U.S. Pressed to Loosen Technology Export Rules

As America rushes to modernize its telecommunications infrastructure, the government is under pressure to let other countries--including its former Cold War enemies--buy state-of-the-art equipment that the defense establishment once feared would help bolster foreign military might.

At stake is upward of $250 billion worth of telecommunications modernization expected to be undertaken over the next 10 years in China, the former Soviet Union and developing nations.

On Wednesday, a congressional panel heard testimony on a bill that would free U.S. telecommunications concerns to sell as much as $45 billion in equipment to China and nations of the former Soviet Union.

The push comes at a time when the Clinton Administration is looking for ways to revive a sluggish economy and amid diminished national security concerns since the fall of the Iron Curtain. The White House is studying a relaxation of export controls on an array of American technologies, and President Clinton reportedly already has decided to loosen restrictions covering $20 billion in anticipated computer sales.

Those in favor of stepping up exports say that selling advanced telecommunications equipment overseas could actually promote U.S. national security because improved telecommunications could foster capitalism and democracy in countries where antiquated systems now make totalitarianism easier.

The Office of Technology Assessment last month reported that “telecommunications in Central and Eastern Europe are in dismal disarray.” Poland, for example, had 2.3 million people waiting to get telephone service (up from 1 million on the waiting list in 1981).

“These export restrictions are outdated relics from yesteryear and are costing Americans jobs,” Rep. Ron Wyden (D-Ore.) said in an interview. Relaxing export restrictions “will not jeopardize national security,” added Wyden, who testified before the House Subcommittee on Economic Policy, Trade and Environment in support of his bill, which would ease export restrictions on certain high-tech goods.

“There’s a big discussion on those issues going on in the White House,” said Thomas A. Kalil, director of the National Economic Council. “Unless we have export control reform, these things we are trying to encourage with our own information infrastructure are going to be difficult.”

The argument is that without global markets to defray costs, American companies won’t be able to invest as much in advanced equipment domestically.

The restrictions, for example, have prevented a consortium led by the Denver-based U S West telephone concern from building the last leg of a world fiber-optic link that would cross Siberia, said Ed Mattiz, executive director of business development for U S West International in London.

The contract for the 11,528-mile Siberian fiber-optic line is worth about $500 million, Mattiz said. He added that he fears Russia may block the project and get the fiber from other countries--such as Israel--that sell the technology.

While there is substantial support in Congress for some sort of easing of the export rules, Rep. Sam Gejdenson (D-Conn.), chairman of the economic policy subcommittee, expressed concern that fancy technology could fall into the wrong hands.

“How would you deal with Iran, Iraq or Libya?” Gejdenson asked Wyden at Wednesday’s hearing.

Wyden said his legislation would continue a ban on selling certain technology to countries viewed as supporting terrorism and that other questionable cases could be resolved by “working with the intelligence community.”

Even under relaxed controls, U.S. companies may be hard-pressed to capitalize on foreign markets. Many developing nations lack financial resources, and some financial institutions have not aggressively lent money for telecommunications projects.