Clinton Dramatically Raises Export Standard for Supers

HPC Select News

September 29, 1993

Washington, D.C. -- Industry leaders Wednesday praised the Clinton administration's decision to ease regulations on the export of high-performance computer systems.

The decision will immediately lift restrictions on the export of computer systems with a composite theoretical performance (CTP) of 194 million theoretical operations per seconds (MTOPS) or less -- with a concurrent proposal to COCOM to raise the level to 500 MTOPS -- and will change the current definition of a "supercomputer" to include systems with a CTP of 2,000 MTOPS or more.

Previously, the Commerce Department restricted the export of systems with a CTP of 12.5 MTOPS or less, and defined a "supercomputer" as a system with performance of at least 195 MTOPS.

Both MTOPS numbers are precisely the levels that industry lobbyists had sought throughout six weeks of meetings with administration officials, including Commerce Secretary Ron Brown and Clinton himself.

"President Clinton hit a home run today," said Robert B. Palmer, president and CEO of Digital Equipment Corp. "This most dramatic change would not have occurred without the direct involvement of President Clinton and his cabinet.

"This Administration deserves tremendous credit for listening to industry needs and truly finding the right balance between U.S. economic security and military security in determining export policy," said Palmer, who appeared at a White House press conference with President Clinton as the administration unveiled its new National Export Strategy.

The new policy is expected to immediately free some $24 billion in computer exports from licensing requirements, with the possibility of an additional $6 billion in unrestricted sales after consultation with U.S. allies.

Currently, only computers possessing the equivalent power of an Intel 486 microprocessor running at 33 megahertz -- a machine that a serious amateur might pick up for home use for roughly $1,000 -- may be sold without an export license.

The new policy ultimately would raise the ceiling to permit sale without license of equipment 40 times that powerful.

"We must do all we can to encourage and facilitate U.S. sales of technology products in foreign markets," said Robert C. DeHaven of Quality Systems Inc., who serves as vice chairman of the American Electronics Association (AEA). "This shows that the Clinton Administration takes economic security as seriously as national security. Exports, which now account for about 25 percent of U.S. electronics production, have enormous potential for growth."

Clinton's decision to ease the controls followed weeks of highly organized lobbying by U.S. business, which got much of what it wanted.

"Everyone was in there," said Kenneth D. Brody, chairman of the Export-Import Bank, who headed the day-to-day work of the panel that wrote the new policy. "The Chamber of Commerce, the National Association of Manufacturers, all the major associations and lots of individual companies -- all across the board," he told the Associated Press.

Ed McCracken, chairman of Silicon Graphics, mentioned the industry's needs during a luncheon with Clinton earlier this month -- prompting the president to dash off a note to aides directing them to be more bold in lifting the restrictions.

"That was very important, when the president personally intervened," an industry official who followed the deliberations closely told AP.

The Computer Systems Policy Project, an alliance of 13 major U.S. computer companies, brought a steady stream of CEOs to Washington over the past six weeks to lobby administration policy-makers.

The group was worried the administration would simply urge long-term reforms in export policy but do nothing to address the imbalance between Cold War standards and rapidly developing new technology. So it set out to convey a sense of crisis to the administration.

Tens of thousands of new advanced computers will be shipped later this year, and the Commerce Department would be flooded with export license applications if it did not act, CSPP lobbyist Kenneth Kay told AP. "We said, 'Here's what we need before the fourth quarter"' of this year.

CSPP was formed in 1989 to develop and advocate industry positions on trade and technology policy issues. CSPP members include the chief executives of Apple, AT&T, Compaq, Control Data Systems, Cray Research, Data General, Digital Equipment Corporation, Hewlett-Packard, IBM, Silicon Graphics, Sun Microsystems, Tandem and Unisys.

"The new proposed control levels will allow compete on even ground in the worldwide market," Palmer noted. "Global competitiveness and administrative costs are directly linked to Digital's ability to positively contribute to the growth and prosperity of the communities in which we operate."

Scott McNealy, president and CEO of Sun Microsystems, encouraged the President to continue the dialogue with industry to ensure that public policy keeps pace with the rapid pace of technological innovation.

"To continue to be competitive today, U.S. computer companies must grow in global markets or die," McNealy said. "By easing export restrictions on computers already widely available from other sources outside the United States, the Clinton administration has taken a bold step to bolster our high-tech exports.

"Foreign markets are a key factor in the future success of this industry," McNealy said. "More than 60 percent of U.S. computer companies' revenues are derived from sources outside the United States. Exports enable innovative American companies to enter new markets and continue to be competitive in existing markets. Each billion-dollar increase in merchandise exports from the U.S. means more than 19,000 new high-tech, higher-wage jobs."

The AEA took the opportunity to note other areas in which regulations could be developed to aid the computer industry:

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