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article may only be used for purposes more limited than those authorized under section 4, for a purpose not authorized under such agreement.

Sec. 4.47 Purposes for Which Military Sales by the United States Are Authorized.-Defense articles and defense services shall be sold or leased 48 by the United States Government under this Act to friendly countries solely for internal security, for legitimate self-defense, for preventing or hindering the proliferation of weapons of mass destruction and of the means of delivering such weapons,49 to permit the recipient country to participate in regional or collective arrangements or measures consistent with the Charter of the United Nations, or otherwise to permit the recipient country to participate in collective measures requested by the United Nations for the purpose of maintaining or restoring international peace and security, or for the purpose of enabling foreign military forces in less developed friendly countries to construct public works and to engage in other activities helpful to the economic and social development of such friendly countries. It is the sense of the Congress that such foreign military forces should not be maintained or established solely for civic action activities and that such civic action activities not significantly detract from the capability of the military forces to perform their military missions and be coordinated with and form part of the total economic and social development effort: Provided, That none of the funds contained in this authorization shall be used to guarantee, or extend credit, or participate in an extension of credit in connection with any sale of sophisticated weapons systems, such as missile systems and jet aircraft for military purposes, to any underdeveloped country other than Greece, Turkey, Iran, Israel, the Republic of China, the Philippines, and Korea unless the President determines that such financing is important to the national security of the United States and reports within thirty days each such determination to the Congress.

Sec. 5.50 Prohibition Against Discrimination. (a) It is the policy of the United States that no sales should be made, and no credits (including participations in credits) or guaranties extended to or for any foreign country, the laws, regulations, official policies, or governmental practices of which prevent any United States person (as defined in section 7701(a)(30) of the Internal Revenue Code of 1954) from participating in the furnishing of defense articles or defense services under this Act on the basis of race, religion, national origin, or sex.

(b)(1) No agency performing functions under this Act shall, in employing or assigning personnel to participate in the performance of any such function, whether in the United States or abroad, take into account the exclusionary policies or practices of any foreign

47 22 U.S.C. 2754.

48 The words "or leased" were added by sec. 109(b)(3) of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1526).

49 Sec. 1202(a) of the Security Assistance Act of 2002 (division B of the Foreign Relations Authorization Act, Fiscal Year 2003; Public Law 107-228; 116 Stat. 1427) inserted "for preventing or hindering the proliferation of weapons of mass destruction and of the means of delivering such weapons," after "self-defense,"

50 22 U.S.C. 2755. Sec. 5 was added by sec. 302(b) of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 752).

government where such policies or practices are based upon race, religion, national origin, or sex.

(2) Each contract entered into by any such agency for the performance of any function under this Act shall contain a provision to the effect that no person, partnership, corporation, or other entity performing functions pursuant to such contract, shall, in employing or assigning personnel to participate in the performance of any such function, whether in the United States or abroad, take into account the exclusionary policies or practices of any foreign government where such policies or practices are based upon race, religion, national origin, or sex.

(c) The President shall promptly transmit reports to the Speaker of the House of Representatives and the chairman of the Committee on Foreign Relations of the Senate concerning any instance in which any United States person (as defined in section 7701(a)(30) of the Internal Revenue Code of 1954) is prevented by a foreign government on the basis of race, religion, national origin, or sex, from participating in the performance of any sale or licensed transaction under this Act. Such reports shall include (1) a description of the facts and circumstances of any such discrimination, (2) the response thereto on the part of the United States or any agency or employee thereof, and (3) the result of such response, if any.

(d)(1)51 Upon the request of the Committee on Foreign Relations of the Senate or the Committee on Foreign Affairs 52 of the House of Representatives, the President shall, within 60 days after the receipt of such request, transmit to both such committees a statement, prepared with the assistance of the Secretary of State,53 with respect to the country designated in such request, setting forth—

(A) all the available information about the exclusionary policies 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 transaction under this Act;

(B) the response of the United States thereto and the results 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 section), and

51 Functions in this paragraph are delegated to the Assistant Secretary of State for Democracy, Human Rights and Labor (Department of State Public Notice 2086; Delegation of Authority No. 214; 59 F.R. 50790).

52 Sec. 9(a)(7) of the USC Technical Amendments (Public Law 103-437; 108 Stat. 4588) struck out "International Relations" and inserted in lieu thereof "Foreign Affairs". Subsequently, sec. 1(a)(5) of Public Law 104-14 (109 Stat. 186) provided that references to the Committee on Foreign Affairs of the House of Representatives shall be treated as referring to the Committee on International Relations of the House of Representatives.

53 Sec. 162(f) of the Foreign Relations Authorization Act, Fiscal Years 1994 and 1995 (Public Law 103-236; 108 Stat. 405) struck out "Assistant Secretary of State for Human Rights and Humanitarian Affairs" and inserted in lieu thereof "Secretary of State".

(ii) on all the facts it is in the national interest of the United States to continue such sale or licensed transaction; 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 subsection 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 statement is transmitted. (3)(A) In the event a statement with respect to a sale or licensed transaction is transmitted under paragraph (1) of this subsection, the Congress may at any time thereafter adopt a joint resolution terminating or restricting such sale or licensed transaction.

(B) Any such resolution shall be considered in the Senate in accordance with the provisions of section 601(b) of the International Security Assistance and Arms Export Control Act of 1976.

(C) The term "certification", as used in section 601 of such Act, means, for the purposes of this paragraph, a statement transmitted under paragraph (1) of this subsection.

Sec. 6.54 Foreign Intimidation and Harassment of Individuals in the United States. No letters of offer may be issued, no credits or guarantees may be extended, and no export licenses may be issued under this Act with respect to any country determined by the President to be engaged in a consistent pattern of acts of intimidation or harassment directed against individuals in the United States. The President shall report any such determination promptly to the Speaker of the House of Representatives and to the chairman of the Committee on Foreign Relations of the Senate. Chapter 2-FOREIGN MILITARY SALES AUTHORIZATIONS Sec. 21.55 Sales From Stocks.-(a)(1) 56 The President may sell defense articles and defense services from the stocks of the Department of Defense and the Coast Guard 57 to any eligible country or

54 22 U.S.C. 2756. Sec. 6. was added by sec. 115 of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1528).

55 22 U.S.C. 2761. Sec. 205 of the International Security Assistance and Arms Export Control Act of 1976 (Public Law 94-329; 90 Stat. 736) amended sec. 21 which formerly read as follows: "Sec. 21. Cash Sales From Stock.-The President may sell defense articles from the stocks of the Department of Defense and defense services of the Department of Defense to any friendly country or international organization if such country or international organization agrees to pay not less than the value thereof in United States dollars. Payment shall be made in advance or, as determined by the President to be in the best interests of the United States, within a reasonable period not to exceed one hundred and twenty days after the delivery of the defense articles or the rendering of the defense services.".

10 United States Code 2390, as added by sec. 815 of the Department of Defense Appropriation Authorization Act, 1979 (92 Stat. 1625), as sec. 975 and later redesignated, prohibited the sale of certain defense articles from Department of Defense stocks. See 10 U.S.C. 2390, in Legislation on Foreign Relations Through 2002, vol. I-B.

Sec. 706 of the Security Assistance Act of 2000 (Public Law 106-280; 114 Stat. 862) provided the following:

"SEC. 706. SENSE OF THE CONGRESS REGARDING EXCESS DEFENSE ARTICLES. "It is the sense of the Congress that the President should make expanded use of the authority provided under section 21(a) of the Arms Export Control Act to sell excess defense articles by utilizing the flexibility afforded by section 47 of such Act to ascertain the 'market value' of excess defense articles.".

56 Sec. 107(a)(1) and (2) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 196) redesignated pars. (1), (2) and (3) as subpars. (A), (B) and (C) and inserted a "(1)" after subsec. (a).

57 Sec. 1222 of the Security Assistance Act of 1999 (title XII of the Admiral James W. Nance and Meg Donovan Foreign Relations Authorization Act, Fiscal Years 2000 and 2001 (H.R. 3427.

international organization if such country or international organization agrees to pay in United States dollars

(A) 56 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; 58

(B) 56 in the case of a defense article intended to be replaced at the time such agreement is entered into, the estimated cost of replacement of such article, including the contract or production costs less any depreciation in the value of such article; or (C) 56, 59 in the case of the sale of a defense service, the full cost to the United States Government of furnishing such service, except that in the case of training sold to a purchaser who is concurrently receiving assistance under chapter 5 of part II of the Foreign Assistance Act of 1961 or to any high-income foreign country (as described in that chapter),60 only those additional costs that are incurred by the United States Government in furnishing such assistance.

(2) 61 For purposes of subparagraph (A) of paragraph (1), the actual value of a naval vessel of 3,000 tons or less and 20 years or more of age shall be considered to be not less than the greater of the scrap value or fair value (including conversion costs) of such vessel, as determined by the Secretary of Defense.

(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 defense service.

(c)(1) 62 Personnel performing defense services sold under this Act may not perform any duties of a combatant nature, including

enacted by reference in sec. 1000(a)(7) of Public Law 106-113; 113 Stat. 1536)) inserted "and the Coast Guard" after "Department of Defense".

58 10 U.S.C. 114(c)2) provides:

"(2) Notwithstanding section 37(a) of the Arms Export Control Act (22 U.S.C. 2777(a)), amounts received by the United States pursuant to subparagraph (A) of section 21(a)(1) of that Act (22 U.S.C. 2761(a)(1))——

"(A) shall be credited to the Special Defense Acquisition Fund established pursuant to chapter 5 of that Act (22 U.S.C. 2795 et seq.), as authorized by section 51(b)(1) of that Act (22 U.S.C. 2795(b)(1)), but subject to the limitation in paragraph (1) and other applicable law; and

"(B) to the extent not so credited, shall be deposited in the Treasury as miscellaneous receipts as provided in section 3302(b) of title 31.".

59 Subpar. (C) was amended and restated by sec. 108(a) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 197). It previously read: "in the case of the sale of a defense service, the full cost to the United States Government of furnishing such service, except that in the case of training, only those additional costs that are incurred by the United States Government in furnishing such training.".

69 Sec. 112(c)(2) of Public Law 104-164 (110 Stat. 1428) inserted "or to any high-income foreign country (as described in that chapter)" after "Foreign Assistance Act of 1961".

61 Par. (2) was added by sec. 107(a)(3) of the International Security and Development Cooperation Act of 1985 (Public Law 99-83; 99 Stat. 196).

62 The paragraph designation "(1)" and a new par. (2) were added by sec. 102 of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3132). Par. (2) was subsequently amended and restated by sec. 103 of the International Security and Development Cooperation Act of 1981 (Public Law 97-113; 95 Stat. 1521). Par. (2) formerly read as follows:

"(2) Within 48 hours after the outbreak of significant hostilities involving a country in which United States personnel are performing defense services pursuant to this Act or the Foreign Assistance Act of 1961, the President shall submit to the Speaker of the House of Representatives and to the President pro tempore of the Senate a report, in writing, setting forth"(A) the identity of such country and a description of such hostilities; and

"(B) the number of members of the United States Armed Forces and the number of United States civilian personnel performing defense services related to such hostilities in such country, their location, the precise nature of their activities, and the likelihood of their becoming engaged in or endangered by hostilities.".

any duties related to training and advising that may engage United States personnel in combat activities,63 outside the United States in connection with the performance of those defense services.

(2) 62 Within forty-eight hours of the existence of, or a change in status of significant hostilities or terrorist acts or a series of such acts, which may endanger American lives or property, involving a country in which United States personnel are performing defense services pursuant to this Act or the Foreign Assistance Act of 1961, the President shall submit to the Speaker of the House of Representatives and to the President pro tempore of the Senate a report, in writing, classified if necessary, setting forth—

(A) the identity of such country;

(B) a description of such hostilities or terrorist acts; and

(C) the number of members of the United States Armed Forces and the number of United States civilian personnel that may be endangered by such hostilities or terrorist acts.

(d) If the President determines it to be in the national interest pursuant to subsection (b) of this section, billings for sales made under letters of offer issued under this section after the enactment of this subsection may be dated and issued upon delivery of the defense article or rendering of the defense service and shall be due and payable upon receipt thereof by the purchasing country or international organization. Interest shall be charged on any net amount due and payable which is not paid within sixty days after the date of such billing. 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 billing and shall be computed from the date of billing. The President may extend such sixty-day period to one hundred and twenty days if he determines that emergency requirements of the purchaser for acquisition of such defense articles or defense services exceed the ready availability to the purchaser of funds sufficient to pay the United States in full for them within such sixty-day period and submits that determination to the Congress together with a special emergency request for the authorization and appropriation of additional funds to finance such purchases under this Act.

(e)(1) After September 30, 1976, letters of offer for the sale of defense articles or for the sale of defense services that are issued pursuant to this section or pursuant to section 22 of this Act shall include appropriate charges for

(A) 64 administrative services, calculated on an average percentage basis to recover the full estimated costs (excluding a

63 The words "training and advising that may engage United States personnel in combat activities" were inserted in lieu of "training, advising, or otherwise providing assistance regarding combat activities" by sec. 102(1) of the International Security and Development Cooperation Act of 1980 (Public Law 96-533; 94 Stat. 3132).

64 The Foreign Operations, Export Financing, and Related Programs Appropriations Act, 2003 (division E of Public Law 108-7; 117 Stat. 177), provided the following under "Foreign Military Financing Program": "Provided further, That not more than $356,000,000 of funds realized pursuant to section 21(e)(1)(A) of the Arms Export Control Act may be obligated for expenses incurred by the Department of Defense during fiscal year 2003 pursuant to section 43(b) of the Arms Export Control Act, except that this limitation may be exceeded only through the regular notification procedures of the Committees on Appropriations:".

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