license applications, frequently to the point where the application is likely to spend more time in this agency than in the Department of Defense.

Given the fact that your bill contemplates a continuation of the existing shared responsibility for the handling of export license applications between the Departments of Defense and Commerce an organizational structure that we support, SAMA has one recommendation to improve the process. At the present time, Commerce licensing officers have little or no discussion with their counterparts at the Department of Defense on license applications. Contrast this with what we understand the situation to be in the Office of Munitions Control where State Department licensing officers can and are encouraged to deal directly with counterparts in other agencies, including the Department of Defense, on license applications. This dialogue between licensing officers appears to us to work well, and in many cases also appears to speed up the processing of cases. We believe that the Commerce Department licensing officers should be encouraged to discuss pending cases with their counterparts in the Department of Defense so that problems can be identified early and resolved more quickly than is presently the case.

SAMA believes that thare are more important issues than the actual location of export control responsibilities that need to be addresses. For example:

1. When can we gain an accurate assessment of foreign availability?

2.

Can we define "militarily critical" in a way that will protect our
national security by both prohibiting our adversaries to obtain
these goods and technologies and permitting U.S. high technology
companies to compete effectively in world markets?

3.

4.

Conclusion

How can we strengthen COCOM?

How do we get non-COCOM countries to join us in denying militarily critical technology and keystone equipment to the U.S.S.R. and its satellite countries?

Mr. Chairman, I would conclude by again commending you for the interest you have shown on the issue of the Export Administration Act and the leadership you have already demonstrated with the introduction of H.R. 1566. We have attempted to provide some constructive comments on this legislation, and we look forward to working with you, the other members of the Subcommittee and the staff as you develop a more comprehensive bill for introduction on or about April 5, 1983. To repeat a principle concern of SAMA as we engage in this effort to improve the export administration process; when foreign sources exist, in the absence of effective multilateral control, unilateral control is not just ineffective in denying equipment to an adversary, but it is directly harmful to our own defense, because it hurts the industries from which defense draws innovative technology.

Mr. BONKER. Mr. Frischkorn.

STATEMENT OF ALLEN R. FRISCHKORN, ASSISTANT VICE PRESIDENT, GTE CORP., REPRESENTING THE ELECTRONIC INDUSTRIES ASSOCIATION

Mr. FRISCHKORN. Mr. Chairman and members of the subcommittee, I am Allen R. Frischkorn, assistant vice president for governmental relations for GTE Corp. I am currently the chairman of the export control committee of the international business council of the Electronic Industries Association [EIA]. I am pleased to appear here today to discuss EIA's views on reauthorization and renewal of the Export Administration Act of 1979.

The Electronic Industries Association is a Washington-based trade association which represents 400 American companies of all sizes ranging from small single-product businesses to large multinational corporations. EIA member companies are involved in the design, manufacture, and sale of electronic components, equipment, and systems throughout the world.

In our industry, 1971 statistics indicate that factory sales of electronic products were about $114 billion of which $23 billion were exports. In that same year, approximately 1.6 million American jobs were involved in the electronic industry, and we estimate about 600,000 of those are dependent upon exports directly.

Let me begin by saying that EIA recognizes the legitimate needs of the United States to control exports for national security purposes. However, U.S. export control laws too often present unwarranted disincentives to U.S. export sales. I am sure that you are well aware of the growing importance of international trade to the United States. With our trade deficit expected to hit $60 to $80 billion this year, and U.S. companies facing increased international competition, it is more important than ever to invigorate our export industries and to maximize our commercial opportunities.

Without the increase in exports necessary to earn the profits essential for continued research, development, and innovation, U.S. companies could well lose their technological edge. This would indeed be a tragedy, since a strong national economy is one of the most important factors in a strong national security.

While increased exports are necessary to our economic health, I am not here today to advocate liberalization of United States export control laws over products and technology destined for the Soviet Union and other Eastern bloc countries. Mr. Chairman and members of the subcommittee, we do not want to sell the Russians the rope. We do not even want to make it easier for them to get the rope through surreptitious means. While there may be some room for decontrol of low technology products to these countries, the Soviet Union and the East bloc, the desire to trade with the East bloc is not the motivating factor behind the business community's concern with the U.S. export control laws. What concerns EIA and others at this table are continued controls on product sales to our allies-France, Germany, Belgium, Italy, and others in the free world-and the apparent desire of this administration to increase controls on technology to free world countries.

ELIMINATION OF CONTROLS ON COOPERATIVELY CONTROLLED PRODUCTS

EIA believes that export licensing requirements imposed for national security reasons can be reduced substantially without affecting the integrity of the export control program. This conclusion is echoed by a recent report of the General Accounting Office. I am sure the subcommitttee is already aware of this report, which concluded that almost one-half of all export license applications received each year could be eliminated without affecting national security, because the products involved are not considered to be militarily significant.

GÃO noted in its report that the present system is more a paper exercise than a control mechanism. In its report, GAO also concluded that license requirements for exports to U.S. allies could also be significantly reduced. In this regard, GAO noted that the Government had denied none of the over 22,000 license applications processed for Cocom countries, Australia and New Zealand in 1979. Cocom countries as you may know, includes NATO countries, minus Iceland and Spain plus Japan. None of those 22,000 applications in 1979 were denied, and very few were ever denied in any given year.

EIA urges Congress to amend the act to eliminate the validated license requirement for shipments of high technology products to Cocom countries and other countries which agree bilaterally with the United States to control products exported to Communist countries in a manner similar to the way the United States controls such products.

In addition, the act should direct the Department of Commerce to eliminate the validated license requirements for low technology products which are not militarily critical for all destinations.

In this regard, EIA is pleased to note, Mr. Chairman, that H.R. 1566 recently introduced by you contains provisions designed to strengthen the Cocom structure, and to eliminate export controls on products going to countries which maintain cooperative programs with the United States. We are also pleased with the provisions in your bill which would eliminate unilateral national security controls on products if the U.S. Government has not denied an export license for that product for a year. As I understand it, this provision would apply to countries other than those which maintain an export control program in cooperation with the United States. In those cases, license requirements would be eliminated altogether.

MCTL

With respect to technology transfers, EIA views with concern the Administration's apparent intent to increase controls over technology transfer without regard to country of destination. The Export Administration Act of 1979 mandates the development of new controls on militarily critical technologies, and the Department of Defense and the Department of Commerce have been working together to implement controls over such technologies.

The basis for the militarily critical technologies list is the perceived need to refocus our control methods by strengthening controls on technology in keystone equipment and by decontrolling

some products and noncritical technology. EIA agrees that technology controls play a legitimate role in protecting our national security. However, EIA has three main concerns about the militarily critical technology effort.

First, the array of technologies covered in the MCTL appears to be far broader than that which is necessary to deny truly critical technologies to our adversaries.

Second, rather than decontrolling end products as urged in the report of the Defense Science Board in 1976, the so-called Bucy Report, the Government appears to be developing a whole new system of technology controls on top of the current system of product controls. This combined approach gives all the appearance of being even more burdensome to exporters than the current controls system.

Finally-and this is something that did not occur to me until I got fairly involved in the militarily critical technologies effort-the thrust of increased controls on technology will fall mainly on our allies and other free world countries, since a validated license will be required for technology transfers to free world countries for the first time. Presently, all technology transfers to the Soviet Union and East bloc require a validated license. You have to go into Commerce prior to making the transfer of technology and apply for a license. It goes through the review process at DOD and other agencies. As it now stands, you don't need to have a license to make a technology transfer to, for example, France or Belgium. All you need is a written assurance statement signed by the transferee in the foreign country indicating that they won't transfer the technology or the products resulting from that technology to the East bloc or Soviet Union or any other country on the prohibited list.

Instead of increasing technology controls on our allies, the Government should try to obtain the agreement of our Cocom partners to enforce controls over agreed technologies which are in fact militarily critical. Similar efforts should be made with our other free world trading partners. Only after efforts to persuade them to engage in a cooperative system of control fail should increased technology controls be imposed on those countries.

EIA takes note of the various proposals which would transfer the commercial export licensing function from the Department of Commerce to a new Office of Strategic Trade or directly to the Defense Department. EIA opposes such proposals. The present system, whereby responsibility has been divided between the Department of Commerce and the Department of Defense, has worked reasonably well. However, since the Department of Commerce also has the responsibility for promoting international trade, we believe that it is in a better position to balance trade interests against those of national security.

Finally, if no other change is made in the U.S. export control laws as a result of the present review, we would hope that the new Export Administration Act would provide for an increase in the resources of the Department of Commerce to process applications in an expeditious manner, and to make the necessary assessments of foreign availability of products and economic impact of the imposition of controls on the U.S. economy.