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How far should US go to regulate its technology exports?

The United States may have become its own worst enemy in trying too hard to protect its lead over the Soviet Union in sophisticated weapons technology. High-technology industry officials warn that American's current system of controlling exports may ultimately make it easier for the Soviets to acquire a broad range of strategic technologies -- advanced electronics, computers, communications equipment, machine tools, production equipment -- in an effort to upgrade their industrial base and the performance of their most sophisticated weapons.

At the same time it is dealing a significant blow to the competitiveness of US high-technology companies in overseas markets, industry officials say.

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"The way we presently administer our system of export controls on high technology may ultimately hurt our own national security more than it hurts the communists," says Donald Weadon, a Washington lawyer who specializes in export control matters.

In trying to regulate too much, the US is less able to protect effectively those technologies that are critical to US national security, say members of the Industry Coalition on Technology Transfer (ICTT), an ad hoc group of seven trade associations representing mor than 3,000 US companies.

They add that the resulting overregulation may ultimately threaten American's ability to maintain a thriving private-sector research-and-development effort, which until now has ensured American preeminence in high technology.

American industry officials say the US should focus its atention on controlling a much shorter list of truly "critical" goods and technologies.

The comments come as policymakers in Washington and industry officials are grappling with the issue of how best to prevent strategic US high technology from finding its way into advanced Soviet weapons suystems. A House-Senate conference committee is currently working to iron out a joint version of the Export Administration Act.

The act controls US exports of goods and technoloies that would make a "significant military contribution" to the Soviets or other potential US adversaries.

The difficulty is that as the Defense Department incorporates a widervariety of technologies into its weapons systems and combat tactics, the distinction between military and civilian technologies blurs. The list of restrictd goods is growing longer and the controls on those goods in general are becoming broader.

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"The wave of technological change is outstripping our ability to regulate it, and so we are trying to regulate everything," says Mr. Weadon.

The is virtual unanimity in the business community and throughout government that export controls are proper and necessary on state-of-the-art and emerging technologies, as well as on "truly critical" technologies in US weapons systems.

Part of the problem is that US weapons systems re not all comprised of state-of-the-art technology. Ajnd sometimes that same technology is already widely available to the Soviets on international markets from foreign suppliers.

Business officials companin that the control process is hurting US high-tech companies in overseas markets, where they are competing against Japanese, West German, French, and other companies that are not subject to such a broad array of national-security and foreign-policy restrictions on their exports. International sales account for as much as 300 to 40 percent of total sales revenues for some US high-tech firms, businessmen point out.

According to Commerce Department officials, 10 years ago US companies were on the cutting edge of 70 percent of the world's technologies. Today the US position has dropped to 50 percent and is projected to drop to as low as 30 percent by 1994.

"The US is not the only kid on theblock these days. We don't have a monopoly on all this stuff," says Thomas Christiansen of the ICTT.

The issue poses a dilemma for Congress, which must strike a balance between national-security concerns and concerns about the dertrimental effects of controls on US high-tech export sales.

Such sales will ultimately affect the health of the American economy. Every according to US government estimates.

Pentagon officials maintain that the United States faces a more serious threat from a Soviet Union made militarily strong with the help of Western technology that from any economic impact from export inconveniences to the business community. Defense officials say that much of the inconvenience can be overcome by automating and streamlining the export-control process.

Of the 102,000 requests from US businesses in 1983 for special permission to export an item listed on the Commodity Control List, approximately 1 percent (1, 254 applications) was rejected for national-security reasons, according to Commerce Department statistics. The rest -- 101,000 individual exports -- were approved.

Some observers point to this as an example of how the export control system is working.

They say it shows that too many items are on the list. In 1984, Commerce Department officials saylthey expect to receive about 140,000 rquests for special permission to export.

Business executives note that it can take from a few weeks to several months for a single license request to clear th export control bureaucracies at the Commerce and Defense Departments.

Even if the license is eventually approved, competing companies in Europe and Asia, hungry for business, can guarantee faster delivery.

As a result, US firms gain a reputation as unreliable suppliers, business executives say.

"If US companies are to remain the world's leaders, then they must have the same access to foreign markets that our competitiors have," Sen. Lloyd Bentsen (D) of Texas told his Senate collegues March 1.

Senator Bentsen characterizes the export-control issue as a basic conflict between "the need to restrict the outflow of strategic technology to our enemies vs. the need to sell products of that technology to fund further research and development."

Sen. Jesse Helms (R) of North Carolina sees it differently.

"It is a historical fact that the transfer of Western goods and technology has created a Frankenstein monster which threatens peace and civilization throughout the world," he sid in a Feb. 29 speech on the Senate floor. "It is high time that all of us in the West realize tht export control is a form of arms control."

By all accounts the Soviet assault on Western high technology has been massive, well coordinated, and -- from the Soviet point of view -- highly successful.

"We are absolutely convinced that Western technology is tremendously important to the Soviets," says Dr. Stephen D. Bryen, deputy assistant secretary for international economics, trade, and security policy at the Pentagon.

"Without this constrant infusion of Western technology they would fall behind in their military development.

"Without Western technology they would not be able to field sophisticated weapons systems," he addes.

According to reports issued by the Defense Department and the Central Intelligence Agency, the Soviets are using Western technology to help whittle away at American's lead in sophisticated weapons.

In global strategic terms, the US counts heavily on its qualitative advantage over the Soviets in wepons systems.

This is because in a conventional war, defense experts expect US and allied troops would be significantly outnumbered by Soviet troops.

In the critical area of microelectronics the Soviets have drawn to within three to five years of American capabilities, Dr. Bryen estimates. "When that is translated into military field systems, it may be closer than that." He adds, "That is the risk."

In the past decade, many of the Soviet Union's major technological advances in weapons systems have accrued not onlylfrom Soviet research facilities but brom high technology developed in laboratories and on proving groungs in the US, according to Defense Department officials.

"The Soviet SA-7 heat-seeking, shoulder-fired antiaircraft missile contains many features of the US Redeye missile," according to 1982 CIA report. (A Soviet-suppliet SA-7 is thought to have been the type of missile that shot down US Navy pilot Robert Goodman over Lebanon last year.)

"The Soviets are taking full advntage of opportunities afforded to acquire Western science and technology to strengthen both their military power and military-industrial base," says a Pentagon assessment issued in early April.

In some cases, according to CIA Director William Casey, such acquistions have enabled the Soviets to incorporate new Western-developed technologies nd countermeasures into their weapons even before the technology has been installed in US weapons systems.

"Our taxpayers are in effect subsidizing the modernization of the Soviet military machine," says Sen. William Proximire (D) of Wisconsin.

According to the Federal Bureau of Investigation, the Soviets maintain a detailed "shopping list" of key Western technologies needed by Soviet scientists and technicians to satisfy specific aspects of the USSR's military and industrial development plans.

Miles Costick, a Defense Department consultant and former Yugoslavian intelligence officer, says the Soviets run a technology clearinghouse in Moscow staffed by 20,000 scientists and technicians.

He adds that the Soviets operate 18 pilot plants "where they try to develop productions models from stolen Western technology."

The Soviets areprimarily interested in obtaining advaced electronics, computers, and production and manufacturing equipment, according to the Defense Department.

EXAMPLES of Soviet interest in Western technology include:

* More than one-thrid of all known Soviet integrated circuits have been copied form US designs.

* Most major Soviet computer systems are patterned after Western computers

* In somecases, the Soviets have purchased complete production plants for integrated circuits and printed circuit boards from the West.

The Soviet effort to acquire US technology ranges from convert work by KGB and allied East-bloc agents, to attendance by Soviet scientists and scholars at US technical conferences, to meticulous monitoring of government publications and other technical documents made public in the US.

Some of the technology has simply been stolen. Some has been smuggled through a network of dummylfirms operating in international high-tech black markets.

But, according to the recent Pentagon report, most has been purchased on the ope market from Western companies.

It is this area -- the export ad possible diversion of US high technology -- that poses the toughest questions for American policy makers.

The problem is that the list of controlled items has grown long and includes many entries some observers feel pose a marginal, if any, threat to US national security.

Critics complain the list reads more like a Who's Who of Americn technology than a selective list of critical and strategic technologies.

The Commodity Control List includes roughly 200 categories of strategic "duel use" technologies -- technologies with borth civilian and military applications. One of those entries -- item 1564, microcircuits -- applies to between 5,000 and 10,000 separate pieces of equipment, according to Commerce Department official.

In cases of "foreign availability," Congress is considering an amendment that would provide a procedure for the decontrol of some of the technologies listed on the Commodity Control List that are already available to the Soviets.

But that doesn't resovle one of the most basic issues in the export-control debate: Where does one draw the line as to what technologies or goods are "truly critical?"

The intent of Congress in passing the Export Administration Act was, in the language of the act, "to restrict the export of goods and technologies which would make a significant contribution to the military potential" of the Soviet Union or other potential adversaires.

Some observers argue that under a broad interpretation of the act even US grain could make a 'significant contribution'' to the Soviet military. It could do so by feeding Sovietr soldiers.

More important, it could contribute militarily to the Soviets by permitting them to divert financial resourses from grain production into production of military hardware.

If stricly enforced, according to these observers, such a broad interpretation would lead to a virtual shutdown of East-West trade.

It also would place signficant power on the shoulders of a handfull of locensing officers in the Commerce Department. These officers must interpret the Export Administration Act and determine which products are to be controlled.

The trick is to identify which products are to be controlled.

''The trick is to identify the critical technologies that you don't want to move into the East bloc and keep that list small enough so you are not interfering with innocent trde,'' says Gen. Danial O. Graham, former chief of the Defense Inteligence Agency and a former deputy durector of the CIA. ''That is a balancing act that is dufficult to do but it must be done.''

Next: a landmark export case that raises more questions than it answers.

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