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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