"(d) The President may enter into contracts or incur other obligations for a cooperative project on behalf of the other participants, without charge to any appropriation or contract authorization, if each of the other participants in the cooperative project agrees (1) to pay its equitable share of the contract or other obligation, and (2) to make such funds available in such amounts and at such times as may be required by the contract or other obligation and to pay any damages and costs that may accrue from the performance of or cancellation of the contract or other obligation in advance of the time such payments, damages, or costs are due.

"(e)(1) For those cooperative projects entered into on or after the effective date of the International Security and Development Cooperation Act of 1985, the President may reduce or waive the charge or charges which would otherwise be considered appropriate under section 21(e) of this Act in connection with sales under sections 21 and 22 of this Act when such sales are made as part of such cooperative project, if the other participants agree to reduce or waive corresponding charges.

"(2) Notwithstanding provisions of section 21(e)1XA) and section 43(b) of this Act, administrative surcharges shall not be increased on other sales made under this Act in order to compensate for reductions or waivers of such surcharges under this section. Funds received pursuant to such other sales shall not be available to reimburse the costs incurred by the United States Government for which reduction or waiver is approved by the President under this section.

(f) Not less than 30 days before a cooperative project agreement is signed on behalf of the United States, the President shall transmit to the Speaker of the House of Representatives, the chairman of the Committee on Foreign Relations of the Senate, and the chairman of the Committee on Armed Services of the Senate, a numbered certification with respect to such proposed agreement, setting forth

"(1) a detailed description of the cooperative project with respect to which the certification is made;

"(2) an estimate of the quantity of the defense articles expected to be produced in furtherance of such cooperative project;

"(3) an estimate of the full cost of the cooperative project, with an estimate of the part of the full cost to be incurred by the United States Government for its participation in such cooperative project and an estimate of that part of the full costs to be incurred by the other participants;

"(4) an estimate of the dollar value of the funds to be contributed by the United States and each of the other participants on behalf of such cooperative project;

"(5) a description of the defense articles and defense services expected to be contributed by the United States and each of the other participants on behalf of such cooperative project;

"(6) a statement of the foreign policy and national security benefits anticipated to be derived from such cooperative project; and

"(7) to the extent known, whether it is likely that prime contracts will be awarded to particular prime contractors or that subcontracts will be awarded to particular subcontractors to comply with the proposed agreement.

"g) Section 36(b) of this Act shall not apply to sales made under section 21 or 22 of this Act and to production and exports made pursuant to cooperative projects under this section, and section 36(c) of this Act shall not apply to the issuance of licenses or other approvals under section 38 of this Act, if such sales are made, such production and exports ensue, or such licenses or approvals are issued, as part of a cooperative project.

"(h) The authority under this section is in addition to the authority under sections 21 and 22 of this Act and under any other provision of law.

"(i)(1) With the approval of the Secretary of State and the Secretary of Defense, a cooperative agreement which was entered into by the United States before the effective date of the amendment to this section made by the International Security and Development Cooperation Act of 1985 and which meets the requirements of this section as so amended may be treated on and after such date as having been made under this section as so amended.

"(2) Notwithstanding the amendment made to this section made by the International Security and Development Cooperation Act of 1985, projects entered into under the authority of this section before the effective date of that amendment may be carried through to conclusion in accordance with the terms of this section as in effect immediately before the effective date of that amendment.".

(b) CONFORMING Amendments.—(1) Section 2(b) of such Act is amended to read as follows:

"(b) Under the direction of the President, the Secretary of State (taking into account other United States activities abroad, such as military assistance, economic

assistance, and the food for peace program) shall be responsible for the continuou supervision and general direction of sales, leases, financing, cooperative projects, and exports under this Act, including, but not limited to, determining

*(1) whether there will be a sale to or financing for a country and the amount thereof;

"(2) whether there will be a lease to a country;

“(3) whether there will be a cooperative project and the scope thereof; and "(4) whether there will be delivery or other performance under such sale, lease, cooperative project, or export,

to the end that sales, financing, leases, cooperative projects, and exports will be inte grated with other United States activities and to the end that the foreign policy of the United States would be best served thereby.".

(2) Section 3(a) of such Act is amended

(A) in the text preceding paragraph (1), by inserting", and no agreement shall be entered into for a cooperative project (as defined in section 27 of this Act)," after "international organization";

(B) in paragraph (2)—
(i) by inserting

or produced in a cooperative project (as defined in section 27 of this Act)," after "so furnished to it"; and

(ii) by inserting "(or the North Atlantic Treaty Organization or the specified member countries (other than the United States) in the case of a cooperative project)" after "international organization" the second place it ap pears; and

(C) in paragraph (3), by inserting "or service" after "such article" both places it appears.

(3) Section 42(e) of such Act is amended

(A) in paragraph (1), by inserting ", and each contract entered into under section 27(d) of this Act," after "of this Act"; and

(B) in paragraph (3), by inserting ", or under contracts entered into under section 27(d) of this Act," after "of this Act".

SEC. 116. EXCHANGE OF TRAINING AND RELATED SUPPORT.

The Arms Export Control Act is amended by inserting the following new chapter after chapter 2B:

"Chapter 2C-Exchange of Training and Related Support

"SEC. 30A. EXCHANGE OF TRAining and RelATED SUPPORT.-(a) Subject to subsection (b), the President may provide training and related support to military and civilian defense personnel of a friendly foreign country or an international organization. Such training and related support shall be provided by a Secretary of a military department and may include the provision of transportation, food services, health services, and logistics and the use of facilities and equipment.

"(b) Training and related support may be provided under this section only pursuant to an agreement or other arrangement providing for the provision by the recipient foreign country or international organization, on a reciprocal basis, of comparable training and related support to military and civilian personnel under the jurisdiction of the Secretary of the military department providing the training and related support under this section. Such reciprocal training and related support must be provided within a reasonable period of time (which may not be more than one year) of the provision of training and related support by the United States. To the extent that a foreign country or international organization to which training and related support is provided under this section does not provide such comparable training and related support to the United States within a reasonable period of time, that country or international organization shall be required to reimburse the United States for the full costs of the training and related support provided by the United States.

"(c) Training and related support under this section shall be provided under regulations prescribed by the President.

"(d) Not later than February 1 of each year, the President shall submit to the Congress a report on the activities conducted pursuant to this section during the preceding fiscal year, including the estimated full costs of the training and related support provided by the United States to each country and international organization and the estimated value of the training and related support provided to the United States by that country or international organization.".

SEC. 117. QUARTERLY REPORTS ON UNITED STATES MILITARY ADVISORS ABROAD.
Section 36(a)(7) of the Arms Export Control Act is amended to read as follows:

“(7) an estimate of—

"(A) the number of United States military personnel, the number of United States Government civilian personnel, and the number of United States civilian contract personnel, who were in each foreign country at the end of that quarter, and

"(B) the number of members of each such category of personnel who were in each foreign country at any time during that quarter,

in implementation of sales and commercial exports under this Act or of assistance under chapter 2, 5, 6, or 8 of part II of the Foreign Assistance Act of 1961, including both personnel assigned to the country and personnel temporarily in the country by detail or otherwise;".

SEC. 118. SENSITIVE TECHNOLOGY.

Section 36(b) of the Arms Export Control Act is amended

(1) by inserting before the period at the end of the second sentence of paragraph (1) the following: ", and a detailed justification of the reasons necessitating the sale of such articles or services in view of the sensitivity of such technology"; and

(2) by adding at the end thereof the following new paragraph: "(5)(A) If, before the delivery of any major defense article or major defense equipment, or the furnishing of any defense service or design and construction service, sold pursuant to a letter of offer described in paragraph (1), the sensitivity of technology or the capability of the article, equipment, or service is enhanced or upgraded from the level of sensitivity or capability described in the numbered certification with respect to an offer to sell such article, equipment, or service, then, at least 45 days before the delivery of such article or equipment or the furnishing of such service, the President shall prepare and transmit to the chairman of the Committee on Foreign Affairs of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate a report

"(i) describing the manner in which the technology or capability has been enhanced or upgraded and describing the significance of such enhancement or upgrade; and

"(ii) setting forth a detailed justification for such enhancement or upgrade. "(B) The provisions of subparagraph (A) apply to an article or equipment delivered, or a service furnished, within ten years after the transmittal to the Congress of a numbered certification with respect to the sale of such article, equipment, or service.

"(C) If the enhancement or upgrade in the sensitivity of technology or the capability of major defense equipment, defense articles, defense services, or design and construction services described in a numbered certification submitted under this subsection costs $14,000,000 or more in the case of any major defense equipment, $50,000,000 or more in the case of defense articles or defense services, or $200,000,000 or more in the case of design or construction services, then the President shall submit to the Speaker of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate a new numbered certification which relates to such enhancement or upgrade and which shall be considered for purposes of this subsection as if it were a separate letter of offer to sell defense equipment, articles, or services, subject to all of the requirements, restrictions, and conditions set forth in this subsection. For purposes of this subparagraph, references in this subsection to sales shall be deemed to be references to enhancements or upgrades in the sensitivity of technology or the capability of major defense equipment, articles, or services, as the case may be.

"(D) For the purposes of subparagraph (A), the term 'major defense article' shall be construed to include electronic devices, which if upgraded, would enhance the mission capability of a weapons system.".

SEC. 119. INCREASE IN CRIMINAL PENALTIES FOR CERTAIN VIOLATIONS OF THE ARMS EXPORT CONTROL ACT.

(a) CRIMINAL PENALTIES.-Section 38(c) of the Arms Export Control Act is amended by striking out "not more than $100,000 or imprisoned not more than two years, or both" and inserting in lieu thereof "for each violation not more than $1,000,000 or imprisoned not more than ten years, or both".

(b) CIVIL PENALTIES.-Section 38(e) of such Act is amended by adding at the end thereof the following: "Notwithstanding section 11(c) of the Export Administration Act of 1979, the civil penalty for each violation involving controls imposed on the export of defense articles and defense services under this section may not exceed $500,000.".

(c) EFFECTIVE DATE.-This section shall take effect upon the date of enactment of this Act or October 1, 1985, whichever is later. The amendments made by this section apply with respect to violations occurring after the effective date of this section.

SEC. 120. OFFICIAL RECEPTION AND REPRESENTATION EXPENSES.

Section 43 of the Arms Export Control Act is amended

(1) in subsection (b) by inserting "and official reception and representation expenses" immediately after "administrative expenses"; and

(2) by adding at the end thereof the following new subsection:

"(c) Not more than $72,500 of the funds derived from charges for administrative services pursuant to section 21(e)(1)(A) of this Act may be used each fiscal year for official reception and representation expenses.".

SEC. 121. SPECIAL DEFENSE ACQUISITION FUND.

(a) CONTINUOUS ORDERS FOR Certain ArtICLES AND SERVICES.-Section 51(a) of the Arms Export Control Act is amended by adding at the end thereof the following new paragraph:

"(3) The Fund may be used to keep on continuous order such defense articles and defense services as are assigned by the Department of Defense for integrated management by a single agency thereof for the common use of all military departments in anticipation of the transfer of similar defense articles and defense services to foreign countries and international organizations pursuant to this Act, the Foreign Assistance Act of 1961, or other law.".

(b) REVOLVING FUND.-Section 51(b) of such Act is amended to read as follows: "(b) The Fund shall consist of collections from sales made under letters of offer, or transfers made under the Foreign Assistance Act of 1961, of defense articles and defense services acquired under this chapter (representing the value of such items calculated in accordance with subparagraph (B) or (C) of section 21(a)(1) or section 22 of this Act or section 644(m) of the Foreign Assistance Act of 1961, as appropriate), together with such funds as may be authorized and appropriated or otherwise made available for the purposes of the Fund.".

SEC. 122. LEASING AUTHORITY.

Section 7307(b)(1) of title 10, United States Code, is amended by inserting before the period at the end thereof the following: except that any lease or loan of such a vessel under such a law shall be made only in accordance with the provisions of chapter 6 of the Arms Export Control Act (22 U.S.C. 2796 et seq.) or chapter 2 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 2311 et seq.)".

SEC. 123. MILITARY ASSISTANCE COSTS; WAIVER OF NET PROCEEDS FOR SALE OF MAP ITEMS. (a) MILITARY ASSISTANCE COSTS.-Section 503(a) of the Foreign Assistance Act of 1961 is amended by adding the following sentence after paragraph (3):

"Sales which are wholly paid from funds transferred under paragraph (3) shall be priced to exclude the costs of salaries of members of the Armed Forces of the United States.".

(b) WAIVER OF NET PROCEEDS.-Section 505(f) of such Act is amended by adding at the end thereof the following: "In the case of items which were delivered prior to 1975, the President may waive the requirement that such net proceeds be paid to the United States Government if he determines that to do so is in the national interest of the United States.".

SEC. 124. STOCKPILING OF DEFENSE ARTICLES FOR FOREIGN COUNTRIES.

Section 514(b)(2) of the Foreign Assistance Act of 1961 is amended to read as follows:

"(2) The value of such additions to stockpiles in foreign countries shall not exceed $360,000,000 for fiscal year 1986 and shall not exceed $125,000,000 for fiscal year 1987.".

SEC. 125. SECURITY ASSISTANCE ORGANIZATIONS.

Section 515(c)(1) of the Foreign Assistance Act of 1961 is amended in the last sentence by striking out "For the fiscal year 1982 and the fiscal year 1983," and inserting in lieu thereof "Pakistan, Tunisia, El Salvador, Honduras,".

SEC. 126. EXCHANGE TRAINING.

Chapter 5 of part II of the Foreign Assistance Act of 1961 is amended by adding at the end thereof the following new section:

"SEC. 544. EXCHANGE TRAINING.-In carrying out this chapter, the President is authorized to provide for attendance of foreign military personnel at professional military education institutions in the United States (other than service academies) without charge, and without charge to funds available to carry out this chapter (not

withstanding section 632(d) of this Act), if such attendance is pursuant to an agreement providing for the exchange of students on a one-for-one, reciprocal basis each fiscal year between those United States professional military education institutions and comparable institutions of foreign countries and international organizations.".

SEC. 127. TRAINING IN MARITIME SKILLS.

(a) AUTHORIZATION.-Chapter 5 of part II of the Foreign Assistance Act of 1961, as amended by the preceding section of this Act, is further amended by adding at the end thereof the following new section:

"SEC. 545. TRAIning in MaritimE SKILLS.-The President is encouraged to allocate a portion of the funds made available each fiscal year to carry out this chapter for use in providing education and training in maritime search and rescue, operation and maintenance of aids to navigation, port security, at-sea law enforcement, international maritime law, and general maritime skills."

(b) EXEMPTION.-Section 660(b) of such Act is amended

(1) by striking out "or" at the end of clause (1);

(2) by striking out the period at the end of clause (2) and inserting in lieu thereof "; or"; and

(3) by adding the following new clause after clause (2):

"(3) with respect to assistance, including training, in maritime law enforcement and other maritime skills.".

SEC. 128. SPECIAL WAIVER AUTHORITY.

Section 614(a)(4) of the Foreign Assistance Act of 1961 is amended to read as follows:

"(4)A) The authority of this subsection may not be used in any fiscal year to authorize

"(i) more than $750,000,000 in sales to be made under the Arms Export Control Act;

"(ii) the use of more than $250,000,000 of funds made available for use under this Act or the Arms Export Control Act; and

"(iii) the use of more than $100,000,000 of foreign currencies accruing under this Act or any other law.

"(B) If the authority of this subsection is used both to authorize a sale under the Arms Export Control Act and to authorize funds to be used under the Arms Export Control Act or under this Act with respect to the financing of that sale, then the use of the funds shall be counted against the limitation in subparagraph (A)(ii) and the portion, if any, of the sale which is not so financed shall be counted against the limitation in subparagraph (A)(i).

"(C) Not more than $50,000,000 of the $250,000,000 limitation provided in subparagraph (A)(ii) may be allocated to any one country in any fiscal year unless that country is a victim of active Communist or Communist-supported aggression, and not more than $500,000,000 of the aggregate limitation of $1,000,000,000 provided in subparagraphs (A)(i) and (A)(ii) may be allocated to any one country in any fiscal year.".

SEC. 129. CONVENTIONAL ARMS TRANSFERS.

(a) NEGOTIATIONS.-At the earliest possible date, the President should, in consultation with United States allies, initiate discussions with the Soviet Union and France aimed at beginning multilateral negotiations to limit and control the transfer of conventional arms to less developed countries.

(b) REPORT.-Within one year after the date of enactment of this Act, the President shall submit to the Speaker of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate a report which specifies steps being taken to fulfill the requirements of subsection (a) and which examines and analyzes United States policies concerning the export of conventional arms, especially sophisticated weapons, and possible approaches to developing multilateral limitations on conventional arms sales. This report shall examine and analyze

(1) the lessons of earlier efforts to negotiate restraints on the export of conventional arms;

(2) the evolution of supplier practices and policies;

(3) the evolution of recipient country attitudes regarding conventional arms transfers;

(4) the effect upon regional stability and security of conventional arms transfers by the United States and its allies and the Soviet Union and its allies;

(5) the relationship between arms imports and the external debt of recipient countries, the allocation of their internal resources, and their economic well