the country where they intend to use them, bypassing all of our current export control mechanisms.

For example, many of the previous speakers have noted the dangers of radiological weapons. While all countries have good export controls on nuclear fuel, it is not clear that they have all taken the necessary steps to safeguard this fuel from theft, and this includes Western European countries. A terrorist organization could steal spent nuclear fuel and use it to build radiological weapons.

Similarly, security measures at U.S. and foreign laboratories may not be adequate to prevent the theft of dangerous biological samples, and in this sense, internal security measures are important to nonproliferation as are export controls.

Nonproliferation must become part of the larger system of homeland defense and the response to terrorism that the administration is building. Proliferation regimes can make an important contribution to this by identifying the key WMD-related items that need additional safeguards and by coordinating effective security measures. Efforts to ensure that WMD does not fall into the hands of terrorists must become part of the multilateral defense against terrorism, and the support we have received since September 11 could be channeled into reinvigorating nonproliferation.

Let me just touch on one of the issues that your staff raised, which is deemed exports. Making nonproliferation a part of the larger counterterrorism and homeland defense effort has implications for deemed exports. Students coming to the United States to study and do research have been a problem for proliferation here and in other countries for many years. The important thing to realize is that the benefits we receive from having these people in the United States probably outweighs the costs of any potential leak of technology, and when I say this, I am reiterating a conclusion that the Reagan Administration came to in its National Security Decision Directive 189.

The answer to deemed exports may lie less in export controls, but thinking in terms of the larger approach to homeland security. Immigration control is one of the most serious vulnerabilities revealed by September 11. All of the terrorists were able to enter the United States, passing through multiple checkpoints both here and in allied countries. Some sort of improved screening for people coming to the United States that included some nonproliferation criteria would probably be more useful than export licensing.

In conclusion, Mr. Chairman, I think export controls can still play a role in nonproliferation and national security, but this role is shrinking. In looking at where we might want to move ahead, it would help to reexamine the fundamental approach to nonproliferation export controls. It would be good to find ways to use the strengths of the three nonproliferation regimes to support homeland defense and counterterrorism. Deemed exports would probably be better treated as part of a broader solution to screening immigrants. And finally, when we move ahead with building export controls, picking up on what Dr. Moodie and Dr. Tucker said, we probably should start with the lists and procedures of the regimes, the use of catch-all controls, and improved immigration

I would like to thank you and I will be happy to take any questions. Senator AKAKA. Thank you very much, Dr. Lewis. Dr. Milhollin. TESTIMONY OF GARY MILHOLLIN,1 DIRECTOR, WISCONSIN PROJECT ON NUCLEAR ARMS CONTROL

Mr. MILHOLLIN. Thank you, Mr. Chairman. It is both an honor and a privilege to appear before this distinguished Subcommittee and testify on this important topic.

I would like to address my remarks to four points: First, whether export controls are succeeding in protecting our security; second, whether they are now being weakened; third, whether violations are being punished; and fourth, what could be done to make export controls stronger.

First, it is very important to realize that export controls can work if they are given a chance. There are success stories in the world that export controls can claim. Argentina and Brazil decided to give up nuclear weapons because, in large part, export controls were imposing great costs on the development of those countries. We know from U.N. inspections in Iraq that Saddam Hussein's nuclear weapon developers could not import certain parts. They had to reverse engineer them, which took time and it is not even clear that they worked. Also, export controls pretty much stopped Saddam Hussein's most ambitious rocket program.

Today, export controls are slowing down India and Pakistan in their efforts to miniaturize their warheads and to build more effective long-range missiles. As long as we have export controls that work decently, that will be true in the future.

However, despite clear successes, American export controls are now weaker than they have ever been in history. Since 1998, when Saddam Hussein was building his mass destruction arsenal, export controls in the United States have been cut about 90 percent. Today, the Commerce Department is receiving about a tenth as many applications as it received in the late 1980's, and when the applications do come in, they are almost always approved. In the last fiscal year, only 4 percent of the applications were denied.

This system imposes virtually no burden on industry and it is a system that seemed to please us quite well in peacetime. Now, however, we are not in peacetime and we know that there are terrorist organizations that want to do us harm and we know that weapons of mass destruction in their hands would threaten our way of life.

I would just like to give you some examples of cases in which our export control system has allowed technology, American technology, to threaten American Armed Forces. Perhaps the most recent case is that of Huawei Technologies, a Chinese company that was caught earlier this year helping Iraq improve its air defense network. These air defenses are designed to shoot down our pilots.

This Chinese firm helped Iraq in defiance of the international embargo against this kind of transaction. At the time the assistance was discovered, Motorola had an export license application

1 The prepared statement of Mr. Milhollin with an attachment appears in the Appendix on

pending at the Commerce Department to help this company improve its ability to build high-speed switching and routing equipment, which would be ideal for an air defense network.

In the recent past, the Commerce Department has licensed a series of sensitive items to Huawei Technologies. Huawei was allowed to buy high-performance computers from Digital Equipment Corporation, IBM, and Hewlett Packard, and Sun Microsystems. In addition, Huawei got $500,000 worth of telecommunication equipment from Qualcomm. Other U.S. firms have helped Huawei by setting up joint operations. These include Lucent Technologies, AT&T, Motorola, and IBM.

As a result of all this American assistance, Huawei's sales are projected to reach $5 billion in 2001. This company began as a $1,000 start-up in 1988, so the result is that U.S. technology, some of which is controlled for export but licensed, and other technology going through joint operations, has built out of virtually nothing a Chinese company that now is able to help Iraq improve its air defenses and put the lives of U.S. servicemen and women at risk. These exports no doubt made money for American companies, but at a cost of threatening our pilots.

Huawei, unfortunately, is not an isolated case. There are two others mentioned in my testimony. One is a situation in which the Commerce Department approved exports to a company in China that supplied anti-ship missiles to Iran and was sanctioned for missile proliferation. We, the United States, sold that company computer equipment for simulating wind effects. If you are building anti-ship missiles, a computer to simulate wind effects is quite useful.

Also, only last month, the Washington Times reported that Iran was installing another large JY-14 radar near its border with Afghanistan. This radar is a very aggressive and powerful air defense radar. It was sold to Iran by a Chinese company called China National Electronics Import-Export Corporation. Before that sale occurred, the U.S. Government approved a series of exports to that company that would be very useful for making that very radar. So again, we are facing a situation where our pilots, if we ever get in a fight with Iran, will have to face equipment probably made with our own technology.

The second point I would like to make is that export controls are now being weakened. In response to the attacks on September 11, the U.S. Government dropped export control sanctions on a series of Indian and Pakistani companies. In my testimony, I provided descriptions and photographs of some of the companies that were dropped from the control list.

One of them is Hindustan Aeronautics. It makes major components for India's largest rockets. In my testimony, there is a photograph of nose cones made by that company.

Another company is Godrej and Boyce. It also makes components for India's largest rockets. It makes a rather powerful liquid fuel rocket engine, which is depicted in a photograph in my testimony. A third firm is India's National Aerospace Laboratory. It conducts missile research. In my testimony, I have a picture of a mis

And fourth, there is Walchandnagar Industries. It produces major components for Indian nuclear reactors that are not inspected by the International Atomic Energy Agency. The absence of inspections means that the plutonium that those reactors make is free for use in atomic bombs. This company, too, was dropped from export control sanctions.

So we have this serious situation where we have a terrorist attack on American soil, and in response to that attack, the U.S. Government drops export controls on companies in developing nations that are making weapons of mass destruction. It seems to me that this is a mistake. It is not the right way to respond to a terrorist attack.

Also, I would like to draw the Subcommittee's attention to the problem of export enforcement. It is very rare for a big company that breaks export control laws in the United States to be punished. I have cited two cases.

One involves the company Silicon Graphics. In 1996, it sold highperformance computers without the required export license to one of Russia's leading nuclear weapons laboratories. After the computers arrived, one of Russia's leading nuclear scientists announced that the Russians were going to start doing simulations like we did with computers instead of doing actual tests. This is a case where it is undisputed that the export needed a license. It was made without the license and nothing has happened. It went to a grand jury years ago and has simply disappeared.

More recently, in 1999, the Cox Committee found that Hughes Electronics and Loral Space Communications-I am sure the Subcommittee is familiar with that case-the Cox Committee found that they deliberately acted without the legally required licenses and violated U.S. export control laws. That case has been in a grand jury for nearly 4 years without any results.

Senator AKAKA. Dr. Milhollin, there is a vote that has been in progress. How much more time do you need?

Mr. MILHOLLIN. I need about 1 minute, perhaps 2 minutes. Perhaps I can do it in 1 minute.

Senator AKAKA. Yes. I have questions, but go ahead.

Mr. MILHOLLIN. I think there are things we can do which would be very easy. In my testimony, I have indicated that we could list the dangerous companies abroad that are trying to make weapons of mass destruction. We know who they are. Their names are well known. I have attached to my testimony a list of 50 Chinese companies that could easily be added to the Federal Register list of dangerous buyers. I recommend that be done as soon as possible. That concludes my testimony.

Senator AKAKA. Thank you very much, Dr. Milhollin.

I am so sorry. We have a rash of votes going on, so let me ask this question of Mr. Christoff and GAO. Has GAO ever looked at which items are of greatest concern for WMD? Is it your experience that an industry compliance program, voluntary or obligatory, can work?

Mr. CHRISTOFF. Mr. Chairman, let me just talk to you about what we have done in GAO. I think one of the important areas that

are the national security implications when you try to decontrol an item and balancing it against the market availability.

The work that we did for this full Committee on high-performance computers is a good example in the sense that Executive Branch agencies, I think, do a good job of determining that many of these high-performance computers are available elsewhere, but they do not look at the national security implications. As we said. in the past, that is an important balancing act that oftentimes does not occur within the Executive Branch.

Senator AKAKA. Thank you.

Let me ask a final question so I have a few minutes left to get to the floor. Dr. Cupitt, in your written testimony, you made a strong argument for a comprehensive study of the anti-terrorist export control policies of key U.S. allies. Should we make changes in the way our current government agencies charged with dual-use export controls work? Do we need a new agency or new interagency process?

Mr. CUPITT. As you may know, I think S. 149, for instance, was going to set up an Office of Technology Assessment that would have as part of its mandate a requirement to assess the export controls systems of other countries. I think that might be an example of one of the things that might be done.

Even though we spend, I know at our Center, we spend a lot of time assessing other countries' export control systems, we are frequently asked, have you assessed country X, and we have to say, no, and we have to say, no one else has and, at least in a comprehensive or systematic way. And for us, I think, to make good policy decisions and good strategies in terms of building a coalition of partners that would have complementary export control systems, we need to know a lot more than what we currently do.

Related to that, I want to mention that I think Dr. Lewis's point about catch-all systems, one of the successes that we have had in recent years is to promote catch-all as a means of addressing some of the items that may not be listed or may have moved off the list, not only here in the United States but in other countries, and that has been an important step. But even there, we do not know that much about who is implementing the catch-all control policies.

Even very basic data like that, we do not really have a good idea, and I think that would be something that would be very useful. Again, I think that S. 149, setting up that Office of Technology Assessment in the Commerce Department, is an example of one of the ways that this might be achieved, that we might improve our data capabilities.

Senator AKAKA. Dr. Lewis, would you make any comments on the same question?

Mr. LEWIS. The question being, do we need a new export control agency? Was that the question?

Senator AKAKA. Yes, whether we need a new agency or new interagency process.

Mr. LEWIS. One thing that would help, Mr. Chairman, and thank you for the question, is that we could definitely use a new law. The law we have now dates from 1979, and so it is an interesting historical artifact, but it does not work very well and the system of