July 1, 2004 4:00 AM PDT

Defense bill could stifle computer trade

In a move that has re-energized the debate over export controls on high-performance computers, the latest version of a defense-spending bill would require companies to seek licenses to export even underpowered desktop computers.


What's new:
The latest version of a defense-spending bill in the House requires companies to obtain licenses to export even low-powered computers.

Bottom line:
The proposed rules are the latest flashpoint in a decades-long tussle between computer companies and national security hawks over the best way to limit the export of technology that could end up in enemy weapons.

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The dramatic tightening of export regulations is included in the National Defense Authorization Act, an annual military funding bill that has already passed the U.S. House of Representatives. Though the proposed rules are only a tiny portion of the 630-page bill, they could have a devastating impact on the computer industry.

"It would bring exports to a grinding halt," said Dan Hoydish, director of trade, public policy and government affairs for Unisys and chairman of the Computer Coalition for Responsible Exports, a trade group that counts many major technology companies as members. "We wouldn't be asking for 20 export licenses in a year, we would be asking for 20,000 in a day."

Today, computer sellers are required to get a license to export any computer with performance equal to or greater than a system with 32 Intel Itanium processors. The current version of the defense authorization act would lower that limit to systems deemed "militarily critical" by the Department of Defense. That level is currently set to the equivalent of a computer using a Pentium 3 processor running at 650MHz, state of the art in 1999 but considered feeble today.

Moreover, the proposed rules would apply to exports destined for any country, including U.S. allies.

The controversial section is not included in a U.S. Senate version of the bill that passed last week. That means the fate of the proposed rules, known as Section 1404, will be determined by negotiations between the House and the Senate, currently slated for later this month.

"As the planet shows no sign of nearing the point where nuclear weapons are banned, it is reasonable to assume that current or aspiring nuclear weapons states will vigorously attempt to acquire high-performance computers."
--Peter Leitner
Defense Department

A congressional staff member familiar with the House and Senate bills said it's likely Section 1404 will be changed or dropped. Still, just the specter of passage has rekindled the debate over whether to control the export of computer technologies to other countries. The issue pits the interests of a key U.S. industry against the needs of national security. Though relatively high-performance computers are widespread, lawmakers concerned with national security would still like to block certain countries and terrorist organizations from obtaining them.

A representative of the House Armed Services Committee, which drafted the amendment to the original House bill, said the legislation would reverse a trend that has weakened U.S. national security and made the proliferation of weapons of mass destruction much more likely. Supercomputers can be used in nuclear-weapons research, as well as in cryptography, antisubmarine warfare and intelligence activities.

"There shouldn't be much daylight between the Department of Defense and Commerce about what requires a license," said Harald Stavenas, spokesman for Rep. Duncan Hunter, R-Calif., who chairs the House Armed Services Committee. "The problem is that there is. Commerce (isn't controlling) things that have critical military applications."

Too relaxed to be vigilant?
The performance limits for exported computers, measured in millions of theoretical calculations per second, or MTOPS, have increased almost annually. Eight times in the last two decades, computer companies have won a relaxation in the Department of Commerce's export limit, which began at less than 160 MTOPS in the mid-1980s and has risen to more than 190,000 MTOPS today.

That's far more lenient than the 1,500 MTOPS the Department of Defense has deemed threatening to the United States' military superiority, according to the Defense Department's Militarily Critical Technologies List. A report published in 2002 by the U.S. General Accounting Office found that most military applications of computer technology require less than 20,000 MTOPS, including programs used to design and simulate nuclear weapons. A currently exportable computer, such as a 32-processor Intel Itanium computer, could run 98 percent of the applications used by the Department of Defense, the report said.

The gap causes many analysts to wonder exactly what the point of export regulations are. The current policy limits the export of computers having a processing power above a certain level to certain countries, including Russia, India, Israel, Pakistan and China.

Calculated threat

Even modest systems have use in researching weapons of mass destruction; experts estimate that the current export limit of 190,000 million theoretical operations per second (MTOPS) satisfies almost all of the Department of Defense's computing needs.

MTOPSMilitary applicationCommercial equivalent
5,000Joint Attack Strike Aircraft designIntel Pentium M processor, 1.5GHz
10,000Ship's infrared search-and- track algorithm developmentIntel Pentium 4 processor, 3.4GHz
15,000Computational fluid dynamics to model extreme aircraft turbulenceAMD Dual Opteron, Model 248
20,000Nuclear blast simulation (in conjunction with nuclear test blasts)AMD Quad Opteron Model 842
25,000Automatic target recognition template developmentAMD Quad Opteron Model 846
50,0003D reduced- physics simulation of nuclear weapon applicationsIntel 8-way Itanium Processor
190,000Satisfies 98 percent of Defense Dept. military computing needsIntel 32-way Itanium Processor

Sources: Commercial numbers from Intel and AMD; military application data from Center for International Security and Cooperation report on export regulations (1998).

Further clouding the issue is the recent trend of building highly capable systems by linking scores of relatively off-the-shelf parts, a process known as clustering. Several of those countries whose imports are limited, such as China and Russia, have sidestepped the regulations by creating their own supercomputers using clusters of hundreds or thousands of less-powerful systems. The Top500 list of supercomputers, released last week, included five homegrown Chinese computers, including one ranked No. 10. A Russian supercomputer ranked 391.

"The number of clustered systems on that list has really multiplied," said David Rose, director of import/export information security policy for chipmaker Intel, a member of the Computer Coalition for Responsible Exports. "Supercomputers are no longer difficult to create."

Moreover, the current export controls, based on a computer's theoretical performance, have widely been criticized as ineffectual and unenforceable. The MTOPS measurement is no longer indicative of a computer's true power and performance, researchers from industry, academia and the General Accounting Office have concluded. Another GAO report found that the Department of Commerce had fallen dangerously behind in its inspections of foreign sites that have purchased U.S. dual-use technology--that with both a commercial and military use--such as supercomputers.

And the fact that the current exportable limit far exceeds the amount of processing power needed for military applications has some analysts scratching their heads.

"There is no linkage between computing power and military capability any longer; in part because, if you want a bigger computer, you just have to go out and buy a few more clusters," said James Lewis, director of the Technology and Public Policy program at the Center for Strategic and International Studies and a former export-control negotiator for the U.S. Department of State. "There are so many computers everywhere on earth, that it's impossible to stop."

An arms race
Not that previous administrations, particularly Ronald Reagan's, haven't tried to control the flow. The proposed rules are the latest battle in a decades-long war between computer companies and national security hawks over the best way to limit the export of technology that could hasten the proliferation of weapons of mass destruction.

The leapfrog race to ever-faster processors has frequently been described as an "arms race." To many worried about the proliferation of weapons of mass destruction, that's exactly what expanding computer power represents.

"As the planet shows no sign of nearing the point where nuclear weapons are banned, it is reasonable to assume that current or aspiring nuclear weapons states will vigorously attempt to acquire high-performance computers to advance their nuclear programs with a degree of covertness hitherto impossible to achieve," Peter Leitner, now the senior strategic trade advisor in the Office of the Secretary of Defense, said in published comments from congressional testimony in 1998. The Defense Department did not make Leitner available to comment for this article.

Until 1985, export of any computing systems to a country with a communist government fell under the U.S. Export Administration Act and was generally refused. The rapid growth of the personal computer industry, and the increasing reliance on computer chips manufactured abroad, made

"There is no linkage between computing power and military capability any longer; in part because, if you want a bigger computer, you just have to go out and buy a few more clusters."
--James Lewis
Center for Strategic and
International Studies
the continued restriction of mass-market computer systems much more difficult, if not impossible. In 1984, the United States reached a pact with Japan, the other major power in the computer chip industry, to regulate the export of high-performance computers under the Supercomputer Control Regime. The United States also used the Coordinating Committee, established in 1949 to limit technology transfer to the Soviet Union, as a forum to set international policy on high-performance computers.

With the definition of supercomputers established, the industry quickly started asking for relaxed export regulations. In January 1985, the Department of Commerce decontrolled the first PCs, allowing the export of personal computers such as the IBM PC-XT. Three years later, the Omnibus Trade and Competitiveness Act of 1988 further relaxed the restrictions to allow any computer under 160 MTOPS to be exported without a license.

As computers became more popular and more powerful, pressure continued to mount to ease the export regulations. In 1991, the United States and Japan renewed their agreement and the first Bush administration eased export restrictions to start at 195 MTOPS and higher. That kicked off further easing of restrictions over the next decade. The Clinton administration raised the maximum unlicensed export level five times during its eight years, from 1,500 MTOPS in 1994 to 85,000 MTOPS in 2001. The second Bush administration further raised the limit to 190,000 MTOPS in January 2002.

"Mind-boggling" legislation
Section 1404 of the appropriations bill would roll back the licensing equation to a level not seen since 1994.

"The President shall require a license...for the export of goods or technologies included on the Militarily Critical Technologies List," Section 1404 of the House bill states. That list cites a level of 1,500 MTOPS as being militarily critical.

The computer-export issue has already become a talking point in Sen. John Kerry's presidential campaign.

Kerry promises that if he's elected president, he'll shift "the emphasis of computer export controls from attempting to control widely available business computers, to controlling the availability of classified software created for applications such as weapons development," according to the Kerry campaign's policy paper.

Yet, on that issue, Kerry may not differ much from his opponent. The Bush administration has criticized that part of the legislation in its Statement of Administration Policy for limiting the Executive Branch's power, and listed it as the third most significant problem with the bill.

"These requirements are contrary to the president's policy to refine U.S. export control to protect truly critical technologies while facilitating legitimate trade," the position paper stated. The paper, however, did not promise to veto the bill if Section 1404 remained intact, something the Bush administration pledged for its top two concerns outlined in the position paper.

"The number of clustered systems on that list has really multiplied. Supercomputers are no longer difficult to create."
--David Rose

Not only does the White House oppose that section of the legislation, but a representative of the Office of the Secretary of Defense also said it's not likely the Pentagon would support a bill that used the list of critical technologies for export restrictions.

The Militarily Critical Technologies List "is not intended to be an export-control list, neither can it function as one," a Defense Department representative said.

Some analysts called the restriction a return to Cold War policies. Seymore Goodman, professor of International Affairs and Computing at the Georgia Institute of Technology and the author of two policy papers used by the Clinton administration on the issue, stressed the impossibility of restricting computers that no longer require entire rooms to house them. Now smuggling a few more computer chips to expand a cluster is easy, he said.

"If this gets through Congress, it is a regression of mind-boggling proportions," Goodman said. "You cannot control anything that is made by the millions and which you can put in your pocket."

Moreover, the rules are unlikely to prevent countries such as Taiwan and China from producing for themselves and selling to other nations computer chips exceeding the 1,500 MTOPS limit. In fact, developing countries such as China may welcome any restriction on U.S. competitors that help its own companies domestically, said Hoydysh of the Computer Coalition for Responsible Exports.

"China is busy developing its own industry," he said. "To some extent, the market penetration issues are welcomed by them, because it protects their industry, without dealing with trade issues."

Some analysts believe the focus on controlling high-performance computers has hurt national security, diverting resources away from nonproliferation activities that have a higher payoff. If computer exports are no longer controlled, the game is not lost, said Dale Nielson, project leader of Lawrence Livermore National Laboratory's Proliferation and Terrorism Prevention Program.

"If people put too much faith in (export controls), then they are closing their eyes to the other things that can be done," he said. "I think that there are enough other critical technologies that can be controlled that people shouldn't see this as a last stance in nonproliferation."


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Posted by Jonathan (832 comments )
Reply Link Flag
thats our gov't for ya
While the gov't is busy running around trying to control exports, half of the other countries in the world will be creating their own pc's and cpu's to sell to the countries we won't sell to.
Posted by (20 comments )
Reply Link Flag
Free invitation to China
Dear China,
Please feel free to take our position as IT superpower and all our exports,
yours generously G.W.Bush and friends
Posted by (1 comment )
Reply Link Flag
you, apparently, did not read the article. It is the congress, dems and reps, who is the idiot. The pres and the future pres, are busy, trying to refute this bill.
Don't let politics cloud your judgment.
Posted by MacarioV (6 comments )
Link Flag
Useless congress debate
To build a guided misile, I am told, you need no more than the power of a processor on a cheap cell phone.
Software technology is what really count. Without the right software, you might as well use the powerfull chips as rocks to kill your neighbor. A useless and non civilized activity, anyways.
Posted by MacarioV (6 comments )
Reply Link Flag
Does anyone use their brain when they create these proposals?
What are they thinking about? Hmmm, sounds like a fantastic opportunity for companies to MOVE to another country where such regulations are considered communistic and take the hundreds of thousands of US jobs with them. Does anyone feel that this country is fast becoming socialist? The Rich will only get richer and forget the American Dream?
Posted by (1 comment )
Reply Link Flag
genie's out of the bottle
It's too late actually, we've outsourced the required manufacturing capabilities and there's no turning back now. Take an AMD based computer, for example. The fab is in what was East Germany. The wafers are cut up and die's mounted in Malaysia. The mainboard is manufactured in Taiwan. Most of the remaining components are made in the Pacific rim. The OS required is freely available everywhere (Linux + clustering software).

We're actually IMPORTING these computers ourselves. By adding these restrictions, all they'll do is hurt what remains of the U.S. manufacturing base.
Posted by (1 comment )
Reply Link Flag
you miss the point
You miss the point with your comment about the limited amount of computer manufacturing in the U.S.

It would be an offense to _arrange_ the export of prohibited items. If Gateway arranges the export of a pentium four computer to me in Canada it will be an offense regardless of where the item actually originated, what country it travelled through to get to me.

If arranging certain exports were not the target of such legislation only longshoremen and truckers could be charged. It is also possible that providing support for those prohibited items already sold would be legally risky.

My advice to corporate, government and other institutional purchasers of computer products is to avoid all American technology companies like the plague unless they wish to hire a large number technology lawyers to monitor purchase orders. Non American companies would be liable for damages caused by any failure to fulfill contract obligations as a result of predictable supply problems caused by using legally restricted American technology companies.

There is a lot of technology that uses chips with the processing power mentioned in the legislation. Its not just American _arranged_ desktops that would be barred but everything that uses the processor. An obvious example would be much of modern manufacturing processes, medical technology etc.

Safer, easier and requires less techno-legal types to simply not buy any American technology.
Posted by arnetwork (11 comments )
Link Flag
Absolutely right! We have no exclusive franchise
A major Taiwanese fab (TSMC) or Samsung in Korea or Philips in the Netherlands or ... All are capable of fabricating leading edge silicon within 30% or closer to the best U.S. fabs Intel, IBM, AMD, Motorola, LSI Logic, ... can do in terms of performance.

If you have ever worked at a semi-conductor house that designs processors, you know that the majority of the design engineers are either recent immigrants or the children of recent immigrants. As a 5th generation U.S. citizen I am a minority being a design engineer.

We are far from owning this field of human endeavor in the U.S. All that would be accomplished by restricting exports of computers would be the slow killing of our computer industry that is already facing massive competition from abroad, from embedded processors to super-computers. The bad actors who want this technology don't have to come to the U.S. to get it at all...

Yes, I'm scared by that statement, too. But by hurting our domestic computer industry, I contend our national defense would be actually harmed, because our defense agencies could be put in the position of relying on a foreign supplier for their high-end computing needs if they really want "state of the art". I don't think anybody in the U.S. wants that.
Posted by (15 comments )
Reply Link Flag
Unworkable and stupid in the extreme
Two things:
I used to do simulations/analyses on effects of nuclear events on
our ICBM systems for the DoD back in the 80's and early 90's
with systems much slower than the top of the line laptops
available today. True, the simulations/analyses took several days
to run, but I did it. Thus there are laptops running around the
world that today could do these analyses while on a plane at
35,000 feet -- and do it in hours, not days. To try to limit the
export of these is stupid since there would be many
businessmen flying around the world that would be violating this
section if it is enacted into law.

Additionally think of this scenario:
An extreme game player has a top of the line machine today: A
dual 3.6 GHz Pentium or a dual 2.4 GHz Opteron or a dual 2.5
GHz PowerPC based system with a top of the line graphics card.
This game player has a friend in Europe or Asia (easy to happen
with the Massively Multi Player Online Role Playing Games out
This gamer then decides to upgrade to the then state of the art
next spring.
This gamer offers to sell the used machine at a huge discount to
his friend. They complete the sale, and the gamer ships the
machine to his friend.

From the limited wording in the article if this clause is enacted
and signed into law the gamer will have just violated export
control laws. The U.S. government cannot police every private
transaction. It is just 100% unworkable.
Posted by shadowself (202 comments )
Reply Link Flag
Mass Destruction Weapons
USA will soon invade your country.
Dont **** with my computer or i'll join al-quaida..
Posted by (1 comment )
Reply Link Flag
"Bad guys" actually don't need to buy this technology!
"Bad guys" actually don't need to buy this technology! Just like spammers can use viruses to plant email servers on private PCs, or crackers can use thousands of infected PCs to launch distributed denial of service attacks, so can terrorists or terroristic regimes create networks of hundreds of thousands of "zombie PCs" working for them as a giant supercomputer utilizing the power of privately owned PCs without their owners knowledge! There's no real need to buy the hardware, and certainly not to export it from the USA!
Posted by hadaso (468 comments )
Reply Link Flag
Double S, Double D
Same S***, Different day... Government paranoia has been going on since before the pyramids were built. When the very FIRST computing machine was built the "then" government looked seriously at classifying it as "TOP SECRET" (actually if I remember correctly they did).

The article talks of an arms race, nuclear threats, desktop computers that can assist the malcontents and such. BAH! The horse was let out of the barn when the first man like creature picked up a rock or a stick and beat the crap out of his opponent.

What chimes in my brain here is fear. Fear of the future based on the past. This bill is concerned with 1/2 a century old technology and the lack of some recent quantum leap that out flanks the "bad guys" and a thought that since we came up with a trump card - the atomic bomb - that someone may possibly outflank us (the US) if we allow "OUR" technology to fall into the hands of the foe. BAH! It's already there with no restrictions. Heck, half if not more of the bleeding edge tech stuff is being developed elsewhere.

Rather than establish a pseudo gag order on US technology, what the government would be smart in doing would be to take the Gates approach. "We want something and if we can't do it or it cost too much for us to do it - buy it or kill it." Better yet they could actually pump up the R&D funding for the "fringe" tech stuff. Which by the way does NOT necessarily take a hoard of high priced MBA's or PhD's to dream up the fringe ideas.

This bill is stupid and does not in any way look forward or protect anything of future value.
Posted by Inetsec (40 comments )
Reply Link Flag
God, what bunch of morons...
Congress tried this with encryption, and then they realized that other countries had developed strong encryption of their own. The only thing the export controls did do is hurt U.S companies trying to compete in other countries. I just wonder how long it will take them to realize that other countries have already developed fast processors. Motorola, for example. I seem to remember after the PS2 came out a few people were worried other countries would cluster them and make a super computer for weapons research.

We have a bunch of paranoid morons in congress. Lets vote out the incumbents
Posted by unknown unknown (1951 comments )
Reply Link Flag
Actually one is only deemed paranoid if the fear is unsubstantiated or that no one else sees the threat. I would suggest that the "paranoia" as you point out is substantiated, but the reflex action is what misses the mark. Education of those in office could fix the problem - if they would pause to listen. I really don't think that replacing one "moron" with another will do the trick.
Posted by Inetsec (40 comments )
Link Flag

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