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Commerce questions computer export bill

Undersecretary William Reinsch lambasts legislation that limits the export of computers as unenforceable and harmful to businesses.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
3 min read
Commerce Department undersecretary William Reinsch today lambasted legislation before the president limiting the export of computer equipment as both harmful to domestic businesses and difficult to enforce.

"Tight control over industry may put companies out of business and come back to bite the Pentagon," Reinsch told the National Security Committee of the House of Representatives, according to staff members from the office of Rep. Zoe Lofgren (D-California) who witnessed the hearing. Reinsch's remarks are significant because he heads the Commerce Department's Bureau of Export Administration (BXA), which would be charged with compliance.

President Clinton also opposes the export legislation but will likely swallow his objections because it constitutes a small part of the sprawling Defense Department authorization bill, according to Congressional insiders. Both branches of Congress passed the bill by a veto-proof margin. The dispute, however, may open the door for future regulatory adjustments.

The provision in question would constrain the export of computers that can perform 2,000 million theoretical operations per second (MTOPS) to "tier 3" countries. The group includes potentially large markets in Russia, China, Israel, and India, as well as some 40 other nations that are not necessarily opponents of United States, but about whom the government has strategic concerns.

Under the bill, computer vendors that want to export computers capable of performing between 2,000 and 7,000 MTOPS would have to notify the Commerce Department's BXA of the proposed transaction and identify the purchasing parties. BXA, in turn, would consult with four other agencies, including the Defense Department. If one of the agencies objects within ten days, the exporter would be required to obtain an export license, which would delay the transaction and could take up to 90 days.

The regulation is aimed at keeping supercomputers out of the hands of nations with nuclear capabilities or ambitions. In the past year, Congress learned of several instances in which sophisticated computers were repurposed for military use in Russia and China.

While Reinsch and Commerce officials stated that export regulations are a necessary component of trade policy, he asserted the 2,000 MTOPS limit is too low. Commercial servers and workstations to be released from IBM and Hewlett-Packard next year will exceed the limit, Commerce Department officials have said.

Enforcement would also prove difficult because foreign buyers will be able to create supercomputers by stringing together computers that perform at less than 2,000 MTOPS.

"For example, lower-level workstations (two to four processors) that are readily available through commercial distribution networks globally can be upgraded easily with uncontrollable plug-in boards to create systems with 64 or more processors that are capable of achieving performance levels in the 7,000-MTOPS range," said Mitchell Wallerstein, deputy assistant secretary of Defense for counterproliferation policy.

"Numerous foreign manufacturers can purchase microprocessors and other components and build relatively sophisticated machines. Microprocessor performance has more than quadrupled in the past five years--from 80 MTOPS in 1993 to over 450 MTOPS today," he continued.

Wallerstein suggested that the bill could be improved to some degree if greater authority to adjust the 2,000-MTOP limit were given to the executive branch. Currently, the president must suggest revisions to Congress. The revisions become effective after 180 days if Congress does not object.

Wallerstein defended the current ceiling of 7,000 MTOPS. No machine with greater capabilities can be sold to a customer in a tier 3 country.

Importantly, the MTOPS standards outlined in the bill is far from clear. Various analysts contacted by CNET's NEWS.COM have given varying interpretations of the MTOP formula. Under some calculations, a four-processor server running next year's 400-MHz Pentium II chips would violate the policy. Others posit that the policy could prevent the free exportation of dual-processor Pentium II workstations.

Amanda Debusk, director of enforcement for Commerce, stated that the regulation could conceivably block the sale of cutting-edge video games, according to witnesses to the hearing.

Meanwhile, two sources have said that a committee similar to the one which drafted the current MTOPS standards is now huddling to devise new standards. The current standard went into effect in October 1995, albeit with different, laxer standards on export licensing.