Responding to sharp outside criticism, the State Department yesterday expressed regret over its approval of an export license for rocket-motor casings considered crucial to the development of long-range ballistic missiles by Brazil.

The Brazilian-made missile casings, which are being shipped this week from Chicago, where they were treated to withstand the stress of launch, will enable that country "for the first time to launch a satellite and build a strategic missile," said Gary Milhollin, a University of Wisconsin law professor and arms proliferation expert, in testimony before a subcommittee of the Joint Economic Committee.

Milhollin called the export contrary to U.S. pledges to halt the proliferation of missile technology and said the sequence of events leading to the State Department's approval illustrated why "our export control system is breaking down" and allowing leakage of key U.S. weapons technology.

Sen. Jeff Bingaman (D-N.M.), the subcommittee chairman, elicited the statement of U.S. regret after closely questioning officials from the Commerce, State and Defense departments about the rocket casings and other recent exports.

"Although there has been a strong series of statements from the administration about the problem of proliferation, I've not seen . . . follow-through with a clear policy," Bingaman said after hearing the officials. "I think senior-level management attention is lacking. Nonproliferation policy consistently seems to take a back seat to our bilateral diplomatic concerns."

Elizabeth Verville, the deputy assistant secretary of state for political and military affairs, said in the agency's first public statement on the rocket casings that a license was granted in October 1989 to a Chicago firm capable of treating them.

She and other officials said the State Department's license decision was not reviewed for potential nonproliferation problems by an interagency group until eight months later, at which point the Defense Department raised objections and called for a suspension of the license.

By the time the administration completed its review, seven of the 18 approved casings had already been treated. "There was no desire to create a serious problem in our bilateral relations with Brazil," Verville said, particularly during Washington's August campaign to win Brazilian compliance with the trade embargo against Iraq.

So a decision was made "at a very high level in our government" to permit the export of seven casings to go forward and bar any further such work, Verville said. She called it an act "we have determined that we do not want to do in the future."

An assertion by another State Department official that the decision properly was kept from interagency review brought a strong objection from Henry Sokolski, the Defense Department's deputy for non-proliferation policy. "I have to disagree," he said, noting that "we believe {the Pentagon} needed to be consulted."

The State and Commerce officials indicated they found no reason to advocate reforms in procedures for reviewing export licenses that would cede additional authority to the Pentagon. But Milhollin advocated such a step, declaring, "the wrong people" are now in charge.