U.S. Mulls Easing 16-Bit Computer Export Controls

By Eduardo Lachica
The Wall Street Journal

August 13, 1987

WASHINGTON -- The U.S. is investigating whether the world-wide supply of foreign-made, 16-bit personal computers is large enough to justify easing U.S. controls on exports of such products to the Soviet bloc.

Reagan administration aides said the Commerce Department is undertaking the survey at the request of U.S. computer manufacturers, who complain that the wide availability of such products elsewhere has made U.S. controls meaningless.

"There's a consensus that the 16-bit technology has matured to the point that it may no longer be necessary to license them for world-wide distribution," said an official at the Pentagon, which has taken a tough stance against technology exports to the Soviet bloc.

The Computer and Business Equipment Manufacturers Association, a Washington-based industry group, said freeing 16-bit computers from such controls would give its members an "even playing field" in competing with foreign suppliers.

Currently, U.S.-made 16-bit computers such as International Business Machines Corp.'s XTs and Apple Computer Inc.'s Apple IIGSs can be exported in small quantities to the Soviet bloc, but the protracted U.S. licensing process penalizes U.S. suppliers. Japan and other allies have quicker licensing systems, while equivalent gear from Taiwan and Singapore is freely traded.

Commerce Department officials described the size of the Soviet personal computer market as modest, but said it could grow substantially if the country's leaders succeed in opening Soviet society to more-advanced communications systems.

U.S. traders describe 16-bit computers, which process 16 pieces of information at the same time, as an intermediate product between the earlier eight-bit models and the more advanced 32-bit units such as IBM's PC AT. In the U.S. market, 32-bit computers have displaced 16-bit machines as the biggest sellers, as more buyers opt for higher-powered machines. By the end of this year, more than two-thirds of all personal computers sold will be the more advanced, 32-bit variety, market analysts estimate. The 16-bit models, while still widely used in offices and homes, are no longer regarded as militarily valuable.

However, U.S. exporters still have to undergo license examination by both the Commerce Department and the Pentagon to ship these products to the Soviet bloc. If a shipment exceeds 10 units, the license has to be sent to Paris for approval by the Coordinating Committee on Multilateral Controls, or Cocom, the allied body monitoring trade with communist countries.

One proposal circulating within the Reagan administration is to require only a "general license" for these products, which in effect would do away with the licensing paper work.

A Commerce Department spokesman said the agency will publish its findings soon in the Federal Register. For the moment, though, its data are "too preliminary to discuss," he said.

The U.S. computer industry has also urged the Commerce Department to undertake similar investigations of the world supply of computer-aided design software, optical disks and advanced photocopying devices. U.S. suppliers have to go through licensing bottlenecks to fill Soviet-bloc orders, even though non-U.S. equivalents are widely available.

The Pentagon lately has supported easier controls on less-sophisticated computers in exchange for Cocom pledges to tighten vigilance on the distribution of more-sensitive products.

A U.S. decision to ease controls on 16-bit computers would almost certainly become Cocom policy. The Western European countries and Japan have urged such easing to help "streamline" Cocom regulations.