deprive the Soviet Union of certain purchases. We simply cannot do so in many areas due to foreign availability. Simply denying United States exports neither keeps the items from our adversaries nor helps our industrial base with those export revenues. Likewise, maintaining burdensome licensing requirements for products and technologies which are available in world markets without such controls diverts our Government export control resources from more effective activities. To the extent U.S. controls reach beyond our borders we demonstrate lack of confidence in our Cocom partners and a lack of realism as to what effectively can be controlled. Mr. Chairman, I would like this opportunity to compliment you for the leadership you have shown in addressing some of the major problems associated with the implementation of the present U.S. export control policy. Your bill, H.R. 1566, would preserve the involvement of the Departments of Commerce and Defense in the export control process. AEA supports this joint responsibility and believes the idea of creating a separate agency would remove or dilute the business perspective that the Commerce Department brings to its deliberations and export controls and may result in inappropriate controls on U.S. exports. We support the positions of H.R. 1566 which would elimiante the requirements for validated licenses of exports to countries that cooperate with the United States in multilateral controls, eliminate unilateral controls on exports to non-Communist countries, increase the Commerce Department export enforcement authority, |