The Arms export control act

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The Arms export control act
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Table of Contents
    Front Cover
        Page i
        Page ii
    Table of Contents
        Page iii
        Page iv
    Chapter 1. Foreign and national security policy objectives and restraints
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
    Chapter 2. Foreign military sales authorizations
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
    Chapter 3. Military export controls
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
    Chapter 4. General, administrative, and miscellaneous provisions
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
    Back Cover
        Page 27
        Page 28
Full Text
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[COMMITTEE PRINT]


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COMMITTEE ON INTERNATIONAL RELATIONS
THOMAS E. MORGAN, Pennsylvania, Chairman


CLEMENT J. ZABLOCKI, Wisconsin
WAYNE L. HAYS, Ohio
L. H. FOUNTAIN, North Carolina
DANTE B. FASCELL, Florida
CHARLES C. DIGGS, JR., Michigan
ROBERT N. C. NIX, Pennsylvania
DONALD M. FRASER, Minnesota
BENJAMIN S. ROSENTHAL, New York
LEE H. HAMILTON, Indiana
LESTER L. WOLFF, New York
JONATHAN B. BINGHAM, New York
GUS YATRON, Pennsylvania
ROY A. TAYLOR, North Carolina
MICHAEL HARRINGTON, Massachusetts
LEO J. RYAN, California
DONALD W. RIEGLE, JR., Michigan
CARDISS COLLINS, Illinois
STEPHEN J. SOLARZ, New York
HELEN S. MEYNER, New Jersey
DON BONKER,. Washington
GERRY E. STUDDS, Massachusetts


WILLIAM S. BROOMFIELD, Michigan
EDWARD J. DERWINSKI, Illinois
PAUL FINDLEY, Illinois
JOHN H. BUCHANAN, JR., Alabama
J. HERBERT BURKE, Florida
PIERRE S. DU PONT, Delaware
CHARLES W. WHALEN, JR., Ohio
EDWARD G. BIESTER, JR., Pennsylvania
LARRY WINN, JR., Kansas
BENJAMIN A. OILMAN, New York
TENNYSON GUYER, Ohio
ROBERT J. LAGOMARSINO, California


MARIAN A. CZARNECKI, ('Chie/ of Staff


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CONTENTS



THE ARMS EXPORT CONTROL ACT
Chapter 1-Foreign and National Security Policy Objectives and Re- Page
straints -------------------------------------------- ------1------- 1
Section 1-The Need for International Defense Cooperation and
Military Export Controls--------------------------------------- 1
Section 2-Coordination With Foreign Policy- ---- ------------- 3
Section 3-Eligibility --------------------------------------------3
Section 4-Purposes for Which Military Sales by the United States
Are Authorized----------------------------------------------- 5
Section 5-Prohibition Against Discrimination---------------------- 6
Chapter 2-Foreign Military Sales Authorizations------------------- 7
Section 21-Sales From Stock------------ ---------------------7
Section 22-Procurement for Cash Sales--------------------------- 10
Section 23-Credit Sales---------------------------- ------ 10
Section 24-Guaranties ------------------------------------------ 11
Section 25-Annual Estimate and Justification for Sales Program__ 11
Chapter 3-Military Export Controls---------------------------------- 12
Section 31-Authorization and Aggregate Ceiling on Foreign Military
Sales Credits------------------------------------------------ 12
Section 32-Prohibition Against Certain Military Export Financing
by Export-Import Bank---------------------------------------- 13
Section 33-Regional Ceilings on Foreign Military Sales----_-- ------ 13
Section 34-Foreign Military Sales Credit Standards. ----------- 13
Section 35-Foreign Military Sales to Less Developed Countries.-__ 13
Section 36-Reports on Commercial and Governmental Military Ex-
ports; Congressional Action------------------------ ----------- 13
Section 37-Fiscal Provisions Relating to Foreign Military Sales
Credits ------------------------------------------------------17
Section 38-Control of Arms Exports and Imports------------------ 17
Section 39--Fees of Military Sales Agents and Other Payments----- 19
Chapter 4-General, Administrative, and Miscellaneous Provisions------ 20
Section 41-Effective Date------------ --------------------------- 20
Section 42-General Provisions------------------------------------ 20
Section 43-Administrative Expenses------------------------------ 21
Section 44-Statutory Construction-------------------------------- 21
Section 45-Statutes Repealed and Amended----------------------- 21
Section 46-Saving Provisions------------------------------------ 22
Section 47-Definitions ------------------------------------2------ 2
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Digitized by the Internet Archive
in 2013












http://archive.org/details/armsexpoOOunit












The Arms Export Control Act


AN ACT To consolidate and revise foreign assistance legislation relating to roimbiir-abjle
military exports
Be it enacted by the Senate and IHowse of Representatircs of the
United States of America 1i Congress assemibl1d, That this Act may
be cited as "lArms Export Control Act".

Chapter 1-FOREIGN AND NATIONAL SECURITY POLICY
OBJECTIVES AND RESTRAINTS
SEC. 1. TIlE NEED FOR INTERNATIONAL DEFENSE COOPERATION AND
MILITARY EXPORT CONTROLS.-As declared by the Congress in the Arms
Count rol and Disarmament Act, an ultimate goal of the United States
contini ies to be a world which is free from the scourge of war and the
dangers and burdens of armaments; in which the use of force has been
subordinated to the rule of law; and in which international adjust-
minents to a changing world are achieved peacefully. In furtherance of
that goal, it remains the policy of the United States to encourage re-
gional arms control and disarmament agreements and to discourage
arms races.
The Congress recognizes, however, that the United States and other
free and independent countries continue to have valid requirements
for effective and mutually beneficial defense relationships in order to
maintain and foster the environment of international peace and secu-
rity essential to social, economic, and political progress. Because of
the growing cost and complexity of defense equipment, it is increas-
ingly difficult and uneconomic for any country, particularly a develop-
ing country, to fill all of its legitimate defense requirements from its
own design and production base. The need for international defense
cooperation among the United States and those friendly countries to
which it is allied by mutual defense treaties is especially important,
since the effectiveness of their armed forces to act in concert to deter
or defeat. aggression is directly related to the operational comipati-
bility of their defense equipment.
Accordingly, it remains the policy of the United States to facilitate
the common defense by entering into international arrangements with
friendly countries which further the objective of applying agreed
resources of each country to programs and projects of cooperative
exchange of data, research, development, production, procurement,
and logistics support to achieve specific national defense requirements
and objectives of mutual concern. To this end, this Act authorizes sales
by the United States Government to friendly countries having sffi-
cient wealth to maintain and equip their own military forces at ade-
quate strength, or to assume progressively larger shares of the costs
thereof, without undue burden to their economies, in accordance with
(1)







the restraints and control measures specified herein and in furtherance
of the security objectives of the United States and of the purposes and
principles of the United Nations Charter.
It is the sense of the Congress that all such sales be approved only
when they are consistent with the foreign policy interests of the
United States, thlie purposes of the foreign assistance program of tlhe
United States as embodied in the Foreign Assistance Act of 1961, as
atilclildei1. the extent and character of the military requirement, and
tlhe economic and financial capability of the recipient country, with
particular regard being given, where appropriate, to proper balance
among such sales, grant military assistance, and economic assistance
as well as to the impact of the sales on programs of social and eco-
,,n)mic development and on existing or incipient. arms races.
It is further the sense of Congress that sales and guaranties under
sect ions 21, o22, 2;-. and 24. shall not be approved where they would
have the effect of arming military dictators who are denying the
growth of fundamental rights or social progress to their own people:
P'ro,';(h d, That the President may waive this limitation when he de-
termines it would be important to the security of the United States.
and promptly so reports to the Speaker of the House of Representa-
tives and the Committee on Foreign Relations in the Senate.
It shall be the policy of the United States to exert leadership in the
world community to bring about arrangements for reducing the inter-
national trade in implements of war and to lessen the danger of out-
break of regional conflict and the burdens of armaments. United
States programs for or procedures governing the export, sale, and
grant of defense articles and defense services to foreign countries and
international organizations shall be administered in a manner which
will carry out this policy.
It is the sense of the Congress that the President should seek to ini-
tiate multilateral discussions for the purpose of reaching agreements
among the principal arms suppliers and arms purchasers and other
countries with respect to tlhe control of the international trade in arma-
mei ts. It is further the sense of Congress that the President should
work actively with all nations to check and control the international
s,Ile and d distribution of conventional weapons of death and destruc-
tion and to encourage regional arms control arrangements. In further-
aWe of this policy. the President should undertake a concerted effort
to convene an international conference of major arms-supplying and
arms-purchlasing nations which shall consider measures to limit con-
ventional arms tr ransfers in the interest of international peace and
stalbilit v.
It is'tllh seisie of the Congress that the ,aggregate value of defense
articles a. Id defense servIces-
(1) which are sold under section 21 or section 22 of this Act;
or
('2) wich aire licensed or approved for exJ)ort under section
38 of this Act to. for the use, or for benefit of the armed forces.
police, intelligence, or oilier internal security forces of a foreign
,ou itry or iternational organization under a commercial sales
i o a ny isl tract; l ll x' t l els.
ill :lil fisca,.l yvar silo ld 110 exceed curr-lenlt levv ls.






SEC. 2. COORDINATION WITH FOREIGN POLICY.-(a) Nothing con-
tained in. this Act shall be construed to infringe upon the powers or
functions of the Secretary of State.
(b) Under the direction of the President, the Secretary of State.
taking into account other United States activities abroad, such as mill-
tary assistance, economic assistance, and food for freedom, shall be
responsible for the continuous supervision and general direction of
sales and exports under this Act, including, but not limited to, deter-
mining whether there shall be a sale to a country and the amount there-
of, and whether there shall be delivery or other performance under
such sale or export, to the end that sales and exports are integrated
with other United States activities and the foreign policy of the United
States is best served thereby.
(c) The President shall prescribe appropriate procedures to assure
coordination among representatives of the United States Government
in each country, under the leadership of the Chief of the United States
Diplomatic Mission. The Chief of the diplomatic mission shall make
sure that recommendations of such representatives pertaining to sales
are coordinated with political and economic considerations, and his
comments shall accompany such recommendations if he so desires.
SEC. 3. ELIGIMBILITY.-(a) No defense article or defense service shall
be sold by the United States Government under this Act to any coun-
try or international organization unless--
(1) the President finds that the furnishing of defense articles
and defense services to such country or international organiza-
tion will strengthen the security of the United States and promote
world peace;
(2) .the country or international organization shall have agreed
not to transfer title to, or possession of, any defense article or
related training or other defense service so furnished to it to
anyone not an officer, employee, or agent of that country or inter-
national organization and not to use or permit the use of such
article or related training or other defense service for purposes
other than those for which furnished unless the consent of the
President. has first been obtained;
(3) the country or international organization shall have agreed
that it will maintain the security of such article and will provide
substantially the same degree of security protection afforded to
such article by the United States Government; and
(4) the country or international organization is otherwise eli-
gible to purchase defense articles or defense services.
In considering a request for approval of any transfer of any weapon.
weapons system, munitions, aircraft, military boat, military vessel.
or otlier implement of war to another country, the President shall
niot giv-e his consent under paragraph (2) to the transfer unless the
United States itself would transfer the defense article under considera-
tion to flat. country. In addition, the President shall not give his
consent under paragraph (2) to the transfer of any significant defense
articles on the United States Munitions List. unless the foreign country
requesting consent to transfer agrees to demilitarize such defense
articles prior to transfer, or the proposed recipient foreign country
provides a commitment in writing to the United States Government






that it will not transfer -,icli defen-,e articles, if not demilitarized, to
any other foreign country or person without first obtaining the consent
of the President. The President shall promptly submit a report to the
Speaker of tihe House of Representatives and to the Committee on
Foreign Relations of thle Senate on the implementation of each agree-
iment entered into pursuant to clause (2) of this subsection.
(b) No sales, credits, or guaranties shall be made or extended
under this Act to any country during a period of one year after such
country Seizes, or takes into custody, or fines an American fishing ves-
sel for engaging in fishing more than twelve miles from the coast of
that country. Thle President may waive the provisions of this sub-
section when lie determinnes it to be important to the security of the
United States or he receives reasonable assurances from the country
involved that future violations will not occur, and promptly so reports
to the Speaker of the House of Representatives and the Committee on
Foreign Relations of the Senate. The provisions of this subsection
shall not be applicable in any case governed by any international
agreement to which the United States is a party.
(c) (1) (A) No credits (including participation in credits) may be
issued and no guaranties may be extended for any foreign country
linder this Act as hereinafter provided, if such country uses defense
articles or defense services furnished under this Act, or any predeces-
sor Act, in substantial violation (either in terms of quantities or in
terms of the gravity of the consequences regardless of the quantities
involved) of any agreement entered into pursuant to any such Act
(i) by using such articles or services for a purpose not authorized
inrder section 4 or, if such agreement provides that. such articles or
services miay only be used for purposes more limited than those au-
thorized under section 4 for a purpose not authorized under such
agreement; (ii) by transferring such articles or services to, or per-
mnitting any use of such articles or services by, anyone not an officer,
employee, or agent. of the recipient country without the consent of the
President; or (iii) by failing to maintain'the security of such articles
or services.
(B) No cash sales or deliveries pursuant to previous sales may be
made with respect to any foreign country under this Act as herein-
after provided, if such country uses defense articles or defense serv-
ices furnished under this Act, or any predecessor Act, in substantial
violation (either in terms of quantity or in terms of the gravity of
tlhe consequences regardless of the quantities involved) of any agree-
nient entered into pursuant to any such Act by using such articles or
services for a purpose not authorized under section 4 or, if such agree-
Iment provides that such articles or services may only be used for pur-
poses more limited than thliose authorized under section 4, for a pur-
pOSe not. authliorize(d under such agreement.
(2) The President shall report to the Congress promptly )upon the
re'eip)t of information that a violation described in paragrap)hl (1) of
this Subsection niay have occurred.
(3) (A) A country shall lbe deemed to be ineligible under suibpara-
graph (A) of paragraph (1) of this subsection, or )both subparagriphs
(A) annd (B) of suchl paragraph in the case of a violation described







in both such paragraphs, if the President so determines and so reports
in writing to the Congress, or if the Congress so determines by joint
resolution.
(B) Notwithstanding a determination by the President of ineligi-
bility under subparagraph (B) of paragraph (1) of this subsection,
cash sales and deliveries pursuant to previous sales may be made if the
President certifies in writing to the Congress that a termination there-
of would have significant adverse impact on United States security,
unless the Congress adopts or has adopted a joint resolution pursuant
to subparagraph (A) of this paragraph with respect to such
ineligibility.
(4) A country shall remain ineligible in accordance with paragraph
(1) of this subsection until such time as-
(A) the President determines that the violation has ceased;
and
(B) the country concerned has given assurances satisfactory to
the President that such violation will not recur.
(d) The President may not give his consent under paragraph (2)
of subsection (a) or under the third sentence of such subsection to a
transfer of a defense article, or related training or other defense serv-
ice, sold under this Act and may not give his consent to such a transfer
under section 505 (a) (1) or 505 (a) (4) of the Foreign Assistance Act
of 1961 unless, 30 days prior to giving such consent, the President
submits to the Speaker of the House of Representatives and the Com-
mittee on Foreign Relations of the Senate a written certification with
respect to such proposed transfer containing-
(1) the name of the country or international organization pro-
posing to make such transfer,
(2) a description of the defense article or related training or
other defense service proposed to be transferred, including the
original acquisition cost of such defense article or related training
or other defense service,
(3) the name of the proposed recipient of such defense article
or related training or other defense service,
(4) the reasons for such proposed transfer, and
(5) the date on which such transfer is proposed to be made.
Any certification submitted to Congress pursuant to this subsection
shall be unclassified, except that information regarding the dollar
value and number of defense articles, or related training or other
defense services, proposed to be transferred may be classified if public
disclosure thereof would be clearly detrimental to the security of the
United States.
(e) If the President receives any information that a transfer of
any-defense article, or related training or other defense service, ias
been made without his consent as required under this section or under
section 505 of the Foreign Assistance Act of 1961. hlie shall report.
such information immediately to the Speaker of the House of Repre-
sentatives and the Committee on Foreign Relations of the Senate.
SEC. 4. PURPOSES FOR WHICH MILITARY SALES BY TIlE UNITED STATES
ARE AFTHORizED.-Defense articles and defense services shall be sold
by the United States Government under this Act to friendly countries


74-774-76--2







solely for internal security, for legitimate self-defense, to permit the
recipient country to participate in regional or collective arrangements
or measures consistent with the Charter of thle United Nations. or
othlervwise to permit the recipient country to participate in collective
measures requested by the United Nations for the purpose of maintain-
ing or restoring international peace and security, or for tihe purpose
of enabling g foreign military forces in less developed friendly countries
to construct pu1)lblic works and to engage in other activities helpful to
tle ec wonomic and -ocial development of such friendly countries. It is
tle ,eses of the Congress that suchll foreign military forces should not
be iniaintained or established solely for civic action activities and that
such civic a(tion activities not significantly detract from tlhe capability
of thli military forces to perform their military missions and be coordi-
nated with and form part of the total economic and social development
effort: P.ror,'ded, That none of the funds contained in this authoriza-
tion .shall be used( to guarantee, or extend credit, or participl)ate in an
extension of credit in connection with any sale of sophisticated weap-
ons systems, such as missile systems and jet aircraft for military
pilrp')(Zes, to any underdeveloped country other than Greece. Turkey.,
Iran, Israel, the Republic of China, tlhe Philippines, and Korea unless
the President (letermines that such financing is important to the na-
tional security of the United States and reports within thirty days each
:Iih d(letermination to the Congress.
SEC. 5. PROIIImITIoN AGAIXST DISCRIMIxATIOx.-(a) It is the policy
of the United States that no sales should be made. andl no credits
(including participations in credits) or guaranties extended to or for
any foreign country, the laws. regulations, official policies. or govern-
mental practices of which prevent any United States person (as de-
fined in section 7701 (a) (30) of the Internal Revenue (Code of 1954)
from participating in the fiurnishing of defense articles or defe,-e
-,rvices under this Act on the basis of race, religion, national origin,
or sex.
(b)(1) No agency )performing functions under this Act shall, in
('em11ploilg or assigning personnel to partii pate in tlhe performance
of any such function, whether in tlhe United States or abroad, take
into account the exclusionary policies or practices of any foreign gov-
ernment where such policies or practices are based upon race, religion,
national origin, or sex.
(2) Each contract entered into by anly such agency for tlhe per-
formawice of any function under this Act shall contain a provision to
tlie effect that no person. partnershipl, corporation, or other entity
performing functions pursuant to such contract, shall, inl employing
or a.siing ,perso,,el to participate in tlhe performance of ay ilsuch
flu.tiol.n, wliIetlier il tUi, I'nite(l States or abroad, take into account tlhe
,X(,lusionary policies or practices of any foreign govern ent where
s icli policies or prac'tices are based upon race. rel igion, national origin.
O)rI sex.
(c) 'Tihe Presidhuit sliall promptly transmit reports to tlie Speaker
of tlie House. of Representatives aI d time c.iuairmlal of thle (C'ommittee
(on Foreirn liRelations of t(lie Senate concerning any instance in w'luich
any I'ited States person (as d(lefined( in section 7701(a) (30) of the
internal Revenue Code of 19!)54) is prevented by a foreign government
om the lmbiis of race, religiolli, national origin, or sex. from participating








in the-perforinance of any sale or licensed traIsaction uinier tiu5 Act.
Such reports shall include (1) a description of the facts and circum-
stances of any such discrimination, (2) the response thereto on the
part of the United States or any agency or employee thereof, iand (3)
thle result of such response, if any.
(d) (1) Upon the request of the Committee on Foreign Relations of
the Senate or the Corumittee on International Relations of the House
of Representatives, the President shall, within 60 days after receipt
of such request, t ransi i t to both such committees a statement, prepared
with the assistance of the Coordinator for Human Rights and Hu-
manitarian Affairs, with respect to the country designated in such
request, setting forth-
(A) all the available information about the exclusionary pol-
icies or practices of the government of such country when such
policies or practices are based upon race, religion, national origin
or sex and prevent any such person from participating in the
performance of any sale or licensed tran-action under this Act;
(B) the response of the United States thereto and the rc:-iults
of such response;:
(C) whether, in the opinion of the President, notwithstanding
any such policies or practices-
(i) extraordinary circumstances exist which necessitate a
continuation of such sale or licensed transaction, and, if so,
a description of such circumstances and the extent to which
such sale or licensed transaction should be continued (subject
to such conditions as Congress may impose under this sec-
tion), and
(ii) on all the facts it is in the national interest of the
United States; to continue such sale or licen.-ed transii-action;
and
(D) such other information as such committee may request.
(2) In the event a statement with respect to a sale or licensed
transaction is requested pursuant to paragraph (1) of this silubsection
but is not transmitted in accordance therewith within 60 days after
receipt of such request, such sale or licensed transaction shall be
suspended unless and until such statenienit is transiiilitted.
(3) (A) In the event a statement with respect to a sale or li'e1iised
transaction is transmitted under paragraph (1) of this subsection, the
Congress may at any time thereafter adopt a joint re-olution termi-
natino or restricting such sale or licensed transaction.
(B) Any such resolution shall be considered in tlie Senate in ac-
cordance with the provisions of section 601(b) of the International
Security Assistance and Arms Export Control Act of 1976.
S(.C) The term "certification", as used in section (601 of such Act,
means, for the purposes of this paragraph, a statement traisjuitted
under paragraph (1) of this subsection.

Chapter 2-FOREIGN MILITARY SALES AUTHORIZATIONS
SEC. 21. SALES FROM STOCKS.-(a) The President may sell defense
articles and defense, services from the stocks of the Departiiient of
Defense to any eligible country or international organization if such
country or international organization agrees to pay in Unite(l States
dollars-







(1) in the case of a defense article not intended to be replaced
at the time such agreement is entered into, not less than the actual
value thereof;
(2) in thle case of a defense article intended to be replaced
at the time such a'reenment is entered into, the estimated cost of
replacement of suclh article, including the contract or production
costs less any depreciation in the value of such article; or
(3) in the case of tlhe sale of a defense service, thle full cost
to the United States Government of furnishing such service.
(b) Except as provided by subsection (d) of this section, payment
shall be made in advance or, if the President determines it to be in the
national interest, upon delivery of the defense article or rendering of
the (lefene service.
(c) Personnel perforniing defense services sold under this Act
iay iot perform any duties of a combatant nature, including any
duties related to traiiiinr, advising, or otherwise providing assistance
regarding combat activities, outside tlhe United States in connection
with the performance of those defense services.
(d) If the President determines it to be in thle national interest
piirsuait to subsection (b) of this section, billings for sales made
iji(ller letters of offer issued under this section after the enactment of
this sub)section may be dated and issued upon delivery of the defense
article or rend(lering of tle d(lefense service and sliall be due and payable
11)poll receipt tlereof by the pulrchlasing country or international oraa-
nization. Interest shall be charged on any net amount due and payable
which is not paid within sixty days after the date of such billing. Tle
rate of interest charged shall be a rate not less than a rate determined
by the Secretary of tlie Treasury taking into consideration the current
average market yield on outstanding short-term obligations of the
I'nlited States as of tlhe last day of thle month preceding the billing
and sliall be computed from the d(late of billinllg. Tle President may
extend siwch sixty-d(ay period to one hundred and twenty days if 1w
(determines., that enIergelIcyV requirements of the purchaser for acquisi-
tion of sueli defensee articles or defense services exceed the ready
availability to the pulrchaser of funds sufficient to pay the United
States iiin full for them within suchl sixty-day period and submits that
deteriii action to tlhe ('o gress together witlh a special emergency
request for the a thorization and appropriation of additional fIlunds to
finance M-u'ch purchases inder tlis Act.
(e) (1) After Septei mbelr 30, 1976, letters of offer for tlhe sale of
l('e feNse arti 'les or for tlie sale of defense services that are issued pur-
uiiinl to this section or puirsuant to section 2"2 of this Act shliall include
ap propriate charges for-
(A) admiiiiistrative services, caleiilated on an average per-
(piet Ir basis to recover t lie fill estiliated( costs of administrat ion
of sales iiiade i mulder this Act to all p1rclhasers of such articles and
services;
(B) any use of plait a(d lpro(lduction equi)nient in connection
with ,-ii defensee articles; aind
(C) a prlioportioi ate aiioiouit of any nonreeurring costs of re-
-e:r11'h. development't and prod luct ion of major defense equipment.
(2) Tl'ie Presihdent mayv redlulce or waive tlie charge or charges which
\\oIld (tlerlwise be consideredl appropriate under paragraphs (1) (B)








and (1) (C) for particular sales that would, if made, significantly ad-
vance United States Government interests in North Atlantic Treaty
Organization standardization, or foreign procurement in the United
States under coproduction arrangements.
(f) Any contracts entered into between the United States and a for-
eign country under the authority of this section or section 22 of this
Act shall be prepared in a manner which will permit them to be made
available for public inspection to the fullest extent possible consistent
with the national security of the United States.
(g) In carrying out section 814 of the Act of October 7,1975 (Public
Law 94-106), the President may enter into North Atlantic Treaty
Organization standardization agreements for the cooperative furnish-
ing of training on a bilateral or multilateral basis, if the financial
principles of such agreements are based on reciprocity. Such agree-
ments shall include reimbursement for all direct costs but may exclude
reimbursement for indirect costs, administrative surcharges, and costs
of billeting of trainees (except to the extent that members of the
United States Armed Forces occupying comparable accommodations
are charged for such accommodations by the United States). Each
such agreement. shall be transmitted promptly to the Speaker of the
House of Representatives and the Committees on Appropriations,
Armed Services, and Foreign Relations of the Senate.
(h) (1) Sales of defense articles and defense services which could
have significant adverse effect on the combat readiness of the Armed
Forces of the United States shall be kept to an absolute minimum.
The President shall transmit to the Speaker of the House of Repre-
sentatives and the Committees on Armed Services and Foreign Rela-
tions of the Senate on the same day a written statement giving. a
complete explanation with respect to any proposal to sell, under this
section, any defense articles or defense services if such sale could have
a significant adverse effect on the combat readiness of the Armed
Forces of the United States. Each such statement shall be unclassified
except to the extent that public disclosure of any item of information
contained therein would be clearly detrimental to the security of the
United States. Any necessarily classified information shall be con-
fined to a supplemental report. Each such statement shall include an
explanation relating to only one such proposal to sell and shall set
forth-
(A) the country or international organization to which the sale
is proposed to be made;
(B) the amount of the proposed sale;
(C) a description of the defense article or service proposed to be
-sold;
(D) a full description of the impact which the proposed sale
will have on the Armed Forces of thie United States; and
(E) a justification for such proposed sale, including a certifica-
tion that such sale is important to the security of the United
States.
A certification described in subparagraph (E) shall take effect on the
date on which such certification is transmitted and shall remain in
effect for not to exceed one year.
(2) No delivery may be made under any sale which is required to
be reported under paragraph (1) of this subsection unless tie certifica-






tion required to l)e transmitted by paragraph (E) of paragraph (1)
is ill efe-t.
Si-:'. 22. Pi', UIt.:MENT FOR CASH SALES.-(a) Except as otherwise
provided in this section, the President may, without requirement for
charge to any appropriation or contract authorization otherwise pro-
vide(d. enter into contracts for the procurement of defense articles or
defense service- for sale for United States dollars to any foreign
country or international organization if such country or inter-
national organiization provides the United States Government with
a dependable undertaking (1) to pay the full amount of such con-
tract which will assure the United States Government against any
loss on the contract, and (2) to make funds available in such amounts
'and at -uch times as may be required to meet the payments required
b)y the (,ntract and any damages and costs that may accrue from the
cancellation of such contract, in advance of the time such payments.
damages, or costs are due. Interest shall be charged on any net amount
by which any such country or international organization is in arrears
under all of its outstanding unliquidated dependable undertakings,
considered collectively. The rate of interest charged shall be a rate not
less than a rate determined by the Secretary of the Treasury taking
into consideration the current average market yield on outstanding
short-term obligations of the United States as of the last day of the
month preceding the net arrearage and shall be computed from the
date of net arrearage.
(b) The. President imay, if lie determines it to be in the national in-
terest. issue letters of offer under this section which provide for billing
upon delivery of the defense article or rendering of the defense serv-
ice and for payment within one hundred and twenty days after the
date of billing. This authority may be exercised, however, only if
the President also determines that the emergency requirements of the
purchaser for acquisition of such defense articles and services exceed
the ready availability to the purchaser of funds sufficient to make pay-
ments on a dependable undertaking basis and submits both determina-
tions to the Congress together with a special emergency request for
authorization and appropriation of additional funds to finance such
purchases under this Act. Appropriations available to the Department
of I)efense may be used to meet the payments required by the con-
tracts for tlhe procurement of defense articles and defense services
and shall be reimbursed by the amounts subsequently received from
the country or international organization to whom articles or services
are sold.
S:(,. 2.C Ir S.A.Es.-Tli'he President is authorized to finance pro-
(irlnii(,ilts of dlifense articles and defense services )by friendly for-
('it cniit'rie(.s indm international organizations on terms requiring the
Ia*mnl'iit to lite united States Governmenit in ITnited States dollars
of-
(1) the viale(, of such articles or services within a period not
to 'ec((,,d twelve year.ns aifte'r thlie deliv'erv of such articles or the
rendering f sIch services;"' and
(2) interest on the unpaid(l balance of that obligation for pay-
miient o()f thlie val ie of such articles or sier-ices, at a. rate equivalent
tot lhe cuiirrent iiverage interest rate, as of the last day of the month








preceding the financing of such procurement, that the United
States Governmen(lt pays on outstanding marketable obligations
of comparable maturity, unless the President certifies to Congress
that the national interest requires a lesser rate of interest and
states in the certification the lesser rate so required and the justi-
ficat ion therefore.
S.. :24. GUA RA.NTIES.-(a) The President may guarantee any indi-
%vidual, corporation, partnership, or other juridical entity doing busi-
ness in the United States (excluding United States Government agen-
cies other than the Federal Financing Bank) against political and
credit risks of nonpayment arising out of their financing of credit sales
of defense articles and defense services to friendly countries and inter-
national organizations. Fees shall be charged for such guaranties.
(b) The President may sell to any individual, corporation, partner-
ship, or other juridical entity (excluding United States Government
agencies other than the Federal Financing Bank) promissory notes
issued by friendly countries and international organizations as evi-
dence of their obligations to make repayments to the United States
on account of credit sales financed under section 23, and may guarantee
p)aymlent thereof.
(c) Funds made available to carry out this Act shall be obligated
in an amount equal to 10 per centum of the principal amount of
contractual liability related to any guaranty issued under this section,
and all the funds so obligated shall constitute a single reserve for the
payment of claims under such guaranties. Any funds so obligated
which are deobligated from time to time during any current fiscal
year as being in excess of the amount necessary to maintain a frac-
tional reserve of 10 per centum of the principal amount of contractual
liability under outstanding guaranties shall be transferred to the
general fund of the Treasury. Any guaranties issued hereunder shall
be backed by the full faith and credit of the United States.
SEC. 25. ANNUAL ESTIMATE AND JUSTIFICATION FOR SALES PRO-
GRAM.-(a) The President shall transmit to the Congress, as a part of
the presentation materials for security assistance programs proposed
for each fiscal year, a report which sets forth-
(1) an estimate of the amount of sales expected to be made to
each country under sections 21 and 22 of this Act, including a
detailed explanation of the foreign policy and United States
national security considerations involved in expected sales to each
country;
(2) an estimate of the amount of credits and guaranties ex-
pected to be extended to each country under sections 23 and 24
of this Act;
(3) a list of all findings which are in effect on the date of such
transmission made by the President pursuant to section 3(a) (1)
of this Act, together with a full and complete justification for each
such finding, explaining how sales to each country with respect
to which such finding has been made will strengthen the security
of the United States and promote world peace; and
(4) an arms control impact statement for each purchasing
country, including (A) an analysis of the relationship between
expected sales to each country and arms control efforts relating





12


to that country, and (B) the impact of such expected sales on tlhe
stability of thle region that includes the purchasing country.
(b) Not later than thirty days following the receipt of a request
made by the Committee on Foreign Relations of the Senate or the
Committee on International Relations of the House of Representatives
for additional information with respect to any estimate submitted
p1)llrsuant to subsection (a), the President shall submit such informa-
tion to such committee.
(c) The President shall make every effort to submit all of the infor-
mation required by this section wholly in unclassified form. In the
event the President submits any such information in classified form.
he shall submit such classified information in an addendum and shall
also submit simultaneously a detailed summary, in unclassified form.
of such classified information.
Chapter 3-MILITARY EXPORT CONTROLS
SEC. 31. ATIIORIZATION AND AGGREGATE CEILING ON FOREIGN MILI-
TARY SALES CREDITS.-(a) There is hereby authorized to be appropri-
ated to the President to carry out this Act not to exceed $1,039,000.0J0
for the fiscal year 1976 and not to exceed $740,000.000 for the fiscal
year 1977. Unobligated balances of funds made available pursuant to
this section are hereby authorized to be continued available by appro-
priations legislation to carry out this Act.
(b) The aggregate total of credits, or participation in credits, ex-
tended pursuant to this Act and of the 'principal amount of loans
guaranteed pursuant to section 24(a) shall not exceed $2,374,700.000
for the fiscal year 1976, of which not less than $1,500.000.000 shall be
available only for Israel, and shall not exceed $2,022,100,000 for the
fiscal year 1977, of which not less than $1,000,000,000 shall be available
only for Israel.
(c) Funds made available for the fiscal years 1976 and 1977 under
subsection (a) of this section shall be obligated to finance the pro-
curement of defense articles and defense services by Israel on a long-
term repayment basis either by the extension of credits, without regard
to thle limitations contained in section 23. or by the issuance of guar-
anties under section 24. Repayment shall be in not less than twenty
years, following a grace period of ten years on repayment. of prin-
cipal. Israel shall be released from one-half of its contractual liability
to repay tlie United States Government with respect to defense articles
,II(d defense services so financed for each such year.
(d) The aggregate acquisition cost to the IUnited States of excess
defensee articles ordered by the President in any fiscal year after fiscal
ear 1976 for delivery to foreign countries or International organiza-
tions under tihe authority of chapter 2 of part II of the Foreign
A.ssist;icnee Act of 1961 or pursuant to sales under this Act may not
(.xce.ed $1V(O.0(0.j((0 (exclusive of ships and their on-board stores and
suipplies transferred in accordance with law).
SEi ( 2. 1 PR'OIBITION AGAINST (C'FiRTr.I.N M LI'rAiY- EXPORT FIN ANc-
i \G BY EXPoRT'-IMPORT B.ANK.-Notwithlstanding any otler l)rovision
of liw, no find, or borrowing authority available to the Export-I'-
)orta. in k of the United States shall be used 1b' such Bank to partici-
pati( in aln, extenLion of credit in connection with any agreement to





13


sell defense articles and defense services entered into with any eco-
nomically less developed country after June 30, 1968.
SEC. 33. REGIONAL CEILINGS ON FOREIGN MILITARY SALES.-(a) The
aggregate of the total amount of military assistance pursuant to the
Foreign Assistance Act of 1961, as amended, of credits, or participa-
tions in credits, financed pursuant to section 23, of the principal
amount of loans guaranteed pursuant to section 24(a), shall, exclud-
ing training, not exceed $40,000,Q00 in each fiscal year for African
countries.
(b) The President may waive the limitations of this section when
he determines it to be important to the security of the United States
and promptly so reports to the Speaker of the House of Representa-
tives and the Committee on Foreign Relations of the Senate.
(c) * [Repealed-1973]
SEC. 34. FOREIGN MILITARY SALES CREDIT STANDARDS.-Tlhe Presi-
dent shall establish standards and criteria for credit and guaranty
transactions under sections 23 and 24 in accordance with the foreign,
national security, and financial policies of the United States.
SEC. 35. FOREIGN MILITARY SALES TO LESS DEVELOPED COUNTRIES.-
(a) When the President finds that any economically less developed
country is diverting development assistance furnished pursuant to the
Foreign Assistance Act of 1961, as amended, or sales under the Agri-
cultural Trade Development and Assistance Act of 1954, as amended,
to military expenditures, or is diverting its own resources to unneces-
sary military expenditures, to a degree which materially interferes
with its development, such country shall be immediately ineligible for
further sales and guarantees under sections 21, 22, 23, and 24, until the
President is assured that such diversion will no longer take place.
(b) * [Repealed-1974]
SEC. 36. REPORTS ON COMMERCIAL AND GOVERN.-MENTAL MILITARY
EXPORTS; CONGRESSIONAL ACTTON.-(a) The President shall transmit
to the Speaker of the House of Representatives and to the chairman of
the Committee on Foreign Relations of the Senate not more than
thirty days after the end of each quarter an unclassified report (except
that any material which was transmitted in classified form under
subsection (b)(1) or (c) (1) of this section may be contained in a
classified addendum to such report, and any letter of offer referred to
in paragraph (1) of this subsection may be listed in such addendum
unless such letter of offer has been the subject of an unclassified cer-
tification pursuant to subsection (b) (1) of this section) containing-
(1) a listing of all letters of offer to sell any major defense
equipment for $1,000,000 or more under this Act to each foreign
country and international organization, by ecntegory, if such letters
of offer have not been accepted or cancelled;
(2) a listing of all such letters of offer that have )een accepted
during the fiscal year in which such report is submitted, together
with the total value of all defense articles ,nd defense services sold
to each foreign country and international organization during
such fiscal year;
(3) the cumulative dollar amounts, by foreign country and
international organization, of sales credit agrc(e11ents under sec-
tion 23 and guaranty agreements under section 24 made during thP
fiscal year in which such report is subinitted;






14


(4) a numbered listing of all licenses and approvals for the
export to each foreign count ryv and international organization
dilrilng slcli fiscal year of commercially sold major defense equip-
mient, by category, sold for $1,000.000 or more. together with the
total value of all defell-e articles and defense services so licensed
for each foreign couit ry and international organization, setting
forth, with respect to the listed major defense equipment-
(A) the items to be exported under the license.
(B) the quaintity and contract price of each such item to
be fiurnislied. and
(C) the iane and address of tlhe ultimate user of each
such item;
(5) projections of the dollar amount-. by foreign country and
international organization, of cash sales expected to be made
under section., 21 and 22, credits to be extended under section 23.
and guaranty agreements to be made under section 24 in the
quarter of the fiscal year immediately following the quarter for
which such report is submitted;
(6) a projection with respect to all cash sales expected to be
made awl credits expected to be extended to each country and
organization for the remainder of the fiscal year in which such
report is transmitted;
(7) an estimate of the number of officers and employees of the
United States Government and of United States civilian contract
personnel present in each such country at the end of that quarter
for assignments in implementation of sales and commercial
exports minder this Act;
(8) a description of each payment, contribution, gift, com-
mission, or fee reported to the Secretary of State under section 39,
including (A) the name of the person who made such payment,
contribution, gift, commission, or fee; (B) the name of any sales
agent or other person to whom such payment, contribution, gift,
commission, or fee was paid; (C) the date and amount of such
payment, contribution, gift, commission, or fee; (D) a descrip-
tion of the sale in connection with which such payment, contribu-
tion, gift, commission, or fee was paid; and (E) the identification
of any business information considered confidential by the person
siibmitting it which is included in the report; and
(9) an analysis and description of the services being p)er-
formed by officers and employees of the United States Govern-
1e it under section 21(a) of this Act, including the number of
persoi nel so emp 1)loyed.
For eali letter of offer to sell under paragraphs (1) and (2), the
relportt shall specify (i) the foreign country or international organiza-
tiio to which the defense article or service is offered or was sold, as the
Case 1my be; (ii) tlhe dollar amount of the offer to sell or the sale and
the number of defense articles offered or sold, as tlie case may be; (iii)
a ,dl(escription of the defense article or service. offered or sold, as the
case mvay be; and (iv) tlhe IUnited States Armed Forces or other agency
of the United States which is making tlhe offer to sell or the sale, as
tc, ,'ase may be.
(b) (1) In the case of any letter of offer to sell any defense articles
or services in(l(er this Act for $25,000,000 or more, or any major







defense equipment for $7,000.000 or more. before such letter of offer
is issued, the President shall submit to the Speaker of tlie House of
RPepresenatives and to the chairman of the Committee on Foreign
Relations of the Senate a numbered certification with respect to such
offer to sell containing the information specified in clauses (i) through
(iv) of subsection (a) and a description, containing the information
specified in paragraph (8) of subsection (a), of any contribution,
gift, commission, or fee paid or offered or agreed to be paid in
order to solicit, promote, or otherwise to secure such letter of offer.
In addition, the President shall, upon the request of such committee
or the Committee on International Relations of the House of Repre-
sentatives, transmit promptly to both such committees a statement
setting forth, to the extent specified in such request-
(A) a detailed description of the defense articles or services
to be offered, including a brief description of the capabilities of
any defense article to be offered;
(B) an estimate of the number of officers and employees of
the United States Government and of United States civilian con-
tract personnel expected to be needed in such country to carry
out the proposed sale;
(C) the name of each contractor expected to provide the
defense article or defense service proposed to be sold (if known
on the d(late of transmittal of such statement);
(D) an analysis of the arms control impact pertinent to such
offer to sell, prepared in consultation with the Secretary of
Defense;
(E) the reasons why the foreign country or international
organization to which the, sale is proposed to be made needs the
defense articles or services which are the subject of such sale and
a description of how such country or organization intends to use
such defense articles or services;
(F) an analysis by the President of the impact of the proposed
sale on the military stocks and the military preparedness of the
United States;
(G) the reasons why the proposed sale is in the national
interest of the United States;
(H) an analysis by the President of the impact of the pro-
posed sale on the military capabilities of the foreign country
or international organization to which such sale would be made;
(I) an analysis by the President of how the proposed sale
would affect the relative military strengths of countries in the
region to which the defense articles or services which are the
subject of such sale would be delivered and whether other coun-
tries in the region have comparable kinds and amounts of defense
articles or services;
(J) an estimate of the levels of trained personnel and main-
tenance facilities of the foreign country or international orga-
nization to which the sale would be made which are needed and
available to utilize effectively the defense articles or services
proposed to be sold;
(K) an analysis of the extent to which comparable kinds and
amounts of defense articles or services are available from other
countries;







(L) an analysis of the impact of the proposed sale on United
States relations with the countries in the region to which the
defense articles or services which are the subject of such sale
would be delivered; and
(MNI) a detailed description of any agreement proposed to be
entered into by the United States for the purchase or acquisition
by the United States of defense articles, services, or equipment,
or other articles, services, or equipment of the foreign country or
international organization in connection with, or as considera-
tion for, such letter of offer, including an analysis of the impact of
such proposed agreement upon United States business concerns
which might otherwise have provided such articles, services, or
equipment to the United States, an estimate of the costs to be
incurred by the United States in connection with such agreement
compared with costs which would otherwise have been incurred,
an estimate of the economic impact and unemployment which
would result from entering into such proposed agreement, and
an analysis of whether such costs and such domestic economic
impact justifyy entering into such proposed agreement.
A certification transmitted pursuant to this subsection shall be un-
clazsified, except that the information specified in clause (ii) and the
details of the description specified in clause (iii) of subsection (a)
iuay be classified if tlhe public disclosure thereof would be clearly
detri-iental to the security of the United States. The letter of offer
;-all not be issued if the Congress. within thirty calendar days after
receiving such certification, adopts a concurrent resolution stat ini
that it objects to the proposed sale, unless the President states in his
(certification that an emergency exist, which re(lquires such sale inli the
national security intere-t, of tlhe United States.
(2) Any such resolution shall be considered in the Senate in ac-
cordancee with the provisions of section 601(b) of the International
Security Assistance and Arms Export Control Act of 1976.
(3) For the purpose. of expediting the consideration and adoption
of concurrent, resolutions.; under this subsection, a motion to proceed
to the consideration of any such resolution afler it las been reported
by the appropriate committee shall be treated as highly p1)rivileg(ed
in tlie House of Representatives.
(c) In the case of an application by a person (other than with re-
gard to a sale under section 21 or section 22 of this Act) for a license
for tihe export of any major defense equipment sold under a contract
in tli(e amiolint of $7.000,000 or more or of defense articles or defense
services sold under a contract in the aiotint of $25,000,000 or more,
not l1(ss tmhan 30 days before issuing suc license tlie President sliall
trainsiit to tihe Speaker of the House of Representatives and to the
cliainian of tlie Comlilittee on Foreign Relations of the Senate an
ncla:issified numbered certification with resl)pect to su1ch application
speci fying (1) the foreign couI n ry 3or international organization to
vhich such export will be made. (2) the dollar amount of the
it.es to b)e exported, and (3) a description of t.lie items to be ex-
ported(. Tn addition, tlie President shall. upontl) tlie request. of such c(.om-
nmitt(e or lie Comnmittee on ITnternationmmal Relations of thpe House of







Representatives, transmit promptly to both such committees a state-
ment setting forth, to the extent specified in such request, a description
of the capabilities of the items to be exported, an estimate of the total
number of United States personnel expected to be needed in the foreign
country concerned in connection with the items to be exported and
an analysis of the arms control impact pertinent to such application,
prepared in consultation with the Secretary of Defense. A certifica-
tion transmitted pursuant to this subsection shall be unclassified.
except that the information specified in paragraph (2) and the details
of the description specified in paragraph (3) may be classified if the
public disclosure thereof would be clearly detrimental to the s.:curity
of the United States.
(d) In the case of an approval under section 38 of this Act of a
United States commercial technical assistance or minanifactiuring licens-
ing agreement for or in a country not a member of the North Atlantic
Treaty Organization which involves the manufacture abroad of any
item of significant, combat equipment on the United States Munitions
List, before such approval is given, the President shall submit a certifi-
cation with respect to such proposed commercial agreement in a man-
ner similar to the certification required under subsection (c) containing
comparable information, except that the last sentence of such sub-
section shall not apply to certifications submitted pursuant to this
subsection.
SEC. 37. FISCAL PROVISIONS RELATING TO FOREI'MN MILITARY SALES
CREDITS.-(a) Cash payments received under sections 21 and 22 and
advances received under section 23 shall be available solely for pay-
tients to suppliers (including the military departments) and refunds
to purchasers and shall not be available for financing credits and
gumaranties.
(b) Amounts received from foreign governments and international
organizations as repayments for credits extended pursuant to section
23., amounts received from the disposition of instruments evidencingr
indebtedness under section 24 (b) (excluding such portion of the sales
proceeds as may be required at the time of disposition to be obligated
as a reserve for payment of claims under guaranties issued pursuant
to section 24(b), which sums are made available for such obliga-
tions), and other collections (including fees and interest) shall be
transferred to the miscellaneous receipts of the Treasury.
SEC. 38. CONTROL OF ARPS EXPORTS ANDT IM.POHTS.-(a)(1) In fur-
therance of world peace and the security and foreign policy of the
United States. the President is authorized to control the import and
the export of defense articles and defense services and to provide for-
eign policy guidance to persons of the United States involved in the
export and import of such articles and services. The President is
authorized to designate those items which shliall be considered as de-
fense articles and defense services for the purposes of this section
and to promulgate regulations for the import and export of such
articles and services. The items so designated shall constitutite the
United States Munitions List.
() Decisions on issuing export licenses under this section shall le
made in coordination with the Director of the United States Arms







Control and Disarmnaiment. Agency and shall take into avcouint the
Director's opiliion as to whlethler the export of an article willcontribute
to an arms race. increase the p)OS.ibilitv of outbrteak or escalationl of
conflict, or prejlludice the development of bilateral or multilateral anus
cont rol arrangements.
(b) (1) As prescribed in regulatiol.ns is!iued under this section. every
person otherr than an officer or employee of tile United States (Gov-
ernileilt actillng in an official capacity) who celnages in the 1busiIness
of manufacturing, exporting, or importingr any defense articles or
defense services desigInated by the Pre:ident under subsection (a)
(1) shall register with tlie United States Governmient agency cliargedl
with the administration of this section, and shall pay a registration
fee which slhall 1be prescribed by such regulations. Suchl regulations
-h all prohibit the return to the United States for sale in the United
State- (other than for tlhe Armed Forc's of the United States and its
allie- or for any State or local law enforcement agency) of any Yiil i-
tary firearms or ammunition of United States mamifacture furnishlied
to foreign (rovernmnents by the Vnited States under this Act or any
other foreign assistance or sales progirain of the United States.
whether or not enhiatnced in value or improved in condition in a foreign
country. This prohibition shall not extend to similar firearms tfliat
have been so substantially transformed as to become, in effect, articles
of foreign manufacture.
(2) Except as otherwise specifically provided in regulations issue(1
under subsection (a) (1), no defense articles or defense services desig-
nated by the President under subsection (a)(1) may be exported or
imported without a license for such export or import, issued in accord-
ance with this Act and regulations issued under this Act. except that
no license shall be required for exports or imports made by or for an
agency of the United States Government. (A) for official use by a
department or agency of the United States Government. or (B) for
carrying out any foreign assistance or sales program authorized by
law and subject, to the control of the President by other means.
(3) No license may be issued under this Act for the export of any
major defense equipment sold under a contract in the amolnt of
2.,000.000 or more to any foreign country which is not a member of
tlhe North Atlantic Treaty Organization unless such major defense
equipment was sold under this Act.
(c) Any person who willfully violates any provision of this section
or .-ection 39, or any rule or regulation issued under either section, or
who willfully, in a registration or license application or required
r'ep)ort. makes any untrue statement of a material fact or omits to
-late a material fact required to be stated therein or necessary to imake
tle statements therein not misleading, shall upon conviction lbe fined
not more than $100,000 or imprisoned not more than two years. or
both.
(d) Tilis section applies to and within tlihe Canal Zone.
(e) In carrying out functions under this section witli respect to
tle e.Xl)ot of defense articles and defense services, the President is
authorized to exercise tlie same powers concerning violations and
e.nfoce ilen, t which are conferred lupon departments, agencies and





19.

officials by sections 6 (c), (d), (e), and .(f) and 7 (a) and (c) of
the Export Administration Act of 1969, subject to the same terms
and conditions as are applicable to such powers under such Act.
Nothing in this subsection shall be construed as authorizing the with-
holding of information from the Congress.
SEC. 39. FEES OF MILITARY SALES AGENTS AND OTIER PAY-
MEXTS.-.,(a) In accordance with such regulations as he may prescribe,
the Secretary of State shall require adequate and timely reporting on
political contributions, gifts, commissions and fees paid, or offered or
agreed to be paid, by any person in connection with-
(1) sales of defense articles or defense services under section
22 of this Act; or
(2) commercial sales of defense articles or defense services
licensed or approved under section 3S of this Act;
to or for the armed forces of a foreign country or international orga-
nization in order to solicit, promote, or otherwise to secure the con-
clusion of such sales. Such regulations shall specify the amounts and
the kinds of payments, offers, and agreements to be reported, and the
form and timing of reports, and shall require reports on the names of
sales agents and other persons receiving such payments. The Secretary
of State shall by regulation require such recordkeeping as he deter-
mines is necessary.
(b) The President may, by regulation, prohibit, limit, or prescribe
conditions with respect to such contributions, gifts, commissions, and
fees as he determines will be in furtherance of the purposes of this
Act.
(c) No such contribution, gift, commission, or fee may be included,
in whole or in part, in the amount paid under any procurement con-
tract entered into under section 22 of this Act, unless the amount
thereof is reasonable, allocable to such contract, and not made to a
person who has solicited, promoted, or otherwise secured such sale, or
has held himself out as being able to do so, through improper influence.
For the purposes of this section, "improper influence" means influence,
direct or indirect, which induces or attempts to induce consideration
or action by any employee or officer of a purchasing foreign govern-
ment or international organization with respect to such purchase on
any basis other than such consideration of merit as are involved in
comparable United States procurements.
(d) (1) All information reported to the Secretary of State and all
records maintained by any person pursuant to regulations prescribed
under this section shall be available, upon request, to any standing com-
mittee of the Congress or any subcoinniittee thereof andl to any agency
of the United States Government authorized by law to have access to
the books and records of the person required to submit reports or to
iiaintain records under this section.
(2) Access by an agency of the United States Government to
records maintained under this section shall be on the same terms and
conditions which govern the access by such agency to thle books and
records of the person concerned.





20


Chapter 4-GENERAL, ADMINISTRATIVE, AND
MISCELLANEOUS PROVISIONS
S,'c. 41. EFFECTIVE DATE.-This Act shall take effect on July 1,1968.
SE(c. 42. GENERAL. PRovisioxNs.-(a) In carrying out this Act.
special emphasis shall be placed on procurement in the United States,
but, suiibject to the provisions of subsection (b) of this section, consider-
ation shall also be given to coproduction or licensed production out-
side the United States of defense articles of United States origin when
slich production best serves the foreign policy, national security, and
econoimny of the United States. In evaluating any sale proposed to be
niade pursuant to this Act, there shall be taken into consideration (1)
the extent to which the proposed sale damages or infringes upon licens-
ing arrangements whereby United States entities have granted licenses
for the manufacture of tlhe defense articles selected by the purchasing
country to entities located in friendly foreign countries, which licenses
result in financial returns to tlhe United States, (2) the portion of
the defense articles so miantifactiired which is of United States origin.
and (3) in coordination within the Director of the United States Arms
(C'lontrol and Disarmament Agency, the Director's opinion as to the
extent to which such sale might contribute to an arms race, or increase
tlhe possibility of outbreak or escalation of conflict, or prejudice the
development of bilateral or multilateral arms control arrangements.
(b) No credit sale shall be extended under section 23, and no guar-
antee shall be issued under section 24, in any case involving copro-
duction or licensed, production outside the United States of any de-
fense article of United States origin unless the Secretary of State shall,
in advance of any such transaction, advise the appropriate commit-
tees of the Congress and furnish the Speaker of the House of Repre-
sentatives and the President of the Senate with full information re-
garding the proposed transaction, including, but not limited to, a
description of the particular defense article or articles which would be
produced under license or coproduced outside the United States, the
etiniated value of such production or coproduction, and the probable
impact of the proposed transaction on employment and production
within the United States.
(c) Funds made available under this Act may be used for procure-
ient. outside the United States only if the President determines that
s ulh procurement will not result in adverse effects upon the economy
of the United States or the industrial mobilization base, with special
reference to any areas of labor surplus or to tlhe net position of the
United States in its balance of payments with the rest of the world,
wlic.h outw(,iglI the e(onoinic or other advantages to tlIe United States
of less cost lv procurenent outside the United States.
(d) (1) With respect to sales and gularanties under sections 21. 22.
2. and 24. t lie Secretary of Defense shall, under the direction of the
Pr-esident, have prinma responsibility for-
(A) tlie determination of military end-item requirements;
(B) the procurement of military equipment in a manner which
pe'rmit- its integrat io, witl service programs;







(C) the supervision of the training of foreign military
personnel;
(D) the movement and delivery of military end-items; and
(E) within the Department of Defense, the perforimince of
any other functions with respect to sales and guaranties.
(2) The establishment of priorities in the procurement, delivery,
and allocation of military equipment shall, under the direction of the
President, be determined by the Secretary of Defense.
(e) (1) Each contract for sale entered into under sections 21 and
22 of this Act shall provide that such contract may be canceled in whole
or in part, or its execution suspended, by the United States at any
time under unusual or compelling circumstances if the national interest
so requires.
(2) (A) Each export license issued under section 38 of this Act
shall provide that such license may be revoked, suspended, or amended
by the Secretary of State, without prior notice, whenever the Secre-
tary deems such action to be advisable.
(B) Nothing in this paragraph may be construed as limiting the
regulatory authority of the President under this Act.
(3) There are authorized to be appropriated from time to time such
sums as may be necessary (A) to refund moneys received from pur-
chasers under contracts of sale entered into under sections 21 and 22
of this Act that are canceled or suspended under this subsection to the
extent such moneys have previously been disbursed to private con-
tractors and United States Government agencies for work in progress.
and (B) to pay such damages and costs that accrue from the corre-
sponding cancellation or suspension of the existing procurement con-
tracts or United States Government agency work orders involved.
(f) The President shall, to-the maximum extent possible and con-
sistent with the purposes of this Act, use civilian contract personnel
in any foreign country to perform defense services sold under this
Act.
SEC. 43. ADMI.NISTRATIVE EXPEN-SES.-(a) Funds made available
under other law for the operations of United States Government agen-
cies carrying out functions under this Act shall be available for the
administrative expenses incurred by such agencies under this Act.
(b) Administrative expenses incurred by any department or agency
of the United States Government (including any mission or group) in
carrying out functions under this Act which are primarily for the
benefit of any foreign country shall be fully reimbursed from amounts
received for sales under sections 21 and 22.
SEC. 44. STATUTORY CONSTRLUCTION.-NO provision of this Act shall
be construed as modifying in any way the provisions of tlhe Atonmic
Energy Act of 1954, as amended, or section 7307 of title 10 of the
United States Code.
SEc. 45. STATUTES REPEALED AND A.MENDED.-(a) Sections 521, 522,
523. 524(b)(3), 525, 634(g). and 640 of the Foreign Assistance Act
of 1961. as amended, are hereby repealed.
(b) Part III of the Foreign Assistance Act of 1961, as amended. is
amended as follows:
(1) Section 622(b) is amended by striking out "or sales".






22


(2) Section 622(c) is amended by striking out "and sales" and
"or sales".
(3) Section 632(d) is amended by striking out "sections 506.
.022. and 523," in the first sentence and inserting in lieu thereof
"section 506".
(4) Section 634(d) is amended by inserting "or any other" be-
t ween "under this"* and "Act" in the fourth sentence.
(5) Section 644(m) is amended by striking out "and sales" in
the first sentence of the paragraph following numbered para-
rIaph (3).
(c) References in law to the provisions of law repealed by subsec-
tion (a) of this section shall hereafter be deemed to be references to
this Act or appropriate provisions of this Act. Except for the laws
specified in section 44, no other provision of law shall be deemed to
apply to this Act unless it refers specifically to this Act or refers gen-
erally to sales of defense articles and defense services under any Act.
SEC. 46. SAVING PRovisIoNxs.-Except as may be expressly provided
to the contrary in this Act. all determinations, authorizations, regula-
tions, orders, contracts, agreements, and other actions issued, under-
taken, or entered into under authority of any provision of law repealed
by section 45(a) shall continue in full force and effect until modified
by appropriate authority.
S rc 47. DEFINITIONS.-For purposes of this Act, the term-
(1) "excess defense article" has the meaning provided by section
644(g) of the Foreign Assistance Act of 1961;
(2) "'value" means, in the case of an excess defense article, not less
than the gr('ater of-
(A) the gross cost incurred by the United States Government
in repairing, rehabilitating, or modifying such article, plus the
scrap value; or
(B) the market value, if ascertainable ;
(3) "defense article", except as provided in paragraph (7) of this
'ect ion. includes-
(A) any weapon, weapons system, munition, aircraft, vessel,
boat, or other implement of war,
(B) any property, installation, commodity, material, equip-
ilint, -upply, or coods use.d for the purposes of making military
sales.
(C) any niachinery, facility, tool, material, supply, or other
itemn necessary for thie manufacture, production, processing, re-
ir. ervicing. storage, construction, transportation, operation, or
11-e of any article listed in this paragraph, and
(D) any component or part of any article listed in this
pl,:tru raiph,
but do,- include b iercliant vessels or (as defined by the Atomic
Em,.'rgv Act of 1954) source material, b'product material, special
nii'l,.-ir material, production facilities. utilization facilities, or atomic
we;ipoi n- or articles involving Restrictedl Dnta:
(4) ",lrfe.i'e service", except as provided in pnragraph (7) of this
-.eCIon, i,- lnles al v service, te.t, inspection, repair, training., puilic.a-
t ion, tc.hni',.l or other anssta ince, or defense information (as definIed
in -,.,ti,, I (e) of the Forein.\. A, sistance Act of 1901l), used for the
Ipurp,)-.I- of ni:uking, military -al,.-





23


(5) "training" includes formal or informal instruction of foreign
students in the United States or overseas by officers or employees of
the United States, contract, technicians, or contractors (including
instruction at civilian institutions), or by correspondence courses.
technical, educational, or information publications and media of all
kinds, training aid, orientation, training exercise, and military advice
to foreign military units and forces;
(6) "major defense equipment" means any item of significant com-
bat equipment on the United States Munitions List having a non-
recurring research and development cost of more than $50,000,000 or a
total production cost of more than $200,000,000; and
(7) "defense articles and defense services" mean., with respect to
commercial exports subject to the provisions of section 38 of this Act.
those items designated by the President ptir-uttant to subsection (a) (1)
of such section.


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UNIVERSITY OF FLORIDA

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