On November 14, 1994, in light of the dangers of the proliferation ofnuclear, biological, and chemical weapons ("weapons of mass destruction"-- WMD) and of the means of delivering such weapons, I issued ExecutiveOrder 12938, declaring a national emergency under the International EmergencyEconomic Powers Act (50 U.S.C. 1701 et seq.). Under section 202(d) of theNational Emergencies Act (50 U.S.C. 1622(d)), the national emergency terminateson the anniversary date of its declaration unless, within the 90-day periodprior to each anniversary date, I publish in the Federal Register and transmitto the Congress a notice stating that such emergency is to continue ineffect. The proliferation of weapons of mass destruction and their meansof delivery continues to pose an unusual and extraordinary threat to thenational security, foreign policy, and economy of the United States. Iam, therefore, advising the Congress that the national emergency declaredon November 14, 1994, and extended on November 14, 1995; November 12, 1996;November 13, 1997; November 12, 1998; and November 10, 1999, must continuein effect beyond November 14, 2000. Accordingly, I have extended the nationalemergency declared in Executive Order 12938, as amended.

The following report is made pursuant to section 204(c) of the InternationalEmergency Economic Powers Act (50 U.S.C. 1703(c)) and section 401(c) ofthe National Emergencies Act (50 U.S.C. 1641(c)). It reports actions takenand expenditures incurred pursuant to the emergency declaration duringthe period May 2000 through October 2000. Additional information on nuclear,missile, and/or chemical and biological weapons (CBW) nonproliferationefforts is contained in the most recent annual Report on the Proliferationof Missiles and Essential Components of Nuclear, Biological and ChemicalWeapons, provided to the Congress pursuant to section 1097 of the NationalDefense Authorization Act for Fiscal Years 1992 and 1993 (Public Law 102-190),also known as the "Nonproliferation Report," and the most recent annualreport provided to the Congress pursuant to section 308 of the Chemicaland Biological Weapons Control and Warfare Elimination Act of 1991 (PublicLaw 102-182), also known as the "CBW Report."

On July 28, 1998, in Executive Order 13094, I amended section 4 of ExecutiveOrder 12938 so that the United States Government could more effectivelyrespond to the worldwide threat of weapons of mass destruction proliferationactivities. The amendment of section 4 strengthens Executive Order 12938in several significant ways. The amendment broadens the type of proliferationactivity that can subject entities to potential penalties under the ExecutiveOrder. The original Executive Order provided for penalties for contributionsto the efforts of any foreign country, project or entity to use, acquire,design, produce or stockpile chemical or biological weapons; the amendedExecutive Order also covers contributions to foreign programs for nuclearweapons and for missiles capable of delivering weapons of mass destruction.Moreover, the amendment expands the original Executive Order to includeattempts to contribute to foreign proliferation activities, as well asactual contributions, and broadens the range of potential penalties toinclude expressly the prohibition of United States Government assistanceto foreign persons, and the prohibition of imports into the United Statesand United States Government procurement. In sum, the amendment gives theUnited States Government greater flexibility in deciding how and to whatextent to impose measures against foreign persons that assist proliferationprograms.

Nuclear Weapons

In May 1998, India and Pakistan each conducted a series of nuclear teststhat brought their nuclear weapon programs out in the open, in defianceof decades of international efforts to prevent the spread of nuclear weapons.Since that time, they have continued production of fissile material fornuclear weapons and have flight-tested ballistic nuclear-capable missiles.World reaction to these developments included nearly universal condemnationacross a broad range of international fora. The United States and a numberof other countries respectively imposed sanctions and other unilateralmeasures. The G-8 agreed to new restrictions on lending by internationalfinancial institutions.

Since the mandatory imposition of U.S. statutory sanctions, we haveworked unilaterally, with other P-5 and G-8 members, with the South AsiaTask Force, and through the United Nations to urge India and Pakistan tomove toward the international nonproliferation mainstream.

We have supported calls by the P-5, G-8, and U.N. Security Council onIndia and Pakistan to take a broad range of concrete actions designed toprevent a costly and destabilizing nuclear arms and missile race, withpossible implications beyond the region. The United States has focusedmost intensely on several objectives that can be met over the short andmedium term: an end to nuclear testing and prompt, unconditional adherenceby India and Pakistan to the Comprehensive Nuclear Test-Ban Treaty (CTBT);constructive engagement in negotiations on a Fissile Material Cutoff Treaty(FMCT) and, pending its conclusion, a moratorium on production of fissilematerial for nuclear weapons and other nuclear explosive devices; restraintin the development of nuclear-capable missiles, as well as their nondeployment;and adoption of controls meeting international standards on exports ofsensitive materials and technology.

Against a backdrop of international pressure on India and Pakistan,intensive high-level U.S. dialogues with Indian and Pakistani officialshave yielded only modest progress, principally on export controls. In September1998, Indian and Pakistani leaders, noting that their countries had alreadydeclared testing moratoria, expressed to the U.N. General Assembly a willingnessto sign the CTBT by September 1999 under certain conditions. Subsequentdevelopments including the Indian election, the Kargil conflict, the Octobercoup in Pakistan, and the U.S. Senate's vote against providing its adviceand consent to CTBT ratification further complicated the issue during 1999,although neither country renounced its commitment. Indian Prime Minister
Vajpayee announced during his visit to Washington in September 2000that India would maintain its moratorium until CTBT entered into force.Both governments have said they would work to build domestic consensusfor CTBT signature, without which they could not sign. Such consensus hasnot been achieved and, consequently, neither country has signed the CTBTthus far.

India and Pakistan both withdrew their opposition to negotiations onan FMCT in Geneva at the end of the 1998 Conference on Disarmament session,and negotiations got underway for a brief time. However, these negotiationswere unable to resume in 1999 or 2000 due to a deadlock over the negotiatingmandate.

Some progress was achieved in bringing Indian and Pakistani export controlsinto closer conformity with international standards. India recently institutednew, more specific regulations on many categories of sensitive non-nuclearequipment and technology and has said that nuclear-related regulationswill be forthcoming. Pakistan has publicly announced regulations restrictingnuclear exports and has indicated that further measures are being prepared.However, both countries' steps still fall well short of international standards.We have begun with India a program of technical cooperation designed toimprove the effectiveness of its already extensive export controls, andencourage further steps to bring India's controls in line with internationalstandards. Similar assistance to Pakistan is prohibited by coup-relatedsanctions.

The summer 1999 Kargil conflict and the October 1999 military takeoverin Pakistan resulted in the suspension of the Indo-Pakistani bilateraldialogue begun at Lahore. Tensions remain high, particularly over insurgentattacks in Kashmir, and there are no encouraging signs that talks willresume soon.

We have agreed to continue regular discussions with India at the seniorand expert levels, and will also remain engaged with Pakistan, as appropriate.Our diplomatic efforts, in concert with the P-5, G-8, and in internationalfora, will also continue.

I discussed these issues with the Governments of India and Pakistanduring my trip there in March 2000 and with Prime Minister Vajpayee whenhe came to Washington this September. With India, we have stressed thatour relationship will not be able to reach its full potential without progresson our nonproliferation and regional security concerns. With Pakistan,we also emphasized the importance of progress on regional security andnonproliferation, among other pressing issues.

In October 1994, the United States and the Democratic People's Republicof Korea (DPRK or North Korea) signed an Agreed Framework which, if fullyimplemented, will ultimately result in the complete cessation of the DPRK'snuclear weapon-related program and its full compliance with the NuclearNon-Proliferation Treaty (NPT). As a first step, North Korea froze constructionand operations at its Yongbyon and Taechon nuclear facilities. The freezeremains in place, and to monitor the freeze, the International Atomic EnergyAgency (IAEA) has maintained a continuous presence at the Yongbyon sitesince 1994. The U.S. spent fuel team completed canning of the accessiblespent fuel rods and rod fragments from the North's 5-megawatt nuclear reactorin April 2000. The IAEA has confirmed that the remaining few rod fragmentsthat are currently inaccessible do not represent a proliferation concern,and the Agency continues to monitor the canned fuel. The U.S. spent-fuelteam returned to the DPRK in October 2000 to continue clean-up and canningat Yongbyon, and to begin looking at long-term maintenance.

Serious U.S. suspicions about an underground facility at Kumchang-niled the United States to raise its concerns directly with Pyongyang andto negotiate access to the site as long as U.S. concerns remain. In May1999, a Department of State-led team of experts visited the site and judgedit, as then configured, not suited to house plutonium production reactorsor reprocessing operations. Based on the data gathered by the U.S. teamand the subsequent technical review, the United States concluded that theactivities were not a violation of the Agreed Framework. A second Departmentof State-led team conducted a visit in May 2000 and found no evidence tocontradict the 1999 assessment. In light of a final review of these results,the joint communique issued following the visit of DPRK Special Envoy JoMyong Rok to Washington stated that "U.S. concerns" about the undergroundsite at Kumchang-ni had been "removed."

While the Kumchang-ni visit addressed some of our nonproliferation concerns,future negotiations with the North will seek to discuss ways to allay allof them -- in the context of assuring full implementation of the AgreedFramework and improving overall relations. In May and July 2000, the UnitedStates and DPRK held rounds of talks concerning Agreed Framework implementationand the DPRK's missile program, respectively. Another round of talks, whichincluded discussion on terrorism issues, was held in New York from September27 to October 2 of this year. During the talks, the DPRK informed us thatDPRK Special Envoy Marshal Jo Myong Rok would visit Washington from October9 to 12, 2000. The joint communique released at the end of that historicvisit noted that both countries "are prepared to undertake a new directionin their relations." Toward that end, the two stated that "neither governmentwould have hostile intent toward the other." Both sides pledged to "redoubletheir commitment and their efforts to fulfill their respective obligationsin their entirety under the Agreed Framework." The DPRK also reaffirmedits ballistic missile flight test moratorium, and agreed that "there area variety of available means, including the Four Party talks, to reducetension on the Korean Peninsula and formally end the Korean War by replacingthe 1953 Armistice Agreement with permanent peace arrangements."

The NPT is the cornerstone of the global nuclear nonproliferation regime.In May 2000, NPT Parties met in New York for the 2000 NPT Review Conference(REVCON). Despite predictions to the contrary, the 158 participating nationsadopted by consensus a Final Document that reviews NPT implementation overthe past 5 years and establishes a program of action for the future. Thisis the first NPT Review Conference to achieve such a Final Document since1985. The Conference met or exceeded all U.S. objectives. It provided animportant boost to the NPT and to nuclear nonproliferation goals in general.

The IAEA verifies states' compliance with their NPT obligations by meansof its safeguards system. The discovery at the time of the Gulf War ofIraq's extensive covert nuclear activities led to an international consensusin favor of strengthening the IAEA safeguards system's ability to detectundeclared nuclear material and activities. The United States and a largenumber of like-minded states negotiated in the mid-1990s substantial safeguardsstrengthening measures, including the use of environmental sampling techniques,expansion of the classes of nuclear activities states are required to declare,and expansion of IAEA access rights. Measures requiring additional legalauthority are embodied in a Model Additional Protocol approved in 1997.This Protocol has now been signed by 54 states and has entered into forcefor 14. Provided the IAEA is given the resources and political supportit needs to implement its new safeguards measures effectively, proliferatorswill now find it much harder to evade the system.

The United States signed the Comprehensive Nuclear-Test Ban Treaty onSeptember 24, 1996. As of early October 2000, 160 countries have signedand 65 have ratified the CTBT, including 30 of the 44 countries requiredby the Treaty for its entry into force. During 2000, CTBT signatories conductednumerous meetings of the Preparatory Commission (PrepCom) and its subsidiarybodies in Vienna, seeking to promote rapid completion of the InternationalMonitoring System (IMS) established by the Treaty.

On September 22, 1997, I transmitted the CTBT to the Senate, requestingprompt advice and consent to ratification. I deeply regret the Senate'sdecision on October 13, 1999, to refuse to provide its advice and consentto ratify the CTBT. The CTBT will serve several United States nationalsecurity interests by prohibiting all nuclear explosions. It will constrainthe development and qualitative improvement of nuclear weapons; make thedevelopment of advanced new types of weapons much more difficult; contributeto the prevention of nuclear proliferation and the process of nuclear disarmament;and strengthen international peace and security. The CTBT marks a historicmilestone in our drive to reduce the nuclear threat and to build a saferworld. For these reasons, we hope that at an appropriate time, the Senatewill reconsider this treaty.

The purpose of the 35-nation Nuclear Non-Proliferation Treaty Exporters(Zangger) Committee is to harmonize implementation of the Non-ProliferationTreaty's requirement to apply Inter-national Atomic Energy Agency safeguardsto nuclear exports. Article III.2 of the Treaty requires parties to ensurethat IAEA safeguards are applied to exports to non-nuclear weapon statesof (a) source or special fissionable material, or (b) equipment or materialespecially designed or prepared for the processing, use or production ofspecial fissionable material. The Committee maintains and updates a list(the "Trigger List") of equipment that may only be exported if safeguardsare applied to the recipient facility. The relative informality of theZangger Committee has enabled it to take the lead on certain nonproliferationissues that would be more difficult to resolve in the  Nuclear SuppliersGroup.

At its March 2000 meeting, the Committee approved the Chairman's reportof Committee activities to the 2000 NPT REVCON. The Committee also agreedto continue consideration of possible future adoption of the full-scopesafeguards (FSS) policy. The Committee also agreed to an informal meetingwith IAEA staff to discuss procedures for keeping the Agency informed onTrigger List changes and the rationale for such changes, since the Agencyuses the Zangger Trigger List as a reference document. A separate workinggroup, chaired by Sweden, is considering the addition of plutonium enrichmentequipment to the Trigger List.

During the past year, two new members have joined the Zangger Committee-- Turkey in October 1999 and Slovenia in March 2000.

All of the nuclear weapon states, including China, are members of theZangger Committee. However, unlike all of the other nuclear weapon statesmembers of the Zangger Committee, China is not a member of the NuclearSuppliers Group (NSG), which requires its members to adhere to a FSS policyof requiring non-nuclear weapon states to accept IAEA safeguards on allof its nuclear facilities as a condition of supply to those states. Chinahas been reluctant to agree to this policy.

With 38 member states, the NSG is a widely accepted and effective export-controlarrangement, which contributes to the nonproliferation of nuclear weaponsthrough implementation of guidelines for control of nuclear and nuclear-relatedexports. Members pursue the aims of the
NSG through adherence to the Guidelines, which are adopted by consensus,and through exchanges of information on developments of nuclear proliferationconcern.

Turkey, Belarus, and Cyprus became the newest members of the NSG inMay 19, 2000. Slovenia was invited to participate as an observer at the2000 Paris Plenary and has applied for NSG membership this year. NSG membersoften agree to allow non-member nations deemed eligible
for NSG membership to participate in Plenary meetings as observers.While not an NSG member, China has taken a major step toward harmonizationof its export control system with the NSG Part 2 Guidelines by the implementationof controls over nuclear-related dual-use equipment, material, and relatedtechnology.

In May 2000, the NSG Troika (composed of the past, present, and futureNSG Chairs -- in this case Britain, Italy and France) met with representativesof the Iranian Government to discuss Iranian criticism of the NSG. Themeeting of the Troika followed up earlier meetings by the Italian Chairin Tehran and on the margins of the 1999 NSG Transparency Seminar in NewYork. The Troika urged Iran to sign the additional protocol with the IAEAthat strengthens safeguards. Iranian officials offered to provide additionalconfidence-building measures to facilitate nuclear exports from NSG members.The United States, as the future plenary chair, intends to be an activeparticipant in all NSG Troika activities in the coming years, though anyinvolvement in Troika contacts with Iran will need to be evaluated on acase-by-case basis prior to the meetings. The United States does not believethat the ongoing discussions with Iran can or should soften supplier attitudes.

During the Plenary meetings in Paris in June 2000, the Czech Republicpresented information on its new legislation intended to halt all tangibleand intangible supply to the Bushehr Nuclear Power Plant in Iran. The Czechdelegation stated that the new legislation covers direct transfers to Bushehr,as well as indirect support through a third party. The Italian NSG Chairpresented a report of NSG activities at the 2000 NPT Review Conference.

Chemical and Biological Weapons

The export control regulations issued under the Expanded ProliferationControl Initiative (EPCI) remain fully in force and continue to be administeredby the Department of Commerce, in consultation with other agencies, inorder to control the export of items with potential use in chemical orbiological weapons or unmanned delivery systems for weapons of mass destruction.

Chemical weapons (CW) continue to pose a very serious threat to oursecurity and that of our allies. On April 29, 1997, the Convention on theProhibition of the Development, Production, Stockpiling and Use of ChemicalWeapons and on Their Destruction (the Chemical Weapons
Convention or CWC) entered into force with 87 of the CWC's 165 StatesSignatories as original States Parties, including the United States, whichratified on April 25, 1997. Russia ratified the CWC on November 5, 1997,and became a State Party on December 8, 1997. As of October 30, 2000, 140countries will have become States Parties.

The implementing body for the CWC -- the Organization for the Prohibitionof Chemical Weapons (OPCW) -- was established on April 29, 1997. The OPCW,located in The Hague is comprised of States Parties and international civilservants that are responsible for implementing the CWC. It consists ofthe Conference of the States Parties, the Executive Council, and the TechnicalSecretariat (TS). The TS carries out the verification provisions of theCWC, and presently has a staff of approximately 500, including about 200inspectors trained and equipped to inspect military and industrial facilitiesthroughout the world. As of October 30, 2000, the OPCW has conducted over790 routine inspections in some 37 countries. No challenge inspectionshave yet taken place. The OPCW maintains a permanent inspector presenceat operational U.S. CW destruction facilities in Utah, on Johnston Island,and elsewhere. Accordingly, approximately 70 percent of the inspectiondays currently have been at U.S. declared facilities.

The United States is determined to seek full implementation of the concretemeasures in the CWC designed to raise the costs and risks for states orother entities attempting to engage in chemical weapons-related activities.Receiving accurate and complete declarations from all States Parties willimprove our knowledge of possible chemical weapons-related activities.Its inspection rovisions provide for access by international inspectorsto declared and potentially undeclared facilities and locations, thus makingclandestine chemical weapons production and stockpiling more difficult,more risky, and more expensive.

The Chemical Weapons Convention Implementation Act of 1998 was enactedinto U.S. law on October 21, 1998, as part of the Omnibus Consolidatedand Emergency Supplemental Appropriations Act for Fiscal Year 1999 (PublicLaw 105-277). -I issued Executive Order 13128 on June 25, 1999, to facilitateimplementation of the Act and the Convention, and published regulationson December 30, 1999, regarding declarations and inspections of industrialfacilities. The United States commenced its submission of industry declarationsat the end of April 2000, and hosted its first industry inspection on May8, 2000. Industry inspections are proceeding well. Our submission of theindustry declarations to the OPCW and commencement of inspections, hasstrengthened U.S. leadership in the organization as well as our abilityto encourage other States Parties to make complete, accurate, and timelydeclarations.

Countries that refuse to join the CWC have been isolated politicallyand denied access by the CWC to certain key chemicals from States Parties.The relevant treaty provisions are specifically designed to penalize countriesthat refuse to join the rest of the world in eliminating the threat ofchemical weapons.

The United States also continues to play an active role in the internationaleffort to reduce the threat from biological weapons (BW). We participatein the Ad Hoc Group (AHG) of States Parties of the Convention on the Prohibitionof the Development, Production and Stockpiling of Bacteriological (Biological)and Toxin Weapons and on Their Destruction (the Biological Weapons Conventionor BWC). The AHG is striving to complete a legally binding protocol tostrengthen the 1972 Convention to promote compliance and enhance transparency.This Ad Hoc Group was mandated by the September 1994 BWC Special Conference.The Fourth BWC Review Conference (November/December 1996) urged the AHGto complete the protocol as soon as possible before the next BWC ReviewConference in 2001. Work is progressing on a draft text through discussionof national views and clarification of existing text. Differences in nationalviews persist concerning such substantive areas as on-site activities,export controls, declarations, and technical assistance provisions. TheUnited States remains strongly committed to the objective agreed to inthe 1996 Review Conference, but will only accept a protocol that enhancesU.S. security and strengthens national and international efforts to addressthe BW threat.

I announced in my 1998 State of the Union Address that the United Stateswould take a leading role in the effort to erect stronger internationalbarriers against the proliferation and use of BW by strengthening the BWCwith a new international means to detect and deter cheating. We are workingclosely with industry representatives to obtain technical input relevantto the development of U.S. negotiating positions and then to reach internationalagreement on protocol provisions.

The United States continues to be a leading participant in the 32-memberAustralia Group (AG) chemical and biological weapons nonproliferation regime.The United States attended the most recent annual AG Plenary Session fromOctober 2-5, 2000, during which the Group reaffirmed the members' continuedcollective belief in the AG's viability, importance, and compatibilitywith the CWC and BWC. Members continue to agree that full adherence tothe CWC and BWC by all governments will be the only way to achieve a permanentglobal ban on chemical and biological weapons, and that all states adheringto these Conventions must take steps to ensure that their national activitiessupport these goals. At the 2000 Plenary, the Group welcomed its newestmembers, Cyprus and Turkey. At this year's plenary, the regime continuedto focus on strengthening and refining AG export controls and sharing informationto address the CBW threat, especially from terrorism. The AG also reaffirmedits commitment to continue its active outreach program of briefings fornon-AG countries, and to promote regional consultations on export controlsand nonproliferation to further awareness and under-standing of nationalpolicies in these areas. The AG discussed ways to be more proactive instemming attacks on the AG in the CWC and BWC contexts.

During the last 6 months, we continued to examine intelligence and otherinformation of trade in CBW-related material and technology that mightbe relevant to sanctions provisions under the Chemical and Biological WeaponsControl and Warfare Elimination Act of 1991. No new sanctions determinationswere reached during this reporting period. The United States also continuesto cooperate with its AG partners and other countries in stopping shipmentsof proliferation concern.

Missiles for Delivery of Weapons of Mass Destruction

The United States continues carefully to control exports that couldcontribute to unmanned delivery systems for weapons of mass destruction,and closely to monitor activities of potential missile proliferation concern.We also continue to implement U.S. missile sanctions laws. In April 2000,we imposed sanctions against a North Korean entity and four Iranian entitiesfor missile proliferation activities. These sanctions followed March 1999missile sanctions against three Middle Eastern entities.

During this reporting period, the 32 Missile Technology Control Regime(MTCR) Partners (members) continued to share information about proliferationproblems with each other and with other potential supplier, consumer, andtransshipment states. Partners also emphasized the need for implementingeffective export control systems. This cooperation has resulted in theinterdiction of missile-related materials intended for use in missile programsof concern.

In March and September 2000, the United States participated in two MTCRReinforced Point of Contact Meetings (RPOC). At the RPOCs, MTCR Partnerscontinued their discussions on new ways to better address the global missileproliferation threat. They also undertook to develop a new multilateralmechanism on missile nonproliferation. This mechanism is intended to complementthe important work of the MTCR and eventually to include the participationof both MTCR and non-MTCR countries.

The MTCR Partners held their annual plenary meeting in Helsinki, onOctober 9-13, 2000. The Partners took decisions concerning the substanceof a new multilateral mechanism on missile non-proliferation and ways totake it forward. They also discussed cooperation on halting shipments ofmissile proliferation concern and exchanged information about activitiesof missile proliferation concern worldwide, including in South Asia, NortheastAsia, and the Middle East.

During this reporting period, the United States continued to work unilaterallyand in coordination with its MTCR Partners to combat missile proliferationand to encourage nonmembers to export responsibly and to adhere to theMTCR Guidelines. Since my last report, we continued our missile nonproliferationdialogues with China, India, the Republic of Korea, and North Korea, andhave raised this issue with Pakistan at senior levels. Although regulardiscussions with Pakistan at the expert level have not proceeded sincethe fall 1999 coup, we remain engaged at the diplomatic level, and I addressedour nonproliferation concerns during my visit to Pakistan in March of thisyear. In the course of normal diplomatic relations we also have pursuedsuch discussions with other countries in Central Europe, South Asia, andthe Middle East.

In July 2000, the United States and the DPRK held a fifth round of missiletalks in Kuala Lumpur. This was the first round of talks after a 16-monthhiatus. It provided a useful opportunity to assess developments since theMarch 1999 talks in Pyongyang, including the DPRK's June 2000 reaffirmationof its moratorium on flight tests of long-range missiles of any kind. TheUnited States discussed its continuing concerns about North Korea's missileactivities and again pressed for tight constraints on DPRK missile development,testing, and exports. Both sides agreed to hold another round of talksas soon as possible, and a sixth round occurred September 28-29 in NewYork. The United States continued to urge the DPRK to take steps to addressU.S. and international concerns about the DPRK's indigenous missile programsand its missile-related activities. The United States also discussed ChairmanKim Jong-Il's idea, suggested to Russian President Putin in mid-July, oftrading missile restraints for launches of DPRK satellites on foreign launchers.During the October visit to Washington of DPRK Special Envoy Jo Myong Rok,the United States and DPRK agreed that "resolution of the missile issuewould make an essential contribution to a fundamentally improved relationshipbetween them and to peace and security in the Asia-Pacific region." TheDPRK also reaffirmed its ballistic missile flight test moratorium "whiletalks on the missile issue continue."

Secretary Albright met with Chairman Kim Jong-Il in Pyongyang October23-24. They had serious, constructive, and in-depth discussions on thefull range of U.S. concerns on missiles, including both the DPRK's indigenousmissile programs and exports. They also explored Chairman Kim's idea ofrestraining DPRK missile capabilities in exchange for launches of DPRKsatellites on foreign boosters. U.S. and DPRK missile experts are scheduledto continue discussions in early November.

In response to reports of continuing Iranian efforts to acquire sensitiveitems from Russian entities for use in Iran's missile and nuclear developmentprograms, the United States is pursuing a high-level dialogue with Russiaaimed at finding ways to work together to cut off the flow of sensitivegoods to Iran's ballistic missile development program and its nuclear weaponprogram. Russia's government has created institutional foundations to implementa newly enacted nonproliferation policy and passed laws to punish wrongdoers.It also has passed new export control legislation to tighten governmentcontrol over sensitive technologies and continued working with the UnitedStates to strengthen export control practices at Russian aerospace firms.However, despite the Russian government's nonproliferation and export controlefforts, some Russian entities continued to cooperate with Iran's ballisticmissile program and to engage in nuclear cooperation with Iran beyond theBushehr Unit 1 nuclear power reactor project, which could further Iran'snuclear weapon aspirations.

Consistent with the Russian government's April 2000 announcement ofadministrative action against the Rector of the Baltic State TechnicalUniversity (BSTU) for his involvement in training Iranian specialists atBSTU, and following our own assessment, the United States announced onApril 24, 2000, plans to impose trade and administrative penalties on theRector for his involvement with the Iranian missile program. At the sametime, the United States also announced its intention to remove restrictionsimposed in July 1998 on two Russian entities -- INOR and Polyus -- whichhave ceased the proliferation behavior that led to the imposition of penalties.However, penalties imposed in July 1998 against five other Russian entitiesand in January 1999 against three additional entities remain in effect.

Value of Nonproliferation Export Controls

The U.S. national export controls -- both those implemented pursuantto multilateral nonproliferation regimes and those implemented unilaterally-- play an important part in impeding the proliferation of WMD and missiles.(As used here, "export controls" refer to requirements for case-by-casereview of certain exports, or limitations on exports of particular itemsof proliferation concern to certain destinations, rather than broad embargoesor economic sanctions that also affect trade.) As noted in this report,however, export controls are only one of a number of tools the United Statesuses to achieve its nonproliferation objectives. Global nonproliferationtreaties and norms, multilateral nonproliferation regimes, interdictionsof shipments of proliferation concern, sanctions, export control assistance,redirection and elimination efforts, and robust U.S. military, intelligence,and diplomatic capabilities all work in conjunction with export controlsas part of our overall nonproliferation strategy.

Export controls are a critical part of nonproliferation because everyemerging WMD/missile program seeks equipment and technology from othercountries. Proliferators look to other sources because needed items areunavailable within their country, because indigenously produced items areof substandard quality or insufficient quantity, and/or because importeditems can be obtained more quickly and cheaply than domestically producedones. It is important to note that proliferators seek for their WMD andmissile programs both items on multilateral lists (like gyroscopes controlledon the MTCR Annex and nerve gas precursors on the Australia Group list)and unlisted items (like lower-level machine tools and very basic chemicals).In addition, many of the items of interest to proliferators are inherentlydual-use. For example, key precursors and technologies used in the productionof fertilizers or pesticides also can be used to make chemical weapons;bio-production technology can be used to produce biological weapons.

The most obvious value of export controls is in impeding or denyingproliferators access to key pieces of equipment or technology for use intheir WMD/missile programs. In large part, U.S. national export controls-- and similar controls of our partners in the Australia Group, MissileTechnology Control Regime, and Nuclear Suppliers Group -- have denied proliferatorsaccess to the largest sources of the best equipment and technology. Proliferatorshave mostly been forced to seek less capable items from nonregime suppliers.Moreover, in many instances, U.S. and regime controls and associated effortshave forced proliferators to engage in complex clandestine procurementseven from nonmember suppliers, taking time and money away from WMD/missileprograms.

The U.S. national export controls and those of our regime partners alsohave played an important role, increasing over time the critical mass ofcountries applying nonproliferation export controls. For example: the 7-memberMTCR of 1987 has grown to 32 member countries; the NSG adopted full-scopesafeguards as a condition of supply and extended new controls to nuclear-relateddual-use items; several nonmember countries have committed unilaterallyto apply export controls consistent with one or more of the regimes; andmost of the members of the nonproliferation regimes have applied national"catch-all" controls similar to those under the U.S. Enhanced ProliferationControl Initiative. (Export controls normally are tied to a specific listof items, such as the MTCR Annex. "Catch-all" controls provide a legalbasis to control exports of items not on a list, when those items are destinedfor WMD/missile programs.) The United States maintains a global program,funded by the Nonproliferation, Anti-terrorism, Demining and Related Activitiesaccount, to assist other countries' efforts to strengthen their exportcontrol systems. A principal focus of this important effort is Russia andthe Newly Independent States (NIS), where we also employ funds providedunder the Freedom Support Act.

The U.S. export controls, especially "catch-all" controls, also makeimportant political and moral contributions to the nonproliferation effort.They uphold the broad legal obligations the United States has undertakenin the Nuclear Nonproliferation Treaty (Article I), Biological WeaponsConvention (Article III), and Chemical Weapons Convention (Article I) notto assist anyone in proscribed WMD activities. They endeavor to assurethere are no U.S. "fingerprints" on WMD and missiles that threaten U.S.citizens and territory and our friends and interests overseas. They placethe United States squarely and unambiguously against WMD/missile proliferation,even against the prospect of inadvertent proliferation from the UnitedStates itself.

Finally, export controls play an important role in enabling and enhancinglegitimate trade. They provide a means to permit dual-use exports to proceedunder circumstances where, without export control scrutiny, the only prudentcourse would be to prohibit them. They help build confidence between countriesapplying similar controls that, in turn, results in increased trade. Eachof the WMD nonproliferation regimes, for example, has a "no undercut" policycommitting each member not to make an export that another has denied fornonproliferation reasons and notified to the rest -- unless it first consultswith the original denying country. Not only does this policy make it moredifficult for proliferators to get items from regime members, it establishesa "level playing field" for exporters.

Threat Reduction

The potential for proliferation of WMD and delivery system expertisehas increased in part as a consequence of the economic crisis in Russiaand other Newly Independent States (NIS). My Administration gives highpriority to controlling the human dimension of proliferation through programsthat support the transition of former Soviet weapons scientists to civilianresearch and technology development activities. I have proposed an additional$4.5 billion for programs embodied in the Expanded Threat Reduction Initiative(ETRI) that would support activities in four areas over FYs 2000-2004:nuclear security; non-nuclear WMD; science and technology nonproliferation;and military relocation, stabilization and other security cooperation programs.Of the $1 billion Congressional ETRI request for FY 2000, an estimated$888 million is available: State  ($182 million), Energy ($293 million),and Defense ($467 million). We are seeking $974 million in FY 2001.

Expenses

Pursuant to section 401(c) of the National Emergencies Act (50 U.S.C.1641 (c)), I report that there were no specific expenses directly attributableto the exercise of authorities conferred by the declaration of the nationalemergency in Executive Order 12938, as amended, during the period fromMay 16, 2000, through November 12, 2000.

Sincerely,

WILLIAM J. CLINTON