[Congressional Record Volume 143, Number 149 (Thursday, October 30, 1997)]
[Senate]
[Pages S11396-S11398]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                DOD AUTHORIZATION BILL CONFERENCE REPORT

  Mr. GRAMS. Mr. President, I rise in opposition to the conference 
report to the DOD authorization bill. One of the issues which held up 
the resolution of the conference was the high performance computer 
issue. This matter certainly was not resolved to my satisfaction, and I 
understand that this is one of three issues that may cause the veto of 
this legislation.
  On July 10 the Grams-Boxer amendment passed in the Senate by a vote 
of 72-27. It created a GAO study on the national security concerns 
related to computer sales between 2,000-7,000 MTOPS to tier 3 
countries. Those countries include China, Russia, and Israel.

[[Page S11397]]

 The amendment was a second degree amendment to an amendment which 
sought to license exports of these mid-level computers, after they had 
been decontrolled 2 years ago. Rather than creating an unwise barrier 
to US-made exports, 72 of my colleagues believed we needed more study 
of this issue before passing this new regulation on the Senate floor 
circumventing the usual committee debate and consideration.
  Mr. President, as Chairman of the Subcommittee on International 
Finance, of the Banking Committee, which has jurisdiction over export 
control matters, I strongly opposed this attempt to circumvent the 
normal committee process. Chairman D'Amato joined me in vigorously 
opposing the underlying amendment, paving the way for a strong Senate 
vote on the issue.
  After the vote, Chairman D'Amato and the Subcommittee Ranking Member 
Carol Moseley-Braun joined me in sending a letter to the Conferees 
requesting we be consulted prior to any attempts to modify the Senate 
provision in conference. I regret that at no time in the months-long 
process did any consultation occur, even though the issue was clearly 
one of Banking Committee jurisdiction.
  I was informed by the conferees that they had accommodated my request 
for a GAO study. What I determined from other sources was that language 
accompanying my study essentially accomplished the same thing as the 
underlying amendment my second-degree amendment defeated. And I was 
supposed to be satisfied because my study remained in the bill.
  I applaud my colleagues who worked hard in the conference committee 
to complete the report. There were many difficult issues effectively 
handled. In total, the bill is a good one. However, because this bill 
may be vetoed, I would like to make a strong case for further 
resolution of this issue once it is returned to conference.
  My specific concerns with the provisions of the conference report are 
the following:
  First, rather than a mandate to obtain export licenses for computers 
between 2,000 and 7,000 MTOPS to tier 3 countries, the conference 
report would require a 10 day notice to Commerce of a proposed sale. If 
no government entity opposes, the shipment can be made. This not only 
creates a bureaucratic nightmare taking scarce resources away from 
review of truly sensitive export license applications, but the reality 
would be that there would be an objection to each one of them--if for 
no other reason that the Government needs more time to look at them. So 
the 10-day notice requirement essentially implements the intent of the 
original amendment the Senate defeated. This is not acceptable. The 
reason we decontrolled in the first place, requiring licenses between 
2,000 and 7,000 MTOPS only to questionable end users in tier 3 
countries, was to free up needed resources to analyze exports of higher 
performance computers, including those computers between 20,000 and 
well over 1 million MTOPS--which are the real supercomputers. Opponents 
of my amendment insisted on defining computers between 2,000 and 7,000 
MTOPS as being supercomputers, but supercomputer technology has long 
ago passed this level of computers. They are now the kind of computer 
systems we have in our offices. They are not supercomputers used to 
design nuclear weapons.
  There is a 180-day layover for future decontrol of computer level 
changes and a 120-day layover for any changes in which countries remain 
on the tier 3 list. I believe the President should have flexibility to 
continue to exercise current authority to make these changes. These 
layovers will give opponents plenty of time to prevent these changes--
and will ensure that no changes will be made in the future even though 
rapid technology advancements challenge us to maintain a system for 
decontrols in the future.
  Mr. President, there is also a requirement for end-user verification 
that could be unenforceable and also create a strain on limited 
resources. This language should be worked out with the Administration. 
Certainly post shipment checks should not be required over 2,000 MTOPS 
regardless of whether decontrol is made in the future. Even by next 
year that level of computer will be found in the local computer store, 
so it is unlikely that all of these verifications could be made. Also, 
there should be some discretion regarding whether verification in every 
case is even necessary if the exporter maintains service on the 
computer.
  Mr. President, I am just as concerned about selling sensitive high-
technology equipment to military end users, but I don't think this is 
the right way to stop the few diversions that brought about the 
original amendment. There is adequate enforcement authority now to 
address diversions. Those that have occurred are being addressed.
  Mr. President, my floor amendment also asks Commerce to work more 
closely with companies to identify questionable end users than they are 
doing now. The GAO study will help us study national security interests 
involving sales of computers at this mid-level. There simply is no need 
for the provisions added in conference that will compromise our efforts 
to remain competitive with other nations which do not have these type 
of requirements. Anyone who will tell you that an export license takes 
only a short time is wrong. It takes months. And sales have been lost 
because of our lengthy, burdensome licensing process.
  Mr. President, I urge my colleagues to oppose this conference report. 
I also ask unanimous consent that a copy of my statement at the time my 
second-degree amendment was offered be printed in the Record. That 
statement relates all of my reasons for opposing the underlying 
amendment reimposing export licenses of these midlevel computers.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

             [From the Congressional Record, July 10, 1997]

       Mr. Grams. Mr. President, I understand that there is a lot 
     of concern in this body about United States computer sales 
     being diverted for military use to either China or Russia. 
     None of us wants that to occur. But we have to consider 
     whether the Cochran amendment solves the problem. I believe 
     that it does not.
       The Cochran amendment would require export licenses for all 
     midlevel computers. Now, these are not supercomputers, these 
     are not high-end computers. You are going to hear that term, 
     but they are not supercomputers. These are midlevel 
     computers, and they are shipped to China, Russia, Israel, and 
     47 other countries. We talk about the Third Tier countries. 
     They involve 51 nations, like Russia, China, India, Pakistan, 
     Saudi Arabia, Israel, Romania, and the Baltic States. Some of 
     our future NATO Allies could also be involved. Mr. President, 
     export licenses do not solve end-user problems. These are 
     diversions that would not have been caught during the export 
     license procedure. Export licenses do require end-user 
     certification, but if the end user chooses to ignore the 
     agreement, or if the computer is stolen, that possibility 
     will not be evident in the licensing process. In my judgment, 
     the current system works.
       Just yesterday, Secretary of Defense Bill Cohen sent us a 
     letter opposing the Cochran amendment. He said the current 
     law and system can deal with unauthorized exports and 
     diversions. This is from the department that has been very 
     conservative on all export decontrol matters. Secretary Cohen 
     further states that we should focus our controls on 
     technology that can make a national security difference, not 
     that which is widely available around the world and is 
     obsolete.
       Yes, Mr. President, there have been three diversions, but 
     that was out of 1,400 sales. But, no, this is not the right 
     way to address those problems. The right way is to force the 
     administration to publish as many military end users as 
     possible and then to work with the industry to identify all 
     military end users. We have been able to identify diversions 
     through our capable intelligence sources. Mr. President, 
     there is no evidence that there are dozens of computers out 
     there used by military end users. It is just not there.
       Further, I don't believe that the industry irresponsibly 
     ignores available information about military end users. They 
     have too much at stake. A company which violates export 
     control laws takes a very big risk. The penalties are 
     prohibition of all exports for 20 years or more, 10 years in 
     prison, and up to a $5,000 fine for each violation. This 
     doesn't include the blemish that would remain on the 
     company's reputation or the great difficulty that company 
     would have in the future seeking an export license. No 
     company, Mr. President, can afford that risk.
       What we would be doing here this morning is handing this 
     midlevel computer business over to the Japanese and other 
     allies. Now, again, I want to emphasize that these are 
     midlevel computers, they are not supercomputers. Next year, 
     they will be the kind of systems that we will be able to have 
     in our offices here in the Senate, or what you could find in 
     a small company or in a doctor's office. These are not the 
     computers that are sought after for nuclear weapons 
     production or design. Again, we are looking

[[Page S11398]]

     at midlevel computers, between 2,000 and 7,000 MTOPS, which 
     are widely available around the world.
       Supercomputers, which are sought after for weapons design, 
     start at the 20,000 MTOPS level and go all the way up to 
     650,000 this year, and they will go beyond the 1 million 
     MTOPS level next year. By the way, China already produces a 
     computer at 13,000 MTOPS. No other country considers these 
     computers to be anything but generally available and will 
     step in to take over the business that the Cochran amendment 
     will hand to them. The question is, is that what we want?
       Also, anyone can purchase upgrades, by the way, to raise a 
     PC, a current PC, above the 2,000 MTOPS level. We can't 
     control the box. We can't control the chips around the world 
     that can be put in it. We can't control the upgrades. There 
     is no way to control these low-level PC's under the 2,000 
     MTOPS threshold, again, since they are available in nearly 
     every country in the world.
       Further, the chips that make up these computers are also 
     available and produced around the world. They were 
     decontrolled during the Bush administration. Our chip 
     producers have markets throughout the world, and they need to 
     maintain them to remain competitive. Chip producers cannot 
     control who receives their end product.
       Also, how do you prohibit a foreign national from using a 
     computer even above the 7,000 level here in the United States 
     and taking the results back, or faxing it back?
       Our friend Jack Kemp has written to us also this week 
     stating that the Cochran amendment would ``establish a policy 
     that is destined to fail and would hurt American computer 
     manufacturers without protecting our national security. The 
     American high-technology sector is critical to the future of 
     this country and must be protected from overly intrusive 
     Government restrictions.''
       I wish there was something we could do to effectively 
     control some of these exports, but it is just not possible at 
     these lower levels. We cannot convince our allies to reverse 
     2 years of their own decontrol. In fact, Europe has tabled a 
     decontrol proposal at 10,000 MTOPS, which proves that they 
     have no intention of even respecting our 7,000 level. We 
     cannot pull all the PC's and upgrades off the retail shelves, 
     and we cannot close our borders to prevent all foreign 
     nationals from entering this country and using our computers.
       We must concentrate our resources on keeping computers 
     above the 7,000 level from reaching military end users; 
     that's for sure. But I fear that an increased license burden 
     in the administration would steer resources away from efforts 
     to locate diversions and investigate them.
       Now, Mr. President, in an earlier statement, I also 
     countered a claim that an export license requirement would 
     not slow down these computer sales. I have heard that someone 
     made the comment that an export license would take 10 days. 
     Well, anyone who knows how the licensing process works knows 
     that it can take many, many months to obtain one. This will 
     only earn our industry a reputation as an unreliable 
     supplier, and it will cost us sales and it will cost us many, 
     many U.S. jobs. The administration admits that a computer 
     license application averages 107 days to reach a decision. I 
     have seen it take far longer. Even 107 days, by the way, is 
     enough to convince the end user to go out and seek a buyer in 
     another country.
       Since so many of the Tier 3 countries are emerging markets, 
     we need to be in there early to maintain a foothold for 
     future sales. When we hear about the 6.3 percent of sales to 
     Tier 3 countries, that is misleading. It is in an area where 
     the market is expanding rapidly. If we leave our companies 
     out of those markets, they will not be there to compete in 
     the future. They will not be there to provide sales and jobs 
     for the United States.
       Another argument I have heard is that there is no foreign 
     availability over 3,500 MTOPS. Well, last year, NEC of Japan 
     tried to sell a supercomputer to the United States Government 
     at a level between 30,000 and 50,000 MTOPS. They match our 
     speeds all the way to the top.
       Mr. President, I believe that all of us are proud of our 
     computer industry, that our industry remains the state of the 
     art in so many areas, particularly in the levels above 7,000. 
     We have made progress to facilitate exports without 
     compromising our national security, progress which began back 
     in the Reagan and Bush administrations, but here is an effort 
     today to reverse all of that progress.
       Our industry has to survive on exports, and it has to 
     pursue commercial business with these 50 countries to remain 
     competitive. All computer sales over the 7,000 MTOPS level do 
     require license now. We have not sold any computers above 
     that level. And, again, the 7,000 MTOPS are not 
     supercomputers--they are not--they are midlevel computers. We 
     have not sold any computers above that level to Tier 3 
     countries; nor do our allies, to my knowledge. However, we 
     should not restrict the sales of these midlevel and, again, 
     generally available computers to commercial end users. We 
     should simply maintain the current licensing requirement for 
     the questionable end users. I firmly believe that there will 
     be improved cooperation between the Government and industry 
     on end-user information, particularly those for Russia and 
     China.
       Now, I also commend the Commerce Department for starting to 
     publish information on end users and to examine all sales 
     that are made to the Tier 3 countries within these computer 
     speeds.
       The Grams-Boxer amendment requests the GAO to determine 
     whether these sales affect our national security. That is 
     very important. It will look into the issue of foreign 
     availability. It will also require the publication of a 
     military end-user list, and it requires Commerce to improve 
     its assistance to the industry on identifying those military 
     end users.
       There will be some that vote today solely to express their 
     dissatisfaction with China's alleged military sales to our 
     adversaries. Let me remind you once again that there is no 
     evidence that U.S. computers were involved in any of those 
     cases. I also urge you to look at the merits of this issue. 
     Pure and simple, the Cochran amendment would hand the sales 
     of midlevel computers over to the Japanese and the Europeans 
     at the expense of an industry that we have sought to protect 
     and to promote and an industry that we are proud of.
       As chairman of the International Finance Subcommittee of 
     Banking, the committee that has jurisdiction over this issue, 
     I strongly, this morning, urge my colleagues to vote for my 
     substitute and let us continue this debate in the normal 
     manner, through committee consideration. At the same time, 
     the administration should step up its efforts to express to 
     the Chinese and the Russians our grave concerns regarding 
     efforts to divert commercial sales to military end users 
     without knowledge of the United States seller.
       Mr. President, I appreciate the efforts of my colleague 
     from Mississippi to address these diversions. I want to work 
     with him in my role as chairman of the subcommittee of 
     jurisdiction to ensure that the current system does work or 
     on how we can improve it once we have better information 
     regarding the extent of the problem.
       I urge the support of my colleagues for the Grams-Boxer 
     substitute as a compromise to this very, very controversial 
     issue. Thank you very much.

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