IP: Fact Sheet on Export Controls on High Performance Computers

[Dave Farber <farber () cis upenn edu>]

>                            THE WHITE HOUSE
>
>      Office of the Press Secretary
> ________________________________________________________________________
> For Immediate Release                                   January 10, 2001
>
>
>             EXPORT CONTROLS ON HIGH PERFORMANCE COMPUTERS
>
>
>
> The President today announced the sixth revision to U.S. export controls
> on high performance computers (HPC) since 1993.  The President's action
> will promote our national security, enhance the effectiveness of our
> export control system and ease unnecessary regulatory burdens on both
> government and industry.
>
> Review of Alternative Control Measures.  In 1995, the President
> announced a new policy for controlling the export of HPCs.  The new
> policy focused on two complementary objectives: (1) limiting the
> acquisition of computational capabilities by potential adversaries and
> countries of proliferation concern, and (2) ensuring that U.S. domestic
> industries supporting computing capabilities important for national
> security could compete in markets of limited security or proliferation
> risks.
>
> The new policy controlled hardware and software products and technology.
> The Administration recognized that the controls would need periodic
> adjustment to ensure effectiveness, given the ever-increasing
> availability of commodity products, such as workstations and servers, of
> which millions are manufactured and sold worldwide every year.  Until
> recently, the 1995 policy has been able to keep pace with this growth by
> adjusting hardware controls periodically to ensure that controls were
> only placed on computers that could be effectively controlled.  Control
> levels have been based on a metric of performance that was well suited
> to the computer architectures of the mid-1990's -- that is, measuring
> performance in millions of theoretical operations per second (MTOPS)
> through a fixed formula.
>
> In mid-1999, it became apparent that the growth in widely available
> computer hardware capabilities was outpacing the ability of export
> control policy to keep up.  President Clinton announced in July 1999
> that hardware controls would be adjusted more frequently and that the
> Administration would seek a more effective way to control the export of
> computational capabilities important for security and proliferation
> interests.  The review, which began in the fall of 1999 and involved all
> relevant security and nonproliferation agencies and private sector
> experts, sought to address the realities of the computer hardware
> market, including the continuing growth in single processor performance
> that can be aggregated relatively easily into multiple processor
> machines, and the advancements in interconnection capabilities that
> allow end-users to network large clusters of computers.  The latter
> element has, in particular, become the single most important challenge
> to the ability to effectively control computer hardware.
>
> The Administration has concluded that there are no meaningful or
> effective control measures for computer hardware that address the
> technological and marketplace challenges identified during the review.
> The review found that the ability to control the acquisition of
> computational capabilities by controlling computer hardware is becoming
> ineffective and will be increasingly so within a very short time.  This
> conclusion reflects our understanding of the level of hardware
> capabilities needed to address problems of national security and
> nonproliferation concern.  Nevertheless, the review did find that there
> is merit in continuing to control national security and
> proliferation-related software.
>
> Given these conclusions about the inability to effectively control
> computer hardware, the Administration would prefer to remove most
> controls on computer hardware exports, including the existing controls
> on exports to Tier 3 countries.  However, it recognizes that the new
> Administration needs an opportunity to examine such a proposal, and,
> that as a legal matter, the FY 1998 National Defense Authorization Act
> (NDAA ? P.L. 105-85) requires continued use of MTOPS to control computer
> exports to Tier 3 and Tier 4 destinations.  The President has decided,
> therefore, based on the advice of n7ational security agencies, to revise
> the current HPC control policy in the short term consistent with legal
> requirements, and at the same time to propose a longer term strategy for
> the consideration of the next Administration.
>
> The Revised Controls.  The Administration will change the four tiered
> country group structure created in 1995 to a three tiered system as
> follows:
>
> Tier 1 (encompassing Western Europe, Japan, Canada, Mexico, Australia,
> New Zealand, Hungary, Poland, the Czech Republic and Brazil) and what
> was formerly Tier 2 (South and Central America, South Korea, ASEAN,
> Slovenia and most of Africa) will be combined into a single Tier 1.
> Exports without an individual license will be permitted for all
> computers (i.e., there is no prior government review) destined for
> end-users/end-uses in this combined Tier 1.  Lithuania will be moved
> from Tier 3 to the new Tier 1.  P.L. 105-85 requires a 120-day
> congressional notification before this move becomes effective.
>
> Tier 3 (India, Pakistan, all Middle East/Maghreb, the former Soviet
> Union, China, Vietnam and Central Europe).  Based on President Clinton's
> August 2000 decision, effective February 26, 2001, exports will be
> permitted under general license up to 28,000 MTOPS and individual
> licenses are required for exports to all end-uses and end-users above
> that figure.
>
> The Administration will implement a new level, 85,000 MTOPS, above which
> individual licenses will be required for all end-users in Tier 3
> countries.  This new level will become effective at the same time as the
> new NDAA notification level.
>
> NDAA Notification.  P.L. 105-85 imposed a requirement for companies to
> provide the Commerce Department with prior notice of exports for systems
> above a certain level to all Tier 3 end-users.  U.S. export control
> agencies have 10 days to inform the company if it must apply for a
> license.  The President's August 2000 decision raised the NDAA
> notification level to 28,000 MTOPS; that decision will become effective
> on February 26, 2001.
>
> The NDAA notification level will be raised from 28,000 MTOPS to 85,000
> MTOPS.  The President will advise the appropriate Congressional
> committees of his decision to raise the NDAA notification level.  By
> law, Congress has sixty days to review this decision, after which the
> change will become effective.
>
> Tier 4 (Iraq, Iran, Libya, North Korea, Cuba, Sudan and Syria).  There
> are no planned changes for Tier 4 countries, current policies continue
> to apply (i.e., the United States will maintain a virtual embargo on
> computer hardware and technology exports to these destinations).
>
> For all these tiers, re-export and retransfer provisions continue to
> apply, and we will continue the policy of individual license review
> under the Enhanced Proliferation Control Initiative (EPCI), which
> provides authority for the government to block exports of computers of
> any level in cases involving exports to end-uses or end-users of
> proliferation concern or risks of diversion to proliferation activities
> (e.g., foreign nuclear weapons design laboratories).  Criminal and civil
> penalties apply to EPCI violators.
>
> The revised controls will become effective when they are implemented in
> formal Commerce Department regulations.  In addition, the Commerce
> Department will continue to review its list of published entities of
> concern as a means of informing exporters of potential proliferation and
> other security risks.  The Department will remind exporters of their
> duty to check suspicious circumstances and inquire about end-uses and
> end-users.  Exporters are advised to contact the Commerce Department if
> they have any concern with the identity or activities of the end-users,
> and the Department will work to expand its efforts -- through public
> seminars and consultations with companies -- to keep industry regularly
> informed regarding problem end-users and programs of proliferation
> concern.
>
> Enhanced Controls on Critical Applications Software.  In addition to
> these short term changes, the President has directed agencies to
> undertake a six-month effort to increase the awareness within industry
> and the government of the already strong export controls that exist on
> software for national security applications (e.g., codes for the design,
> development and operation of weapon systems), and to identify and invest
> in additional measures for the protection of critical national security
> software codes.
>
> Legislative Proposal.  Given the Administration's conclusions about the
> lack of controllability of computer hardware, the inadequacy of MTOPS as
> a control measure, and the lack of appropriate substitutes, the
> President also proposes that Congress repeal the provisions of P.L.
> 105-85 that require notification of certain proposed computer hardware
> exports, waiting periods for adjustments in controls and post-shipment
> visits.
>
> Multilateral Coordination.  The Administration has consulted with other
> nations, including members of the Wassenaar Arrangement, to ensure that
> they understand the basis for today's changes in controls.  We are
> committed to working closely with them to adjust multilateral controls
> to reflect technological advances and collective security concerns.  Our
> controls remain consistent with the purposes of the Wassenaar
> Arrangement -- to deny arms and sensitive dual-use technologies to
> countries of concern, and to develop mechanisms for information sharing
> among the partners as a way to harmonize our export control practices
> and policies.  The United States will also continue to implement
> reporting requirements on computer exports as appropriate to fulfill
> U.S. obligations under the Wassenaar Arrangement.



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