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Weapons of Mass Destruction (WMD)

USIS Washington File

01 October 1998


(Whether Clinton will sign or veto bill not clear)  (520)
By Bruce Odessey
USIA Staff Writer
Washington -- The U.S. Senate has voted final passage of a bill that
would reverse President Clinton's 1996 decision transferring export
licensing authority for commercial communications satellites from the
State Department to the Commerce Department.
Whether Clinton will sign or veto the bill was not clear after the
Senate's 96-2 vote October 1. Secretary of Commerce William Daley had
planned to recommend a veto, a Commerce spokeswoman said.
An override of a veto requires two-thirds votes in both the House of
Representatives and Senate.
Members of Congress argued that the State Department's stricter
satellite licensing procedure would protect against transfers of
sensitive launch technology that foreign governments could use for
building missiles.
Congress took the action while investigating charges that China
obtained missile technology in violation of U.S. law through its
program of launching U.S.-built satellites; U.S. licenses are required
for exports of such satellites to Chinese launch pads.
The satellite provision was passed as part of the fiscal year 1999
defense authorization bill. In the defense authorization bill passed a
year earlier, Congress reversed administration policy relaxing export
controls on high-performance computers; Clinton signed that bill
despite his opposition to that provision.
The 1999 bill would transfer license control back to State from
Commerce March 15, giving U.S. manufacturers a short window of
opportunity to continue sending license applications to Commerce.
It would give the Defense Department more review authority over
satellite exports.
It would require a report to Congress from the president for any
decision waiving Tiananmen Square sanctions in order to approve a
satellite export to China.
The bill would also prohibit exports of missile equipment or
technology to China unless the president certifies that the export
will not improve Chinese missile capabilities and will not hurt the
U.S. space launch industry.
Administration officials have argued that they doubt the Chinese
derived any crucial information for their missile system by launching
U.S.-built satellites.
Industry opponents of the proposed licensing authority transfer back
to State argued that it would only drive away business to foreign
Opponents pointed out also that the incident that triggered
congressional investigations, concerning work by Loral Space &
Communications Ltd., was approved by the State Department before
license authority was transferred to Commerce in 1996.
U.S. satellite manufacturers face another problem under the bill
concerning tax credits under a 1971 law designed to promote foreign
sales by U.S. companies that set up special export subsidiaries.
Once satellites were transferred to the State Department munitions
list, exporters would be eligible to receive only a 2.6-percent tax
credit; exports of non-military items are eligible for 5.2-percent tax
Bills have been introduced in the House and Senate that would raise
the tax credit to 5.2 percent for all defense exports, but few days
remain in the current congressional session to pass such a bill.

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