Defense bill could stifle computer trade

In a move that has re-energized the debate over export controls on high-performance computers, the latest version of a defense-spending bill would require companies to seek licenses to export even underpowered desktop computers.

The dramatic tightening of export regulations is included in the National Defense Authorization Act, an annual military funding bill that has already passed the U.S. House of Representatives. Though the proposed rules are only a tiny portion of the 630-page bill, they could have a devastating impact on the computer industry.

"It would bring exports to a grinding halt," said Dan Hoydish, director of trade, public policy and government affairs for Unisys and chairman of the Computer Coalition for Responsible Exports, a trade group that counts many major technology companies as members. "We wouldn't be asking for 20 export licenses in a year, we would be asking for 20,000 in a day."

Today, computer sellers are required to get a license to export any computer with performance equal to or greater than a system with 32 Intel Itanium processors. The current version of the defense authorization act would lower that limit to systems deemed "militarily critical" by the Department of Defense. That level is currently set to the equivalent of a computer using a Pentium 3 processor running at 650MHz, state of the art in 1999 but considered feeble today.

Moreover, the proposed rules would apply to exports destined for any country, including U.S. allies.

The controversial section is not included in a U.S. Senate version of the bill that passed last week. That means the fate of the proposed rules, known as Section 1404, will be determined by negotiations between the House and the Senate, currently slated for later this month.

"As the planet shows no sign of nearing the point where nuclear weapons are banned, it is reasonable to assume that current or aspiring nuclear weapons states will vigorously attempt to acquire high-performance computers." --Peter Leitner Defense Department

A congressional staff member familiar with the House and Senate bills said it's likely Section 1404 will be changed or dropped. Still, just the specter of passage has rekindled the debate over whether to control the export of computer technologies to other countries. The issue pits the interests of a key U.S. industry against the needs of national security. Though relatively high-performance computers are widespread, lawmakers concerned with national security would still like to block certain countries and terrorist organizations from obtaining them.

A representative of the House Armed Services Committee, which drafted the amendment to the original House bill, said the legislation would reverse a trend that has weakened U.S. national security and made the proliferation of weapons of mass destruction much more likely. Supercomputers can be used in nuclear-weapons research, as well as in cryptography, antisubmarine warfare and intelligence activities.

"There shouldn't be much daylight between the Department of Defense and Commerce about what requires a license," said Harald Stavenas, spokesman for Rep. Duncan Hunter, R-Calif., who chairs the House Armed Services Committee. "The problem is that there is. Commerce (isn't controlling) things that have critical military applications."

Too relaxed to be vigilant?
The performance limits for exported computers, measured in millions of theoretical calculations per second, or MTOPS, have increased almost annually. Eight times in the last two decades, computer companies have won a relaxation in the Department of Commerce's export limit, which began at less than 160 MTOPS in the mid-1980s and has risen to more than 190,000 MTOPS today.

That's far more lenient than the 1,500 MTOPS the Department of Defense has deemed threatening to the United States' military superiority, according to the Defense Department's Militarily Critical Technologies List. A report published in 2002 by the U.S. General Accounting Office found that most military applications of computer technology require less than 20,000 MTOPS, including programs used to design and simulate nuclear weapons. A currently exportable computer, such as a 32-processor Intel Itanium computer, could run 98 percent of the applications used by the Department of Defense, the report said.

The gap causes many analysts to wonder exactly what the point of export regulations are. The current policy limits the export of computers having a processing power above a certain level to certain countries, including Russia, India, Israel, Pakistan and China.

Further clouding the issue is the recent trend of building highly capable systems by linking scores of relatively off-the-shelf parts, a process known as clustering. Several of those countries whose imports are limited, such as China and Russia, have sidestepped the regulations by creating their own supercomputers using clusters of hundreds or thousands of less-powerful systems. The Top500 list of supercomputers, released last week, included five homegrown Chinese computers, including one ranked No. 10. A Russian supercomputer ranked 391.

"The number of clustered systems on that list has really multiplied," said David Rose, director of import/export information security policy for chipmaker Intel, a member of the Computer Coalition for Responsible Exports. "Supercomputers are no longer difficult to create."

Moreover, the current export controls, based on a computer's theoretical performance, have widely been criticized as ineffectual and unenforceable. The MTOPS measurement is no longer indicative of a computer's true power and performance, researchers from industry, academia and the General Accounting Office have concluded. Another GAO report found that the Department of Commerce had fallen dangerously behind in its inspections of foreign sites that have purchased U.S. dual-use technology--that with both a commercial and military use--such as supercomputers.

And the fact that the current exportable limit far exceeds the amount of processing power needed for military applications has some analysts scratching their heads.

"There is no linkage between computing power and military capability any longer; in part because, if you want a bigger computer, you just have to go out and buy a few more clusters," said James Lewis, director of the Technology and Public Policy program at the Center for Strategic and International Studies and a former export-control negotiator for the U.S. Department of State. "There are so many computers everywhere on earth, that it's impossible to stop."

An arms race
Not that previous administrations, particularly Ronald Reagan's, haven't tried to control the flow. The proposed rules are the latest battle in a decades-long war between computer companies and national security hawks over the best way to limit the export of technology that could hasten the proliferation of weapons of mass destruction.

The leapfrog race to ever-faster processors has frequently been described as an "arms race." To many worried about the proliferation of weapons of mass destruction, that's exactly what expanding computer power represents.

"As the planet shows no sign of nearing the point where nuclear weapons are banned, it is reasonable to assume that current or aspiring nuclear weapons states will vigorously attempt to acquire high-performance computers to advance their nuclear programs with a degree of covertness hitherto impossible to achieve," Peter Leitner, now the senior strategic trade advisor in the Office of the Secretary of Defense, said in published comments from congressional testimony in 1998. The Defense Department did not make Leitner available to comment for this article.

Until 1985, export of any computing systems to a country with a communist government fell under the U.S. Export Administration Act and was generally refused. The rapid growth of the personal computer industry, and the increasing reliance on computer chips manufactured abroad, made

"There is no linkage between computing power and military capability any longer; in part because, if you want a bigger computer, you just have to go out and buy a few more clusters." --James Lewis Center for Strategic and International Studies

the continued restriction of mass-market computer systems much more difficult, if not impossible. In 1984, the United States reached a pact with Japan, the other major power in the computer chip industry, to regulate the export of high-performance computers under the Supercomputer Control Regime. The United States also used the Coordinating Committee, established in 1949 to limit technology transfer to the Soviet Union, as a forum to set international policy on high-performance computers.

With the definition of supercomputers established, the industry quickly started asking for relaxed export regulations. In January 1985, the Department of Commerce decontrolled the first PCs, allowing the export of personal computers such as the IBM PC-XT. Three years later, the Omnibus Trade and Competitiveness Act of 1988 further relaxed the restrictions to allow any computer under 160 MTOPS to be exported without a license.

As computers became more popular and more powerful, pressure continued to mount to ease the export regulations. In 1991, the United States and Japan renewed their agreement and the first Bush administration eased export restrictions to start at 195 MTOPS and higher. That kicked off further easing of restrictions over the next decade. The Clinton administration raised the maximum unlicensed export level five times during its eight years, from 1,500 MTOPS in 1994 to 85,000 MTOPS in 2001. The second Bush administration further raised the limit to 190,000 MTOPS in January 2002.

"Mind-boggling" legislation
Section 1404 of the appropriations bill would roll back the licensing equation to a level not seen since 1994.

"The President shall require a license...for the export of goods or technologies included on the Militarily Critical Technologies List," Section 1404 of the House bill states. That list cites a level of 1,500 MTOPS as being militarily critical.

The computer-export issue has already become a talking point in Sen. John Kerry's presidential campaign.

Kerry promises that if he's elected president, he'll shift "the emphasis of computer export controls from attempting to control widely available business computers, to controlling the availability of classified software created for applications such as weapons development," according to the Kerry campaign's policy paper.

Yet, on that issue, Kerry may not differ much from his opponent. The Bush administration has criticized that part of the legislation in its Statement of Administration Policy for limiting the Executive Branch's power, and listed it as the third most significant problem with the bill.

"These requirements are contrary to the president's policy to refine U.S. export control to protect truly critical technologies while facilitating legitimate trade," the position paper stated. The paper, however, did not promise to veto the bill if Section 1404 remained intact, something the Bush administration pledged for its top two concerns outlined in the position paper.

"The number of clustered systems on that list has really multiplied. Supercomputers are no longer difficult to create." --David Rose Intel

Not only does the White House oppose that section of the legislation, but a representative of the Office of the Secretary of Defense also said it's not likely the Pentagon would support a bill that used the list of critical technologies for export restrictions.

The Militarily Critical Technologies List "is not intended to be an export-control list, neither can it function as one," a Defense Department representative said.

Some analysts called the restriction a return to Cold War policies. Seymore Goodman, professor of International Affairs and Computing at the Georgia Institute of Technology and the author of two policy papers used by the Clinton administration on the issue, stressed the impossibility of restricting computers that no longer require entire rooms to house them. Now smuggling a few more computer chips to expand a cluster is easy, he said.

"If this gets through Congress, it is a regression of mind-boggling proportions," Goodman said. "You cannot control anything that is made by the millions and which you can put in your pocket."

Moreover, the rules are unlikely to prevent countries such as Taiwan and China from producing for themselves and selling to other nations computer chips exceeding the 1,500 MTOPS limit. In fact, developing countries such as China may welcome any restriction on U.S. competitors that help its own companies domestically, said Hoydysh of the Computer Coalition for Responsible Exports.

"China is busy developing its own industry," he said. "To some extent, the market penetration issues are welcomed by them, because it protects their industry, without dealing with trade issues."

Some analysts believe the focus on controlling high-performance computers has hurt national security, diverting resources away from nonproliferation activities that have a higher payoff. If computer exports are no longer controlled, the game is not lost, said Dale Nielson, project leader of Lawrence Livermore National Laboratory's Proliferation and Terrorism Prevention Program.

"If people put too much faith in (export controls), then they are closing their eyes to the other things that can be done," he said. "I think that there are enough other critical technologies that can be controlled that people shouldn't see this as a last stance in nonproliferation."