ITI Pushes For Further Export Control Relaxation

WASHINGTON (01/31/2000) - The Information Technology Industry Council (ITI) will continue pushing for further relaxation of the U.S. government's licensing regime on the export of fast computers and semiconductors, an ITI official said today.

ITI listed export controls among its top priorities at a luncheon here today as the 106th U.S. Congress begins returning in earnest from the holiday break and setting its agenda for the second year of the session.

The most recent changes in licensing rules for computer exports which U.S.

President Bill Clinton announced last summer took effect Jan. 23. The Clinton administration is on the verge of announcing another round of adjustments this week, said Dan Hoydysh, director of Unisys Corp.'s Washington office and co-chairman of the ITI's Computer Coalition for Responsible Exports.

However, although the U.S. government's computer export adjustments are now starting to occur every six months, Hoydysh said the changes barely keep pace with the latest products the IT industry is bringing out.

The U.S. export control system was designed to control the export of high-performance computers in order to prevent certain technologies from falling into the hands of U.S. adversaries. The government's rating system for the rest of the countries in the world has list rankings from tier 1 to tier 3, tier 3 nations being those countries deemed potentially to pose a hostile threat to the U.S.

Countries such as Japan, Canada and 29 other allies comprise the government's tier 1 list, and exports of high-performance computers to those countries are not restricted.

Exports to countries on the tier 2 list, including 104 countries in Asia, Latin America, Africa and Central and Eastern Europe, require a license for computers that can perform more than 20,000 MTOPS (millions of theoretical operations per second), which is how the U.S. government measures computer power.

But rules governing the 50 tier 3 countries, including China, Russia and Israel, are more restrictive, and that's what the IT industry will lobby to change over the coming months, Hoydysh said.

The current control level for exports to tier 3 countries is 6,500 MTOPS for military end-users. There's no license required for sales to civilian end-users of computers able to perform between 6,500 MTOPS and 12,300 MTOPS, but computer companies have to give the U.S. government 10 days' notice of any sales.

Licenses are required for sales of 12,300 MTOPS and higher performance computers to tier 3 countries, but Hoydysh said he believes the U.S. government will do away with that requirement when it announces its revised export controls this week. However, the amended rules won't be effective for six months, he added.

Hoydysh said the export control rules are outdated and could harm U.S. computer companies trying to compete against foreign computer and semiconductor makers who aren't subject to such rules. U.S. IT companies are also facing increased competition from abroad, Hoydysh said. From 1998 to 1999, the number of non-U.S. computer and semiconductor competitors doubled to 10, he added.

"There seems to be a perception that no one in the world can make these products but us," Hoydysh said. "That's simply not true."

Hoydysh also noted that with the forthcoming release of Intel Corp.'s Itanium processor, capable of more than 6,000 MTOPS, worldwide demand for high-performance computers will grow still further. He held up a box containing slots for four Itaniums, saying it will cost about US$20,000. Hoydysh added that demand for the processors will be so great that hundreds of thousands of the chips will be sold worldwide.

In addition to urging changes in the export control rules, ITI will support passage in the U.S. Congress of permanent normal trade relations with China by June, said Rhett Dawson, ITI president. The vote will be crucial to U.S. technology companies because continued U.S.-China trade hinges upon that vote, Dawson said. [See "US, China Reach WTO Deal," Nov. 15, 1999.]The ITI, in Washington, can be reached at +1-202-737-8888 or found on the Web at http://www.itic.org/.

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