LEXIS-NEXIS® Congressional Universe-Document
LEXIS-NEXIS® Congressional
Copyright 1999
Federal News Service, Inc.
Federal News Service
OCTOBER 28, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH: 3157 words
HEADLINE: PREPARED STATEMENT OF
DAN HOYDYSH
CO-CHAIR OF THE COMPUTER COALITION FOR RESPONSIBLE EXPORTS
BEFORE THE
HOUSE GOVERNMENT REFORM COMMITTEE
GOVERNMENT MANAGEMENT, INFORMATION AND TECHNOLOGY SUBCOMMITTEE
BODY:
Mr. Chairman, Members of the Committee.
Good Morning. My name is Dan Hoydysh. I am the Co-Chair of the Computer
Coalition for Responsible Exports (CCRE) and am testifying today on CCRE' REP.
WAXMAN: On behalf (I am also Director, Trade, Public Policy
& Government Affairs of the Unisys Corporation). I want to thank you for
providing me and the CCRE with the opportunity to share our views on U.S.
computer export controls.
The CCRE is an alliance of American computer companies and allied associations
established to inform policy makers and the public about the nature of the
computer industry -- its products, market trends, and technological advances.
CCRE Members include Apple Computer, Inc., Compaq Computer Corporation, Data
General Corporation, Dell Computer Corporation, Hewlett-Packard Company, IBM
Corporation, Intel Corporation, NCR Corporation, Silicon Graphics, Inc., Sun
Microsystems, Inc., Unisys Corporation, the American Electronics Association
(AEA), the Computer and Communications Industry Association (CCIA), the
Computer Systems Policy Project (CSPP), Electronic Industries Alliance (EIA),
and the Information Technology Industry Council (ITI).
The CCRE is committed to promoting and protecting U.S. national security
interests, and seeks to work in close partnership with the Congress and the
Executive Branch to ensure that America's economic, national security, and
foreign policy goals are realized. CCRE believes that a strong, internationally
competitive computer industry is critical to ensuring that U.S. national and
economic security objectives are achieved and that U.S. economic and
technological leadership is
maintained.
The U.S. computer industry has a long history of cooperation with the U.S.
government on security-related high technology issues. They take their
responsibilities in the area very seriously. CCRE members strongly believe that
U.S. national security is tied to U.S. technological leadership. U.S. computer
companies also devote hundreds of employees and millions of dollars annually to
complying with export control regulations. It is not our role, however, to
define U.S. national security needs - - that is for the Congress and the
Executive Branch. Rather, we do and will continue to provide the Congress and
Executive Branch with information concerning the rapidly changing technology
and international market conditions that we believe they will need to take into
consideration in shaping up to date and effective U.S. export control policies
for computers.
In our testimony today we want to make the following four key points: (1) the
Administration's July
proposal to adjust the
computer export controls is supported by the technological and market trends of the global computer
industry; (2) the President's July proposal should be implemented immediately
as the present delay is hurting the U.S. computer industry with no apparent
benefit to national security; (3) given the present experience with the 180 day
delay in implementing the adjustments to the
computer export controls, future Presidential proposals adjusting the export control thresholds should
only be subject to a thirty day review period; and (4) given the trends in
computer performance over the foreseeable future, a more responsive and
efficient export control regime needs to be developed.
I. The July Proposal to Adjust the
Computer Export Controls is Supported by the Technological and Market Realities of the Global Computer
Industry
In July, the President proposed raising the
computer export control threshold for
Tier III countries from 2000 MTOPS to 6500 MTOPS. Computers that will perform
up to 6,500 MTOPS are widely available from U.S. and foreign manufacturers, as
are the components and know- how to manufacture such computers or clusters of
computers that will perform up to 6,500 MTOPS.
Computers that can perform up to 6,500 MTOPS are widely available because (A)
of the increasing power of mass market microprocessors, that (B) are employed
in increasingly common multiprocessor systems (with correspondingly higher
performance levels), and (C) global computer market trends mean that
multi-processor computers so widely available that many are now commodities.
A. Increasing Processing Performance Trends Support the July Proposal to Adjust
the
Computer Export Controls
The recent increases in microprocessor performance are one of the main factors
supporting the proposed adjustment. The performance of microprocessors (chips)
-- the brains of the computer -- continues to improve
dramatically. Gordon Moore, the former CEO of Intel once observed
"that the power of semiconductor technology doubles every 18 months." However, the pace of technological advance is accelerating.
Since its introduction in March of 1999 the Pentium III Xeon microprocessor has
increased in power from 1167 MTOPS (500 MHZ) to 1710 MTOPS -- an increase in
power of almost 50% in 6 months. In the year 2000, Intel projects that its mass
market Itanium microprocessor will perform at 5622 MTOPS.
In addition to Intel's mass market microprocessors there are two recently
introduced microprocessors that perform above 2000 MTOPS. Both have been placed
in mass market personal computers. Apple has introduced the widely available
Power Mac G4 computer that uses the G4 microprocessor. The 450 MHZ G4 performs
at 2775 MTOPS. Early
next year the G4 will be sold with a 500 MHZ microprocessor that will perform
at 3084 MTOPS.
IBM is also now selling its widely available Aptiva line of personal computers
with a microprocessor, the 700 MHZ AMD Athlon, that performs at 2130 MTOPS.
B. The Trend of Increasing Performance Through the Use of Multiprocessor
Systems Supports the July Proposal to Adjust the
Computer Export Controls
Another major factor supporting the proposed adjustment is the increasing usage
of multiprocessor computer systems. Multiprocessor systems are now widely
available on the world market. According to projections in the Gartner Group
Report, in 2000 over 4.3 million computers that can accommodate two processors,
over 500,000 computers that can accommodate 4 processors, and over 125,000
computers that can accommodate 8 processors will be sold world-wide. The Gartner Group Report projects that by the end of 2000, the installed
worldwide base of computer systems that can accommodate 2, 4, 6, and 8
processors should be approximately 14 million, while by the end of 2001 there
will be over 20 million such computers installed worldwide.
The chart below and the following examples using Intel technology illustrate
the dramatic increases in mass market multi-processor power that is resulting
in an ever increasing number of computers performing in the range covered by
the President's proposal.
Today the 550 MHZ Intel Pentium III Xeon, which performs at about 1300 MTOPS,
is the basic building bloc of multiprocessor servers using Intel architecture.
A computer system using two 550 MHZ Intel Pentium III Xeon microprocessors
performs at about 2400 MTOPS,
while one using four microprocessors performs at about 4600 MTOPS, and one
using eight microprocessors performs at about 9000 MTOPS.
In 2000, it is projected that the mass market 750 MHZ Pentium III Xeon
microprocessors used in PCs will perform at 1750 MTOPS. A two- processor server
using these commodity chips is projected to perform at 3250 MTOPS, while one
using four of these microprocessors is projected to perform at 6250 MTOPS. ,
and systems with eight of those microprocessors are projected to perform at
12250 MTOPS.
Most significantly, however, in 2000, it is also expected that the Intel
Itanium (formerly called the Merced) microprocessor will be available for use
in multiprocessor servers using Intel architecture. The Itanium is projected to
perform at 5622 MTOPS. A system with two
Itanium microprocessors is projected to perform at 10996 MTOPS, while one with
four microprocessors is projected to perform at 21748 MTOPS.
C. Global Computer Market Trends of Increasing Use of Multiprocessor Systems
Support the July Proposal to Adjust the
Computer Export Controls
Any review of proposals to adjust
computer export controls should take into account global computer market trends - both the foreign
availability of multiprocessor computers, as well as the also the foreign
capability to manufacture computers that would be subject to export controls.
In addition, the overseas installed base of computers that would be subject to
export controls is also relevant to the effectiveness of any export control
regime.
(1) Foreign Availability and Capability
There are foreign computer companies that compete or are capable of competing
with U.S. computer companies for sales of computers that perform above the
level that is controlled by U.S. export controls. The table below clearly
shows that foreign computer companies are competing in the server, workstation
and PC markets. TOP FOREIGN COMPUTER MANUFACTURERS Based on Units Sold
Worldwide in 1997 (Table not transmittable.)
*Amdahl is owned by Fujitsu, but is located in the U.S. and subject to U.S.
export control regulations.
The number of foreign computer companies and the number of products they offer
that compete at higher performance levels is increasing all the time as
computer technology continues to advance and is available overseas and at
relatively low cost. The chart below shows the increasing number of foreign
computer companies that are marketing servers and workstations that can perform
in the range covered by the proposed adjustment to the
computer export control laws.
Computer companies in France (Bull), Japan (Hitachi, NEC, Fujitsu, Mitsubishi
and Toshiba), Taiwan (Acer and AST), Germany (Siemens and Comparex), and Italy (Olivetti) are all making 2 and 4-way
multiprocessor computers. Many of these companies are already marketing or have
announced that they will be selling 8-way computers (e.g. Bull, NEC, Hitachi,
Fujitsu, and Siemens). For example, on August 24, 1999, Fujitsu issued a press
release in which it announces that it will be shipping computers with 8-way
upgradeable Intel Pentium III Xeon processors. It should also be noted that
NEC, Siemens, Hitachi, Fujitsu, Bull, Acer, and Toshiba have indicated that
they will be employing the Intel Itanium in multi-chip computers (a 2- way
Itanium is projected to performs at 10,996 MTOPS, a 4-way is projected to
perform at 21,746 MTOPS).
Indeed, the Gartner Group Report forecasts that next year foreign computer
manufacturers will sell over
20,000 eight-way configurable computers, almost 140,000 four-way configurable
computers, and almost 950,000 two-way configurable computers. In 2001, the
Gartner report projects that over 1,300,000 two-way computers and over 150,000
four- way computers will be manufactured by foreign computer companies. Many of
these foreign computer systems will be using mass market microprocessors that
will have performances for 4-way configurations above 20,000 MTOPS.
In addition foreign end-users can also achieve high performance levels through
networking commercial off-the-shelf inexpensive computers. Indeed, this view is
supported by a statement from the Cox Committee Report:
According to officials at the Lawrence Livermore National Laboratory,
networking represents only a ten percent additional cost over the cost of
computing
hardware for large systems. Thus, up to approximately 50,000 MTOPS, the
computing capability available to any country today is limited only by the
amount of money that is available to be spent on commercial-off-the-shelf
networking.
(Cox Committee Report, Volume 1, Chapter 3/Technical Afterword, at 158).
Furthermore, the Cox Committee Report notes that there are networking
technology installations in 17 foreign countries, including India, Israel, and
the PRC. (Id.)
This foreign availability and capability is a major factor that supports the
President's proposed adjustments to the
computer export controls.
(2) Foreign Installed Base
As computer technology advances and is spread around the world, the installed
base of computers that can perform above current export control thresholds will
continue to grow. In addition to providing data on technology advances, the
Gartner Group Report also
provided data on international market trends. The Report shows that there is
presently a large overseas installed base of servers and workstations, many of
which perform in the range covered by the proposal. The chart below shows the
increasing (Image)foreign installed base.
The Gartner Group Report forecasts that by the end of 2000, over eight million
multiprocessor servers and workstations will have been sold overseas by U.S.
and foreign computer manufacturers. The Report also forecasts that by the end
of 2000, over one million computers that can be configured with up to four
microprocessors will have been sold overseas. Most of those computers will
operate above the present
computer export control thresholds, and indeed many will perform above the President's proposed export
control thresholds or can be easily upgraded with the latest most powerful
commodity microprocessors to perform above those levels.
Accordingly, the large installed base of computers outside the United States
cannot be ignored when reviewing the President's proposals. The larger the
installed base -- the more difficult it is to implement an effective export
control system.
The discussion above concerning the changing performance levels of
microprocessors and computers over the next few years clearly shows the need
for further adjustments next year. CCRE is committed to working with the
Congress and the Executive Branch in determining the adjustment that will be
necessary next year in light of the technological and market realities.
I. The President's Proposal Should be Implemented Immediately
We hope that this Committee will agree with us that ineffective unilateral US
controls that provide a competitive advantage to foreign manufacturers will --
in the long run -- damage our national security by eroding our technological
pre-eminence. It is our view that the President's proposal to raise the
computer control thresholds is a prudent response to technological, economic
and competitive realities and therefore urge this Committee to support the
immediate implementation of the proposal. Tomorrow, October 29, 1999, will
mark the 120 day anniversary of the President's announcement of his proposal.
The delay is hurting U.S. computer companies. Sales are being lost, market
position is being hurt, long-term relationships with distributors are
suffering, and our foreign competitors are positioning themselves to reap the
benefits.
Not only are the prohibitions impacting the latest U.S. personal computer
lines, such as the Apple G4 and the latest IBM Aptiva, but also many U.S.
multiprocessor business computers that perform above 2000 MTOPS.
(See Attachments) As a result, U.S. companies will lose valuable market share,
customer loyalty, follow-on business (services, upgrades, successor computers),
and suffer damaged reputation as companies unable to
sell mass market computers in a timely fashion.
As we have explained, the systems covered by the proposed change are mass
market computers that are widely available to Tier 3 customers from foreign
companies. Thus the U.S. computer industry is suffering serious harm for no
apparent national security benefit. We therefore urge this Committee to support
efforts to immediately implement the President's July 1, 1999,
computer export control adjustment proposals.
III. The Process for Updating Export Controls on Computers Should be Streamlined
In 1997, the House Armed Services Committee correctly predicted that export
controls on computers will need to be updated periodically. Consequently, this
committee provided a means for adjusting those controls in the FY 1997 NDAA.
That process, however, included a waiting period of 180 days. Recent experience
has shown that such a long
delay defeats the purpose of allowing the President to adjust the export
controls, yet provides no corresponding national security benefit.
Adjustments to the
computer export control laws are proposed following a determination that the adjustment will not harm
the national security. Indeed, at the press conference following the
announcement in July, Deputy Secretary of Defense Hamre stated that
"every one of (DOD's) concerns was accommodated (in the interagency process) and
(that DOD is) satisfied that (DOD) can continue to protect the country."
A delay of six months has a very serious implication for an industry whose
product introduction life cycles typically run three months. Furthermore, six
months is too long for an industry that depends on its ability to beat its
foreign competition to the marketplace with the newest technology. Important
markets can be lost and the dominant position of the U.S. computer
industry threatened through such a long delay. Our foreign competition is ready
and willing to exploit such market opportunities. Once lost, it is far from
clear that markets can be recovered. A shorter time period for review will
still give the Congress adequate time to review the national security
ramifications of any changes in the U.S.
computer export control laws. Additionally, there is no precedent for such a long review period . Even
sales of items on the munitions list such as tanks, rockets, and
high-performance aircraft require only a 30 day review period.
Many members of Congress have come to similar conclusions regarding the harm
caused by the six month delay. Indeed, there have even been bills introduced to
amend the six month delay. The Senate Committee on Banking, Housing and Urban
Affairs, in its
reported version an Export Administration Act, has unanimously recommended
reducing the review period for adjusting
computer export controls to 60 days. In addition, Representative Lofgren (D-CA) has introduced a bill,
HR 2623, that would amend the FY 1998 NDAA by striking 180 days and inserting
30 days. In the Senate, Senator Reid also introduced a similar bill (S- 1483).
I. The Export Control System Needs to be Changed
As the present experience clearly shows, there is a need for a more efficient
and responsive new
computer export control system, beyond the immediate need to adjust the export control thresholds. A
performance based
computer export control system is proving difficult to administer given the rapid advances in computer
performance levels and the wide availability of components and know-how. In light of this reality, we urge that the Congress and the Executive
Branch, with the support and assistance of the computer and other hi-tech
industries, to continue its bipartisan consideration of other methods of
achieving the national security goals presently associated with
computer export controls.
END
LOAD-DATE: November 2, 1999