West Is Easing Policy on Sales To Soviet Bloc
By Clyde H. Farnsworth
The New York Times
February 15, 1988
The United States and allied governments are trying to make it easier for companies to sell nonmilitary goods to the Soviet bloc, reflecting the inexorable demand of industries for new markets and the swift global diffusion of technology.
The affected products range from technology used in making prune juice to moderately sophisticated computers. Sales of passenger jetliners to the East bloc also appear likely. [ Page D6. ] The Western governments are increasing the number of products and technologies that can be shipped, working to police more closely the fewer items that remain banned, trying to streamline export licensing by cutting red tape and processing time, and even publishing the once-secret lists of embargoed products. Computer Rules Relaxed
Personal computers of low sophistication introduced in the early 1980's -freely available in Hong Kong, Singapore and Malaysia, and even in such Communist countries as Hungary and East Germany - can now be sold to the Soviet Union without the need to seek an export license from the Coordinating Committee for Multilateral Export Controls, known as Cocom.
That 16-nation group is charged with keeping strategic technology out of Soviet hands. Later this year, it is expected to endorse favorable export consideration for computers that are 50 percent more powerful than those that currently qualify for such treatment, according to American and European officials. This would permit the Soviet Union to buy such machines as an I.B.M. mainframe 4341, a Motorola 68000 model and most 16-bit microprocessors, which can process 16 bits of information at once and are considered in the medium power range for personal computers.
Urinalysis and blood-analysis machines had been embargoed because they contain embedded microprocessors, which, the Pentagon had argued, could be modified for use in Soviet military equipment. Now such machines are off the list of prohibited trade items in recognition that these microprocessors are freely available at electronics stores like Radio Shack in the United States. Aircraft Sales Likely
Officials said Cocom is likely to permit passenger jetliners made by the Boeing Company, the McDonnell Douglas Corporation or Europe's Airbus Industrie consortium to be sold or leased to the East bloc for the first time.
''Prospects have arisen for the future sale of American commercial aircraft in three Eastern European countries - Poland, Hungary and Rumania,'' Rozanne L. Ridgway, Assistant Secretary of State for European and Canadian Affairs, said recently during Congressional testimony. ''But the realization of these prospects must await a review of the technology-transfer questions that clearly must be answered.''
Paul Freedenberg, Acting Under Secretary of Commerce for Export Administration, said that in this, as in all export-control cases, the advantages to Western businesses must be balanced against the implications of possibly leaking technology to the Soviet Union.
Mr. Freedenberg suggested in an interview that he favored Cocom approval of the aircraft sales. ''There are some technical questions that have to be sorted out, but they seem soluble,'' he said. ''Obviously the Soviets have jet aircraft.'' One of the questions is how to prevent the inertial guidance systems from falling into Soviet hands.
Cocom is under similar pressure from European as well as American telecommunications companies to permit the sale of advanced telecommunications equipment to improve civilian phone systems in Eastern Europe and the Soviet Union.
The French have already sold low-technology telecommunications equipment to the City of Leningrad, a Commerce official observed.
''At stake in the telecommunications area alone are orders that could run into the billions of dollars,'' said Jan Vanous, research director of PlanEcon Inc., a Washington-based consulting group that studies Eastern Europe and the Soviet Union. U.S. Policies Under Review
The United States maintains export controls that are even more rigorous than those of Cocom, a 49-year-old consultative body comprising the members of the North Atlantic Treaty Organization, except for Iceland, plus Japan.
But in a process started by the late Commerce Secretary Malcolm Baldrige and being furthered by his successor, C. William Verity Jr., both former corporate executives, the American procedures are slowly being simplified.
One innovation is a speeded-up computerized effort to process shipments to both Communist and non-Communist countries.
Another is a proposed change in American regulations that would permit transfer without an export license of technology of little strategic importance, such as procedures for making blue jeans or setting up a prune juice factory.
Changes at the Pentagon have helped this process along. Former Defense Secretary Caspar W. Weinberger and his principal export control deputy, Assistant Defense Secretary Richard N. Perle, were perceived in the bureaucracy as hard-liners opposed to any easing on grounds that the Soviet military would benefit.
Both have now left. The new Pentagon chief, Frank C. Carlucci, a former president of Sears World Trade Inc., is giving general support to the streamlining operation.
Pentagon officials joined those of State and Commerce to present a unified American position on these issues at a high-level Cocom meeting last month in Paris.
The 16 member Governments agreed to a two-tier effort to improve effectiveness. Their communique spoke of ''rationalizing'' the list, or raising the level of technology that could be exported, and then of ''concentrating on the control of those goods and technologies that are strategically significant.''
Many analysts said that it would have been more difficult to achieve such a conclusion if Mr. Weinberger and Mr. Perle were still in power. 'Wasting Taxpayers' Money'
''The United States is becoming more realistic,'' said Charlotte Le-Gates, communications director of the Computer and Business Equipment Manufacturers Association, which represents leading high-technology companies.
This country ''had been using manpower and money trying to protect secrets that are no longer secret,'' she said, adding, ''Trying to regulate clear down to prune juice was not only wasting taxpayers' money, but hurting our exports.''
The pressure for change was coming not only from the business community, but also from Congress and European governments.
The House trade bill, now in conference, contains a provision sponsored by Don Bonker, Democrat of Washington and chairman of a House foreign affairs subcommittee on international economic policy, calling for a 40 percent reduction in the items on the control list. House Democrats see the controls costing the United States billions of dollars in lost exports.
One of the most persistent European critics of Cocom is Hans-Dietrich Genscher, the West German Foreign Minister, who recently told the European Parliament in Strasbourg that its controls go ''beyond what is necessary.''
West Germany and most other European countries are eager to trade more with the Soviet bloc. Because of disarmament and other Russian initiatives, the Soviet leader Mikhail S. Gorbachev seems less adversarial than his predecessors. He has been seeking Western help to restructure the Soviet economy and provide more consumer goods, and many Western governments and companies want to respond. Fewer Items, Taller Fences
Officials use the metaphor of fences to describe what is going on in Cocom. In effect, it is building higher fences around fewer items.
This fence-building involves strengthened enforcement with stiffer penalties so that the fewer regulated items will be better monitored. The hope is to prevent illegal diversions of the magnitude of one reported last year. In that incident, Norway's Kongsberg Vaapenfabrikk and a subsidiary of the Toshiba Corporation of Japan sold the Soviet Union machines that reportedly allowed it to develop quieter propellers for Navy submarines.
Congressional reaction to that situation has been strong and at times emotional. Congress has already acted, for example, to ban sales of Toshiba products at American military PX's around the world.
But most analysts see the Toshiba-Kongsberg affair as an anomaly that should not interrupt Cocom's general streamlining process.
''The simple fact is that Cocom controls far too much and hasn't kept up with the pace of technological development,'' said Lionel H. Olmer, former Under Secretary of Commerce for International Trade Administration. ''The list has to become more dynamic.''
Copyright 1988 The New York Times Company