LEXIS-NEXIS® Congressional Universe-Document
LEXIS-NEXIS® Congressional
Copyright 1999
Federal News Service, Inc.
Federal News Service
JUNE 17, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH: 1413 words
HEADLINE: PREPARED STATEMENT OF
RHETT DAWSON
PRESIDENT
INFORMATION TECHNOLOGY INDUSTRY COUNCIL
BEFORE THE
SENATE BANKING, HOUSING AND URBAN AFFAIRS COMMITTEE
SUBJECT - THE EXPORT ADMINISTRATION ACT
BODY:
Good morning and thank you Mr. Chairman for inviting me to testify today. I
appreciate your leadership on this issue.
I am Rhett Dawson, president of the Information Technology Industry Council.
ITI is the association that represents the leading IT companies. Our members
include such companies as IBM, Intel, Cisco, Microsoft, Gateway, Dell, Compaq,
HP and 3Com -- just to name a few.
Last year, our members had a combined worldwide revenue of more than $440
billion and we employed more than 1.2 million people in the United States.
The US IT industry is the envy of the world -- it is a perfect example of what
can develop when given the freedom to innovate. Today, I want to talk about
how our industry and our government can work together to ensure that the US IT
industry can retain its world leadership in information technology, while
making sure we continue to protect our national security.
Let's focus on three areas on how we can change export control regulations:
- National Security
Technology
- What the Congress and the Administration Can Do
National Security
Last month the Cox Report was released and it gave us a clear picture on
national security. We agreed with many of the reports findings:
- Higher
penalties for those who violate export control laws.
- The need to re-enact the Export Administration Act to establish export
control regime that can respond to technological changes and market realities.
- And, the need for multilateral controls to protect sensitive technologies
that could threaten our security interests.But what we need is a level playing
field where our foreign competitors are not permitted to take advantage of
unilateral U.S. government strategies.
Our industry is committed to upholding and protecting our country's national
security interests. We are not asking for, nor do we want, to do away with
export control regulations for countries where true supercomputers must be
controlled, clearly in terrorist countries but also those countries where
technology, if it is not otherwise available, might prove threatening to the
U.S.
The most appropriate and most effective export control threshold for these
countries from a national security as well as a
national economic perspective is one that draws the lines between computers
that are commodities and those that are not. Drawing that line is what we hope
you will consider doing as you move forward with the Export Administration Act.
The Cox Report has sparked a very important debate about the role technology
plays in our national security. But it is important to keep in mind that even
in the midst of the espionage case, Congressman Cox made sure to point out that
technology should be used as a tool of democracy.In late March, in the San lose
Mercury News, Congressman Cox wrote:
"Encouraging exports to China that promote individual freedom and well-being is
in the United States' national security interest ... the U.S. should focus on
unleashing the Internet as an engine of freedom in China."
This point is made even more clear in the best-selling book The
Lexus and the Olive Tree by Thomas L. Friedman. He writes:
"An Internet company formed in Chicago in 1998, called China Online, uses
stringers inside China to gather market and other news. They file the
information to Chicago via the Internet, and China Online then beams it back to
China, again via the Internet. Among the things that China Online offers as a
daily service is the black-market rate of the Chinese currency against the
dollar in China's major cities. Its reporters go out into the market every day,
check the rate with the underground dealers, and then file it to Chicago. This
is very useful data for anyone doing business in China, particularly for
Chinese. IT is something the Chinese government would never provide to its
people, let alone to the world, but Beijing is now powerless to stop it."
This is
something that is happening today and it is happening because people in China
are getting the tools they need to communicate with the outside world.I spent
the last two years of the Reagan Administration in the White House. And
something that I learned there is that democracy grows through engagement. It
was the fax machine that helped bring down the Berlin Wall and I believe it
will be Internet that will help bring democracy to China.
We believe that you can, and must, strike a balance that preserves our national
security while maintaining the US technological leadership. To do this we hope
you will closely examine the key question of foreign availability.
Next, I want to highlight just a couple short examples of why we need to
recognize that technology is racing ahead of current control levels which means
that export control threshold levels, so-called
MTOPs, must be raised sooner, rather than
later.
Real World Examples
ITI represents the leading IT companies. Many of our companies produce personal
computers that are shipped around the world for use in the home and in the
office.
When the new export control thresholds were set in 1996, because the processing
capabilities were much lower, ordinary business computers - computers with 2,
4, 6, and even 8 microprocessors could be exported to Tier 3 countries. This
year, if no change is made to the current 2000
MTOPs level, all of these computers using new microprocessors will be controlled.
Gateway, a company in the home state of Senator Johnson, where you can log onto
the Internet to build your own computer, will soon exceed the 2000
MTOPs level. Apple Computer, another one of our member companies, will roll out its
next generation computer later this summer. It too is expected
exceed the 2000
MTOP level.
Dell and Compaq -- two companies in your home state of this Committee's
Chairman, will soon bump up against the current threshold as they try to ship
their products outside the United States.
But this is not just about computers. The Sony Play Station I! -- which many of
us have in our homes for our kids or grandkids -- will be required to go
through the export control regulation process because it contains a chip that
exceeds the current threshold.
Where will people around the world go to get computers if not from the United
States? They will go to France, Japan or even China or the many other countries
that have the ability to produce these products but not the regulatory hurdles
that our country has imposed on itself.
This summer we are on a collision course. Without changing the existing control
level, the United States
IT industry could face some very formidable and real economic hurdles -- having
consequences not only for our industry but also the overall U.S. economy.
Under these circumstances we have proposed to the Clinton Administration that
the threshold for Tier 3 countries be increased from the current 2000
MTOPs level to 12,300
MTOPs by the end of this month. This level would allow for the export of widely
available computers -- 1 to 8 processor business computers -- that are either
on the market now or will be early next year from our foreign competitors.
In addition, we have proposed that the threshold for Tier 2 countries should be
raised from 10,000 to 30,000
MTOPs. This change is consistent with the severe threat posed by these computers to
U.S. national security interests and reflects the advances in technology that
have occurred in the last three years.
Certain Tier 2 countries -- or key trading partners -- should be
"graduated" to Tier
1.The need for these changes is real and immediate. We hope Congress and the
Administration will act -- quickly -- to avoid the collision with market
realities that we are facing.
Support on the Hill and in the Administration
In meetings with Congress and the Administration we have received a lot of
support for increasing the current threshold level. The CEOs of ITFs member
companies will keep the pressure on Congress and the Administration to act
soon. Most importantly, we are pleased this Committee is holding this hearing
and we are hoping that you work toward a distinction between a commodity,
something that is difficult, if not impossible, to control, and a true
supercomputer. That would be a positive, and important, development.
Conclusion
Thank you, again, for the opportunity to testify today.
We look forward to working with you to help ensure that the US technology
industry continues to be a leader at home and around the world.
END
LOAD-DATE: June 19, 1999