ÿWPC* F4´)é´2z¯ˆ­­nsbÜ:@y,ð:+•f /ËôT!Íø¥PcðsÐéÇÊ2gtþ7XT¤i#¥?áò©†Ø1ß0¿X*‡™@Ï=^å¡Ÿ¨{ï k±«ÄìÁ^j_oQ«¬¥—’:ÍVõ>+‰«¯ùÀ>عá;uº[?ˆü~p1 ^ƒ7“F~ÑFê¢ÞstF­nx9ohçËDÙ]#âì±ÿÅFq6,>ç‡ ß «ã:ÁQ§‚9#·ozQÅ[=:1k(Æ"ÓÞÔ¡æºü“²X å»-Nº™¹<ïÏ„½‡}‘M>ý*„1Áf¶‰^­Ë2ë ª5à4ì4"‰¶ƒp‹WH\J­E‡Ê‘4¼°$ªK?·ÝG+Ó0™Fîä0 7]ù =G‰)èûú€¤û‰WšÄ]hÅ™Ý/I}Ÿa'Üþ_>÷_ÔÆà™<Ë&îc$¦Òdâel-õ1}”³ïC>ŠN®^ )SBô³"‡ÛZJ€¥%õ OÒ±áŽäàcßÄι›Æ ¥M %i$øê×5±kͤ j„Ï™ O` ‘}’¨š-wAëk_'öLe{l3Œ 8 uDjeûkÖd!1k§Š`PW# üUN %U 0([w@ƒ4Ã××U>æ$/, 0D[UNŸ#íb bb"˜HP LaserJet 4 Plus/4M PlusHPPCL5E,ä,,,,,ä0 (ÖÃ9 Z ‹6Times New Roman RegularX($¡¡ ŸD V¡~¢v£v¤D¥‹¦˧v¨DIƒ>"3|x¨<èÀ( 9Z &Courier Regular %Ý ƒ ¯)ÝÝ  ÝAppendix€I(3¯$©©Ý ƒ!ÝÝ  Ý(ÖÃ9 Z ‹6Times New Roman Regular Ñ € ÑÙ  Ù"ùII-"ù- ù"ù- ùÝ ƒ!ÝÝ  ÝñŸñ›Ô€ X|&XXXÔ›Ö€ ÿÿÖ›Ñ7€ÅKXXdìdÈ7ÑñŸññ§ññ£ñØ_Øñ£ññ§ññ£ñØØÙÙñ£ññ§ñØVØñ§ññ£ñÑ€Ññ£ññ£ñÑ7€u4XXdìdÈ7Ññ£ññ¢ññ£ññ¢ñØ_ØØØÙÙñ¢ññ£ñÔ€ Xu4XXXÔñ¢ññ£ññ¢ñ›ñ¢ññ£ññ¢ññ¢ñœñ¢ññ£ññ¢ñрћñ¢ññ£ññ¢ññ£ññ¢ñÑ7€E+XXdìXXdì7Ññ¢ññ£ñ›ñ¢ññ¥ñÑ  Ññ¥ññ¢ñà@èè%ìàÔ‡  )Í X Xu4Ôò òAPPENDIX€Ió óÔ#† Xu4X  )Í#ԈР° ÐÌÌà@„„ìàò òSUMMARY€OF€COMMENTS€ON€FOREIGN€POLICY€EXPORT€CONTROLSó óˆÐ ¼  ÐÌà  àIn€the€òòFederal€Registeróó€of€October€2,€1996€(Vol.€61€No.€192,€p.€51395),€the€DepartmentÐ ” ä Ðrequested€comments€from€the€public€on€existing€foreign€policy„based€controls€maintained€underÏSection€6€of€the€Act.€€In€the€notice,€the€Department€sought€comments€on€how€existing€foreignÏpolicy„based€controls€have€affected€exporters€and€the€overall€public.€€Specifically,€the€noticeÏinvited€public€comments€about€such€issues€as:€€the€effectiveness€of€controls€where€foreignÏavailability€exists;€whether€the€goals€of€the€controls€can€be€achieved€through€other€means€such€asÏnegotiations;€the€compatibility€of€the€overall€U.S.€policy€toward€the€country€in€question;€the€effectÏof€controls€on€U.S.€economic€performance€and;€the€enforceability€of€the€controls.€€TheÏDepartment€also€requested€comments€from€the€member€companies€of€its€Technical€AdvisoryÏCommittees(TACs)€and€the€President's€Export€Council€Subcommittee€on€Export€AdministrationÏ(PECSEA).ÌÌà  àThe€Department€received€nine€comments.€€All€are€available€for€review€in€the€DepartmentÏof€Commerce,€Bureau€of€Export€Administration.€€The€Department€has€included€some€of€theÏsubstantive€comments€under€the€"Consultation€with€Industry"€section€of€each€of€the€control€areasÏwhere€the€comments€were€specific€to€particular€controls.€€Three€members€of€the€PECSEA€Ïcommented€in€both€their€capacity€as€members€of€the€PECSEA€and€as€members€of€the€companiesÏthat€they€represent,€specifically,€Hardinge€Inc.,€International€Business€MachinesÏCorporation(IBM)€and€United€Technologies.€€Two€of€the€Department€of€Commerce's€TACsÏresponded:€the€Information€System€TAC€(ISTAC)€and€the€Regulatory€€Procedures€TACÏ(RPTAC).€€Three€other€companies€sent€comments:€Sun€Microsystems,€Inc.,€The€BoeingÏCompany,€Varian€Associates,€Inc.€and€an€association€representing€nuclear€energy€industries,Ïcalled€the€Nuclear€Energy€Institute.€€The€Department€attributes€each€comment€to€the€tradeÏassociation€or€manufacturer€providing€the€information.€€ÌÌà  àA€summary€of€the€major€issues€raised€in€the€public€submission€follows.€€Most€of€theÏcomments€fell€into€three€broad€areas:€unilateral€controls,€the€ð ðcatch„allðð€in€the€EnhancedÏProliferation€Control€Initiative€(EPCI),€and€the€ð ðunfair€impactðð€provision€of€the€proposed€ExportÏAdministration€Act€which€did€not€pass€the€104th€Congress.Ìñ¢ññ¥ññ¢ñœñ¢ññ¥ññ¢ñÌòòUnilateral€ControlsóóÐ <%Œ # ÐÌà  àUnited€Technologies€supported€a€recommendation€to€the€President€from€the€PresidentððsÏExport€Council€to€appoint€a€government„industry€panel€to€assess€the€current€status€of€allÏeconomic€sanctions,€particularly€those€that€are€unilateral,€and€recommend€policies€to€guide€the€useÏof€unilateral€controls€in€the€future.€€United€Technologies€felt€this€would€be€ð ða€much€moreÏmeaningful€exercise€than€the€current€annual€review€of€existing,€entrenched€foreign€policy€basedÏexport€œcontrols.ðð›Ð °+'* Ðœòòñ¤ññ ñÐ  ° Ðñ ññ¤ññ¢ñ›ñ¢ññ¨ññ¡ñÑ€ŠTÑñ¡ññ¨ñ›Ìóóà  àThe€RPTAC€also€supported€the€letter€that€the€Presidentððs€Export€Council€sent€to€theÐ œì ÐPresident.€€The€letter€discussed€the€adverse€effect€that€unilateral€sanctions€have€on€the€economicÏsecurity€of€our€nation.€€The€limited€purpose€of€distancing€the€United€States€from€abhorrent€acts€orÏactors€is€questionable€and€may€be€counterproductive€when€friendly€foreign€governments€openlyÏrefuse€to€follow€the€U.S.€lead€and€offer€competitive€products.€€The€ISTAC€said€it€was€difficult€toÏimagine€how€unilateral€controls€could€be€effective€for€commodities€for€which€the€United€States€isÏnot€the€sole€supplier.ÌÌà  àVarian€Associates,€Inc.€claimed€that€many€decisions€made€to€further€the€U.S.€foreignÏpolicy€goals€fail€to€balance€the€economic€impact€on€vital€American€industries.€€The€U.S.ÏœGovernment›€needs€to€work€harder€to€limit€its€own€use€of€foreign€policy€measures€which€areÏunilateral€in€nature.€€œIBM›€believes€that€this€discretionary€power€of€imposing€unilateral€controls€hasÏbeen€used€in€recent€years€as€the€ð ðweapon€of€first€resort,ðð€rather€than€as€the€last€resort.€€The€impactÏof€U.S.€foreign€policy€actions€against€other€countries€has,€therefore,€fallen€unfairly€on€AmericanÏexports€and€jobs.€€Under€the€old€œCOCOM€system,›€a€U.S.€veto€of€another€countryððs€exports€bothÏsafeguarded€U.S.€national€security€prerogatives€and€ensured€that€U.S.€producers€would€not€sufferÏa€competitive€disadvantage.€€As€the€Wassenaar€Arrangement€allows€no€similar€veto,€the€possibilityÏexists€that€the€United€States€will€resort€to€unilateral€controls€more€often.ÌÌà  àSun€Microsystems€was€concerned€that€the€United€States€is€considering€retaining€currentÏunilateral€controls€on€Eastern€European€countries€and€the€PRC€when€the€Wassenaar€ArrangementÏnational€security€controls€are€implemented.€€Unilateral€export€controls€are€generally€ineffective,Ïother€than€to€distance€the€United€States€from€an€offensive€nation.€€While€such€distancing€may€be€aÏlaudable€symbolic€goal,€it€seriously€undercuts€U.S.€competitiveness€and€imposes€a€substantialÏprice€in€terms€of€an€economic€drag€on€the€U.S.€economy.€€ÌÌà  àHardinge,€Inc.€gave€a€specific€example€of€being€hurt€by€unilateral€controls€when€ChengduÏAircraft€Industrial€Corporation€did€not€invite€any€American€machine€tool€builders€to€China€forÏtechnical€discussions.€€Hardinge€says€that€was€because€of€Chengduððs€difficulty€in€obtaining€exportÏlicenses€for€American€products€and€because€Chengdu€had€not€encountered€such€difficulties€withÏthe€Europeans€or€Japanese.€€Insistence€on€rigid€export€controls€for€items€beyond€the€nuclearÏcontrol€list€is€a€guarantee€that€U.S.€machine€tool€builders€will€suffer€unfair€competition€in€theÏworld€marketplace.€€Hardinge€has€simply€stopped€trying€to€sell€highly€accurate€machine€tools€toÏChinese€customers€because€numerous€past€license€rejections€has€shown€that€the€U.S.€GovernmentÏhas€no€intention€of€allowing€these€sales.€€Other€U.S.€machine€tool€builders€have€reached€the€sameÏconclusion.€€ÌÌòòñ¢ññ¦ñÔ& Ä Ôñ¦ññ¢ñEPCIóóÐ ¸'#& ÐÌà  àVarian€Associatesñ¢ññ¦ñÔ'ĸ'+Ôñ¦ññ¢ñ,€Inc.€said€that€the€ð ðcatch„allðð€provisions€of€the€Enhanced€ProliferationÏControl€Initiative€(EPCI)€€should€be€eliminated.€€The€only€items€which€should€be€controlled€areÏthose€which€have€been€multilaterally€agreed€to€by€one€of€the€four€export€control€regimes,€i.e.,€theÐ h+¸&* ÐWassenaar€Arrangement,€the€MTCR,€the€NSG€and€the€Australia€Group.€€Varian€œindicated€that€itÏhas›€lost€a€long„standing€customer€in€India€due€to€the€U.S.€Governmentððs€over„reachingÏinterpretation€of€the€EPCI€rules.€€U.S.€policy€makers€need€to€remember€that€by€denying€aÏparticular€export€to€a€U.S.€exporter,€it€is€often€not€just€a€single€sale€which€is€lost.€€Many€times,Ïthe€lost€opportunity€of€a€single€sale€permits€other€foreign€competitors€to€enter€a€market€whichÏwas€previously€closed€to€them.€€The€end€result€is€far€greater€than€the€loss€of€the€singleÏtransaction.ÌÌà  àSun€Microsystems€protested€that€they€have€had€particular€difficulty€in€complying€withÏEPCI€regulations,€especially€the€€so„called€ð ðcatch„allðð€controls€on€œthe€export›€œof€items›€otherwiseÏeligible€for€general€license€shipment.€€Providing€clean€economic€data€is€very€difficult€given€thatÏthese€rules€are€so€vague€and€the€standards€for€compliance€so€unclear.€€Sun€recommends€that€theseÏcatch„all€rules€be€abolished.€€Sun€has€asked€Commerce€for€guidance€and€help€from€time€to€timeÏand€received€very€little€helpful€guidance€in€response€to€these€requests.€€In€some€cases€Sun€wasÏinformed€not€to€make€sales€to€the€entities€in€question,€but€other€U.S.€competitors,€who€were€notÏso€informed,€sold€comparable€U.S.€products€to€the€same€entities.€€œSunððs€failure€to€sell€the€productÏto€the›€foreign€œcompany›€only€took€a€sale€away€from€Sun€and€gave€it€to€a€competitor€who€was€notÏas€diligent.€€In€another€case,€it€took€Sun€six€months€to€get€a€response€from€Commerce,€despiteÏrepeated€requests.ÌÌà  àThe€RPTAC€noted€that€in€1995€the€European€Community(EC)€acceded€to€a€U.S.Ïinitiative€to€adopt€a€catch„all€control€regulation;€yet,€the€majority€of€EC€countries€have€notÏimplemented€in€national€regulations€functional€ð ðcatch„allðð€controls.€€The€U.S.€regulations€andÏpractices€are€generally€broader€than€those€of€other€countries.ÌÌòòEAA€RenewalóóÐ Ð  ÐÌà  àIBM€was€pleased€to€see€an€ð ðUnfair€Impact€on€U.S.€Exportersðð€provision€in€the€mostÏrecent€attempts€of€the€Clinton€Administration€to€secure€a€reauthorization€of€the€ExportÏAdministration€Act.€€The€unfair€impact€provision€would€help€to€focus€the€attention€of€AmericanÏpolicy„makers€on€the€breakneck€speed€that€is€so€characteristic€of€the€computer€industry,€therebyÏhelping€to€ensure€that€U.S.€industry€remains€competitive€in€the€global€marketplace.€€However,Ïthis€version€of€a€new€EAA€œ(H.R.›€361)€was€not€passed€in€the€104th€Congress.ÌÌà  àHardinge€Associates,€Inc.€also€mention€the€ð ðunfair€impactðð€provision€and€œits›Ïdisappointment€that€œH.R.›€361€was€not€passed€by€this€Congress.€The€unfair€impact€provisionÏwould€have€provided€the€opportunity€for€relief€from€the€advantage€given€our€foreign€competitorsÏby€their€governmentsðð€lax€interpretation€of€international€export€control€regimes.€€HardingeÐ ,`'* Ðñ¢ññ¨ññ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ¨ññ¢ññ§ññ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ§ññ¢ñœindicated€that€it€recently›€lost€an€order€for€multiple€machines€because€a€German€competitionÏagreed€to€supply€a€Chinese€manufacturer€with€machines€well€in€excess€of€existing€accuracyÏñ¢ññ¦ññ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ¦ññ¢ñlimits.€€Hardinge€felt€compelled€to€offer€only€products€within€the€parameters€of€the€limits€of€theÏNuclear€Non„Proliferation€Controls.€€In€a€recent€Chinese€machine€tool€show,€this€sameÏñ¢ññ¦ññ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ¦ññ¢ñœcompetitor›€openly€displayed€and€offered€for€sale€machines€with€published€and€advertisedÏaccuracies€well€beyond€existing€control€limits.€€œHardinge€submitted€for€the€recors€photographs›€ofÏœthe›€competitorððs€display€ñ¢ññ¤ññ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ¤ññ¢ñand€copies€of€its€sales€brochures€œto›€the€Senate€Subcommittee€onÏInternational€Finance€at€its€July€31,€œ1996,›€hearing€on€HR€361,€the€Export€Administration€Act€ofÏ1996.€€Hardinge€recognizes€that€the€Nuclear€Non„Proliferation€controls€exclude€anyÏconsideration€of€foreign€œavailability›€but€continues€to€stress€the€unfair€disadvantage€caused€byÏunequal€enforcement€of€these€controls.€€Ìñ¢ñÑŠTÑÑ€ÑÙÙÑ  Ññ¢ññ¡ñœÑ_ãÑÙÙÑ  Ññ¡ñÌ