Export Control and Defense Trade Reciprocity Provisions Dropped
Fiscal Year 2005 National Defense Authorizaton Act Passed by Congress
Updated October 13, 2004
House-Senate Conference Concludes, Bill Sent to President
(Updated October 13, 2004)
The House and Senate completed their Conference on HR 4200 the Fiscal Year 2005 National Defense Authrorization Act (Also know asthe Ronald W. Reagan national Defense Authorization Act for Fiscal Year 2005) Friday October 8, 2004. The House of Representatives adopted the Conference Report later that day by a vote of 359-14. On Saturday, October 9, 2004 the Senate adopted the report by voice vote. The final language, including the Conference Report, is posted on the House Armed Services Committee website and are linked below:
The following provision were dropped. A brief summary of these provisions can be found below:
House Sections
- Section 811
- Section 812
- Section 1402
- Section 1403
- Section 1404
- Section 1405
- Section 1406
Senate Sections Dropped
- Section 841
- Section 842
- Section 843
Background
On May 20, 2004 the House of Representatives passed its version of the National Defense Authorization Act for Fiscal Year 2005 (H.R. 4200) 391-34. The Senate is scheduled to continue floor deliberations on its version of the bill (S. 2400) in early June.
There are several provisions in both versions of the bill, as well as several potential amendments, that NDIA would like to make you aware of. Based on initial feedback from our members, NDIA has formulated the following positions on the provisions of concern.
Below is a brief description of the specific provisions, links to the actual bill language and accompanying Committee reports, the Administration's position, background papers, talking points and NDIA letters. NDIA will continue to add to this website with background briefs, talking points and actions items for each issue as they are developed.
Bill Language and Committee Reports
Summary of Provisions of Interest
Below is a brief summary of those provisions and potential amendments that NDIA is monitoring that would impact the health of the defense industrial base.
Senate Bill (S. 2400)
Title IIIV, Subtitle D, Sections 841, 842, 843
- Senate Section 841: Commission on the Future of the National Technology & Industrial Base (page 166)
This section would establish a 12 person Presidential Commission to 1) study the issues associated with the future of the national technology and industrial base in the global economy, particularly with respect to its effect on Untied States national security; and 2) asses the future ability of the national technology and industrial based to attain the national security objectives of the United States. The Commission is required to report back to Congress by March 1, 2008.
- Senate Section 842: Conforming Standard for waiver of domestic source or content (page 172)
This section would provide the Secretary of Defense with the authority to waive all domestic source requirements or domestic content requirements for the procurement of items from those foreign countries with reciprocal defense procurement memorandum of understanding. This would apply to 21 of the United States' largest defense trading partners.
- Senate Section 843: Consistency with United States obligations under trade agreements (page 176)
This section would provide the Secretary of Defense with the authority to not implement any provision within the bill that would violate United States obligations under the any trade agreement. It would require the Secretary of Defense to make this determination in consultation with the Secretary of Commerce, the Secretary of State and the United Stated Trade Representative.
Amendments Filed For Floor Debate
Updated June 11, 2004
The following amendments have been filed and are awaiting consideration before the full Senate.
- Dayton Amendment SA 3197:
Senator Dayton (D-MN) has filed an amendment to strike Sections 842 & 843 from the bill. NDIA is opposed to Senator Dayton's amendment (see NDIA letter to Chairman Warner linked below). Inclusion of Sections 842 & 843 in the final bill sends a strong message that the United States values its trading partners and allies and is supportive of international industrial cooperation.
- McCain (pdf) Second-degree Amendment to Dayton SA 3320:
This amendment would replace the original bill language in Sections 842 and 843. It would provide the Secretary of Defense with the authority to waive all domestic source requirements or domestic content requirements for the procurement of items from those foreign countries with a Declaration of Principles with the United States. This would apply to 6 of the United States' largest defense trading partners.
- McCain (pdf) Second-degree Amendment to Dayton SA 3321:
This amendment would replace the original language in Sections 842 and 843. It would provide the Secretary of Defense with the authority to waive all domestic source requirements or domestic content requirements for the procurement of items from those foreign countries that have supplied air, naval, ground,or stabilization forces uned the United States Central Command or the International Security Assistance Force in Operation Enduring Freedom or Operation Iraqi Freedom. This would apply to 50 plus countries.
- McCain (pdf) Amendment to strike industrial base provisions from Fiscal Year 2004 National Defense Authorization Act (Public law 108-136) SA 3319:
This amendment would repeal sections 812, 813 and 814 of last years National Defense Authorization Act. These provisions were the result of House, Senate and Administration negotiations during the House-Senate Conference Committee last year. These provisions were included in lieu of earlier "Buy American" provisions inlcuded in the House version of the bill. NDIA opposed the orginial language.
- Dodd (pdf) Amendment SA 3311:
This amendment would require the Secretary of Defense to impose comparable offsets on firm contracted or subcontracted to the Department of Defense if a preponderance of goods/services supplied under the contract are prduced, manufactured, grown or extracted in a foreign country that requires offsets greater than 100 percent from U.S. companies wether by law or practice. The Secretary of Defense has the option to impose similar offsets if the foreign country imposes offsets of any percentage on U.S. contracts in excess of $5 million. The amendment would also require a report to Congress on any U.S. imposed offset put into effect by this legislation. NDIA is opposed to this amendment (See NDIA letter to Chairman Warner linked below).
- Biden (pdf) Amendment SA 3378:
This amendment contains several provisions impacting the defense-related export controls of the United States. The amendment would increase the Congressional Notification Threshold for export licenses as follows: Major Defense Equipment: raised to $50 million (currently $14 million); Defense Articles and Services: raised to $100 million (currently $50 million); and Construction: raised to $350 million (currenlty $200 million). The amendment authorizes waivers to the International Traffic in Arms Regulations (ITAR) for Australia and the United Kingdom but includes several reporting requirements on the waivers use and implimentation. Third, the amendment provides waiver authority for certain export license requirements of communication satellites to NATO countries and Australia, New Zealand and Japan. Senators Lugar and Biden (pdf) have written Chairman Warner in support of their amendment.
Summary of Senate Floor Action
Updated June 22, 2004
During the full Senate consideration of S. 2400, the Senate voted to accept a Warner/McCain substitute (SA 3320) to the Dayton Amendment (SA 3197). The Warner/McCain amendment was adopted 54-46. The Warner/McCain amendment would keep Section 843 and amend section 842 to only apply to countries with Declaration of Principles (DOP) or similar agreements. This includes: Italy, Netherlands, Norway, Spain, Sweden, the UK, Australia (Statement of Principles) and Canada (similar agreement).
As of the afternoon of June 22, the Senate had yet to begin consideration of the Dodd Amendment (SA 3311). The Senate leadership has expressed a desire to complete consideration of the bill by Wednesday, June 23 and to move directly to conisderation of the Fiscal Year 2005 Defense Approprations Act.
House Bill (H.R. 4200)
Title IIIV, Subtitle B & Title XIV, Subtitle A, Sections 1401, 1402, 1403, 1404, 1405, 1406
- House Section 811: Defense Fair Trade (page 325)
This section would prohibit the Secretary of Defense from entering into a contract or permit a subcontract for the procurement of any defense article or defense service on the U.S. Munitions List from a foreign firm unless the country in which the firm is located applies the same offset agreements to U.S. contracts as the Department of Defense imposes on foreign firms, which the U.S. currently does not do. The Secretary of Defense may waive this requirement on a contract-by-contract or subcontract basis provided it meets national security objectives and is published in the Federal Register for 30 days. This requirement would be in effect for all contracts entered into one year from enactment of the bill and defines a foreign firm as a business entity that performs substantially all of its manufacturing, production and R&D outside the United States.
- House Section 812: Amendments to Domestic Source Requirements (page 330)
This section would require the Secretary of Defense to publish a notice on FedBizOpps.gov each time the Department of Defense intends to issue a waiver of domestic source (Berry Amendment) requirements 1) due to the inability of U.S. sources to provide sufficient quantity, quality or material at reasonable market price or 2) for the purchase of specialty metals or chemical protective clothing from foreign countries as a condition of existing offset requirements or other trade agreements.
- House Section 1402: Exemption from licensing requirements for export of significant military equipment (page 449)
This section would prevent the President from establishing an exemption from licensing requirements, such as the Canadian ITAR (International Traffic in Arms Regulations) exemption, for the export of significant military equipment (SME). This would impact current negotiations for similar exemptions for defense exports to Australia and the United Kingdom.
- House Section 1403: Cooperative Projects with friendly foreign countries (page 450)
This section would require a U.S. firm to obtain an export license whenever a transfer is carried out pursuant to a commercial contract entered into under a cooperative project. A cooperative project is defined as any program jointly managed by two or more countries (i.e. NATO programs, JSF, etc.). Under current law, subcontractors could export under the prime contractor’s license.
- House Section 1404: Licensing requirements for export of military critical technologies (page 451)
This section would require a U.S. firm to obtain an export license for any item on the Military Critical Technology List as of January 20, 2004. This would remove several exemptions that are currently in law.
- House Section 1405: Control of exports of United States weapons technology to the People’s Republic of China (page 451)
This section is a reaction to European Union proposals to remove sanctions on the transfer of dual-use technology to the People’s Republic of China. It would require U.S. firms to obtain export licenses for any dual-use or military technology--and assurances from the end user that the technology will not be transferred to China--for exports to foreign firms and countries that have exported to China any technology currently controlled by U.S. export laws.
- House Section 1406: Strengthening international export controls (page 452)
This section would require the President to report to Congress every 6 months, beginning 180 days after enactment of the bill, on the President’s plan for creating an effective multilateral export control regime.
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Statements of Administration Policy (SAP) and Department of Defense Letters
The SAP is the formal mechanism by which the Administration conveys its position--either concern or support--for legislation under consideration by Congress.
Department of Defense Letters to Congress
Background Papers
Below are background papers developed by NDIA for its members as reference material
Talking Points
The documents below were developed as multi-association talking points for members to use in their communications with Congress and the Administration.
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NDIA & Multi-Association Letters and Position Statements
What You Can Do
NDIA encourages its member companies that feel strongly on any of these provisions to contact their Senators and Members of Congress. NDIA encourages its members to incorporate the background papers, talking points and NDIA letters on this page into their correspondence with the Congress.
If you have any questions regarding these provisions or the bill in general, please contact either Pete Steffes, Vice President for Government Policy (703-247-9470, psteffes@ndia.org) or Ben Stone, Director, International Trade Policy & Programs (703-247-2561, bstone@ndia.org).
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