[Senate Hearing 105-238]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 105-238


 
                 PROLIFERATION AND U.S. EXPORT CONTROLS

=======================================================================


                                HEARING

                               before the

                SUBCOMMITTEE ON INTERNATIONAL SECURITY,
                  PROLIFERATION, AND FEDERAL SERVICES

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 11, 1997

                               __________

      Printed for the use of the Committee on Governmental Affairs



                       U.S. GOVERNMENT PRINTING OFFICE
 41-566cc                     WASHINGTON : 1997
_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
SUSAN M. COLLINS, Maine              JOHN GLENN, Ohio
SAM BROWNBACK, Kansas                CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         JOSEPH I. LIEBERMAN, Connecticut
THAD COCHRAN, Mississippi            DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma                RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania          ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire             MAX CLELAND, Georgia
ROBERT F. BENNETT, Utah
             Hannah S. Sistare, Staff Director and Counsel
                 Leonard Weiss, Minority Staff Director
                    Michal Sue Prosser, Chief Clerk
                                 ------                                

   SUBCOMMITTEE ON INTERNATIONAL SECURITY, PROLIFERATION AND FEDERAL 
                                SERVICES

                  THAD COCHRAN, Mississippi, Chairman
SUSAN M. COLLINS, Maine              CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         DANIEL K. AKAKA, Hawaii
DON NICKLES, Oklahoma                RICHARD J. DURBIN, Illinois
ARLEN SPECTER, Pennsylvania          ROBERT G. TORRICELLI, New Jersey
BOB SMITH, New Hampshire             MAX CLELAND, Georgia
                   Mitchel B. Kugler, Staff Director
                Linda Gustitus, Minority Staff Director
                       Julie Sander, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Cochran..............................................     1

                               WITNESSES
                        Wednesday, June 11, 1997

William A. Reinsch, Under Secretary for Export Administration, 
  Department of Commerce.........................................     3
Mitchel B. Wallerstein, Deputy Assistant Secretary for 
  Counterproliferation, Department of Defense....................    12
Stephen D. Bryen, President, Delta Tech..........................    36
William Schneider, Fellow, Hudson Institute......................    43

                     Alphabetical List of Witnesses

Bryen, Stephen D.:
    Testimony....................................................    36
    Prepared statement...........................................    40
Reinsch, Willliam:
    Testimony....................................................     3
    Prepared statement...........................................     8
Schneider, William, Jr.:
    Testimony....................................................    43
    Prepared statement...........................................    45
Wallerstein, Mitchel B.:
    Testimony....................................................    12
    Prepared statement...........................................    14


                 PROLIFERATION AND U.S. EXPORT CONTROLS

                              ----------                              


                        WEDNESDAY, JUNE 11, 1997

                                     U.S. Senate,  
                Subcommittee of International Security,    
                      Proliferation, and Federal Services  
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:40 a.m., in 
room SD-342 Dirksen Senate Office Building, Hon. Thad Cochran, 
Chairman of the Subcommittee, presiding.
    Present: Senators Cochran and Durbin.

             OPENING STATEMENT OF CHAIRMAN COCHRAN

    Senator Cochran. The Subcommittee will please come to 
order.
    Let me first welcome everyone to today's hearing of the 
Subcommittee on International Security, Proliferation, and 
Federal Services of the Governmental Affairs Committee.
    The topic of today's hearing is Proliferation and U.S. 
Export Controls.
    The Subcommittee has previously held hearings on Chinese 
and Russian Proliferation. Today we will examine how U.S. dual-
use export control policies may be promoting military 
modernization in other nations, principally Russia and China, 
and the extent to which this modernization helps these nations 
continue their proliferant activities.
    With the end of the Cold War came the need to reexamine 
American export control practices, especially with respect to 
goods having both military and civilian applications, goods 
commonly referred to as dual use. During the latter stages of 
the Cold War, approximately $100 billion per year worth of 
exports required an export license.
    In 1996, the Commerce Department licensed for export $4.9 
billion worth of dual-use technology, while our total export 
volume of goods and services amounted to $846 billion. The 
licensed exports comprised just under six-tenths of one percent 
of total U.S. exports in 1996.
    Or, if you wish, look at American export controls in 
another way. Less than \1/2\ of 1 percent of the U.S. economy 
is covered by export controls. Of that, more than 95 percent of 
export license requests are approved.
    President Clinton entered office promising to liberalize 
U.S. export controls. He restated this promise in a September 
1993 letter to Edward McCracken, Chairman and CEO of Silicon 
Graphics, when he said that he is ``personally committed to 
developing a more intelligent export control policy, one that 
prevents dangerous technologies from falling into the wrong 
hands without unfairly burdening American commerce.''
    I am concerned that President Clinton's relaxed export 
control policy on supercomputers has accomplished precisely the 
opposite of his stated intention of ``preventing dangerous 
technologies from falling into the wrong hands.''
    According to Victor Mikhailov, Russia's Minister of Atomic 
Energy, we now know that five American supercomputers--four of 
which came from Edward McCracken's Silicon Graphics--reside in 
Russia's premier nuclear weapons design labs. We also know, 
from Secretary Reinsch's testimony to the House of 
Representatives in April, that 46 American supercomputers are 
in the People's Republic of China, at least one of which was 
sold to the Chinese Academy of Sciences by Silicon Graphics. 
And these 46 may be only the tip of the iceberg.
    We know some other things, too. We know, of course, that 
Russia's nuclear weapons labs design nuclear weapons. We also 
know that the Chinese Academy of Sciences is a key participant 
in Chinese military research and development, and has been for 
a long time, working on everything from the DF-5 ICBM--which is 
capable of reaching the United States--to uranium enrichment 
for nuclear weapons.
    According to the Chinese Academy of Sciences, its new 
Silicon Graphics ``Power Challenge XL'' supercomputer provides 
the Academy with ``computational power previously unknown'' 
which is available to ``all the major scientific and 
technological institutes across China.''
    The good news is that some of these ``major scientific and 
technological institutes across China'' may not be involved in 
developing weapons of mass destruction and missile delivery 
systems for China and its clients, but some surely are, and 
they're doing this work courtesy of what appears to be, at 
best, a deeply flawed U.S. export control policy.
    Today the Subcommittee will examine what the dual-use 
technology export control policies of the United States are, 
how they are working, and to what extent these policies need 
revision.
    Our witnesses today are well-qualified to assist in the 
examination of these questions. We will hear first from William 
Reinsch, Under Secretary of Commerce for Export Administration, 
who worked previously on Capitol Hill and, today, oversees 
export control policy for the Commerce Department, and Dr. 
Mitchel Wallerstein, who as the Deputy Assistant Secretary of 
Defense for Counterproliferation, is the Defense Department's 
most senior official with responsibility for these issues.
    Our second panel is comprised of Dr. Stephen Bryen, 
President of Delta Tech and a former Defense Department 
official with the responsibility for export controls, and Dr. 
William Schneider, a former State Department official who is 
currently a Hudson Institute Fellow and also the chairman of 
the State Department's Defense Trade Advisory Group.
    The Cold War's end does not decrease the need for the 
continued safeguarding of sensitive American dual-use 
technology. While there may no longer be a single, overarching 
enemy of the United States, there is little doubt that many 
rogue States, and perhaps others, have interests clearly 
inimical to those of the United States. Helping these nations--
or helping other nations to help these nations--to acquire 
sensitive dual-use technology capable of threatening American 
lives and interests makes no sense.
    I am going to ask Secretary Reinsch to proceed with 
whatever comments or statements he would like to make. We have 
a copy of a statement, which the Committee has received, which 
we will print in the record in full, and then we will hear from 
Dr. Mitchel Wallerstein, and then have an opportunity to 
discuss your testimony.
    Secretary Reinsch, you may proceed.

  TESTIMONY OF WILLIAM A. REINSCH, UNDER SECRETARY FOR EXPORT 
             ADMINISTRATION, DEPARTMENT OF COMMERCE

    Mr. Reinsch. Thank you very much, Mr. Chairman. It is a 
pleasure to be back in this room. On the whole, I think I would 
rather be back up there sitting behind you, but that is all 
right. I am looking forward to the dialogue.
    The President considers an effective strategic trade export 
control program to be a critical element of our overall 
national security posture and, as you noted, he has directed us 
to regularly update our system so that it focuses on the new 
threats we face today.
    Since the end of the Cold War, crafting export control 
policy has become more difficult because the world is more 
complex and the battle lines between competing interests less 
defined. The Cold War had a certain elegant simplicity. The 
United States and its allies had a clear enemy, and we largely 
agreed on how it should be contained. Economic sacrifice was 
often asked and usually made by countries and companies in the 
name of containment, and that was a policy that worked.
    That structure, though, has now been replaced by less-
defined and more ambiguous threats no longer confined to a 
handful of relatively predictable actors. The immediate threats 
are now terrorism and the proliferation of weapons of mass 
destruction to a handful of smaller, geographically diverse 
rogue States.
    At the same time, the rapid spread of advanced technology 
in a globalizing economy has made critical items widely 
available--including some of the ones that we will be 
discussing today--and it has greatly increased the number of 
nations capable of producing advanced technology.
    As a result, the United States does not have a monopoly on 
these items, if it ever did, and it has become harder to reach 
international consensus on what threats we face and harder to 
enforce any agreements that we do reach. For many nations, 
economic objectives are now paramount as they seek to penetrate 
new markets. Yesterday's adversaries are today's customers, and 
yesterday's allies are today's competitors.
    Even when a policy is clear, our ability to implement it is 
not. The world abhors chemical and biological weapons, for 
example, but they can be produced with 40-year-old technologies 
using feedstocks and equipment found in hotel kitchens, 
breweries, universities and even high schools all over the 
world.
    Building a nuclear weapon, as you know, Mr. Chairman, does 
not require sophisticated computers.
    The administration's response to these changed 
circumstances is based on four major principles.
    The first is reforming the export licensing process so that 
all relevant agencies can bring their expertise to the table in 
a timely manner. This allows for comprehensive interagency 
review of sensitive transactions while ensuring that the 
process does not put U.S. exporters at a disadvantage.
    Second is streamlining controls so they focus on items that 
pose the greatest threat to our security;
    Third is clarifying our regulatory regime so that exporters 
know what their obligations are and know how to improve their 
internal compliance programs; and
    Fourth is strengthening the multilateral systems.
    With regard to process reform--and I think this is 
important in light of the discussion that we'll have today--we 
have revamped the licensing process, via Executive Order, so 
that all relevant agencies can review all export license 
applications if they wish. In return for that expansion of 
review authority, the other agencies have committed to Commerce 
to conduct their reviews within strict time limits, to provide 
a statutory or regulatory basis for their views, and to 
participate in a dispute settlement process at appropriate 
political levels.
    It is important to note in that process that some 96 
percent of the applications that we review are resolved by 
interagency consensus at the working level. Those were there 
are differences of opinion are by far the minority and they are 
worked out in the dispute settlement process that I referred to 
that is implemented in the President's Executive Order of 
December 1995. Thus far all specific license disputes have been 
settled and have not had to be escalated beyond the Assistant 
Secretary level.
    With respect to streamlining, we have updated controls on a 
wide variety of equipment, including high-performance 
computers, in order to reflect rapid technological advances 
that have made previously controlled items old technology 
widely available from numerous foreign sources.
    Let me say a couple words about computers, if I may, Mr. 
Chairman, in view of your remarks.
    In 1992, we treated a computer capable of running at 195 
Million Theoretical Operations per Second or MTOPS as a 
supercomputer subject to strict controls. Today, personal 
computers that exceed this level of performance are being sold 
for less than $2,000 at retail stores such as Best Buy, and 
Radio Shack, and through mail order catalogues.
    Not having seen your back room in a while, Mr. Chairman, I 
suspect the computers that are in there are supercomputers, 
according to the 1995 definition, and I suspect the ones in 
your personal office are in that same category.
    When President Clinton took office, he was urged by 
Congressional leaders of both parties to make long overdue 
reforms in this area, and I believe our efforts to do that have 
been a model of good government decision making. The 
President's 1995 decision was the result of a joint interagency 
recommendation based on work that various agencies, including 
the Defense Department, did internally as well as a private 
sector study. The studies came to similar conclusions--that 
advances in computing technology were making ever-higher 
performing computers widely available internationally to the 
point where controls on them would be ineffective. In addition, 
they concluded that the level of computer power needed for a 
number of activities, including nuclear weapons development, 
was already widely available abroad. Other functions, which we 
wanted to protect, required performance levels well above the 
levels that the President ultimately set in his decision of 
October of 1995.
    It is also worth noting that none of these studies took 
full account of the rapid development of semiconductor 
technology that has permitted significant upgrading of existing 
machines by adding processors, as well as taking into account 
parallel processing, the linking together of many smaller 
computers to achieve the same effect as a much larger machine.
    Both of these developments have had an enormous impact on 
making high-performance computers essentially commodity 
products. In 1996, for example, the average--not the highest, 
but the average performance level for a multiple processor was 
6,923 MTOPS, and that is forecast to rise to well over 10,000 
MTOPS this year.
    The average level for a single processor this year is 655 
MTOPS; in other words, a single processor is now over the level 
of what we considered a supercomputer 5 years ago, and that 
level is forecast to rise to 1,135 next year, and the level of 
the highest-performing single processor right now is higher 
than 1,135 MTOPS.
    I make these points, Mr. Chairman, to illustrate, first of 
all, the rapid pace of technological development in this field 
and, second, to point out that this is the real issue when it 
comes to the availability and the ubiquity of this technology. 
It is not primarily a question of whether the Indians or the 
Russians or the Chinese are developing indigenous computers on 
their own. What they are doing is demonstrating what everybody 
else in the world was demonstrating, which is their ability to 
string lots of small computers together or to buy commodity 
chips and build advanced computers through upgrades and through 
parallel processing. This is, from the standpoint of people who 
are concerned about this technology getting out there, not good 
news, but the fact is it is out there and, in fact, it has been 
out there for a good while.
    Our regulations and our policy prohibit the export under a 
license exception, which means without advance approval by the 
government, of computers that the exporter knows will be used 
to enhance computational power above the eligibility limits 
allowed for particular countries.
    Beyond that, controlling computers today with complete 
effectiveness would really mean individually licensing 
computers down to the level of those in your office, which 
would be absurd administratively and would be disastrous 
economically for this sector and all of the secondary and 
tertiary sectors of our economy that depend upon it.
    The President's policy is a reflection of the reality of 
computer technology today. It is available abroad and is 
rapidly increasing in power and speed. Controls on all but the 
highest levels have limited utility, and efforts to control at 
lower levels will not only be unsuccessful, they will limit our 
ability to widely disseminate American standards, American 
software, and American hardware and, thereby, damage our 
companies economically.
    There has already been considerable consolidation within 
the high-performance computing industry. These companies depend 
significantly on their exports for their survival, and their 
survival, I would argue, is essential not only to our economic 
health and growth, but also to our own national security.
    In the area of regulatory reform, for the first time in 
over 40 years, we clarified and simplified our regulations 
through a comprehensive rewrite that made them more user 
friendly and easier to enforce. All of that was in line with 
the goals set by the Trade Promotion Coordinating Committee, 
which is an organization that the Congress authorized, 
actually, while I was still here in 1992.
    With respect to multilateral cooperation, the 
administration has worked hard to establish the Wassenaar 
Arrangement, which deals with multilateral controls on exports 
of conventional arms and sensitive dual use equipment. This is 
a particularly important development as we transition from 
East-West Cold War controls to a regime that focuses upon 
transfers of equipment and technology that could enhance 
conventional military capabilities in destabilizing ways or 
increase the access of rogue nations to weapons of mass 
destruction or the means to deliver them.
    I also want to note, Mr. Chairman, that one of the most 
important things I think we have done and one of the least 
heralded is our work with many of the newly independent States 
of the former USSR and Central and Eastern Europe to help them 
develop effective export control systems.
    These initiatives are particularly important since many of 
these countries possess strong technical capabilities which can 
support weapons proliferation programs. They've got a lot of 
equipment, they've got a lot of scientists, but they don't have 
a lot of experience with border controls. And what we have 
done, what Defense has done, what the Customs Service has done, 
what the State Department has done is to work with these 
countries to train their personnel to supply them with the 
equipment that they need to maintain competent export control 
systems, and in some cases to help them write their laws and 
also to help them write their regulations.
    This is a slow process, but the result is countries that 
are newly independent are developing competent export control 
systems for themselves and are learning to appreciate the 
importance of those systems, particularly if they want to 
ultimately join the Wassenaar Arrangement, as some of them 
have--Russia and Ukraine--or other multilateral regimes that 
are out there.
    We think this is a very important program which, 
incidentally, was funded with Nunn-Lugar money through the 
appropriation and authorization proves that the Congress 
undertook in past years. We think it is clearly in our national 
interest to work closely with these countries and to help them 
develop these procedures.
    In all of these initiatives, I also want to mention, Mr. 
Chairman, in view of your reference to a couple of cases, our 
enforcement program at the Bureau of Export Administration 
plays a key role, particularly as we focus more on specific 
end-users and end-uses, and I am glad to point out that 
Congress has supported these efforts through additional funds, 
particularly in view of your status as a senior member of the 
Appropriations Committee. I always like to have the opportunity 
to talk to you about how important enforcement is and how 
important adequate resources to do it are.
    We have, in recent years, undertaken the criminal 
prosecutions of persons who illegally exported zirconium for 
Iraqi munitions, unlicensed equipment for India's missile 
program, brokerage services for Iraqi rocket fuel, and gas 
masks to suspected Aum Shinrikyo terrorists in Japan, just to 
name a few.
    These investigations also included the first civil charges 
and penalties for alleged unlicensed exports of biotoxins which 
are controlled to prevent proliferation. Just 2 weeks ago we 
executed a search warrant on a firm that apparently shipped 
software for integrated circuit design to China without the 
proper license.
    BXA prohibits export of items that would make material 
contributions to proliferation projects abroad, regardless of 
whether such items are specifically listed on our Control List 
in our regulations. Using the Enhanced Proliferation Control 
Initiative provisions of our regs, an exporter must apply for a 
license when he or she knows or is informed by BXA that the 
end-use of an item may be destined for a project or activity of 
proliferation concern. Our regs also prohibit any person from 
supporting proliferation projects in any way, even when there 
are no U.S. products or no export transactions involved.
    As an example, following a joint investigation of several 
agencies, a Long Island resident pled guilty to violating the 
EPCI provisions of our regulations by brokering the sale of 
Chinese-origin ammonium perchlorate, which is a rocket fuel 
ingredient, for shipment to Iraq. The shipment was stopped. The 
individual was apprehended.
    In order to save a little time, let me skip some comments 
in my formal remarks, Mr. Chairman, and make a few brief 
comments on Russia and China, which I know are countries of 
concern to you.
    Russia is continuing to develop its own export control 
system and is in the early stages of participating in 
International Export Control Regimes. As I mentioned, it is a 
member of Wassenaar. It is a party to major nonproliferation 
treaties and agreements. It has signed but not yet ratified the 
Chemical Weapons Convention.
    We are encouraged by these developments and hopeful that 
they will enable us to work out problems in a cooperative way, 
including cases of diversion or illegal purchases.
    At the same time, as Mr. Einhorn reported to you last week, 
although Russian policies with respect to the development and 
export of weapons of mass destruction are encouraging, actual 
events from time to time are not consistent with those 
policies. Until we see greater consistency between Russian 
policy and practice, including a Russian export control system 
that is more reliable and fully harmonized with our own--and we 
are working with them on that and that of our other Wassenaar 
partners--we will continue to maintain appropriate controls on 
exports to Russia.
    Finally, on China, let me close with a brief note. The 
administration policy toward China, as you know, is one of 
constructive engagement. We seek to engage with China to 
strengthen cooperation in areas where we agree and resolve 
differences where we do not.
    Our overall goal is to encourage China to become integrated 
into the world system and to meet international norms of 
behavior in nonproliferation, in export controls, as well as 
other areas. We believe that expanding trade, business, 
academic, and government contacts with China supports this 
goal.
    The administration rejects the view that China is an enemy 
that must be contained. Our export control policy toward China 
seeks to support our engagement strategy and the creation of 
higher paying export-based jobs in the United States while 
denying licenses for items whose export would pose significant 
national security risks to the United States.
    For this reason, the vast majority of U.S. exports to China 
proceed with no objections by the U.S. Government. However, we 
scrutinize carefully exports which might raise national 
security concerns. We also continue to maintain Tiananmen 
Square sanctions, which limit the items that can be licensed 
for China. Where appropriate, we impose sanctions on Chinese 
entities for proliferation or other activities consistent with 
U.S. law.
    I would also note in passing, Mr. Chairman, as an example 
of the scrutiny that we provide, the licensing data that we 
have for China suggests that over the last several years the 
denial rate has tripled compared to previous years. We are 
spending a great deal of time on Chinese license applications 
and examining them very carefully.
    We are proud in this administration of our Strategic Trade 
and Non-proliferation record. We think we have developed an 
effective interagency process that facilitates legitimate 
trade, while restricting transfers that are inimical to our 
national interests. We have strengthened our enforcement 
capabilities with your support, and we have worked effectively 
with the business community to enlist their support for our 
control initiatives, which is absolutely critical.
    In the years ahead, we will continue to try to do exactly 
those same things. We also look forward to working with the 
Congress more closely even than we have to those same ends.
    Thank you.
    [The prepared statement of Mr. Reinsch follows:]

        PREPARED STATEMENT OF UNDER SECRETARY WILLIAM A. REINSCH

 Clinton Administration Strategic Trade and Non-Proliferation Control 
                                 Agenda

                              Introduction

    I am pleased to be here today to discuss the Clinton 
Administration's strategic trade control program and to explain how it 
addresses the proliferation and other security threats we face in an 
era of major geopolitical transformation. The President considers an 
effective strategic trade control program to be a critical element of 
our overall national security posture, and he has directed us to 
constantly update our system so that it focuses on the new threats we 
face today.
    Since the end of the Cold War, crafting export control policy has 
become more difficult because the world is more complex and the battle 
lines between competing interests less defined. The Cold War, as long 
and costly as it was, had a certain elegant simplicity. The United 
States and its allies had a clear enemy, and we largely agreed on how 
it should be contained. Economic sacrifice was often asked and usually 
made by countries and companies in the name of containment, and that 
worked.
    Now that familiar structure has been replaced by less defined and 
more ambiguous threats no longer confined to a handful of relatively 
predictable actors. The immediate threats are now terrorism and the 
proliferation of weapons of mass destruction to a handful of smaller, 
geographically diverse rogue states.
    At the same time, the rapid spread of advanced technology in a 
globalizing economy has made critical items widely available, and it 
has greatly increased the number of nations capable of producing 
advanced technology. As a result, the United States does not have a 
monopoly on these items, if it ever did, and it has become harder to 
reach international consensus on what threats we face and harder to 
enforce any agreements we do reach. For many nations, economic 
objectives are now paramount as they seek to penetrate new markets. 
Yesterday's adversaries are today's customers, and yesterday's allies 
are today's competitors.
    Even when a policy is clear, our ability to implement it is not. 
The world abhors chemical and biological weapons, for example, but they 
can be produced with forty-year-old technologies using feedstocks and 
equipment found in hotel kitchens, breweries, universities and even 
high schools around the world. Building a nuclear weapon does not 
require sophisticated computers. The Administration's response to these 
changed circumstances includes basing its program on four major 
cornerstones:

          (1) Reforming the export licensing process so that all 
        relevant agencies can bring their expertise to the table in a 
        timely manner. This allows for comprehensive interagency review 
        of sensitive transactions while ensuring that the process does 
        not put U.S. exporters at a disadvantage.
          (2) Streamlining controls so they focus on items that pose 
        the greatest threat to our security.
          (3) Clarifying our regulatory regime so that exporters can 
        better understand their obligations and improve their internal 
        compliance programs.
          (4) Strengthening multilateral control systems.

                       Principal Accomplishments

    With respect to process reform, we have, through Executive Order, 
revamped the licensing process so that all relevant agencies can review 
all export license applications, if they wish. In return for that 
expansion of review authority, the other agencies have committed to 
Commerce to conduct their reviews within strict time limits, to provide 
a statutory or regulatory basis for their views, and to participate in 
a dispute settlement process at appropriate political levels.
    Thus far, this system appears to be working. Agencies are taking 
their responsibilities seriously, and processing times are down, except 
for licenses that formerly were not reviewed by other agencies. 
Commerce has sought and will continue to seek delegations of authority 
from the other agencies narrowing the scope of licenses they wish to 
see.
    It is important to note that some 96 per cent of the applications 
we review are resolved by interagency consensus at the working level. 
Those where there are differences of opinion are by far the minority of 
what we consider, and they are worked out in the dispute settlement 
process I referred to. Thus far all specific license disputes have been 
settled and have not had to be escalated beyond the assistant secretary 
level.
    With respect to streamlining, we have updated controls on high 
performance computers, semiconductors and semiconductor manufacturing 
equipment, Beta-test software, telecommunications equipment, and 
chemical mixtures, among others. These changes reflect rapid 
technological advances that have made previously controlled items 
``old'' technology widely available from numerous foreign sources.
    For example, in 1992 we treated a computer capable of running at 
195 Million Theoretical Operations per Second (MTOPS) as a 
supercomputer subject to strict controls. Today, personal computers 
that exceed this level of performance are being sold for less than 
$2000 at retail stores such as Best Buy and Radio Shack and through 
mail order catalogues.
    When President Clinton took office he was urged by Congressional 
leaders of both parties to make long overdue reforms in this area, and 
I believe our policy has been a model of good government decision 
making. The President's 1995 decision was the result of a joint 
interagency recommendation based on work that various agencies, 
including the Department of Defense, did internally, as well as a 
private sector study. The studies came to similar conclusions--that 
advances in computing technology were making ever-higher performing 
computers widely available internationally to the point where controls 
on them would be ineffective. In addition, they concluded that the 
level of computer power needed for a number of activities, including 
nuclear weapons development, was already widely available abroad. Other 
functions, which we wanted to protect, required performance levels well 
above the levels the President set.
    It is also worth noting that none of these studies took into 
account the rapid development of semiconductor technology that has 
permitted significant upgrading of existing machines by adding 
processors as well as parallel processing--the linking together of many 
smaller computers to achieve the same effect as a much larger machine. 
Both of these developments have had an enormous impact on making high 
performance computers essentially commodity products. In 1996, for 
example, the average performance level for a multiple processor was 
6923 MTOPS, forecast to rise to well over 10,000 this year. The average 
level for a single processor this year is 655 MTOPS, forecast to rise 
to 1135 next year.
    Our regulations prohibit the export under a license exception of 
computers that the exporter knows will be used to enhance computational 
power above the eligibility limit allowed for particular countries. 
Beyond that, controlling computers today with complete effectiveness 
would really mean individually licensing computers down to the level of 
those in your office, which would be absurd administratively and 
disastrous economically.
    The President's policy is a reflection of the reality of computer 
technology today--it is available abroad and is rapidly increasing in 
power and speed. Controls on all but the highest levels have limited 
utility, and efforts to control at lower levels will not only be 
unsuccessful, they will limit our ability to widely disseminate 
American standards and software and damage our companies economically. 
There has already been considerable consolidation within this industry, 
and these companies depend on exports for their survival.
    In the area of regulatory reform, for the first time in over 40 
years, we clarified and simplified the Export Administration 
Regulations through a comprehensive revision and reorganization, making 
them more user-friendly and easier to enforce. As a result, exporters 
have a better understanding of their obligations. All of this has been 
done in accordance with the goals set by the Trade Promotion 
Coordinating Committee (TPCC) in 1993.
    With respect to multilateral cooperation, the Administration has 
worked hard to establish the Wassenaar Arrangement, which deals with 
multilateral controls on exports of conventional arms and sensitive 
dual use equipment. This is a particularly important development as we 
transition from East-West Cold War controls to a regime that focuses 
upon transfers of equipment and technology that could enhance 
conventional military capabilities in destabilizing ways or increase 
the access of rogue nations to weapons of mass destruction or the means 
to deliver them. We continue to work in Wassenaar to build consensus 
with our new partners on strategic controls and sales of military 
equipment.
    The Administration has also worked to strengthen other multilateral 
nonproliferation regimes such as the Australia Group, the Missile 
Technology Control Regime and the Nuclear Suppliers Group by further 
harmonizing implementation procedures and expanding membership when 
possible. These actions not only advance our non-proliferation 
objectives but also enhance U.S. exporters' ability to engage in 
legitimate trade and compete worldwide on a level playing field. 
Finally, we have worked with many of the newly independent states of 
the former USSR and Central and in Eastern Europe to help them develop 
effective export control systems. These initiatives are particularly 
important since many of these countries possess strong technical 
capabilities to support weapons proliferation programs. It is clearly 
in our national interest to work closely with them as they develop the 
legal, regulatory, administrative and enforcement capabilities they 
need to control sensitive exports.
    In all of these initiatives BXA's enforcement program plays a key 
role in protecting our national security and foreign policy interests, 
particularly as we focus more on specific end-users and end- uses, and 
Congress has supported these efforts through additional funds. Through 
our nonproliferation, counter terrorism, and national security export 
enforcement programs, we have conducted hundreds of investigations over 
the last four and a half years. These have led to the criminal 
prosecution of persons who illegally exported zirconium for Iraqi 
munitions, unlicensed equipment for India's missile program, brokerage 
services for Iraqi rocket fuel, and gas masks to suspected Aum 
Shinrikyo terrorists in Japan, just to name a few. These investigations 
also included the first civil charges and penalties for alleged 
unlicensed exports of biotoxins which are controlled to prevent 
proliferation. Just two weeks ago we executed a search warrant on a 
firm that apparently shipped software for integrated circuit design to 
China without the proper license.
    BXA prohibits exports of items that would make material 
contributions to proliferation projects abroad, regardless of whether 
such items are specifically listed on the Commerce Control List in the 
Export Administration Regulations (EAR). Under the Enhanced 
Proliferation Control Initiative (EPCI) provisions of the EAR an 
exporter must apply for a license when he or she knows or is informed 
by BXA that the end use of an item may be destined for a project or 
activity of proliferation concern. In addition, the EAR prohibits any 
US person from supporting proliferation projects in any way--even when 
there are no U.S. products or no export transactions involved. For 
example, following an investigation by Commerce, Customs and FBI, a 
Long Island resident pled guilty to violating the EPCI provisions of 
the EAR in that he brokered the sale of Chinese-origin ammonium 
perchlorate, a rocket fuel ingredient, to Iraq. The shipment was 
stopped. This ``catch-all'' control regime is comprehensive and 
provides an important underpinning to our overall strategic trade 
control program.

                             Future Trends

Chemical Weapons Convention
    The Chemical Weapons Convention represents a critical step forward 
in our effort to counter the proliferation of weapons of mass 
destruction by establishing an international norm whereby nations agree 
to ban an entire class of weapons. BXA will focus on two major areas--
obtaining data declarations from about 2000 non-governmental plant 
sites and coordinating international inspections of those facilities. 
Our objective is to ensure compliance with U.S. treaty obligations in a 
manner that minimizes costs of compliance for US industry and maximizes 
protection of confidential business information.

         Further Export Control Liberalizations Will Be Limited

    We are down now to less than 9,000 licenses annually, and, 
increasingly, they are limited to items that are multilaterally 
controlled or items that are controlled to terrorist or other rogue 
states where our policy is unlikely to change in the short run. 
Accordingly, we are not likely to see many dramatic control list 
modifications in the near term. Nevertheless, we have an ongoing need 
to keep our controls up to date with advances in technology and 
spreading foreign availability. In sectors like electronics, where 
product life cycles are short, we need to review our policies regularly 
to make sure we are not continuing to control old generation items that 
are now widely available from other sources.
    I know that at least two nations are of particular interest to this 
Committee with respect to our export control efforts--Russia and China. 
Let me comment briefly on each.
Russia
    Russia is continuing to develop its own export control system and 
is in the early stages of participating in international export control 
regimes. It is a member of Wassenaar and just signed the NATO-Russia 
Founding Act which provides a framework for a new substantive 
relationship between NATO and Russia. It is a party to major non-
proliferation treaties and agreements. It has signed but not yet 
ratified the CWC, as the Russian Parliament still has the CWC before 
it. BXA is active in providing direct training and support to working 
with Russian (and NIS) trade and export control officials under our 
Nonproliferation Export Control Cooperation program. We are encouraged 
by these developments and hopeful that they will enable us to work out 
problems in a cooperative way, including cases of diversion or illegal 
purchases. At the same time, as Mr. Einhorn reported to this Committee 
last week, although Russian policies with respect to the development 
and export of weapons of mass destruction are encouraging, actual 
events from time to time are not consistent with those policies. Until 
we see greater consistency between Russian policy and practice, 
including a Russian export control system that is more reliable and 
fully harmonized with our own and that of our other Wassenaar partners, 
we will continue to maintain appropriate controls on exports to Russia.
China
    Let me close by briefly addressing our licensing policy toward 
China. The Administration policy toward China is one of constructive 
engagement. We seek to engage with China to strengthen cooperation in 
areas where we agree and resolve differences where we do not. Our 
overall goal is to encourage China to become integrated into the worls 
system and to meet international norms of behavior, in nonproliferation 
and export controls, as well as other areas. We believe that expanding 
trade, business, academic, and government contacts with China is 
supportive of this goal.
    The Administration rejects the view, held by some of our critics, 
that China is an enemy that must be contained. Our export control 
policy toward China seeks to support our engagement strategy and 
creation of higher-paying, export-based jobs in the U.S., while denying 
licenses for items whose export would pose significant national 
security risks to the U.S. For this reason the vast majority of U.S. 
exports to China proceed with no objections by the U.S. Government. 
However, we scrutinize carefully exports which might raise national 
security concerns. We also continue to maintain Tiananmen sanctions, 
which limit the items that can be licensed for China. Where appropriate 
we impose sanctions on Chinese entities for proliferation or other 
activities, consistent with U.S. laws.

                               Conclusion

    The Clinton Administration is proud of its strategic trade and non-
proliferation record. We have developed an effective interagency 
process that facilitates legitimate trade while restricting transfers 
that are inimical to our national interests. We have strengthened our 
enforcement capabilities, and we have worked effectively with the 
business community to enlist their support for our control initiatives. 
In the years ahead, we will continue our efforts to work closely with 
the Congress so that we can present a united front to the world 
community on nonproliferation and counter-terrorism.

    Senator Cochran. Thank you very much for your comments and 
for your statement, which we have put in the record in full.
    We will now go to Dr. Wallerstein for his comments. We have 
a copy of your statement, Dr. Wallerstein, and we will put that 
in the record in full and encourage you to make such summary 
comments as you think would be helpful to the Subcommittee.
    You may proceed.

TESTIMONY OF MITCHEL B. WALLERSTEIN, DEPUTY ASSISTANT SECRETARY 
        FOR COUNTERPROLIFERATION, DEPARTMENT OF DEFENSE

    Mr. Wallerstein. Thank you, Mr. Chairman. I am pleased to 
do so.
    Secretary of Defense Cohen stated in his 1997 annual report 
that technology security and export controls are an important 
element in strengthening the preventive defense pillar of U.S. 
defense strategy. Secretary Cohen emphasized that DOD's 
technology security efforts serve two main purposes; first, 
they seek to prevent the proliferation of nuclear, biological, 
and chemical weapons--what we refer to as NBC weapons--and 
their means of delivery, which are primarily ballistic and 
cruise missiles.
    Secondly, export controls seek to preserve U.S. military 
technological advantages by controlling conventional arms and 
sensitive dual-use goods, services, and technology.
    Proliferation threatens U.S. national security interests. 
There is certainly no question about that. It can exacerbate 
regional instabilities and increase the threats to U.S. 
interests worldwide, particularly in regions where we may be 
likely to deploy forces, such as Northeast Asia and the Persian 
Gulf.
    DoD believes that this proliferation threat can be 
effectively addressed through support for nonproliferation 
regimes, promotion of effective national export controls, and 
close export control cooperation with foreign governments that 
are responsible members of the world community and that share 
our concerns regarding proliferation.
    We know that carefully targeted and rigorously enforced 
export controls can and do dramatically slow the pace of 
proliferation and raise the cost to potential proliferators.
    We also believe that it is important to continue to 
carefully regulate exports of potentially destabilizing 
conventional arms and sensitive dual-use technologies. It is no 
coincidence that the countries seeking NBC weapons and missile 
delivery systems are also simultaneously attempting to build up 
their conventional weapons capabilities.
    Let me also note that the Department of Defense sees no 
signs that the underlying forces, which are causing NBC weapons 
proliferation and destabilizing conventional arms build-ups is 
abating. The post-Cold War era is characterized by global 
diffusion of technology and increasing indigenous expertise, 
which contributes to more widespread production of high 
technology goods in many regions.
    That production, in turn, makes possible the application of 
advanced civilian technologies to military users.
    DoD has special responsibility to provide our Armed Forces 
with the best and most technologically advanced equipment for 
fighting future conflicts and for protecting the safety of 
these men and women. Our fighting men and women performed 
brilliantly in Desert Storm in large measure because they had 
the most advanced technology, which they needed to maintain 
conventional superiority on the battlefield.
    We must continue to provide the most advanced equipment to 
our fighting forces and ensure that this equipment is superior 
to that of any foe. Export controls are essential in 
maintaining our technology lead in key military systems.
    Let me emphasize a few major principles that I believe 
should be kept in mind in implementing export controls.
    First, is the need for a strong policy on which to control 
and, as required, to impose conditions or to deny sensitive 
exports to any destination for reasons of national security or 
foreign policy.
    Second is the need to retain substantial administration 
flexibility in both establishing and implementing controls.
    And third is the need to maintain a sufficiently broad 
basis for imposing unilateral controls under certain limited 
conditions, while we endeavor at the same time to make such 
controls more fully multilateral in their impact.
    I believe that we have already moved effectively to 
implement these principles by improving the efficiency and the 
transparency of the U.S. Government export control process.
    As Under Secretary Reinsch has noted, in a recent Executive 
Order, the President has directed that there will be 
appropriate interagency review of all dual-use export licenses, 
thereby addressing a Congressional concern that the Department 
of Defense has on occasion in the past not been afforded the 
opportunity to review certain dual-use exports.
    The Executive Order also imposes, as Under Secretary 
Reinsch said, rigorous time constraints that allow us to 
account for national security concerns while still providing 
for expeditious review of license applications.
    The new Executive Order is an example of this 
administration's efforts to streamline the export control 
process, to tighten controls where necessary, but still to 
ensure that U.S. exporters remain competitive in the world 
market.
    At the same time, multilateral export control frameworks 
have been enhanced by the establishment of theWassenaar 
Arrangement on export controls for conventional arms and dual-
use goods and technologies. This Wassenaar Arrangement--which, 
by the way, the name derives from the town outside The Hague in 
the Netherlands where the agreement was negotiated--compliments 
other existing multilateral nonproliferation regimes 
specifically directed at curtailing the spread of weapons of 
mass destruction and their means of delivery. This includes the 
Nuclear Suppliers Group, the Missile Technology Control Regime 
and the Australia Group.
    In sum, Mr. Chairman, proliferation is a multifaceted 
challenge that spans the full spectrum of conflict and 
threatens peace and stability at different levels--globally as 
well as regionally. It is not a challenge that will soon go 
away. For this reason, it is appropriate and necessary to use a 
wide range of national and international resources, including 
effective export controls, in our attempts to control the 
proliferation of nuclear, biological, and chemical weapons, 
missile delivery systems, as well as the dual-use goods and 
technologies that contribute to them.
    I will conclude my statement there and am happy to respond 
to your questions.
    [The prepared statement of Mr. Wallerstein follows:]

             PREPARED STATEMENT DR. MITCHEL B. WALLERSTEIN

    Thank you, Mr. Chairman, for the opportunity to testify on the 
topic of proliferation and U.S. export controls.
    Secretary of Defense Cohen stated in his 1997 annual report that 
technology security and export controls are an important element in 
strengthening the preventive defense pillar of U.S. defense strategy. 
Secretary Cohen emphasized that DOD's technology security efforts serve 
two main purposes. First, they seek to prevent the proliferation.of 
nuclear, biological, and chemical (NBC) weapons and their means of 
delivery--primarily ballistic and cruise missiles. Second, export 
controls seek to preserve U.S. military technological advantages by 
controlling conventional arms and sensitive dual-use goods, services, 
and technologies.
    Proliferation threatens U.S. national security interests. It can 
exacerbate regional instabilities and increase the threats to U.S. 
interests worldwide--particularly in regions where we may be more 
likely to deploy forces, such as Northeast Asia and the Persian Gulf. 
DOD believes that this proliferation threat can be effectively 
addressed through support for nonproliferation regimes, promotion of 
effective national export controls, and close export control 
cooperation with foreign governments that are responsible members of 
the world community and that share our concerns regarding 
proliferation. We know that carefully targeted and rigorously enforced 
export controls can and do dramatically slow the pace of proliferation 
and raise the cost for potential proliferators.
    We also believe that it is important to continue to carefully 
regulate exports of potentially destabilizing conventional arms and 
sensitive dual-use technologies. It is no coincidence that countries 
seeking NBC weapons and missiles are also simultaneously attempting to 
build up their conventional weapons capabilities.
    Let me also note that DOD sees no signs that the underlying forces 
which are causing WMD proliferation and destabilizing conventional arms 
build-ups are abating. The post-Cold War era is characterized by global 
diffusion of technology and increasing indigenous expertise contributes 
to more widespread production of high technology goods in many regions. 
That production, in turn, makes possible the application of advanced 
civilian technologies to military uses.
    Because of the increasingly diverse regional threats to our 
security interests particularly in regions where U.S. forces are now or 
may be deployed, the U.S. must demonstrate leadership, in part, by 
maintaining a strong, effective export control system as one element of 
a broader nonproliferation and regional strategy. DOD supports 
effective export controls not only on armaments, such as advanced 
weapons platforms, but also on enabling dual-use goods and 
technologies, such as advanced machine tools and high performance 
computers (including supercomputers) that are needed to manufacture, 
maintain, and use these arms.
    In this regard, DOD has a special responsibility to provide our 
armed forces with the best and most technologically advanced equipment 
for fighting future conflicts and for protecting their safety. Our 
fighting men and women performed brilliantly in Desert Storm, in large 
measure because they had the advanced technology needed to service and 
maintain conventional superiority on the battlefield. We must continue 
to provide the most advanced equipment to our fighting forces, and 
ensure that this equipment is superior to that of any foe. Export 
controls are essential in maintaining our technology lead in key 
military systems.
    Let me emphasize a few major principles that I believe should be 
kept in mind in implementing export controls. First is the need for a 
strong policy basis on which to control and, as required, to impose 
conditions or to deny sensitive exports to any destination for reasons 
of national security or foreign policy. Second is the need to retain 
substantial Administration flexibility in both establishing and 
implementing controls. Third is the need to maintain a sufficiently 
broad basis for imposing unilateral controls under certain 
circumstances, while we endeavor at the same time to make such controls 
more effective by multilateralizing them to the greatest extent 
possible.
    I believe that we have already moved effectively to implement these 
principles by improving the efficiency and transparency of the U.S. 
Government export control process. In a recent Executive Order the 
President has directed that there will be appropriate interagency 
review of all dual-use categories of licenses, thereby addressing 
Congressional concerns that the Department of Defense has, on occasion, 
not been afforded the opportunity to review certain sensitive dual-use 
exports. The Executive Order also imposes rigorous time constraints 
that allow us to account for national security concerns, while still 
providing for expeditious review of license applications. The new 
Executive Order is an example of the Administration's efforts to 
streamline the export control process, tightening controls where 
necessary, but still ensuring that U.S. exporters are competitive in 
the world market.
    I also would like to point out that the multilateral export 
controls framework has been enhanced by the establishment last year of 
the Wassenaar Arrangement on Export Controls for Conventional Arms and 
Dual-Use Goods and Technologies. The Arrangement complements other 
existing multilateral non-proliferation regimes specifically directed 
at curtailing the spread of weapons of mass destruction and the means 
to deliver them (the Nuclear Suppliers Group, the Missile Technology 
Control Regime, the Australia Group). The Wassenaar Arrangement has 33 
founding members, and it is intended to increase transparency and 
responsibility on worldwide transfers of munitions and sensitive dual-
use goods. Members include traditional U.S. allies, Russia, Ukraine, 
and other countries of the former Warsaw Pact as well as select 
countries from Asia and Latin America. A principal objective of the new 
regime is to identify and block potential security problems before they 
become major threats. As the first effort to establish worldwide 
restraints on arms exports, the Arrangement is intended to prevent 
acquisition of conventional weapons by countries that threaten 
international peace and stability.
    The Department of Defense also promotes more effective multilateral 
controls by, among other things, emphasizing U.S. Government efforts to 
help upgrade other nations' export control systems and to make more 
rigorous the rules and procedures of the nonproliferation regimes. The 
Administration has decided that dealing with the proliferation threat 
requires effective export controls worldwide. Through legislation such 
as the Freedom Support Act and subsequent funding appropriations (e.g., 
Cooperative Threat Reduction & Nonproliferation and Disarmament Fund) 
the Congress has also made the establishment of worldwide effective 
export controls a priority of U.S. foreign policy. Consequently, DOD 
directly supports the Administration's and Congress's goals in this 
area.
    In sum, proliferation is a multi-faceted challenge that spans the 
full spectrum of conflict and threatens peace and stability at 
different levels--globally as well as regionally. It is not a challenge 
that will soon go away. For this reason, it is appropriate and 
necessary to use a wide range of national and international resources, 
including effective export controls, in our attempts to control 
proliferation.
    Mr. Chairman, this concludes my formal statement. I would be happy 
to answer any questions that you or the other Committee members might 
have.

    Senator Cochran. Thank you very much, Mr. Secretary.
    Before proceeding with questions, I want to welcome our 
good friend from Illinois, Senator Durbin, and yield to him for 
any opening comments that you would like to make.
    Senator Durbin. I will just ask questions later.
    Senator Cochran. Secretary Reinsch, in your comments that 
you made to the Committee, you talked about the fact that in 
this day of emerging technologies that they are much 
moreadvanced today than they were even 4 years ago and, 
particularly, in computers, that there already is out there the 
capability to develop computers with the power that we used to 
call supercomputers that are now ordinary, everyday computers. 
But isn't it a fact that only the U.S. and Japan are the 
manufacturers who are capable of manufacturing the true 
supercomputers in today's jargon?
    Mr. Reinsch. I would like to say that we cornered the 
market on that, Mr. Chairman, because I think that would be 
good news, and we have a study underway to determine the answer 
to that question.
    Right now, based on the information available, I would say 
that is, by and large, correct, but it misses the point. As I 
said in my statement the real issue is upgrades, parallel 
processing, the ability to assemble computer power through work 
stations and the acquisition of single and multiple processors 
that are uncontrolled, and widely available, and those are 
widely produced in lots of other countries.
    Senator Cochran. A General Accounting Office review of 
computer export data indicates that it is unlikely that Russian 
military and nuclear weapons laboratories had acquired 
computers capable of more than approximately 3,500 MTOPS--
million of theoretical operations per second--due to a lack of 
known sales of computers above that capability from the United 
States or Japan, and then they say these are the only countries 
currently producing computers above that level.
    Is that a correct statement? Is GAO right about that; that 
the United States and Japan are the only countries currently 
producing computers above the 3,500 MTOPS level?
    Mr. Reinsch. I cannot, at this point, make a convincing 
case that that is wrong, Mr. Chairman. There was testimony on 
the House side on this point by Ken Flamm, formerly of the 
Defense Department and now at the Brookings Institution, that 
suggested that there were some other producers, but I don't 
have that information, and I am not prepared to put it forward. 
For purposes of this discussion, I am happy simply to assume 
that that is correct.
    The question, of course, really is, though, what would the 
Russians have done or what would they have been able to do had 
an American company not sold them the computers that are at 
issue? Would they have been able to obtain comparable computing 
power through other means. I think the answer to that is yes. 
They didn't have to go down that road because the sale took 
place.
    Senator Cochran. The policy that this administration now 
has, as I understand it, classifies different countries to 
which U.S. manufacturers are permitted to export comuters of 
certain capabilities. There are Computer Tier I countries, 
including Western Europe, Japan, Canada, Mexico, Australia, New 
Zealand. No license is required for supercomputer exports to or 
re-exports among those countries. So that is a license-free 
zone that we have described, as I understand it.
    There is a second tier in the new policy, which includes 
South America, South Korea, the ASEAN nations, Hungary, Poland, 
the Czech Republic and others, where no license is required to 
export supercomputers with capabilities up to 10,000 MTOPS. 
Record keeping and reporting by the manufacturer, though, is 
required.
    And then there are the Tier III countries, and those are 
the ones of particular concern that we are talking about today, 
comprised of India, Pakistan, all of the Middle East not 
included in other tiers, states of the Former Soviet Union, 
China, Vietnam, and the rest of Eastern Europe. Export 
requirements under this Tier III licensing requirements are 
somewhat complicated depending on who the end user is, military 
or civilian, and what the end use is, military or civilian. And 
the license applications, required, as I understand it, for 
these countries are supposed to be examined on a case-by-case 
basis, and these individual validated export licenses are 
required to export to or re-export among Tier III countries 
computers capable of greater than 2,000 MTOPS to military end 
users or end uses in these countries. This, of course, includes 
nuclear, biological, chemical, or missile-related end-uses.
    Is that a fair characterization of our policy and the 
regulations that your office is responsible for enforcing?
    Mr. Reinsch. Yes, it is, Mr. Chairman.
    The only minor point I would make is with respect to Tier 
III and the Middle East. It is the non-embargoed Middle East. 
There is a Tier IV, which includes a number of countries in the 
Middle East, like Iran and Iraq, where the effective limit is 
six MTOPS, and it hasn't changed in years.
    Senator Cochran. Right. Cuba, Iraq, Iran, Libya, North 
Korea, Sudan, and Syria.
    Mr. Reinsch. Yes. They are in a sep----
    Senator Cochran. There is another tier, Tier IV.
    Mr. Reinsch. Yes. I wouldn't want anyone to think that they 
are in Tier III.
    Senator Cochran. That is the embargo. No supercomputer 
sales are permitted to those Tier IV countries; is that 
correct?
    Mr. Reinsch. Well, effectively. Our limit is six MTOPS, 
which eliminates everything.
    Senator Cochran. That is a typewriter, isn't it? 
[Laughter.]
    Mr. Reinsch. Yes. Approximately.
    Your description of the Tier III policy, as I heard it, is 
correct.
    Senator Cochran. Let me ask you this. If I am an exporter 
and I want to sell a supercomputer to one of these Tier III 
countries, China, for example, is there any way I can consult 
and get a list of suspected end users that would be prohibited 
under this policy? Can I consult with you so you can give me a 
list of those that I shouldn't sell to in China, for example, 
who are military end users?
    Mr. Reinsch. There are approximately three things you can 
do. You can always consult with us, and people do that. 
Normally, that consultation takes the form of a company coming 
in and saying, ``We intend to do business with X. Is that OK? 
What do you think of X? Do you have information about Entity X, 
whatever it is? Is that an end user that would require a 
license?''
    We are prepared and have told the companies that we are 
prepared to answer those questions when they come in. We had a 
meeting with--this is a fairly small universe of producers, by 
the way, six or seven--and we had a meeting with them shortly 
after this policy became effective and went over the procedures 
that we wanted them to follow, the kinds of records that we 
wanted them to keep, which they have been keeping, and the 
opportunities they had to consult. They can come in and do 
that.
    In addition, second, we can inform them individually or 
collectively of end users that are problematical within the 
meaning of the President's policy or, alternatively, third, we 
can publish in the Federal Register the names of entities that 
we have identified as proliferation end users for which a 
license would be required.
    We have begun to do that. We have not done it extensively 
so far. There are intelligence sources and methods issues that 
come up frequently, as well as some other considerations.
    We have thus far published--and this is a policy that we 
adopted last year in terms of a mechanism for working these 
things through and making a decision--thus far we have 
published two names, and we expect, within the next week or so 
to publish a significantly longer list of more names that will 
include Chinese names. The two names that we published were in 
Israel and India.
    Senator Cochran. It is my understanding that the Department 
of Commerce has refused up to now to make available any listing 
of military users in Russia or in China or in India or in 
Pakistan and that the only one, when asked, that was identified 
was in Israel. Is this sort of trying to shut the door after 
everything is already out?
    Mr. Reinsch. This is a frustrating question, which I know 
has been the subject of some comment in the newspapers. The 
reason I am frustrated, frankly, Mr. Chairman, is because you 
are sitting here talking to the two people that have been 
trying to get this information out and publish this information 
for a long time.
    The decision to publish information, however, is not one 
that resides exclusively in a single agency. This is an 
interagency decision. As I said, with virtually all of these 
matters there are sources and methods, and intelligence-related 
questions that have to be debated and considered, and sometimes 
we don't publish, frequently we don't publish for that reason, 
even though we have identified someone that, for other reasons, 
ought to be published.
    Senator Cochran. The practical result has been to put the 
exporters on the honor system and to give them the 
responsibility for determining who is a military end user or 
what will be a likely military end use.
    Mr. Reinsch. I don't agree with that, Mr. Chairman. I think 
that overstates it.
    As I said, we have had a good bit of consultation with 
them, talking to them about what to look for, red flags, what 
kind of indicators they ought to identify in their customer 
business. We have invited them to come in and consult with us 
regularly. In the Russian situation, and I assume you are 
familiar with the facts of that, most of the companies in this 
universe of companies did come in and consult with us about the 
Russian end users and, in fact, they submitted licenses 
acknowledging that these were end users for which licenses 
needed to be submitted. We didn't publish those names, but they 
figured it out. It wasn't very hard to figure it out. They 
consulted with us.
    We declined to approve those licenses. They got the 
message. There is a company that you mentioned that did not get 
that message, apparently, and undertook the sale, and that is a 
matter of investigation right now with the Justice Department, 
and I can't comment further on the case.
    But I would say that, by and large, these companies have 
not had a lot of difficulty figuring out who the military end 
users are and which are not.
    Senator Cochran. There was some statement in your remarks 
about how many supercomputers have been purchased under this 
new policy by China. I think 46 is the number that I remember. 
You may have mentioned that in your testimony over on the House 
side at a hearing there.
    Mr. Reinsch. That is what I said.
    Senator Cochran. You told us a specific number of 
supercomputers that have been purchased in Russia and China. 
How do you know there aren't more than that in those two 
countries? How do you know there are just 46 in China, for 
example, and do you know where they all are?
    Mr. Reinsch. The companies, under the President's policy, 
are required to keep records of all sales worldwide. They have 
done so. They have submitted those records to us. The numbers 
that I cited in that testimony were the numbers that we had 
available at that time that the companies had represented to us 
were the sum total of their sales.
    Now, as with anything in life, there are two possibilities; 
one, they may have forgotten something, and in point of fact, 
we have got some additional ones dribbling in, only one 
additional one for China. But there is always that possibility 
as they go through their records and recalculate.
    There is also the possibility, of course, that they are 
lying to us; that someone is engaging in fraud. That is an 
enforcement matter. That is why I have enforcement agents who 
do a variety of things that I would prefer not to get into 
publicly to test the validity of the information that we're 
given and to work with parties other than the companies 
themselves on those points.
    We don't simply take their word for it. But that is where 
we begin.
    Senator Cochran. Let me ask you this about the end uses to 
which the supercomputers have been put. Are you satisfied that 
none of the supercomputers have been used to upgrade the 
quality of nuclear weapons in China?
    Mr. Reinsch. We have no evidence that any of them have been 
used for that purpose. We have a very high level of confidence 
on that point with respect to all but two, based on the kind of 
end user it is, and there are a couple where we are looking 
into the matter further, but that is not based on any evidence 
that there is a problem. It is based on our desire to learn a 
little bit more about the nature of the end user.
    Senator Cochran. There have been published reports in the 
press that the Chinese Academy of Sciences is involved in 
assisting in the upgrade of nuclear weapons capability or 
missile technology in China. Do you agree with those press 
reports?
    Mr. Reinsch. Mr. Chairman, that is something that the 
intelligence community has looked into in considerable detail. 
We have information on that, but it is classified and I can't 
provide it to you in open session.
    Senator Cochran. Do you have any evidence that any of the 
supercomputers, which have been sold by U.S. firms have 
violated your export control policies that have not been 
reported in the press?
    Mr. Reinsch. Well, I can't keep track of everything the 
press reports. There are three cases that are under 
investigation; the two in Russia, which have been reported in 
the press, and the single one that you alluded to with respect 
to China and the Chinese Academy of Sciences, which has also 
been reported in the press, is one that is being looked at.
    Senator Cochran. And that is the one that is involving the 
Chinese Academy of Sciences?
    Mr. Reinsch. That is correct. That is the one that was 
stated in the press.
    Senator Cochran. Do you know whether Silicon Graphics has 
sold any high-performance computers to countries that are 
proliferation risks other than Russia and China?
    Mr. Reinsch. We have their complete records, Mr. Chairman. 
I would have to look it up. I was focused on China for this 
hearing. We can find out.
    Senator Cochran. I would appreciate your providing that for 
the record, if you could.
    Does the Commerce Department have a list of the 1,100 high-
performance computers which documents the end user, the speed 
of the computer, the date of export, value and the identity of 
the exporter?
    Mr. Reinsch. Yes.
    Senator Cochran. Could you furnish that to the Committee 
for our record?
    Mr. Reinsch. I was afraid you were going to ask me that, 
Mr. Chairman. This is information that is protected by Section 
12(c) of the Export Administration Act. Section 12 of the 
Export Administration Act requires us to provide this 
information to the Congressional Committees of appropriate 
jurisdiction and prohibits them from making that information 
further available except by a vote of the full Committee.
    We have not yet made a judgment as to whether this is a 
Committee of appropriate jurisdiction. The main Committee of 
appropriate jurisdiction in the Senate is the Senate Banking 
Committee, which has not requested this information. I would 
have to consult with my lawyers, frankly. We have not had a 
request from your Committee before and haven't made a judgment 
on whether you fall within the meaning of 12(c).
    Senator Cochran. Since the Nuclear Nonproliferation Treaty 
was signed, this Committee has had the responsibility of 
oversight of compliance with the terms of that agreement, and 
we annually review the status of that and the compliance with 
the treaty terms by signatories. I can recall when I first 
became Chairman of the Subcommittee that had jurisdiction over 
that subject, I met regularly with the ambassador, who is our 
delegate to the Vienna IAEA Conference on the subject of 
safeguards and compliance with safeguards.
    Senator Chuck Percy had the responsibility of chairing this 
Subcommittee at one time. Other Senators have as well. Senator 
Scoop Jackson at one time had responsibilities with respect to 
this subject. The Committee continues to exercise jurisdiction 
over this area of proliferation, and that is the responsibility 
that we are undertaking to discharge in the conduct of these 
hearings. So I think it is clearly established that here in the 
Senate the Subcommittee is the Committee of jurisdiction.
    Having said that, I would be glad to take it up with the 
Chairman of the Committee and other members of the Committee 
for further discussion. But if it is determined that I am right 
about that, we will resubmit that question in writing and ask 
for you to produce that information. But we will be glad to 
explore that further. I respect your position that you are 
taking at this point.
    Mr. Reinsch. You make a very compelling case, Mr. Chairman. 
I hope you can appreciate the situation that I am in. We have 
no reluctance to provide the information to the Congress, and 
we have told the Committees that clearly our--for example, our 
authorizing Committees who made a similar request--that we are 
happy to provide the information. So we don't have any problem 
with it coming to the Congress.
    I have to defend the law as it's written, and I have to 
consult with my lawyers, but I certainly understand the 
strength of your case, and I understand, also, the very broad 
jurisdiction the Government Affairs Committee has.
    Senator Cochran. Dr. Wallerstein, you mentioned that the 
Defense Department has concerns in this area and 
responsibilities as well, and with the interagency guidelines 
that have now been promulgated I assume that part of your 
responsibility is to assess the security risk of the exports of 
these over a thousand high performance computers that we know 
have already taken place.
    Have you come to any conclusion about whether or not these 
exports do pose a new security risk to the United States?
    Mr. Wallerstein. Senator, we review each of these proposed 
exports on a case-by-case basis and provide our views back to 
the Commerce Department, in the case of dual-use licensing and 
to the State Department, in the case of licensing of munitions 
exports.
    In some cases we recommend conditions be imposed on the 
exports; and that can be done, particularly for machines of 
higher capability. So that we may have a higher level of 
confidence that the machine is being used for the purposes that 
are proposed in the export license.
    Based on our case-by-case assessment and on the 
conditionality that we have on occasion recommended, and that 
has been implemented, we have no immediate evidence to suggest 
that the exports to China or to any other country have been 
inimical to U.S. national security interests.
    Senator Cochran. It is my understanding that the 
capabilities of these supercomputers are such that they can be 
used and may have been used to develop smaller nuclear warheads 
for missiles and to improve the accuracy of missiles that are 
used to deliver weapons of mass destruction.
    Do you have any evidence to support the conclusion that 
some of these computers have been used in those ways?
    Mr. Wallerstein. Sir, I have no immediate evidence to 
document the assertion that you are making. That said, I would 
certainly acknowledge that, as Under Secretary Reinsch has 
already indicated, with the global diffusion of computing 
technology, there is wider access to more capable computers.
    I am sure you have heard the assertion made that the 
original designs for the first U.S. nuclear weapons were done 
on slide rules or on very primitive calculating machines. There 
is no question that lower-powered computers can aid in certain 
kinds of military applications, but those computers have become 
commodities at this point in time in 1997.
    What we have determined, and what was integral to the 
change in policy that was implemented in 1995, were that there 
were applications that were well above the levels that we 
permit to be exported without a validated license that are 
essential to U.S. national security, and we have safeguarded 
those applications.
    Senator Cochran. Do you know whether our government, either 
the military or other agencies of our government, has conducted 
any analytical studies to try to assess the threat these 
supercomputers could present to our military or to our national 
security before concurring with the administration's assessment 
of essentially decontrolling as a matter of national interest 
the sale of supercomputers above the 2000 MTOPS threshold?
    Mr. Wallerstein. Senator, I have direct responsibility in 
the Department of Defense for this matter, and I can assure you 
that both in the 1993 computer policy change and, again, in the 
1995 computer policy change, all elements of the Department of 
Defense were integrally involved. This included all parts of 
the Office of the Secretary of Defense as well as the Joint 
Chiefs of Staff and the services.
    Senator Cochran. I have some more questions about China, 
and Russia, and also Iran, but I am going to defer to my 
friend, Senator Durbin, for any questions he might have at this 
point.
    Senator Durbin.
    Senator Durbin. Thank you, Mr. Chairman. And thank you for 
this hearing. I think it is an important and fascinating topic.
    I want to try to come to grips with an understanding about 
the current export policy that this administration has 
instituted. One of the critics of that policy has said that we 
have--I won't use his words, but I will say we have reduced 
export controls on strategic technology to one-tenth of what 
they were under the Bush administration. Under President Bush, 
no computer performing more than 12.5 million operations per 
second could be sold to Russia or China without a license. Now 
computers up to seven billion operations per second can go 
without a license if the sale is not to a nuclear, chemical 
missile or military site.
    Is that a fair characterization of the change in export 
policy?
    Mr. Reinsch. Yes. Strictly in terms of theoretical level of 
performance, yes.
    Senator Durbin. And, of course, then it raises the question 
if we are turning loose this level of technology, this 
expanding level of technology, what controls do we retain in 
that process? I think that is what this hearing is all about.
    I am troubled by some of the things that have been said. 
The whole question of dual use assumes, does it not, some 
cooperation on the part of the purchaser in terms of end use 
and disclosure of that end use?
    Mr. Reinsch. Well, to grant a license the end user has to 
be identified, and we can make judgments about the nature of 
that end user. Those are, in part, made based on 
representations that the end user as well as the American or 
exporter applicant might make. But the licensing process is 
also informed by intelligence information, enforcement 
information, other things that we know about the end user that 
he or she may not tell us or may not want us to know.
    Senator Durbin. So we try, when we don't trust the 
purchaser, to verify the end use through our own surveillance 
within that country?
    Mr. Reinsch. We have a variety of means. Prelicense checks 
is one of them, in which our posts abroad engage in, well, 
exactly what I said, a prelicense check of the facility. There 
have been a couple famous cases in the distant past in the 
1980s, where people have gone out after the fact to look for 
the computer and discovered an empty building and the computer 
had been shipped off somewhere else or discovered that the 
company was a mail drop. There is a lot you can discover with 
prelicense checks. There is a lot you can discover just by 
wandering around a plant to determine the nature of their real 
business, which they may or may not want to tell you.
    The fact is, at the same time, though, it is a reality that 
all exports, when they leave our shore, go into somebody else's 
hands, and we don't have control over them any more. It may be 
somebody in the UK, and you have a high level of confidence in 
what is going to happen. It may be somebody in China and you 
have a lower level of confidence about what is going to happen, 
but it is equally out of our control.
    Senator Durbin. Someone said earlier this century--I can't 
recall the exact source--that a capitalist will sell you the 
rope you will use to hang him.
    I am just wondering, in this instance, whether or not we 
are keeping track of this rope appropriately.
    Let's take one other aspect of this. Let's assume you have 
a conscientious business in the United states that doesn't want 
to get caught selling to someone who is going to misuse this 
product. From what you have said, if they come to their 
government and say, ``Give us some guidance. We would like to 
know which customers to avoid in Russia or China or some of 
these other nations,'' I think your testimony was that there is 
a limited amount that you can tell them.
    Mr. Reinsch. We can tell them a good bit. We can't tell 
them probably as much as they would like, and we can't always 
tell them as much as we know because sometimes we are 
constrained by the way in which we obtain the information from 
revealing even that we have it.
    Senator Durbin. Have we thrown in the towel when it comes 
to export controls? Are we assuming that there are so many 
sources of this technology around the world that we might as 
well let American exporters earn some money and hope that maybe 
at least we'll make a few bucks off of this deal?
    Mr. Reinsch. No, we haven't thrown in the towel at all, 
Senator. I think the conversation is a bit skewed because we 
have been talking exclusively about computers, which is a 
technology that is uniquely difficult to control for the 
reasons I have said.
    In a number of other areas, and I think Dr. Wallerstein can 
mention them, but areas like stealth technology, advanced 
materials, composite materials, very sophisticated electronics, 
chemical precursors, biotoxins, a whole host of things that we 
control, I think our system is very effective.
    Senator Durbin. But these ubiquitous computers that tend to 
be----
    Mr. Reinsch. That is different. It is not unique, but it is 
different.
    Senator Durbin. We don't seem to have much of a handle on 
them. I just wondered why, under the 1995 policy as I 
understand it, most supercomputers sold for civilian purposes 
do not need to be licensed for export by the Federal Government 
and exporters, consequently, cannot be required to track how 
they are used. Is that a fair statement?
    Mr. Reinsch. No. The exporters are required to keep records 
of every sale of high-performance computers.
    Senator Durbin. But I am talking about end use. They can 
certainly give the name of the nominal purchaser, but there is 
no way to track, and what you are suggesting is only through 
spy techniques can we attempt verification.
    Mr. Reinsch. Well, they give us both the--they know both 
the name of the end user and the end use. They know why the 
machine is being is being bought. That is what they tell us. 
Now, if you are asking me how do they know 12 months down the 
road that the machine, A, is still there and, B, is still being 
used for that purpose, that gets back to the control question. 
Although, actually, in the case of computers there is a way to 
tell because these things, particularly the high-performance 
ones, need regular service. I wouldn't want to suggest they 
break frequently, but a standard part of this kind of transfer 
is an ongoing service, and supply, and parts and sometimes 
upgrade relationship with the vendor. So the manufacturers know 
and have an ongoing relationship with the buyer most of the 
time, and know whether the machine is still there and have a 
pretty good idea of how it is being used.
    Senator Durbin. So do we keep or does the company keep and 
file with the government a log, not only of sales and 
purchases, but continued maintenance and repair so that we can 
see if the end use is as it was stated at the originalpurchase?
    Mr. Reinsch. They keep those records. They provide them to 
us on request. In this particular case, we have requested them 
and are receiving them.
    Senator Durbin. We have had a couple instances, have we 
not, in the last few months involving Silicon Graphics that 
suggests that computer sales were made in Russia and China that 
were at least suspect?
    Mr. Reinsch. Yes. That is, as I said, under active 
investigation via the Justice Department. I don't want to go 
into a lot of detail that would prejudice that outcome, but I 
think that is a fair statement.
    Senator Durbin. I am not going to ask you to go into it, 
but I think it really tells the story about this new policy and 
the fact that we have surrendered control in a lot of areas 
that, for whatever reason. I don't know if it is our belief 
that the world market is so rife with these computers that we 
might as well get a piece of the action or whatever reason, but 
we seem to have taken a new approach to this, which is very 
porous and not very accountable, as I see it.
    Mr. Reinsch. If I may, Senator. I am not here to tell you 
that is good news. I guess I am here to tell you that that is 
technological and commercial reality. The reason this is a 
ubiquitous technology is because of the chips. Semiconductor 
chips, single and multiprocessors, most of which now, as a 
single processor, function at a higher level than the entire 
computer that the Bush administration controlled, are out 
there. Lots of countries make them. Lots of countries make them 
in ways that will fit into American products. Upgrades are 
easy. You slide another board in, more chips, and you have got 
more capacity.
    You can string these things together in parallel 
processing. We can export 40 Pentiums and you are at 6,000/
7,000 MTOPS right there.
    I can make it even worse for you. If I were the Chinese, to 
be frank, I wouldn't deal with exports. I would set up a front 
company in this country, buy one, and it wouldn't even be an 
export, and have them do all of the computation I wanted inside 
the United States and ship the data back.
    Senator Durbin. I think it is curious the date of this 
hearing, it's just 1963, June 10, 1963, that President Kennedy 
gave a speech at American University about his vision of the 
end of nuclear weapons in the world and hoped that we would 
reach it and all that has transpired since, including the end 
of the Cold War and a reduction in nuclear warheads. We seem to 
be on the right track there.
    But as we are making tangible, measurable progress at that 
level, it is probably because we are stuck in the mind-set of 
the 1960s and the belief that this is the protection of our 
future.
    It appears that the challenge for the new century is in 
technology, where the right computer can provide, from what I 
have read, as much or more information than nuclear testing 
used to provide in years gone by.
    From what I hear and your testimony, this is not 
controllable. It is not a question of counting warheads. And 
there is such an easy commerce in this technology that holding 
out the prospect of controlling proliferation may be naive.
    I don't know if our export policy makes sense. I have real 
serious questions when it comes to China and certainly as to 
Russia.
    Would a flat prohibition on the sale of dual-use technology 
to countries who refuse end-use verification be effective?
    Mr. Reinsch. Not in the computer area, no, for the reasons 
that you and I have both said.
    Senator Durbin. They will buy it from someone else.
    Mr. Reinsch. Sure. But let me not leave you--I mean, you 
have made some very thoughtful observations, Senator, but let 
me not leave you with as little hope as you have suggested by 
observing that the computer is neither the beginning nor the 
end nor the larger part of our proliferation policy. You can, 
as Dr. Wallerstein said, design a nuclear weapon without one, 
but even if you designed one, you need a lot of--to build a 
bomb, to build a missile you need a lot of things besides a 
computer.
    You need a lot of special materials, beginning with uranium 
or plutonium. You need to be able to have a continuous supply 
of that. There are a lot of other special materials, including 
special steel, that goes into the making of the bomb. A missile 
has all kinds of electronic systems, special materials and 
other things that are an integral part of making it function.
    These things we control, and we control them very 
effectively, and they are not ubiquitous technologies in the 
way that computers are. So I would not, while I am gloomy in 
the sense about the utility or the possibility really of 
controlling a technology that is widespread with respect to 
software and the intellectual [inaudible] computer you can 
export over the phone. Think of the enforcement problems 
associated with that. While I am gloomy about that, I am not 
gloomy about our ability to deter proliferation because there 
are so many other pieces of the puzzle where I think what we 
are doing is very effective.
    Mr. Wallerstein. Senator, let me pick up specifically on 
the nuclear aspect of this, which you were just addressing.
    As you know, the other part of President Kennedy's famous 
statement in 1963 was that he predicted there would be over 20 
nuclear capable States in the 1970's. Of course, that never 
came to be; in part, because, as Under Secretary Reinsch has 
indicated, we control effectively a range of technologies. We 
also have participated and have increased the robustness of the 
Nuclear Suppliers Group and the effectiveness of IAEA.
    The other point to make here is that, while it is certainly 
or it may be the case that some elements of our computer policy 
have had to reflect the growing worldwide availability of 
computers, the level of computational capability that is 
required to run the very sophisticated models that are involved 
in nuclear safety and surety are well above those that we were 
talking about earlier; that is, the 7,000 MTOP threshold. 
Moreover, the states that have signed the CTBT will not be 
doing any further testing. And any state that would test which 
is not a member we would have other means to address that, and 
we are certainly not selling advanced computers to those 
countries.
    So I think that with respect to your concerns about nuclear 
safety, and nuclear security, and nuclear nonproliferation that 
our policy is in tune with those concerns and that we still 
have the ability to control these higher level machines. As we 
have said, we do not allow exports to military or defense end 
users and we would, in any case, require a validated license.
    Senator Durbin. I would be remiss if I didn't at least ask 
the follow-up question if the same response would apply when it 
comes to biological and chemical weapons, since we have, as you 
have indicated, some elements involved in nuclear weaponry that 
can and are carefully monitored. Can the same be said of the 
biological and chemical weapons?
    Mr. Wallerstein. Well, of course, with the advent now of 
the Chemical Weapons Convention, we have a very, very large 
number of countries in the world, including the United States, 
which are now committed to restrict the export of chemical 
precursors and other elements that are required for the 
production of chemical weapons to states that are 
nonsignatories.
    We also have the Australia Group, which controls the export 
of both chemical precursors and biological agents that are 
necessary for CW and BW weapons.
    I would also note, however,that these are classically dual-
use technologies. We have to remain very vigilant here because, 
particularly with biological weapons, there is an ease of 
concealability problem; due to the fact that these kinds of 
weapons can be manufactured inside of pharmaceutical facilities 
that are also producing for legitimate civilian civil end-use. 
So we do need continued vigilance, but we feel that, again, 
with our controls and with our multilateral commitment, through 
the Australia Group, the Chemical Weapons Convention, and the 
Biological Weapons Convention, we are addressing that.
    Senator Durbin. Thank you. Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator.
    I am told that Russia's Minister of Atomic Energy made a 
surprising announcement in January that his ministry had 
purchased five American supercomputers; four from Silicon 
Graphics and one from IBM for two Russian nuclear weapons 
design labs; Chelyabinsk-70 and ARZAMAS-16.
    The minister's announcement was particularly shocking, 
given the Commerce Department's decision not to approve export 
license applications for similar supercomputers to the Russian 
Ministry of Atomic Energy in the fall of 1996. The press 
publicized this nonapproval to Hewlett-Packard and IBM.
    Secretary Reinsch, if the Russian Government can obtain 
from the United States without an export license supercomputers 
for its nuclear weapons design labs, how can you say that the 
administration's new export restrictions on high-performance 
computers is serving its intended purpose?
    Mr. Reinsch. Well, these are cases, as I said, that are 
under investigation.
    Senator Cochran. This is the first time I have mentioned 
these. You hadn't responded to this question before.
    Mr. Reinsch. I mentioned the Russian cases before. This is 
a situation in which we thought we had done a very effective 
job publicly and privately. I have to be careful because, as I 
said, there is a Justice Department investigation going on 
here, Mr. Chairman, and I don't want to interfere with it.
    We thought we had done a very effective job publicly and 
privately in indicating to the companies in this small universe 
what was appropriate with respect to those institutions and 
what was not. We have the obvious fact that one or more 
companies didn't get that message. I think that will play out 
in the criminal justice system. I don't think that is a 
question of policy, frankly.
    Senator Cochran. So this involves Silicon Graphics as well 
then.
    Mr. Reinsch. Yes, as reported.
    Senator Cochran. You mentioned that the Justice Department 
was investigating Silicon Graphics.
    Mr. Reinsch. As publicly reported, the sales to Russia were 
units by Silicon Graphics and one by IBM, and those are the 
investigations that are underway right now. They have both been 
referred to the appropriate Assistant U.S. Attorney.
    Senator Cochran. There was published by the Department a 
Russian Defense Business Directory indicating Russia's military 
sites in order to acquaint potential exporters of the fact that 
they shouldn't export or they should obtain permission to 
export before they sold anything. Why is it that you published 
the Russian Defense Business Directory to acquaint people with 
potential illegal or improper purchasers but didn't publish a 
similar guide for China? Was there any reason for that?
    Mr. Reinsch. Yes. That wasn't the purpose of the directory, 
Mr. Chairman. That directory was funded by Nunn-Lugar funds, 
and our activities in this area were restricted to Russia, 
Ukraine, Kazakstan, and Belarus under the Nunn-Lugar 
formulation. The purpose of that directory--and we publish 
directories for several of those other States, too--was to 
assist in defense conversion in those countries; that is, 
trying to get Russian or Belarussian or Ukrainian or whatever 
defense companies out of the missile or defense or weapons 
business and into other businesses, and we were trying to help 
American companies understand what kind of capacity there was 
over there for joint ventures or other kinds of trade or deal-
making in civilian areas. That was the purpose of the 
directories.
    Senator Cochran. The Russian minister, Mikhailov, made it 
clear that Russia intended to use the supercomputers to design 
new nuclear weapons. If the Defense Department or if Commerce 
had known this at the time, would it have supported an export 
license request to sell computers for that purpose, Secretary 
Wallerstein?
    Mr. Wallerstein. Senator, our policy is clear and 
unequivocal. We do not support the export of any computers that 
would assist the Russian nuclear weapons design, safety or 
surety program.
    Mr. Reinsch. And as you noted we did not support it when we 
were presented with applications to send similar machines to 
the same places 3 months earlier.
    Senator Cochran. I have been told that Silicon Graphics has 
indicated an intention to upgrade the computer that it sold to 
the Chinese Academy of Sciences. If that is true, Dr. 
Wallerstein, is it your opinion that the Department of Defense 
would object to any license for that purpose?
    Mr. Wallerstein. Senator, I would have to see the details 
of the specific proposal and refer to our technical experts 
within the Department to determine the nature of that 
application and whether we could agree to that license, or if 
we would require additional conditions on the license.
    Senator Cochran. Secretary Reinsch, do you know whether 
Silicon Graphics has actually made application for a license to 
upgrade the computer that it sold to the Chinese Academy of 
Sciences?
    Mr. Reinsch. Not that I am aware of, Mr. Chairman. As far 
as we know, no, they haven't. I would like to say, just to go 
back to something I said very early on this point, Mr. 
Chairman, it might be fruitful for us, and I think I can do 
this because it is not 12(c) information, although it is 
classified, we might want to find a way to share with you our 
evaluation of the Chinese Academy of Sciences. You might be 
interested in that.
    Senator Cochran. We may very well do that then.
    With your consent to appear, we can make available a time 
that is mutually convenient for the Committee and for both of 
you, and we can hear that in a classified session. We have done 
that with other witnesses on other subjects as a part of this 
series, and I think that is a good idea, for us to have the 
full story.
    Let me just say, to further elaborate on this issue about 
the jurisdiction of the Committee, I omitted to say that 
Senator Glenn, of course, has been Chairman of this Committee, 
too, and this Subcommittee as well. And in a letter from Acting 
Under Secretary Barry Carter, February 16, 1994, providing 
information on the nuclear referral list and information that 
had been requested in a letter from Senator Glenn, he says this 
on page 2 of his letter, ``We are providing this licensing 
information to you as the Chairman of the Committee on 
Governmental Affairs pursuant to the confidential provisions of 
Section 12(c) of the Export Administration Act of 1979, as 
amended.''
    We are that Committee. That is the Committee.
    Mr. Reinsch. It sounds like my predecessor already made 
that judgment, which is nice to know.
    Senator Cochran. Yes. So there is precedent.
    Mr. Reinsch. I wouldn't want to be inconsistent with my 
predecessor, particularly because of the respect I have for 
him, Mr. Chairman.
    Senator Cochran. I am just saying this for the benefit of 
your lawyers, who didn't particularly do much research, I 
think.
    Mr. Reinsch. No. My lawyers have not given me an opinion.
    Senator Cochran. Oh. Oh, I thought you said your lawyers 
have cautioned you about giving us----
    Mr. Reinsch. They have not given me one, and I will make 
sure they are apprised of this. The only distinction I would 
make is that there is--and we have made this distinction on the 
House side with respect to this same material--there is a 
distinction between the full Committee and the Subcommittee, 
which probably doesn't make any practical difference who signs 
the letter.
    Senator Cochran. I said I was going to ask you a question 
about Iran, and I am.
    The issue that I want to ask you to tell me your views 
about involves the possibility of using this new policy to sell 
supercomputers, 7,000 MTOPS, to a country in the Middle East, 
who could then transfer the equipment or make the sale to Iran. 
For example, the United Arab Emirates is a Tier III country 
under the administration's policies on decontrolling U.S. high-
performance computer sales. U.S. supercomputer manufacturers, 
then, could sell to buyers in Dubai without an export license, 
providing it's a civilian buyer for civilian use up to 7,000 
MTOPS. It is a fact that Iran imports more goods through Dubai 
than through its own ports because of Dubai's trans-ship to 
Iran. There is nothing to prevent the supercomputers from going 
on to Iran or anywhere else, for that matter from Dubai.
    The General Accounting Office found in 1994 that the 
Commerce Department system of post-shipment verifications was 
ineffective. Dr. Wallerstein, last week Deputy Assistant 
Secretary of State Einhorn expressed his concern in testimony 
before this Subcommittee about Iran's ongoing pursuit of 
weapons of mass destruction and ballistic missile delivery 
systems.
    Does the Defense Department share this concern and do you 
also share the concern that there is inadequate safeguard to 
prevent trans-shipment of supercomputers under these new 
policies?
    Mr. Wallerstein. Senator, we certainly do share the State 
Department's concern about the general pattern that we see 
emerging with respect to Iran and its attempts to acquire 
nuclear, biological, chemical weapons and missile delivery 
capability. We see a widespread and fairly sophisticated effort 
underway to evade the controls that are in place, and we are in 
regular contact--we, that is, the U.S. Government is in regular 
contact with our key allies and other major exporters to try to 
assure that they will not be successful.
    Certainly, as we have already indicated in this hearing, 
there is a lot of material out there in world markets, 
particularly in the computing area, which is beyond control. So 
there is no way that this can be airtight. But it is a concern, 
and we are concerned about Iranian and WMD development.
    Senator Cochran. I am going to ask you and also Secretary 
Reinsch if you know whether any of the over 1,000 high-
performance computers exported from the United States since the 
administration adopted this new policy have been shipped to 
Dubai or anywhere else in the United Arab Emirates and whether 
or not any of these computers has made its way to Iran.
    Mr. Reinsch. Let me say first, Mr. Chairman, that if they 
did make their way to Iran that would be a violation of U.S. 
law. I would want there to be no doubt about that. And that 
makes it for me an enforcement question, which has some of the 
difficulties that both you and also Senator Durbin had 
mentioned earlier.
    We have a complete list of where they were sent. As I said, 
in preparing for this hearing I focused on China and Russia. I 
didn't bring the whole list with me. We can certainly find out.
    It would not be a violation of U.S. law to export one to 
Dubai, and I can easily find out if any were shipped there and 
we have, as I said, means of determining whether they are still 
there or not.
    Senator Cochran. I am curious to know in your enforcement 
activities whether or not you have undertaken to investigate 
whether any of these supercomputers in the Middle East have 
been trans-shipped to Iran.
    Mr. Reinsch. We are looking at all of them right now. I 
wouldn't say that we have an investigation of a specific one 
under way. We are examining all of the records that we have 
obtained and other information to determine whether there is 
any evidence that warrants any investigation.
    As Dr. Wallerstein and I both said beforehand thus far--
well, you've raised Iran. I guess our response was on China--
but thus far we have no evidence that anything like that has 
happened. If we obtain any evidence then we will proceed with 
an investigation. We are actively looking for it.
    Senator Cochran. One question about the efficacy of these 
new policies is the assumption that the administration seems to 
be making that everybody can piece together small computers and 
make these giant high-performance computers, 7,000 MTOPS and 
higher, but I come back to this testimony that our General 
Accounting Office gave in April that the United States and 
Japan are the only countries in the world that can produce 
high-performance computers operating faster than 3,500 MTOPS.
    The White House, when it issued its fact sheet in October 
of 1995 announcing this new policy said, in support of 
President Clinton's statement, that ``we conservatively judge 
that computers up to 7,000 million theoretical operations per 
second will become widely available in open commerce within the 
next 2 years.''
    Is that borne out by the facts today or was that just flat 
wrong?
    Mr. Reinsch. I would say two things, Mr. Chairman.
    First of all, we have another study underway to determine a 
definitive answer to that question, which is why we have made 
clear that we don't intend to take further liberalizing action 
in the computer sector until a new study and further work is 
completed, which may or may not recommend any further actions. 
That study is not due to be completed until the end of the 
year.
    I would say, based on what we know and also looking at what 
we are informed by industry in terms of technological advances, 
that the 1995 study was somewhere between right on and 
conservative in its predictions of what was going to happen.
    And I would really recommend, Mr. Chairman--I don't want to 
insert it in the record because that would kill several trees--
but I really recommend that you and/or your staff take a look 
at the study. I think that it will make a persuasive case that 
the issue in this area is not what GAO said it was in the sense 
that it is not whether the Indians are building a machine. It 
is not whether the Russians are building a machine. It is the 
kind of processors, multiprocessors and work stations that are 
out there via a whole range of producers that is the issue.
    I think, in that regard, the study, if anything, 
underestimated what has happened in the last 2 years. But as I 
said, we will see. We are doing a new study, and we will be 
guided not only by that, but partly by that when it is done.
    Senator Cochran. I understand that you did base your 
decision on a study, but that the study said that some of its 
conclusions were based on ``conjecture'' and not hard evidence. 
Is this the Goodman Study that you are referring to?
    Mr. Reinsch. It's the study that I am referring to. I don't 
recall the study saying it was based on conjecture, but I will 
make a deal with you. If you will read the whole thing, I will 
re-read the whole thing, and we can make a decision.
    Let me say also that was, by no means, the sole basis on 
which we did this. Each of the agencies involved, and Dr. 
Wallerstein, I think, wants to comment, did their own internal 
work on this subject.
    Mr. Wallerstein. Yes. Let me add a few comments, if I may.
    Senator Cochran. Please.
    Mr. Wallerstein. First of all, with respect to the 
assertion about the 3500 MTOP cut-off, you put your finger on 
what the dramatic changes that are now underway. Up until the 
1995 time period, we were able to measure the power of these 
machines because they were so-called single vector processor 
machines; that is, these were large boxes that had enormous 
number-crunching capability. But now we are moving into a new 
era, which is characterized both by massive parallel processing 
and by clustered work stations.
    So whole new strategies or architectures are evolving, 
which change fundamentally the nature of the control problem. 
This is, in part, what the new study will look at.
    Our position has been--and this is a governmentwide 
position since 1993--that we need to look at this approximately 
every 18 months, not necessarily to change the policy, but at 
least to determine where the technology and the markets have 
gone in that time period, and that is what we have done and 
will continue to do.
    As Under Secretary Reinsch has already said, we are going 
to look at it again. We may determine that the market has not 
evolved that fast and, we need to look at where the 
controllability thresholds are. And the report that he referred 
to does talk about this notion of controllability thresholds. 
So I do also commend it to your attention.
    Part of what we did in 1995 was an internal DOD assessment 
of the applications that we use computers for within our the 
defense community. We discovered that there were clusters of 
applications; one around 10,000 MTOPS, another above 20,000 
MTOPS.
    I might note, also, Mr. Chairman, that the most powerful 
machines now are in excess of 100,000 MTOPS. So when we talk 
about this range of 2,000 to 7,000 MTOPS, we are way down at 
the lower end of a range that goes up to over 100,000 MTOPS.
    Senator Cochran. And that is the market that I think you 
were referring to, Secretary Reinsch, when you said we have 
cornered the market on those high-performance computers. Is 
that correct? We are the country that manufactures----
    Mr. Reinsch. I certainly hope so, yes.
    Mr. Wallerstein. These were highly sensitive----
    Senator Cochran. What are your rules on that? Do we sell 
those to anybody who has got the money to buy them or do we 
have a list of prohibited purchasers?
    Mr. Reinsch. Well, you have articulated the policy, Mr. 
Chairman. With respect to Tier I countries, which are 
essentially our NATO allies and a few others, we don't have a 
limit. We do have a record keeping requirement. With respect to 
Tier II, anything over 10,000 requires a license. I would just 
say in passing, as evidence of what Dr. Wallerstein said, in 
the first 3 months of this calendar year, we got more license 
applications for computers above 10,000 than we had received in 
all of 1996. And so this is a steadily and very quickly growing 
field.
    The processor data that I showed you, that I think I 
mentioned in my testimony--I was going to blow these charts up, 
but I think you can see them. This is the estimated performance 
curve for single processors. Where we are on the curve right 
now is this year. These are the industry projections for where 
a single processor is going to be by the Year 2000. 2,615 MTOPS 
estimated in the Year 2000. That is one processor. That is not 
even a computer.
    I have got similar data for multiprocessors.
    And then, to me, the most interesting one is they did a 
little upgrade chart; that is, a look at the extent to which 
you could upgrade the existing box by adding new processors, 
sticking in new boards. This year the range of upgrades that 
you can undertake for computers, existing machines, ranges from 
504 MTOPS to 122,000 MTOPS. I mean, this is mushrooming.
    You may remember from hearings that I am sure you 
participated in with respect to high technology Moore's Law, 
which is computer speed doubles every 18 months to 2 years, and 
this has been an axiom in the industry for I think about 15 
years. I periodically ask industry people, ``Where is the end? 
When do we cap? When can you not grow anymore?'' and they 
continue to say never.
    Now, I don't know whether I believe them, but every curve 
we have seen from everybody suggests that that is the way this 
industry is going very quickly, and it is going in exactly the 
way Dr. Wallerstein said; clustered work stations massively 
parallel processing. The big box is not what is happening any 
more.
    Senator Cochran. One question with respect to the fact that 
your policies are based upon a definition of civilian use as 
opposed to military use in determining whether or not a sale 
would be permitted to a Tier III country. An export requires 
our individual validated license if over 2,000 MTOPS, and can 
be denied, if it's going to be for a military end user or for a 
military purpose.
    How can you tell in a country like China, for example, 
where you have a mix of civilian and military activity at a 
research lab like the Chinese Academy of Sciences, that the 
supercomputer is not going to be used for military purposes in 
some way or that any entity that is subject to influence by the 
central government to share its technology with a military 
entity is not going to be in a position to have to comply with 
that?
    It strikes me as very risky business, indeed, to permit the 
sale of these highly sophisticated state-of-the-art 
supercomputers to entities in China, which can easily pass on 
the technology or share that with others in that country for 
military purposes.
    Are you satisfied that this is really serving our national 
security interests? I am sure it is serving our economic 
interests to permit these sales. But it seems to me that it is 
putting our security interests at risk by carrying through with 
this flawed policy.
    Mr. Reinsch. I think you were right, Mr. Chairman, that in 
China, not uniquely, but peculiarly, it is hard to tell the 
military from the civilians, not because they hide it but 
because the PLA has its fingers in a lot of civilian pies, as 
it were, hotels, restaurants, things like that.
    We rely on a lot of information. A lot of it is 
intelligence based, and is based on information that we have 
compiled through other enforcement activities over the years, 
as well as the representations of the end users as well as 
prelicense checks and a variety of other devices to make the 
best judgment we can.
    Now you have a colleague in the House, I know, who has 
stated on the record in the hearing that we had on this subject 
over there that, from his point of view, all Chinese end users 
are bad because the PLA presumably is in a position to access 
any computer shipped to anybody in China.
    Well, of course, that is at least theoretically true in any 
country in the world. As I said to Senator Durbin, once it 
leaves our country, we lose control. Now, it is probably a bit 
more realistic to suspect that that would actually happen in 
China than it might happen in some other country. But if you 
want zero risk, then you make a fair point about our policy. 
And as I said in my testimony, the only way that you are going 
to get zero risk in the computer business is to license 
individually all PCs, including the ones in the back room, and 
deny them all to virtually everywhere because even if you deny 
them all to China you have got the secondary market and you 
have got re-exports. If you are talking about thousands and 
thousands of low-level computers, there is very little you can 
do about it.
    So we try to assess risk. We try to make our own 
independent judgment of when an end user is a bad end user or 
not. It is not our belief as an administration that all end 
users in China are, by definition, bad and that all of them 
are, by definition, under the thumb of the PLA, and we are 
prepared to permit the exports of these things to legitimate 
end users.
    Now, I will also say that we have not approved any license 
applications for high-performance computers to China of over 
7,000 MTOPS. Under our policy, all computers over 7,000 require 
a license. We have not approved any of those licenses. The 
entire discussion that we have had today has been in the 2,000 
to 7,000 range, where we have a distinction between military 
and civilian.
    You make a very good point. It is a very difficult judgment 
to make and we and the companies are drawing the line as best 
we can. I would never guarantee you that somebody isn't going 
to end up on the wrong side of the line at some point.
    Senator Cochran. I am reminded, when Secretary Perry was 
here for his confirmation hearing in 1993, he was asked about 
how you control the sale of dual-use technology, and he said, 
``It is a hopeless task. It only interferes with a company's 
ability to succeed internationally trying to control the 
sales.''
    Do you agree with that view, Secretary Wallerstein? He's no 
longer the Secretary. You can disagree, you know. [Laughter.]
    Mr. Wallerstein. I sense a trap here, Senator.
    I have had the privilege of working with former Secretary 
Perry on a number of studies before we both were in government, 
at the U.S. National Academy of Sciences, on this very subject.
    Secretary Perry is among the most thoughtful individuals on 
this, both because of his defense expertise and because he is, 
by training, an engineer and mathematician.
    I do not know the context in which that question was asked 
to him, but I do know that both in the studies that we 
undertook at the National Academy of Sciences, and during his 
tenure as Secretary, he supported carefully designed export 
controls on dual-use technology. In fact, he was a strong 
advocate for some of the policy changes that were undertaken 
during the first Clinton administration.
    Senator Cochran. Secretary Reinsch, have you turned over to 
the Justice Department any evidence that would involve 
officials of the Commerce Department in facilitating the sale 
of these supercomputers to China that you think are illegal 
transactions?
    Mr. Reinsch. I don't know how to answer that question, Mr. 
Chairman. Nobody has asked us for anything. The computers in 
question, the computers that are under investigation were all 
shipped without a license. There was no action by the Commerce 
Department to permit those to occur.
    I don't know what evidence there would be. If there is any, 
I am happy to. Since we are not talking about licenses that 
were approved, we don't--it is like trying to develop 
documentary evidence on a negative. We don't have any 
information. They didn't come to us.
    Senator Cochran. Well, there have been some suggestions 
that the Chinese Government has undertaken to try to influence 
policies of this government by various means and through 
contacts with various officials in our government, including 
some who worked at the Commerce Department. And so I am curious 
to know whether or not you have turned over the evidence of any 
such transactions to the Department of Justice for their 
review.
    Mr. Reinsch. We've responded to every request and every 
subpoena that we have gotten on all of these matters as a 
department. The Bureau of Export Administration has gotten some 
requests for information primarily from the Committees in the 
Congress that are investigating the same issue. I don't recall 
offhand if we have gotten a request from the Justice Department 
or not, but we will certainly turn over to them whatever they 
want, and we have turned over to the Congressional 
investigators everything they have asked for.
    The individual, I would just say in passing, the 
individual, if you are referring to Mr. Huang, about who many 
of the allegations have been made, was not part of the Bureau 
of Export Administration and didn't interact with the licensing 
process.
    Senator Cochran. Senator Durbin.
    Senator Durbin. No questions.
    Senator Cochran. Thank you very much for participating in 
the hearing and being here and sharing your testimony with us 
and for your statements and for the additional material that 
you may be able to give us to help us fully fill out our 
record.
    Thank you very much.
    Senator Cochran. Let me introduce our second panel as the 
Secretaries leave the witness table.
    Dr. Stephen Bryen is the President of Delta Tech, 
Incorporated. He has considerable experience in the field of 
export control policy, having been the Deputy Under Secretary 
of Defense for Trade Security Policy from 1981 to 1988.
    While at the Department of Defense, Dr. Bryen served as the 
first Director of the Defense Technology Security 
Administration.
    Dr. William Schneider also has experience in export control 
policy, having served as Under Secretary of State for Security 
Assistance, Science, and Technology, from 1982 to 1986. While 
at the State Department, Dr. Schneider was the Chairman of the 
Senior Interagency Group on the Transfer of Strategic 
Technology. He currently serves as an advisor to the State 
Department, as the Chairman of the Department's Defense Trade 
Advisory Group.
    Dr. Bryen, I am going to ask you to proceed first, if you 
will. We have statements which we will put in the record, and 
then we'll ask Dr. Schneider for his remarks, and then we'll 
have an opportunity to discuss them with you.
    Dr. Bryen, you may proceed.

      TESTIMONY OF STEPHEN D. BRYEN, PRESIDENT, DELTA TECH

    Mr. Bryen. Thank you, Mr. Chairman. I will submit my whole 
statement for the record. I am going to touch on some of it by 
way of introduction of this subject.
    But before that I thought it might be useful just to 
clarify a little bit what we are talking about, since there 
seems to be some confusion between PCs and supercomputers in 
the Department of Commerce, and since that confusion exists, I 
thought I would try my very best to clarify, if I can.
    Senator Cochran. Would you pull the microphone just a 
little closer to you, so we can hear clearly?
    Mr. Bryen. I will do the best I can.
    Dr. Wallerstein mentioned two of three kinds of 
supercomputers. There are three types known today and a fourth 
that may emerge. There is the Vector processor, which is the 
oldest type. The Cray computer is most famous as a Vector 
processor.
    There are massively parallel processors that are called MPP 
computers, and then there is another type of parallel 
processing called Symmetric Multiprocessors. So those are the 
three kinds. PCs are not supercomputers and you can't stick 
them together to make them into supercomputers, not yet. There 
is work on clustered work stations, as Dr. Wallerstein 
mentioned, but so far, at least, the breakthroughs have not 
occurred and there is not that type of supercomputing available 
to anyone yet.
    I have no doubt that it will be eventually available.
    The Symmetric Multiprocessor machine, which is the Silicon 
Graphics type of machine that you have referred to, is one of 
the most popular ones, and it is more and more used in the 
Defense Department. And, in fact, in my testimony at the back I 
have taken a look at just one supercomputing center in the 
Defense Department. There aren't that many, but I took 
advantage of the fact that this one was pretty well documented 
on the Internet, and it became a convenient way for me to do my 
research.
    I might mention parenthetically that there is a lot of 
information on the Internet these days, and it is one of the 
good sources of learning about what the Chinese have been 
buying in the way of supercomputers.
    I would also like to make two ancillary points in respect 
to that. The first is before the administration decontrolled 
supercomputers--and this was about 18 months ago, I guess--the 
sales were very tightly regulated. And as far as I know, not 
one single supercomputer ever wound up in the wrong hands.
    It's interesting that this new policy has caused a 
diversion--I recognize Secretary Reinsch said that there are at 
least two cases under active Justice Department investigation; 
one in Russia and another in China. And that one in China is 
the Chinese Academy of Sciences. So I have really very serious 
doubts that this policy is serving our national interest if 
this sort of thing goes on.
    The U.S. Army site that I mentioned is very much like the 
site that has been put into place in China at the National 
Academy of Sciences. It has more or less the same machines. So 
that is why I selected it. Other than the convenience of having 
these nice graphics on the Internet is the fact that we can 
take a look at what is going on there and the kind of work they 
are doing.
    By the way, I just was selective. There was too much to 
fill up your book with, but if you would like to have all of it 
I would be glad to print out the rest of it. Because some of 
the work is in missiles, in-theatre missile defense, in 
particular. Some of the work is in biological and chemical 
defenses. Some of the work is in dealing with complex and 
difficult problems such as how you design a hypersonic vehicle. 
All of this is being done on this type of processor. This is 
not child's play. This is a serious effort that the Army is 
making to understand certain processes.
    In one of the pictures you have is a re-entry vehicle. It 
is modeled on the supercomputer. The idea is to make this re-
entry vehicle efficient and accurate so that it hits the target 
that it is intended to hit with a high degree of accuracy and 
that it doesn't fail in the process.
    Another project going forward is studying how chemical 
weapons disperse and how you can decontaminate, because we 
faced that threat in the Gulf War, as you know, and, as 
everyone recognizes, we are going to face it again. So 
understanding how to deal with it is very important.
    While they are looking at that, the Army is also looking at 
how you clean up a subway station. You know what happened in 
Japan. It could happen here.
    This is the sort of technology that we are selling to China 
and to other countries.
    I also want to say that you can't hook up a lot of PCs and 
get a supercomputer. I don't know where that idea came about. 
If you could do it, the Chinese would be more than happy to 
hook up a lot of PCs and not buy million-dollar supercomputers 
from Silicon Graphics or Hewlett-Packard or Digital Equipment 
or any other company.
    The fact is, when the flood gates were open, they bought a 
huge number of supercomputers. Most companies that sell these 
things--they don't sell that many of them--most companies that 
sell these things are pretty proud of the sales, and they 
usually post them in their publicity. They put out a press 
release, ``We just sold a supercomputer to this company or that 
company. Isn't it great?''
    Silicon Graphics did that, and you can get on the Internet 
all of their sales up to the time of the decontrol when they 
stopped publishing the list. I think the answer is clear. Their 
biggest customer is probably China now, and they are not real 
proud of that or at least they don't want us to know too much 
about what's going on.
    But what's going on is that a lot of technology is being 
transferred to China. I am very concerned about it. I think it 
is not in the national interest. I think that these machines 
can be controlled. I think that we could have a policy that is 
effective.
    The other thing I would like to point out is that these 
machines are not standalone. They are not just being sold to an 
end user. This is a myth. It is total mythology. They are being 
sold and put into networks, hooked up to all kinds of 
institutes. Defense establishments I am sure are connected. 
Nuclear establishments I know are connected. Universities are 
connected.
    More than that, these networks--by the way, the networking 
technology is also coming from the United States. From what we 
can determine, and this is from outside research, the networks 
are both public and private; that is to say, there is a 
classified portion to the networks that are being established. 
So that what you see is not what you get. What you see is the 
public part, but there is a private part, classified part, 
probably where most of the sensitive nuclear and other kinds of 
research is going on.
    We know that China is pushing very hard to modernize its 
military forces and its nuclear weapons. I will just refer to 
two areas, but Secretary Albright also mentioned a third one 
yesterday, a new longer range ICBM that China is working on. 
But in addition to that, China is working on a MIRV capability, 
a Multiple Independently Targeted Re-entry Vehicle capability, 
and the ability to build small and compact nuclear weapons that 
can work in a MIRV missile.
    Supercomputers will speed up the process of all of that and 
make it, I believe, possible for China to achieve that kind of 
capability very quickly.
    In addition to that, China is working very hard on cruise 
missiles, and I am not completely sure in my own mind whether 
cruise missiles aren't worse in some ways than ICBMs. That is 
because you can't tell what kind of warhead they have. They 
could have a nuclear warhead. They could have a chemical or 
biological warhead or a conventional warhead. We used our 
Tomahawk cruise missile in the Gulf War, as you know, and after 
that, most recently, in a retaliatory attack with conventional 
warheads. But that same missile can carry a nuclear warhead.
    And China can design the warheads and, in fact, a lot of 
the whole vehicle using supercomputers.
    In addition to that, China is acquiring other technology 
from the United States, which is being approved by license by 
this administration, such as the Global Positioning System 
manufacturing technology, which enables China to have high-
class guidance at a relatively low investment and to do it 
quickly.
    I think the issue here is the speed at which China can 
modernize its military capabilities, and what we are doing is 
aiding and abetting the process of giving to China, selling to 
China, if you would like, these sorts of capabilities.
    I think that this policy on supercomputers is a very 
dangerous one. You have had a chance to talk to the Secretary 
about that. He claims that the Commerce Department is 
intimately involved in all of these decisions, even though 
there are no licenses here that they consult with all of the 
companies.
    I can't, for the life of me, understand how, for example, 
they would sell a supercomputer system to the Chinese Academy 
of Sciences. I have been there. I have seen their nuclear 
accelerator. They showed it to me. I know what kind of business 
they are in, and I think the administration knows what kind of 
business they are in.
    Why we would sell supercomputing to them is hard to 
understand. It doesn't really make sense. And, again, their 
system is part of other networks. All of this is tied together 
by fiber optic high-speed networks, again sold by the United 
States.
    So it would seem to me that what really should be done is a 
pause, a halt. Such exports should be stopped for now. I have, 
at the end of my testimony, a number of recommendations. They 
are not my recommendations. There is an organization here in 
town called the Jewish Institute for National Security Affairs, 
which has, among its members, many retired military and flag 
rank officers who look at these questions, and their sense is, 
first, to suspend the current regulations on high-performance 
computers and require individual licenses for them. I am not 
saying you can't export them, but get a license like we have 
always done in the past. There aren't that many, 47 or whatever 
the number is not going to exactly strain the capabilities of 
the Defense Department or the Commerce Department to process 
licenses and to have real accountability on these transactions.
    Secondly, let's get a full accounting of what is gone. I am 
far from convinced that 46--or now it is up one more 
officially--47, is the right number. I think it is a much 
larger number, but I can't say for sure, and I think that we 
are all owed an explanation as to what's actually transacted.
    I know Commerce Department loves to wave the flag of the 
12(c) Export Administration Act provision. We can't tell you 
about this. It is proprietary and all of that nonsense. Then 
just don't put the company names. Just tell us where they went, 
how many there are, what the speed of the processor, and then 
they are completely out from under 12(c). 12(c) is only 
designed to protect corporate proprietary information. So if 
you take away the name of the company there is nothing to 
protect, and they can provide that list today or at least what 
they have, and the Committee should have that, and the American 
people should have that, should know what's going on so that 
independent people can make an evaluation, since, quite 
frankly, the administration has not made any.
    There is no study that I know of that has really looked at 
the military implications of any of this and, specifically, in 
relation to China. I don't know of any. I heard a lot of babble 
about that in the conversation today, but none was really 
referred to, and I don't think there is one, and that is very 
scary, very scary, and there should be one.
    Third, we should have a study of the impact of computer 
sales both on our national security and on weapons 
proliferation. The proliferation issue is a very serious issue. 
China is a proliferant country. They have been selling missile 
technology to Pakistan. That has been the subject of quite a 
lot of controversy in the past few years. This is a serious 
matter. It has lots of consequences and surely we should try to 
understand what is going on and do so soon.
    Fourth, using the CIA and the Defense Intelligence Agency, 
and I am more partial to DIA in this, let's see who is trying 
to get supercomputers and what their reasons are, what do they 
want them for.
    Everyone talks about we're doing civilian research. What is 
that? I mean, what is really being--what are they really being 
used for? What kind of work are they being used for? Do we have 
any idea?
    I think the intelligence community can tell us a lot about 
that if they put their mind to the task, and they surely should 
be tasked to do that soon.
    And, finally, and most importantly, develop and propose an 
effective multilateral export control licensing system, not one 
that fails on the most crucial issues.
    Again, I reiterate. We never lost a supercomputer before. 
This administration has lost at least two in Russia and one in 
China, which they admit to, and probably a lot more, and that's 
something that we should seek to prevent, and I believe that we 
can do that. But it is going to require cooperation.
    As far as who owns this business, Senator, you are both 
quite right. It is really the United States. Japan has 
supercomputers, mostly the Vector type, but the real parallel 
processing type machines are being built here. So it is our 
technology, and I think we have the possibility of controlling 
it.
    I should also add to that, that it's not just the hardware 
that is at issue. The software is very important because one of 
the things that we learned with respect to what the Russians 
were trying to do during the period of the Soviet Union is they 
were trying to get Western hardware, but they were also seeking 
to run Western software on it.
    A lot of development work in software is very critical to 
how you build weapon systems and, consequently, I think you 
have to control the software as much as the hardware in some of 
these cases.
    So that's my way of introduction, and I will be glad to 
answer your specific questions.
    Senator Cochran. Thank you very much, Dr. Bryen.
    [The prepared statement of Mr. Bryen follows:]

               PREPARED STATEMENT OF DR. STEPHEN D. BRYEN

    The sale or transfer of supercomputers is, and has long been, a 
sensitive national security issue. It is an issue that not only 
directly affects the United States, but also is of great importance to 
America's friends and allies. Ultimately, it is a subject that affects 
international security and world peace. In this connection I believe 
the sale of 46 or more supercomputers to China is a risk to American 
national security, and it is a threat to many of our allies and 
friends. This includes, but is not limited to, Japan, Australia, New 
Zealand, Taiwan, Singapore, the Philippines, Thailand, Malaysia, 
Indonesia, Korea in the Pacific region and our allies and friends in 
the Middle East, because of China's arms sales to Iran, Iraq, Pakistan 
and Syria.
    My expertise is in technology policy. Technology policy considers 
how to enhance technology and America's technology leadership and also 
how to prevent the loss of technology to potential adversaries.
    In my years of service in the Defense Department as the Deputy 
under Secretary of Defense for Trade Security Policy, and as the 
founder and first director of the Defense Technology Security 
Administration, I was closely involved in the issue of safeguarding 
supercomputers. I helped negotiate and implement the 1986 U.S.-Japan 
Supercomputer Agreement, which set up a system to carefully monitor and 
regulate sales of supercomputers.
    It should be emphasized that regulations on supercomputers had 
nothing to do with the bold War. Our interest in working with Japan was 
to make sure that supercomputers were not used to help develop weapons 
of mass destruction. In the case of China I am convinced that U.S. 
supercomputer sales are being used precisely for this purpose.
    Our policy of technology transfer to China is, in many respects, 
more extreme than what the Europeans and the United States did in 
transferring technology to Saddam Hussein before the Gulf War.
    In the case of Iraq, Saddam got hold of nuclear technology, missile 
manufacturing know-how, and chemical and biological weapons from 
Western companies. The acquisition of these capabilities made him much 
more dangerous than he otherwise might have been. In my Opinion, we 
were very lucky that Saddam jumped the gun and invaded Kuwait before 
his nuclear weapons capability was in place.
    In the Case of China, we are transferring much. more sophisticated 
technology than anyone ever sold to Iraq. The consequence of this is 
that China's military will have greater sway over decisions in China 
that will affect American national security
    China is seeking to enhance its nuclear weapons and their delivery 
systems. Examples include adding MIRV (multiple independently targeted 
reentry vehicles) capabilities to Chinese ICBM's and manufacturing 
small nuclear warheads for extended range cruise missiles.
    Supercomputers are important for China to achieve these goals. 
Having them will enable China to speed up the design and development 
process by many years, to develop advanced weapons covertly and to 
build far more accurate nuclear systems that can be used against 
military targets.
    China can use supercomputers to enhance many other weapons 
programs. For example, China can work out the best way to disperse 
chemical and biological weapons; can design advanced stealth aircraft 
and missiles, can improve its ability to detect submarines (enhanced 
ASW), and can intercept and crack encrypted communications. China has 
already been given enough supercomputer power to break any commercial 
encryption prom, such as those in use today by financial institutions. 
Giving China supercomputers also enhances her ability to use advanced 
information warfare techniques, such as attacking our own computer 
infrastructure.
    Chinese acquisition of additional nuclear capabilities, and the 
more rapid modernization of her conventional systems, will make our 
ability to maintain peace in the region surrounding China more 
difficult. Chinese nuclear threats will have to be taken more 
seriously.
    Last year during China's military exercise in the Taiwan straits, I 
was in Taiwan with former CIA Director Jim Woolsey and Admiral Leon 
``Bud'' Edney. While China may only have been attempting to disrupt the 
Taiwanese elections, it was far from a sure thing that China would not 
expand its military exercise (which included live missile firings that 
closed off important parts of the Taiwan straits) into an actual attack 
on Taiwan. The dispatch of two of our aircraft carrier Task Forces to 
the Straits area acted as a deterrent to China--in fact, it shocked the 
Chinese. At one point a senior Chinese official, in reaction to the 
appearance of the Task Forces, threatened to incinerate Los Angeles in 
retaliation.
    The sale of supercomputers to China should be regarded as a crazy 
policy. Logic dictates an urgent reevaluation of our technology 
transfer policy to China based on Chinese behavior in the Taiwan 
straits and its threats against Taiwan. But, instead of a reassessment, 
reckless transfers of supercomputers to China not only continue but 
have been stepped up.
    It is even more shocking to realize that neither the Defense 
Department, the CIA nor the Commerce Department, which has licensing 
authority for supercomputers, had any idea where the supercomputers 
were going. ``Ask me no questions, I will tell you no lies'' seems to 
be the official policy.
    Why did this happen? One reason is the Commerce Department set up a 
system to transfer supercomputers where reporting is not required. In 
fact, the only reason anybody bothered to find out what was going on 
was the public disclosure by the Russians that they had acquired 
supercomputers from the United States for two of their nuclear weapons 
facilities.
    From what can be pieced together from public sources, the situation 
in China is much worse and far more dangerous.
    Consider the supercomputer system sold to the Chinese Academy of 
Sciences. I understand this is a Silicon Graphics Challenge XL: 
supercomputer system made up of some 32 processors. According to public 
data, this single system is faster than two-thirds of the classified 
systems available to the Defense Department, including one NSA site, 
the U.S. Naval Underwater Weapons Center, U.S. Army TACOM, the Defense 
Science Organizations and the U.S. Air Force/National Test Facility.
    The Academy of Sciences in China is deeply involved in nuclear 
programs. In fact, in 1987 when I was in China I toured one of the 
Academy's nuclear research facilities.
    According to research done by an independent expert, the 
supercomputer system at the Chinese Academy of Sciences installation is 
sitting behind a firewall \1\ (a Cisco router) Basically, it is set up 
so that many parts of the system are accessible only by computers and 
networks on the restricted side of the firewall.
---------------------------------------------------------------------------
    \1\ A computer ``firewall'' is a security device that prevents an 
outsider from having access to all or part of a computer system. A 
firewall can be software, hardware or a combination of both.
---------------------------------------------------------------------------
    The system has about a dozen SGI workstations that are clearly 
identifiable by names like ``Indigo,'' and ``Iris,'' which are 
particular SGI models. Then there are other workstations that use the 
names of flowers and animals. It would seem these other workstations 
are part of the hidden network of the supercomputer complex. The 
network is set up so that the public part of it can be connected to the 
outside world. The rest of the system is what we would call a 
``classified'' system.\2\ The outside has no access to it.
---------------------------------------------------------------------------
    \2\ The classified networks in China are probably encrypted. The 
U.S. has sold encryption technology to China.
---------------------------------------------------------------------------
    The computer networks in China are state of the art and are 
supplied primarily by the United States. They are supported by digital 
telecommunications systems.
    It is United States policy to prohibit sales of supercomputers for 
any nuclear, chemical, biological or missile end use There is good 
reason to believe this prohibition has been effectively bypassed.
    There is information that U.S. companies selling supercomputers 
understand they will be used for military and nuclear purposes. For 
example, one U.S. company marketing supercomputers is in a joint 
venture with a state-owned aerospace enterprise and focuses on selling 
high-end computers to the aerospace industry in China, much of which is 
involved in military work. Another distributor of supercomputers in 
China, Geotech, says that its target market for supercomputers includes 
``oil and gas [industries], research institutes and defense.'' And, in 
any case, all Chinese supercomputer assets are in networks and, as we 
have seen, major parts of these networks are closed.
    There are those who say that supercomputers going to China are only 
for basic scientific research. But, as is well known and accepted, 
there is no need to have closed, secure network for basic research.
    So far, the Department of Commerce has disclosed that 46 
supercomputers have been sold to China over the past eighteen months. 
Actually, the number may be far higher. There are three reasons to 
distrust the Commerce Department's disclosure:

        1. LThe Commerce Department only recently asked U.S. companies 
        for data on supercomputers they sold to China. Not all the 
        companies have reported yet.

        2. LPowerful computers slightly under the 2,000 MTOP (Millions 
        of Theoretical Operations Per Second) threshold are 
        supercomputers and perform the same way as those just above the 
        2,000 MTOP regulatory limit, are not counted by the Commerce 
        Department.

        3. LMany of the less than 2,000 MTOP machines in China may have 
        been upgraded by adding additional processors. Machines made by 
        SGI, Convex (Hewlett Packard), Digital Equipment and others can 
        be upgraded by adding additional processors.

        4. LAdditional computing power can be obtained by special 
        software for networking parallel-processor type machines.

    It is important to know the real number of machines sold, the 
networks they are hooked into, and to determine how many are part of 
the classified system China is constructing. In addition, it is 
important to find out the types of software that have been sold for 
these computers, and the likely uses there may be for the software. 
Above all, it is vital to assess how these acquisitions will impact on 
U.S. defense programs and policies.
    The Jewish Institute for National Security Affairs Board of 
Directors made the following recommendations earlier this month, which 
I support. They are:

        1. LSuspend the current regulations on High Performance 
        Computers, restoring the previous validated licensing 
        requirement for supercomputers.

        2. LDemand a full accounting of supercomputer sales under the 
        current export regime.

        3. LConduct a full assessment of the impact of computer sales 
        on national security and on weapons proliferation.

        4. LAssess, using the CIA and Defense Intelligence Agency, who 
        is seeking supercomputers and why they are wanted.

        5. LDevelop and propose an effective multilateral export 
        licensing system.

    Senator Cochran. Dr. Schneider, welcome. You may proceed 
with your remarks.

 TESTIMONY OF WILLIAM SCHNEIDER, JR., FELLOW, HUDSON INSTITUTE

    Mr. Schneider. Thank you very much, Mr. Chairman. I 
appreciate the privilege of being able to appear before the 
Subcommittee today. I have prepared testimony, which I have 
already provided, and I will simply offer a few observations 
and also some suggestions for proposed reforms.
    The administration has appropriately placed the 
counterproliferation struggle at the top of its foreign policy 
priority agenda. The problem I have is that the export control 
system, in parallel with diplomacy, are the front lines of 
dealing with the proliferation problem and are not likely to be 
effective in achieving the laudable counterproliferation aims 
of the administration. This is so not only with respect to 
weapons of mass destruction, but also to their means of 
delivery and advanced conventional weapons as well.
    We know the threat of proliferation is a very serious one. 
Just to give the Committee a calibration point about how 
extensive the sweep of the decontrol on sophisticated 
technology is, is during my own service in the Department of 
State a decade ago, in the area of dual-use export licenses, 
approximately 150,000 licenses were issued each year during 
that period.
    Now although the volume of trade has more than doubled 
since that period and the volume of high-tech trade has gone up 
several fold beyond that, we are issuing only 8,000 licenses 
per year. In other words, from 150,000 down to 8,000. It is a 
very substantial scope of decontrol.
    A second point is it is important to take note of the 
changes in the way military technology is developing. Until the 
1970s, military technology was fairly isolated. It was 
developed uniquely for military applications and it typically 
was at the cutting edge of the employment of modern technology.
    The situation has changed very rapidly with advances in 
microelectronics computation, advanced materials, and so forth. 
Now the engine driving military performance is sophisticated 
civil sector technology. This is creating what I have described 
as a ``new path to proliferation'' compared to what we had 
anticipated a decade ago.
    Rather than seeking to acquire information about the 
scientific trick, so to speak, to, say, produce nuclear 
weapons, which we have historically guarded very carefully by a 
statutory classification system. Now proliferation is a 
question of industrial processes. The scientific knowledge or 
secrecy surrounding the scientific knowledge no longer protects 
us from the proliferation of these advanced technologies. The 
proliferation of industrial processes is what is creating the 
problem.
    Two recent examples: Iraq and China. In both cases, we have 
had a policy of not providing them with munitions list 
technology; that is, defense-related technology, but we did 
have, until the Gulf War, we did have a policy of allowing Iraq 
to have access to sophisticated civil technology.
    The result was that they were able to produce not only 
weapons of mass destruction or move considerably towards that 
goal, but also ballistic and cruise missiles.
    The case is even stronger with respect to China, where the 
United States and most of the European allies do not ship 
advanced munitions list technology. The access to sophisticated 
industrial technology, including computers, machine tools, 
software materials, et cetera, is accelerating the rate at 
which China is able to modernize its Armed Forces. Facilitating 
the modernization of China's Armed Forces is not U.S. public 
policy and, as a consequence, the aims of U.S. policy are being 
frustrated by the ineffectiveness of the export control system.
    As a consequence, I have suggested a few reforms that might 
be considered by the Congress and, perhaps, by the 
administration as well. One is to refocus the policy on 
controlling exports to get at the proliferation problem. 
Decontrol has gone to the point where the export control system 
is, in effect, abetting proliferation rather than containing 
it.
    The second is intelligence collection and processing. 
Intelligence collection and processing is essential to 
effective diplomacy in the counterproliferation field. The 
level of effort and the nature of intelligence support to the 
export control function has declined very substantially, and in 
order to reclaim the effectiveness of the export control system 
this needs to be changed.
    The third point is an export control regulatory practice. 
The U.S. Government should be maintaining a data base on end 
users. The problem that Dr. Bryen mentioned in China is a 
serious one. The PLA owns more than 20,000 businesses and many 
of them are fronts for defense-related transactions, and this 
needs to be monitored.
    Restoration of end user checks in China is another issue 
that should also be considered. I think this can be done 
without significant changes in appropriated funds. As I 
mentioned, the Bureau of Export Administration and the 
Department of Commerce has about 300 full-time equivalent 
personnel to process about 8,000 licenses.
    The Department of State has munitions list licensing 
responsibility. They have 45,000 licenses, and they have less 
than 50 people processing the licenses. So I think there is 
enough in the way of head count in the Agency to support more 
end user checks to these sensitive destinations.
    The fourth point is to increase diplomatic support for 
export control management. Dr. Bryen mentioned an effective 
multilateral regime. I think a dimension of this is effective 
diplomatic support to work with other countries that are 
becoming diversion channels for some of this technology or are 
in other ways abetting the diffusion of the technology.
    The final point is interagency coordination. We found 
during the COCOM period where export controls were a high 
national priority that it was important to have effective 
senior-level policy coordination to make sure that all of the 
agencies were using their respective resources to bring the 
matter to closure. The decline in the importance of export 
control is reflected in the diminishing level of bureaucratic 
attention it's receiving, and I think the interagency process 
should be effectively reformed.
    I am pleased to entertain any questions you might have, Mr. 
Chairman.
    [The prepared statement of Mr. Schneider follows:]

              PREPARED STATEMENT OF WILLIAM SCHNEIDER, JR.

    Mr. Chairman and Members of the Committee: Thank you for offering 
me the privilege of testifying before this Committee today. I am 
William Schneider, Jr. I formerly served as Under Secretary of State 
(1982-86) in the U.S. Department of State where I had responsibility 
for the management of the Department's export control functions as well 
as interagency coordination of export control policy as Chairman of the 
Senior Interagency Group on Strategic Trade Controls. I subsequently 
served as Chairman of the General Advisory Committee on Arms Control 
and Disarmament (1987-93), a statutory advisory committee. My testimony 
will address the subject of the role export controls can play as a 
dimension of national policy to limit the risk posed to U.S. interests 
by the proliferation of weapons of mass destruction (WMD) and their 
means of delivery as well as a advanced conventional weapons.
The threat posed to U.S. interest by proliferation
    The nature of the Cold War limited the potential for the 
proliferation of technologies associated with weapons of mass 
destruction and their means of delivery as well as advanced 
conventional weapons. The dynamics of U.S. and former Soviet Union's 
leadership role of competing ideological blocs established conditions 
which limited the degree to which the military application of advanced 
technologies was proliferated to non-allied states. The implementation 
of a successful multilateral export control regime (The Coordinating 
Committee on Strategic Trade--COCOM) limited the flow of advanced dual-
use as well as munitions-list technology between the blocs, and in 
parallel, constrained access to this technology to many non-COCOM 
members as well. The limited counter-proliferation enforcement 
arrangements supporting the Nuclear Non-Proliferation Treaty of 1968 
was supplemented by a U.S.-led Nuclear Suppliers Group which 
considerably improved the formal enforcement apparatus of the NPT. 
Somewhat similar arrangements were established under the Missile 
Technology Control Regime (for military missiles) and the Australia 
Group (chemical weapons).
    The collapse of the former Soviet Union in 1991 materially changed 
the environment associated with the proliferation problem, both 
increasing incentives for proliferation and diminishing the role of the 
export control apparatus as the first line of defense against 
proliferation. The COCOM organization was disbanded in 1994, and 
replaced by a much less effective and far more narrowly focused entity 
known as the Wassenaar Arrangement. In parallel with the dismantling of 
the multilateral structure of export control coordination was the sharp 
decline in national controls. During the period of my service in the 
Department of State in the mid-1980s, nearly 150,000 validated export 
licenses for dual-use products were issued annually. Successive waves 
of decontrol have reduced the number of such licenses to less than 
8,000 despite a much larger volume of trade. The virtual abandonment of 
dual-use export controls as an instrument of public policy has been 
matched or exceed by U.S. allies. As a result, the international 
structure of export controls for dual-use technologies has been largely 
disbanded as well. At the same time, the number of munitions licenses 
has declined only about twenty percent during the same period (to about 
45,000 today) despite a 50% decline in the size of international arms 
market and total U.S. munitions list exports. This trend reflect an 
increase in regulatory activity in the United States concerning 
munitions list (i.e. defense products and services) exports.
    An unanticipated consequence of the collapse of the former Soviet 
Union was the centrifugal forces in international affairs unleashed by 
the end of the Cold War. Regions of the World which were once primary 
sources of Cold War confrontation such as the Middle East became 
secondary security considerations for nations outside of the region. 
The loss of activism within the U.S. national security apparatus in the 
details of local security arrangements and the alliances such interests 
produced a result which has been reflected in the Post Cold War 
increase in the scale of the proliferation. Affected nations attended 
to their own security aims knowing that the end of the Cold War 
diminished the interest of extra-regional players in local or regional 
security. Indigenous arms development programs supplemented offshore 
procurements of defense products and services. Weaker nations sometimes 
turned to WMD and their means of delivery to achieve their regional 
security objectives. These developments in turn destabilized several 
areas of the world.
    The best known events occurred in the Middle East. Both Iran and 
Iraq sought to develop their own military ballistic and cruise missiles 
as well as weapons of mass destruction. In conjunction with offshore 
procurements of conventional defense products, they produced formidable 
military establishments posing an overwhelming threat to U.S. allies. 
Iraq's invasion of Kuwait in 1990 required a vast multinational effort 
to reverse, but not before it had terrorized the region's population 
with ballistic missile attack and the prospective threat of weapons of 
mass destruction. According to the testimony of the head of the UN's 
Special Commission on Iraq (UNSCOM), despite an unprecedented UN 
mandate, and more than five years of UN inspections in Iraq, the 
international community has been unable to prevent Iraq from continuing 
its development of ballistic missiles and weapons of mass destruction. 
While UN sanctions imposed on Iraq continue, the threat posed to the 
region in the short term, and to the U.S. in the medium/long-term by 
Iraq's WMD/missile program endures. The loosening of the fabric of 
diplomatic obstacles and political incentives to proliferate WMD/
missiles and advanced conventional weapons has produced an troublesome 
post-Cold War irony--the proliferation threat to the United States and 
its allies has become more serious following the Cold War than was the 
case during the Cold War.
Changes in the application of advanced technology for military purposes
    Throughout much of the Cold War period, the imperatives of the 
military competition between the U.S. and Soviet blocs caused the 
military establishment to be at the leading edge of the development and 
application of advanced technology. Many developments such as high 
performance computers, advanced aircraft and propulsion systems, 
microelectronics, materials, signal processing, optics, space, and 
others found their most sophisticated and demanding applications in the 
defense sector. The underlying scientific and industrial technology 
supporting the defense industrial base was also at the cutting edge of 
advanced technology whose performance characteristics exceeded the 
needs of the civil sector.
    Under these circumstances, the civil sector was the beneficiary of 
advanced technology developed for military purposes. Advanced 
aerodynamic and hot section metallurgy for example, developed for 
military aircraft and propulsion systems was a crucial factor in 
advances in civil aviation that propelled the United States to world 
leadership in the industry. The military requirements for the use of 
space for large communications, weather, and surveillance satellites 
created a space-launch services capability that was exploited by the 
private sector albeit slowly, during the 1970s and more rapidly during 
the 1980s. The military requirements in these and other fields of 
advanced technology skewed the availability of these capabilities, 
however. Military space launch demands limited the commercial sector to 
relatively large costly satellites in space. This pattern of military 
requirements produced a demand for advanced technology that was 
subsequently exploited by the private sector for civil applications.
    This situation began to change in the 1970s, and accelerated 
rapidly since the 1980s. The driving force producing advanced military 
capabilities are the civil sector's demand for advanced technologies 
which are frequented exploited prior to the use of the technology in 
defense applications. The requirements for advanced civil applications 
of modern technology now regularly exceed--often far exceed--military 
requirements. As a consequence the defense sector is now the recipient 
of ``trickle down'' technology from the civil sector.
    The change in the path of the development and application of 
advanced technology for military purposes has been recognized by the 
Department of Defense. A series of initiatives undertaken by former 
Secretary of Defense William Perry has put the Department on track to 
incorporate these trends into defense planning. Commercial technologies 
and practices will increasingly supplement, and perhaps eventually 
supplant the technologically isolated industrial apparatus surrounding 
DOD-unique military specifications. This has been reinforced by the 
results of the Quadrennial Defense Review whose report was published 
last month. The QDR envisions a future defense posture for the United 
States that will emphasize information-driven military capabilities 
largely derived from advanced technologies in the civil sector.
The new path to proliferation
    The threat posed to American interests by the proliferation of WMD/
missiles, and to a lesser extent advanced conventional capabilities has 
become widely understood. What is not so well understood is the 
changing process of applying advanced technologies for military 
purposes. In the past WMD technologies, especially nuclear weapons 
design, development, manufacturing, and test information was protected 
by the secrecy afforded by a unique security classification process 
established by statute (The Atomic Energy Act) for the military 
applications of atomic energy. Missile technology was more difficult to 
protect. Public policy embedded in the statute creating the National 
Aeronautics and Space Administration (NASA) made dissemination of space 
technologies an affirmative object of public policy. This produced a 
co-mingling of military and civil applications of space which has 
limited the success of the MTCR. Chemical weapons and the underlying 
technologies were already well known due to their employment on an 
industrial scale in World War I. Control efforts are largely focused on 
containing the transfer of precursor chemicals on an industrial scale 
to potential proliferators.
    The leakage of nuclear weapons design technology over time has 
become a flood in recent years. A telling recent example has been a 
decision by the Department of Energy to release to the public most of 
the computer codes associated with nuclear weapon design (apart from 
weapon dynamics). These data can be purchased commercially on a single 
CD-ROM and will enable potential proliferators to overcome design 
problems in nuclear weapons when placed in the hands of experienced 
physicists. One experienced physicist was able to add a few hundred 
lines of computer code to the data released by the U.S. Government to 
replicate the information needed to produced advanced fission and 
thermonuclear weapons Thus, the problems facing potential proliferators 
has evolved from a problem of basic scientific design to one of 
industrial processes today. Access to advanced modeling and simulation 
and industrial production capabilities are now the pacing obstacles to 
proliferation. The crucial difference from the situation which obtained 
during much of the Cold War period is that the enabling technologies 
for proliferation are almost entirely found in the civil sector, not 
the defense sector.
    We have two recent examples which underscore the manner in which 
the path to proliferation has changed as a result of the shift in the 
focus of advanced technology requirements from the military to the 
civil sector.
Iraq
    The troublesome role of Iraq in Middle East security was widely 
understood during the 1970s and 1980s. Its support for international 
terrorism, its implacable hostility to Israel, and its Cold War 
affiliation with many of the aims of the former Soviet Union in the 
region made U.S. relations with Iraq an adversarial one. As a result, 
the U.S. Government declined to sell munitions list technology to Iraq, 
even during a brief period when U.S. and Iraqi foreign policy interests 
overlapped in the mid-1980s (preventing Iran's military domination of 
the Northern Gulf region). Although the former Soviet Union was a major 
supplier of conventional military equipment, with but a few exceptions, 
most U.S. allies agreed to abstain from providing Iraq with advanced 
conventional weapons technology.
    However, no effort was made to prevent the sale of advanced 
commercial and industrial technology to Iraq; to the contrary, such 
sales were promoted. Indeed, the sale of such products was seen as 
offering an affirmative benefit to U.S. foreign policy in the late 
1980s. Promoting Iraq's industrial and commercial development would 
produce a set of interests in Iraq some argued, that would ultimately 
undermine the military domination of Iraq's political culture. 
Providing commercial and industrial opportunities for Iraq's aspiring 
and politically moderate middle class would serve long-term U.S. 
interests.
    Iraq was flooded with American, European, and Asian advanced 
commercial technology. This technology was diverted into a clandestine 
network within Iraq's defense industrial establishment. Advanced 
western commercial technology enabled Iraq to extend the range of its 
SCUD ballistic missiles to enable it to become a weapon of terror 
throughout the region from the Eastern Mediterranean to Iran. 
Reassuring ``estimates'' of Iraq's potential for deploying nuclear 
weapons of a decade or more were based on a belief in the success of 
NPT-derived export controls aimed at frustrating Iraq's ability to 
produce fissile material. MTCR controls were seen as effective because 
no state producing long-range (>500 km.) theater ballistic missiles had 
transferred such systems or components of systems to Iraq. Subsequent 
events affirmed the proposition that presumption is the mother of 
error.
    Iraq's access to advanced industrial, not military technology from 
the West permitted it to become a major security threat to the United 
States interests in the Middle East. Rather than being a threat only to 
its contiguous neighbors, it was able to extend the reach of its 
threatening aspirations throughout the Middle East region. The 
decontrol of advanced civil sector ("dual use") technology among the 
industrialized nations of the world was the enabling policy change 
which contributed to Iraq's indigenous capability for WMD and military 
missiles.
China
    Since mid-1989, the U.S. has declined to provide China with 
munitions list technologies. A parallel understanding with most U.S. 
allies (apart from Israel) has caused them to limit their own transfers 
of munitions list technology and equipment. China's acquisition of 
advanced military equipment and technology has been limited to two 
sources; Russia and Israel. Russia is the only nation providing China 
with integrated military end-items (e.g. Kilo-class submarines, Su-27 
strike aircraft, etc.). Israel's cooperation according to press 
reports, is limited to providing advanced military subsystem technology 
which is subsequently integrated into end products by China defense-
industrial establishment. Illustrations of this collaboration includes 
the avionics for China's F-10 aircraft now under development and 
Russia-Israeli cooperative program to produce an airborne early warning 
aircraft (a counterpart to the U.S. AWACS).
    Despite the aim of U.S. policy to deny China advanced military 
capabilities through ban on the transfer of munitions list technology 
to China, U.S. exports of advanced civil sector (i.e. dual-use) 
technology to China have become the enabling feature of China's ability 
to modernize its armed forces. The U.S. is providing no military 
technology, but is providing China with the manufacturing capabilities 
to produce advanced military equipment based on military technology 
obtained from other nations. An irony of these circumstances is that 
because the U.S. is providing advanced civil sector rather than 
military technology, China's military modernization is proceeding more 
rapidly than would be the case had China been dependent on imports of 
U.S. munitions list technologies.
    China's ability to do so is facilitated by the manner in which 
existing export controls are managed. End user verification--a routine 
feature of advanced technology exports to China in the 1980s--have been 
abandoned. This has permitted advanced technology imports to be 
routinely diverted from nominal civil application to defense product 
manufacturing processes. Moreover, the monitoring activities of the 
U.S. Government have abstained from a focus on the transfer of advanced 
civil sector technology to China's defense industry. The monitoring has 
focused instead on the production of military systems which often do 
not emerge until several years after the enabling manufacturing 
technology has reached its defense industrial establishment.
    The recent case of the transfer of modern machine tools to China 
for the manufacture of aircraft to China underscores problems of 
policy, intelligence, and enforcement of the export control function. 
Advanced machine tools developed in the U.S. for the manufacture of 
military aircraft, but excess to the needs of U.S. industry were sold 
to China for civil aviation manufacturing purposes. China has refused 
to permit end-use verification making it infeasible for U.S. 
authorities to ascertain the use of this equipment. Subsequent evidence 
revealed that the machine tools and related equipment was transferred 
to a military aircraft production facility. This facility will produce 
advanced military aircraft derived from military technologies China has 
obtained from other suppliers. In the end, allied nations in Asia will 
face China's armed forces able to field advanced military capabilities 
in significant numbers because of manufacturing technology provided 
from the U.S. civil sector.
    These two examples illustrate the path most likely to be adopted by 
potential proliferators; to acquire advanced civil sector (i.e. dual 
use) rather than military technology to permit the development, 
production, test, and support of advanced military capabilities. This 
approach is abetted by the process of decontrolling the export of a 
large fraction of modern technology pertinent to the production of 
advanced military capabilities. This result is an unintended 
consequence of current export control policy and regulation.
Recommendations for modernization of U.S. export controls
    U.S. munitions list export controls under the Arms Export Control 
Act are effective in supporting the aim of public policy; assuring the 
congruence between U.S. foreign policy objectives and arms transfer 
policy. President Clinton's Conventional Arms Transfer policy 
promulgated in February, 1995 published general arms transfer policy 
criteria that has contributed to the effective management of arms 
transfer policy.
    The more problematic area for public policy are export controls for 
dual use technologies, equipment, and services. Both the Clinton and 
Bush administrations have liberalized export controls on dual use 
technology, equipment, and services that has had the unintended 
consequence of facilitating the process of proliferating WMD and their 
means of delivery as well as advanced conventional weapons. Export 
control policy and regulation needs to be modernized to allow it to be 
brought into alignment with public policy relating to the management of 
problem of proliferation.
Export control policy
    Current policy understates the relevance of dual-use technology to 
the problem of proliferation. This in turn has led to very extensive 
process of decontrol that has facilitated rather than limited the 
proliferation of WMD, ballistic/cruise missiles, and advanced 
conventional weapons technology. Export controls need to recapture dual 
use technologies, products, and services relevant to the development, 
manufacture, test, and support of WMD, ballistic/cruise missiles, and 
advanced conventional weapons. The aim of such a policy is to limit 
access of proliferation-prone end-users to dual use technologies, 
equipment, and services which abet proliferation.
Intelligence collection and processing
    Effective intelligence collection and processing is crucial to 
successful constraints on the dispersion of advanced dual-use 
technologies pertinent to proliferation. Diplomatic coordination with 
nations allied with the U.S. in the counter-proliferation struggle 
depend on timely and precise U.S. intelligence information concerning-
efforts by proliferators to obtain controlled dual-use technology, 
equipment, and services. Systematic collection and processing of 
pertinent information by the intelligence community for use by U.S. 
diplomats and law enforcement personnel can have a significant impact 
on the effectiveness of U.S.--counter-proliferation policy.
Export control regulatory practice
    The international market for advanced dual-use technology is 
important to sustaining American industrial competitiveness. The 
management of export controls should not become an instrument for 
inadvertently frustrating legitimate exports because of poorly 
implemented regulations. Maintenance of a data-base on end-users, 
diversion channels, and the requirements of proliferation-prone end 
users can significantly facilitate the effective management of export 
controls without preventing legitimate commerce in advanced technology. 
Restoration of end-user checks for transactions involving a significant 
proliferation risk is an illustration of an important deterrent to 
diversion. This should be a practical measure to achieve since funding 
and numbers of Full Time Equivalent (FTE) personnel in the Bureau of 
Export Administration (BXA) in the Department of Commerce remains high 
despite low levels of export licensing activity compared to 
circumstances a decade ago. BXA has over 300 FTE to support the 
management of approximately 8,000 validated export licenses. The 
Department of State's Office of Defense Trade Controls issues 
approximately 45,000 licenses per year with fewer than 50 FTEs.
Diplomatic support for export control management
    The disestablishment of the COCOM organization in 1994 eliminated 
the primary international organization to coordinate dual-use export 
controls on a multilateral basis with like-minded nations. The focus of 
the Wassenaar Arrangement on constraining (or in its presently limited 
role, monitoring) conventional arms transfers to sensitive destinations 
(primarily the ``pariah'' states such as Iran and Libya) makes it 
unlikely that this institution will be an appropriate venue for the 
coordination of multinational transfers of sophisticated dual-use 
technologies to proliferation-prone end-users. In the interim, a series 
of bilateral measures are the most likely to achieve success. If 
intelligence support for U.S. diplomacy is effective, direct bilateral 
diplomacy can be effective. An ability to provide timely and accurate 
information on impending dual-use transfers can contain covert 
procurements of controlled technology.
    The expansion of dual use technologies controlled for counter-
proliferation purposes should be included in national control lists 
managed by allied nations. In many cases, U.S. allies abandon most of 
their national export control apparatus when the U.S. decontrolled most 
advanced technology exports. Diplomatic efforts carried out on a 
bilateral basis can help rebuild a ``virtual'' multilateral export 
control structure despite the absence of formal institutions designed 
for the purpose. This aim is facilitated by the widespread consensus 
among most allied nations on the need to contain proliferation.
Enforcement and international sanctions
    Sanctions against export control violations has proven to be an 
effective instrument to facilitate compliance in the case of munitions 
list controls. As it can be argued that the diversion of sophisticated 
dual-use technology, equipment, and services to proliferation prone 
end-users poses no less a long-term danger to American interests, 
sanctions for noncompliance with dual-use should be no less severe than 
for munitions list violations.
    International sanctions for violations of export control violations 
are honored more in the breach than the observance. This has 
significantly diminished the credibility of sanctions. China's sale of 
cruise missiles to Iran in 1996 in explicit violation of the Gore-
McCain sanctions legislation approved in the aftermath of the Gulf War, 
for example, have not been imposed due to the conflict of sanctions 
with other U.S. policy objectives. The widespread practice of ignoring 
statutory sanctions requirements for munitions list cases makes it 
difficult for the U.S. to encourage allied states to establish 
effective enforcement of national export control regulations.
Interagency coordination
    Post Cold War optimism about the impact of the collapse of the 
former Soviet Union on U.S. security interests abroad has led to a 
separation of U.S. advanced technology trade from security interests. 
Interagency coordination that would permit policy management of U.S. 
advanced technology trade pertinent to the proliferation problem has 
declined substantially from Cold War period practice. An appropriate 
interagency apparatus led at the Under Secretary level would provide a 
desirable balance between regular policy oversight and flexible and 
integrated management of the export control system to include all 
pertinent agencies including the Departments of State, Defense, 
Commerce, the NSC, the intelligence community, and other agencies as 
appropriate.

                               * * * * *

    Export controls are an important instrument of foreign policy in 
coping with one of the most enduring problems of national security--the 
ability of potentially hostile states to use international commerce to 
facilitate the creation of a security threat to the U.S. and its 
allies. I look forward to an opportunity to respond to your questions.

    Senator Cochran. I appreciate very much both of you 
touching on not only your impressions of the comments that were 
made by the administration witnesses on this subject, but 
making some suggestions for reform and change in the policies 
and initiatives that have to be undertaken if we are going to 
protect our security interests in connection with the export of 
these dual-use technologies.
    There was one suggestion that we heard that in the case of 
Russia one of the computers that they ended up with there ended 
up coming from a U.S. company in Europe. What can we do about 
that, the trans-shipment? I asked the witnesses about exports 
into the Middle East that could wind up in Iran. Of course they 
could end up in Iran from China, too, because not only has 
China sold missiles and technology to Pakistan, but it's also 
sold cruise missiles and other technologies to Iran as well.
    How do we better protect ourselves from the trans-shipment 
of supercomputers? Is there any way to do that?
    Mr. Schneider. Yes, there is, Mr. Chairman, and this is 
quite readily attended to if the product is licensed. This 
requires effective intelligence support to be aware of 
diversions if it is indeed a criminal diversion where the, say, 
a buyer in Europe is trans-shipping it to a bad end user, let's 
say, in Russia. If we know about it, the customs protocols are 
in place to enable us to stop that shipment, and this can be 
done, again, with effective diplomacy.
    But as Dr. Bryen was suggesting, we have to have a 
licensing regime for these, otherwise it's not practical to 
effect those controls.
    Senator Cochran. Dr. Bryen.
    Mr. Bryen. Well, I agree completely that the whole issue 
here is the administration is allowing companies to send these 
computers out of the United States without licenses--without 
licenses--and then you can't enforce anything. It is impossible 
to account.
    Even the accountings they get are only first order; that is 
to say, where they think they went the first time. Where they 
end up, they have no idea. So you have to have individual 
validated licenses if you want to have any accountability. It 
is that simple.
    Senator Cochran: What suggestions with respect to the 
definition of high computer technology? We were talking about 
these tiers and the tier that is described as being 2,000 MTOPS 
to 7,000 MTOPS. Is that relevant to anything? Is there any 
basis for the tier system and the definitions in terms of MTOP 
capacity?
    Mr. Bryen. I think the whole thing is totally synthetic, 
first of all. The three tiers or actually they call Tier IV--
one is a ``no'' tier--but the three ``yes'' tiers consist of a 
grab bag of countries that are very peculiar, lumped together, 
and it doesn't make any sense. You have lots of little 
inconsequential countries in the second tier, for example. They 
can get very powerful machines. What they would use them for no 
one has any idea.
    So this business of tiers, I think, is bizarre.
    Secondly, the number, this 2,000 threshold number has been 
pulled out of someone's hat. I don't think it has any relevance 
to anything. You have to try and grasp, basically, two things; 
one, how machines would be used, what purposes will they be put 
to, and try to peg your controls on that information. If a 500 
MTOPS machine is what you need to do good, solid nuclear work, 
then you should be controlling those, not 2,000 MTOPS machines. 
And I don't know that the Goodman Study or any other study has 
actually addressed that important issue.
    So the first point is to try and figure out the end use and 
then try to peg your computer controls to that.
    The second issue is the fact that parallel machines, 
particularly the symmetric ones, can be hooked together, and 
they become more powerful machines. This is a considerable 
concern. If you can sell four or six or eight or 10 or 20 
machines that can be stuck together and it would be something 
else, then you have a real problem on your hands.
    The current regulations don't distinguish the type of 
machine; that is to say, they don't deal with whether it is a 
parallel machine or a Vector machine or what kind of machine it 
is, whether it can be effectively coupled with another sister 
processor to make a more powerful unit, and I think the 
regulations there need changing. They need to reflect the real 
power--MTOPS is not enough. You have to have more about the way 
these machines work together, the different processors work 
together in order to make a judgment on how to handle this.
    Senator Cochran. Dr. Schneider.
    Mr. Schneider. Just a footnote to that is that the 
technology of networking the computers, in addition to the 
computers themselves and the associated hardware, should also 
be the subject of the control regime because they are 
increasingly crucial to the exploitation of these capabilities.
    Senator Cochran. There was a question I asked of the 
administration witnesses about the evaluation or assessment 
that had been done by the military of the potential threats to 
our national security by reason of exporting supercomputers. I 
am curious to know what your information is about whether or 
not we have undertaken, to your knowledge, any such assessment 
of the threat to our national security from the sale of 
supercomputers.
    Do you know of any that has been done by our military 
officials?
    Mr. Schneider. No. The one study I am acquainted with, 
which was, I believe, done in response to a House National 
Security Committee request and legislation a year or so ago was 
done by a group at Stanford University. It was not done by the 
Defense Department itself. It was apparently contracted for 
study, but I don't know of one that has been done by the 
Defense Department itself.
    Senator Cochran. But this is a recent study that was done 
for the Department of Defense; is that correct?
    Mr. Schneider. Yes. It was done for the Department of 
Defense, but it had some limitations in the way the study was 
done, so it would not be able to respond to the questions you 
were asking.
    Senator Cochran. Dr. Bryen.
    Mr. Bryen. I don't know of any Defense Department study 
that relates our national security to the sale of 
supercomputers. I don't think there is one.
    There was an Energy Department study in the late 1980s, 
which assessed the importance of supercomputing to nuclear 
weapons development. That's a good study. The Committee ought 
to get one. It's not classified, and it makes some very telling 
points about how supercomputers are vital to the design and 
deployment of nuclear systems.
    Senator Cochran. Based on what you know about our policies 
and about the emerging sophistication of weapons of mass 
destruction in both China and Russia, particularly, do you feel 
this is a situation where we ought to press the administration 
to make a change in its policy? Are we on the right track here 
in this hearing by pushing for this and urging that it be 
reconsidered?
    Mr. Schneider. I believe so, Mr. Chairman. I think there is 
a wide consensus, not only within the Executive Branch, but 
between the Executive Branch and the Congress, about the aim of 
controlling proliferation. Export controls are a crucial aspect 
of it, and it is the part of the system that is broken.
    Senator Cochran. Dr. Bryen.
    Mr. Bryen. I agree with that. I should also mention the 
administration is trying to decontrol even more supercomputers, 
and that is what the second study is all about that they are 
conducting at the moment. The word is, that I have heard, is 
that they want to set the base threshold at 10,000 MTOPS 
instead of 2,000 MTOPS, and they are trying to justify that. So 
anything you can do, Mr. Chairman to block progress in 
decontrolling even more sensitive technology would be very 
helpful at this stage.
    I am very worried about this. This is I would call it 
reckless, sir.
    Senator Cochran. Well, I appreciate very much your 
attendance at this hearing and your very helpful participation.
    I am going to call on the General Accounting Office and 
request an additional study of the relationship between the 
dual use export control liberalization of this administration 
and our national security. They have had an opportunity, and I 
referred to a report that they had done already on this subject 
of export controls and supercomputers. But I think we need more 
information, and since we don't have it from existing sources, 
we'll ask GAO to do one.
    I think this has been a most interesting and helpful 
hearing. It has also been disconcerting and alarming in many 
ways.
    We are going to continue to pursue our interest in 
proliferation and our national security interests. Our next 
hearing is going to be on July 17 at 2 p.m., where we will 
review the ABM Treaty Compliance Review Process. Until then, 
the Committee is in recess.
    [Whereupon, at 11:55 p.m., the Subcommittee adjourned, 
subject to the call of the Chair.]



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