Confusion: Easing of export restrictions in question

Soviet Turmoil May Delay Sale of High-End Products

Holly Hubbard
Computer Reseller News

August 26, 1991

San Jose, Calif. -- Last week's failed attempt to overthrow Soviet president Mikhail Gorbachev could delay impending plans to remove remaining export restrictions on personal-computer hardware and software products in Russia, Eastern Europe and other markets.

Several U.S. government agencies were believed to be reconsidering the expected implementation of a COCOM-backed initiative that would lift licensing restrictions on a wide variety of computer and communications products. They include 486-based 33MHz PCs and minicomputers equivalent to IBM Corp.'s AS/400.

COCOM, the Coordination Committee on Multilateral Export Controls, is a 17-nation group that regulates the sales of high-technology products to the Soviet Union and Eastern Bloc countries. In April 1990, it was instrumental in deregulating the export restrictions on 286- and 386-based hardware equipment.

The pending deregulations, part of the COCOM Core List Initiative, were scheduled to go into effect on Sept. 1. But the coup attempt prompted some U.S. government agencies to reconsider, and a final decision is not expected from the U.S. government until this week.

The apprehension in government circles set off concern in the private sector.

"We're talking about literally billions of dollars of trade being tied up in this," said Bill Chastka, president of Alexandria, Va.-based Washington Resources International, which advises U.S. companies about computer export policies.

Chastka said the U.S. Department of Defense has already voted to postpone the initiative's implementation, while the Department of State and the National Security Council were undecided. Only the Department of Commerce was firmly behind the action, he added.

A Department of Commerce official, while admitting that a postponement "could stall U.S. {computer-industry} efforts" in the Soviet Union and Eastern Bloc, could not confirm an actual delay in implementation. A Department of State official had no comment.

Lydia McClure, manager of Export Administration and Licensing for AST Research Inc., Irvine, Calif., also said there could be a delay in implementing the new regulations.

"The perception of a bureaucratic delay hanging over our head could cause a foreign company to choose an alternative {hardware} source," McClure said. She added that manufacturers from countries without similar restrictions could more easily move into the Soviet computer market.

Despite the uncertainty over the pending export regulations, U.S. industry executives expressed optimism last week about the outcome of events in the Soviet Union.

"The coup is going to create a better business environment faster," said Jane Kitson, Lotus Development Corp.'s business development manager for the U.S.S.R.

Duane Hall, vice president and managing director of MicroAge International, based in Tempe, Ariz., said, "From a commercial standpoint, this could put a bit of a wrinkle in getting our day-to-day business done, but our centers are open and doing business."

MicroAge, working through a joint venture, currently operates three centers in the Soviet Union.

A former Soviet emigre who is currently a ComputerLand Corp. franchisee, Michael Tseytin, said that last week's failed coup attempt could actually push the Soviet Union's privatization process along even faster. Tseytin owns three ComputerLand outlets in the Soviet Union. "If anything, I think the coup could increase our business," he said.

Copyright 1991 CMP Publications, Inc. All rights reserved.