Where Industry and Security Intersect
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The United States maintains controls on high performance computers (HPCs) in recognition of the strategic and proliferation significance of HPCs, including software and technology. Such controls are adjusted from time to time to reflect advances in computer technology and expanding worldwide availability. The Export Administration Regulations (EAR) set forth special provisions for exports and reexports of HPCs and related software and technology controlled for “XP” reasons. “XP” controls supplement requirements that apply based on other control reasons. “XP” controls apply unless a License Exception is available, and vary according to destination, end-user, and end-use.
A license is required for “XP” reasons for exports and reexports of computers, including electronic assemblies and specially designed components, that have a composite theoretical performance (CTP) greater than 190,000 million theoretical operations per second (MTOPS) to “Tier III” countries. The Tier III countries are set forth in section 740.7(d) of the EAR. A license is also required for “XP” reasons for exports and reexports of computers having a CTP greater than 28,000 MTOPs to “Tier IV” countries. The Tier IV countries are Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. (See Chapters 4 and 5 of this report for additional foreign controls that apply to exports of computers to Tier IV countries.)
On January 14, 2003, the Department of Commerce amended the EAR to implement revisions that were agreed upon in the February 2002 meeting of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies (Wassenaar Arrangement). This rule removed license requirements for exports and reexports of general purpose microprocessors to most destinations to conform with changes in the List of Dual-Use Goods and Technologies maintained and agreed to by governments participating in the Wassenaar Arrangement. This rule retained license requirements for exports and reexports to designated terrorist-supporting countries. In addition, this rule established a new license requirement for the export or reexport of general purpose microprocessors if, at the time of the export or reexport, the exporter or reexporter knows, has reason to know, or is informed by the Bureau of Industry and Security (BIS) that the item will be or is intended to be used for a military end-use in a country that is of concern for national security reasons or by a military end-user in such a country.
Recognizing the strategic and proliferation significance of HPCs, the purpose of “XP” controls is to prevent the transfer or diversion of HPCs to end-users that may use the computers in an unauthorized manner, detrimental to U.S. foreign policy and national security interests.
1. Probability of Achieving the Intended Foreign Policy Purpose. The Secretary has determined that these controls are likely to achieve the intended foreign policy purpose, in light of other factors, including the availability from other countries and that the foreign policy purpose has been partially achieved through negotiations on export controls with the participating states of the Wassenaar Arrangement. The widespread availability of the components, technical know-how needed to build HPCs, and the speed with which the technology of these items improves, are challenges to achieving the control’s objectives. U.S. controls for HPCs are designed to permit the government to calibrate control levels and licensing conditions depending on the national security or proliferation risk posed by a specific destination, enhance U.S. national security, and preserve the technological lead of U.S. industry by ensuring that controls on computers are effective and do not unnecessarily impede legitimate computer exports.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives and will not have any significant adverse foreign policy consequences with the extension of these controls. The controls are consistent with the U.S. foreign policy goals of preventing U.S. exports that might contribute to destabilizing military capabilities and preventing the proliferation of weapons of mass destruction (WMD) and missiles. Since HPCs can be used in development of such weapons, U.S. export controls, in concert with those of our allies, permit denial of HPCs to potential proliferators. Extensive U.S. participation in various multilateral control groups, specifically the Wassenaar Arrangement, demonstrates the U.S. commitment in this regard.
3. Reaction of Other Countries. The Secretary has determined that any adverse reaction to these controls is not likely to render the controls ineffective nor will any adverse reaction by other countries be counter-productive to U.S. foreign policy interests. Since many of the countries that have the capacity to produce HPCs share U.S. opposition to the proliferation of WMD, there is a high degree of cooperation between the United States and its partners in multilateral export control regimes.
4. Economic Impact on U.S. Industry. The Secretary has determined that any adverse effect of these controls on the U.S. economy, including on the competitive position of the United States in the international economy, does not exceed the benefit to U.S. foreign policy objectives. Revisions to HPC control thresholds enable U.S. industry to remain competitive in the world market and ensure that U.S. national security interests are maintained by keeping sensitive computers under export controls. The current CTP level of 190,000 MTOPS reflects advances in computer technology, mass-market conditions, and increased foreign availability.
In FY 2003, the Department of Commerce did not approve any licenses for export of computers listed under Export Control Classification Number (ECCN) 4A003. Seven cases, valued at $397,680, were returned without action – mainly because a license was not required. There were no denials for exports of HPCs in FY 2003.
5. Effective Enforcement of Control. The Secretary has determined the U.S. Government has the ability to effectively enforce these controls. As long as HPC controls are imposed on the most advanced models, which are generally manufactured by a few companies and not in large supply, there are no particular enforcement concerns. However, if technology outpaces the control levels, it may become difficult to enforce controls on lower-level items that are manufactured for the mass market.
The Department of Commerce, through its Information Systems Technical Advisory Committee (ISTAC) and computer-related industry associations, holds ongoing discussions with the private sector on HPC controls. Industry has repeatedly urged that improvements in performance and the widespread ability to cluster uncontrolled, low-level computers to achieve high performance computing be taken into account in adjusting export control policy. The U.S. Government takes these factors into account when reviewing computer controls.
In an October 21, 2003, Federal Register notice, the Department of Commerce solicited comments from industry on the effectiveness of U.S. foreign policy-based export controls. Comments were solicited from all six of the Department’s TACs, which advise BIS, as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS webpage. The comment period closed on November 21, 2003, and eight comments were received.
Sun Microsystems submitted comments, some of which pertain to high performance computer controls. Sun recommended that the “scope of Tier III controls should be narrowed substantially in order to recognize the realities of the networked world and to discontinue the dangerous and counterproductive pretension that controlling commercial computing power will be either viable or effective in the coming years.” Sun further commented that Tier III countries should be those “identified in the CIA’s semiannual WMD report to Congress under Section 721 of the Intelligence Authorization Act for FY 1997” rather than the extensive list of countries currently included in Computer Tier III. Sun is concerned about the proposed regulation published by BIS in the Federal Register on October 24, 2003, to impose a cap of 150,000 MTOPS on transfers to countries and nationals outside the former Computer Tier I group and a cap of 75,000 MTOPS on Computer Tier III, as Sun contends that such action would basically reinstate the former Tier II type controls on technology. Sun feels the U.S. Government should shift its focus from performance metrics to accelerating the advantage the U.S. military already has in exploiting these technologies.
While none of its comments specifically addressed high performance computer controls, the Industry Coalition on Technology Transfer (ICOTT) provided general comments about all foreign policy-based export controls, stating that these controls are unilateral and largely ineffective. ICOTT recommended that unilateral controls should only be used when the symbolism of the act of imposing controls outweighs the injury to American workers and businesses. In addition, ICOTT suggested that if unilateral controls are to be imposed while the United States negotiates with its trading partners to seek multilateral support, those unilateral controls should be of limited duration. A detailed review of all comments received can be found in Appendix I.
The United States actively consults with allies, its Wassenaar Arrangement partners, and other potential supplier nations to ensure that they understand the basis for U.S. controls. The United States is working particularly closely with Japan in this regard.
The United States will continue to use diplomatic efforts to discourage other nations from acquiring HPCs for use in the WMD development and other uses that threaten U.S. interests. The United States also works closely with other supplier countries, most of whom are members of the Wassenaar Arrangement, to increase the effectiveness of multilateral controls. However, these efforts can only supplement, not replace, the effectiveness of actual export controls.
The key to effective HPC export controls is to set control levels just above the level of computer capability that end-users with security and proliferation risks can obtain from non-U.S. sources due to widespread availability. The ability of these end-users to achieve high performance computing capability by clustering together lower-level components is a factor in determining the appropriate control level. HPC control levels are intended to maintain realistic export control levels in this dynamic market. According to private sector forecasts, multi-processor systems may soon be available on a worldwide basis from foreign manufacturers, including configurations that exceed current U.S. computer control thresholds. In addition, the ability to cluster computers together using off-the-shelf components to achieve high performance computing power has become widespread. The U.S. Government’s ongoing consultations with its Wassenaar Arrangement partners reflect the U.S. Government’s efforts to obtain international cooperation in controlling foreign availability, as evidenced by the January 14, 2003, publication of an amendment to the EAR.
