The Export reorganization act, 1975 : hearings before the Committee on Government Operations, United States Senate, Ninety-fourth Congress, first session, April 24, 30, and May 1, 1975 online

Persian Gulf oil. The U.S. policy of virtually unlimited arms sales to Iran
increases this danger.

The British recently set an important precedent by refusing to sell Jaguar
fighter-bombers to Libya because of the refusal of the Libyan government to
provide assurances that the planes would not be transferred to Egypt or other
third countries. While Pentagon officials insist that they have not sold Persian
Gulf countries everything asked for, not many requests seem to have been
refused.

What is needed therefore is similar restraint by the United States, first in
the form of a temporary embargo and second, restrictions on long-range offen-
sive systems such as the F-14 and the F-4. The third and most important con-
ference of all arms suppliers to work out some meaningful limits on the flow
of arms to this highly volatile area of the world.

[Stefan Leader and Bob Berman work for the Center for Defense Informa-
tion, a private research institute in Washington.]



[From the Congressional Record — Senate, April 15, 1975]

Introductory Remarks by Senator Percy on S. 1439

Mr. PERCY. Mr. President, the Government Operations Committee during the
past Congress gave major emphasis to the reorganization of the executive
branch of the Government in the fields of natural resources, energy research
and development and nuclear licensing regulation. In addition to hearings on



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the creation of a Department of Energy and Natural Resources and the enact-
ment of the Federal Energy Administration, the committee dealth with the
creation of the Nuclear Regulatory Commission, with authority over the licens-
ing of nuclear reactors and nuclear exports of certain kinds, and the Energy
Research and Development Agency, to be a comprehensive agency to promote
research in all forms of energy.

During this Congress the committee has been studying the question of the
organization of the Government for the export of strategically significant mate-
rials. We found that the Commerce Department Office of Export Administration
performs the vast bulk of the licensing for export of most strategically impor-
tant products and commodities. Yet we found that the State Department
licenses export of arms, ammunition, and the implements of war under the
Mutual Security Act, and that the Treasury Department licenses certain
exports under the Trading With the Enemy Act. And, we found that, when we
enacted the NCR/ERDA legislation, we had inadvertently permitted the licens-
ing for export of nuclear facilities and materials to rest in the Nuclear Regula-
tory Commission, whereas the authority for approval of nuclear technology
exports rests in the Energy Research and Development Administration.

This illogical, inefficient separation of similar functions among at least five
agencies is being corrected by the bill I am introducing today with the cospon-
sorship of the distinguished chairman of the Government Operations Commit-
tee, Senator Ribicoff, and the distinguished Senator from Ohio, Senator Glenn,
a new and highly valued member of our committee.

This bill, the Export Reorganization Act of 1975, rests on the essential logic
that like functions should be grouped in one agency. There is ample precedent
for centralizing these sentitive export licensing functions, which might appear
to require administration by other agencies, in the Commerce Department. The
Commerce Department already licenses exports of the components of nuclear
reactors. Such exports have increased in number, reflecting the fact that the
emphasis of U.S. nuclear exports has shifted from complete reactors toward
reactor aprts and related assemblies.

Because it is the agency that has been, since World War II, responsible for
licensing strategic exports, including exports to the Soviet Union and other
Communist countries under the COCOM process, the Commerce Department has
had a great deal of experience in coordinating its sensitive licensing decisions
with other departments and agencies. For example, at the present time the Sec-
retary of Defense must sign off on exports of potentially strategic goods to the
Communist countries before Commerce issues the actual license. And, the
Attorney General must approve decisions to export eavesdropping equipment
before Commerce issues a license.

Similarly, the Export Reorganization Act of 1975 requires that, before the
Commerce Department may issue a license for the export of nuclear facilities,
materials, and technology, it must have the certification of the Nuclear Regu-
latory Commission that the country to which any such technology, facility or
material is to be exported has safeguards at least substantially comparable to
the safeguards that the NRC requires be applied to nuclear facilities in the
United States.

This is an extremely important provision. By removing from the Nuclear
Regulatory Commission the responsibility for issuing licenses, and by requiring
that it concentrate on the critical, judgmental question whether or not that
export is in the public interest in that it is made under adequate safeguards,
we will hopefully upgrade application of safeguards worldwide. By safeguards,
we refer to the physical security systems that are used to protect nuclear
facilities and materials shipments, and the materials accountability systems
that are employed to insure that nuclear materials are not diverted by theft or
other means to possibly military uses.

The importance of this aspect of the Export Reorganization Act of 1975 has
been underscored by the Secretary of State and the Director of the Arms Con-
trol and Disarmament Agency.

Expressing a new emphasis in American policy in a major address to the
United Nations in October 1974, the Secretary indicated that American policy
must change. He said :

"The United States and a number of other countries have widely supplied
nuclear fuels and other nuclear materials in order to promote the use of
nuclear energy for peaceful purposes. This policy cannot continue if it leads
to the proliferation of nuclear explosives."

ACDA Director Ikle has said that the export of peaceful nuclear technology
directly threatens the proliferation of military nuclear weapons capability,
and that such exports must be given new scrutiny.



495

Just as the bill requires that the Nuclear Regulatory Commission give prior
approval before the Commerce Department issues export licenses for nuclear
facilities, materials, and technology, so the bill requires that the State Depart-
ment give prior approval before the Commerce Department may issue licenses,
for exporting munitions. And, before the Commerce Department issues licenses
for the export of products to "blocked" countries under the Trading With the
Enemy Act, Treasury must give its approval.

Thus, our bill establishes a uniform system for the export licensing of a
number of strategic materials and products.

Mr. President, in addition to the benefits that I hope will result from the
centralizing of this important governmental function in one agency, I would
hope that the bill will also have the critically important result of upgrading
this Nation's concern for the safeguarding of nuclear facilities and materials.
This objective is a critically important one, important in the most direct ways
to the health and safety of the people of this country, and to our common
defense and security.

Mr. President, I ask unanimous consent that a statement on the bill by Sen-
ator Glenn be included in the Record, as if read, immediately following the
statement of Senator Ribicoff.

Mr. President, I also ask unanimous consent that the text of the bill be
printed in the Record following the statement of Senator Glenn.

Mr. RIBICOFF. Mr. President, as chairman of the Committee on Government
Operations, I am pleased to join the distinguished ranking minority member,
Mr. Percy, in introducing a bill that provides major interagency reform of the
present system for exporting strategically sensitive commodities from the
United States.

The bill, the Export Reorganization Act of 1975, transfers to the Department
of Commerce the licensing and approval authorities for certain exports which
now reside in the Department of State, the Department of the Treasury, the
Energy Research and Development Administration and the Nuclear Regulatory
Commission. At the same time, the bill requires the Secretary of Commerce to
obtain approval from the heads of agencies whose expertise is vital for insuring
that the decisions on whether to export strategically significant commodities
are made in full consideration of our vital natioDal interests.

By centralizing the export licensing and approval function in the Commerce
Department, the bill recognizes the lead agency role already played by Com-
merce in export licensing — and thereby promotes economy and efficiency with
respect to a vital function in the executive branch. By requiring the Secretary
of Commerce to coordinate with the agencies having the lead technical and
policy roles in evaluating the impact of significant exports, the bill recognizes
a procedure for consultation that dates back to 1949 and thereby promotes
interagency coordination and cooperation.

Mr. President, there is great wisdom in singling out a Federal agency to
which nearly all persons and commercial interests seeking to engage in foreign
commerce can apply for the necessary export license. The Commerce Depart-
ment has served as that agency since export controls were first applied at the
start of World War II. It has developed the expertise that now makes it pos-
sible for the Department's Office of Export Administration to process and take
action within 1 week on 90 percent of the nearly 300 applications it receives
daily. At least 95 percent are acted on in less than 2 weeks.

The remaining 5 percent are the most difficult cases requiring interagency
review of technical and policy questions. Under present law, for example, the
Secretary of Defense must sign off on virtually all applications to export to
Communist countries: the Secretary of Agriculture must approve exports of
agricultural commodities, and the Attorney General must approve the export
of eavesdropping equipment.

The licensing functions being transferred to the Commerce Department by
this act involve exports of a no less sensitive nature.

The function of licensing the export of arms, ammunition and the implements
of war under the Mutual Security Act is transferred from the State Depart-
ment, but no such license can be issued by the Secretary of Commerce without
the written approval of the Secretary of State.

The function of licensing exports under the Training With the Enemy Act is
transferred from the Treasury Department, but no such license can be issued
by the Secretary of Commerce without the written approval of the Secretary
of the Treasury.

The function of approving the export of nonmilitary miclear technology is



496

transferred from the Energy Research and Development Administration, and
the function of licensing exports of civilian nuclear facilities and materials is
transferred from the Nuclear Regulatory Commission. No such approval or
license for civilian nuclear exports can be issued by the Secretary of Com-
merce unless the Nuclear Regulatory Commission makes a determination that
the safeguards against nuclear theft, diversion and sabotage are comparable to
safeguards required by the Commission to obtain a commercial nuclear license
in the United States.

The Commerce Department already issues export licenses for component
parts of nuclear reactors on the advice of ERDA, not NRC. Ironically, nuclear
components now comprise the major share of our nuclear exports, reflecting a
shift away from the sale of technology, such as blueprints, and the complex
subassemblies that other nations cannot produce themselves.

The NRC now has no voice in either the export of U.S. nuclear technology
or the export of components parts that other nations need to convert that tech-
nology into operating reactors. Therefore, NRC has been excluded from playing
any role in the lion's share of the Nation's nuclear exports, despite the fact
that it is designated by the Atomic Energy Act to regulate such exports in the
interest of public health and safety and common defense and security. This
problem is compounded by the fact that NRC has little more than rubberstamp
authority over the exports of facilities and materials which it now licenses,
based on international agreements and safeguards findings provided by ERDA.

The act transfers from the Energy Research and Development Administra-
tion to the Department of State the function of negotiating with other nations
agreements for cooperation on developing nonmilitary nuclear technology, facil-
ities and materials for research and electrical power generating purposes. The
act requires the Nuclear Regulatory Commission to establish safeguards cri-
teria to be used by the State Department in negotiating these agreements. The
agreements for cooperation provide the basic groundrules for making nuclear
exports to particular nations.

The act also transfers from the Energy Research and Development Admin-
istration to the Nuclear Regulatory Commission functions relating to safe-
guards for commercial nuclear technology, facilities and materials which are
exported by the United States. In addition, the Commission has transferred to
it from the Department of Transportation all functions involved in establish-
ing regulations for the transportation of radioactive materials in interstate
and foreign commerce.

In order to promote adequate safeguards against the conversion of peaceful
nuclear exports to weapons purposes, the act makes several important require-
ments of the Nuclear Regulatory Commission :

The Commission must file a nuclear proliferation assessment statement with
the Arms Control and Disarmament Agency with respect to each strategically
significant nuclear-export application and offer the agency an opportunity to
comment on the advisability of the export.

The Commission must establish and operate a special training program for
technicians from nations which purchase commercial nuclear exports from the
United States. The training will involve the most advanced safeguards tech-
niques for detecting diversion of nuclear materials and preventing theft and
sabotage.

The Commission must conduct a comparative study of physical-security and
materials-accounting safeguards regulations and guidelines of the United States
and of the International Atomic Energy Agency, and make recommendations
to the President and to Congress for the upgrading of these safeguards.

The Commission must study and make recommendations on the feasibility of
internationalizing all strategically significant aspects of the commercial nuclear
fuel cycle in all parts of the world to minimize the danger of nations or sub-
national groups converting peaceful plutonium or uranium for use in atomic
bombs or deadly dispersal devices.

Mr. President, I consider the Export Reorganization Act an extremely impor-
tant piece of legislation because it applies a uniform system of interagency
coordination, with appropriate checks and balances, to the process of licensing
strategically significant commodities for export by the United States.

The proposed reorganization of Federal controls over peaceful nuclear ex-
ports is especially crucial because it seeks to reverse the present dangerous
proliferation of commercial reactors and materials throughout the world with-
out adequate safeguards to prevent the spread of nuclear weapons.



497

The nuclear export policies and practices of this Nation are not only danger-
ous ; they are scandalous. For years we have been exporting our commercial
nuclear technology both in the form of blueprints and actual reactors without
insisting on safeguards that are strict enough to prevent their conversion to
weapons purposes.

For years we have been the sole exporter of the enriched uranium needed
to fuel the free world's commercial reactors, but we never used this monopoly
to insist on safeguards that would prevent the plutonium byproducts of these
reactors from being made into atomic bombs.

We have ratified the Nuclear Non-Proliferation Treaty, but we continue to
sell our nuclear exports to non-NPT countries like India which refuse to place
all of their nuclear facilities under even the limited safeguards of the Inter-
national Atomic Energy Agency.

IAEA safeguards are designed only to detect diversion of nuclear materials
by nations, not to prevent theft and sabotage by terrorist groups. It is ques-
tionable whether present IAEA safeguards are adequate to foil a nation that
seeks to secretly stockpile plutonium.

The excuse that our Government and our nuclear industry give for continu-
ing to export nuclear reactors under presently inadequate safeguards is that if
we do not sell our reactors to nations that want to buy them, other nuclear
exporting nations will make the sales — and under safeguards conditions that
are less strict than our own.

The terrible irony of all this is that the reactors now being sold by such
exporters as France and West Germany in competition with our own reactors
are based on designs that American manufacturers originally sold to French
and West German manufacturers. The exports of this American nuclear tech-
nology had been approved by the old Atomic Energy Commission without re-
quiring, as a condition of the sale, that foreign manufacturers impose strict
safeguards on their own reactor exports. The result is that we now find our-
selves in an increasingly nuclear-powered world that is governed by old-
fashioned nationism and crass commercialism.

Unless something is done — and done quickly — to reverse this trend, the
spread of nuclear weapons and the threat of nuclear blackmail may be irre-
versible.

There are hopeful signs that our Government may, at last, have awakened
to the problem. Last fall, Secretary of State Kissinger told the United Nations
General Assembly :

"We must take into account that plutonium is an essential ingredient of
nuclear explosives and that in the immediate future the amount of plutonium
generated by peaceful nuclear reactors will be multiplied many times. Hereto-
fore, the United States and a number of other countries have widely supplied
nuclear fuels and other nuclear materials in order to promote the use of
nuclear energy for peaceful purposes. This policy cannot continue if it leads to
the proliferation of nuclear explosives. Sales of these materials can no longer
be treated by anyone as a purely commercial competitive enterprise."

More recently, Fred Ikle, Director of the Arms Control and Disarmament
Agency, stated the problem succinctly : The export of peaceful nuclear technol-
ogy, he said, "provides not only the means, but also the cover," for a spread
of nuclear weapons. He also noted :

"Now we suspect that the intent to make nuclear weapons exists in several
places even though the capability is not yet there."

Mr. President, the time has come for the nuclear debate to rise above simple
name calling. One side calling the other "pronuclear" or "antinuclear" proves
nothing and solves nothing. It only causes confusion and anger at a time when
we must be clearheaded and calm. The time has come to stop arguing whether
nuclear exports are a problem and start taking meaningful action to prevent
the problem from getting out of hand.

Mr. President, last year the Government Operations Committee took the first
step in that direction by managing the Energy Reorganization Act, which
abolished the Atomic Energy Commission and replaced it with two new agen-
cies to separate regulation from promotion of nuclear powers in the United
States.

This year, the nuclear provisions of the Export Reorganization Act seek to
extend this separation of Federal regulatory and promotional activities to the
export of nuclear technology abroad, as well. The transfers contained in the
act would place clear authority and vitally needed resources in the Nuclear



498

Regulatory Commission to establish as rigorous safeguards for nuclear exports
as we require for the nuclear technology we use here at home.

Plutonium stolen abroad poses as great a danger to our defense and security,
to our health and safety, as plutonium stolen at home. The same holds true for
every nation in the world. Therefore, I do not accept the argument that we
cannot condition our nuclear sales on strict safeguards because other nuclear
exporting nations will not follow our example.

I believe that if the United States exerts world leadership on this momentous
issue, other nations will follow. We are still the world leader in nuclear tech-
nology ; we are still the major supplier of enriched nuclear fuel. Other nations
cannot ignore us — yet. But time is running out. Unless we are prepared to live
in peril in a world of nuclear disorganization, we must begin to act wisely now.

Next month, more than 100 nations will meet in Geneva the Nuclear Non-
proliferation Treaty 5 years after it took effect. I plan to hold a series of hear-
ings beginning April 24 on the nuclear provisions of this act to explore the
relationship between nuclear exports and weapons proliferation, and to estab-
lish a public record that will be useful to the conference. I have asked Senator
Glenn, in recognition of his scientific and technical achievements, to serve as
ad hoc chairman of these hearings.

The Government Operations Committee also will soon issue a compendium of
reading materials on the issue of nuclear exports and proliferation to provide
as complete a record as possible on the legal, technical and policy aspects of
the problem.

Mr. President, the world's 185 commercial reactors, now located in 35 nations,
have produced a total of 135,000 pounds of plutonium. Most of this plutonium
remains inaccessible in highly radioactive spent reactor fuel. By the year 2000,
some 100 or more nations will have 2,000 nuclear power reactors, and these
reactors will be generating an estimated 2 million pounds of plutonium a year,
every year. If every nation by then is permitted to reprocess its own plutonium
under safeguards that are no stricter than they are today, then there is little
hope that any nation — or any well-armed terrorist group — can be prevented
from getting plutonium if it wants it.

Mr. President, the technology can be found in public print today for making
a crude nuclear device, capable of killing 100,000 people in a densely populated
area, using only about 20 pounds of plutonium. Safeguards will have to be very
strict indeed to prevent 20 pounds of plutonium from being diverted from the
2 million pounds that the world's reactors will generate each year.

I urge that we start reorganizing the executive branch to deal with the
problem now.

Mr. GLENN. Mr. President, I am pleased to cosponsor the Export Reorgani-
zation Act of 1975. In an era of economic plight, it is imperative that we care-
fully consider our export capabilities and opportunities. The proposed bill will
centralize export licensing in the Department of Commerce, thereby reducing
time-consuming bureaucratic delays and allowing American businessmen to
speedily react to business opportunities abroad.

In addition to enhancing our trade potential, the bill is designed to improve
the future peace and safety of all citizens. The dual nature of nuclear power
offers mankind new capabilities for both assistance and destruction. It is pre-
cisely this unique dual capacity which demands constant vigilance. There is
not one difference between the innards of a nuclear weapon and a "peaceful
explosive."

The apparent diversion of plutonium by India from a Canadian reactor for a
"peaceful" explosion demonstrates exactly the dangers we face. Estimates are
that by the year 2000, there may be 2 million pounds of plutonium produced
annually. We must do everything in our power to avert the use of this material
by terrorists and to protect against the prospect of a world of nuclear armed
states turning to violence to resolve differences. With that objective, the bill
would restrict the export of nuclear power facilities, materials or information
unless the U.S. Nuclear Regulatory Commission determined that safeguards
"substantially comparable" to our own domestic procedures exist in the recip-
ient country. Further, the Commission would be directed to examine the safe-
guards which are currently in force domestically and internationally and to
make recommendations for the means to upgrade those found to be deficient.