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Weapons of Mass Destruction (WMD)

June 10, 1998

Statement of U. S. Sen. Richard C. Shelby (R-Ala.)

Chairman, Senate Select Committee on Intelligence

Open Hearing On U. S. Technology Transfers To China


The Committee has begun an investigation into allegations that the transfer of sensitive technology to China may have led to a serious breach of our national security.
It has been reported that American companies may have helped improve the accuracy, reliability and lethality of Chinese intercontinental ballistic missiles targeted on U. S. cities. These allegations are extremely disturbing; our inquiry will address matters that go to the heart of our national security.
In April 1996, following the explosion of a Chinese Long March missile carrying a Loral satellite, a team of engineers headed by Loral met with China Aerospace officials to discuss the problems with the Long March missile.
China Aerospace has several lines of work: one is building civilian space launch vehicles to place commercial satellites into orbit; and another is building nuclear-armed intercontinental ballistic missiles (ICBMs) targeted on the United States and other countries.
With the exception of the nuclear warhead, virtually every component of a civilian space launch booster is similar or identical to ICBM components. And many of the technologies required to accurately place a satellite in orbit are strikingly similar to those required to accurately deliver a warhead to its target.
In the process of helping the Chinese fix their civilian missile, it has been reported that Loral and Hughes, and possibly others, may have transferred expertise and sensitive technical information that could help China to improve the accuracy and reliability of its missiles, including ICBMs targeted on the United States. Similar assistance from other companies may also have helped China develop Multiple Independently-targetable Reentry Vehicles for its ICBM force. Did these transfers harm U. S. national security interests? Congress and the American people need to know all the facts.
Although it is not the subject of today's hearing, the American people also need to know the facts about the decision earlier this year to approve a waiver for export of an additional Loral satellite to China - at a time when Loral was under criminal investigation for possible violation of the export control laws in the transfer I just described.
The transfer of technology by Loral is not the only matter that raises concerns about our policies governing the export of sensitive satellite and related technologies to China. For almost 10 years, beginning under the Bush Administration, U.S. satellite makers have exported satellites to be launched on Chinese missiles, attracted by the relatively low cost of Chinese launch services.
Because of the similarities I have described between a civilian satellite launch and the release of a military warhead, these transfers are inherently sensitive, and are extensively regulated by export control laws and regulations. The history of those laws and regulations, and of their implementation, is the primary issue before us today.
There have been significant changes in the rules governing satellite exports since President Bush authorized the first such launch in December 1989. Our witness today will go into greater detail, so I'm only going to summarize briefly.
Initially, satellites were listed on the U. S. Munitions List and licensed under the jurisdiction of the State Department. In April 1992, following a two-year review to determine which dual-use technologies could safely be transferred from the State Department to the Commerce Department jurisdiction, President Bush moved those commercial communications satellite technologies that did not have certain militarily significant features to the control of the Commerce Department.
The difference between State Department and Commerce Department jurisdiction is an extremely important distinction. In considering the export of items on the U. S. Munitions List, the State Department considers only the national security and foreign policy ramifications of the export. If national security or foreign policy interests of the United States are at risk, the transfer can be blocked.
The Commerce Department, as befits its name, has a different world view, and operates under a different legal framework. Most important, when Commerce reviews a license it is required by law to weigh commercial and trade concerns against national security.
Lastly, there are significant procedural differences between the Munitions List and the Commerce Control List, differences which relate both to the process by which applications are approved, the ability of other agencies to object on national security grounds, and the technology security safeguards and monitoring requirements that are imposed on the actual export and launch of the satellite.
In October 1995, after an intense interagency debate over proposals to move the remaining satellite technologies to the Commerce Control List, or CCL, Secretary of State Christopher signed an order retaining these technologies under the State Department's jurisdiction. But in March 1996, President Clinton overturned Secretary Christopher's decision, and transferred the satellites to Commerce control. I believe that this final shift of all satellite technologies, including those with military significance, onto the Commerce Control List represents a fundamental sea change in our technology transfer policies.
We have a witness before the Committee today that will shed some light on this sea change. In January of 1997, at the request of another Committee of Congress, the General Accounting Office performed an in-depth study of the transfer of commercial satellites from the Munitions List to the Commerce Control List.
Today, in this first open hearing of our investigation into impacts to U.S. national security from advanced satellite technology exports to China, we have asked Ms. Katherine Schinasi, Associate Director of the National Security and International Affairs Division, to testify on the GAO's findings, and to provide an update on subsequent developments.
We have asked her to describe the decision-making process that led to transfer of satellite technologies to the CCL, the balancing of security and commercial concerns, the export control process itself, the legal, practical and even philosophical distinctions between the Munitions List and the Commerce Control List, the role of the Defense Department and Intelligence Community in highlighting national security concerns, and the nature and implementation of monitoring and other security procedures designed to protect sensitive technologies.
I believe that she will help us to ascertain whether the decisions I have described were wise decisions, or whether economic and commercial concerns, aided by vigorous lobbying from the aerospace industry, may have been allowed to override critical national security interests. The American people deserve an honest, straightforward accounting of these events.
The General Accounting Office, or "GAO" was established by the Budget and Accounting Act of 1921 to independently audit Government agencies. Over the years the Congress has expanded GAO's audit authority, added new responsibilities and duties, and strengthened GAO's ability to perform independently.
I think it is fair to say that GAO reports have raised the hackles of administrations of both parties over the years. We look to the GAO for fair, critical, insightful accounting of the actions of the executive branch. I want to thank Ms. Schinasi, and the GAO, for being very responsive to the Committee's request to appear within a very short time frame.
I want to also take this opportunity, in open session, to express my concern that the Justice Department is still preventing information that is key to our oversight investigation from being brought to this Committee.
We have received summary paragraphs with conclusions from three of the technical reports that we requested from the Administration at our hearings last week. Because the conclusions are contradictory, the Committee must have access to the underlying technical details in order for us to do our job. The documents are readily available within the Executive Branch, therefore we should be given copies IMMEDIATELY.
Ms. Schinasi, these comments about documents are certainly not directed at you. The GAO has been most helpful to the Committee. I welcome you today, and we look forward to your testimony.


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