Where Industry and Security Intersect
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Adjusting export controls on high performance computers (HPCs) is a high priority for the United States as improvements in computer technology continue to enhance system performance. In an effort to avoid continuous review cycles to keep pace with rapid technology changes and in order to only capture computers of true significance to our national security, the Administration is currently studying alternative control metrics to Composite Theoretical Performance (CTP). Prior to completion of this study, the Administration is committed to reviewing control levels every six months to ensure that mass-marketed commodities are not subject to export controls.
Two major adjustments were made to HPC controls in FY 2000. The first changes to HPC controls was announced on February 1, 2000. The revised controls maintained the four country groups announced in 1995, but amended the countries in, and control levels for, the following country groups:
On February 16, the President sent a report to Congress justifying the changes to the Tier III country list and NDAA notification level. The Department of Commerce published a regulation in the Federal Register on March 10, 2000, implementing the new controls. As stipulated in the FY 1998 National Defense Authorization Act, the movement of Romania from Tier III to Tier II went into effect 120 days from the date the President's Report went to Congress (June 14) and the update of the NDAA notification level went into effect 180 days from the date the President's Report was delivered to Congress (August 14).
The second adjustment was announced on August 3, 2000. This revision:
Export of any computer to proliferation-related end users still requires a license. The President sent a report to Congress justifying the changes to the Tier III country group and NDAA notification level on August 31, 2000. The Department of Commerce published a regulation in the Federal Register on October 13, 2000, implementing the new controls. As stipulated in the FY 1998 National Defense Authorization Act, the movement of Estonia from Tier III to
Tier II is effective 120 days from the date the President's Report went to Congress (December 29, 2000) and the update of the NDAA notification level is effective 180 days from the date the President's Report was delivered to Congress (February 27, 2001).
The purpose of the high performance computer controls is to prevent the transfer or diversion of computers to end users who might make unauthorized use of such computers. The controls demonstrate the degree of U.S. concern over illegitimate access to such machines, and assist the United States in its efforts to obtain multilateral cooperation consistent with the HPC Agreement and our Wassenaar Arrangement obligations.
1. Probability of Achieving the Intended Foreign Policy Purpose. The widespread availability of the components and the technical know-how needed to build high performance computers and the speed with which the technology of these items improves are challenges to achieving the objectives of these controls. The United States' HPC export controls are designed to permit the government to calibrate control levels and licensing conditions depending on the national security or proliferation risk posed by a specific destination, enhance U.S. national security and preserve the technological lead of the U.S. computer industry by ensuring that controls on computer exports and reexports are effective and do not unnecessarily impede legitimate computer exports.
2. Compatibility with Foreign Policy Objectives. Preventing the proliferation of weapons of mass destruction and the means to deliver them is a fundamental goal of U.S. foreign policy. Since HPCs can be used in the development of weapons of mass destruction, our export controls, in concert with those of our allies, deny HPCs to potential proliferators and therefore are compatible with U.S. foreign policy objectives. Extensive U.S. participation in various multilateral control groups, specifically the Wassenaar Arrangement, demonstrates the United States' commitment in this regard.
3. Reaction of Other Countries. Since many of the countries that have the capacity to produce HPCs share U.S. opposition to the proliferation of weapons of mass destruction, there is a high degree of cooperation between the United States and its partners in multilateral export control regimes. Many of our allies share the belief that the CTP metric needs to be revised or replaced completely with a metric that more accurately represents a true performance measure.
4. Economic Impact on U.S. Industry. In FY 2000 the United States approved 247 licenses for high performance computers, valued at $259.6 million, and denied 5 license applications valued at $2.9 million. The Department of Commerce returned without action (RWA'd) 140 license applications, valued at $66.2 million. The regular revisions to the control thresholds ensure that U.S. industry remains competitive in the world market, yet our national security interests are maintained by keeping sensitive computer systems under export controls.
5. Enforcement of Control. As long as controls on high performance computers are imposed on the most advanced models that are expensive, manufactured by a limited number of companies, and not in large supply, there are no particular enforcement concerns. However, as technology outpaces the control levels, it becomes increasingly difficult to enforce controls on inexpensive computers or their building blocks that are manufactured by many suppliers or mass- marketed.
The Department of Commerce, through its Information Systems Technical Advisory Committee (ISTAC) and the President's Export Council Subcommittee on Export Administration (PECSEA), holds ongoing discussions with industry on high performance computer controls. Industry has repeatedly urged that improvements in performance be taken into account in adjusting computer export policy. In response to this urging, the Administration reviews computer controls every six months to ensure they reflect the current state of technology. Additionally, the Administration is working closely with industry on examining alternative metrics for controlling HPCs.
On November 6, 2000, the Department of Commerce, via the Federal Register and via BXA's webpage, solicited comments from industry on the effectiveness of foreign policy-based export controls. A more detailed review of the comments is available in Appendix I.
In a letter submitted to the Department of Commerce, Sun Microsystems criticized the performance-based controls on high performance computers, citing in particular the high cost industry pays to comply with controls on Tier II countries. Sun stated that these controls hinder the ability of U.S. companies to respond flexibly to changing market conditions: "While most Tier II licenses are ultimately approved, they are processed with full interagency reviews, long delays, and complex restrictive conditions on use. The controls ultimately affect the perception of the customer on the reliability of U.S. vendors as solutions providers..." Sun also raised concerns about the difficulty companies face in complying with EPCI controls in e-commerce transactions. Sun offered some possible solutions, including the creation of a de minimis dollar value for screening of low-level transactions.
The United States actively consults with allies and other potential supplier nations to ensure that they understand the basis for U.S. controls. The United States is working particularly closely with Japan. In Wassenaar, the United States proposed raising the decontrol level for HPCs to 28,000 MTOPS. The December 2000 Wassenaar plenary meeting adopted this proposal.
The United States will continue to use diplomatic efforts to discourage other nations from acquiring HPCs for the development of weapons of mass destruction and other uses that threaten U.S. interests. We will also work closely with other supplier countries to increase the effectiveness of multilateral controls. However, these efforts can only supplement, not replace, the effectiveness of actual export controls.
The key to effective export controls is to set control levels above the level of computer capability that end users with security and proliferation risks can obtain from non-U.S. sources as a result of widespread availability. The ongoing review of HPC policy control levels is intended to maintain realistic export control levels in this dynamic market. However, according to private sector forecasts, multi-processor systems may soon be available on a worldwide basis from foreign manufacturers, including configurations that exceed current U.S. computer control thresholds.