WILLIAM B. FILBERT : Keying on High-Tech Exports : O.C. Businessman on Advisory Panel Predicts Changes
As political tensions ease somewhat between Moscow and Washington, the business world hopes to benefit from this warming of relations through increased trade.
One sign of the benefits to come came last summer, when the U.S. Commerce Department lifted export restrictions on a broad range of desktop personal computers and cleared the way for their export to the Soviet Union and Eastern Europe.
But computer companies say this move, which cleared the way for technology developed in the mid-1980s, is not enough. Clones of many other high-level computers and computer peripherals are widely available from manufacturers in the Far East and elsewhere.
Earlier this month, President Bush unveiled a plan for a sweeping overhaul of Western restrictions on high-technology exports to Eastern Europe. This proposal will be up for discussion when the 17-nation Coordinating Committee on Multilateral Export Controls (Cocom) meets next month in Paris. Cocom administers export controls for the United States and its Western allies.
Bush’s plan is the result of suggestions gathered from government agencies and the high-tech industry. Working behind the scenes is a group of 10 technical advisory committees that cover the entire spectrum of technology, including semiconductors, biotechnology, computers and telecommunications equipment. Each committee is composed of various government agencies and industry representatives who advise the Commerce Department on export-control policies.
William B. Filbert, president of International Diversified Technologies Inc. in Anaheim, sits on one of these panels, called the Computer Peripherals Technical Advisory Committee. Filbert, an engineer by training, was appointed to the committee by Commerce Secretary Robert A. Mosbacher.
In a recent interview with Times staff writer Cristina Lee, Filbert talked about the nation’s export-control policies and how computer companies, both large and small, can have a say in influencing those policies.
Q. What is the Computer Peripherals Technical Advisory Committee, and what are its responsibilities?
A. This committee is one of 10 that have been in existence for many years. They have been established to advise the Department of Commerce’s Bureau of Export Administration on how control should be established on various technical items. It consists of eight members from the computer peripherals industry and nine from the U.S. government representing the departments of Commerce, State and Defense.
In this committee, there are two of us from California. I’m the only representative from Southern California, and there is someone from the Bay Area who works with Ampex Corp. in Redwood City. Ampex makes video recorders and related equipment.
We’re supposed to meet every other month at the Bureau of Export Administration in Washington. But we’ve been meeting once a month during the past four to six months because of all the changes taking place in Eastern Europe.
We meet in both open and closed meetings. In the open meetings, there is the opportunity for any company to present arguments to the committee about why a particular commodity or group of commodities should be decontrolled.
This is not commonly known to the industry--that there is this vehicle with which to present your arguments to the committee and the U.S. government simultaneously. The Federal Register announces committee meetings at least three weeks ahead of their scheduled time. So this is an excellent opportunity for members of the industry to present a description and the function of their products and the problems they’re having in exporting them.
There are many computer peripheral companies in Orange County. We have Distributed Logic Corp., Emulex Corp., Western Digital Corp., AST Research Inc., MAI Basic Four Inc. and Alpha Microsystems Inc. There are a number of companies here that specialize in graphic workstations, which fall under the computer peripheral area.
Q. What does the committee do with the arguments companies present during these open meetings?
A. It is within the prerogative of the technical advisory committee to formulate a position concerning those particular commodities. With assistance from the various government agencies, we create a position that would represent the U.S. government’s position in Cocom.
Obviously, that procedure for approval can take a considerable amount of time. It depends on the item and how critical it is. It could be a minimum of three months and a maximum of forever. But a typical period might be in the order of three to six months.
Q. Is this committee widely used by industry as a vehicle to loosen high-tech export restrictions?
A. The larger companies take advantage of these open presentations. For example, 3M made a presentation to us about two months ago. And they made a presentation based upon the magnetic recording tapes they make. They came up with a very strong argument that this tape is available through other sources and, therefore, should be decontrolled. It made sense to do so. The technical advisory committee took that under consideration.
I contacted a number of companies in Orange County that I felt could use the CPTAC to express their concerns and the problems they’ve had in exporting. I have yet to have one come and actually take advantage of the service.
The reasons, I think, are a combination of several factors. It’s either everyone does not realize that there is such a group, or they’re too busy to take the time to fight these kinds of problems. And there’s the natural reluctance on the part of many of us, whether we are in the engineering field or just private citizens, to say that it’s not worth the time to fight city hall.
I was one of those kinds of people for many years, but I’ve since found that there is some value if you can find the right approach, that there is a value in challenging the government concerning some of the restrictions they put on our exports.
Q. How does a high-tech company wishing to export its products know if its products fall within the limits of export control?
A. First of all, each company in the electronics business should go through a classification of their products to find out whether it’s controlled or decontrolled. You can do that by going to the regulations and looking through the commodity-control list.
Generally speaking, that can be a problem if the technical people within a company are not familiar with the regulations, and, in turn, the people with the regulations background don’t have the technical experience. That’s the first hurdle.
If it’s determined that a particular commodity is decontrolled, then they don’t have a problem and that commodity can be exported under a general license to anywhere in the world except the embargoed countries. Currently, there are five countries on that list: Libya, Cuba, Vietnam, Cambodia and North Korea.
If they find that the commodity is controlled, then they should ask at what level is it controlled and if other general licenses are available for that export of controlled commodity.
Q. What are the different levels under which export licenses are granted?
A. There are several levels under the individually validated license. There are applications for exports for which you are likely to get approval. This means you will, in all probability, get approval.
There are situations where you’ll be given favorable consideration, which means you may or may not get approval.
And there are those applications such as supercomputers for which you know you won’t get approval, so why bother?
So you need to know which slot your products fall in. That way, your sales and marketing force knows where to target (its efforts).
These various categories are not only determined by technical performance parameters but also by geographic areas. This is an area that many companies overlook. They don’t look at the fact that they should make a decision as to what I’d call the proper “slotting” of the products. And, therefore, they may lose marketing possibilities.
It is important for companies that are dealing with controlled commodities to keep current with these changes. That way, when something becomes decontrolled or fits in the general license categories, they can immediately alert their sales force and go in and attack those markets. You can be sure that our overseas competitors, primarily the Japanese and the West Germans, are doing that. They are very aggressive in these overseas markets, and it’s important for U.S. exporters to be equally as aggressive.
Q. How can companies keep current with export-control changes?
A. Companies can find changes in export-control regulations in the Federal Register. This is the official government document that is published daily, except on federal holidays. It announces all of the various changes that take place within the U.S. government, not just at the Bureau of Export Administration. And it’s the government’s position that when any change is published in the Federal Register, then the public has been informed. The government’s position is: If you don’t know about it, that’s your problem.
Q. From your observations, are the technology companies in Orange County well-informed of developments in export licensing?
A. I’d say many are not. It could be for a number of reasons, such as they’re too busy or they don’t appreciate the need for this.
In my opinion, one of the problems that Orange County companies and other firms throughout the nation face is that we’re just not sensitive to the opportunities and the need to export overseas. Many marketing and sales people just aren’t tuned in to the international events that are taking place and don’t recognize or appreciate the potential opportunities that are presently there or may exist in the near future.
Not many companies send representatives to attend international business meetings around the area. I feel that Orange County and the nation truly are in the midst of an international trade revolution. During the last 30 to 40 years, so many things have changed as the result of the electronics revolution. The advent of transistor radios, fax machines and personal computers has changed the world. With changes in the Eastern bloc, as well in the European Economic Community and in Hong Kong with China’s takeover in 1997, I believe there is another major revolution about to take place in international trade. In the United States, I believe, we are not sensitive to that.
If I walk in the streets of other countries in the world, they talk about what’s going on in the world. When you walk the streets in the United States or in Orange County, nobody talks about what’s going on in the rest of the world. We’re not sensitive to it. And that’s reflected among the business people of the area.
I think there are some companies that are on top of changes that are taking place in the licensing regulations as well as politically throughout the world. But they’re in the minority.
Q. What are the different technical advisory committees at the Bureau of Export Administration?
A. The 10 different committees cover the computer peripherals, components and related test equipment; semiconductors, transportation and related equipment; telecommunications equipment; computer systems; electronic instrumentation; automated manufacturing equipment; and biotechnology.
Q. Should high-tech companies expect any changes in export controls in 1990?
A. I think that over the remainder of the year, you’ll see small changes taking place that will give relief to various segments of the technology base here in Orange County. However, I would think that any significant changes will occur toward the end of the year.
Companies should start immediately reading the Federal Register. For example, there was a significant change that was announced in February in which many integrated circuits were placed under a general license (allowing them) to be exported without prior government approval to most countries in the Free World. That was a significant change for the integrated circuits industry.
I expect to see some changes of a similar magnitude occur in the computer and computer peripheral areas between now and the end of the year.
But aside from decontrol, one of the major problems in dealing with the Eastern European nations is currency exchange. (Eastern European nations) have a limited amount of hard currency. Companies in the United States, in general, and Orange County, in particular, don’t have the experience and expertise to deal with nations on a barter basis.
Some of the more sophisticated Japanese trading organizations and West German trading organizations know how to do that. They have the mechanisms in place, or they’ll set them up in order to do trading. They will take the time and trouble to do that.
Our export controls are going to be influenced not in the next six months but in the next two years by changes in the European Economic Community and by what position it takes in high-technology exports. Cocom, which fundamentally controls high-tech exports to Eastern Europe, is obviously going to change as a result of the European Economic Community’s unification and West Germany’s plans to bring East Germany into its economy. That represents fundamental political problems and, no doubt, changes in the NATO countries. And that is going to effect Cocom.