Commerce Dept. Will Strengthen Monitoring of Computer Exports

By Paul Mann
Aviation Week & Space Technology

January 21, 1985

Washington -- Ambiguous language in last summer's Western alliance accord on computer exports to the Soviet bloc means the U. S. will have to strengthen its monitoring of the allies' compliance to forestall them circumventing the accord, to the detriment of U. S. trade, according to Commerce Dept. officials.

They acknowledge the concern of U. S. computer industry officials that the complex language of the accord, which came into force Jan. 1, may hamper uniform interpretation by the 15 signatory nations. That could open the way for selective application and compound an old problem that U. S. industry has objected to for years: that because the U. S. government interprets multilateral controls more strictly than the allies do, U. S. industry suffers more restraints than Europe's and Japan's.

Commerce officials said they would guard against this by intensifying scrutiny of national shipping reports filed with CoCom, the informal Coordinating Committee headquartered in Paris that monitors the military security implications of many kinds of Western goods exported to the Soviet Union and its client states. The computer accord was formulated under CoCom auspices.

Monthly Reports

William T. Archey, acting assistant secretary of Commerce for trade administration, said: ''We're going to be able to get fairly quickly each month reporting on shipments and a fairly good sense of whether or not the other countries are or are not interpreting more broadly than we are. It takes four to eight months to adjust to a new agreement and how it's going to work. We're not going to sit back if our allies are interpreting it much more broadly than we are, because that would disadvantage U. S. companies considerably and we don't want that to happen.''

John K. Boidock, head of the Commerce Dept.'s Office of Export Administration, said that in coming months the department will publish interpretive notes to clarify the text of the computer accord. But he said problems and unintended effects ''won't come to light until export license applications are filed.'' Notes will be furnished to industry ''as we gain experience and understanding ourselves about where the discrepancies exist. This computer control program is so complicated it's going to demand a pretty rigorous program of publishing interpretations,'' Boidock said.

A U. S. industry official familiar with the technical language that grew out of last summer's policy accord said computer export controls would be stricter than portrayed by Defense Dept. officials who briefed the press on the broad outlines of the agreement last summer (AW&ST July 23, 1984, p. 21).

Technical guidelines ''are much stricter than we thought in the preciseness of their application to the pieces, parts and elements of computer systems,'' he said. ''The controls in effect as of Jan. 1 are in many ways unilateral because of our unilateral interpretation of them.''

Ambiguities Noted

Commerce Dept. officials acknowledge ambiguities. Dan Hoydysh, director for scientific and electronic equipment in the department's Office of Export Administration, said: ''As a general proposition there is much more subjectivity, much more interpretation in this control than in the previous one, because we have introduced concepts like 'ruggedized,' like user-programmable, which have definitions in words, not in numbers. One of the best examples is the definition of embedded, in the decontrol of embedded computers. The definition of embedded is vague. It's not clear how to interpret it in the current business practice. One interpretation could leave the embedded decontrol an empty box because industry simply doesn't build things the way the embedded definition seems to be going,'' Hoydysh said. ''It's clear we will have to get back to CoCom'' and pursue harmonized interpretations of unclear clauses and definitions, he said. ''Otherwise it could undermine the purpose of the agreement.''

The new controls, published Dec. 31 in the Federal Register, embrace three entries in the department's Commodity Control List (CCL), with software and telecommunications switching broken out into separate entries. The same entries appear in CoCom's International List (IL). They are:

1565A: Hardware--This includes computers and related equipment. Analog, digital and hybrid computers are covered and are defined in the regulations. This entry also covers explicitly for the first time computers contained in other equipment. Category 1565A regulates peripherals and related equipment used hand in hand with computers, as well as technical data for the design, development, manufacture or use of computers and peripherals. Computerized instruments, formerly entry 4529B, fall in 1565A.
1566A: Software--This entry shifts export control from a unilateral U. S. control over all software to a multilateral control over some software. Controlled software will be listed in this entry and ''if it's not in there, it's not controlled,'' Hoydysh said. There are exceptions, however. ''If it's specific software for semiconductor manufacturing or design, it might be listed on 1355, or if it's software for numerical control machine tools, it might be listed under 1091. The CoCom scheme is that software, if it's controlled, is going to be on the CCL or on the International List. Otherwise it's not controlled, as far as CoCom is concerned.'' Hoydysh said discussions with Defense Dept. officials and others had led to a general feeling that ''the vast bulk of software is not controlled.'' To an extent still uncertain, however, the licensing burden on U. S. software exports to the West may increase. Where previously, written assurances were required for some kinds of software, validated licenses henceforth may be required, although not at low levels of sophistication.
1567A: Telecommunications switching--In this entry, CoCom placed a ban on all exports to the Soviet bloc. This became effective immediately last summer to head off pending sales the U. S. regarded as dangerous to the CoCom nations' military security.

The CoCom accord contains three standards of ruggedization for establishing treatment of given exports. They are:

Computers ruggedized to military specifications.
Computers ruggedized above a commercial office environment.
Computers ruggedized above a commercial civil environment.

MIL-SPEC ruggedization is well defined and computers so ruggedized are unlikely to receive CoCom approval. The two commercial environments lack clear definition, Hoydysh said. ''We are working with the Defense Dept. to come up with a better definition.''

Generally, the new CoCom formulas put fewer restraints on mainframe and personal computer exports but more restrictions on super minicomputers and software. Commerce officials cautioned, however, that licensing treatment will have to be determined case by case because of numerous qualifications that may apply to a given computer category.

For example, low-level computers with data processing rates of 5-15 million bits per second will be licensed for export to the East at national discretion--meaning no prior multilateral review will be required--with monthly national reports to CoCom on what has been sold. But when asked if computers in this category would be free to go under U. S. interpretation of the rules, Archey demurred.

''Your question is too broad,'' he said, ''because you've got to look into these cases--at models. Is it ruggedized? Does it have a hard disk? What is the nature of the peripheral? No one here can give you an answer that says between 5 and 15 we're going to interpret it XYZ. You've got to deal with it on a case basis; you can't get into generic descriptions.''

Some Commerce officials disagree with the Defense Dept.'s portrayal last summer of what some facets of the agreement were. One said, for example, that ''there is no such thing as the red line'' and ''the red line was explicitly rejected in the negotiations by CoCom.''

The red line was used by Defense Dept. officials to refer to the 48-million processing data rate threshold beyond which mainframes effectively were banned from CoCom export to the Soviet bloc. Commerce Dept. officials agreed that in practical terms such a threshold exists, but asserted that the red line concept was rejected. They characterized the threshold as ''a de facto informal threshold that touches off intensified scrutiny,'' rather than as a trigger to ban outright a computer export of that capability or higher. In CoCom parlance, computers in the 48-million-or-above data processing rate category would be treated as a general exceptions request. Because of this, all 15 member countries must agree to the license application and any member may veto it.

Commerce officials backed the Pentagon view that mainframes in the 28-48-million category will remain subject to CoCom's 30-day prior review but be treated with favorable predisposition to export if the Communist purchaser is deemed proper. According to the Defense Dept., exports in this category cannot go forward if any CoCom nation objects, but Commerce officials were less certain.

''It is not clear to me on what grounds one can object, and whether the objection becomes an automatic veto,'' Hoydysh said.

Archey said he believed, based on past experience, that an objection raised on an export in this category would proceed from an allegation that the proposed end-user was in fact military, not civilian.

''I think that clearly we would still use that as a criterion,'' Archey said. ''I think Dan is correct, it's somewhat ambiguous whether a country can oppose it. It does not have the same veto authority per se that a general exceptions request has, but there have been instances in the last year when there was favorable consideration, even national discretion, where the U. S. was able to demonstrate to another CoCom country that the end-user was actually military.

''Under CoCom rules, even if it's a national discretion, if the end-user isn't pure civilian, then you're not supposed to sell. So I think we would elect to make the same arguments here.''