US companies fear tighter exporting curbs over China

Frustrated US technology companies fear tighter restrictions may be placed on their exports on foot of the recently published Congressional report that claimed China possessed detailed information on US nuclear weapons and other technologies.

The Cox Report has more than 900 pages of detailed findings, a third of them still classified and therefore secret. The report argues that Chinese spies have succeeded in obtaining information on the US military weapons' trove and have stolen a weapons' guidance system. It also lists instances where China has legally acquired information from public sources and legally purchased the highpower computers that can be used for military applications. China could build an arsenal similar to that of the US if it chose, the report claims.

The report, which caused a furore across the US and immediately became a political football for the potential candidates in next year's Presidential election, has a section that suggests that US technology exports need to be carefully monitored and perhaps restricted.

But technology companies say they are already frustrated by US government restrictions on a variety of their products - those that fall under the so-called "dual-use" category of being useful for both civilian and military applications. The restrictions prohibit the sale of some technologies to some countries. In other cases, vendors are required to obtain a special licence for each sale.

According to technology companies, the restrictions fail to accommodate swift advances in technology and computing power and seriously hobble their ability to compete in a global market.

"We're up against limits that the government has imposed on microprocessors and computer systems that are very mass-market computers now," says Mr Bill Calder, a spokesman for microprocessor manufacturer Intel. "These are commodity level products. Anyone can have these systems these days."

Currently, Intel cannot sell its latest 500-MHz Pentium III computer chip to China without a licence. Mr Calder says Intel has a 550-MHz chip on line already and will produce a 600-MHz chip by the end of the year, both of which will exceed the limits on the level of computing power allowable for exports anywhere.

Those limitations are measured in "mtops", or millions of theoretical operations per minute, a US government performance standard. The existing limit is 2,000 mtops, upped from 500 mtops only last January.

According to Mr Calder, some work stations already push 2,000 mtops. He adds that within a year or two, a single chip will be able to exceed 2,000 mtops.

As recently as a decade ago, such high-performance machines would have cost hundreds of thousands of pounds and would mostly have been limited to research institutes and the military. But similar computers today can be purchased for around $3,000 and are widely used for everything from architectural and engineering design to creating Hollywood special effects.

Intel and other companies have formed a lobby group called the Computer Coalition for Responsible Exports (CCRE) to try to convince politicians that the issue must be resolved or US companies will suffer in the marketplace.

They point out that other countries sell the same products without restrictions and thus, the existing guidelines do not prevent restricted countries from obtaining such technologies. In addition, companies like Intel complain that countries to which they can legally export their products, such as European states, are able to sell on their US products without restrictions. For example, a European computer-maker can market a system with a restricted Intel chip directly to China if it wishes.

"We ship these processors now in the millions through thousands of distributors throughout the world," says Mr Calder. "You can't really control the uncontrollable," says Mr Calder. As a lobbying issue for Intel, the export issue is now "number one or two", he says. The publication of the Cox Report will not help the company in that effort, he admits.

Presidential hopefuls were quick to use the report as a means of criticising the Clinton administration and some immediately expressed the belief that technology exports should be limited.

"Trade will open a window to the free world for the people of China. But there is a difference between selling food and selling technology that could be used against America and our allies," said one Presidential front runner, Texas governor George W. Bush, son of the former president.

Another legislator, Representative Benjamin Gilman, who is chair of the House International Relations Committee, cautioned that until the report's findings are carefully considered, Congress should put the brakes on pending legislation, called the SAFE Act, to loosen restrictions on the export of encryption technologies.

But others criticised the Cox Report, claiming it made assumptions about the uses to which China would put legally-available, widely-marketed technologies. One defence analyst pointed out on National Public Radio that while the US has 6,000 armed nuclear warheads capable of striking China, the Chinese have a total of 20 warheads that could reach the US and which use older technology. There is no evidence that China has developed any of the US weapons for which it supposedly has plans, the analyst said.

In Silicon Valley, Chinese-American workers also expressed dismay at the report, which they feel may incite racism. More than 300,000 Chinese-Americans work in the technology industry in the US, according to an industry analyst.

Technology companies say the report and political reactions to it underline their need to have greater awareness about Washington's understanding of their industry and to maintain a more visible and vocal lobbying presence. Only in the past year have most individual companies decided they needed Washington lobbyists and begun to form associations such as CCRE to inform politicians, the media and the public about issues that concern them.

Karlin Lillington is at klillington@irish-times.ie