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On The Export Front, The Cold War Still Rages


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ON THE EXPORT FRONT, THE COLD WAR STILL RAGES

In a move designed to cheer its high-tech corporate supporters, the Clinton Administration is readying proposals to ease restraints on a wide range of computer exports. The Commerce Dept. is likely to reveal its plans to relax controls on Sept. 30, as part of a long-awaited package of export-promotion reforms. Later this fall, the government may adopt a narrower definition of supercomputers--now the subject of stringent export licenses.

Welcome as such steps are, they don't go far enough. Computer makers are preparing powerful new products that will still be subject to the worst of the export red tape. And despite the end of the cold war, the rule changes initially would apply only to sales to allies.

High-tech executives want the Administration to go further. At stake, says J. David Richardson, a fellow at the Institute for International Economics, is $30 billion in exports that U.S. companies lose annually due to the restrictions. "We're still operating with a cold war mentality," says Richardson.

LITTLE RELIEF. Still, companies from California's Silicon Valley to Boston's Route 128 corridor are glad to see any movement by Washington. The Administration plans to liberalize export controls on computers that perform up to 110 million theoretical operations a second (MTOPS). That would end licensing provisions that have blocked exports of popular products such as Silicon Graphics Inc.'s Indigo workstations.

But the rollback of restrictions won't help for long. "By the end of '94, our products will exceed that limit," says Michael H. Morris, a vice-president at workstation maker Sun Microsystems Inc. And the new rules would provide no quick relief for companies that want to sell to the booming markets in China and the former Soviet Union. Those exports are governed by the 17-nation Coordinating Committee on Multilateral Export Controls (COCOM), which restricts shipments of civilian goods that can be diverted for military purposes. After relaxing the rules on sales to allies, which the Administration can do unilaterally, it plans to seek changes in COCOM's regulations.

That may be tough. European members, led by Germany, want the U.S. to ease restrictions on advanced telecommunications gear in exchange for relaxing computer curbs. But U.S. security agencies have fought such a deal because looser controls on fiber-optic-transmission equipment would hinder their ability to eavesdrop. For similar reasons, the agencies are against easing controls on encryption software (page 43).

It's up to President Clinton to break the bureaucratic impasse and push more sweeping export-control revisions. He can start by overruling the spy agencies' objections to liberalizing the sale of fiber-optic lines. The rapid spread of technology is making most of the restrictions academic. Computers that surpass the 110-MTOPS level are readily available in Taiwan and South Korea, which aren't members of COCOM. China already has facilities capable of producing fiber-optic gear.

BAD GUYS? The U.S. could also push hard to draw Taiwan, the former Soviet republics, and other developing nations into weapons and high-tech export-control clubs. Washington could entice them with trade concessions or other benefits.

Enlarging COCOM while scrapping its traditional East-West focus will be tricky. The U.S. and its allies don't always agree on who the bad guys are. Right now, for example, the U.S., Europe, and Japan are at odds over how much to restrict trade with Iran. Such differences can probably be overcome, but that will require more political initiative than the Administration has mustered so far. And unless Washington moves quickly to resolve the squabbles, its ballyhooed campaign to beef up export promotion won't live up to its billing.Amy Borrus


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