17 September 1998
Source: http://www.nytimes.com/library/tech/98/09/biztech/articles/17computer-exports.html

The New York Times

##### September 17, 1998

## U.S. Agency Faults Study on Exports of Computers

##### By JEFF GERTH

WASHINGTON -- When the Clinton administration relaxed export controls on high-performance computers in 1996, it relied on a flawed report that did not study the national security implications and concluded with scant data that the computers were already easily available around the world, government auditors said Wednesday.

The opposite conclusion is true, said the General Accounting Office, the audit arm of Congress. In a report released to a Senate panel, the auditors found that such high-performance computers "are not readily available" to countries of national security concern to the United States, like China, India or Pakistan.

The GAO report also said that American manufacturers continue to dominate the overseas market. An important administration argument for loosening export controls was that easing controls was the only way American computer makers could compete against widely available foreign-made technology.

The auditors said that "a key element" in the decision to relax the export controls was a Stanford University study, commissioned by the Commerce and Defense departments without any competition, that said some U.S. computer technology was uncontrollable worldwide and efforts to control it would harm the industry.

But the auditors said that the study "lacked empirical evidence or analysis regarding its conclusion" of uncontrollability. The GAO also said that the study failed to do one of its assigned tasks: study how countries like China might use the computers for military purposes.

Within a year after the export rules were loosened, military installations in Russia and China obtained a few powerful new American computers, prompting criminal investigations and a retightening by Congress of the export controls.

The study's authors responded to the GAO, and their responses were presented to the Senate subcommittee on International Security, Proliferation and Federal Services by Harold Johnson, the GAO's associate director.

Johnson said that the authors told the accounting office that they did not do a national security threat analysis because the federal government does not have the right information to do such a study. Seymour Goodman, the study's principal author, disputed the GAO's criticism of his report's analysis. "We had a lot of empirical evidence and we did a comprehensive analysis that was different from theirs and that focused on the availability of U.S.-built systems."

William Reinsch, the undersecretary of commerce for export administration, defended the administration's relaxation of controls and said the GAO had asked the wrong question in looking at the computer marketplace.

"Even though the U.S. today dominates the market for high-performance computers, there is a performance threshold below which we can not realistically expect to maintain control of computers unless we restrict sales to our closest allies," he said.

Reinsch went on to argue that the GAO was wrong to rank national security as the top priority for looking at this issue. Instead, he said, the first priority should be the realities of the marketplace, where high-performance computers "are becoming less and less controllable because they are becoming smaller, cheaper, more powerful and more reliable, requiring less vendor support."

President Clinton announced the change in policy in late 1995, fulfilling a pledge he made early in his administration to computer executives. The move also helped countries like China, which could now buy more advanced American computers without any federal license as long as the technology was used for civilian purposes.

But the new rules made the exporter responsible for deciding whether a license was required, a decision previously made by the federal government. This new responsibility, the GAO report said, was "particularly difficult" for companies selling to countries like China, "where identifying the distinction between a civilian and military end user can be difficult without information that is sometimes available only to the U.S. government."

Now, the Clinton administration is weighing whether to further relax the computer export limits. But the administration's critics remain "concerned that the policy is flawed," said Sen. Thad Cochran, R-Miss., who led Wednesday's hearing.

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