House Foreign Affairs Committee Report on H.R. 5916, the Security Assistance and Arms Export Control Reform Act of 2008

110TH CONGRESS

REPORT

HOUSE OF REPRESENTATIVES

2d Session

110-626

--SECURITY ASSISTANCE AND ARMS EXPORT CONTROL REFORM ACT OF 2008

MAY 12, 2008- Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Mr. BERMAN, from the Committee on Foreign Affairs, submitted the following

R E P O R T

[To accompany H.R. 5916]

[Including cost estimate of the Congressional Budget Office]

The Committee on Foreign Affairs, to whom was referred the bill (H.R. 5916) to reform the administration of the Arms Export Control Act, and for other purposes, having considered the same, reports favorably thereon with an amendment and recommends that the bill as amended do pass.

SUMMARY

H.R. 5916 would authorize security assistance for Israel and other countries, and assistance to North Korea in dismantling its nuclear facilities. In addition, the bill would require the Department of State to improve the review and processing of export licenses for defense articles, and would authorize the appropriation of such sums as may be necessary in 2009 and future years for that purpose. CBO estimates that enacting H.R. 5916 would increase discretionary spending by $3.2 billion over the 2009-2013 period, assuming appropriation of the estimated amounts. Implementing the bill would increase direct spending by $500 million over the 2009-2018 period, primarily by allowing a Department of Defense (DoD) revolving fund to spend balances without appropriations action. Implementing the bill would not affect revenues.

H.R. 5916 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would not affect the budgets of state, local, or tribal governments.

SUBTITLE B: MISCELLANEOUS PROVISIONS

Sec. 124. Increase in Congressional Notification Thresholds and Expediting Congressional Review for South Korea and Israel.

Section 124 increases monetary thresholds for Congressional review periods of FMS and commercial arms sales:

ÌFor NATO+5--from $25 to $75 million for Significant Military Equipment (SME), $100 million to $200 million for total contract value.

ÌFor all other countries--from $15 to $50 Million for SME, $50 to $100 Million for total contract value.

This provision increases the threshold level for the Congressional 15/30-day resolution-of-disapproval review period. However, it also retains existing statutory threshold levels for notification of the export to Congress.

The result is that the Committees on Foreign Affairs and Foreign Relations, the committees of jurisdiction over U.S. arms exports, will still see and evaluate arms exports to all parties at existing levels, thereby ensuring that Congressional oversight is retained. This occurs through a longstanding, informal `preconsultation' process that this and previous Administrations engage in with the Committee, through which questions and concerns are addressed, and alterations made. This preconsultation process will continue at the current threshold notification levels.

For defense exports below the new, higher formal 15/30-day Congressional review threshold that this bill will establish, export licenses can be awarded 2-4 weeks faster, thereby increasing U.S. defense exports' competitiveness. As such, this is a `win-win' outcome: Congressional oversight for national security is preserved, but defense exporters are able to be more competitive.

Sec. 127. Reporting on Value of Major Defense Equipment and Defense Articles Exported Under Section 38 of the Arms Export Control Act.

Section 127 requires an annual listing of the value of actual arms deliveries by country as part of the annual Congressional Budget Justification to improve the transparency of the U.S. arms export process and facilitate Congressional oversight.

TITLE IV: MISCELLANEOUS PROVISIONS.

Sec. 401. Authority to Build the Capacity of Foreign Military Forces.

This section grants the Secretary of State train-and-equip authority, authorized up to $25,000,000 in unobligated FMF funds for the Fiscal Years 2009 and 2010, to respond to contingencies in foreign countries or regions with training, procurement and capacity-building of a foreign country's national military forces.

This authority is necessary for the Department of State to directly provide assistance to train and equip foreign military forces to support U.S. security operations and to better engage in counterterrorism operations.

The National Defense Authorization Act of 2006 authorized the use of DoD funds to build the capacity of a foreign country's national military forces in order for that country to conduct counterterrorist operations or participate in or support military or stability operations in which U.S. Armed Forces are a participant. Since FY 2006, the State Department and Defense Department have been working to jointly develop and implement programs under 1206 authority. The Department of State maintains that longstanding security assistance authorities and resources should be supplemented to be capable of meeting today's U.S. strategic requirements. Existing authorities exercised by the Department of State for the provision of security assistance include the Foreign Military Financing (FMF), International Military Education and Training (IMET), and Peacekeeping Operations (PKO) accounts authorized by the Foreign Assistance Act of 1961, as amended (FAA), and the Arms Export Control Act (AECA). While the committee concurs with the Administration that new security assistance tools need to be developed in order to meet the security challenges of the 21st century, we are also concerned by the apparent migration of security assistance authorities from the Department of State to the Department of Defense. This provision intends to address that trend by designating certain funds for the Secretary of State to use the full flexibility under existing law to provide training and equipment for foreign militaries when such assistance meets U.S. foreign policy objectives. It draws on unobligated FMF balances for funding. During the last fiscal year, the Department of State had almost $4 million in unobligated funds, which could be useful for financing this program authority. The Committee intends to review the management of U.S. security assistance during the remainder of this Congress and the next.

TITLE V: AUTHORITY TO TRANSFER NAVAL VESSELS

Sec. 501. Authority to Transfer of Naval Vessels to Certain Foreign Recipients.

This section authorizes the grant of surplus U.S. naval vessels to Peru, Chile, Greece and Pakistan. Transfers of naval vessels must satisfy certain statutory requirements, which stipulate that naval vessels larger than 3,000 tons or less than 20 years old may not be transferred to another nation unless approved by law.

According to the Secretary of the Navy, these proposed transfers would improve U.S. political and military relationships with close allies. They would support strategic engagement goals and regional security cooperation objectives. The U.S. would incur no costs in transferring these naval vessels. The recipients would be responsible for all costs associated with the transfers, including maintenance, repairs, training, and fleet turnover costs.