Where Industry and Security Intersect
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The United States maintains controls on high performance computers (HPCs) in recognition of the strategic and proliferation significance of HPCs, including related software and technology. Such controls are adjusted from time to time to reflect advances in computer technology and expanding worldwide availability. The Export Administration Regulations (EAR) set forth special provisions for exports and reexports of HPCs and related software and technology controlled for “XP” reasons. “XP” controls supplement requirements that apply to the commodity based on other control reasons. “XP” controls apply unless a License Exception is available. XP controls vary according to destination, end-user, and end-use.
No licenses are required for “XP” reasons for exports or reexports to countries in “Tier I.” A license is required for “XP” reasons for exports and reexports of computers, including electronic assemblies and specially designed components, that have a composite theoretical performance (CTP) greater than 190,000 million theoretical operations per second (MTOPS) to “Tier III” countries. A list of countries in Tiers I and III is set forth in section 740.7 of the EAR. A license is also required for “XP” reasons for exports and reexports of computers having a CTP greater than 28,000 MTOPs to “Tier IV” countries. The Tier IV countries are Cuba, Iran, Libya, North Korea, Sudan, and Syria. In addition, there are controls on these countries that require licenses for exports of computer and related items below the 28,000 MTOPS level. (See Chapters 4 and 5 of this report for additional foreign policy controls that apply to exports of computers to Tier IV countries.)
Recognizing the strategic and proliferation significance of HPCs, the purpose of “XP” controls is to prevent the transfer or diversion of HPCs to end-users that may use the computers in an unauthorized manner detrimental to U.S. foreign policy and national security interests.
1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary has determined that these controls are likely to achieve the intended foreign policy purpose, notwithstanding other factors, including the availability of high performance computer items from other countries; and that the foreign policy purpose cannot fully be achieved through negotiations with the participating states of the Wassenaar Arrangement or through alternative means. The widespread availability of the components and of the technical know-how needed to build HPCs, and the speed with which the technology of these items improves, are challenges to achieving U.S. controls’ objectives. U.S. controls for HPCs 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 U.S. industry by ensuring that controls on computers are effective and do not unnecessarily impede legitimate computer exports.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives, and that the extension of these controls will not have any significant adverse foreign policy consequences. The controls are consistent with the U.S. foreign policy goals of preventing U.S. exports that might contribute to destabilizing military capabilities and preventing the proliferation of weapons of mass destruction (WMD) and missiles. Since HPCs can be used in development of such weapons, U.S. export controls, in concert with those of our allies, permit denial of HPCs to potential proliferators. Extensive U.S. participation in various multilateral control groups, specifically the Wassenaar Arrangement, demonstrates the U.S. commitment in this regard.
3. Reaction of Other Countries. The Secretary has determined that any adverse reaction to these controls is not likely to render the controls ineffective, nor will any adverse reaction by other countries be counter-productive to U.S. foreign policy interests. Since many of the countries that have the capacity to produce HPCs share U.S. opposition to the proliferation of WMD, there is a high degree of cooperation between the United States and its partners in multilateral export control regimes on the matter.
4. Economic Impact on U.S. Industry. The Secretary has determined that any adverse effect of these controls on the U.S. economy, including on the competitive position of the United States in the international economy, does not exceed the benefit to U.S. foreign policy objectives. Revisions to HPC control thresholds enable U.S. industry to remain competitive in the world market and ensure that U.S. national security interests are maintained by keeping sensitive computers under export controls. The current CTP level of 190,000 MTOPS reflects advances in computer technology, mass-market conditions, and increased foreign availability. The vast majority of computers may be exported from the United States without an export license.
In FY 2004, the Department of Commerce approved eight license applications for export of computers listed under Export Control Classification Number (ECCN) 4A003, with a total value of $39.3 million. Eleven cases, valued at $2.1 million, were returned without action – mainly because a license was not required. There were two denials for exports of 4A003 items (analog to digital converter boards) in FY 2004, with a value of $90,000. In FY 2004, the total export of all computers from the United States was worth approximately $40 billion. Those computers that require a license for “XP” reasons represented about .1 percent of that total, and those that were denied represented about .000025 percent of the total value.
5. Effective Enforcement of Controls. The Secretary has determined the U.S. Government has the ability to effectively enforce these controls. So long as HPC controls are imposed on the most advanced models, which are generally manufactured by a few companies and not in large supply, there are no particular enforcement concerns. However, if technology outpaces the control levels, it may become difficult to enforce controls on lower-level items that are manufactured for the mass market.
The Department of Commerce, through its Information Systems Technical Advisory Committee (ISTAC) and computer-related industry associations, holds ongoing discussions with the private sector on HPC controls. Industry has repeatedly urged that improvements in performance, and the widespread ability to cluster uncontrolled, low-level computers to achieve high performance computing, be taken into account in adjusting export control policy. The U.S. Government takes these factors into account when reviewing computer controls.
In a September 28, 2004, Federal Register notice, the Department of Commerce solicited comments from industry on the effectiveness of U.S. foreign policy-based export controls. Comments were solicited from all six of the Department’s Technical Advisory Committees (TACs), which advise the Department, as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS Web page. The comment period closed on November 19, and 12 comments were received.
While none of its comments specifically addressed high performance computer controls, the Industry Coalition on Technology Transfer (ICOTT) provided general comments about all foreign policy-based export controls, stating that these controls are unilateral and largely ineffective. ICOTT recommended that unilateral controls should only be used when the symbolism of the act of imposing controls outweighs the injury to American workers and businesses. In addition, ICOTT suggested that if unilateral controls are to be imposed while the United States negotiates with its trading partners to seek multilateral support, those unilateral controls should be of limited duration. A detailed review of all comments received can be found in Appendix I.
The United States actively consults with its allies, its Wassenaar Arrangement partners, 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 this regard.
The United States will continue to use diplomatic efforts to discourage other nations from acquiring HPCs for use in WMD development and other uses that threaten U.S. interests. The United States also works closely with other supplier countries, most of which are members of the Wassenaar Arrangement, 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 HPC export controls is to set control levels just above the level of computer capability that end-users with security and proliferation risks can obtain from non-U.S. sources due to widespread availability. The ability of these end-users to achieve high performance computing capability by clustering together lower-level components is a factor in determining the appropriate control level. HPC control levels are intended to maintain realistic export control levels in this dynamic market. 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. In addition, the ability to cluster computers together using off-the-shelf components to achieve high performance computing power has become widespread. The U.S. Government’s ongoing consultations with its Wassenaar Arrangement partners reflect the U.S. Government’s efforts to obtain international cooperation in controlling foreign availability.
