U.S. Streamlines Rules for High-Tech Exports : Commerce, Defense Departments Compromise to Ease Trading With Western Europe and Japan

The Commerce and Defense departments Tuesday unveiled a streamlined procedure to ease the export of many high-technology products to buyers in Western Europe, Japan and other friendly countries.

The change amounts to a compromise between the Commerce Department’s wish to relax controls on products whose export would aid the U.S. trade balance and the Pentagon’s refusal to yield control over technology transfers to the Soviet Union and its allies.

Under the program, time-consuming export licenses for shipments to “reliable” companies in friendly countries would no longer be required. Instead, companies qualifying for classification as a “certified end user” would be eligible to receive the goods immediately upon being identified.

“We regard this proposal as the major way to move ahead,” said Stephen D. Bryen, deputy assistant defense secretary. “It will stop diversion (of technology to the Soviets). It will not impede trade.”

Bryen, a past critic of the Commerce Department’s administration of the Export Control Act, stressed that “we in Defense are in complete agreement with Commerce” on the plan, which he called “the first reform of the export control system in many, many years.” Bryen said the plan--which is to take effect in 60 days to allow time for industry comment--effectively preempts a section of the House-passed trade bill that would gut the export control system by slashing by 40% the list of items subject to controls. The Commerce Department now determines the items on the list, with advice from the Defense and State departments.

The most sensitive products--top-of-the-line, state-of-the-art technology such as supercomputers--would not be included among the goods to be freed from export licenses, according to Paul Freedenberg, assistant commerce secretary for trade administration.

“The idea,” he said, “is to speed up the processing of most exports so that we can concentrate on those more difficult cases.”

Once foreign companies are certified as end users and receive a “gold card” number--akin to a credit card identification--a U.S. exporter could clear shipments to them with a simple telephone call to the Commerce Department’s office of export licensing. The average time for shipping eligible high-tech goods to approved customers in friendly countries could be slashed from 11 or more days to two days, Freedenberg said. “This would allow a small exporter to sell to any certified end user,” he said. “It should help put U.S. exporters back in a competitive situation.”

Under the new system, end-user customers in approved countries would be eligible to apply for certification. Freedenberg cautioned that it would take at least two years for the system to be phased in because it will be up to prospective customers to apply for certification.

Bryen speculated that “conceivably 10,000 to 20,000 companies could get such a license.”

The first certifications would be limited to the 16 countries in COCOM, an organization made up of the North Atlantic Treaty Organization countries and Japan, to control leaks of technology to the Soviet Bloc.

The gold card certifications would be good for two years and would be renewable if there were no violations.

To deal with the vexing problem of goods that are passed on by the receiving company to other users, the system would allow certified customers to transfer goods to other certified users without having to apply for a re-export license.

After the COCOM group, the next tier of eligibility would most likely cover companies in friendly non-alliance countries, Bryen said.

Although he declined to name the countries, it was clear that he included Sweden, Switzerland, Austria, Israel, South Korea, Hong Kong and Taiwan.

The American Electronics Assn., which has been pressing for looser controls, reserved comment on the plan until it has had time to study it.

By definition, the Soviet Union, the Warsaw Pact countries and China, to which shipments of advanced Western technology are curtailed under U.S. law and COCOM rules, would not be eligible for gold card certification. Trading entities in Yugoslavia, however, might conceivably qualify, Bryen said--provided that the anti-Soviet Communist government in that country was prepared to impose COCOM-like controls on transfers to Warsaw Pact nations.

“We have been talking to European companies,” Bryen said. “Their main complaint is how long it takes to get something from us. Their reaction to this concept is positive.”