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111th Congress                                              Exec. Rept.
                                 SENATE
 2d Session                                                       111-5

======================================================================



 
    DEFENSE TRADE COOPERATION TREATIES WITH THE UNITED KINGDOM AND 
                               AUSTRALIA

                                _______
                                

               September 24, 2010.--Ordered to be printed

                                _______
                                

          Mr. Kerry, from the Committee on Foreign Relations,
                        submitted the following

                                 REPORT

              [To accompany Treaty Docs. 110-7 and 110-10]

    The Committee on Foreign Relations, to which was referred 
the Treaty between the Government of the United States of 
America and the Government of the United Kingdom of Great 
Britain and Northern Ireland Concerning Defense Trade 
Cooperation, done at Washington and London on June 21 and 26, 
2007 (Treaty Doc. 110-7, the ``U.S.-UK Treaty'') and the Treaty 
between the Government of the United States of America and the 
Government of Australia Concerning Defense Trade Cooperation, 
done at Sydney, September 5, 2007 (Treaty Doc. 110-10, the 
``U.S.-Australia Treaty''), having considered the same, reports 
favorably thereon with conditions, understandings, and 
declarations as indicated in the resolutions of advice and 
consent for each treaty, and recommends that the Senate give 
its advice and consent to ratification thereof, as set forth in 
this report and the accompanying resolutions of advice and 
consent.

                                CONTENTS

                                                                   Page

  I. Purpose..........................................................2
 II. Background.......................................................2
III. Discussion.......................................................4
 IV. Committee Action................................................15
  V. Committee Recommendations.......................................16
 VI. Section-by-Section Analysis of Resolution of Advice and Consent to 
     Ratification of the U.S.-UK Defense Trade Cooperation Treaty....17
VII. Section-by-Section Analysis of Resolution of Advice and Consent to 
     Ratification of the U.S.-Australia Defense Trade Cooperation 
     Treaty..........................................................23
VIII.Text of Resolutions of Advice and Consent to Ratification.......28

 IX. Letter From Senators Levin and Warner...........................43
  X. Hearing on the Defense Trade Cooperation Treaties, December 10, 
     2009............................................................47

                               I. Purpose

    The purpose of these two treaties, along with an 
Implementing Arrangement to each treaty, both of which were 
also provided to the Senate, is to promote defense cooperation 
between the United States and its treaty partners by creating, 
for certain joint operations, programs and projects involving 
the United States and certain treaty partner governmental and 
agreed non-governmental entities, an exemption from certain 
provisions of the Arms Export Control Act (22 U.S.C. 2751 et 
seq.; hereinafter, ``AECA'') for agreed classified and 
unclassified exports of defense articles and defense services.
    In his Letter of Transmittal of the U.S.-UK Treaty to the 
Senate, President George W. Bush stated that the treaty would 
``allow for greater cooperation between the United States and 
the United Kingdom, enhancing the operational capabilities and 
interoperability of the armed forces of both countries.''
    In an article-by-article analysis of the U.S.-UK Treaty 
prepared by the Department of State which was submitted to the 
Senate as part of the Letter of Transmittal of that treaty to 
the Senate, the State Department added that:


        it is in the mutual security and defense interests of 
        the United States and the United Kingdom to improve the 
        interoperability of their armed forces by facilitating 
        the movement of defense articles in support of certain 
        mutually agreed activities, while maintaining and 
        ensuring proper safeguards against unauthorized release 
        of the defense technology involved.


    The Letter of Transmittal and article-by-article analysis 
for the U.S.-Australia Treaty included similar language.

                             II. Background

    The United Kingdom and Australia are exceptionally close 
allies of the United States, with ties of history, culture, and 
national security interests that have led each country's armed 
forces to fight side by side with those of the United States in 
many conflicts over the last century. The economic and 
technological ties between the United States and these proposed 
treaty partners are also exceptionally close, and this extends 
to cooperative programs or projects to develop defense 
capabilities for use by both countries. When the United States, 
a treaty partner, and relevant defense contractors and 
suppliers are engaged in such a program or project, the need to 
process export license requests for the back-and-forth flow of 
components, supplies and technology can slow the pace of 
cooperation and impede the exchange of ideas and solutions to 
problems. Given that virtually all of the several thousand 
requests for arms export licenses to these two countries 
annually are granted, the defense establishments of the United 
States and its proposed treaty partners have long argued that a 
streamlined arms export process would be in the U.S. national 
interest.
    Section 38(a) of the AECA authorizes the President to 
control the import and export of defense articles and services, 
and to provide foreign policy guidance to persons of the United 
States involved in the export and import of such articles and 
services. Further, the AECA authorizes the President to 
establish a United States Munitions List (hereinafter, 
``USML''), which shall include those items that the President 
designates as defense articles and defense services. The 
President is further authorized to promulgate regulations for 
the import and export of such articles and services. The 
statutory authority to promulgate regulations with respect to 
exports was delegated to the Secretary of State by Executive 
Order 11958, as amended. The Secretary of State has implemented 
that authority through the International Traffic in Arms 
Regulations (22 Code of Federal Regulations, Subchapter M, 
Parts 120-130; hereinafter, ``ITAR''). Pursuant to the ITAR, 
any person wanting to export a defense article or service 
included on the USML, unless the export qualifies for certain 
exemptions established within the ITAR, must obtain the 
approval of the State Department's Directorate of Defense Trade 
Controls, which administers the export control authority that 
has been delegated to the Secretary of State.
    Under section 36(c) of the AECA, for a direct commercial 
sale from a U.S. private company over a certain threshold of 
value to the United Kingdom or Australia, Congress must be 
formally notified 15 calendar days before the executive branch 
may issue a license for such an export. Commercially licensed 
arms sales cases involving defense articles that are firearms 
controlled under Category I of the USML and valued at $1 
million or more must also be formally notified to Congress for 
review 15 days prior to the license for export being approved. 
After having been notified, Congress has an opportunity enact a 
joint resolution blocking the executive branch from issuing the 
proposed license for export. Recognizing the difficulty that 
the Senate's rules of procedure present in passing such 
legislation in time to block issuance of the license, the AECA 
establishes expedited procedures for Senate consideration of a 
joint resolution to block the license.
    Pursuant to section 3 of the AECA, nations and private 
entities acquiring defense articles and defense services from 
the United States must agree that they will secure approval 
from the United States before transferring or reselling any 
defense articles or defense services to any third-party or 
nation. To this end, the ITAR requires that, with certain 
limited exceptions, the Directorate of Defense Trade Controls 
must provide written approval to the ultimate end user of any 
exported defense article before that end user can resell, 
transfer, transship, or otherwise dispose of the defense 
article. With certain exceptions, section 3(d) of the AECA 
requires the President to notify Congress 15 days prior to 
approving transfers to the United Kingdom or Australia above 
thresholds of value similar to those established for the 
original sale.
    In the Letter of Submittal from the Secretary of State to 
the President for the U.S.-UK Treaty, then-Secretary of State 
Condoleezza Rice wrote:


        For several years, the United States and the United 
        Kingdom have sought to negotiate a legally binding 
        agreement that would provide a mutually agreeable 
        exemption for exports to the United Kingdom of defense 
        articles controlled pursuant to the Arms Export Control 
        Act (AECA) from some requirements, such as the 
        licensing requirements, of Section 38 of the AECA and 
        its implementing regulations, the International Traffic 
        in Arms Regulations.


    The Security Assistance Act of 2000 (Public Law 106-280) 
amended section 38 of the AECA to explicitly authorize the 
President to exempt a foreign country from the licensing 
requirements established under the AECA with respect to exports 
of defense items. The new subsection 38(j) of the AECA that 
P.L. 106-280 added required that to make use of this authority, 
the President must conclude a binding bilateral agreement with 
the foreign country that requires the foreign country, inter 
alia,--

        to establish an export control regime that is at least 
        comparable to United States law, regulation and policy 
        requiring--

                  (i) conditions on the handling of all United 
                States-origin defense items exported to the 
                foreign country, including prior written United 
                States Government approval for any reexports to 
                third countries; [and]

                  (ii) end-use and retransfer control 
                commitments, including securing binding end-use 
                and retransfer control commitments from all 
                end-users. with respect to such United States-
                origin defense items.


    In 2003, the United States reached agreements with the 
United Kingdom and Australia to exempt certain unclassified 
exports of defense articles and defense services from export 
license requirements in the ITAR. Neither agreement met the 
standard set by subsection 38(j) of the AECA, however. The 
United Kingdom is inhibited both constitutionally and by virtue 
of its membership in the European Union from giving blanket 
assurances regarding reexports to third countries, and 
Australian law is not readily adapted to limits on the transfer 
of defense articles or defense services to companies within the 
country. The executive branch therefore sought legislation to 
permit the exemption agreements to enter into force. Such 
legislation was included as section 1059A in the Senate-passed 
version of the Ronald W. Reagan National Defense Authorization 
Act for Fiscal Year 2005, but that provision was not included 
in the conference-reported version of the bill and did not 
become law.
    It was in the context of this legislative frustration that, 
in 2007, the executive branch adopted a new approach for 
liberalizing defense trade with the United Kingdom and 
Australia. Instead of relying strictly upon the export control 
regimes of the United Kingdom and Australia, those countries 
would agree also to treat defense articles and defense services 
exported from the United States as classified information, so 
as to bring these defense articles and defense services under 
each country's information security laws and regulations. These 
bilateral agreements would take the form of treaties, moreover, 
which were deemed to be self-executing and would require action 
in the United States only by the Senate. While the treaties 
contained the basic framework of the proposed defense trade 
regime, many of the details of the regime were addressed in 
``Implementing Arrangements'' separate from the treaties for 
which the executive branch opted not to seek the Senate's 
advice and consent.

                            III. Discussion

    A detailed paragraph-by-paragraph analysis of the Treaties 
may be found in the Letters of Submittal from the Secretary of 
State to the President, which is reprinted in full in Treaty 
Document 110-7 and 110-10. A summary of key provisions is set 
forth below.

Definitions

    Article 1 of each treaty contains definitions of terms. The 
U.S.-Australia Treaty defines the word ``Scope'' (such 
capitalized words being terms of art in the treaties), which 
was omitted from the U.S.-UK Treaty, so the committee 
recommends that the resolution of advice and consent to the 
U.S.-UK Treaty include an understanding that defines Scope as 
in the U.S.-Australia Treaty.
    The definition of ``Territory of the United Kingdom'' in 
the U.S.-UK Treaty includes not only England, Wales, Scotland 
and Northern Ireland, but also ``any territory for whose 
international relations the United Kingdom is responsible in 
respect to which Her Majesty's Government gives notice to the 
United States Government that such territory shall be included 
within this definition for the purposes of this Treaty.'' The 
inclusion of such a territory in the Territory of the United 
Kingdom, or of an entity in such a territory in the ``United 
Kingdom Community'' (see below), for the purposes of the U.S.-
UK Treaty could be problematic, given that responsibility for 
such a territory's international relations might not include 
complete control over that territory's classified information 
or arms export control regimes. Some British territories have 
been known as tax havens or as hubs for money laundering, and 
the committee sought assurances that there was no intent to 
include such territories in the U.S.-UK Treaty. The Department 
of State assured the committee, in an answer for the record, 
that: ``The Official Secrets Act extends to any act done by any 
person in these territories as if it were done in the UK.'' 
(The committee's questions for the record and the executive 
branch's answers are appended to this Report.) The committee 
notes, moreover, that although the United States Government 
would not be able to object to including such territories in 
the U.S.-UK Treaty, it would be able to deny membership in the 
United Kingdom Community to any entity that prompted concern.
    In light of these concerns, the committee recommends that 
the resolution of advice and consent to ratification of the 
U.S.-UK Treaty include a condition requiring prompt 
notification to the Committee on Foreign Relations of the 
Senate and the Committee on Foreign Affairs of the House of 
Representatives of any addition of territories (or of 
discussions regarding such additions) to the Territory of the 
United Kingdom and consultation with the committees ``before 
approving any addition to the United Kingdom Community of a 
non-governmental entity or facility outside the territory of 
England, Scotland, Wales, or Northern Ireland.''

Approved Communities

    Each treaty and its implementing arrangement provide for 
the establishment of an ``Approved Community'' of government 
entities, companies, and individuals in the treaty partner 
country and the United States that will be given clearance to 
work on projects and operations that involve license-free 
equipment and technology transfers between the two countries. 
Any U.S. company or other U.S. entity otherwise eligible to 
export U.S. defense articles and services can make use of the 
treaties. Treaty partner government facilities and government 
personnel, agreed companies and individuals qualifying for 
inclusion in the Approved Community will not be required to 
obtain an export license from the U.S. State Department for 
most defense articles or items of defense technology on the 
USML. The members of the Approved Community of each treaty 
partner are not required to use the procedures established by 
the treaty, but should they choose not to do so, they must use 
(and abide by) the existing U.S. defense export licensing or 
sales procedures.
    The implementing arrangements set out criteria for 
determining how private entities in each treaty partner country 
will qualify to become part of the treaty's Approved Community. 
While treaty partner entities are required to be accredited by 
that country to handle classified information, the criteria 
treat other matters--such as foreign ownership, control, and 
influence; previous convictions for violations of U.S. or 
treaty partner export laws; or other national security risks--
as factors to be taken into consideration, rather than as 
absolute requirements.
    The U.S. Government is empowered by Article 4, paragraph 2 
of each treaty, however, to request the removal of any non-
governmental treaty partner persons or entities included in the 
Approved Community, and such a request must be honored if the 
United States does not rescind the request after consultations 
with the treaty partner. This raises the question of when the 
United States will avail itself of that privilege. The 
committee recommends that each resolution of advice and consent 
to ratification contain a requirement that the United States 
invoke this provision if sanctions are in effect against a 
member of the treaty partner's Approved Community under either 
section 73(a)(2)(B) of the AECA (relating to illegal transfers 
of missile equipment or technology) or section 81 of the AECA 
(relating to contributions to a country's chemical or 
biological weapons programs). The committee further recommends 
that each resolution of advice and consent include requirements 
for notification and consultation with the Foreign Relations 
and Foreign Affairs Committees before the United States agrees 
to the initial or continued inclusion in a treaty partner's 
Approved Community of a nongovernmental entity if the 
Department of State is aware that the entity, or any one or 
more of its relevant senior officers or officials, has been 
convicted of violating a statute cited in paragraph 38(g)(1) of 
the AECA or is, or would be if that person were a United States 
person, (a) ineligible to contract with any agency of the U.S. 
Government; (b) ineligible to receive a license or other form 
of authorization to export from any agency of the U.S. 
Government; or (c) ineligible to receive a license or any form 
of authorization to import defense articles or defense services 
from any agency of the U.S. Government.
    Article 5 of each treaty provides that the United States 
Community will consist, in part, of ``[n]ongovernmental United 
States entities registered with the United States Government 
and eligible to export Defense Articles under United States law 
and regulation.'' The committee was particularly concerned to 
ensure that the United States will not simply assume that all 
entities registered with the government are in fact eligible to 
export. The committee recommends that the resolutions of advice 
and consent to ratification of the treaties contain a 
requirement that regulations: (a) limit a person from being a 
member of the United States Community, pursuant to Article 5(2) 
of each treaty, if that person is generally ineligible to 
export pursuant to section 120.1(c) of the ITAR; and (b) 
require any nongovernmental entity that ceases to be included 
in the United States Community to comply with instructions from 
authorized United States Government officials and to open its 
records of transactions under the treaty to inspection by 
United States Government and, as appropriate, authorized treaty 
partner officials pursuant to Article 12 of each treaty. The 
committee recommends further that the resolutions require the 
President to certify that appropriate mechanisms have been 
established to identify, in connection with the process for 
determining whether a nongovernmental entity is in the United 
States Community pursuant to Article 5(2) of each treaty, 
persons who meet the criteria in section 38(g)(1) of the AECA 
(22 U.S.C. 2778(g)(1)); and the committee recommends that the 
implementing legislation include a provision making clear that 
the identification of persons who are indicted for, or 
convicted of, violations of the statutes listed in section 
38(g)(1) of the AECA may be conducted regarding persons who 
export defense items under the treaties, even if such persons 
never seek an export license.

Treaty Scope Limited to Specific Activities

    In addition to limiting license-free trade under the treaty 
to certain entities, the treaties only permit license-free 
trade that relates to certain activities. Defense articles and 
services will be able to be exported to a treaty partner's 
Approved Community, and exchanged within it, without U.S. 
export or re-transfer approvals, so as long as the exports are 
in support of:


    Combined military or counterterrorism operations;

    Agreed research, development, production and support 
        programs or security and defense projects;

    Treaty partner government-only end-uses; or

    U.S. Government-only end-uses.


    The United States and the proposed treaty partners have not 
finalized the lists of combined military or counter-terrorism 
operations that will be within the Scope of the treaty (Article 
3(1)(a)), cooperative security and defense research, 
development, production, and support programs that will be 
within the Scope (Article 3(1)(b)), and which security and 
defense projects where the UK Government is the end-user will 
be within the Scope (Article 3(1)(c)). Lists of the 
unclassified operations, programs and projects will be 
published, so that U.S. arms exporters will be able to 
determine what proposed exports might be within the scope of 
each treaty.

Defense Articles and Services Exempted from the Treaty

    In addition to limiting the treaties' scope to specific 
purposes, the treaties permit each party to exclude certain 
defense articles and defense services (including technical 
data) from license-free export and re-transfer pursuant to the 
treaties. Even if transactions involve members of an Approved 
Community and fall under the list of approved projects, export 
of such defense articles and defense services would have to be 
done in accordance with existing U.S. export law and 
regulations.
    The executive branch has stated that it will exempt from 
each treaty's coverage certain defense items related to U.S. 
nonproliferation obligations:


    Defense Articles listed in the Missile Technology Control 
        Regime (MTCR) Annex (i.e., complete rocket systems, 
        including ballistic missile systems, space launch 
        vehicles, and sounding rockets, or complete unmanned 
        aerial vehicle systems capable of delivering at least a 
        500 kilogram payload to a range of 300 kilometers, and 
        associated production facilities, software, or 
        technology for these systems; and Rocket stages, re-
        entry vehicles and equipment, solid or liquid 
        propellant motors, guidance sets, thrust vector control 
        systems, and associated production facilities, software 
        and technology);

    Defense Articles listed in the Chemical Weapons Convention 
        (CWC) Annex on Chemicals, the Convention on Biological 
        and Toxin Weapons, and the Australia Group (AG) Common 
        Control Lists (CCL); and

    USML Category XVI Defense Articles specific to design and 
        testing of nuclear weapons.


    Other defense articles and defense services that the United 
        States will exempt from the Scope of each treaty 
        include USML items that the treaty partner does not 
        control, as well as such technologies as:


            Reduced observables and counter-low observables;

            Electronic and optical countermeasures and counter-
        countermeasures;

            Certain anti-tamper measures;

            Defense articles specific to satellites, satellite 
        payloads, and their specifically designed or modified 
        components; and

            Defense articles specific to Man Portable Air 
        Defense Systems (MANPADs).


    The committee believes that the nonproliferation exemptions 
from the Scope of the treaties are of particular importance, as 
they ensure that the treaties will not undermine U.S. 
compliance with agreements that are vital pillars of the 
international nonproliferation regime. In the committee's view, 
these exemptions should be governed by law, so that they cannot 
be rescinded without prior congressional authorization. The 
implementing legislation proposed by the committee contains a 
provision that would achieve this end. The committee also 
recommends that the implementing legislation require that the 
United States exempt from the Scope of the U.S.-UK Treaty those 
defense items that are on the USML, but are not controlled by 
the United Kingdom.
    The committee understands the logic of allowing each Party 
to add items to, or subtract items from, the lists of items 
exempt from the Scope of each treaty. The technologies in 
question are extremely sensitive, however, and a decision to 
delete a technology from the list of items exempt from the 
Scope of a treaty could be profoundly important. The committee 
recommends, therefore, that each resolution of advice and 
consent to ratification include a condition requiring 30 days' 
prior notice to the Foreign Relations and Foreign Affairs 
Committees of such an action.

Safeguarding U.S. Defense Items Exported under the Treaties

    The treaties and their implementing arrangements safeguard 
against unauthorized transfers by prohibiting defense articles 
and defense services exported to the Approved Community in a 
treaty partner country from being re-exported or transferred 
outside of the Approved Community without the approval of both 
the U.S. and treaty partner governments. Rather than rely 
solely upon its export control laws, each treaty partner would 
classify all otherwise unclassified defense articles and 
defense services exported pursuant to the treaties, upon 
entering that country, as RESTRICTED-USML goods/information, a 
level of classification that is slightly below the U.S. level 
of CONFIDENTIAL. Both facilities and personnel receiving U.S. 
exports under this treaty will have to be vetted and cleared by 
both the treaty partner and U.S. governments to receive 
RESTRICTED goods or technology.
    In the United Kingdom, for example, enforcement of these 
provisions will be the administrative responsibility of the 
Ministry of Defence, backed up by the authority of the British 
Official Secrets Act. All requests for Re-exports or Re-
transfers will be reviewed by the Ministry of Defence. (Under 
the treaties and implementing arrangements, a ``Re-transfer'' 
is a transfer of a covered item from a member of the Approved 
Community to a non-member of the Approved Community within the 
territory of the treaty partner. A ``Re-export'' is the 
movement of a covered item by a member of the Approved 
Community to a location outside of the territory of the treaty 
partner or the United States.) Since all the defense articles 
provided under the treaty are classified, the Ministry of 
Defence will not provide permission for a Re-export or Re-
transfer without obtaining U.S. Government authorization. 
Certain exceptions to the Re-export or Re-transfer restrictions 
are possible, but only if agreed to by the two governments and 
set out in the implementing arrangements. This can permit, for 
example, Re-export of items that are being used in support of 
the United Kingdom's Armed Forces overseas. Importantly, by 
classifying items exported under the treaty, the United Kingdom 
can bar Re-exports to the rest of the European Union unless the 
U.S. Government approves, without violating its obligations as 
a member of the European Union.
    The treaties and their implementing arrangements further 
establish important requirements to aid enforcement of 
compliance. Each party to the treaties shall have the right to 
conduct end-use monitoring of exports or transfers conducted 
under it. A detailed process for recording the movement of 
defense articles under the provisions of the treaties is 
established, with Approved Community members required to retain 
such records (but not to transmit them to either government) 
for five years. And treaty partners will be required to obtain 
a signed statement from each non-governmental entity or 
facility in their Approved Community acknowledging some ten 
specific standards that it will be required to meet regarding 
U.S. defense articles and defense services received under the 
treaty. This requirement will serve both to inform Approved 
Community members of their obligations and to provide a written 
indication of their acceptance of such obligations, which may 
be used in any enforcement action.
    Each party to the treaties will be obliged to investigate 
any suspected violations, inform the other party of the result 
of the investigations, and cooperate in enforcement efforts as 
appropriate. The committee recommends that the resolution of 
advice and consent to each treaty include an understanding, to 
be included in the instrument of ratification, that the words 
``as appropriate'' in each implementing arrangement do not 
detract in any way from the treaty obligation to investigate 
suspected and reported violations and to inform the United 
States of the results of such investigations.
    The parties to each treaty are to consult at least once a 
year on the co-operative aspects of export controls, and to 
review the operation of the treaty. Any disputes arising out 
of, or in connection with, the treaty are to be resolved on a 
bilateral basis between the parties and will not be referred to 
any court, tribunal, or third party.

Enforcement of Compliance with Treaty Obligations

    The first line of defense in arms export control is the 
export licensing process, in which exporters register with the 
Department of State and then the Department (and, as 
appropriate, other departments or agencies) will review 
proposed exports; the second line of defense is the export 
process, in which the Department of Homeland Security (DHS) 
reviews exporters' documentation for arms exports. In both 
cases, agencies check names against data bases of ineligible 
persons. The treaties will eliminate the licensing process for 
qualifying exports, but DHS will still review shipping 
documentation to determine whether exports that are asserted to 
be license-free under the treaties are, in fact, in order. The 
committee took pains to ensure that DHS would have the needed 
personnel and information technology to process such exports 
effectively. The committee recommends that each resolution of 
advice and consent to ratification contain a requirement that 
the President certify that: (a) appropriate mechanisms have 
been established to verify that nongovernmental entities in the 
United States that export defense articles or defense services 
pursuant to the treaties are eligible to export them under 
United States law and regulation as required by Article 5(2) of 
the treaties; and (b) DHS personnel at U.S. ports have prompt 
access to a State Department database containing registered 
exporters, freight forwarders and consignees, and watch lists 
regarding U.S. companies, and are prepared to prevent attempts 
to export pursuant to the treaties by U.S. persons who are not 
eligible to export defense articles and defense services under 
U.S. law or regulation, even if such person has registered with 
the U.S. Government.
    Much of the committee's examination of these treaties 
focused on the question of whether, without accompanying 
legislation, the executive branch would be able to effectively 
enforce compliance with the treaties. Violations of arms export 
controls are a fact of life, and it is reasonable to expect 
that there will be cases in which companies misuse the license 
exemptions provided by these treaties. Because the treaties 
supersede elements of the AECA, it was not at all clear whether 
section 38(a) of the AECA, on which the executive branch relies 
for authority to issue regulations, section 38(c), which 
provides for criminal penalties for violations, and section 
38(e), which provides for civil penalties, could be used in an 
enforcement action against an entity that had proceeded under 
one of the treaties instead of under the AECA. The executive 
branch argued initially that no authority other than that 
provided by the treaties themselves was required to issue 
regulations that would provide for such penalties. Later it 
adopted the view that the treaties would create a ``safe 
harbor'' from the AECA, that section 38(a) of the AECA could 
still be used (along with the treaties themselves) as authority 
to issue regulations, and that sections 38(c) and 38(e) would 
therefore remain applicable to persons who made use of the 
treaties but engaged in activities that violated the treaties 
and therefore brought their conduct back under the AECA. The 
executive branch provided several drafts of implementing 
regulations as it sought to meet concerns raised by the 
committee and by the Department of Justice, while avoiding the 
need for implementing legislation. At length, however, the 
executive branch agreed to support implementing legislation. 
The committee believes that the proposed legislation 
accompanying these treaties, by changing the law to accommodate 
these treaties and to provide for criminal and civil penalties 
for their violation, will remove any cause for question 
regarding the authority of the executive branch to prosecute 
violators of the treaties. It will also maintain certain AECA 
provisions that would otherwise have been superseded by the 
treaties, as noted elsewhere in this Report.

Self-execution and Interaction with Existing Law

    Each treaty contains a statement in its preamble that says, 
``Understanding that the provisions of this Treaty are self-
executing in the United States.'' The committee found this 
statement to be problematic on several grounds. Such a 
preambular declaration was unprecedented in U.S. treaties, and 
it purported to determine an issue that has traditionally been 
considered a subject for discussion, regarding each treaty, 
between the executive branch and the Senate. As explained 
above, moreover, it was substantively suspect in that it 
purported to rule out the use of legislation to make clear the 
federal government's authority to impose criminal or civil 
penalties for violations of the treaties, their implementing 
arrangements, and regulations issued to implement the treaties. 
The executive branch eventually concluded that these treaties 
are not self-executing and submitted the following answer for 
the record: ``Notwithstanding the statement in the preamble of 
these Treaties, the Treaties are not self-executing. They will 
be implemented through legislation and regulations 
thereunder.''
    If the assertion of self-execution had been contained in 
the body of these treaties, the committee would have 
recommended that they be amended to delete that language. The 
assertion is made only in each treaty's preamble, however, and 
such language is not legally binding on the parties. It has not 
been the Senate's practice to amend preambular language in 
treaties, precisely because such language imposes no obligation 
on the United States. The committee recommends instead, 
therefore, that each resolution of advice and consent to 
ratification contain the following declaration: ``This Treaty 
is not self-executing in the United States, notwithstanding the 
statement in the preamble to the contrary.'' This declaration 
will make the Senate's position clear, in case there is any 
doubt. It will not affect the rights or obligations of our 
treaty partners.
    The treaties will supersede elements of the AECA, however, 
and not all of those impacts were intended when the treaties 
were negotiated. Notably, there was no intent to override the 
ban on incentive payments in section 39A of the AECA. The 
committee recommends that the implementing legislation for 
these treaties amend that section of the AECA to include 
exports under the treaties.
    The committee also recommends that the resolutions of 
advice and consent to ratification of these treaties include an 
understanding that conveys the interpretation of the United 
States that the treaty does not exempt any person or entity 
from any United States statutory and regulatory requirements, 
including any requirements of licensing or authorization, other 
than those included in the ITAR, as modified or amended. This 
is required to make clear the intent of the Parties that the 
treaties not supersede such other statutory or regulatory 
provisions as the requirement (flowing, at least in part, from 
section 38 of the AECA) for the Department of Justice's Bureau 
of Alcohol, Tobacco and Firearms to approve certain permanent 
imports of firearms for sale to private parties in the United 
States.

Private Rights and Intellectual Property Rights

    The committee's proposed resolutions of advice and consent 
to ratification include a standard declaration that: ``This 
Treaty does not confer private rights enforceable in United 
States courts.'' With regard to intellectual property rights, 
the proposed resolutions go on to state:


          No liability will be incurred by or attributed to the 
        United States Government in connection with any 
        possible infringement of privately owned patent or 
        proprietary rights, either domestic or foreign, by 
        reason of the United States Government's permitting 
        Exports or Transfers or its approval of Re-exports or 
        Re-transfers under the Treaty.


    The latter language is expected also to be promulgated in 
amendments to section 126 of the ITAR. The committee recommends 
its inclusion in the resolutions of advice and consent to 
ratification so as to underscore that the Senate understands 
and accepts that ratification of the treaties will not result 
in the United States Government incurring any liability with 
respect to the intellectual property rights of persons whose 
rights may be infringed by the recipients of exports or 
transfers under the treaties.
    At the same time, the treaty drafters took pains to address 
the issue of intellectual property rights under the treaties. 
Article 10 of each treaty states:


          (1) Nothing in this Treaty shall be construed as 
        granting, implying, diminishing, or otherwise affecting 
        rights to, or interest in, intellectual property or 
        other proprietary information of the Parties or of 
        persons or entities within the Approved Community 
        pursuant to this Treaty.
          (2) Nothing in this Treaty shall affect any 
        provisions for the protection of intellectual property 
        and other proprietary information that may be agreed 
        between the Parties or the persons or entities referred 
        to in paragraph (1).


    The Department of State's article-by-article analysis of 
the treaties adds: ``Accordingly, such persons or entities may 
agree between themselves on procedures to provide protections 
to intellectual property or other proprietary information, 
additional to the protections afforded to classified 
information.''
    In the committee's view, the treaties do not detract from 
the intellectual property rights of persons or entities that 
take necessary action to reinforce those rights when exporting 
a defense item under the treaties or when selling it to the 
United Kingdom or Australia under the Foreign Military Sales 
program. If a formal contract contains provisions protecting 
those rights (e.g., by barring the retransfer of a defense item 
to a competing private company), the treaties will not 
supersede that contract. Private entities should understand, 
however, that absent such contractual protection, they may have 
less visibility into the use or subsequent transfer of defense 
items sold under the treaties or sold to the United Kingdom or 
Australia under the Foreign Military Sales program. Companies 
bear the responsibility of establishing their intellectual 
property rights under such sales.
    The committee recommends that the resolutions of advice and 
consent to ratification of the treaties contain a provision 
requiring the executive branch to analyze the implications of 
the treaties for the protection of intellectual property rights 
of United States persons, with particular attention to the 
effect of Article 3, paragraph 3 of the treaties, which allows 
the treaties to be applied to defense items that were exported 
under the Foreign Military Sales program. It recommends further 
than the President be required to report to Congress annually 
on any concerns relating to infringement of intellectual 
property rights that were raised to the President or an 
executive branch department or agency by Approved Community 
members, and developments regarding any concerns that were 
raised in previous years.

The Role of Congress

    As noted above, under the AECA, Congress has the power to 
review proposed direct commercial sales valued over a certain 
threshold. Under the treaties, the U.S. Government must approve 
re-transfers and re-exports outside of the Approved 
Communities; and the executive branch agreed to provide 15 
days' prior notice of such approvals to Congress. But Congress 
might lose the legal right to review such transfers and to take 
action under expedited procedures to stop them before they are 
approved. This is because section 3 of the AECA, which 
establishes the role of Congress in the approval of re-exports, 
applies to defense articles or defense services either (a) sold 
or leased under the AECA, or (b) licensed or approved under 
section 38 of the AECA. At least under some legal theories of 
the effect of the treaties, such exports would not be under the 
AECA and the re-export provisions of section 3 of the AECA 
would therefore not apply to such defense items. The committee 
recommends that the implementing legislation for these treaties 
address this concern by specifically applying section 
3(d)(3)(A) of the AECA to exports under the treaties. The 
committee recommends further that the implementing legislation 
include a provision mandating the prior notice that the 
executive branch had proposed regarding exports under the 
treaties that would otherwise fall within the purview of 
section 36 of the AECA.
    A similar concern arises regarding the requirements for the 
executive branch to report to Congress on cases of 
discrimination against Americans on the basis of race, 
religion, national origin or sex in arms export activities 
(section 5(c) of the AECA) and on arms exports that might occur 
in the forthcoming year (section 25 of the AECA). The committee 
recommends that the implementing legislation for these treaties 
amend those sections to include exports pursuant to the 
treaties.

Amendments and Implementing Arrangements

    Article 19 of each treaty states: ``This Treaty may be 
amended by written agreement of the Parties.'' Any such 
amendment would need to be submitted to the Senate for advice 
and consent to ratification under Article II, Section 2, Clause 
2 of the Constitution of the United State."
    A more difficult question relates to the Implementing 
Arrangements that are authorized in Article 14 of each treaty. 
Paragraph 1 of Article 14 provides, in part: ``The Implementing 
Arrangements may be amended or supplemented as mutually 
determined by the Parties.'' The executive branch did not 
submit the Implementing Arrangements to the Senate for its 
advice and consent. Rather, the executive branch provided the 
texts of the Implementing Arrangements to the Senate for its 
information only. Because changes to the Implementing 
Arrangements could have significant impacts on the nature and 
scope of the treaty regime, the committee believes that it 
would be inappropriate for such changes to be made without 
Congressional approval.
    The committee recommends, therefore, that the implementing 
legislation for the treaties include a requirement that any 
amendment to either of the Implementing Arrangements for these 
treaties, other than an amendment that addresses an 
administrative or technical matter, may enter into effect only 
if the Congress adopts, and there is enacted, legislation 
approving the entry into effect of that amendment for the 
United States. The legislation that the committee proposes 
includes an illustrative list of provisions, any amendment to 
which would not be considered administrative or technical.
    The committee further recommends that the implementing 
legislation include a requirement for notice to the Foreign 
Relations and Foreign Affairs Committees 15 days prior to the 
entry into effect of any amendment to one of the Implementing 
Arrangements that does not require legislative approval. The 
legislation recommended by the committee would permit the 
President to waive this requirement, and instead notify the 
committees within five days after an amendment came into 
effect, if the President determines and certifies to the 
committees that this is important to maintain the viability and 
effectiveness of the treaty.

Duration and Withdrawal

    The treaties are each of unlimited duration. Each party has 
the right to withdraw from the treaty, however, after providing 
six months' notice and consulting with the other party, if it 
believes that its national interests have been jeopardized.

                         IV.  Committee Action

    The U.S.-UK Treaty was signed on June 21 and 26, 2007, and 
was received in the Senate and referred to the Committee on 
Foreign Relations on September 20, 2007. The U.S.-Australia 
Treaty was signed on September 5, 2007, and was received in the 
Senate on December 3, 2007.
    The committee held a public hearing on the treaties on May 
21, 2008. Then-Senator Biden chaired the hearing. Testimony was 
received from the Honorable John C. Rood, Acting Under 
Secretary of State for Arms Control and International Security.
    On July 3, 2008, Senators Biden and Lugar also submitted in 
writing questions for the record to the Honorable Michael B. 
Mukasey, Attorney General of the United States, and the 
Honorable Michael Chertoff, Secretary of Homeland Security.
    In connection with the May 2008 hearing, the committee also 
received letters from the Honorable George W. Bush, President 
of the United States; the Right Honorable Gordon Brown, Prime 
Minister of the United Kingdom of Great Britain and Northern 
Ireland; the Honorable Dennis Richardson, Ambassador of 
Australia to the United States of America, accompanied by a 
letter from the Honorable Kevin Rudd, Prime Minister of 
Australia, to the Honorable Harry Reid, Majority Leader of the 
United States Senate; the Right Honorable Baroness Ann Taylor 
of Bolton, Minister of State for Defence Equipment and Support, 
United Kingdom of Great Britain and Northern Ireland; the 
Aerospace Industries Association; Robert J. Stevens, Chairman, 
President, and Chief Executive Officer of the Lockheed Martin 
Corporation; Ron Rittenmeyer, Chairman, President, and Chief 
Executive Officer, EDS; and Daryl G. Kimball, Executive 
Director, Arms Control Association, Dr. Ivan Oelrich, Vice 
President of Strategic Security, Federation of American 
Scientists, and Arthur Shulman, General Counsel, Wisconsin 
Project on Nuclear Arms Control, accompanied by a statement for 
the record by Matt Schroeder, Federation of American 
Scientists, Arthur Shulman and Matthew Godsey, Wisconsin 
Project on Nuclear Arms Control, and Jeff Abramson, Arms 
Control Association. The full record of the May 2008 hearing, 
including the answers to questions for the record as originally 
submitted and the letters submitted to the committee in 
connection with the hearing, is provided in S. Hrg. 110-651.
    On August 27, 2008, Senators Biden and Lugar received a 
letter from Senator Carl Levin, Chairman of the Committee on 
Armed Services, and Senator John Warner expressing their strong 
support for the treaties. That letter is appended to this 
report.
    On December 10, 2009, the committee held another public 
hearing on the treaty. Senator Kerry chaired the hearing. 
Testimony was received from the Honorable Andrew Shapiro, 
Assistant Secretary of State for Political-Military Affairs, 
and the Honorable James A. Baker, Associate Deputy Attorney 
General. Their statements for the record, the transcript of 
that hearing, and responses to questions for the record, 
including revisions by the State Department to certain 
responses submitted in connection with the May 2008 hearing, 
are appended to this report.
    On December 17, 2009, Senator Lugar submitted questions for 
the record to the Honorable John Merton, Assistant Secretary of 
Homeland Security for Immigration and Customs Enforcement, and 
Mr. Jayson P. Ahern, Acting Commissioner for Customs and Border 
Protection. Those letters and their responses are also appended 
to this report.
    On September 21, 2010, the committee considered the 
treaties and ordered them favorably reported by a voice vote, 
with a quorum present and without objection. The committee 
recommended a resolution of advice and consent to ratification 
for each treaty.

                      V. Committee Recommendations

    The committee believes these treaties can make an important 
contribution to improving defense trade cooperation with the 
United Kingdom and Australia, and accordingly recommends that 
the Senate act promptly to give them its advice and consent. 
The committee recommends a resolution of advice and consent to 
the U.S.-UK Treaty that contains 9 conditions, 7 
understandings, and 3 declarations. The committee recommends a 
resolution of advice and consent to the U.S.-Australia Treaty 
that contains 8 conditions, 6 understandings, and 3 
declarations. The text of each recommended resolution is 
printed below, followed by a section-by-section analysis.
    The committee further recommends implementing legislation 
for the two treaties. The report to accompany that legislation, 
S.3581, as amended, is a separate document from this Report.
    In light of the purpose of these treaties to facilitate 
defense cooperation with two close U.S. allies, the United 
Kingdom and Australia, the committee regrets that approval of 
the treaties has required nearly three years from the date of 
their submission by the President. The committee values greatly 
the United States' strong partnership with the United Kingdom 
and Australia and the important contributions these countries 
have made to our shared security interests. The committee's 
delay in approving these treaties does not reflect any doubt on 
the committee's part about the value of maintaining and 
strengthening these important relationships.
    Aspects of these treaties raised significant issues 
regarding the Senate's role in the treaty making process. Both 
treaties included a highly unusual preambular provision 
purporting to specify how their provisions would be 
implemented, enforced, and incorporated into U.S. law, 
prejudging decisions which the Senate has traditionally had a 
co-equal role with the executive branch in making. The treaties 
also allocated significant aspects of the treaty regime to 
``Implementing Arrangements'' separate from the treaties which 
were not submitted for the Senate's advice and consent. The 
executive branch initially took the position that, once the 
treaties entered into force, these Implementing Arrangements 
could be amended--including in ways that would alter 
fundamental aspects of the treaty's regime--without the 
Senate's consent. Much of the committee's review of the 
treaties was devoted to considering these issues, and to 
crafting the provisions of the implementing legislation and 
resolutions of advice and consent necessary to resolve them 
appropriately.
    The committee notes that regular executive branch 
consultation with the Senate during the process of negotiating 
treaties is essential to the effective exercise of the treaty 
power shared by the two branches. Had the executive branch 
consulted with the Senate during the course of the negotiation 
of these treaties, many of the issues that delayed their 
approval by the committee could have been anticipated and 
avoided.

VI. Section-by-Section Analysis of Resolution of Advice and Consent to 
      Ratification of the U.S.-UK Defense Trade Cooperation Treaty


Condition (1). United States preparation for treaty implementation.

    The committee recommends that the Senate condition its 
advice and consent to ratification on a requirement that the 
President take several steps prior to entry into force of the 
treaty.
    At least 15 days prior to entry into force, the President 
must submit a report to Congress that: (1) describes steps 
taken to ensure that the executive branch and United States 
industry are prepared to comply with treaty requirements; (2) 
analyzes the implications of the treaty for the protection of 
intellectual property rights of United States persons; (3) 
explains what steps the United States Government is taking and 
will take to combat improper illegal intangible exports under 
the treaty; and (4) sets forth the issues to be addressed in 
the Management Plan called for by Section 12(3)(f) of the 
Implementing Arrangement and the procedures that are expected 
to be adopted in that Plan.
    Prior to entry into force, the President must certify that 
changes to the ITAR have been published in the Federal Register 
pursuant to the AECA and that such changes would: (1) make 
clear the legal obligation for any person involved in an 
Export, Re-Export, Transfer, or Re-Transfer under the treaty 
(as those terms are defined in the treaty) to comply with all 
requirements in the revised ITAR; (2) make clear the legal 
obligation for Approved Community members to comply with United 
States Government instructions and requirements regarding U.S. 
Defense Articles (as the term is defined in the treaty) added 
to the list of exempt Defense Articles pursuant to Article 3(2) 
of the treaty; limit a person from being a member of the U.S. 
Community pursuant to Article 5(2) of the treaty, if that 
person is generally ineligible to export pursuant to 22 CFR, 
section 120.1(c); and (4) require any nongovernmental entity 
that ceases to be included in the United States Community to 
comply with instructions from authorized United States 
Government officials and to open its records of transactions 
under the treaty to inspection by United States Government, and 
as appropriate, authorized United Kingdom Government officials 
pursuant to Article 12 of the treaty.
    Prior to entry into force, the President must also certify 
the following:


          (1) that appropriate mechanisms have been established 
        to identify, in connection with the process for 
        determining whether a nongovernmental entity is in the 
        United States Community pursuant to Article 5(2) of the 
        treaty, persons who meet the criteria in section 
        38(g)(1) of the AECA (22 U.S.C. 2778(g)(1)). Section 
        38(g)(1) of the AECA imposes an obligation on the 
        President to develop appropriate mechanisms to 
        identify, in connection with the export licensing 
        process under Section 38, persons who are the subject 
        of an indictment, or have been convicted of a violation 
        of, certain enumerated statutes;

          (2) that appropriate mechanisms have been established 
        to verify that nongovernmental entities in the United 
        States that Export pursuant to the treaty are eligible 
        to export Defense Articles under United States law and 
        regulation as required by Article 5(2) of the treaty;

          (3) that the Department of Homeland Security 
        personnel at U.S. ports: (a) have prompt access to a 
        State Department database containing registered 
        exporters, freight forwarders and consignees, and watch 
        lists regarding U.S. companies; and (b) are prepared to 
        prevent attempts to export pursuant to the treaty by 
        United States persons who are not eligible to export 
        Defense Articles under United States law or regulation;

          (4) that the Secretary of Defense has promulgated 
        appropriate changes to the National Industrial Security 
        Program Operating Manual and to Regulation DoD 5200.1-
        R, ``Information Security Program,'' and has issued 
        guidance to industry regarding marking and other treaty 
        compliance requirements; and

          (5) that a capability has been established to conduct 
        post-shipment verification, end-use/end-user monitoring 
        and related security audits for Exports under the 
        treaty. This specific certification must also be 
        accompanied by a report setting forth the legal 
        authority, staffing and budget provided for such 
        capability and additional executive branch or 
        congressional action recommended to ensure effective 
        implementation.


Condition 2. Treaty partner preparation for implementation.

    Prior to entry into force of the treaty, the President must 
certify to Congress that the Government of the United Kingdom 
has promulgated all necessary regulatory changes, including: 
changes to export control regulations, changes to the United 
Kingdom Security Policy Framework and related security 
regulations for Government and United Kingdom Industry; and 
changes to the MOD classified Material Release Procedure.

Condition 3. Joint operations, programs, and projects.

    The Secretary of State shall keep the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives informed of the lists of combined 
military and counter-terrorism operations, cooperative security 
and defense research, development, production, and support 
programs, and specific security and defense projects--i.e., the 
programs that define the scope of the treaty pursuant to 
Article 3(1). The Committee on Foreign Affairs is included 
because it, like the Committee on Foreign Relations, has 
jurisdiction over the AECA.

Condition 4. Exempted defense articles.

    Condition 4(A) provides that the President may remove a 
Defense Article from the list Defense Articles exempt from the 
Scope of the treaty, if such removal is not barred by United 
States law, 30 days after the President informs the Committee 
on Foreign Relations of the Senate and the Committee on Foreign 
Affairs of the House of Representatives of such proposed 
removal. The 30-day notice period will give the committees time 
to discuss the proposed removal with the executive branch.
    Under Condition 4(B), when a Defense Article is added to 
the list of Defense Articles exempt from the Scope of the 
treaty, the Secretary of State must provide a copy of the 
Federal Register Notice delineating the policies and procedures 
that will govern the control of such Defense Article, as well 
as an explanation of the reasons for adopting those policies 
and procedures, to the Committee on Foreign Relations and the 
Committee on Foreign Affairs within 5 days of the issuance of 
such Notice.

Condition 5. Changes to the definition of the territory of the United 
        Kingdom.

    Article 1(8) of the treaty allows the UK Government to add 
certain territories to the definition of ``Territory of the 
United Kingdom'' (i.e., beyond the usual ``England and Wales, 
Scotland and Northern Ireland''), an option that is not found 
in the parallel treaty with Australia. Some British territories 
have histories as havens where arms brokers might engage in 
questionable practices (e.g., the Isle of Man, or the Turks and 
Caicos Islands), and there could be questions regarding the UK 
Government's ability to enforce export control and classified 
information laws in some of its territories. Condition (5)(A) 
therefore requires that the Secretary of State inform the 
Committee on Foreign Relations of the Senate and the Committee 
on Foreign Affairs of the House of Representatives within 15 
days of either the initiation of consultations with the United 
Kingdom concerning the inclusion of any additional territory in 
the definition of ``Territory of the United Kingdom'' or the 
receipt through diplomatic channels of notice that a territory 
or group of territories has been added to the definition.
    Under Condition 5(B), the Secretary of State must consult 
with the Committee on Foreign Relations and the Committee on 
Foreign Affairs before approving any addition to the United 
Kingdom Community of a non-governmental entity or facility 
outside the territory of England, Scotland, Wales, or Northern 
Ireland. Thus, if the UK ``Territory'' is enlarged, the 
committees will still be able to weigh in regarding persons in 
the added territory who might be proposed for membership in the 
Approved Community. All this is merely precautionary; the 
committee has no indication at this time that the UK Government 
intends to use the option to change the definition that Article 
1(8) affords.

Condition 6. Approved Community membership.

    Under Condition 6(A), if sanctions are in effect against a 
person in the United Kingdom Community pursuant to section 
73(a)(2)(B) or section 81 of the AECA (22 U.S.C. 2797b(a)(2)(B) 
or 2798), the United States is required to raise the matter 
with the United Kingdom pursuant to Article 4(2) of the treaty 
and Section 7(9) of the Implementing Arrangement. These 
provisions relate to removal of an entity from the United 
Kingdom Approved Community when the requesting Party (either 
the United States or the United Kingdom) considers such removal 
to be in its national interests.
    Condition 6(B) requires the Secretary of State to inform 
the Committee on Foreign Relations of the Senate and the 
Committee on Foreign Affairs of the House of Representatives at 
least five days before the United States Government agrees to 
the initial inclusion in the United Kingdom Community of a 
nongovernmental United Kingdom entity, if the Department of 
State is aware that the entity, or any of its relevant senior 
officers or officials (1) has been convicted of violating a 
statute enumerated in section 38(g)(1) of the AECA; or (2) is, 
or would be if that person were a United States person: (a) 
ineligible to contract with any agency of the U.S. Government; 
(b) ineligible to receive a license or other authorization to 
export from any agency of the U.S. Government; or (c) 
ineligible to receive a license or other authorization to 
import defense articles or defense services from any agency of 
the U.S. Government. The United States has the power to reject 
such a person as a member of the Approved Community, and prior 
notice will give the committees an opportunity to weigh in if 
the UK Government proposes to add such a person or if the State 
Department proposes to grant an exception to an otherwise 
ineligible person.
    If the United States Government agrees to the continued 
inclusion in the United Kingdom Community of a nongovernmental 
United Kingdom entity, when the Department of State is aware 
that the entity, or any one or more of its relevant senior 
officers or officials, raises one or more of the concerns 
referred to in paragraph 6(B), the Secretary of State must 
inform and consult with the Committee on Foreign Relations and 
the Committee on Foreign Affairs not later than 5 days after 
such agreement.

Condition 7. Transition policies and procedures.

    Article 3(3) of the treaty allows the UK Government to 
acquire Defense Articles from the U.S. Government through the 
Foreign Military Sales (FMS) program and then convert them to 
treaty-covered status. The means by which this would be done 
have not yet been determined, however, so this condition 
requires the President to report to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives on these new policies at least 15 
days before they are adopted.
    Similarly, the treaty and Implementing Arrangements allow 
for entities in an Approved Community to move from the 
requirements of United States Government defense export 
licenses or other authorizations issued under the ITAR to the 
processes established under the treaty. Fifteen days before 
formally establishing the procedures for members of the United 
Kingdom Community to transition to processes established under 
the treaty, the President must provide a report on such 
procedures to the Committee on Foreign Relations and the 
Committee on Foreign Affairs.

Condition 8. Congressional oversight.

    To ensure Congress has the information necessary to fulfill 
its oversight responsibilities, the Secretary of State must 
inform the Committee on Foreign Relations of the Senate and the 
Committee on Foreign Affairs of the House of Representatives 
promptly of any report, consistent with Section 11(4)(b)(vi) of 
the Implementing Arrangement, of a material violation of treaty 
requirements or procedures by a member of the Approved 
Community. Further, the Department of State must brief both 
committees regularly regarding issues raised in the Management 
Board called for in Section 12(3) of the Implementing 
Arrangement, and the resolution of such issues.

Condition 9. Annual report.

    The President must submit a report to Congress by March 31, 
2011, and annually thereafter, which covers all treaty 
activities during the previous calendar year.

Understanding 1. Meaning of the phrase ``identified in.''

    The treaty makes occasional reference to matters 
``identified in'' the Implementing Arrangement, where in fact 
the Implementing Arrangement merely says that the Management 
Plan will specify these matters. Understanding (1) is intended 
to make clear that the Senate was aware of, and did not object 
to, that disconnect.

Understanding 2. Meaning of the word ``Scope.''

    This definition was included in the U.S.-Australia Treaty, 
but not in the U.S.-UK Treaty (apparently by accident).

Understanding 3. Cooperative programs with exempt and non-exempt 
        defense articles.

    This understanding makes clear the view of the United 
States that if a cooperative program is mutually determined, 
consistent with Section 2(2)(e) of the Implementing 
Arrangement, to be within the Scope of the treaty pursuant to 
Article 3(1)(b) of the treaty despite involving Defense 
Articles that are exempt from the Scope of the treaty pursuant 
to Article 3(2) of the treaty, the exempt Defense Articles 
shall remain exempt from the Scope of the treaty and the treaty 
shall apply only to non-exempt Defense Articles required for 
the program.

Understanding 4. Investigations and reports of alleged violations.

    This understanding makes clear that Article 10(3)(f) does 
not detract in any way from the obligation in Article 13(3) of 
the treaty for each Party to ``promptly investigate all 
suspected violations and reports of alleged violations of the 
procedures established pursuant to this treaty,'' and to 
``promptly inform the other Party of the results of such 
investigations.''

Understanding 5. Exempt defense articles.

    This understanding makes clear that if one Party to the 
treaty exempts a type of Defense Articles from the scope of the 
treaty pursuant to Article 3(2) of the treaty, then Defense 
Articles of that type will be treated as exempt by both Parties 
to the treaty.

Understanding 6. Intermediate consignees.

    This understanding makes clear that any intermediate 
consignee of an Export from the United States under the treaty 
must be a member of the Approved Community or otherwise 
approved by the United States Government. Accordingly, third-
country persons will not normally be responsible for 
transporting Exports under the treaty.

Understanding 7. Scope of treaty exemption

    This understanding conveys the interpretation of the United 
States that the treaty does not exempt any person or entity 
from any United States statutory and regulatory requirements, 
including any requirements of licensing or authorization, other 
than those included in the ITAR, as modified or amended. The 
United States interprets the term ``license or other written 
authorization'' in Article 2 and the term ``licenses or other 
authorizations'' in Article 6(1), as these terms apply to the 
United States, and the term ``prior written authorization by 
the United States Government'' in Article 7, to refer only to 
such licenses, licensing requirements, and other authorizations 
as are required or issued by the United States pursuant to the 
ITAR, as modified or amended; and the United States interprets 
the reference to ``the applicable licensing requirements and 
the implementing regulations of the United States Arms Export 
Control Act'' in Article 13(1) to refer only to the applicable 
licensing requirements under the ITAR, as modified or amended. 
Among other things, the treaty does not modify or amend the 
authorities related to the permanent import of defense articles 
and services set out in Article 38(a)(1) of the AECA (22 U.S.C. 
2778(a)(1)).

Declaration 1. Self-execution.

    This declaration states that the treaty is not self-
executing in the United States, notwithstanding the statement 
in the preamble to the contrary. The declaration represents the 
shared understanding of the committee and the executive branch. 
(The executive branch conveyed its position on this matter in a 
response to a question for the record submitted on September 
20, 2010.) The treaty will be implemented in the United States 
through legislation and regulations thereunder.
    The committee notes that the inclusion in a treaty of a 
statement on the purported self-executing nature of the treaty 
is highly unusual--perhaps unprecedented--and is contrary to 
the longstanding practice that such matters are determined 
through the shared understanding of the Senate and the 
executive branch. The committee strongly discourages the 
executive branch from including such provisions in future 
treaties.

Declaration 2. Private rights.

    This declaration makes clear that the treaty does not 
confer private rights enforceable in United States courts.

Declaration 3. Intellectual property rights.

    This declaration makes clear that no liability will be 
incurred by or attributed to the United States Government in 
connection with any possible infringement of privately owned 
patent or proprietary rights, either domestic or foreign, by 
reason of the United States Government's permitting Exports or 
Transfers or its approval of Re-exports or Re-transfers under 
the treaty.

VII. Section-by-Section Analysis of Resolution of Advice and Consent to 
  Ratification of the U.S.-Australia Defense Trade Cooperation Treaty


Condition (1). United States preparation for treaty implementation.

    The committee recommends that the Senate condition its 
advice and consent to ratification on a requirement that the 
President take several steps prior to entry into force of the 
treaty.
    At least 15 days prior to entry into force, the President 
must submit a report to Congress that: (1) describes steps 
taken to ensure that the executive branch and United States 
industry are prepared to comply with treaty requirements; (2) 
analyzes the implications of the treaty for the protection of 
intellectual property rights of United States persons; (3) 
explains what steps the United States Government is taking and 
will take to combat improper illegal intangible exports under 
the treaty; and (4) sets forth the issues to be addressed in 
the Management Plan called for by Section 12(3)(f) of the 
Implementing Arrangement and the procedures that are expected 
to be adopted in that Plan.
    Prior to entry into force, the President must certify that 
changes to the ITAR have been published in the Federal Register 
pursuant to the AECA and that such changes would: (1) make 
clear the legal obligation for any person involved in an 
Export, Re-Export, Transfer, or Re-Transfer under the treaty 
(as those terms are defined in the treaty) to comply with all 
requirements in the revised ITAR; (2) make clear the legal 
obligation for Approved Community members to comply with United 
States Government instructions and requirements regarding U.S. 
Defense Articles (as the term is defined in the treaty) added 
to the list of exempt Defense Articles pursuant to Article 3(2) 
of the treaty; limit a person from being a member of the U.S. 
Community pursuant to Article 5(2) of the treaty, if that 
person is generally ineligible to export pursuant to 22 CFR, 
section 120.1(c); and (4) require any nongovernmental entity 
that ceases to be included in the United States Community to 
comply with instructions from authorized United States 
Government officials and to open its records of transactions 
under the treaty to inspection by United States Government and, 
as appropriate, authorized Australian Government, officials 
pursuant to Article 12 of the treaty.
    Prior to entry into force, the President must also certify 
the following:


          (1) that appropriate mechanisms have been established 
        to identify, in connection with the process for 
        determining whether a nongovernmental entity is in the 
        United States Community pursuant to Article 5(2) of the 
        treaty, persons who meet the criteria in section 
        38(g)(1) of the AECA (22 U.S.C. 2778(g)(1)). Section 
        38(g)(1) of the AECA imposes an obligation on the 
        President to develop appropriate mechanisms to 
        identify, in connection with the export licensing 
        process under Section 38, persons who are the subject 
        of an indictment, or have been convicted of a violation 
        of, certain enumerated statutes;

          (2) that appropriate mechanisms have been established 
        to verify that nongovernmental entities in the United 
        States that Export pursuant to the treaty are eligible 
        to export Defense Articles under United States law and 
        regulation as required by Article 5(2) of the treaty;

          (3) that the Department of Homeland Security 
        personnel at U.S. ports: (a) have prompt access to a 
        State Department database containing registered 
        exporters, freight forwarders and consignees, and watch 
        lists regarding U.S. companies; and (b) are prepared to 
        prevent attempts to export pursuant to the treaty by 
        United States persons who are not eligible to export 
        Defense Articles under United States law or regulation;

          (4) that the Secretary of Defense has promulgated 
        appropriate changes to the National Industrial Security 
        Program Operating Manual and to Regulation DoD 5200.1-
        R, ``Information Security Program,'' and has issued 
        guidance to industry regarding marking and other treaty 
        compliance requirements; and

          (5) that a capability has been established to conduct 
        post-shipment verification, end-use/end-user monitoring 
        and related security audits for Exports under the 
        treaty. This specific certification must also be 
        accompanied by a report setting forth the legal 
        authority, staffing and budget provided for such 
        capability and additional executive branch or 
        congressional action recommended to ensure effective 
        implementation.

Condition 2. Treaty partner preparation for implementation.

    Prior to entry into force of the treaty, the President must 
certify to Congress that the Government of Australia has 
enacted legislation to strengthen its controls over defense and 
dual-use goods, including controls over intangible transfers of 
controlled technology and brokering of controlled goods, 
technology, and services, and that the Government of Australia 
has promulgated regulatory changes required to satisfactorily 
implement the treaty regime.

Condition 3. Joint operations, programs, and projects.

    The Secretary of State shall keep the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives informed of the lists of combined 
military and counter-terrorism operations, cooperative security 
and defense research, development, production, and support 
programs, and specific security and defense projects--i.e., the 
programs that define the scope of the treaty pursuant to 
Article 3(1). The Committee on Foreign Affairs is included 
because it, like the Committee on Foreign Relations, has 
jurisdiction over the AECA.

Condition 4. Exempted defense articles.

    Condition 4(A) provides that the President may remove a 
Defense Article from the list Defense Articles exempt from the 
Scope of the treaty, if such removal is not barred by United 
States law, 30 days after the President informs the Committee 
on Foreign Relations of the Senate and the Committee on Foreign 
Affairs of the House of Representatives of such proposed 
removal. The 30-day notice period will give the committees time 
to discuss the proposed removal with the executive branch.
    Under Condition 4(B), when a Defense Article is added to 
the list of Defense Articles exempt from the Scope of the 
treaty, the Secretary of State must provide a copy of the 
Federal Register Notice delineating the policies and procedures 
that will govern the control of such Defense Article, as well 
as an explanation of the reasons for adopting those policies 
and procedures, to the Committee on Foreign Relations and the 
Committee on Foreign Affairs within 5 days of the issuance of 
such Notice.

Condition 5. Approved Community membership.

    Under Condition 6(A), if sanctions are in effect against a 
person in the Australian Community pursuant to section 
73(a)(2)(B) or section 81 of the AECA (22 U.S.C. 2797b(a)(2)(B) 
or 2798), the United States is required to raise the matter 
with Australia pursuant to Article 4(2) of the treaty and 
Section 6(9) of the Implementing Arrangement. These provisions 
relate to removal of an entity from the Australian Approved 
Community when the requesting Party (either the United States 
or Australia) considers such removal to be in its national 
interests.
    Condition 6(B) requires the Secretary of State to inform 
the Committee on Foreign Relations of the Senate and the 
Committee on Foreign Affairs of the House of Representatives at 
least five days before the United States Government agrees to 
the initial inclusion in the Australian Community of a 
nongovernmental Australian entity, if the Department of State 
is aware that the entity, or any of its relevant senior 
officers or officials (1) has been convicted of violating a 
statute enumerated in section 38(g)(1) of the AECA; or (2) is, 
or would be if that person were a United States person: (a) 
ineligible to contract with any agency of the U.S. Government; 
(b) ineligible to receive a license or other authorization to 
export from any agency of the U.S. Government; or (c) 
ineligible to receive a license or other authorization to 
import defense articles or defense services from any agency of 
the U.S. Government. The United States has the power to reject 
such a person as a member of the Approved Community, and prior 
notice will give the committees an opportunity to weigh in if 
the Australian Government proposes to add such a person or if 
the State Department proposes to grant an exception to an 
otherwise ineligible person.
    If the United States Government agrees to the continued 
inclusion in the Australian Community of a nongovernmental 
Australian entity, when the Department of State is aware that 
the entity, or any one or more of its relevant senior officers 
or officials, raises one or more of the concerns referred to in 
paragraph 6(B), the Secretary of State must inform and consult 
with the Committee on Foreign Relations and the Committee on 
Foreign Affairs not later than 5 days after such agreement.

Condition 6. Transition policies and procedures.

    Article 3(3) of the treaty allows the Australian Government 
to acquire Defense Articles from the U.S. Government through 
the Foreign Military Sales (FMS) program and then convert them 
to treaty-covered status. The means by which this would be done 
have not yet been determined, however, so this condition 
requires the President to report to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives on these new policies at least 15 
days before they are adopted.
    Similarly, the treaty and Implementing Arrangements allow 
for entities in an Approved Community to move from the 
requirements of United States Government defense export 
licenses or other authorizations issued under the ITAR to the 
processes established under the treaty. Fifteen days before 
formally establishing the procedures for members of the 
Australian Community to transition to processes established 
under the treaty, the President must provide a report on such 
procedures to the Committee on Foreign Relations and the 
Committee on Foreign Affairs.

Condition 7. Congressional oversight.

    To ensure Congress has the information necessary to fulfill 
its oversight responsibilities, the Secretary of State must 
inform the Committee on Foreign Relations of the Senate and the 
Committee on Foreign Affairs of the House of Representatives 
promptly of any report, consistent with Section 11(6)(f) of the 
Implementing Arrangement, of a material violation of treaty 
requirements or procedures by a member of the Approved 
Community. Further, the Department of State must brief both 
committees regularly regarding issues raised in the Management 
Board called for in Section 12(3) of the Implementing 
Arrangement, and the resolution of such issues.

Condition 8. Annual report.

    The President must submit a report to Congress by March 31, 
2011, and annually thereafter, which covers all treaty 
activities during the previous calendar year.

Understanding 1. Meaning of the phrase ``identified in.''

    The treaty makes occasional reference to matters 
``identified in'' the Implementing Arrangement, where in fact 
the Implementing Arrangement merely says that the Management 
Plan will specify these matters. Understanding (1) is intended 
to make clear that the Senate was aware of, and did not object 
to, that disconnect.

Understanding 2. Cooperative programs with exempt and non-exempt 
        defense articles.

    This understanding makes clear the view of the United 
States that if a cooperative program is mutually determined, 
consistent with Section 2(2)(e) of the Implementing 
Arrangement, to be within the Scope of the treaty pursuant to 
Article 3(1)(b) of the treaty despite involving Defense 
Articles that are exempt from the Scope of the treaty pursuant 
to Article 3(2) of the treaty, the exempt Defense Articles 
shall remain exempt from the Scope of the treaty and the treaty 
shall apply only to non-exempt Defense Articles required for 
the program.

Understanding 3.  Investigations and reports of alleged violations.

    This understanding makes clear that Article 10(3)(f) of the 
Implementing Arrangement does not detract in any way from the 
obligation in Article 13(3) of the treaty for each Party to 
``promptly investigate all suspected violations and reports of 
alleged violations of the procedures established pursuant to 
this treaty,'' and to ``promptly inform the other Party of the 
results of such investigations.''

Understanding 4. Exempt defense articles.

    This understanding makes clear that if one Party to the 
treaty exempts a type of Defense Articles from the scope of the 
treaty pursuant to Article 3(2) of the treaty, then Defense 
Articles of that type will be treated as exempt by both Parties 
to the treaty.

Understanding 5.  Intermediate consignees.

    This understanding makes clear that any intermediate 
consignee of an Export from the United States under the treaty 
must be a member of the Approved Community or otherwise 
approved by the United States Government. Accordingly, third-
country persons will not normally be responsible for 
transporting Exports under the treaty.

Understanding 6. Scope of treaty exemption

    This understanding conveys the interpretation of the United 
States that the treaty does not exempt any person or entity 
from any United States statutory and regulatory requirements, 
including any requirements of licensing or authorization, other 
than those included in the ITAR, as modified or amended. The 
United States interprets the term ``license or other written 
authorization'' in Article 2 and the term ``licenses or other 
authorizations'' in Article 6(1), as these terms apply to the 
United States, and the term ``prior written authorization by 
the United States Government'' in Article 7, to refer only to 
such licenses, licensing requirements, and other authorizations 
as are required or issued by the United States pursuant to the 
ITAR, as modified or amended; and the United States interprets 
the reference to ``the applicable licensing requirements and 
the implementing regulations of the United States Arms Export 
Control Act'' in Article 13(1) to refer only to the applicable 
licensing requirements under the ITAR, as modified or amended. 
Among other things, the treaty does not modify or amend the 
authorities related to the permanent import of defense articles 
and services set out in Article 38(a)(1) of the AECA (22 U.S.C. 
2778).

Declaration 1. Self-execution.

    This declaration states that the treaty is not self-
executing in the United States, notwithstanding the statement 
in the preamble to the contrary. The declaration represents the 
shared understanding of the committee and the executive branch. 
(The executive branch conveyed its position on this matter in a 
response to a question for the record submitted on September 
20, 2010.) The treaty will be implemented in the United States 
through legislation and regulations thereunder.
    The committee notes that the inclusion in a treaty of a 
statement on the purported self-executing nature of the treaty 
is highly unusual--perhaps unprecedented--and is contrary to 
the longstanding practice that such matters are determined 
through the shared understanding of the Senate and the 
executive branch. The committee strongly discourages the 
executive branch from including such provisions in future 
treaties.

Declaration 2. Private rights.

    This declaration makes clear that the treaty does not 
confer private rights enforceable in United States courts.

Declaration 3. Intellectual property rights.

    This declaration makes clear that no liability will be 
incurred by or attributed to the United States Government in 
connection with any possible infringement of privately owned 
patent or proprietary rights, either domestic or foreign, by 
reason of the United States Government's permitting Exports or 
Transfers or its approval of Re-exports or Re-transfers under 
the treaty.

                VIII. Text of Resolutions of Advice and 
                        Consent to Ratification


              THE U.S.-UK DEFENSE TRADE COOPERATION TREATY

    Resolved (two-thirds of the Senators present concurring 
therein),

SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO CONDITIONS, 
                    UNDERSTANDINGS AND DECLARATIONS.

    The Senate advises and consents to the ratification of the 
Treaty with the United Kingdom Concerning Defense Trade 
Cooperation (as defined in section 5 of this resolution), 
subject to the conditions in section 2, the understandings in 
section 3 and the declarations in section 4.

SECTION 2. CONDITIONS.

    The Senate's advice and consent to the ratification of the 
Treaty with the United Kingdom Concerning Defense Trade 
Cooperation is subject to the following conditions, which shall 
be binding upon the President:
    (1) United States Preparation for Treaty Implementation.
    (A) At least 15 days before any exchange of notes pursuant 
to Article 20 of the Treaty, the President shall submit to the 
Congress a report--
          (i) describing steps taken to ensure that the 
        Executive branch and United States industry are 
        prepared to comply with Treaty requirements;
          (ii) analyzing the implications of the Treaty, and 
        especially of Article 3(3) of the Treaty, for the 
        protection of intellectual property rights of United 
        States persons;
          (iii) explaining what steps the United States 
        Government is taking and will take to combat improper 
        or illegal intangible exports (i.e., exports as defined 
        in part 120.17(a)(4) of title 22, Code of Federal 
        Regulations) under the Treaty; and
          (iv) setting forth the issues to be addressed in the 
        Management Plan called for by Section 12(3)(f) of the 
        Implementing Arrangement and the procedures that are 
        expected to be adopted in that Plan.
    (B) Before any exchange of notes pursuant to Article 20 of 
the Treaty, the President shall submit to the Congress a 
certification that changes to the International Traffic in Arms 
Regulations (parts 120-130 of title 22, Code of Federal 
Regulations) have been published in the Federal Register 
pursuant to the Arms Export Control Act, as appropriate, that 
would, upon entry into force of the Treaty,--
          (i) make clear the legal obligation for any person 
        involved in an Export, Re-export, Transfer, or Re-
        transfer under the Treaty to comply with all 
        requirements in the revised International Traffic in 
        Arms Regulations, including by taking all reasonable 
        steps to ensure the accuracy of information received 
        from a member of the Approved Community that is party 
        to an Export, Re-export, Transfer, or Re-transfer under 
        the Treaty;
          (ii) make clear the legal obligation for Approved 
        Community members to comply with United States 
        Government instructions and requirements regarding 
        United States Defense Articles added to the list of 
        exempt Defense Articles pursuant to Article 3(2) of the 
        Treaty;
          (iii) limit a person from being a member of the 
        United States Community, pursuant to Article 5(2) of 
        the Treaty, if that person is generally ineligible to 
        export pursuant to section 120.1(c) of title 22, Code 
        of Federal Regulations; and
          (iv) require any nongovernmental entity that ceases 
        to be included in the United States Community to comply 
        with instructions from authorized United States 
        Government officials and to open its records of 
        transactions under the Treaty to inspection by United 
        States Government and, as appropriate, authorized 
        United Kingdom Government officials pursuant to Article 
        12 of the Treaty.
    (C) Before any exchange of notes pursuant to Article 20 of 
the Treaty, the President shall submit to the Congress--
          (i) a certification that appropriate mechanisms have 
        been established to identify, in connection with the 
        process for determining whether a nongovernmental 
        entity is in the United States Community pursuant to 
        Article 5(2) of the Treaty, persons who meet the 
        criteria in section 38(g)(1) of the Arms Export Control 
        Act (22 U.S.C. 2778(g)(1));
          (ii) a certification that appropriate mechanisms have 
        been established to verify that nongovernmental 
        entities in the United States that Export pursuant to 
        the Treaty are eligible to export Defense Articles 
        under United States law and regulation as required by 
        Article 5(2) of the Treaty;
          (iii) a certification that United States Department 
        of Homeland Security personnel at United States ports--
                  (a) have prompt access to a State Department 
                database containing registered exporters, 
                freight forwarders and consignees, and watch 
                lists regarding United States companies; and
                  (b) are prepared to prevent attempts to 
                export pursuant to the Treaty by United States 
                persons who are not eligible to export Defense 
                Articles under United States law or regulation, 
                even if such person has registered with the 
                United States Government;
          (iv) a certification that the Secretary of Defense 
        has promulgated appropriate changes to the National 
        Industrial Security Program Operating Manual and to 
        Regulation DoD 5200.1-R, ``Information Security 
        Program,'' and has issued guidance to industry 
        regarding marking and other Treaty compliance 
        requirements; and
          (v) a certification that a capability has been 
        established to conduct post-shipment verification, end-
        use/end-user monitoring and related security audits for 
        Exports under the Treaty, accompanied by a report 
        setting forth the legal authority, staffing and budget 
        provided for this capability and any further Executive 
        branch or congressional action recommended to ensure 
        its effective implementation.
    (2) Treaty Partner Preparation for Treaty Implementation.
    Before any exchange of notes pursuant to Article 20 of the 
Treaty, the President shall certify to Congress that the 
Government of the United Kingdom has promulgated all necessary 
regulatory changes, including:
          (A) changes to export control regulations, setting 
        forth a Treaty-specific Open General Export License 
        (OGEL);
          (B) changes to the United Kingdom Security Policy 
        Framework and related security regulations for 
        Government and United Kingdom Industry; and
          (C) changes to the MOD Classified Material Release 
        Procedure (F680), to take account of Treaty Re-exports 
        and Re-transfers.
    (3) Joint Operations, Programs and Projects.
    The Secretary of State shall keep the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives informed of the lists of combined 
military and counter-terrorism operations developed pursuant to 
Article 3(1)(a) of the Treaty; cooperative security and defense 
research, development, production, and support programs 
developed pursuant to Article 3(1)(b) of the Treaty; and 
specific security and defense projects developed pursuant to 
article 3(1)(c) of the Treaty.
    (4) Exempted Defense Articles.
          (A) The President may remove a Defense Article from 
        the list of Defense Articles exempt from the Scope of 
        the Treaty, if such removal is not barred by United 
        States law, 30 days after the President informs the 
        Committee on Foreign Relations of the Senate and the 
        Committee on Foreign Affairs of the House of 
        Representatives of such proposed removal.
          (B) When a Defense Article is added to the list of 
        Defense Articles exempt from the Scope of the Treaty, 
        the Secretary of State shall provide a copy of the 
        Federal Register Notice delineating the policies and 
        procedures that will govern the control of such Defense 
        Article, consistent with Section 4(7) of the 
        Implementing Arrangement, as well as an explanation of 
        the reasons for adopting those policies and procedures, 
        to the Committee on Foreign Relations of the Senate and 
        the Committee on Foreign Affairs of the House of 
        Representatives within five days of the issuance of 
        such Notice.
    (5) Changes to the Definition of the Territory of the 
United Kingdom.
          (A) The Secretary of State shall inform the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives within 
        15 days of the initiation of consultations with the 
        United Kingdom concerning the inclusion of any 
        additional territory or territories in the definition 
        of ``Territory of the United Kingdom'' for the purposes 
        of Article 1(8) of the Treaty, and shall inform the 
        Committees within 15 days of receipt through diplomatic 
        channels of notice that a territory or group of 
        territories has been added to the definition of 
        ``Territory of the United Kingdom'' for the purposes of 
        Article 1(8) of the Treaty.
          (B) The Secretary of State shall consult with the 
        Committee on Foreign Relations of the Senate and the 
        Committee on Foreign Affairs of the House of 
        Representatives before approving any addition to the 
        United Kingdom Community of a non-governmental entity 
        or facility outside the territory of England, Scotland, 
        Wales, or Northern Ireland.
    (6) Approved Community Membership.
          (A) If sanctions are in effect against a person in 
        the United Kingdom Community pursuant to section 
        73(a)(2)(B) or section 81 of the Arms Export Control 
        Act (22 U.S.C. 2797b(a)(2)(B) or 2798), the United 
        States shall raise the matter pursuant to Article 4(2) 
        of the Treaty and Section 7(9) of the Implementing 
        Arrangement.
          (B) The Secretary of State shall inform the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives not 
        later than 5 days before the U.S. Government agrees to 
        the initial inclusion in the United Kingdom Community 
        of a nongovernmental United Kingdom entity, if the 
        Department of State is aware that the entity, or any 
        one or more of its relevant senior officers or 
        officials:
                  (i) Has been convicted of violating a statute 
                cited in paragraph 38(g)(1) of the Arms Export 
                Control Act (22 U.S.C. 2778(g)(1)); or
                  (ii) is, or would be if that person were a 
                United States person,
                          (a) ineligible to contract with any 
                        agency of the U.S. Government;
                          (b) ineligible to receive a license 
                        or other form of authorization to 
                        export from any agency of the U.S. 
                        Government; or
                          (c) ineligible to receive a license 
                        or any form of authorization to import 
                        defense articles or defense services 
                        from any agency of the U.S. Government.
          (C) The Secretary of State shall inform and consult 
        with the Committee on Foreign Relations of the Senate 
        and the Committee on Foreign Affairs of the House of 
        Representatives not later than 5 days after the United 
        States Government agrees to the continued inclusion in 
        the United Kingdom Community of a nongovernmental 
        United Kingdom entity, if the Department is aware that 
        the entity, or any one or more of its relevant senior 
        officers or officials, raises one or more of the 
        concerns referred to in paragraph (B).
    (7) Transition Policies and Procedures.
          (A) No fewer than 15 days before formally 
        establishing the procedures called for in Section 5(5) 
        of the Implementing Arrangement, the President shall 
        provide to the Committee on Foreign Relations of the 
        Senate and the Committee on Foreign Affairs of the 
        House of Representatives a report concerning the 
        policies and procedures developed to govern the 
        transition to the application of the Treaty, pursuant 
        to Article 3(3) of the Treaty, of Defense Articles 
        acquired and delivered under the Foreign Military Sales 
        program.
          (B) No fewer than 15 days before formally 
        establishing the procedures called for in Section 8(2) 
        of the Implementing Arrangement, the President shall 
        provide to the Committee on Foreign Relations of the 
        Senate and the Committee on Foreign Affairs of the 
        House of Representatives a report concerning the 
        policies and procedures developed to govern the members 
        of the United Kingdom Community wishing to transition 
        to the processes established under the Treaty, pursuant 
        to Article 14(2) of the Treaty, from the requirements 
        of a United States Government export license or other 
        authorization.
    (8) Congressional Oversight.
          (A) The Secretary of State shall inform the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives 
        promptly of any report, consistent with Section 
        11(4)(b)(vi) of the Implementing Arrangement, of a 
        material violation of Treaty requirements or procedures 
        by a member of the Approved Community.
          (B) The Department of State shall brief the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives 
        regularly regarding issues raised in the Management 
        Board called for in Section 12(3) of the Implementing 
        Arrangement, and the resolution of such issues.
    (9) Annual Report.
    Not later than March 31, 2011, and annually thereafter, the 
President shall submit to Congress a report, which shall cover 
all Treaty activities during the previous calendar year. This 
report shall include:
          (A) a summary of the amount of Exports under the 
        Treaty and of Defense Articles transitioned into the 
        Treaty, with an analysis of how the Treaty is being 
        used;
          (B) a list of all political contributions, gifts, 
        commissions and fees paid, or offered or agreed to be 
        paid, by any person in connection with Exports of 
        Defense Articles under the Treaty in order to solicit, 
        promote, or otherwise to secure the conclusion of such 
        sales;
          (C) any action to remove from the United Kingdom 
        Community a nongovernmental entity or facility 
        previously engaged in activities under the Treaty, 
        other than due to routine name or address changes or 
        mergers and acquisitions;
          (D) any concerns relating to infringement of 
        intellectual property rights that were raised to the 
        President or an Executive branch Department or Agency 
        by Approved Community members, and developments 
        regarding any concerns that were raised in previous 
        years;
          (E) a description of any relevant investigation and 
        each prosecution pursued with respect to activities 
        under the Treaty, the results of such investigations or 
        prosecutions and of such investigations and 
        prosecutions that continued over from previous years, 
        and any shortfalls in obtaining prompt notification 
        pursuant to Article 13(3) of the Treaty or in 
        cooperation between the Parties pursuant to Article 
        13(3) and (4) of the Treaty;
          (F) a description of any post-shipment verification, 
        end-user/end-use monitoring, or other security activity 
        related to Treaty implementation conducted during the 
        year, the purposes of such activity and the results 
        achieved; and
          (G) any Office of Inspector General activity bearing 
        upon Treaty implementation conducted during the year, 
        any resultant findings or recommendations, and any 
        actions taken in response to current or past findings 
        or recommendations.

SECTION 3. UNDERSTANDINGS.

    The Senate's advice and consent to the ratification of the 
Treaty with the United Kingdom Concerning Defense Trade 
Cooperation is subject to the following understandings, which 
shall be included in the instrument of ratification:
    (1) Meaning of the Phrase ``Identified in.''
    It is the understanding of the United States that the 
phrase ``identified in'' in the Treaty shall be interpreted as 
meaning ``identified pursuant to.''
    (2) Meaning of the Word ``Scope.''
    It is the understanding of the United States that the word 
``Scope'' in the Treaty shall be interpreted as meaning ``the 
Treaty's coverage as identified in Article 3.''
    (3) Cooperative Programs With Exempt and Non-Exempt Defense 
Articles.
    It is the understanding of the United States that if a 
cooperative program is mutually determined, consistent with 
Section 2(2)(e) of the Implementing Arrangement, to be within 
the Scope of the Treaty pursuant to Article 3(1)(b) of the 
Treaty despite involving Defense Articles that are exempt from 
the Scope of the Treaty pursuant to Article 3(2) of the Treaty, 
the exempt Defense Articles shall remain exempt from the Scope 
of the Treaty and the Treaty shall apply only to non-exempt 
Defense Articles required for the program.
    (4) Investigations and Reports of Alleged Violations.
    It is the understanding of the United States that the words 
``as appropriate'' in Section 10(3)(f) of the Implementing 
Arrangement do not detract in any way from the obligation in 
Article 13(3) of the Treaty, that ``Each Party shall promptly 
investigate all suspected violations and reports of alleged 
violations of the procedures established pursuant to this 
Treaty, and shall promptly inform the other Party of the 
results of such investigations.''
    (5) Exempt Defense Articles.
    It is the understanding of the United States that if one 
Party to the Treaty exempts a type of Defense Articles from the 
scope of the Treaty pursuant to Article 3(2) of the Treaty, 
then Defense Articles of that type will be treated as exempt by 
both Parties to the Treaty.
    (6) Intermediate Consignees.
    It is the understanding of the United States that any 
intermediate consignee of an Export from the United States 
under the Treaty must be a member of the Approved Community or 
otherwise approved by the United States Government.
    (7) Scope of Treaty Exemption.
    The United States interprets the Treaty not to exempt any 
person or entity from any United States statutory and 
regulatory requirements, including any requirements of 
licensing or authorization, other than those included in the 
International Traffic in Arms Regulations, as modified or 
amended. Accordingly, the United States interprets the term 
'license or other written authorization' in Article 2 and the 
term `licenses or other authorizations' in Article 6(1), as 
these terms apply to the United States, and the term 'prior 
written authorization by the United States Government' in 
Article 7, to refer only to such licenses, licensing 
requirements, and other authorizations as are required or 
issued by the United States pursuant to the International 
Traffic in Arms Regulations, as modified or amended; and the 
United States interprets the reference to 'the applicable 
licensing requirements and the implementing regulations of the 
United States Arms Export Control Act' in Article 13(1) to 
refer only to the applicable licensing requirements under the 
International Traffic in Arms Regulations, as modified or 
amended.

SECTION 4. DECLARATIONS.

    The Senate's advice and consent to the ratification of the 
Treaty with the United Kingdom Concerning Defense Trade 
Cooperation is subject to the following declarations:
    (1) Self-execution.
    This Treaty is not self-executing in the United States, 
notwithstanding the statement in the preamble to the contrary.
    (2) Private Rights.
    This Treaty does not confer private rights enforceable in 
United States courts.
    (3) Intellectual Property Rights.
    No liability will be incurred by or attributed to the 
United States Government in connection with any possible 
infringement of privately owned patent or proprietary rights, 
either domestic or foreign, by reason of the United States 
Government's permitting Exports or Transfers or its approval of 
Re-exports or Re-transfers under the Treaty.

SECTION 5. DEFINITIONS.

    As used in this resolution:
    (1) The terms ``Treaty with the United Kingdom Concerning 
Defense Trade Cooperation'' and ``Treaty'' mean the Treaty 
between the Government of the United States of America and the 
Government of the United Kingdom of Great Britain and Northern 
Ireland Concerning Defense Trade Cooperation, done at 
Washington and London on June 21 and 26, 2007.
    (2) The terms ``Implementing Arrangement Pursuant to the 
Treaty'' and ``Implementing Arrangement'' mean the Implementing 
Arrangement Pursuant to the Treaty between the Government of 
the United States of America and the Government of the United 
Kingdom of Great Britain and Northern Ireland Concerning 
Defense Trade Cooperation, which was signed in Washington on 
February 14, 2008.
    (3) The terms ``Defense Articles,'' ``Export,'' ``Re-
export,'' ``Re-transfer,'' ``Transfer,'' ``Approved 
Community,'' ``United States Community,'' ``United Kingdom 
Community,'' and ``Territory of the United Kingdom'' have the 
meanings given to them in Article 1 of the Treaty.
    (4) The terms ``Management Board'' and ``Management Plan'' 
have the meanings given to them in Section 1 of the 
Implementing Arrangement.
    (5) The terms ``person'' and ``foreign person'' have the 
meaning given to them by section 38(g)(9) of the Arms Export 
Control Act (22 U.S.C. 2778(g)(9)). The term ``U.S. person'' 
has the meaning given to it by part 120.15 of title 22, Code of 
Federal Regulations.

                              ----------                              


          THE U.S.-AUSTRALIA DEFENSE TRADE COOPERATION TREATY

    Resolved (two-thirds of the Senators present concurring 
therein),

SECTION 1. SENATE ADVICE AND CONSENT SUBJECT TO CONDITIONS, 
                    UNDERSTANDINGS AND DECLARATIONS.

    The Senate advises and consents to the ratification of the 
Treaty with Australia Concerning Defense Trade Cooperation (as 
defined in section 5 of this resolution), subject to the 
conditions in section 2, the understandings in section 3 and 
the declarations in section 4.

SECTION 2. CONDITIONS.

    The Senate's advice and consent to the ratification of the 
Treaty with Australia Concerning Defense Trade Cooperation is 
subject to the following conditions, which shall be binding 
upon the President:
    (1) United States Preparation for Treaty Implementation.
          (A) At least 15 days before any exchange of notes 
        pursuant to Article 20 of the Treaty, the President 
        shall submit to the Congress a report--
                  (i) describing steps taken to ensure that the 
                Executive branch and United States industry are 
                prepared to comply with Treaty requirements;
                  (ii) analyzing the implications of the 
                Treaty, and especially of Article 3(3) of the 
                Treaty, for the protection of intellectual 
                property rights of United States persons;
                  (iii) explaining what steps the United States 
                Government is taking and will take to combat 
                improper or illegal intangible exports (i.e., 
                exports as defined in part 120.17(a)(4) of 
                title 22, Code of Federal Regulations) under 
                the Treaty; and
                  (iv) setting forth the issues to be addressed 
                in the Management Plan called for by Section 
                12(3)(f) of the Implementing Arrangement and 
                the procedures that are expected to be adopted 
                in that Plan.
          (B) Before any exchange of notes pursuant to Article 
        20 of the Treaty, the President shall submit to the 
        Congress a certification that changes to the 
        International Traffic in Arms Regulations (parts 120-
        130 of title 22, Code of Federal Regulations) have been 
        published in the Federal Register pursuant to the Arms 
        Export Control Act, as appropriate, that would, upon 
        entry into force of the Treaty,--
                  (i) make clear the legal obligation for any 
                person involved in an Export, Re-export, 
                Transfer, or Re-transfer under the Treaty to 
                comply with all requirements in the revised 
                International Traffic in Arms Regulations, 
                including by taking all reasonable steps to 
                ensure the accuracy of information received 
                from a member of the Approved Community that is 
                party to an Export, Re-export, Transfer, or Re-
                transfer under the Treaty;
                  (ii) make clear the legal obligation for 
                Approved Community members to comply with 
                United States Government instructions and 
                requirements regarding United States Defense 
                Articles added to the list of exempt Defense 
                Articles pursuant to Article 3(2) of the 
                Treaty;
                  (iii) limit a person from being a member of 
                the United States Community, pursuant to 
                Article 5(2) of the Treaty, if that person is 
                generally ineligible to export pursuant to 
                section 120.1(c) of title 22, Code of Federal 
                Regulations; and
                  (iv) require any nongovernmental entity that 
                ceases to be included in the United States 
                Community to comply with instructions from 
                authorized United States Government officials 
                and to open its records of transactions under 
                the Treaty to inspection by United States 
                Government and, as appropriate, authorized 
                Australian Government officials pursuant to 
                Article 12 of the Treaty.
          (C) Before any exchange of notes pursuant to Article 
        20 of the Treaty, the President shall submit to the 
        Congress--
                  (i) a certification that appropriate 
                mechanisms have been established to identify, 
                in connection with the process for determining 
                whether a nongovernmental entity is in the 
                United States Community pursuant to Article 
                5(2) of the Treaty, persons who meet the 
                criteria in section 38(g)(1) of the Arms Export 
                Control Act (22 U.S.C. 2778(g)(1));
                  (ii) a certification that appropriate 
                mechanisms have been established to verify that 
                nongovernmental entities in the United States 
                that Export pursuant to the Treaty are eligible 
                to export Defense Articles under United States 
                law and regulation as required by Article 5(2) 
                of the Treaty;
                  (iii) a certification that United States 
                Department of Homeland Security personnel at 
                United States ports--
                          (a) have prompt access to a State 
                        Department database containing 
                        registered exporters, freight 
                        forwarders and consignees, and watch 
                        lists regarding United States 
                        companies; and
                          (b) are prepared to prevent attempts 
                        to export pursuant to the Treaty by 
                        United States persons who are not 
                        eligible to export Defense Articles 
                        under United States law or regulation, 
                        even if such person has registered with 
                        the United States Government;
                  (iv) a certification that the Secretary of 
                Defense has promulgated appropriate changes to 
                the National Industrial Security Program 
                Operating Manual and to Regulation DoD 5200.1-
                R, ``Information Security Program,'' and has 
                issued guidance to industry regarding marking 
                and other Treaty compliance requirements; and
                  (v) a certification that a capability has 
                been established to conduct post-shipment 
                verification, end-use/end-user monitoring and 
                related security audits for Exports under the 
                Treaty, accompanied by a report setting forth 
                the legal authority, staffing and budget 
                provided for this capability and any further 
                Executive branch or congressional action 
                recommended to ensure its effective 
                implementation.
    (2) Treaty Partner Preparation for Treaty Implementation.
    Before any exchange of notes pursuant to Article 20 of the 
Treaty, the President shall certify to Congress that the 
Government of Australia has--
          (A) enacted legislation to strengthen generally its 
        controls over defense and dual-use goods, including 
        controls over intangible transfers of controlled 
        technology and brokering of controlled goods, 
        technology, and services, and setting forth:
                  (i) the criteria for entry into the 
                Australian Community and the conditions 
                Australian Community members must abide by to 
                maintain membership, including personnel, 
                information and facilities security 
                requirements;
                  (ii) the record-keeping and notification and 
                reporting requirements under the Treaty;
                  (iii) the handling, marking and 
                classification requirements for United States 
                and Australian Defense Articles Exported or 
                Transferred under the Treaty;
                  (iv) the requirements for Exports and 
                Transfers of United States Defense Articles 
                outside the Approved Community or to a third 
                country;
                  (v) the rules for handling United States 
                Defense Articles that are added to or removed 
                from the list of items exempted from Treaty 
                application;
                  (vi) the rules for transitioning into and out 
                of the Australian Community;
                  (vii) auditing, monitoring and investigative 
                powers for Commonwealth officials and powers to 
                allow Commonwealth officials to perform post-
                shipment verifications and end-use/end-user 
                monitoring; and
                  (viii) offenses and penalties, and 
                administrative requirements, necessary for the 
                enforcement of the Treaty and its Implementing 
                Arrangement; and
          (B) promulgated regulatory changes setting forth:
                  (i) the criteria for entry into the 
                Australian Community, and terms for maintaining 
                Australian Community membership;
                  (ii) the criteria for individuals to become 
                authorized to access United States Defense 
                Articles received pursuant to the Treaty;
                  (iii) benefits stemming from Australian 
                Community membership, including a framework for 
                license-free trade with the United States in 
                classified or controlled items falling within 
                the scope of the Treaty;
                  (iv) the conditions Australian Community 
                members must abide by to maintain membership, 
                including:
                          (a) record-keeping and notification 
                        requirements;
                          (b) marking and classification 
                        requirements for defense articles 
                        Exported or Transferred under the 
                        Treaty;
                          (c) requirements for the Re-transfer 
                        to non-Approved Community members and 
                        Re-export to a third country of defense 
                        articles; and
                          (d) maintaining security standards 
                        and measures articulated in Defense 
                        protective security policy to protect 
                        defense articles pursuant to the 
                        Treaty;
                  (v) provisions to enforce the procedures 
                established pursuant to the Treaty, including 
                auditing and monitoring powers for Australian 
                Department of Defence officials and powers to 
                allow Department of Defence officials to 
                perform post-shipment verifications and end-
                use/end-user monitoring;
                  (vi) offenses and penalties, including 
                administrative and criminal penalties and 
                suspension and termination from the Australian 
                Community, to enforce the provisions of the 
                Treaty; and
                  (vii) requirements and standards for 
                transition into or out of the Australian 
                Community and Treaty framework.
    (3) Joint Operations, Programs and Projects.
    The Secretary of State shall keep the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of 
the House of Representatives informed of the lists of combined 
military and counter-terrorism operations developed pursuant to 
Article 3(1)(a) of the Treaty; cooperative security and defense 
research, development, production, and support programs 
developed pursuant to Article 3(1)(b) of the Treaty; and 
specific security and defense projects developed pursuant to 
article 3(1)(c) of the Treaty.
    (4) Exempted Defense Articles.
          (A) The President may remove a Defense Article from 
        the list of Defense Articles exempt from the Scope of 
        the Treaty, if such removal is not barred by United 
        States law, 30 days after the President informs the 
        Committee on Foreign Relations of the Senate and the 
        Committee on Foreign Affairs of the House of 
        Representatives of such proposed removal.
          (B) When a Defense Article is added to the list of 
        Defense Articles exempt from the Scope of the Treaty, 
        the Secretary of State shall provide a copy of the 
        Federal Register Notice delineating the policies and 
        procedures that will govern the control of such Defense 
        Article, consistent with Section 4(7) of the 
        Implementing Arrangement, as well as an explanation of 
        the reasons for adopting those policies and procedures, 
        to the Committee on Foreign Relations of the Senate and 
        the Committee on Foreign Affairs of the House of 
        Representatives within five days of the issuance of 
        such Notice.
    (5) Approved Community Membership.
          (A) If sanctions are in effect against a person in 
        the Australian Community pursuant to section 
        73(a)(2)(B) or section 81 of the Arms Export Control 
        Act (22 U.S.C. 2797b(a)(2)(B) or 2798), the United 
        States shall raise the matter pursuant to Article 4(2) 
        of the Treaty and Section 6(9) of the Implementing 
        Arrangement.
          (B) The Secretary of State shall inform the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives not 
        later than 5 days before the U.S. Government agrees to 
        the initial inclusion in the Australian Community of a 
        nongovernmental Australian entity, if the Department of 
        State is aware that the entity, or any one or more of 
        its relevant senior officers or officials:
                  (i) Has been convicted of violating a statute 
                cited in paragraph 38(g)(1) of the Arms Export 
                Control Act (22 U.S.C. 2778(g)(1)); or
                  (ii) is, or would be if that person were a 
                United States person,
                          (a) ineligible to contract with any 
                        agency of the U.S. Government;
                          (b) ineligible to receive a license 
                        or other form of authorization to 
                        export from any agency of the U.S. 
                        Government; or
                          (c) ineligible to receive a license 
                        or any form of authorization to import 
                        defense articles or defense services 
                        from any agency of the U.S. Government.
          (C) The Secretary of State shall inform and consult 
        with the Committee on Foreign Relations of the Senate 
        and the Committee on Foreign Affairs of the House of 
        Representatives not later than 5 days after the United 
        States Government agrees to the continued inclusion in 
        the Australian Community of a nongovernmental 
        Australian entity, if the Department is aware that the 
        entity, or any one or more of its relevant senior 
        officers or officials, raises one or more of the 
        concerns referred to in paragraph (B).
    (6) Transition Policies and Procedures.
          (A) No fewer than 15 days before formally 
        establishing the procedures called for in Section 5(5) 
        of the Implementing Arrangement, the President shall 
        provide to the Committee on Foreign Relations of the 
        Senate and the Committee on Foreign Affairs of the 
        House of Representatives a report concerning the 
        policies and procedures developed to govern the 
        transition to the application of the Treaty, pursuant 
        to Article 3(3) of the Treaty, of Defense Articles 
        acquired and delivered under the Foreign Military Sales 
        program.
          (B) No fewer than 15 days before formally 
        establishing the procedures called for in Section 7(2) 
        of the Implementing Arrangement, the President shall 
        provide to the Committee on Foreign Relations of the 
        Senate and the Committee on Foreign Affairs of the 
        House of Representatives a report concerning the 
        policies and procedures developed to govern the members 
        of the Australian Community wishing to transition to 
        the processes established under the Treaty, pursuant to 
        Article 14(2) of the Treaty, from the requirements of a 
        United States Government export license or other 
        authorization.
    (7) Congressional Oversight.
          (A) The Secretary of State shall inform the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives 
        promptly of any report, consistent with Section 
        11(6)(f) of the Implementing Arrangement, of a material 
        violation of Treaty requirements or procedures by a 
        member of the Approved Community.
          (B) The Department of State shall brief the Committee 
        on Foreign Relations of the Senate and the Committee on 
        Foreign Affairs of the House of Representatives 
        regularly regarding issues raised in the Management 
        Board called for in Section 12(3) of the Implementing 
        Arrangement, and the resolution of such issues.
    (8) Annual Report.
    Not later than March 31, 2011, and annually thereafter, the 
President shall submit to Congress a report, which shall cover 
all Treaty activities during the previous calendar year. This 
report shall include:
          (A) a summary of the amount of Exports under the 
        Treaty and of Defense Articles transitioned into the 
        Treaty, with an analysis of how the Treaty is being 
        used;
          (B) a list of all political contributions, gifts, 
        commissions and fees paid, or offered or agreed to be 
        paid, by any person in connection with Exports of 
        Defense Articles under the Treaty in order to solicit, 
        promote, or otherwise to secure the conclusion of such 
        sales;
          (C) any action to remove from the Australian 
        Community a nongovernmental entity or facility 
        previously engaged in activities under the Treaty, 
        other than due to routine name or address changes or 
        mergers and acquisitions;
          (D) any concerns relating to infringement of 
        intellectual property rights that were raised to the 
        President or an Executive branch Department or Agency 
        by Approved Community members, and developments 
        regarding any concerns that were raised in previous 
        years;
          (E) a description of any relevant investigation and 
        each prosecution pursued with respect to activities 
        under the Treaty, the results of such investigations or 
        prosecutions and of such investigations and 
        prosecutions that continued over from previous years, 
        and any shortfalls in obtaining prompt notification 
        pursuant to Article 13(3) of the Treaty or in 
        cooperation between the Parties pursuant to Article 
        13(3) and (4) of the Treaty;
          (F) a description of any post-shipment verification, 
        end-user/end-use monitoring, or other security activity 
        related to Treaty implementation conducted during the 
        year, the purposes of such activity and the results 
        achieved; and
          (G) any Office of Inspector General activity bearing 
        upon Treaty implementation conducted during the year, 
        any resultant findings or recommendations, and any 
        actions taken in response to current or past findings 
        or recommendations.

SECTION 3. UNDERSTANDINGS.

    The Senate's advice and consent to the ratification of the 
Treaty with Australia Concerning Defense Trade Cooperation is 
subject to the following understandings, which shall be 
included in the instrument of ratification:
    (1) Meaning of the Phrase ``Identified In.''
    It is the understanding of the United States that the 
phrase ``identified in'' in the Treaty shall be interpreted as 
meaning ``identified pursuant to.''
    (2) Cooperative Programs With Exempt and Non-Exempt Defense 
Articles.
    It is the understanding of the United States that if a 
cooperative program is mutually determined, consistent with 
Section 2(2)(e) of the Implementing Arrangement, to be within 
the Scope of the Treaty pursuant to Article 3(1)(b) of the 
Treaty despite involving Defense Articles that are exempt from 
the Scope of the Treaty pursuant to Article 3(2) of the Treaty, 
the exempt Defense Articles shall remain exempt from the Scope 
of the Treaty and the Treaty shall apply only to non-exempt 
Defense Articles required for the program.
    (3) Investigations and Reports of Alleged Violations.
    It is the understanding of the United States that the words 
``as appropriate'' in Section 10(3)(f) of the Implementing 
Arrangement do not detract in any way from the obligation in 
Article 13(3) of the Treaty, that ``Each Party shall promptly 
investigate all suspected violations and reports of alleged 
violations of the procedures established pursuant to this 
Treaty, and shall promptly inform the other Party of the 
results of such investigations.''
    (4) Exempt Defense Articles.
    It is the understanding of the United States that if one 
Party to the Treaty exempts a type of Defense Articles from the 
scope of the Treaty pursuant to Article 3(2) of the Treaty, 
then Defense Articles of that type will be treated as exempt by 
both Parties to the Treaty.
    (5) Intermediate Consignees.
    It is the understanding of the United States that any 
intermediate consignee of an Export from the United States 
under the Treaty must be a member of the Approved Community or 
otherwise approved by the United States Government.
    (6) Scope of Treaty Exemption.
    The United States interprets the Treaty not to exempt any 
person or entity from any United States statutory and 
regulatory requirements, including any requirements of 
licensing or authorization, other than those included in the 
International Traffic in Arms Regulations, as modified or 
amended. Accordingly, the United States interprets the term 
`license or other written authorization' in Article 2 and the 
term `licenses or other authorizations' in Article 6(1), as 
these terms apply to the United States, and the term `prior 
written authorization by the United States Government' in 
Article 7, to refer only to such licenses, licensing 
requirements, and other authorizations as are required or 
issued by the United States pursuant to the International 
Traffic in Arms Regulations, as modified or amended; and the 
United States interprets the reference to `the applicable 
licensing requirements and the implementing regulations of the 
United States Arms Export Control Act' in Article 13(1) to 
refer only to the applicable licensing requirements under the 
International Traffic in Arms Regulations, as modified or 
amended.

SECTION 4. DECLARATIONS.

    The Senate's advice and consent to the ratification of the 
Treaty with Australia Concerning Defense Trade Cooperation is 
subject to the following declarations:
    (1) Self-execution.
    This Treaty is not self-executing in the United States, 
notwithstanding the statement in the preamble to the contrary.
    (2) Private Rights.
    This Treaty does not confer private rights enforceable in 
United States courts.
    (3) Intellectual Property Rights.
    No liability will be incurred by or attributed to the 
United States Government in connection with any possible 
infringement of privately owned patent or proprietary rights, 
either domestic or foreign, by reason of the United States 
Government's permitting Exports or Transfers or its approval of 
Re-exports or Re-transfers under the Treaty.

SECTION 5. DEFINITIONS.

    As used in this resolution:
    (1) The terms ``Treaty with Australia Concerning Defense 
Trade Cooperation'' and ``Treaty'' mean the Treaty between the 
Government of the United States of America and the Government 
of Australia Concerning Defense Trade Cooperation, done at 
Sydney, September 5, 2007.
    (2) The terms ``Implementing Arrangement Pursuant to the 
Treaty'' and ``Implementing Arrangement'' mean the Implementing 
Arrangement Pursuant to the Treaty between the Government of 
the United States of America and the Government of Australia 
Concerning Defense Trade Cooperation, which was signed in 
Washington on March 14, 2008.
    (3) The terms ``Defense Articles,'' ``Export,'' ``Re-
export,'' ``Re-transfer,'' ``Transfer,'' ``Approved 
Community,'' ``United States Community,'' ``Australian 
Community,'' and ``Scope'' have the meanings given to them in 
Article 1 of the Treaty.
    (4) The terms ``Management Board'' and ``Management Plan'' 
have the meanings given to them in Section 1 of the 
Implementing Arrangement.
    (5) The terms ``person'' and ``foreign person'' have the 
meaning given to them by section 38(g)(9) of the Arms Export 
Control Act (22 U.S.C. 2778(g)(9)). The term ``U.S. person'' 
has the meaning given to it by part 120.15 of title 22, Code of 
Federal Regulations.

               IX. Letter From Senators Levin and Warner











X. Hearing on the Defense Trade Cooperation Treaties, December 10, 2009






                                TREATIES

                              ----------                              


                      THURSDAY, DECEMBER 10, 2009

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:04 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. John F. Kerry 
(chairman of the committee) presiding.
    Present: Senators Kerry, Feingold, Shaheen, Kaufman, and 
Lugar.

             OPENING STATEMENT OF HON. JOHN KERRY,
                U.S. SENATOR FROM MASSACHUSETTS

    The Chairman. The hearing will come to order. Thank you all 
for being here. I apologize for a slightly late start.
    Today, obviously, we meet to consider treaties with two of 
our closest allies, the United Kingdom and Australia. These are 
treaties that would change how our country controls arms 
exports and shares military technology. The committee actually 
first took testimony on these treaties in May of last year, so 
this is the second hearing that we are devoting to this, and 
there's a reason for that.
    The commercial exports of U.S. defense articles and know-
how currently require a license from the State Department, as 
do later retransfers to a third party or country. If an export 
or retransfer is above a certain value, the Department has to 
inform Congress prior to issuing a license. During the time 
that this has been in effect, Congress has never enacted a 
resolution to block a proposed sale. But our authority to do so 
gives Congress a voice in the transactions with significant 
implications for our national security.
    America maintains arms export controls so that we can keep 
our weapons and technology from falling into the wrong hands to 
the best of our ability to do so. We do not want American 
weapons to contribute to human rights abuses, fuel 
destabilizing regional conflicts, or be used against us or our 
allies. And we reject any arms deal that violates our 
international obligations.
    Our arms control export system imposes administrative 
burdens and delays that have wound up hindering legitimate 
trade and defense cooperation. And this has been a major issue 
with our friends, and particularly in this case with Great 
Britain and Australia. It is particularly hindering in the case 
of cooperation required for joint weapons development programs. 
And sometimes, frankly, it makes sense to try to streamline the 
process.
    We have done this under existing law for many arms exports 
to Canada, a close ally whose export controls largely mirror 
our own. It is hard to make an argument that either the United 
Kingdom or Australia don't rise to the same level of friendship 
and the same relationship with the United States as Canada.
    We have important joint defense projects with both 
Australia and Great Britain--the United Kingdom--and the 
overwhelming majority of all arms export license requests 
involving them are approved. Our countries' forces obviously 
serve and die together in Afghanistan and elsewhere.
    Australia and the United Kingdom's laws, however, differ 
from ours. And neither country, for different reasons, can 
guarantee an iron-clad control under its export control law 
over retransfers of U.S. defense articles or technology to 
third or fourth parties.
    The United Kingdom's European Union treaty obligations, for 
example, prevent it from meeting the requirements of United 
States law for an exemption like Canada's. Therefore, the 
treaties before us seek to incorporate a new approach to get 
rid of these hurdles between us, streamline this operation and 
behave the way good friends ought to behave.
    For arms exports relating to an approved set of joint 
projects or operations, these treaties allow all but the most 
sensitive U.S. arms and know-how to be exported without a case-
by-case State Department approval.
    Within the United Kingdom and Australia, only government 
entities and jointly approved--jointly approved--private 
companies and facilities will have access to weapons and know-
how. And the United Kingdom or Australia will treat exports and 
transfers under the treaty not just as defense articles or 
defense services, but also as classified information.
    This means that British or Australian users will need a 
security clearance and they will be bound by security standards 
applied to classified information. If the United States export 
is improperly handled or diverted, those found to have done so 
will face prosecution under United Kingdom or Australian 
national security laws, as well as export control laws.
    The treaties leave a number of blanks that need to be 
filled in, so our committee has pressed the Executive to 
provide that additional information. At last year's hearing, 
the State Department was able to promise that draft regulations 
would be provided; then the Department of Justice warned that 
the committee needed to evaluate the initial State Department 
draft for the possibility that it might imperil prosecutions of 
individuals or companies who violate the treaties' terms. And 
so that's the process we've been engaged in.
    In the intervening year, some significant progress has been 
made. The State Department produced draft regulations that 
reassured the Justice Department, which then told the committee 
that implementing legislation would not be needed to enable 
them to pursue court action against violators.
    On the basis of this progress, we are now holding today's 
hearing; and I intend to move forward in drafting and passing a 
resolution of advice and consent to ratification.
    Now, nobody in any treaty like this can predict with 
certainty exactly how every step of the actual work in practice 
is going to unfold. But I am convinced that the political and 
national defense benefits of advancing these treaties outweighs 
any risks.
    We will have some work to do after the Senate acts with 
respect to authorities and protections concerning arms export 
established by existing law. And we can remedy, I believe, 
those things as we do go forward, and I think people are 
comfortable with that notion. But I see no need to hold up the 
treaties' entry into force while we do those ongoing tweaks, if 
you will. We should move ahead and trust that the benefits of 
this relationship with both the United Kingdom and Australia 
far outweigh any of these rather marginal questions that, I 
think, exist.
    I'm pleased to welcome today Andrew Shapiro, the Assistant 
Secretary of State for Political-Military Affairs. He's well 
known to many of us, here, from his years as, then-Senator 
Clinton's national defense aide.
    And Associate Deputy Attorney General James Baker is a 
career Justice Department official, and well-known for his 
exemplary service as head of the Office of Intelligence Policy 
and Review.
    And gentlemen, we welcome both of you here, and look 
forward to your testimonies.
    Before that, I recognize Senator Lugar.

              STATEMENT OF HON. RICHARD G. LUGAR,
                   U.S. SENATOR FROM INDIANA

    Senator Lugar. Well, thank you very much, Mr. Chairman.
    Today, as you pointed out, we consider pending defense 
trade treaties with the United Kingdom and Australia. And I 
join you in welcoming our witnesses, Mr. Andrew Shapiro, 
Assistant Secretary of State for Political-Military Affairs, 
and Mr. James Baker, Associate Deputy Attorney General.
    This, as you also pointed out, is the committee's second 
hearing on these treaties. During our first hearing in May 
2008, I noted that I supported the goal of these treaties and 
believed that, if carefully implemented, they could enhance our 
national security. During 2008, however, the Bush 
administration did not resolve many questions about the 
treaties' implementation and enforcement. Also unresolved were 
questions about how the treaties would affect congressional 
oversight and the Senate's role in the treaty-making process.
    In 2003, the Bush administration requested waivers to 
provisions in the Arms Export Control Act for bilateral 
agreements with the United Kingdom and Australia. Those 
bilateral agreements would have created lists of individuals in 
the United Kingdom and Australia who qualified to receive 
unlicensed exports from the United States of what the Bush 
administration called ``low-sensitivity, unclassified defense 
items.''
    Then, in 2007, the Bush administration negotiated and 
submitted the treaties that we are discussing today. The 
treaties loosen restrictions more than the 2003 bilateral 
agreements. They create a set of new compliance procedures, 
permit exports of both classified and unclassified items, and 
apply to both commercial arms sales and to government sales 
under the Foreign Military Sales Program.
    They also rely on ``implementing arrangements'' that are 
not being submitted for advice and consent, even though these 
arrangements govern the operation of the treaties.
    Among the major issues considered at the hearing in 2008 
were proposed amendments to the International Traffic in Arms 
Regulations to implement the treaties in the United States. 
President Bush promised in his letter transmitting the treaties 
to the Senate to provide these amendments to us. The final 
draft regulations, however, did not arrive in the Senate until 
September 2008.
    Unfortunately, neither the implementing arrangements, nor 
the regulations clarified how enforcement would work. The State 
Department subsequently stated that the treaties would create a 
``safe harbor'' for defense trade. The executive branch 
insisted it had created a strong system for ensuring 
enforcement and compliance by relying on classification laws in 
the United Kingdom and Australia. But it is not clear how 
enforcement will occur in the United States under a safe 
harbor.
    We look forward to learning from our witnesses today how 
this safe harbor will work and how it will ensure enforcement 
in the United States.
    A purpose of these treaties is to eliminate export licenses 
for defense articles being sold to the United Kingdom and 
Australia. The treaties specify that groups in the United 
States, the United Kingdom, and Australia may export and 
receive unlicensed defense articles if they are a part of the 
``Approved Community.'' The license-free regime applies to 
classified defense exports and sensitive defense technologies.
    Some sensitive defense articles and information would still 
require licenses; however, the lists of such items may change 
with time.
    The Foreign Relations Committee needs to understand how the 
administration will enforce against abuses of the treaties. If 
a person in the United States Approved Community makes a 
license-free export, but then diverts the export to 
unauthorized recipients, what recourse will the United States 
law enforcement authorities have? What authorities and 
resources are needed to effectively investigate and prosecute 
such conduct?
    We also must understand fully how the treaties affect 
Congress' ability to oversee arms exports. By exempting exports 
from the Arms Export Control Act, the treaties eliminate 
advance notification to Congress of exports or retransfers of 
defense articles exported to the United Kingdom and Australia.
    Another important point in need of clarification is the 
procedure required to make significant changes in the treaty 
regimes after they are approved. Under most treaties approved 
by the Senate, such changes may only be made by treaty 
amendments submitted to the Senate for approval. If changes can 
be made to these defense trade treaties through other means, 
the Senate may well have concerns.
    In the case of these treaties, vital details are contained 
in the so-called ``implementing arrangements'' rather than in 
the texts of the treaties. These implementing arrangements 
address the treaties' scope and effect, including categories of 
items that may be exported without licenses, persons and 
entities in each country receiving license-free exports, rules 
on retransfers of items under the treaties, and arrangements 
for cooperation in enforcement.
    The executive branch did not submit these ``implementing 
arrangements'' to the Senate for its advice and consent. This 
suggests that changes might be made to critical treaty 
components without Senate approval. The administration needs to 
explain in detail its intent in excluding these ``implementing 
arrangements'' from advice and consent.
    Likewise, the Obama administration should inform the 
committee, and the entire Congress, whether it intends to 
negotiate similar treaties with additional countries. The Bush 
administration stated it would not seek additional defense 
trade treaties.
    I look forward to addressing these important questions and 
issues with today's witnesses. And once again, we are very 
pleased you gentlemen are with us.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Lugar. And I appreciate 
the series of questions that you raise, all of which are 
important. And we look forward to having good dialogue on it.
    Secretary Shapiro, if you would lead off, and Deputy 
General, if you'd follow? Thanks.

 STATEMENT OF ANDREW SHAPIRO, ASSISTANT SECRETARY OF STATE FOR 
POLITICAL-MILITARY AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Shapiro. Mr. Chairman, Senator Lugar, thank you for 
holding this hearing and for the opportunity to testify before 
the committee on the bilateral defense trade cooperation 
treaties between the United States and the United Kingdom, and 
the United States and Australia. The administration strongly 
supports ratification of these two treaties.
    Mr. Chairman, I will deliver a brief oral statement, but 
also ask that the committee enter my written statement into the 
record.
    The Chairman. Without objection, it will be.
    Mr. Shapiro. First, I would like to thank the members of 
the committee and the committee staff for their diligent work 
on this initiative. Our interaction on these treaties has been 
invaluable. The insights and questions provided by the 
committee and its staff have helped to guide this 
administration's review of the treaties and informed the 
detailed regulations that the State Department will publish if 
the treaties are ratified.
    This administration has conducted an exhaustive review of 
the treaties and their effect on our national security and 
foreign policy interests. I have met with officials from the 
United Kingdom and Australia to discuss the treaties and their 
importance to our bilateral relationships. We have worked 
closely with the Department of Defense to evaluate the 
treaties' ability to enhance interoperability with these 
important partners, while maintaining our national security 
interests.
    We have also worked with the Department of Justice and the 
Department of Homeland Security to ensure that the provisions 
of the treaties can be implemented and enforced under current 
U.S. law. Today, I affirm to you that the President and his 
administration fully support the treaties and believe they 
would establish a stable framework for enhancing our strategic 
relationships with these two key allies.
    When we speak about the details of these two treaties, it 
can be easy to lose sight of the exceedingly important role 
that they are designed to play. I would like to share one 
example with you.
    When U.S. and coalition forces are attacked, an IED 
explodes, or a suicide bomber murders civilians, conducting a 
forensic investigation of the scene is essential. The 
information gained by such an investigation helps determine the 
sources of insurgent arms, ammunition, and explosives; it 
supports efforts to stem the flow of arms to insurgents. And it 
helps us to identify ways in which we can better protect our 
forces in combat.
    Our military has highlighted the fact that there is an 
urgent need to improve current capabilities in this key area. 
The treaties would enhance U.S. industry's ability to engage in 
technical discussions on this subject with United Kingdom and 
Australian companies. Such companies could provide solutions to 
technological challenges, reduce costs, and accelerate delivery 
of expeditionary forensic capabilities to coalition forces.
    Without the treaties, the ability of engineers and other 
scientists to even discuss the export controlled technology 
associated with expeditionary forensic capabilities are subject 
to many more bureaucratic processes and proceed much less 
seamlessly than they would with the treaty regime in place. I 
assure you that the benefits, such as more efficient delivery 
of key capabilities to our servicemembers would not be gained 
at the expense of our responsibility to protect U.S. defense 
technologies.
    Under the treaty regime, the United States and its treaty 
partners would be able to prosecute cases under their national 
laws that involve transactions that do not satisfy the 
requirements and obligations that the parties would establish 
to implement the treaties.
    Along with these gains, the treaties would also recognize 
and support the longstanding special relationship that the 
United States, the United Kingdom, and Australia share. We have 
long worked together to develop advanced strategic 
technologies; technologies that have provided the advantage to 
help win two World Wars, protected lives, and advanced our 
countries' interests in numerous conflicts.
    United States/United Kingdom and United States/Australian 
cooperation on radar, initially developed and employed by the 
U.K. in the 1930s continues to this day. More recently, U.K.-
developed counter-IED technology has been used by all three 
nations to better protect against this deadly threat.
    These treaties come at a time when the United States, 
United Kingdom, and Australian forces are once again working 
together on the battlefield to protect our collective security. 
Ensuring that our forces can get the best technology in the 
most expeditious manner possible, and that they possess 
critical interoperability is essential to our success, not only 
today's campaigns, but also in future efforts to address shared 
security challenges.
    The treaties would also foster an even more competitive 
defense marketplace with these allies, and would create an 
environment that would help support the U.S. defense industrial 
base, and the jobs that it provides to Americans.
    The Defense Trade Cooperation treaties with the United 
Kingdom and Australia support United States foreign policy and 
national security interests. They would fortify our bilateral 
relations with important partners, support our joint operations 
overseas, and foster the expeditious development of 
technologies that are critical to current and future security 
efforts. They would accomplish this while allowing us to 
continue to protect critical U.S. defense technologies.
    On behalf of the administration, I encourage the Senate to 
provide its advice and consent to ratification of these 
treaties.
    [The prepared statement of Mr. Shapiro follows:]

  Prepared Statement of Assistant Secretary Andrew Shapiro, Bureau of 
    Political-Military Affairs, Department of State, Washington, DC

    Mr. Chairman, thank you for holding this hearing and for the 
opportunity to testify before the committee on the two bilateral 
defense trade cooperation treaties between the United States and the 
United Kingdom (Treaty Document 110-7), and the United States and 
Australia (Treaty Document 110-10). The ratification of these Treaties 
is strongly supported by this administration.
    First, I would like to take this opportunity to thank the members 
of the committee and the committee staff for their diligent work on 
this initiative. Our interaction with the committee on these Treaties 
has been invaluable. The insights and questions provided by the 
committee have helped to guide this administration's review of the 
Treaties and informed the detailed draft regulations that the State 
Department will publish once the Treaties are ratified.
    This administration has conducted an exhaustive review of the 
Treaties and their effect on United States national security and 
foreign policy interests. I have met officials from the United Kingdom 
and Australia to discuss the Treaties and their importance to our 
bilateral relationships. We have worked closely with representatives 
from the Department of Defense to evaluate the Treaties' ability to 
enhance interoperability with these important partners, while 
maintaining our national security interests. We have also worked with 
the Department of Justice and the Department of Homeland Security in 
order to ensure that the provisions of the Treaties can be implemented 
and enforced under current U.S. law. Today, I affirm to you that the 
President and his administration fully support the Treaties and believe 
they will establish a stable framework through which we can enhance our 
strategic relationship and battlefield readiness with these two key 
allies in the future.
    When we speak about the details of these Treaties and the framework 
that they establish, it is easy to lose sight of the exceedingly 
important role that these Treaties are designed to play. I would like 
to share a few examples with you.
    When United States and coalition forces are attacked, an IED 
explodes, or a suicide bomber murders civilians, conducting a forensic 
investigation of the scene is essential. The information gained by such 
an investigation helps determine the sources of insurgent arms, 
ammunition, and explosives; it greatly supports the gathering and 
analysis of intelligence, which helps us stem the flow of arms to 
insurgents. It allows us to identify ways in which we can better 
protect our forces in combat and it allows us to identify the dead and 
to prosecute the guilty. Our military has highlighted the fact that 
there is an urgent need to improve current capabilities in this key 
area. The Office of the Under Secretary of Defense for Acquisition, 
Technology and Logistics has stated that the Treaties, if ratified, 
could facilitate United States, United Kingdom, or Australian research 
and development that is needed to meet this urgent need. The Department 
of Defense has already awarded a number of contracts in this area, and 
the Treaties would enhance United States industry's ability to engage 
in technical discussions on this subject with United Kingdom and 
Australian companies. Such companies could provide solutions to 
technological challenges, reduce costs, and accelerate delivery of 
expeditionary forensic capabilities to coalition forces. Without the 
Treaties, the ability of engineers and other scientists to just discuss 
the export controlled technology associated with expeditionary forensic 
capabilities could be subject to many more bureaucratic processes and 
proceed much less seamlessly than with the Treaty exemption regime in 
place. In this case, the Treaties could be used to help meet this 
urgent need more effectively and even more quickly.
    Another urgent requirement is the need to field nonlethal 
capabilities for counterpiracy and maritime counterterrorism. The 
Department of Defense is actively pursuing development and acquisition 
of a range of nonlethal technologies and equipment in this area. The 
Department of Defense would like to work with U.K. and Australian naval 
authorities and acquisition organizations through cooperative programs 
and international contractor teaming. As with cooperation on forensics 
discussed above, the Treaties' streamlined export control arrangements 
would allow U.K. and Australian companies to work more seamlessly with 
U.S. firms to meet this urgent requirement. Furthermore, the United 
States and its key allies would gain more timely and flexible access to 
Australian and U.K. firms, which could develop more time-responsive, 
affordable solutions.
    Real world technologies that are needed urgently today to save 
lives could be developed more quickly using the system that the 
Treaties, if ratified, would create.
    The Treaties also recognize and support the longstanding special 
relationship that the United States, the United Kingdom, and Australia 
share. Since World War I, the United States and the United Kingdom have 
worked together to develop advanced strategic technologies; 
technologies that provided the advantage to help us win two World Wars, 
protect lives, and advance our countries' interests in numerous 
conflicts. The alliance between the United States and Australia was 
also forged on the battlefields of World War II, and as Australia's 
industrial base began to flourish, our economic and strategic 
relationship grew.
    We have a long history of scientific and technological cooperation 
from which our nations have benefited. The combination of the British 
Merlin engine with the American-developed P-51 airframe resulted in the 
best fighter aircraft of World War II. United States-United Kingdom and 
United States-Australian cooperation in radar--initially developed and 
employed by the U.K. in the 1930s--continues to this day. U.K.-
developed counterimprovised explosive device (IED) technology has been 
used by all three nations to improve systems that protect against this 
deadly threat in Iraq and Afghanistan.
    These examples of cooperation in defense development, production, 
and support among the United States, Australia, and the United Kingdom 
illustrate the breadth and depth of the industrial dimension of our 
alliances. The Treaties, if ratified, will help the United States and 
these key allies develop and field the next generation technology that 
is needed to save lives and protect our countries' security and foreign 
policy interests. The Treaties would accomplish this by streamlining 
the processes by which certain controlled items are transferred between 
the United States and the United Kingdom or Australia. Specifically, 
the Treaties will provide the President with the authority to 
promulgate regulations that will allow, without prior written 
authorization, the export or transfer of certain defense articles and 
defense services controlled pursuant to the International Traffic in 
Arms Regulations (ITAR) between the United States and the United 
Kingdom or between the United States and Australia, when in support of:

          1. Combined military and counterterrorism operations;
          2. Cooperative security and defense research, development, 
        production, and support programs;
          3. Mutually agreed security and defense projects where the 
        end-user is the Government of the United Kingdom or the 
        Government of Australia; or
          4. U.S. Government end-use.

    The U.S. Government will maintain its authority over which foreign 
end-users may have access to ITAR-controlled items under the Treaties 
by mutually agreeing with the Government of the United Kingdom, and 
with the Government of Australia, on an ``Approved Community'' of 
private sector entities that may receive defense articles and defense 
services under the Treaties. Further, not all ITAR-controlled items 
will be eligible for export under the Treaties. We have identified such 
ineligible items in a proposed ``Exemption List,'' which was carefully 
developed with the Department of Defense, and provided to the 
committee.
    Both the United Kingdom and Australia have agreed to protect 
defense items exported from the United States under the Treaties using 
their national laws and regulations. These laws and regulations govern 
exports of controlled goods and technologies and safeguard classified 
information and material. This is an extremely important Treaty 
benefit; that is, the United Kingdom and Australia have agreed to 
classify as ``Restricted'' otherwise unclassified ITAR-controlled 
defense articles exported from the United States pursuant to the 
Treaty. This subjects all handling, exports and reexports to the 
respective classified information laws and regulations. Under these 
legal authorities, the United Kingdom and Australia will require prior 
United States approval, in addition to their own governments' approval, 
for the reexport or retransfer of such items outside the Approved 
Community. In addition, we have agreed with the United Kingdom and 
Australia on detailed compliance and enforcement measures, to be 
imposed on members of each Community. These measures were negotiated by 
United States Government representatives from the Departments of State, 
Justice, Homeland Security, and Defense. These details, and others 
related to the implementation of the Treaties, are contained in the 
``Implementing Arrangements'' called for in both Treaties.
    Both the United States and its treaty partners will be able to 
prosecute cases involving exports, reexports and transfers that do not 
satisfy the specific requirements and obligations that the parties will 
establish to implement the Treaties.
    We have determined that, if ratified, the Treaties would be 
implemented in the United States through federal regulations. First, 
the Department would promulgate regulations that would create an 
exemption from the requirement of a license under the Arms Export 
Control Act for particular, specified exports to the United Kingdom and 
Australia. Such regulations would require an exporter to meet certain 
conditions in order to take advantage of the exemptions contemplated by 
the treaties. New regulations would also independently prohibit certain 
exports that do not satisfy the conditions that must be met in order to 
come within the Treaty-based safe harbor. The latter regulations would 
be enforceable criminally pursuant to section 38(c) of the act and 
administratively pursuant to section 38(e) of the act. With this 
approach, we are confident that the Treaties and the United States 
underlying export-control framework can be robustly enforced. We very 
much appreciate the discussions that we had with the committee on this 
matter.
    Beyond the specifics of how the regime established by the Treaties 
will function, it is important to understand how they would 
significantly advance many aspects of our bilateral relationships with 
the United Kingdom and Australia and support Unites States foreign 
policy and national security interests.
    The United States, United Kingdom, and Australia have strong 
economic ties. Perhaps reflective of our shared cultures, customs, and 
language, the United States is the largest supplier of foreign direct 
investment in the United Kingdom and Australia. Likewise, the United 
Kingdom is the largest investor in the United States, while Australia 
is the eighth largest. In the defense sector, there are several large 
joint ventures between the firms of our nations, and many of these 
firms own subsidiaries in the United States, United Kingdom and 
Australia. United States, Australian and United Kingdom companies often 
work together on joint development projects. These partnerships help to 
leverage financial and technological resources between our nations. 
They have resulted in the development of technologies that are used to 
enhance the security of our nations and protect life.
    The institutionalized reforms in these Treaties will create 
opportunities for more efficient exchanges between our defense firms 
and those of the United Kingdom and Australia, many of which specialize 
in development, production, and support of critical equipment needed to 
fight and win current and future conflicts.
    The Treaties will create an even more competitive defense 
marketplace with these allies. In order to successfully confront future 
conflicts and security challenges, it is important to maintain critical 
industrial and engineering capabilities in the United States. In order 
to accomplish this, United States companies must have opportunities to 
compete and the ability to compete effectively. United States industry 
depends upon exports to maintain its proficiency and financial health. 
These Treaties would create an environment that would support the U.S. 
defense industrial base and the jobs that it provides to Americans.
    These Treaties come at a time when United States, United Kingdom, 
and Australian forces are once again working together on the 
battlefield to protect our collective security. Ensuring that our 
forces can get the best technology possible in the most expeditious 
manner possible and that they possess the critical capability of 
interoperability is essential to our success, not only in today's 
campaigns, but also in future conflicts. Our nations will continue to 
rely upon each other in the future as we continue to fight violent 
extremism and address other shared security challenges.
    United States, Australian, and United Kingdom forces deployed in 
current and future operations must continue to be able to rely upon the 
equipment produced by our three nations' defense establishments to 
fight and win against our collective adversaries. Past experience tells 
us that the United States, the United Kingdom, and Australia will 
continue to train and operate together as partners. A streamlined 
export control environment under the Treaties with these key allies 
would enhance opportunities for future development of defense 
technology. Greater agility in development, and economies of scale in 
production and support, will result in more timely delivery of much-
needed capabilities to our forces while reducing costs. This in turn 
will yield increased battlefield effectiveness, as all three nations' 
forces will be outfitted with common, interoperable, and supportable 
force protection, weapons, intelligence, surveillance, and 
reconnaissance, logistics, and command, control, and communications 
systems.
    We must recognize the economic and strategic importance of 
facilitating legitimate and secure trade between our nations. The 
Treaties help to accomplish this objective.
    I assure you that these benefits are not gained at the expense of 
our responsibility to protect U.S. defense technologies. As I noted 
before, we have excluded the most sensitive defense articles from 
Treaty eligibility. In both countries, only security-cleared entities 
and staff with a need to know may have access to items exported under 
the Treaties. Furthermore, Approved Community members will continue to 
have detailed recordkeeping requirements and would be subject to 
auditing, monitoring, and verification measures to ensure compliance 
and to aid in the investigation of potential violations.
    The Defense Trade Cooperation Treaties with the United Kingdom and 
Australia support U.S. foreign policy and national security interests. 
They fortify our bilateral relations with important partners; they 
support our joint operations overseas, and they will foster the 
expeditious development of technologies that are critical to current 
and future military, counterterrorism, and security efforts. They 
accomplish this while allowing us to continue to protect critical U.S. 
defense technologies. On behalf of the administration, I encourage the 
Senate to provide its advice and consent to ratification of these 
Treaties.

    The Chairman. Thank you very much.

 STATEMENT OF JAMES BAKER, ASSOCIATE DEPUTY ATTORNEY GENERAL, 
             DEPARTMENT OF JUSTICE, WASHINGTON, DC

    Mr. Baker. Mr. Chairman, Ranking Member Lugar, members of 
the committee, thank you very much for inviting the Department 
of Justice to testify at this hearing today on ratification of 
the two treaties that are before you.
    I'm pleased to discuss the Department's role in the fight 
against the illegal exportation of sensitive technology, and 
how the Department would enforce provisions of the two treaties 
to try to prevent such diversion.
    I've submitted a written statement to the committee and I 
ask that it be make part of the record.
    The Chairman. Without objection, it will be.
    Mr. Baker. And I will focus only on a few points from my 
statement in my oral remarks here today.
    As the committee is aware, the Arms Export Control Act, or 
AECA, governs international defense cooperation including the 
sale and export of weapons, and is used to prevent foreign 
powers and entities from acquiring weapons of mass destruction 
and sensitive technologies.
    The AECA authorizes the President to establish a munitions 
list and to create a licensing regime to control the export of 
defense articles and defense services. Through Executive order, 
the President delegated this authority to the Secretary of 
State who--through subordinate officers--issued the 
International Traffic in Arms Regulations, or ITARs--setting up 
a licensing regime and export regulations. Under the ITARs, 
certain persons and entities must register with the Department 
of State, and obtain a license prior to exporting defense 
articles or providing defense services.
    The treaties establish approved communities of governmental 
agencies and private companies that may export or import 
defense articles without such licenses. In brief, the treaties 
allow approved private companies in the United Kingdom and 
Australia to obtain certain defense articles and defense 
services from the United States without otherwise required 
export licenses from the Department of State.
    The safe harbors that will be available under the 
regulations promulgated pursuant to the treaties will also 
permit members of an Approved Community to transfer defense 
articles on the U.S. Munitions List to another Approved 
Community member without having to obtain a license.
    The Implementing Arrangements provide specifications 
related to the implementation of the treaties, including how 
items exported under the treaties will be protected and how 
entities may become members of the Approved Community. These 
provisions were negotiated following signature of the treaties.
    The Implementing Arrangements also establish procedures for 
the United States and United Kingdom, on the one hand, and the 
United States and Australia, on the other, to share records and 
conduct audits and investigations. The Implementing 
Arrangements contemplate that, following ratification of the 
treaties, the United States would promulgate regulations to 
clarify the scope of the safe harbors and ensure that conduct 
falling outside of the designated safe harbors will be subject 
to the AECA's civil and criminal enforcement regime.
    A transaction that fully complies with the safe harbor 
established by regulations promulgated pursuant to the treaties 
would not be subject to criminal or civil penalties under AECA. 
Conversely, a transaction falling outside of the designated 
safe harbors would remain fully subject to the civil and 
criminal enforcement measures under the AECA. As the Department 
has stated previously, no new authorizing legislation would be 
required to prosecute such a violation.
    Under Supreme Court precedent, because the treaties are 
self-executing, they are ``equivalent to an act of the 
legislature'' for purposes of Federal law. Upon ratification of 
the treaties, therefore, the President would have the authority 
to issue regulations pursuant to the treaties themselves to 
create exemptions from the applicable licensing requirements of 
the AECA and ITAR and establish the designated safe harbors 
contemplated by the treaties.
    In addition, the President would have the authority to 
promulgate regulations under section 38(a)(1) of the AECA to 
make conduct falling outside the designated safe harbors 
subject to the enforcement regime of the AECA. These 
regulations will establish conditions for persons exporting or 
transferring pursuant to the treaties, and an export or 
transfer that fails to satisfy those conditions would be 
enforceable through both criminal and civil sanctions.
    Mr. Chairman, that concludes my opening statement. Again, I 
would like to thank the committee for the opportunity to appear 
before you today to discuss the treaties and the enforcement of 
our export laws. And I look forward to any questions that the 
committee may have.
    [The prepared statement of Mr. Baker follows:]

    Prepared Statement of James A. Baker, Associate Deputy Attorney 
             General, Department of Justice, Washington, DC

    Senator Kerry, Ranking Member Lugar, and members of the committee, 
my name is James A. Baker, and I am an Associate Deputy Attorney 
General, with responsibility for national security matters. Thank you 
for inviting the Department of Justice (``the Department'') to testify 
at this hearing on ratification of two treaties: (1) The Treaty Between 
the Government of the United States of America and the Government of 
the United Kingdom of Great Britain and Northern Ireland Concerning 
Defense Trade Cooperation (June 21 and 26, 2007), S. Treaty Doc. 110-7 
(``U.S.-UK Treaty''); and (2) the Treaty Between the Government of the 
United States of America and the Government of Australia Concerning 
Defense Trade Cooperation (Sept. 5, 2007), S. Treaty Doc. 110-10 
(``U.S.-Australia Treaty'') (collectively, the ``Treaties''). I am 
pleased to discuss the Department's role in the fight against illegal 
export of sensitive technology and how the Department would enforce the 
provisions of the two Treaties to try to prevent such diversion.
    I would like to emphasize one point regarding the Treaties from the 
Department's perspective. That is, the export regime established by the 
Treaties can be created without the need for any implementing 
legislation. The President has full authority under the Treaties and 
existing law to create the regime, including the authority to prohibit 
certain export activities. Indeed, with relatively minor regulatory 
amendments, we will have sufficient legal authorities to prosecute 
criminally, and to take administrative action against, persons and 
companies who violate the requirements of the regime, including 
diverting defense articles beyond participants in the regime.
    the threat of illegal acquisition of restricted u.s. technology
    With the United States producing the most advanced technology in 
the world, it has become a primary target of illicit technology 
acquisition schemes by foreign states, criminals, and terrorist groups. 
The U.S. Government, defense sector, private companies and research 
institutions are routinely targeted as sources of arms, technology, and 
other materials. The items sought from America in these illegal schemes 
are as diverse as missile technology, nuclear technology, night vision 
systems, assault weapons, trade secrets, technical know-how, and 
fighter jet parts.
    Foreign governments are aggressive in illegally acquiring sensitive 
U.S. technology. They have been observed directly targeting U.S. firms; 
employing commercial firms in the United States and third countries to 
acquire U.S. technology; and recruiting students, professors, and 
scientists to engage in technology collection.
    China and Iran pose particular export control concerns. The 
majority of U.S. criminal export prosecutions in recent years have 
involved restricted U.S. technology bound for these nations. In fiscal 
year (``FY'') 2008, for example, roughly 43 percent of all defendants 
charged in criminal export cases were charged with illegally exporting 
restricted materials to Iran or China. In total, Iran ranked as the 
leading destination for illegal exports of restricted technology in the 
prosecutions brought in FY 2008, as well as those in FY 2007.
    Illegal exports of U.S. goods bound for Iran have involved such 
items as missile guidance systems, Improvised Explosive Device 
(``IED'') components, military aircraft parts, night vision systems and 
other materials. Illegal exports to China have involved rocket launch 
data, Space Shuttle technology, missile technology, naval warship data, 
Unmanned Aerial Vehicle or ``drone'' technology, thermal imaging 
systems, military night vision systems and other materials.
    The improper transfer of such goods poses direct threats to U.S. 
allies, U.S. troops overseas, and to Americans at home. Such transfers 
also undermine America's strategic, economic, and military position in 
the world.
               the national export enforcement initiative
    Keeping U.S. weapons technology and other restricted materials from 
falling into the wrong hands is a top counterintelligence priority of 
the Department. Spearheaded by the National Security Division's 
Counterespionage Section, the National Export Enforcement Initiative is 
the Department's primary mechanism for achieving this objective by 
combating illegal exports of restricted military and dual-use 
technology from the United States. Led by a career prosecutor, the 
initiative is designed to enhance prosecution of these crimes and to 
deter illicit activity.
    The cornerstone of the initiative has been the ongoing formation of 
multiagency Counter-Proliferation Task Forces in U.S. attorneys' 
offices around the country. Today, there are more than 20 Counter-
Proliferation Task Forces or working groups operating nationwide, some 
straddling more than one judicial district, that include the Federal 
Bureau of Investigation, the Department of Homeland Security's U.S. 
Immigration and Customs Enforcement, the Department of Commerce's 
Bureau of Industry and Security, the Pentagon's Defense Criminal 
Investigative Service, Naval Criminal Investigative Service, and Air 
Force Office of Special Investigations, and other agencies as well. The 
task forces have built on prior interagency efforts used in districts 
where officers from these and other agencies pool data and jointly 
pursue cases. Under the leadership of U.S. attorneys, the task forces 
foster coordination critical to the success of export control.
    Because export control cases involve complex statutory and 
regulatory schemes, sophisticated technology, international issues, 
and, often classified information, training for prosecutors and agents 
has been a critical focus of the initiative. To date, the initiative 
has resulted in enhanced training for more than 1,000 agents and 
prosecutors involved in criminal and foreign counterintelligence 
investigations. The Department, along with other agencies, has also 
created the Technology Protection Enforcement Group (``TPEG''), an 
interagency headquarters-level working group, to enhance export control 
coordination among law enforcement agencies and between law enforcement 
agencies and the Intelligence Community.
    With the creation of new task forces and the enhanced training and 
coordination among agencies, the number of criminal export prosecutions 
has grown nationwide. In its first full year of operations, during FY 
2008, the National Export Enforcement Initiative resulted in criminal 
charges against more than 145 defendants, compared to roughly 110 
defendants charged in FY 2007. Charges brought in these cases include 
violations of the Arms Export Control Act (``AECA''), the main export 
control statute, but also the International Emergency Economic Powers 
Act, the export control provision of the USA PATRIOT Improvement and 
Reauthorization Act of 2005, the Trading with the Enemy Act, and other 
statutes.
        the export control regime and the treaties' safe harbors
    The Arms Export Control Act governs international defense 
cooperation, including the sale and export of weapons, and is used to 
prevent foreign powers and entities from acquiring weapons of mass 
destruction and sensitive technologies. The AECA authorizes the 
President to establish a munitions list and to create a licensing 
regime to control the export of defense articles and defense services. 
Through Executive Order 11958, the President delegated this authority 
to the Secretary of State who, through the office of the Deputy 
Assistant Secretary for Defense Trade Controls and Managing Director of 
Defense Trade Controls, Bureau of Political-Military Affairs, issued 
the International Traffic in Arms Regulations (``ITAR'') setting up a 
licensing regime and export regulations. Under the ITAR, persons 
engaged in the business of manufacturing or exporting defense articles 
and defense services must register with the Department of State and 
obtain a license prior to exporting defense articles or providing 
defense services.
    The Treaties establish Approved Communities of governmental 
agencies and private companies that may export or import defense 
articles without such licenses. In brief, the Treaties allow approved 
private companies in the U.K. and Australia to obtain certain defense 
articles and defense services from the United States without the 
otherwise required export license from the Department of State. The 
safe harbors that will be available under regulations promulgated 
pursuant to the Treaties will also permit members of an Approved 
Community to transfer defense articles on the U.S. Munitions List to 
another Approved Community member without having to obtain a license.
    The Implementing Arrangements provide the specifications related to 
the implementation of the Treaties, including how items exported under 
the Treaties will be protected and how entities may become members of 
the Approved Community. These provisions were negotiated following 
signature of the Treaties. The Implementing Arrangements also establish 
procedures for the United States and United Kingdom and United States 
and Australia to share records and conduct audits and investigations. 
The Implementing Arrangements contemplate that, following ratification 
of the Treaties, the United States would promulgate regulations to 
clarify the scope of the safe harbors and ensure that conduct falling 
outside the designated safe harbors will be subject to the AECA's civil 
and criminal enforcement regime.
                         enforcing the treaties
    A transaction that fully complies with the safe harbor established 
by regulations promulgated pursuant to the Treaties would not be 
subject to criminal or civil penalties under AECA. Conversely, a 
transaction falling outside the designated safe harbors would remain 
fully subject to the civil and criminal enforcement measures under the 
AECA. As the Department has stated previously, no new authorizing 
legislation would be required to prosecute such a violation.
    Because the Treaties are self-executing, they are ``equivalent to 
an act of the legislature'' for purposes of federal law. Medellin v. 
Texas, 128 S. Ct. 1346, 1356 (2008). Upon ratification of the Treaties, 
therefore, the President would have the authority to issue regulations 
pursuant to the Treaties themselves to create exemptions from the 
applicable licensing requirements of the AECA and ITAR. These 
regulations would thus establish the designated safe harbors 
contemplated by the Treaties and establish requirements for 
qualification for the safe harbor.
    In addition, the President would have authority to promulgate 
regulations under section 38(a)(1) of the AECA to make conduct falling 
outside the designated safe harbors subject to the enforcement regime 
of the AECA. These regulations would be promulgated pursuant to the 
``broad statutory delegation'' in section 38 of the AECA to control the 
import and the export of defense articles and defense services. B-West 
Imports, Inc. v. United States, 75 F.3d 633, 636 (Fed. Cir. 1996). It 
is the Department's understanding that these regulations will track 
those to be promulgated under the Treaties and would thus establish 
conditions for persons exporting or transferring pursuant to the 
Treaties, and an export or transfer that fails to satisfy those 
conditions would be enforceable through both criminal and civil 
sanctions.
                               conclusion
    Thank you for the opportunity to discuss the Department of 
Justice's role in enforcing export controls and its relation to the 
Treaties. I look forward to answering your questions.

    The Chairman. Well, thank you very much, Mr. Baker, we 
appreciate it.
    Let me begin by going at this question of the ability to 
deter and to prosecute violations.
    Obviously, this has been a primary concern of the committee 
as we've gone along here. We appreciate the work you've done 
with our staff along the way to resolve any questions that 
might exist.
    But for the record, I just wanted to make it absolutely 
clear, whether or not you are completely confident that these 
treaties will not weaken efforts with regards to prosecution 
and deterrence under the AECA.
    Mr. Baker. Mr. Chairman, thank you.
    The Department has concluded that the regulations that will 
be issued following ratification of these treaties--if that's 
what you decide--will be enforceable. The Department will be 
able to enforce the ITAR regulations and the provisions of the 
AECA, following ratification of these treaties.
    The Chairman. Under the regime that's envisioned by them, 
are you absolutely confident that if there were a diversion of 
a weapon or a technology, sold to a company in the United 
Kingdom or Australia, under the treaty, are you confident that 
that violator could be prosecuted in United States courts?
    Mr. Baker. Yes, Mr. Chairman. We are confident that if 
someone--the same way as is done today--someone who illegally 
diverts something on the munitions list, inappropriately, 
illegally, can be brought to court in the United States and 
prosecuted here.
    The Chairman. In the letters transmitting the treaties to 
the Senate the President promised to provide any proposed 
amendments to the International Traffic in Arms Regulations.
    The last draft of those amendments that was provided the 
committee came in, as Senator Lugar referenced, I think in 
September 2008. Have you made, or do you contemplate making, 
Secretary Shapiro, any more changes to those draft regulations?
    Mr. Shapiro. Thank you, Senator Kerry.
    We, as the new administration, reviewed the treaties and 
after consultation with the staff of the Foreign Relations 
Committee and with the Justice Department, we've concluded that 
there may be--not major changes that need to be made, but 
changes that might need to be made. We don't anticipate these 
to be significant, but----
    The Chairman. When do you anticipate the text might be 
forthcoming?
    Mr. Shapiro. Our plan--we are eager to have these treaties 
ratified, and our plan is to get them to you as soon as we can, 
and we are working with the Justice Department toward that end.
    The Chairman. Could you guarantee us, for instance, that we 
could have those by mid-January?
    Mr. Shapiro. I'm hesitant to guarantee without consulting 
with my Justice Department colleague in advance, but I will 
commit to make every effort to do that and certainly, if you 
want them by mid-January, we want to satisfy that.
    The Chairman. Can your Justice Department colleague perhaps 
help us here?
    Mr. Baker. We will make sure that--we will keep in mind 
your proposed deadline, and do everything we can to try to meet 
that, Senator. I'm also----
    The Chairman. We reconvene on the 19th and this is overdue, 
frankly, in my judgment. So, I'd like the committee staff to 
have an opportunity, obviously, to be able to review those 
regs, and then see where we go in those early days of next 
year.
    U.S. Customs officials at our borders and ports will be 
responsible for checking the paperwork of anyone trying to use 
the treaties to export a defense item. What is the status, in 
your judgment, of the readiness of our outbound Customs 
officials, in terms of personnel, training, equipment, to carry 
out the responsibilities under these treaties?
    Mr. Shapiro. Well, I obviously don't want to speak for the 
Customs Department--Customs Service--but what I will say is, is 
that we are committed to ensuring that the Customs Service has 
all of the information that it needs to be able to track 
exports.
    And indeed, you know, under the--currently as its 
contemplated--an exporter who wants to take advantage of the 
treaty would have to identify that in their Customs paperwork, 
they would have to identify that they were exporting to--who 
they were exporting to in the United Kingdom, which would allow 
confirmation of whether they're a member of the approved 
community or not.
    And we will continue to work with Customs if they require 
any additional information to be able to track, just as they do 
now, where they have information that exporters provide, it is 
anticipated that exporters will have to provide that 
information in order to take advantage of the treaty 
provisions.
    The Chairman. In October of this year, in response to a 
question for the record from the committee, Mr. Baker, the 
Department of Justice wrote, ``further or more detailed 
information required in the shipper's export declarations and 
export information filed in the automated export system could 
assist in preventing abuse of the treaty exemption.'' And then 
you added that, ``the requirement could be effected through 
regulations.''
    My question to you, Secretary Shapiro, is do you intend to 
require that exporters under the treaties indicate the joint 
operation, program or project for which the export is required, 
pursuant to Article 3(1)?
    Mr. Shapiro. Again, our goal is to work with the Customs 
Service to ensure that they have the information that they need 
to properly track exports under the treaty. It's something 
we're willing to consider; I am not in a position now to say 
that, definitively one way or the other, but we wanted--
certainly want to make sure that the Customs Service has the 
information they need to properly track exports under the 
treaty.
    The Chairman. Well, do you have a concern, Mr. Baker--I 
mean, is this something that you would like to see them do, is 
this something that would help in terms of the enforcement 
process?
    Mr. Baker. I think we would certainly favor any efforts 
that we could undertake--especially the ones we suggest here--
to try to gather more information before anything leaves the 
United States. So, these were some----
    The Chairman. That can be done by regulation?
    Mr. Baker. We believe so, yes, Senator.
    The Chairman. So, Mr. Shapiro, if they're suggesting that 
might be helpful, it would seem to me that it might be helpful 
to the ratification process if you were to include that in the 
January tasks, so to speak.
    Mr. Shapiro. Understood.
    The Chairman. I think that'd be helpful.
    Are you considering other information that an exporter 
under the treaties might reasonably be required to provide as a 
matter of just regulatory, administrative process?
    Mr. Shapiro. As of now, again, we want the Customs Service 
to be able to properly track exports under the treaty. We have 
no specific information that we have currently decided to 
include, but in that process of consultation with the Customs 
Service and the Justice Department, there are things that we 
can provide that would assist in that process, we want to work 
with them to reach that goal.
    The Chairman. Are there any ongoing or planned 
negotiations--I think I heard you say this in the testimony, 
but I think Senator Lugar raised the question--are there any 
ongoing or planned negotiations with any other countries 
regarding arms export control exemptions and licensing 
requirements?
    Mr. Shapiro. Senator Kerry, there are none. As you pointed 
out, the relationship with the United Kingdom and Australia is 
unique, and that's why we are pursuing the treaties with the 
United Kingdom and Australia, but we have no plans to negotiate 
with any other--defense trade cooperation treaties--with other 
countries, and there are no ongoing negotiations.
    The Chairman. At last year's hearing--after the hearing, 
actually--Senators Biden and Lugar asked an extensive set of 
questions for the hearing record. Have you had a chance to 
review the State Department's answers to those questions?
    Mr. Shapiro. Yes.
    The Chairman. Do any of those answers need to be revised in 
any way?
    Mr. Shapiro. A very small number will need to be revised, 
which we will plan to get over to you as soon as possible. Your 
staff was particularly helpful in pointing out, in our 
discussions, the need for possible revisions.
    The Chairman. And those you'll try to get to us, also--
well, that has to be in, actually, before we close the record 
here.
    Mr. Shapiro. Yes.
    The Chairman. Which would be, say--when we--I think a week 
from now?
    Mr. Shapiro. OK. We will make sure that we get them to you.
    The Chairman. That'd be great.
    Now, I've received several letters relating to these 
treaties, submitted on behalf of the Aerospace Industry 
Association, Boeing Company, Northrop Grumman, and the Arms 
Control Association. I'd ask unanimous consent that they be 
made part of the record of the hearing.
    [No response.]
    The Chairman. If there's no objection, they will be.
    The Chairman. Let me, Secretary Shapiro, also just commend 
the Department for the actions in pursuit of the Global Arms 
Trade Treaty. As you know, that would set legally binding 
minimum standards for weapons transfers and our export control 
system is a superb system--one of the best in the world--and it 
is very much in our interest, obviously, to try to bring the 
exporting countries up to those standards. So, I'm pleased that 
we're taking an active role in that, and I applaud that on your 
behalf.
    I might ask, as a matter of the record, also, would you 
submit to us the--Mr. Baker, really, I think more to you, but 
probably combined--we just want clarity in the record, with 
respect to the precise legal theory for the implementation of 
the treaties. As you know, one approach is the amending or 
superseding of the provisions of the Arms Export Control Act 
that are not consistent with the framework suggested by the 
treaty.
    And under the second approach there's the view that the 
treaty is the equivalent of a legislative enactment that 
addresses the same subject matter. And I think it would be 
helpful to us to just have the clarity with respect to that as 
we go forward, affecting the relationship between the treaties 
and the AECA.
    Mr. Baker. Certainly, Mr. Chairman. We'll go back through 
the different letters that we've sent to the committee and look 
at them again, and make sure that we can--we've provided you 
with the clearest answer possible.
    The Chairman. Terrific. Appreciate it very much.
    Senator Lugar.
    Senator Lugar. Thank you, Mr. Chairman.
    Mr. Baker, with regard to regulations, first of all, in 
your prepared statement you address regulations that would be 
issued under the treaties and under the Arms Control Act to 
enforce the treaties. First question: Have these regulations 
been finalized? And, if not, when do you expect them to be 
finalized?
    Mr. Baker. No, Senator, they have not been finalized. These 
are the same regulations that we're talking about here with 
Secretary Shapiro, so we'll do everything we can to have those 
to you by mid-January.
    Senator Lugar. Mid-January?
    Mr. Baker. Yes, sir.
    Senator Lugar. Does the confidence of the Department of 
Justice about its ability to enforce the treaties depend on the 
final form these regulations take?
    Mr. Baker. Senator, very much so. The regulations--
especially the changes to the ITAR regulations--will be 
critical to our ability to enforce violations of the export 
laws of the United States, so absolutely these regulations are 
very important.
    Senator Lugar. And will the administration provide these 
regulations to this committee for its review prior to committee 
action on the treaties? And if your answer is ``Yes,'' will 
this be done in mid-January?
    Mr. Baker. Yes, Senator.
    Senator Lugar. That was a very important part of our 
rationale for holding this hearing today, as you know.
    Now, Mr. Baker, on the safe harbors issue, your testimony 
refers to safe harbors in the Arms Control Act's enforcement 
regime that would be established under the treaties. The term 
``safe harbor'' isn't contained in the treaties or the 
implementing arrangements. Your testimony indicates that the 
executive branch would promulgate regulations to clarify the 
scope of the safe harbors and to establish requirements to 
qualify for them. Has the administration made final decisions 
regarding the scope and qualifications requirements for these 
safe harbors? And if so, have these been communicated to this 
committee?
    Mr. Baker. No, Senator, again these are the same 
regulations we're talking about, and we need to get these 
right, we need to finalize them so that it's absolutely clear 
to everyone what is permitted and what's prohibited. So, these 
are very important, and we're still working on them.
    Senator Lugar. And that will be a part of this mid-January 
submission?
    Mr. Baker. Yes, sir.
    Senator Lugar. Finally, given that these safe harbors are 
not part of the treaties before the Senate, what role does the 
administration envision the Senate would have in reviewing or 
approving them?
    Mr. Shapiro. I'll take this one. Which is, obviously we are 
going to be submitting these regulations before the 
consideration by the Senate of the advice and consent--for 
advice and consent. So, the Senate will have an opportunity to 
review before any potential vote on these treaties. And we are, 
you know, committed to fully consulting with this committee and 
the Senate on the nature of the safe harbors that this will 
provide.
    Senator Lugar. So, hypothetically, the committee might make 
suggestions for changes, amendments, and what have you, at the 
time of this submission?
    Mr. Shapiro. Well, and I would just say, as I mentioned 
previously, we don't anticipate that the regulations that we 
will be submitting will have major changes from the ones that 
were previously submitted. These are just as we have worked 
with the Justice Department on sharpening the basis for 
enforcement, we realize that there may need to be some changes, 
but we don't anticipate that these changes will be major, and 
so there--you have a sense based on what you have already, and 
then you will have additional information when we provide the 
revised regulations.
    Senator Lugar. Secretary Shapiro, on April 29, Secretary 
Clinton wrote to us about these treaties. She suggested that 
she would oppose efforts by the Senate to establish oversight 
requirements for treaty implementation, through either 
legislation or resolutions of advice and consent.
    She further suggested that such oversight requirements 
``would frustrate the treaties' purpose.'' Secretary Clinton 
proposed that the Senate's oversight interests be addressed by 
a series of congressional notification procedures, which she 
pledged the Department would implement as a matter of policy.
    Now, Secretary Shapiro, what assurance would the Senate 
have that oversight procedures implemented by this 
administration as a matter of policy would be continued by 
future administrations?
    Mr. Shapiro. Well, I would say that it is in this--not only 
this administration's interest, but any administration's 
interest to have a close working relationship regarding the 
oversight of these treaties, going forward. I would point out 
that we, in the, we seek--we have a cooperative relationship 
regarding arms sales which are not enshrined in law, but which 
have developed through practice and procedures which numerous 
administrations have followed, because it is important for the 
working relationship between the executive branch and the 
legislative branch. And so, we anticipate that that same 
tradition would continue, because it would be in the interest 
of working together with the executive branch and the 
legislative branch.
    Senator Lugar. Why would this administration oppose 
appropriate legal requirements that would keep the Congress 
informed about the implementation of the treaties?
    Mr. Shapiro. Well, again, to go back to the Secretary's 
letter, our goal is to have these treaties ratified as 
expeditiously as possible, to ensure that the United States, 
United Kingdom, and Australia are able to take full advantage 
of the terms of the treaties. And we believe that, in her 
letter she laid out a number of suggested consultation 
mechanisms, and we believe that those suggested consultation 
mechanisms would enable Congress to have the ability to provide 
its input to the executive branch, without a need to actually 
legislate them.
    Senator Lugar. Well, without being tedious, I still would 
ask how mandating a congressional role in overseeing the 
treaties would frustrate their purpose. In other words, why 
can't this be incorporated in the treaty, as opposed to the 
question arising two administrations down the trail when those 
folks come to us and we have a different idea about all of 
this?
    Mr. Shapiro. Again, I would go back to, you know, we have 
various consultation mechanisms in the arms sales process which 
are not enshrined in law, which--but which work--which do work. 
I mean, we have an ongoing conversation on how to improve them, 
and how to make them more efficient, but those were not 
enshrined in law, but administrations have continued to follow 
them from administration to administration.
    So, we think that the consultations that Secretary Clinton 
offered in her letter would be adequate to allow Congress to 
offer its advice and input to the administration, without the 
need for legislation. And we would anticipate that future 
administrations would see the benefit of this, as well, as 
administration after administration has seen it in the arms 
sales context.
    Senator Lugar. Well, obviously, one reason why this has 
arisen again is that perhaps we should have confidence other 
administrations would have. But there, at least, is a case to 
be made for penning it down now while we're thinking about it.
    Let me ask, given the oversight responsibilities of the 
House of Representatives with respect to arms control, does the 
Obama administration believe the House has an interest in the 
proposed arrangements for implementing the treaties and has the 
administration consulted with the House concerning these 
arrangements?
    Mr. Shapiro. As these were negotiated as treaties and under 
the Constitution, the Senate has the responsibility to provide 
advice and consent on treaties, our efforts have been focused 
on the Senate, and toward what we need to satisfy the Senate's 
concerns toward ratification. So, that has been the focus of 
our efforts, thus far.
    Senator Lugar. This is doubling back to the history of the 
situation, but as we've pointed out, during a May 2008 hearing 
with Bush administration officials they declined to submit the 
implementing arrangements. Obviously, you're taking a different 
stance by pledging to transmit the aforementioned package by 
mid-January, so I'll not try to review the problem of conflict 
between your interpretation and theirs. You've decided along 
with us, perhaps, that this is best to proceed and we 
appreciate that.
    Let me just ask whether or not the administration believes 
the Senate should have a role in approving future changes to be 
made in the implementing arrangements as time goes by? 
Furthermore, do you see the changes that might be constructive?
    Mr. Shapiro. Well, as the Secretary pointed out in her 
letter, she would commit that we would consult with the Senate 
before any changes in--we would provide notification well in 
advance of changes to the implementing arrangements.
    Senator Lugar. What if we disagree with these changes down 
the trail, and there's really no permanent record, at least as 
a part of the treaty ratification now?
    Mr. Shapiro. Well, I mean, I think that our administration 
and future administrations would take the concerns of Congress 
quite seriously. And that would be, you know, the purpose of a 
notification, would be to offer an opportunity to receive those 
comments from the committee and from the Senate.
    Senator Lugar. Well, my time has concluded for the moment, 
we may come back if we can, Mr. Chairman.
    The Chairman. Absolutely.
    Senator Lugar. But, I think this is still a point of 
discussion. I understand your point of view, that changes might 
be made. We might agree or disagree with them. I suppose, in 
terms of congressional oversight, some would argue the 
responsible course is to pen things down now, before we ratify, 
so that we don't have a speculation as to future 
administrations' agreements or disagreements that we know more 
about the future.
    I'll leave it at that for the moment, Mr. Chairman. And 
you'll have to----
    The Chairman. I'll come right back to you.
    Senator Feingold.
    Senator Feingold. Thank you, Mr. Chairman.
    Thank you for being here to testify.
    Our partnerships with Australia and the United Kingdom are, 
of course, among our most important alliances, and I strongly 
support efforts to expedite our arms exports to these key 
partners in a manner that retains Congress' constitutional role 
in overseeing our arms control regime. In the wake of the 
terrorist attacks of September 11, it's more important than 
ever that we strengthen our arms control regime.
    The illicit arms trade aids terrorists and the states that 
sponsor them. It also contributes to instability, including in 
areas of particular concern to me as the chair of the 
Subcommittee on African Affairs.
    So, with these overriding concerns in mind I just have a 
couple of questions.
    Mr. Baker, the licensing regime creates an evidentiary 
trail that the Justice Department uses to prosecute those who 
attempt to divert weapons or munitions to criminal entities, 
terrorist organizations, or state sponsors of terrorism, that's 
right, isn't it?
    Mr. Baker. Yes, sir.
    Senator Feingold. And in what percentage of prosecutions 
for violations of our arms export laws has the Department 
relied upon evidence obtained from the licensing process?
    Mr. Baker. Obtained from the licensing process? Senator, I 
would expect that it's a high percentage, I could get you a 
more accurate answer for the record if I could take that back 
and go back and do some research on that, but I would--it's a 
high percentage, in terms of the evidentiary trail.
    Senator Feingold. Thanks for that answer, and I look 
forward to the more specific follow-up.
    Mr. Baker, we're entering uncharted legal territory by 
substituting the proven licensing system with an, as of yet, 
unproven system of vetting so-called ``approved communities.'' 
If unforeseen legal problems arise, will our only recourse be 
to issue new regulations, and if a future administration is 
unwilling to make such changes to the regulations, what remedy 
would Congress have?
    Mr. Shapiro. I mean, I would say on--that the--we 
anticipate that these treaties will offer significant benefits. 
Under the--and the Justice Department, in our consultation, 
which Mr. Baker talked about is confident of its ability to 
prosecute, and he can talk to that more fully. But, I would say 
that it is our intent that these be enforceable. We want to 
protect national security. And if there--we don't anticipate 
that there would be problems, we don't think that we think that 
we have worked out with the Justice Department a firm basis for 
enforcement. But if we have missed something, we will want to 
correct it, because we want to ensure that violations are able 
to be prosecuted if there are violations of the treaty.
    Senator Feingold. Mr. Baker, would you like to answer that?
    Mr. Baker. Just to amplify, Senator, yes. I mean, one--as 
you know, from your experience on the Judiciary Committee, 
enforcing the criminal laws of the United States is a 
multifaceted enterprise, and the first step of that is to make 
sure that the statutes and regulations under which prosecutions 
would be brought are as crystal clear as we can make them. 
Should we encounter problems in the future, obviously, that's 
something that we would fix. That would come out, I assume, in 
judicial findings or difficulties we would have in bringing 
charges, and so on and so forth.
    So, I think we would be very supportive--indeed, urging--
that any changes that we saw that needed to be made to the 
regulations would be done.
    Senator Feingold. Mr. Baker, if defense articles or 
services are retransferred to entities outside of the approved 
communities, would a congressional resolution to block such 
transfer enjoy the benefit of the expedited procedures provided 
in the Arms Export Control Act?
    Mr. Baker. So, Senator, to make sure that I understand--so 
this would be a reexport from the United Kingdom or Australia 
to another location?
    Senator Feingold. To entities outside of the approved 
communities.
    Mr. Baker. Yes, I think----
    Mr. Shapiro. I will say that, under the terms of the 
treaty, a retransfer or reauthorization outside of the approved 
community requires our--U.S.--approval. And so, and if they do 
not--if they do not obtain U.S. approval, then that is a 
violation of the law that can be prosecuted. So, we think that 
there--that that provides ample means to ensure that there are 
not improper retransfers or reauthorizations outside the 
approved community.
    Senator Feingold. Do you agree with that, Mr. Baker?
    Mr. Baker. Yes, retransfers--I'm sorry--well, retransfers 
or reexports without U.S. Government approval would be illegal, 
under the AECA and the ITAR regulations as we would put them 
forth after ratification.
    Senator Feingold. I thank you both.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Senator Lugar.
    Senator Lugar. Mr. Baker, in the August 20, 2009, letter to 
Attorney General Holder, Senator Kerry and I asked whether 
there were any authorities that the Department of Justice 
believes to be important or useful to effect the enforcement of 
the treaties that would require an enactment of new 
legislation.
    Now, the Department answer indicated that, ``There are no 
additional authorities necessarily for enforcement of these 
treaties.'' Whether the additional authorities are necessary is 
a different question than whether such authorities would be 
useful, or would put the treaties enforcement on a sounder 
basis.
    At this point, what is the Department of Justice's position 
on enforcement of the treaties being made more effective or 
less vulnerable for a legal challenge to enact, when 
appropriate, implementing legislation, rounding the enforcement 
authorities for the treaties in the Arms Control Act itself?
    Mr. Baker. Our current assessment, Senator, is that the 
combination of the treaties, the AECA, and the ITAR regulations 
would provide us with adequate tools to establish a criminal 
violation of the--of those regulations and that framework. So, 
our assessment is that because of the way the treaties are 
drafted and their structure, that they are self-executing, 
therefore no implementing legislation is required.
    I can certainly take back as a question--if that's OK with 
you, Senator, the question about whether additional legislation 
would be necessary. Or would it be helpful, or would it add 
something? Our assessment is that sitting here today, it's not 
necessary, and that we can do what we need to do within the 
existing structure.
    Senator Lugar. Well, please take back the dual question 
whether it's necessary or whether, in fact, it's desirable as a 
point of good government and permanent implementation of this 
idea.
    Mr. Baker. Yes, I will. Thank you, Senator.
    Senator Lugar. Now, Mr. Baker, or Secretary Shapiro, where 
do these treaties fit into the review that on August 13 the 
White House announced as a broad-based interagency process for 
reviewing the overall U.S. export control system, which 
includes defense trade processes? That's a broader concept, but 
how do these treaties fit into that review?
    Mr. Shapiro. As Senator Kerry pointed out, these treaties 
are being negotiated with two close allies--the United Kingdom 
and Australia--and provide a streamlined mechanism for defense 
trade cooperation.
    Our export trade review is looking at the system as a 
whole. How do we--is it appropriate for a 21st century world, 
and are there improvements that we can make that would better 
protect our national security and update it for the 21st 
century?
    It is not anticipated that that export review would impact 
the regime that we are establishing with the treaties, but that 
is a much broader look at the defense trade process, in 
general, not just the State Department, the Commerce 
Department--it's an interagency process and is trying to, 
again, make sure that we are protecting our national security 
adequately in the 21st century.
    Senator Lugar. Please discuss, just for a moment, whether 
or not this review contemplates major changes in the way in 
which the United States conducts defense trade with the United 
Kingdom or Australia. Are these special cases or is there 
anything more to be said about those two?
    Mr. Shapiro. And again, the review has just gotten 
underway, but in my participation in the review, it is not 
designed to--it has not been discussed that it would change, in 
any way, the defense trade regime that is being established 
under these treaties. Again, it's a much broader view that it's 
taking a look at a whole export control system that we 
currently have, and particularly the licensing systems at both 
the, you know, Department of Commerce and Department of State, 
so--and this treaty regime creates a different structure for 
that defense trade.
    So, I would, again, we're early in the review, so I don't 
have much more to say, but in the discussions that we've had, 
indeed, people have pointed to the, you know, to these treaties 
as, you know, something that we want to get ratified as a way 
of improving our defense trade relationship between the United 
States and United Kingdom and Australia, but it has not been 
contemplated in the discussions thus far that the export trade 
review will take a look at these treaties and make any changes 
or modifications to these treaties.
    Senator Lugar. Well, let me ask just one final question, 
and this may be sort of an outrageous example of difficulty, 
but let us take the situation in which a party in the United 
States that is prepared to supply weapons or information or 
whatever is required by the United Kingdom or Australia, but 
this party--in addition to those two countries--makes some 
exports to potential terrorist organizations in the world. It 
could be under any number of covers, people supposedly as the 
customers may seem, on the face of it, as legitimate customers 
under the treaty, but the parties involved understand, really, 
that there is a more liberal regime going on, here, and that 
this may be the vehicle for making those kind of transfers.
    Now, clearly, as you contemplate, the work both in State 
and Justice, you believe you would have means of investigation 
and prosecution in this country of parties, whoever they might 
be who might contemplate such an activity. I'm just simply 
curious, in the world in which we live, how rigorous this 
investigation is, all the way through. How long it takes us to 
discover that there is something amiss here before we begin 
looking for the culprits who may, by this time, have fled our 
shores altogether.
    Mr. Shapiro. Well, I would point out that the treaty 
contains certain protections that are designed to prevent that 
type of conduct from happening. You have to be a member of the 
approved community. We, in the United States, get to sign off 
on who is a member of the United Kingdom or Australian approved 
community. And we do that in consultation with our intelligence 
agencies and the Department of Justice, to make sure that front 
companies are not going to be members of the approved 
community. So, that's a first line of defense.
    Senator Lugar. Would Australian and United Kingdom 
intelligence persons, or their equivalent of our investigative 
folk, also be doing that? In other words, do we have the 
benefit of whatever they know about particular customers?
    Mr. Shapiro. Right. Well, remember that in both countries, 
members--they can only have members of the approved community 
who have intelligence security clearances. And in order to get 
security clearances, they've been vetted.
    So only those companies or persons who have security 
clearances can be members of the approved community. So, 
presumably, those intelligence agencies are vetting people to 
ensure that they are not members of front companies, or 
involved in transactions that we would not want.
    So, the treaty provides a means to prevent that from 
happening. In the event that somehow, some way, somebody got 
through that process, then we have--then the--and we discover 
that they have not--that they have tried to export under the 
license improperly, we will have records through just the way 
people with the license have to file with the Customs Service 
certain information, people who are taking advantage of the 
treaty will also be filing with the Customs Service certain 
information, and they can check to ensure that the export is 
going to the person who is listed on the paperwork that they 
filed, and again that person should be a member of the approved 
community.
    Mr. Baker. Senator, yes, just briefly--the scenario that 
you described, I think, is obviously illegal. It would be 
obvious, I believe, under our laws as we would put them forward 
in the regulations that that type of conduct would be 
prohibited.
    The challenge, then, becomes investigating it. Learning 
about the offense in the first instance--and there's a variety 
of ways that law enforcement agencies and agents learn about 
offenses that I could go through here, but the next trick will 
then be to gather the evidence and to interview the witnesses 
who will be some--in the hypo that you described--some in the 
United States and some abroad.
    We will have to work closely with our allies in a 
collaborative fashion to obtain that evidence, to get access to 
those witnesses and to bring those people to justice. So, it's 
a multifaceted response, again, to try to address the kind of 
illegal activity that you've described in your hypothetical.
    Senator Lugar. And, at least in your initial conversations 
with our allies, they understand the predicament for all three 
of us--Australia, United Kingdom, and the United States, that 
there's a vetting procedure to begin with, those who are buying 
and selling, but beyond that, an agreement for cooperation in 
terms of collaborative investigation involving agencies 
internationally.
    Mr. Shapiro. Right. And that is included in the text of the 
treaties that requires that violations have to be reported 
immediately, and that there must be cooperation in any 
investigations. So, this is an obligation that both countries 
have undertaken.
    Senator Lugar [presiding]. Thank you very much.
    In the absence of the chairman, let me recognize you, 
Senator Shaheen.
    Senator Shaheen. Thank you very much, Senator Lugar, and I 
apologize, I was at another hearing. But I wanted to be here 
for two reasons.
    First, to recognize Jim Baker who I had the good fortune to 
work with at the Kennedy School. And my favorite story about 
Jim is that he put on this sign for the students who were 
coming into see him, ``Not `the' Jim Baker.'' [Laughter.]
    So, we're delighted to have you here before the committee 
today. Thank you very much.
    But also wanted to be here because I wanted to make a point 
that we heard yesterday at the European Affairs Subcommittee, 
which I chair. And, obviously, I think, all of us want to be 
able to support the ultimate objectives of these treaties, 
these are our most critical allies, they're fighting shoulder 
to shoulder with us in Afghanistan and a closer defense trade 
relationship will help to reaffirm the important ties and 
increase the ability of our forces to work on the ground, both 
in Afghanistan and in other places in the future.
    And I also appreciate the economic gains that would come 
from a more efficient and streamlined exchange between our 
defense firms and those of the United Kingdom and Australia and 
that's a particular concern for us in New Hampshire where we 
have a number of defense-related businesses who are very 
interested in the outcome of what happens with these treaties. 
I think BAE Systems is probably the biggest of those, who you 
all would recognize, but also we have a number of their 
suppliers and smaller businesses who are very concerned about 
what will happen.
    So, I want to offer my full support to the chairman and 
ranking member, as we look at the best way to deal with moving 
these treaties forward.
    But, the issue that came up yesterday with respect to 
concern in these treaties and others, is export control reform. 
And I know, Senator Lugar, that you raised this in your 
questions, but what we heard from some of the business 
interests who were testifying, particularly small business, is 
concern about the requirements that they need to comply with if 
they're going to export.
    And given the significance, I think, to our future economy, 
we need to make sure that while we protect our security, we 
also have regulations that help our businesses compete.
    So, I wonder--I guess this question is really for you, Mr. 
Shapiro, what--whether you're looking at ITAR regulations and 
what potential there is to take a look at whether the current 
regulations are still consistent with the new global economy 
that we're in, or if it's--if some of the--they were designed 
for the cold war, and whether we need to upgrade those?
    Mr. Shapiro. Thank you, Senator Shaheen. And I remember, 
during my confirmation hearing, you asked me about these 
treaties, and I'm glad that we're able to have this hearing to 
answer further questions about them.
    As far as the export control reform effort, I think you hit 
it right on the head, which is, we want to ensure that we have 
an export control system that protects national security, but 
also ensures that we have a system that makes sense in a 21st 
century economy.
    Now, we have gotten down in our review--it's still in the 
earlier stages--we have not gotten down to the level of, this 
regulation or that regulation needs to be changed. And indeed, 
it's a very important part of this review, that we want to have 
robust congressional consultation. And we want to know from the 
congressional perspective what makes sense and what doesn't. 
You're hearing from constituents, you've had--a number of 
people on the Hill--have had expertise in this area, and we 
want to be able to make sure that that is informing the 
administration's export control reform effort.
    So, the answer is ``Yes,'' we are taking that very 
seriously, to ensure that we have an export control reform 
effort that both protects national security but is also--has 
mechanisms, efficient mechanisms--and we fully intend to 
consult closely with Congress on this, going forward.
    Senator Shaheen. And, do you have a timetable for when that 
might start, and how long that might take?
    Mr. Shapiro. Well, we've begun meeting, internal to the 
administration. I think congressional consultations will begin 
in earnest after the New Year, and how long it will take, you 
know, I think there is an eagerness to get this done. Secretary 
Gates has made clear that this is a priority of his. Under 
Secretary Tauscher has expertise from her time in the House, so 
we've got the right team in place to pursue this, but we want 
to do it as quickly as makes sense. And, which will garner the 
support, obviously, of Capitol Hill. So, I don't want to put a 
timetable on it, but we recognize that this is a very real 
issue to a lot of--to our national security, but also to a lot 
of constituents. And so we want to get it right.
    Senator Shaheen. OK. I appreciate that, and certainly 
support that sentiment. I hope that there will be some sense of 
urgency about the need to address this.
    Thank you.
    Thank you, Mr. Chairman.
    The Chairman [presiding]. Well, thank you very much, 
Senator Shaheen, I appreciate it. We appreciate your 
stewardship of the European Affairs Subcommittee. And I know 
you have a sense of how urgent this is.
    This has really, kind of, dragged on and it's something 
that we've got to resolve, one way or the other.
    Now, Senator Lugar has asked important questions and I 
would like just to incorporate the full committee in wanting to 
have the answers appropriately. This is not adversarial. We 
have one interest, which is to facilitate the process in a way 
that keeps faith with our interests about arms exports.
    And so, my hope is that you can really burn and churn, give 
the answers Senator Lugar needs, that we need, to be reassured 
about our direction, so the full Senate can give its advice and 
consent in an intelligent and sensitive way to the interests 
that are at stake, here.
    If there are no--Senator Lugar, do you have any other 
questions?
    [No response.]
    The Chairman. If not, we appreciate you coming up today, we 
look forward to getting that information by mid-January, as I 
say. I think that providing, you know, we're satisfied and we 
have the ability to move forward, which I would hope we could, 
we could do so expeditiously.
    I know our friends in the United Kingdom and in Australia 
are waiting to see how we proceed here, and obviously, I think 
it's important to those relationships.
    We stand adjourned.
    [Whereupon, at 11:16 a.m., the hearing was adjourned.]

 Additional Material and Questions and Answers Submitted for the Record


         Letters Submitted for the Record by Senator John Kerry


 Responses of Assistant Secretary of State Andrew Shapiro to Questions 
                   Submitted by Senator Richard Lugar

    Question. The Bush administration answered a series of questions 
for the record in connection with this committee's May 21, 2008, 
hearing on these treaties.

   Do answers submitted in 2008 continue to accurately 
        represent the executive branch's current views and may the 
        committee rely on them as authoritative? If not, please 
        identify particular answers that no longer reflect the position 
        of the executive branch and provide the committee with 
        appropriate revised answers, including explanations as to the 
        need for each revision.

    Answer. Based on a review of the questions for the record submitted 
following the May 2008 hearing, revisions have been made to the 
following questions: 5, 7, 44, 50, 53, 63, 72, and 79. Please see the 
attached submission for the revisions and explanatory notes.

    Question. In your written statement, you suggested that the 
treaties could promote development of anti-IED capabilities and 
counterpiracy and maritime counterterrorism capabilities important to 
current military operations.

   Does the Department believe that governmental programs of 
        the sort in your testimony are ineligible for license 
        exceptions under existing authorities available to the 
        Department of State and Defense under the Arms Export Control 
        Act (AECA)?

    Answer. Exemptions available under existing authorities would 
potentially permit a limited number of the transactions and other 
activities involved in such programs to occur on a license-free basis. 
However, these existing exemptions do not cover the range of activities 
encompassed by such programs that exemptions under the treaties would 
allow, nor do the limited exemptions that currently exist afford the 
flexibility and enhanced ability for collaboration involving United 
States, United Kingdom, and Australian industry that would be available 
under the treaty regime.

    Question. In response to a question for the record at the 
committee's May 2008 hearing on the treaties, the Bush administration 
stated that the median processing time for license applications for the 
United Kingdom and Australia was ``7 days and 8 days respectively.''

   Is this information still accurate? If not, please indicate 
        the current median processing time for such license 
        applications.
   Please indicate how this license processing time poses 
        significant challenges for addressing urgent needs of the sort 
        described in your testimony.

    Answer. The median processing time for the United Kingdom and 
Australia continues to be 7 days and 8 days respectively in calendar 
year 2009. Nonetheless, the export licensing process introduces the 
potential for delay. The treaties are designed to mitigate delays that 
can occur under the export licensing process.
    In terms of delay, the treaties would accelerate the export of 
defense articles and services and ensure that urgently needed goods and 
services can be delivered in the most expeditious manner.
    Although many export transactions can be anticipated by industry, 
others are not. For those members of the approved community working on 
a project covered under the treaties, the treaty regime will encourage 
the free flow of discussions concerning controlled data, thereby 
allowing scientists, engineers, sales associates and others to do their 
job more efficiently and with less interruption. They would not have to 
halt conversations regarding technical data covered by the treaties. 
Today, if these conversations cross into areas unanticipated in the 
original license applications, including discussing information about a 
different model of a particular system not listed in the license 
application, firms must stop the process and wait the period needed to 
file for and receive approval from the government for this activity. 
This stoppage can be particularly detrimental to the collaborative 
process.
    Furthermore, by removing the need to process thousands of licenses 
approved for both countries (over 99 percent of which were approved) 
the treaties will permit us to better focus on license applications to 
countries and transactions that require individual review. This will 
support our efforts to ensure that all licenses are processed in a 
timely manner, especially those that are needed to support the 
development of technology needed by U.S. and coalition forces.
    The treaties, if ratified, would encourage the flow of information 
and could eliminate days if not weeks of time currently spent filing 
and waiting for a license before urgently needed equipment could be 
shipped, data shared, or services provided. Facilitating the flow of 
defense trade to these close allies enhances our mutual security, 
signifies the close, special relationships we enjoy, facilitates 
interoperability by permitting United Kingdom and Australian Armed 
Forces to obtain U.S. equipment/technology with minimal to no delay, 
removes barriers to defense trade that may cause foreign manufacturers 
to design out U.S. content/technologies, and enables us to more closely 
integrate our defense industries for the long term.


additional response of assistant secretary andrew shapiro to questions 
            submitted by senator lugar (september 20, 2010)


    Question. What is the administration's position on whether the 
Defense Trade Cooperation Treaties with the United Kingdom and 
Australia are self-executing in the United States?

    Answer. Notwithstanding the statement in the preamble of these 
Treaties, the Treaties are not self-executing. They will be implemented 
through legislation and regulations thereunder.

           ATTACHMENT: REVISED 2008 QUESTIONS FOR THE RECORD

 Questions for the Record Submitted to Acting Under Secretary of State 
 John Rood by Senator Joseph Biden, May 21, 2008 (revised January 26, 
                                 2010)

    Question No. 5. Each treaty states in the preamble that ``the 
provisions of this Treaty are self-executing in the United States.''

    a. Was this language included at the request of the United States?
    b. Why was it necessary to include this language?
    c. What is the legal effect of including this language in the 
preamble?
    d. Does the inclusion of this language limit in any way the manner 
in which these treaties can be implemented in the United States?

    Answer. a. Yes.

    With respect to b, c, and d, below, I am advised by the State 
Department's Legal Adviser that:

    b. It was not legally necessary to include this language in order 
to make the treaties self-executing in the United States--this could 
alternatively have been clarified through the record of the Senate's 
advice and consent; however, at the time the treaties were negotiated, 
it was considered desirable to leave no doubt as to the intended 
effect.

    c. It reflects a clear intent with respect to the domestic legal 
effect of the treaties in the United States, including that the 
treaties themselves provide sufficient authority to issue the 
regulations necessary to fully implement them.

    d. The Senate may, in consultation with the executive branch, take 
steps in the Senate's resolution of advice and consent to each treaty 
to address the manner in which these treaties are to be implemented.

    Question No. 7. Under what legal authority will the Department of 
State promulgate regulations for these treaties, given that the current 
International Traffic in Arms Regulations (ITAR, 22 CFR 120-130) are 
promulgated under the authority of section 38 of the Arms Export 
Control Act, which presumably will be superseded by the treaties?

   If no provision of law can be cited, what implications will 
        that have for enforcement actions against a company that fails 
        to abide by the new regulations?

    Answer. Upon ratification of the treaties, the President would have 
the authority to issue regulations pursuant to the treaties themselves 
to create exemptions from the applicable licensing requirements of the 
Arms Export Control Act and International Traffic in Arms Regulations. 
These regulations would thus establish the designated safe harbors 
contemplated by the treaties and establish requirements for 
qualification for the safe harbor.
    In addition, because the treaties would not supersede section 38(a) 
of the Arms Export Control Act, as amended, the President would have 
authority to promulgate regulations under section 38(a)(1) of the Arms 
Export Control Act, as amended, to make conduct falling outside the 
designated safe harbors subject to the enforcement regime of the Arms 
Export Control Act.

    Question No. 44. Article 5(2) of each treaty states the United 
States Approved Community shall consist of nongovernmental entities 
``registered with the United States Government and eligible to export 
Defense Articles under United States law and regulation.''

    a. On what basis is initial registration ever denied?
    b. The International Traffic in Arms Regulations, at 22 CFR 
122.1(c), notes that ``Registration does not confer any export rights 
or privileges.'' Under current regulation and practice, is eligibility 
to export established at the time of registration, or only when the 
entity applies for its first license to export? If the latter, what 
measures will be taken to establish a registered nongovernmental 
entity's eligibility to export defense articles and, as a result, its 
membership in the United States approved community, if that entity has 
not yet applied for a license to export?

    Answer. a. Neither initial nor renewal applications to register are 
denied by the Department for anything but procedural reasons (e.g., 
errors on the application). The Arms Export Control Act requires that 
companies in the defense arena (as defined by specific criteria) must 
register with the Department and maintain this registration and does 
not include a provision to deny a registration even for serious 
criminal offenses. Even companies that have been debarred are still 
required to maintain their registration as long as their defense 
related activities meet the requirements for registration. In rare 
cases, the Department will return a registration application based on 
its analysis that the entity is not required to register under the 
regulations or its activities are more appropriately and directly 
regulated through another company that is or should be registered with 
the Department.

    b. Eligibility is a key element of the Arms Export Control Act 
(AECA) and the International Traffic in Arms Regulations (ITAR). 
Registration is the first step but an exporter must also be eligible as 
defined in the ITAR. As provided in Article 5(2) of each treaty, 
exporters under the treaties must meet the same requirements currently 
followed for existing ITAR exemptions--they must be registered and 
eligible.

    Question No. 50. How will the U.S. Government ensure that the 
freight forwarders and intermediate consignees involved in license-free 
exports or transfers under the treaties are legitimate and reliable 
entities?

   Will freight forwarders and intermediate consignees have to 
        be members of the approved community? If so, what is the legal 
        authority under which the executive branch will establish this 
        or any other requirement relating to such persons, if section 
        38(g) of the Arms Export Control Act is not applicable to 
        exports or transfers under the treaties and given that neither 
        the treaties nor the implementing arrangements mention freight 
        forwarders or intermediate consignees?
   Will it suffice to require that freight forwarders and 
        consignees be members of the approved community? Article 5(2) 
        requires that United States community members be ``registered 
        with the United States Government and eligible to export 
        defense articles under United States law and regulation,'' but 
        it is not clear to the committee whether an entity engaged only 
        in license-free exports or transfers would be investigated in 
        the manner that a registered exporter is investigated when it 
        first obtains an export license.
   What are the possible advantages and disadvantages of 
        requiring that freight forwarders and consignees for exports 
        and transfers be certified Customs Brokers?
   What are the possible advantages and disadvantages of 
        requiring that freight forwarders and consignees for exports 
        and transfers register with the Department of State? Does the 
        Directorate of Defense Trade Controls (DDTC) have sufficient 
        resources to run a registration and investigation program of 
        this sort?

    Answer. In the United States, some freight forwarders are also 
registered as exporters, subjecting them to the registration and 
eligibility requirements established for inclusion in the approved 
community. For those who are not, we are exploring an option to allow 
the use of other freight forwarders/intermediate consignees engaged in 
activities under the treaty who are in good standing with the 
Department of Homeland Security's Bureau of Customs and Border 
Protection (CBP) as licensed Customs Brokers. The advantage of this 
approach is that licensed Customs Brokers are subject to background 
investigation and must pass a comprehensive examination of U.S. customs 
regulations administered by CBP. Another possible option would be to 
require that freight forwarders/intermediate consignees handling 
exports under the treaty register with DDTC. A registry of freight 
forwarders/intermediate consignees would be different from current ITAR 
registration requirements for manufacturers, exporters, and brokers, 
but would be subject to the same vetting procedures used for 
registration. The advantage of this approach is that it includes 
screening against the Department's Watchlist and vetting by law 
enforcement. While this would represent additional workload, we believe 
it could be managed with existing resources or resources made available 
by the decline in licensing workload associated with the treaties. The 
State Department, in conjunction with CBP, has been exploring options 
and will implement them in the International Traffic in Arms 
Regulations.
    The legal basis for placing requirements on the freight forwarders 
and intermediate consignees comes from the treaties as well as section 
38(a)(1) of the Arms Export Control Act, as amended.

    Question No. 53. Under the terms of the treaties, what legal 
authority is there for any Party to use freight forwarders or 
intermediate consignees that are not members of the approved community 
to handle exports or transfers?

   May the initial export of a defense article be handled by an 
        entity not in the approved community, because it has not yet 
        been provided to a Treaty Partner? If so, will the U.S. 
        Government still have the legal authority to restrict the 
        choice of freight forwarders or intermediate consignees?
   Once a defense item has been exported, must subsequent 
        transfers be handled only by approved community members, 
        because any transfer ``from the Approved Community'' must be 
        treated as a retransfer or a reexport pursuant to Article 1?

    Answer. The requirements applicable to freight forwarders and 
intermediate consignees will be specified in the regulations 
promulgated pursuant to the Arms Export Control Act and the treaties. 
These regulations will detail the ability of freight forwarders and 
intermediate consignees to participate in treaty exports. The legal 
basis for placing requirements on the freight forwarders and 
intermediate consignees comes from the treaties as well as section 
38(a)(1) of the Arms Export Control Act, as amended.

    Question No. 63. Under Secretary Rood, in his testimony before the 
committee on May 21, 2008, told the committee that it was the opinion 
of the State Department's Office of the Legal Adviser that ``the Treaty 
will change the legal reporting requirements under the Arms Export 
Control Act,'' making it discretionary for the executive branch to 
provide notification to Congress prior to providing United States 
Government approval for a retransfer or reexport pursuant to Article 
9(1) of both treaties.

    a. Other than the treaties themselves, what provision of United 
States law authorizes the President to consent (or withhold such 
consent) to the retransfer or the reexport of defense articles exported 
pursuant to the treaties?
    b. If notification to Congress of proposed retransfers and 
reexports will be discretionary, does the executive branch believe that 
the provisions of section 3(d) of the Arms Export Control Act regarding 
procedures for consideration of a resolution of disapproval will still 
apply to these cases? Or will Congress have to change the law if it 
wants to preserve its role in the review of arms transfers to third 
parties?
    c. What other provisions of U.S. law on the export or transfer of 
defense articles would no longer apply if such defense articles are not 
exported pursuant to section 38 of the Arms Export Control Act, such as 
under an agreement meeting the conditions of section 38(j)? For 
example, would sections 3(a), 3(c)(2), 3(f), 3(g), 4, 5, 6, 23, 24, 39, 
39A, 40, 73 and 81 of the Arms Export Control Act still apply to 
exports or transfers or, as appropriate, to the approval of reexports 
or retransfers?
    d. What is the effect of the treaties on the application of laws 
governing the transfer of nuclear, chemical or biological materials, 
equipment or technology? If such exports were not to be exempted from 
the scope of the treaties pursuant to Article 3(2) and section 4 of the 
implementing arrangements, or were later to be removed from the list of 
defense articles exempt from the scope of the treaty, could items under 
Categories XIV and XVI of the United States Munitions List be exported 
under the treaties without an export license or other case-by-case 
authorization?
    e. What is the effect in United States law of the statement in 
Article 3(3) of both treaties that, ``Once delivered pursuant to a 
[Foreign Military Sales program] Letter of Offer and Acceptance, such 
Defense Articles may be treated as if they were exported under this 
treaty in accordance with procedures mutually determined in the 
implementing arrangements''? Does that statement affect in any way the 
requirements of section 3(d) of the Arms Export Control Act?

    Answer. I am advised by the office of the State Department's Legal 
Adviser of the following:

    a. As a retransfer or reexport of defense articles exported 
pursuant to the treaties is outside of the scope of the treaties' 
licensing exemptions, retransfer or reexport authorization would be 
provided in accordance with section 38 of the Arms Export Control Act, 
as amended (AECA).

    b. Section 3(d) of the AECA does not apply as a matter of law 
because the original export was not pursuant to section 38 of the AECA.

    c. As stated in the answer to Question 8, certain statutory 
provisions, though not explicitly overridden by the treaties, are 
rendered irrelevant for exports and transfers that fall within the 
scope of the treaties because there will be no license application or 
other approval pursuant to section 38 of the AECA to trigger the 
provisions of the statute. With respect to the particular provisions 
referenced in the question:

   The requirement in section 3(a) to obtain authorization 
        prior to any retransfer to a person not an officer, employee or 
        agent of the particular government or to change the end-use of 
        a defense article or defense service would not apply to a 
        defense article or defense service for which the transfer or 
        the change in end-use is pursuant to the treaty;
   The requirement in section 3(a)(2) to report to Congress 
        where a substantial violation of any agreement entered into 
        pursuant to the Arms Export Control Act, or any predecessor 
        act, may have occurred will continue to apply with respect to 
        defense articles and defense services provided pursuant to a 
        letter of offer and acceptance pursuant to the Foreign Military 
        Sales program;
   The restriction in section 3(f) on the making of sales and 
        leases will continue to apply;
   The requirement in section 3(g) relating to agreements 
        applicable to sales or leases would continue to apply to 
        letters of offer and acceptance pursuant to the Foreign 
        Military Sales program;
   Defense articles and defense services will still only be 
        sold or leased for the purposes identified in section 4;
   The requirements of section 5 will continue to require a 
        standard clause in U.S. Government contracts entered into for 
        the performance of any function under the Arms Export Control 
        Act. With respect to the reporting requirement contained in 
        section 5(c), while such requirement will continue to apply to 
        Foreign Military Sales, it will not apply to exports pursuant 
        to either treaty as such exports will not be a ``licensed 
        transaction under this Act'';
   The requirements of section 6 will continue to apply to the 
        issuance of letters of offer and the extension of credits or 
        guarantees. Such requirements will not apply to exports under 
        either treaty as such exports may occur without the issuance of 
        an export license;
   Section 23 will remain a potential authority for the 
        provision of defense articles and defense services to Australia 
        and the United Kingdom;
   Guaranties may be provided pursuant to section 24;
   Section 39 will continue to apply to sales made pursuant to 
        the Foreign Military Sales program. However, it will not apply 
        to exports under either treaty as such exports will not be 
        ``licensed or approved under Section 38'';
   Section 39A will continue to apply to sales made pursuant to 
        the Foreign Military Sales program. However, it will not apply 
        to exports under either treaty as such exports will not be 
        ``licensed under this Act'';
   Section 40 will continue to apply;
   Section 73 will continue to apply; and
   Section 81 will continue to apply.

    d. The list of defense articles exempted from treaty coverage 
includes ``Defense Articles listed in the Missile Technology Control 
Regime (MTCR) Annex, the Chemical Weapons Convention (CWC) Annex on 
Chemicals, the Convention on Biological and Toxin Weapons, and the 
Australia Group (AG) Common Control Lists (CCL).'' The list of exempted 
defense articles also includes ``USML Category XVI Defense Articles 
specific to design and testing of nuclear weapons'' and Defense 
Articles specific to naval nuclear propulsion. DOD is unlikely to 
recommend, or agree to, a removal of either of these exemptions. Items 
in Categories XIV and XVI of the United States Munitions List could 
only be exported under the treaties without a license if they did not 
include one of the listed exempted technologies and if they met all 
other requirements of the treaties (e.g., approved community, approved 
program or project, etc.).

    e. If the treaty partner government transfers in accordance with 
the treaties a defense article or defense service originally sold 
pursuant to the FMS program, it is not required to request or obtain 
USG authorization. Therefore, the notification requirements contained 
in section 3(d) of the AECA would not apply.

    Question No. 72. Article 12 states that ``Each Party shall require 
that entities within its Community . . . maintain detailed records . . 
. [and] shall ensure that such records . . . are made available upon 
request to the other Party.'' Is it the view of the executive branch 
that the treaties themselves, upon Senate advice and consent and 
ratification by the President, give the executive branch legal 
authority to require by regulation that United States persons maintain 
detailed records and make such records available to foreign governments 
in connection with the treaties? If so, please explain.

    a. To what officials, in each Treaty Partner, would such records be 
available on request?
    b. Would such requests require the concurrence of the Treaty 
Partner?
    c. Section (3)(a) of the implementing arrangements states that the 
sharing of records between Participants shall be ``subject to their 
respective laws.'' What are the relevant provisions of law in the 
United States and in each Treaty Partner, and how are they likely to 
affect the maintenance and sharing of detailed records required by 
Article 12?

    Answer. The executive branch's legal authority derives from the 
Arms Export Control Act, as well as the treaties. The sharing of such 
records will be done in accordance with the procedures outlined in the 
Implementing Arrangements, section 11(2), to support treaty operations 
and enforcement efforts.

    a. In Australia, such records would be available to government 
officials in organizations including the Department of Defence (Defence 
Export Control Office, Defence Legal and the Defence Security 
Authority), Australian Customs Service and the Australia Federal 
Police. In the United Kingdom, records would be available to government 
officials in organizations including Department of Business, 
Enterprise, and Regulatory Reform and Her Majesty's Revenue and Customs 
as enforcing agencies and to the Ministry of Defence, which will 
monitor compliance with the treaty.

    b. Concurrence of the Treaty Partner would be required where a 
request was made from one Treaty Partner of an entity in the 
jurisdiction of the other, i.e., a U.S. request relating to a British 
company and vice versa. Neither the United Kingdom, Australia, nor the 
United States would be expected to seek concurrence where it is 
checking records of entities in its own territory.

    c. In the United States, the government's ability to obtain records 
and documents would be subject to our domestic laws, most importantly 
the fourth amendment to the U.S. Constitution. Australia's legislation 
to give effect to the provisions of the treaty will require that 
Australian community members make and maintain records in relation to 
each activity done pursuant to the treaty. It is proposed that if a 
member fails to make and maintain such records it should constitute an 
offence. Various U.K. legislation must be considered when dealing with 
a request of this kind, including the Data Protection Act, Freedom of 
Information Act and the Official Secrets Act, as well as common law 
duties of confidentiality. Given the type of records to be transferred, 
it is not expected that there would be a problem in allowing the 
transfer, especially as companies will have agreed to provide such 
information as part of joining the approved community.

    Question No. 79. If an export under the treaties is diverted to a 
third party while on route to a Treaty Partner, what offenses will have 
been committed under U.S. or Treaty Partner law? (Assume, for the 
purposes of this question, that both the shipper and the putative end-
user were involved in the diversion and that wrongful acts were 
committed in both countries.) Which Party to the treaty will have the 
primary role regarding investigation and prosecution?

    Answer. It will depend on the facts. The diversion to a third party 
of an export from the United States might constitute conduct falling 
outside the terms of the treaties, their Implementing Arrangements, and 
the regulations promulgated pursuant to the treaties. As the amendments 
to the International Traffic in Arms Regulations would require that the 
foreign parties obtain U.S. Government authorization prior to any 
retransfer or reexport, such conduct would constitute a violation of 
the Arms Export Control Act and the International Traffic in Arms 
Regulations. Such conduct may also violate new Australian legislation 
that would be enacted to implement the provisions of the treaty. Such 
conduct may also violate the U.K. Trade in Goods Control Order 2005, 
which has effect when there has been an export control offense but the 
goods have never touched U.K. soil, provided the act that led to them 
being ``diverted'' was done either by a U.K. citizen anywhere in the 
world or by a foreign national based in the United Kingdom. This U.K. 
legislation has been widely drafted such that ``any act calculated to 
promote'' would mean that what may appear a minor role in the act could 
be caught under this order. The treaty partners would work together to 
investigate the matter in a coordinated fashion. The Treaty Partners 
would consult each other on possible prosecutions related to the 
conduct and determine the most effective and efficient means of 
criminal investigation and prosecution. The independent prosecuting 
authorities in each nation would maintain discretion in any individual 
case.
                                 ______
                                 

   Responses of Associate Deputy Attorney General James A. Baker to 
            Questions Submitted by Senator Richard G. Lugar

    Questions. Under the executive branch's proposed approach to 
implementing these treaties, it would rely on the self-execution of the 
treaties themselves to create an exception to the license requirements 
contained in the Arms Export Control Act (AECA), and it would then rely 
on the AECA to promulgate regulations making conduct falling outside 
treaty-created safe harbors subject to the AECA's enforcement regime. 
In so doing, the executive branch would appear to be relying, at root, 
on a treaty as the basis for modifying the scope of the criminal and 
civil liability regime provided for in the AECA.

   No. 1. Has the Department of Justice's Office of Legal 
        Counsel reviewed whether it is consistent with the Constitution 
        to rely in this way on a treaty to alter the scope of a 
        criminal liability regime created by statute? If so, what has 
        the Office of Legal Counsel concluded on this question? If not, 
        please indicate why such a review by the Office of Legal 
        Counsel has not been conducted.

    Answer. It is the view of the Department of Justice that the 
exemptions to the enforcement regime of the Arms Export Control Act 
that would be established by the United Kingdom and Australia treaties 
and the regulations promulgated thereunder would be constitutionally 
permissible. Although a treaty generally cannot itself establish a 
Federal criminal offense, see, e.g., Hopson v. Krebs, 622 F.2d 1375, 
1380 (9th Cir. 1980) (``Treaty regulations that penalize individuals 
are generally considered to require domestic legislation before they 
are given any effect''); The Over the Top, F.2d 838, 845 (D. Conn. 
1925), we are not aware of any authority for the view that treaties may 
not exempt certain actors from, or have the practical effect of 
narrowing the scope of, criminal culpability under other Federal law. 
The United Kingdom and Australia treaties, and the regulations to be 
promulgated thereunder, would not prescribe any additional criminal 
offenses; rather, they would merely exempt certain conduct, undertaken 
in conformity with the treaties and the implementing regulations, from 
the AECA's enforcement regime. Please also see the response to Question 
8.

   No. 2. Is the Department of Justice aware of any other 
        instances in which a self-executing treaty has provided the 
        basis for modifying the scope of a statutory regime providing 
        for criminal or civil penalties under U.S. law? Please identity 
        any such instances.

    Answer. The United States has previously entered into treaties that 
provide persons with immunity from civil suits and criminal sanctions 
in particular circumstances. See, e.g., 1961 Vienna Convention on 
Diplomatic Relations, art. 31(l), 23 U.S.T. 3227 (granting diplomatic 
agents ``immunity from the criminal jurisdiction of the receiving 
State,'' as well as immunity from ``civil and administrative 
jurisdiction'' with certain exceptions); 1963 Vienna Convention on 
Consular Relations, art. 43(l), 21 U.S.T. 77, 104 (granting consular 
officials immunity from ``the jurisdiction of'' the host country's 
judicial or administrative authorities for ``acts performed in the 
exercise of consular functions''). Moreover, in Cook v. United States 
(The Mazel Tov), 288 U.S. 102, 118-19 (1933), the Supreme Court held 
that a ``self-executing'' treaty between the United States and Great 
Britain ``superseded'' the authority that an earlier statute had 
conferred upon the Coast Guard to board, search, and seize vessels 
suspected of being engaged in the illegal smuggling of liquors into the 
United States beyond our territorial waters.

    Questions. In an August 20, 2009, letter to Attorney General 
Holder, Senator Kerry and I asked whether there were any authorities 
the Department of Justice believes to be important or useful to the 
effective enforcement of these treaties that would require the 
enactment of new legislation. The Department's answer indicated only 
that ``there are no additional authorities necessary for enforcement of 
these treaties.'' Whether additional authorities are ``necessary'' is a 
different question than whether such authorities would be useful or 
would put treaty enforcement on a sounder footing.

   No. 3. Does the Department of Justice believe enforcement of 
        these treaties could be made more effective, or less vulnerable 
        to legal challenge, through the enactment of appropriate 
        implementing legislation grounding the enforcement authorities 
        for the treaties in the AECA?

    Answer. As both the Department of Justice and the Department of 
State previously have advised the committee, new legislation is not 
needed to implement the treaties, or to penalize conduct that falls 
outside the scope of the treaties and implementing regulations. The 
AECA already contains sufficient authorities to penalize exports that 
do not satisfy the conditions for exemption established by the treaties 
and implementing regulations.

   No. 4. In an enforcement proceeding, does the Department of 
        Justice believe that U.S. courts will attach as much weight to 
        regulations issued in the absence of a new implementing statute 
        as they would to a statute providing authorities for enforcing 
        the treaties?

    Answer. Yes.

   No. 5. From an enforcement perspective, what disadvantages, 
        if any, does the Department of Justice see to the enactment of 
        implementing legislation to provide authorities for enforcing 
        the treaties?

    Answer. Although the Department does not foresee any disadvantages 
from an enforcement perspective if Congress were to enact further 
implementing legislation, we do not believe such legislation is 
necessary.

    Questions. If the Senate is to approve these treaties, it is 
important that we have a high degree of confidence that the law 
enforcement community will have the tools and resources it needs to 
enforce against any abuses of the treaties.

   No. 6. Can you assure the committee that the Department of 
        Justice's ability to enforce against such abuses will not be 
        diminished by the absence of amendments to the AECA to provide 
        the authorities for such enforcement actions?

    Answer. With clear and precise implementing regulations issued by 
the Department of State within the International Traffic in Arms 
Regulations (``ITAR''), the absence of legislative amendments to the 
Act would not diminish our ability to enforce the Act.

   No. 7. Does the Department of Justice believe that the 
        treaties and regulations your testimony contemplates require 
        the compilation and maintenance of sufficient documentation 
        relating to the export of United States defense articles, 
        defense services, and related technical data to facilitate law 
        enforcement efforts to detect, prevent, and prosecute criminal 
        violations of any provision of the AECA, including the efforts 
        on the part of countries and entities engaged in international 
        terrorism to illicitly acquire United States defense items?

    Answer. The regulations issued by the Department of State within 
the ITAR to implement and effectuate the treaties include additional 
and strong documentation requirements as well as the requirement for 
foreign companies to comply with the document demands of law 
enforcement agencies. Such conditions will contribute significantly to 
our ability to investigate and prosecute diversion schemes and the 
abuse of the treaties' exemption.

    Question. In your testimony, you indicate that the executive branch 
would intend to rely on section 38(a)(1) of the AECA to promulgate 
regulations making conduct falling outside treaty-created safe harbors 
subject to the AECA's enforcement regime. Other provisions of the AECA 
operate to limit the President's ability to establish regulations 
exempting foreign countries from the AECA's license requirements. For 
example, section 38(j) of the AECA provides that the President may use 
the AECA's regulatory authority to exempt a foreign country from the 
AECA's licensing requirements only if specified conditions are met.

   No. 8. Does the Department of Justice believe that the 
        requirements of section 38(j) of the AECA must be satisfied 
        before the executive branch may promulgate regulations under 
        section 38(a)(1) of the AECA to implement these treaties? If 
        not, why not?

    Answer. No. Subsection 38(j) provides that the President may not 
utilize the regulatory authority in paragraph 38(a)(1) ``to exempt a 
foreign country from the licensing requirements of this chapter'' 
except pursuant to the terms of a ``binding bilateral agreement with 
the foreign country'' as specified under that section. 22 U.S.C. 
Sec. 2778(j)(1)(A); see also id. Sec. 2778(f)(2). The regulations 
exempting certain parties acting pursuant to the United Kingdom and 
Australia treaties from the AECA's licensing requirements, however, 
would be promulgated pursuant to the self-executing treaties 
themselves, not paragraph 38(a)(1). To the extent that the Secretary of 
State promulgates regulations under paragraph 38(a)(1) of the AECA, 
those regulations would not themselves exempt any parties from the 
AECA's licensing requirements; rather, they would clarify that conduct 
falling outside the treaties and their implementing regulations is 
subject to the AECA's enforcement regime.

    Questions. In your testimony you indicate that the content of the 
regulations implementing these treaties would be critical to the 
Department of Justice's ability to enforce against abuses of the 
treaties.

   No. 9. Do you agree that in order to ensure effective 
        prosecution, it will be crucial that any regulations 
        promulgated regarding permitted and prohibited activities in a 
        safe harbor created by the treaties must be precise and 
        complete regarding what actions constitute offenses under the 
        treaties, their implementing arrangements, and regulations 
        implementing the treaties in the United States?

    Answer. Yes. Regulations promulgated under paragraph 38(a)(1) of 
the AECA will ensure that conduct falling outside of the treaties' 
exemptions, and conduct violating the prohibitions and conditions of 
the ITAR, are subject to the AECA's civil and criminal enforcement 
regime.

   No. 10. If so, what elements does the Department of Justice 
        believe must be included in such regulations to satisfy such 
        requirements?

    Answer. Such regulations will specify the precise scope and limits 
of the treaties' exemptions, and the conditions that must be satisfied 
in order to qualify for such exemptions. In addition, the regulations 
will unambiguously prescribe prohibited conduct or conduct falling 
outside the treaties' exemptions.
                                 ______
                                 

  Responses of Assistant Secretary of Homeland Security John Morton, 
Immigration and Customs Enforcement, and Acting Commissioner Jayson P. 
Ahern, Customs and Border Protection, to Questions Submitted by Senator 
                             Richard Lugar

    Question No. 1. In 2003, then-Under Secretary for Border Security 
and Transportation Security Asa Hutchinson stated with regard to 
bilateral agreements for licensing exemptions with the United Kingdom 
and Australia that ``Depending on the volume of license exempt cargo 
moving through each [U.S.] port, these proposed ITAR country exemptions 
could increase or significantly increase . . . workloads and require 
additional inspectors'' for outbound Customs review of exports made 
under the agreements.
    In 2008, DHS stated in answers for the record submitted to this 
committee that U.S. Customs and Border Protection (CBP) ``expects the 
impact on inspections for [the treaties] to be minimal because the new 
regulatory exemption may be handled similar to existing exemptions.'' 
It also stated that ``CBP does not plan on adding additional officers 
at . . . ports'' as a result of implementation of the treaties in the 
United States.

   Do CBP's 2008 answers mean that no more scrutiny will be 
        applied to outbound review of exports made under the treaties 
        than would be applied to unlicensed exports under, for example, 
        the Canadian exemption?

    Answer. CBP utilizes a number of techniques to screen and target 
licensable export shipments. The existence of a license or license 
exemption is not the sole criteria in determining the need for 
additional screening requirements. Therefore, should the treaties be 
ratified, exports made under the license exemptions for the treaties 
would currently receive the same level of scrutiny as a licensed 
shipment.

    Question. No. 2. Will CBP or Immigration and Customs Enforcement 
(ICE) modify any existing practice or seek any additional resources for 
review of munitions exports to the United Kingdom and Australia, and do 
CBP and ICE expect that DHS will provide updated guidance to CBP and 
ICE regarding review of munitions exports to the United Kingdom and 
Australia, once the treaties are in force?

    Answer. The inspection of exports is the primary responsibility of 
CBP. ICE is charged with the investigation of illegal exports. ICE will 
continue to utilize its broad export authorities to investigate the 
illegal export and diversion of munitions items. Based on the 
implementing arrangements and proposed U.S. Government and foreign 
government regulations, policy, and procedural changes for the Defense 
Trade Cooperation Treaties with the United Kingdom and Australia, ICE 
would be permitted to participate with the host government on end-use 
verifications in order to ensure the prompt investigation by the host 
government of alleged violations. The treaties have not yet been 
ratified, so new regulations have not yet been issued.

    Question. No. 3. What impact will the implementation of these 
treaties have on ICE's Project Shield America?

    Answer. Through ICE's industry outreach program, ``Project Shield 
America'' (PSA), special agents conduct presentations for U.S. 
manufacturers of arms and sensitive technology to educate them about 
export laws and solicit their assistance in preventing illegal foreign 
acquisition of their products. Since late 2001, ICE special agents have 
conducted more than 17,000 industry outreach presentations, which have 
resulted in tips that have led to successful ICE criminal 
investigations around the world. Although ICE does not believe there 
will be a significant impact on PSA, the implementation of the treaties 
will necessitate the updating of materials and require additional 
training for ICE special agents who conduct PSA outreach.

    Question No. 4. In the absence of legislation grounding enforcement 
authorities for the treaties in a statute, does ICE believe that the 
treaties would pose any challenges for its investigation efforts in 
export enforcement that would prevent or inhibit its ability to pursue 
cases resulting in arrests, prosecutions, and convictions of offences 
under the Export Administration Act, the Arms Export Control Act, the 
Trading with the Enemy Act, the International Emergency Economics 
Powers Act, or other related statutes?

    Answer. No, legislative changes are not needed to implement the 
treaties, as the absence of legislation will not pose any additional 
challenges for its investigative efforts in export enforcement. ICE 
continues to believe that strong implementing regulations are a vital 
component to the success of these treaties.
    As far as whether or not the current U.S. statutes are legally 
sufficient to allow export enforcement investigations and prosecutions, 
ICE defers to the statements made by James A. Baker, Associate Deputy 
Attorney General, U.S. Department of Justice, before the Senate 
Committee on Foreign Relations at a December 10, 2009, hearing on the 
treaty between the United States, the United Kingdom of Great Britain, 
and Northern Ireland concerning defense trade cooperation:

          A transaction that fully complies with the safe harbor 
        established by regulations promulgated pursuant to the treaties 
        would not be subject to criminal or civil penalties under AECA 
        [the Arms Export Control Act]. Conversely, a transaction 
        falling outside the designated safe harbors would remain fully 
        subject to the civil and criminal enforcement measures under 
        the AECA. As the Department has stated previously, no new 
        authorizing legislation would be required to prosecute such a 
        violation.
          Because the treaties are self-executing, they are 
        ``equivalent to an act of the legislature'' for purposes of 
        Federal law. Medellin v. Texas, 128 S. Ct. 1346, 1356 (2008). 
        Upon ratification of the treaties, therefore, the President 
        would have the authority to issue regulations pursuant to the 
        treaties themselves to create exemptions from the applicable 
        licensing requirements of the AECA and ITAR [International 
        Traffic in Arms Regulations]. These regulations would thus 
        establish the designated safe harbors contemplated by the 
        treaties and establish requirements for qualification for the 
        safe harbor.
          In addition, the President would have authority to promulgate 
        regulations under section 38(a)(1) of the AECA to make conduct 
        falling outside the designated safe harbors subject to the 
        enforcement regime of the AECA. These regulations would be 
        promulgated pursuant to the ``broad statutory delegation'' in 
        section 38 of the AECA to control the import and the export of 
        defense articles and defense services. B-West Imports, Inc. v. 
        United States, 75 F.3d 633, 636 (Fed. Cir. 1996). It is the 
        Department's understanding that these regulations will track 
        those to be promulgated under the treaties and would thus 
        establish conditions for persons exporting or transferring 
        pursuant to the treaties, and an export or transfer that fails 
        to satisfy those conditions would be enforceable through both 
        criminal and civil sanctions.

    Question No. 5. Given that the scope of the treaties is larger than 
the scope of the bilateral licensing exemption agreements, does CBP 
believe that workloads on its inspectors would increase or 
significantly increase?

    Answer. CBP has statutory and regulatory authority to take 
appropriate action, including the authority to investigate, detain or 
seize any export or attempted export, of defense articles or technical 
data contrary to the International Traffic in Arms Regulations (ITAR).
    CBP has been coordinating with the Department of State, Directorate 
of Defense Trade Controls to ensure the regulatory provisions 
implementing the United Kingdom and Australia treaties can be 
effectively and efficiently enforced for all export shipments. 
Additionally, CBP coordinates with the Census Bureau to modify the 
Automated Export System (AES) to address the conditions of the proposed 
ITAR exemptions.
    To identify shipments that do not meet the conditions established 
by the ITAR to implement the treaties, CBP will use AES and the 
Automated Targeting System (ATS) to identify shipments that have a 
high-risk of being in violation of the ITAR. For those shipments 
targeted CBP will inspect the commodities and review the associated 
shipping documents. If violations are believed to exist, the shipments 
will be detained by CBP and referred to the Directorate of Defense 
Trade Controls to determine if there is a violation of the ITAR. Once 
the determination is made, the shipment will be either released or in 
the case of a violation the shipment will be seized by CBP.

    Question. No. 6. In 2005, the U.S. Government and Accountability 
Office (GAO) found that 256 CBP officers were assigned to cover all 
outbound enforcement at 317 U.S. ports of exit and border crossings. In 
2008, DHS stated in answers submitted to this committee that 256 CBP 
officers were assigned to outbound enforcement, supported by 32 
nonuniformed personnel. Have these numbers changed since 2008?

    Answer. In March 2009 CBP reestablished the Outbound Enforcement 
Division to focus on export and outbound enforcement issues. The office 
includes program managers that work with the Department of State, 
Directorate of Defense Trade Controls to address all export control 
issues for all International Traffic in Arms Regulations controlled 
commodities.
    CBP has increased the number of personnel performing outbound 
enforcement at the 317 U.S. ports of exit from approximately 256 in 
2008 to over 350 in 2009. Local CBP ports of exit continue to manage 
and address local outbound enforcement operations based on workload or 
identified threat.
    CBP is working with the local ports of exit to reestablish Outbound 
Enforcement Teams in those ports where personnel are available and 
there is sufficient export workload.

    Question No. 7. Given that the scope of the treaties is larger than 
the scope of the bilateral licensing exemption agreements, how can CBP 
contend that no additional inspectors will be required to ensure that 
the burdens mentioned in 2003 by then-Under Secretary Hutchinson do not 
pose challenges to the investigative and enforcement missions of CBP 
and ICE?

    Answer. As explained in Question No. 5 (850863) CBP has statutory 
and regulatory authority to take appropriate action, including the 
authority to investigate, detain or seize any export or attempted 
export, of defense articles or technical data contrary to the 
International Traffic in Arms Regulations (ITAR).
    The number of shipments under the proposed United Kingdom and 
Australia ITAR license exemptions is expected to relate to a 
corresponding decrease in the number of shipments under a license to 
the same countries. Therefore, we do not anticipate an increase in 
shipments that would necessitate an increase in the number of 
inspectors that are needed.
                                 ______
                                 

Responses of Associate Deputy Attorney General James Baker to Questions 
                 Submitted by Senator Russell Feingold

    Question. Mr. Baker, during the hearing I asked whether, if defense 
articles or services are retransferred to entities outside the approved 
community, a congressional resolution to block such a transfer would 
enjoy the benefit of the expedited procedures provided in the Arms 
Export Control Act. You responded that such transfers would require 
U.S. approval. I understand but that does not mean that it would 
trigger the special procedures laid out in the Arms Export Control Act. 
My reading is that the expedited review procedures of that Act would 
not be triggered by a retransfer because such retransfer would be 
governed by the terms of the treaty not the Act. Is that correct?

    Answer. It is correct that the ``report-and-wait'' procedures set 
forth in 22 U.S.C. Sec. 2753(d)(3) by their terms apply only to certain 
defense articles and services the export of which has been ``licensed 
or approved under'' section 38 of the AECA, and thus would not apply to 
the retransfer of items exported pursuant to an exemption under the 
treaties and their implementing regulations. Nevertheless, as the 
Department of State indicated in its response to QFR No. 64 in 2008, it 
``intends to notify Congress of any request to retransfer or reexport 
to a person or entity outside of the particular approved community a 
defense article or defense service where the value of such transaction 
meets or exceeds the thresholds identified in section 3(d) of the 
AECA.'' The Department of State has informed us that this remains an 
accurate statement of its intention, i.e., that the Department of State 
which has the authority under the treaties to withhold approval of such 
retransfers (see Article 9 of the treaties)--would not provide such 
approval in a case where Congress by joint resolution (i.e., enacted 
legislation) prohibits such retransfer.

    Question. Please list the information required pursuant to the Arms 
Export Control Act and the information that will be required pursuant 
to the regulations to be issued under the treaties.

    Answer. The information generally required pursuant to the Act and 
the ITAR depends upon the nature of the export license or approval 
requested and is set forth at sections 123, 124, and 125 as well as 
other portions of the ITAR. The information required with regard to 
exports under the treaties will be listed at sections 126.16 and 126.17 
of the proposed revised ITAR regulations. The Department of State 
issues and administers those requirements.

    Question. Please list the information derived from the license 
application that was most commonly used to prosecute violators of the 
Arms Export Control Act or International Traffic in Arms Regulations.

    Answer. Our prosecution of AECA violations commonly involves 
unlicensed diversion schemes. When applicable to an investigation, 
information contained in a licensing application concerning the end-use 
and end-user is generally of greatest interest to investigators.