Industry seeks more export slack

Electronic News, Oct 4, 1993 by Bernard Levine

NEW YORK -- Buoyed by last week's Administration proposals to ease many computer export restrictions, industry advocates began mounting a broad-scale offensive to lift other barriers deemed relics of the Cold War. High on the agenda of industry trade groups and others lobbying for more far-reaching action was liberalizing many other rules governing components and telecommunications, as well as computer system sales to Russia and other parts of the old Soviet Union, China and other potential new markets.

Company executives and electronics associations strongly praised President Clinton's initiative, which also included bolstering federal financial incentives and programs to stimulate foreign sales, giving him high marks for heeding many industry recommendations. However, several quickly added a wish list of further proposals; at least one group, the Electronic Industries Association (EIA), was reportedly huddling with sympathetic congressmen trying to draft new legislation to be introduced over the next month or so aimed at promoting more U.S. high-tech exports.

EIA wouldn't comment on the specific reports, but its president, Peter F. McCloskey, noted that even with the "important improvements" outlined last week, "there is much that needs to be done in order to encourage maximum possible exports by removing additional federal disincentives, restrictions and artificial barriers."

The American Electronics Association (AEA) commended the President for acting on many of its earlier suggestions but vowed to continue lobbying for more improvements. The Semiconductor Industry Association (SIA) noted "rules on export controls need to be changed so they cover only products that pose a potential threat to national security."

Industry insiders have privately been urging the elimination of the majority of export barriers to most countries, except for a handful of states. It is frequently argued that many products U.S. companies are prohibited from selling to certain countries are readily available from other sources, frequently U.S. allies.

The Administration strategy raised the threshold on computer technology which can be sold to restricted countries. It is proposing to immediately increase the threshold for exports of computers to many destinations from 12.5 MTOPs (millions of theoretical operations per second--computer processing as measured by the U.S.) to 194 MTOPs and longer term to 500 MTOPs. This will free approximately $30 billion worth of computer exports from the requirement of obtaining licensing authorization. Also proposed is a redefinition of supercomputer from 195 to 2000 MTOPS.

The Administration would also simplify and better coordinate efforts to offer financial assistance for exports, creating an International Advocacy Coordinating Network to support American commercial interests overseas. More federal dollars would also be pumped into export promotion programs.

But many in the industry continue to push for more changes. The AEA, for example, said while it "applauds the Administration's progress in computer export controls, there are other areas where the industry continues to look to the Administration to develop improvements." It listed the following:

* Decontrol computer components along with computer systems to make the liberalization truly meaningful and apply the decontrol to all except embargoed and terrorist countries.

* Devise either an indexing system or a regular review mechanism to make sure that these improvements are not a one-time deal.

* Decontrol exports of telecommunications systems, which are a key tool for democratization and economic growth in former communist countries. AEA notes that COCOM partners are unlikely to agree to the Administration's computer decontrol proposal if it shows no movement in telecommunications decontrol.

* Decontrol exports of all mass market software with encryption capabilities.

* Eliminate unilateral foreign policy and nonproliferation controls that don't have the full support of our allies.

"We must do all we can to encourage and facilitate U.S. sales of technology products in foreign markets," said Robert C. DeHaven of Quality System and AEA vice chairman, terming the computer control threshold proposals "the most progressive action taken to rationalize the export control regime since the end of the Cold War."

Robert B. Palmer, president and CEO of Digital Equipment Corp., said "This administration deserves tremendous credit for listening to industry needs and truly finding the right balance between U.S. economic security and military security in determining export policy."

Sun Microsystems president/CEO Scott McNealy encouraged the Administration to continue the dialogue with industry to ensure public policy keeps pace with technological innovation, adding: "To continue to be competitive today, U.S. computer companies must grow in global markets or die. By easing export restrictions on computers already widely available from other sources outside the U.S., the Clinton Administration has taken a bold step to bolster our high-tech exports."