60-Day Wait Stretches to More Than Eight Months Red Tape Snarls Seattle Exporter's Sale to China
By Stuart Auerbach, Staff Writer
The Washington Post
July 21, 1984
A Seattle businessman named Harry Rutstein shipped $100,000 worth of computer programming equipment last November to an exhibit in Peking where he hoped his products would be snapped up by Chinese eager for the high-tech products.
He was right. The Shanghai Radio Factory agreed to buy the equipment, which left the United States under an exhibition license that required it to be returned if not sold.
Rutstein said he was assured by U.S. officials that he could get the needed export sales licenses within 60 days. He was wrong.
The deal has not been consummated as the 60-day wait for an export license has stretched to more than eight months. The United States issued its license in five months, but insisted Rutstein also get approval from Cocom, the 15-nation Paris-based coordinating committee on strategic exports, where the application still languishes.
Rutstein can't understand why Cocom approval is needed, especially because his product was described in an unclassified cable from the U.S. Embassy in Peking as containing "no technological secret" and "similar to those made by dozens of companies, many in this area."
Moreover, Rutstein said licenses for items similar to his are approved within one week in Japan.
Rutstein's complaints "echo remarks made by so many other companies that have reported actual loss of business, contracts canceled, reputations in jeopardy and customers telling American firms, 'We like your product but if you won't ship it, we'll go elsewhere,' " said Ned Quistorff, a commercial attache' in the U.S. Embassy in Peking, in a four-page cable to Washington released recently by Rutstein.
Quistorff added that U.S. companies lost $40 million to $50 million in sales to China "due to licensing problems" during the first four months of the year.
As a result of a loosening of U.S. restrictions on the sale of high technology to China, Commerce Secretary Malcolm Baldrige predicted sales this year would total $2 billion.
But Rutstein, president of the Dorado Co., said in a letter to Rep. Don Bonker (D-Wash.) that "delays and uncertainties" in government licensing procedures "make the marketing in China for high-tech products . . . very frustrating."
"It does not seem realistic," he continued, "to approve a product for sale to China, which a license for an exhibition implies, and then take three months to a year to verify whether the end-user in China poses a national security risk. We must recognize that if a sale is made to a university, factory, commune or any other entity within the People's Republic of China, that sale is made to only one customer, the government of China."
Commerce, State and Defense Department officials in Washington disputed many of Rutstein's complaints, especially that the United States' allies are selling equipment to China that is similar to his without getting the time-consuming approval from Cocom. They agreed, however, that delays for licensing approval of longer than a year are not right and said the Reagan administration is streamlining procedures to speed up the process.