Testimony of Michael J. Copps
Assistant Secretary for Trade Development
International Trade Administration, U.S. Department of Commerce

before the

Special Committee on the Year 2000 Technology Problem
United States Senate

March 5, 1999

The Year 2000 Problem and the Department's International Outreach Activities

Mr. Chairman and Members of the Special Committee, thank you for inviting me today to talk about the Department of Commerce's international Y2K outreach activities. It is always good to "come home," and as someone who worked here in the Senate for nearly 15 years, I thank you for the opportunity.

First, permit me to commend the Committee's leadership in examining and reporting on the Y2K problem to the American people. The report that the Committee released just this week is an exceedingly valuable contribution to our understanding of the problem, and it provides a wealth of specific information about Y2K compliance challenges and initiatives both at home and abroad. It gives the government, in all branches and at all levels, and the American people in all their pursuits, important information as we work together to overcome a serious problem.

Let me begin with a brief update on the Department's efforts to achieve internal compliance of our critical systems. As of our February quarterly report to the Office of Management and Budget, 86 per cent of our mission-critical systems had been made Y2K compliant. All of our most vital systems will be compliant by the March 31, 1999 deadline set by OMB. About 10 of the 472 systems on our compliance list will require until June of this year to reach full compliance. Along with completing compliance on these systems, our internal efforts have turned to contingency planning and independent verification of the work that has been done.

Our efforts at the Department of Commerce are part of a much greater whole. I think you are familiar with the basic structure. At the apex is the President's Council on the Year 2000 Conversion. Deputy Secretary of Commerce Robert Mallett serves as our Department's representative on the Council. To assist Deputy Secretary Mallett, the Secretary has appointed a Director of our Y2K outreach efforts, Don Wynegar, who is responsible for coordinating the efforts of the various agencies within the Department and cooperating directly with the Chair of the President's Council, and Assistant to the President, John Koskinen. He also works closely with the International Cooperation Center, headed by Bruce McConnell of the White House, coordinating our international outreach efforts. Mr. Wynegar is here with me this morning.

As you know, for the purposes of outreach, Mr. Koskinen has established some 25 working groups representing all sectors of our nation's economic activity. As part of his responsibilities relative to the Council, Mr. Wynegar oversees three of these working groups: International Trade, Information Technology, and Science and Technology. Each of these working groups is made up of representatives from the private sector and various government agencies. For example, the Information Technology Working Group (ITWG) includes representatives from 17 industry associations along with the Federal Trade Commission, Department of Defense, Department of the Interior, and other federal agencies.

Closer to where I work is the International Trade Sector Working Group. This working group overlaps with other sectors, such as Finance and Transportation. The Departments of Commerce, Transportation, Agriculture and Defense, the Federal Reserve, U.S. Customs and the United States Information Agency participate in the working group meetings. The working group has representatives from a broad spectrum of industry associations, ranging from freight forwarders to transport groups to manufacturers. Mr. Chairman, I am the relatively new Assistant Secretary for Trade Development, and this unit is unique in government in that we work day-in, day-out with the private sector -- the companies and trade associations. My job is to build partnerships to encourage market access and increased exports. We are in the process of using these valuable ties to help tackle the Y2K problem.

Private sector members of the working groups are spearheading a variety of outreach efforts related to Y2K. For example, the Information Technology Association of America, a member of the Information Technology Working Group, has been on the forefront of awareness raising efforts since 1995 and organized a Y2K Summit in London in October, 1998 to heighten awareness internationally.

Our Under Secretary for International Trade, Ambassador David Aaron, spoke at this conference. He underscored the fact that a failure to address the Y2K problem in the international trade community could have serious consequences for the world economy. All nations, developed or developing, computerized or not, are interwoven into a global web of economic interdependence that a Y2K mishap could unravel. Most companies around the world are part of a complex interconnection of suppliers, vendors, customers, transportation and communciation links that enable commerce to take place. Secretary Daley, Deputy Secretary Mallett and Under Secretary Aaron continue to call on all countries, whether developed or developing, to move swiftly to ensure that the Y2K problem does not disrupt the world's engine for economic growth, international trade.

Reporting from both government and private sector sources suggests that small and medium-sized enterprises are the most vulnerable to the millennium bug, not just those located in the United States, but throughout the world. The European Commission reported in 1998 that: " evidence suggests that SMEs have a particularly low level of awareness and face special problems in terms of access to relevant information."

We have seen and heeded the reports which document that SMEs are lagging behind in addressing the Y2K problem, and we are focusing much of our outreach attention on SMEs, both here at home and internationally. And we are making the Department work together to get the job done. I can assure the Committee that all the appropriate agencies of the Department, including the International Trade Administration, the National Institute of Standards and Technology, the Economic Development Administration, the National Telecommunications and Information Administration, and the Minority Business Development Agency, are working closely together to plan and conduct our domestic and international outreach activities.

That means we are using 104 Export Assistance Centers, 162 Foreign Commercial Service posts and 48 Minority and Native American Business Development Centers and Minority Business Opportunity Committees to get the word out on Y2K. And we are using our regional desks in ITA's Market Access and Compliance unit to help spur global action.

In November 1998, we asked our U.S. and Foreign Commercial Service posts overseas to answer a series of questions relating to Y2K preparedness in their host countries. We have posted the information they provided on the International Trade Administration's home page (http://y2k.ita.doc.gov). These reports have reinforced our concern that small and medium-sized enterprises lag behind in addressing the Y2K problem. They have also strengthened our resolve to focus our outreach efforts on these types of organizations.

We have also prepared an informative and action-inducing fact sheet on the Y2K problem. It includes a self-assessment checklist. We have this fact sheet up on the International Trade Administration's web site, and we are also distributing it through our domestic and overseas U.S. and Foreign Commercial Offices and to 3,000 small and medium-sized enterprises in all industrial sectors in the United States. Mr. Chairman, I would ask your permission to enter a copy of this fact sheet into the record as part of my testimony.

The Commerce Department's National Institute of Standards and Technology's (NIST), through its work with the Manufacturing Extension Partnership (MEP) has developed a self assessment tool to help organizations evaluate their exposure to the Y2K problem and to devise contingency and remediation plans. The tool is available on the World Wide Web and provided on a CD-ROM. We have been distributing it through our centers throughout the country and have received very favorable reactions from those in small and medium-sized manufacturing businesses who have used this tool and found it both user-friendly and effective.

We have decided to use the CD-ROM-based self-assessment tool internationally and we are translating the tool and accompanying material, such as the user's manual, into seven additional languages. The CD-ROM will also include a ten-minute video featuring Secretary of Commerce William Daley and noted Y2K experts from around the world. The objectives of the video are to briefly describe the Y2K problem and its implications; to help companies assess their state of Y2K readiness; and to encourage contingency planning and remediation. The CD-ROM also has "hot links" via the Internet to other sources of assistance, including the software evaluation tools available from NIST on its web site.

In cooperation with the Department of State and the United States Information Agency, we will be distributing the CD-ROM through our embassies around the world. The target audience will be multiplier organizations, such as government agencies and trade associations, that can distribute the CD-ROM to small and medium-sized enterprises.

The Department has additional diagnostic tools available free from NIST's Information Technology Laboratory that go beyond planning to include evaluation of software programs for date dependencies. These tools can be downloaded from the NIST web site (http://www.nist.gov/y2k)

To further reach small businesses, the Department has worked in interagency collaboration with the Department of Agriculture and the Small Business Administration to develop seminars and workshops to train field staff personnel to address Y2K. This partnership also has set up a Y2K Help Center for Small Business at NIST, which is staffed by skilled analysts trained to assist small businesses with their Y2K project questions.

In yet another joint effort with the State Department, the Russian government, and the American Chamber of Commerce, we conducted a Y2K conference in Moscow last November. The positive reaction to that conference led us to plan similar events in other countries. In order to select other countries in which to hold these conferences, we conducted an analysis of our relationship with our trading partners in terms of bilateral trade volumes, foreign direct investment, strategic materials, petroleum imports, critical infrastructure and Y2K risk. Using this analysis, we have selected 14 countries as candidates for focused Y2K outreach efforts. In some cases, we will hold not only bilateral, but regional conferences to involve other nations that have not been targeted.

During his Business Development Mission to China at the end of this month, Secretary Daley plans to hold a Y2K Conference in Shanghai that will feature speakers from both the Chinese and U.S. sides who are successfully addressing the problem. The video and self-assessment tool that I described earlier will be available in English and Mandarin Chinese. It will be demonstrated as part of the presentations and distributed to the audience.

Other events are planned for the period ending May 31. For example, Deputy Secretary Mallett will discuss the Y2K issue and have the CD-ROM distributed to attendees at regional conferences in Botswana (April) and in Nigeria (May). Under Secretary Aaron will host a regional round-table in the Middle East during his trade mission to that area next month. We are also working to involve senior management from other agencies in such outreach during their official visits abroad.

As we approach January 1, 2000, contingency planning and operational continuity will become even more critical in efforts to address the Y2K problem. We are putting in place a structure at the Department that will receive calls for information and assistance and direct these callers to the most appropriate sources for help. We hope that our efforts will contribute to minimizing the negative effects of the Y2K problem on U.S. commercial interests and the business community.

The Y2K problem affects us all and a solution must involve us all, using each sector's particular strengths, leveraging and outreach capabilities.. Working together, the private sector and the public sector, through creative partnering activities, will, I am confident, be able to minimize Y2K problems and allow us to greet the new millennium with the enthusiasm the occasion deserves. We at the Department look forward to working with the Members of this Committee, and all the Congress, to ensure just that result.

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