Proposed Curbs Send Chill Down Industry Mainframe
Shaken high-technology executives braced Tuesday for a new round of restrictions on their overseas sales in the wake of a House committee report charging that lax enforcement of export controls, as well as outright espionage, had permitted China to obtain militarily valuable American know-how.
Executives and independent analysts warned that the proposed restrictions--particularly that the government verify China does not use American-made computers for military purposes--would result in lost sales without enhancing national security.
“Our biggest concern is that the industry will end up losing market share to foreign competitors without accomplishing any strategic goal,” said Dan Hoydysh, trade policy director for computer-maker Unisys Corp.
Although industry spokesmen declined to attack the report directly, their comments made clear that they see themselves as unfairly lumped in with alleged spies at government labs and with defense contractors accused of knowingly violating export control laws.
They were quick to point out that key sections of the report appeared inconclusive about whether China was actually putting U.S. computers to military use. They also said the report is ambiguous about whether China has computers powerful enough to do what the document portrayed as one of the greatest dangers: simulating a nuclear explosion for test purposes.
The report said the two most powerful computers sent to China to date were rated at 10,000M-TOPS (millions of theoretical operations per second) or about the same as a good business computer here.
In releasing the 900-page report, Rep. Christopher Cox (R-Newport Beach), the committee’s chairman, accused China of orchestrating “a widespread effort to obtain U.S. military technology by any means.” He charged that China “has induced businesses to provide military-related technology for commercial motives.”
Calling for tighter controls put the committee at loggerheads with the U.S. computer industry, which repeatedly has sought and won looser controls as technology has improved. Indeed, the industry is in the midst of a campaign for still further loosening.
Under current rules, Intel Corp. cannot sell its top-of-the-line Pentium III 550-megahertz processor in China without special approval from the U.S. government. But computer technology is advancing so quickly that the Pentium III is likely soon to become obsolete for military purposes.
While acknowledging that the Cox report represents a setback to their latest effort to change the rules, executives noted that they had succeeded in winning desired changes from every administration since Ronald Reagan’s. In large measure, analysts said, their success stems from the global nature of the high-technology industry.
“We have the toughest export control rules of any country in the world and what it means is that we’re losing sales,” said Paul Freedenberg, government relations director of the Assn. of Manufacturing Technology, which represents the machine tool industry, and a former Commerce undersecretary in charge of export control during the Reagan administration.
“There’s no ability to control the uncontrollable,” said Hoydysh, the Unisys executive who spoke for the dozen-member Computer Coalition for Responsible Exports.
“Things that are commodity products are widely available everywhere, like it or not,” he said.
The Cox report itself conceded that American companies should be able to sell computers to overseas customers, including China. In its recommendations, the committee said that it “supports the sale of computers to [China] for commercial but not military purposes.”
The problem is that there is no easy way to check the uses of high-tech products once they leave the United States, executives and independent analysts said, nor is there a consensus among the nation’s Cold War allies about restricting sales to China or other countries.
“If the U.S. tries to unilaterally impose restrictions, it simply isn’t going to succeed,” said Greg Mastel, vice president and research director for the Economic Strategy Institute, a Washington think tank. “The only alternative is to gain a multilateral consensus [to restrict sales] and, frankly, I don’t think we can get one.”
At least in part, the conditions that produced the controversy date to the decision to shrink the U.S. defense budget after the demise of the Soviet Union and its network of allies in the late 1980s and early 1990s.
Given declining resources, Defense Department officials looked to the private sector for technological innovation--in particular, for technology that had both defense and civilian uses--known as “dual use” technology. Defense contractors began seeking ways to convert their military know-how into commercial uses.
Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va., said key technologies became “intrinsically harder to control.”
“When most of the critical technologies involved in defense work were unique to the military, it was much easier to draw an unambiguous dividing line around those technologies and to keep potential adversaries away from them,” he said. “How do you control security-intensive technology that didn’t even originate in the defense arena?”
Regardless, Thompson joined industry executives in opposing wholesale tightening of export controls, because sales of many of these goods to China and other foreign countries “are the critical drivers of our trade” overseas.
“This genie is out of the bottle,” he said. “If we are not careful with these export restrictions, we will hobble our trade competitiveness without materially enhancing our security.”
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Times staff writer James F. Peltz contributed to this story from Los Angeles.
