LEXIS-NEXIS® Congressional Universe-Document

LEXIS-NEXIS® Congressional

MARCH 16, 1999, TUESDAY

SECTION: IN THE NEWS

LENGTH: 3470 words

HEADLINE: PREPARED STATEMENT OF
DAN HOYDYSH
UNISYS CORPORATION
CO-CHAIRMAN OF THE COMPUTER COALITION FOR RESPONSIBLE EXPORTS
BEFORE THE SENATE COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
SUBCOMMITTEE ON INTERNATIONAL TRADE AND FINANCE

BODY:

Mr. Chairman, Members of the Subcommittee.
Good Morning. My name is Dan Hoydysh. I am Director, Trade, Public Policy & Government Affairs of the Unisys Corporation. I also have the privilege of serving as Co-Chair of the Computer Coalition for Responsible Exports (CCRE). I want to thank you for providing me and the CCRE with the opportunity to share our views on U.S. computer export controls. Mr. Chairman, I would ask that my written testimony be submitted for the record and that I summarize the key points.
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.
Today the CCRE is announcing the beginning of a public effort to reach out and provide information on the U.S. computer industry, advances in computer technology and international market trends. To provide evidence of the these technological advances and international market trends and the impact they will have on computer export control regimes, CCRE is releasing today a study conducted by the Gartner Group, an independent information technology research and consulting company. In August, 1998, the CCRE engaged the Gartner Group to undertake an independent examination of both the U.S. and foreign high-performance computer industries. The Report provides extensive data on advances in technology and international market developments. The Report should therefore be a very valuable tool in any effort to formulate an up-to-dateand rational computer export control policy. Mr. Chairman, I would ask that the Gartner Group Report and the CCRE Primer "Computers and Export Controls: Balancing America's Needs Promoting America's Interests." be submitted for the record.
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, the Computer and Communications Industry Association (CCIA), the Computer Systems Policy Project (CSPP) 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. Members of CCRE also believe that a strong, internationally competitive computer industry is critical to U.S. national and economic security and contributes significantly to U.S. economic and technological leadership.
U.S. computer companies also devote hundreds of employees and millions of dollars annually to complying with export control regulations. 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.
The U.S. computer industry supports effective controls on supercomputer exports that threaten U.S. national security interests. The industry has a long history of cooperation with the U.S. government on security-related high technology issues. It is not our role, however, to define U.S. national security needs - - that is for the Congress and the Executive Branch. 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.
I. Present and Past Multilateral Export Controls Can Provide Guidance in Formulating Future Export Control Regimes
The CCRE strongly supports multilateral export control regimes provided they are effective and universally applied. Obviously any discussion of future multilateral (and indeed unilateral) computer export controls must be shaped by past and existing multilateral export control regimes.
Multilateral agreements on export controls historically were dominated by the Cold War and the U.S.-led COCOM. COCOM was effective because it was fortified by the Cold War's unity of purpose and targets, and because it provided that member countries could veto the exports of other countries' products if those exports posed a national security threat. With the demise of the Cold War, COCOM gradually was supplanted by multilateral export control regimes that reflected discrete purposes such as the proliferation of weapons and technologies of mass destruction and the attempt to prevent terrorist countries from procuring dangerous weapons and technologies. There are four basic multilateral export control regimes.
(1) The Missile Technology Control Regime
The Missile Technology Control Regime (MTCR) was established in 1987 to limit the proliferation of long-range missiles "capable of delivering nuclear weapons." In 1993, the MTCR was expanded to include missile systems capable of delivering all types of weapons of mass destruction (nuclear, chemical, and biological). The 32 member countries of the MTCR maintain a list of controlled dual-use goods and technologies. General purpose commercial computer are not covered by the MTCR; only those that are specifically designed and hardened for missile use.
(2) Nuclear Suppliers Group
The 35 member Nuclear Suppliers Group (NSG) was established in the late 1970s to coordinate export control efforts on all aspects of nuclear supply, with the goal ofpreventing the proliferation of nuclear weapons capabilities. Despite the strongly shared purpose to prevent the spread of nuclear weapons, member countries have not seen the need to include computers on the NSG control list.
(3) The Australia Group
The Australia Group was founded in 1985 to prevent the proliferation of chemical weapons. In 1990 it expanded its focus to include certain biological agents and research/production equipment. The 30 member countries continue to closely coordinate export control efforts on chemical precursors and other dual-use goods and technologies important to the development and production of chemical and biological weapons. Exports of commercial computers are not covered by the Australia Group controls.
(4) The Wassenaar Arrangement

The Wassenaar Arrangement is the successor to COCOM. It was established in 1996, after the dissolution of COCOM, and the U.S. has used it primarily with regard to the export of certain conventional arms and dual-use items to "terrorist" or "rogue" nations (such as Iraq, Iran, Libya, and North Korea). Neither China nor Russia is a target of the Wassenaar Arrangement -- in fact, Russia is a member country.
Unlike COCOM, the Wassenaar Arrangement does not provide for a veto; and unlike COCOM there is not an agreed security mission.

The 33 members, through their own national policies and laws, maintain the restrictions they deem appropriate over the agreed lists of conventional arms and dual-use items. As a result, each country is free to permit the export of products and technologies covered by the agreement without consulting other members.
The Wassenaar Arrangement also provides a window into the problems any multilateral computer export control regime would face. While computers over 2000 MTOPS are currently listed, some European countries have recently proposed raising the level to 10,000 MTOPS. A year ago, all other members except the United States supported an increase to 4000 MTOPS. There is clearly a difference of opinion over thetypes of computers that should be covered by the Wassenaar Arrangement. This issue, along with others, would need to be resolved in order to make a multilateral regime work.
(5) Future Multilateral Export Control Regimes
The fact that the three multilateral regimes covering missiles, chemical weapons, and nuclear weapons do not consider computers an important element of the manufacturing or development of those weapons suggests that effective multilateral export controls aimed at controlling nuclear, chemical, and missile technology through controls on widely available commercial computers will be difficult to formulate. Furthermore, the actual operation of the one remaining multilateral export control regime that covers computers, the Wassenaar Arrangement, suggests that to be effective multilateral computer export control will have to be carefully crafted to take into account the widely differing perspectives on the security threats involved and the level of computer performance.
II. Computer Technology Trends Will Make Formulating a Multilateral Computer Export Control Regime Difficult
Driven by consumer demand, advances in computer technology are occurring at an astounding pace. Since the last revision to U.S. computer export control levels was implemented in 1996, the computer power of widely available microprocessors -- the brains of the computer -- has increased five fold. Today a $1,500 laptop has as much power as the multi-million dollar "supercomputer" of the 1980s. And the technology is now available to link a cluster of personal computers to achieve high speed computing power -- with directions on how to do so available on the Internet. Once technology is out of the box, experience has proven that it becomes readily and widely available.
The following specific technological and marketing trends should be considered in formulating any multilateral (or unilateral) computer export control policy:
(1) Increasing Processing Power
The performance of microprocessors (chips) -- the brains of the computer -- will continue to improve dramatically. Gordon Moore, the former CEO of Intel onceobserved "that the power of semiconductor technology doubles every 18 months."However, the pace of technological advance is accelerating. Currently the Pentium IIIperforms at about 1200 MTOPS. In the year 2000, Intel projects that its Mercedmicroprocessor will perform at 5622 MTOPS. This represents a quadrupling, notdoubling of power, over the next 18 months.
As performance has improved, costs have dropped as well - by nearly 25 percent per year, making the new technologies accessible to a broad customer base. The chart below and the following examples using Intel technology illustrate the dramatic increases in mass market microprocessor power that is resulting in an ever increasing number of computers performing above the current export control thresholds.
Computer Power Based on High Volume Chips
In January 1996 the 200 MHZ Intel Pentium Pro was the basic building block of multiprocessor servers using Intel architecture. It performed at 233 MTOPS. A businessserver using six 200 MHZ Intel Pentium Pro microprocessors performed at about 1200 MTOPS and cost roughly 100,000 dollars. Today, roughly the same computing power is available in a Pentium III desktop PC, for about 2000 dollars.
In the second half of 1999, it is expected that the 600 MHZ Intel Pentium III Xeon, which is projected to perform at 1400 MTOPS, will be the basic building bloc of multiprocessor servers using Intel architecture. A computer system using two 600 MHZ Intel Pentium III Xeon microprocessors is projected to perform at 2600 MTOPS, while one using four microprocessors is projected to perform at 5000 MTOPS, and one using eight microprocessors is projected to perform at 9800 MTOPS.
In 2000, it is projected that commodity microprocessors used in PCs will perform at about 2700 MTOPS. A two-processor server using these commodity chips is projected to perform at 5000 MTOPS, while one using four microprocessors is projected to perform at 9667 MTOPS, and systems with eight of those microprocessors are projected to perform at 19001 MTOPS.
In 2000, it is also expected that the Intel Merced microprocessor will be available for use in multiprocessor servers using Intel architecture. The Merced is projected to perform at 5622 MTOPS. A system with two Merced microprocessors is projected to perform at 10996 MTOPS, while one with four microprocessors is projected to perform at 21746 MTOPS, and systems with eight microprocessors are projected to perform at 43252 MTOPS.
Even with these tremendous advances, the power of the computers described above pales in comparison to the power of true supercomputers, which perform at over one million MTOPS. The chart below clearly shows the significant difference between supercomputers and the computers described above.Performance of Popular Commercial Computers Subject to Export Controls Compared with Performance of High Speed Supercomputers
(2) Increasing Performance through Replacing the Chip
Rather than buying a new computer system every few years, consumers are demanding the ability to upgrade existing systems by replacing the old chips and othercomponents with newer, faster ones. Many components for upgrading PCs, workstations, and low-end servers can now be purchased at retail outlets like CompUSA, through 800 numbers, by catalogue, or over the Internet.
(3) Increasing Performance Through Adding a Chip
Until recently, most computers were built with single processors. Now, systems are increasingly being designed with empty sockets on the motherboard -- the main circuit board -- for inserting additional microprocessors.
(4) Increasing Performance Through Adding a Motherboard
To allow consumers to easily increase power computers are now designed with "expansion slots" that allow for the insertion of extra motherboards with additional microprocessors on them. Installation of additional boards often takes only a few minutes and can even be done while the computer is running. Additional boards may easily be purchased through the computer manufacturers, resellers, and other dealers.
(5) Increasing Performance Through the Use of Multiprocessors Systems
Multiprocessor systems are now widely available on the world market. According to the Gartner Group Report, over 1.8 million computers that can accommodate two processors, over 400,000 computers that can accommodate 4 processors, and over 100,000 computers that can accommodate 8 processors were sold world-wide in 1997. Annual sales are projected to be in those same ranges over the next several years. By the end of 1999, the installed worldwide base of computer systems that can accommodate 2, 4, 6, and 8 processors should be approximately nine million.
(6) Clustering
Clustering, or connecting many computers together to perform a specific task or groups of tasks, is an emerging trend driven by business, researchers, and consumers seeking high-speed computing power at lower cost. While traditionally used by academic institutions, government laboratories, and other non-commercial locations, the popularity of clustering is spreading and becoming increasingly commercialized. Clusters can be built from off-the-shelf components, and operate with widely available software.
(7) Standardization
To remain competitive and satisfy customer demands, computer companies have altered the way they manufacture and market their computers.

In the early days of the computer industry almost any computer would be constructed of parts made almost entirely by one manufacturer. Proprietary systems were the norm -- today, they are the exception.
Today business computers, whether laptops, desktops or deskside systems, are built with standard components from various manufacturers. Moreover, most of these "commodity parts" are built in factories all over the world. One look at the inside of almost any computer -- laptop, PC, workstation, or server - will reveal the "technological diversity" of the computer industry: chips from Taiwan, hard-drives from Singapore, sound cards from Japan. This standardization process has been a boon to consumers all over the world who benefit from the relatively low cost of computers and the availability of parts.
III. Global Computer Market Trends Will Make Formulating a Multilateral Computer Export Control Regime Difficult
Any discussion of multilateral (and indeed unilateral) computer export controls should take into account global computer market trends - both the foreign availability of controlled computers, but 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 proposed export control regime.
(1) Foreign Availability and Capability
There are foreign computer companies that compete or are capable of competingwith 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.
(Table not transmittable.)
The number of foreign computer companies and the number of products they offer that compete at that performance level is increasing all the time as computer technology continues to advance and is available overseas and at relatively low cost. Thechart below shows the increasing number of foreign computer companies that are marketing servers and workstations that can perform above the current control threshold.
Major Computer Companies Selling Servers and Workstations that Perform over 2000 MTOPS
As an example of this foreign capability, dual-processor motherboards are widely available at low cost from countries such as Taiwan, allowing powerful dual-processor systems to be easily assembled for approximately $2,000. In addition, four-way multiprocessor technology is easily and cheaply available throughout the world, allowing for the production of systems that will be able to perform above the current computer export control thresholds. Within the next twelve months, eight-way multiprocessor technology is projected to be also widely available. Furthermore, the "know-how" to assemble from commodity parts computers that can perform in excess of the present control thresholds is currently widely available.
Indeed, the Gartner Group Report forecasts that foreign computer manufacturers will sell in 1999 over 20,000 eight-way configurable computers, over 120,000 four-way configurable computers, and over 650,000 two-way configurable computers. Many of these systems will be able to perform above the current 2000 MTOPS control threshold.
This foreign availability and capability must be considered when formulating an effective multilateral (or unilateral) computer export control regime.
(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 either perform close to or above the current export control thresholds. The chart below shows the increasing foreign installed base.
Worldwide Unit Sales of Servers with 2,4,6 and 8 Microprocessors
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 foreigncomputer 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 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 formulating a multilateral (or unilateral) computer export control regime. The larger the installed base -- the more difficult it is to implement an effective export control system.
Conclusion
The formulation of a multilateral (or unilateral) export control regime that targets widely available business computers is complex. Not only are there the divergent interests of our allies, but the technological and international market realities make the endeavor particularly complicated. It is precisely because of these complexities that the U.S. computer industry is committed to working with the Congress and the Administration in trying to fashion an effective and realistic export control strategy that protects U.S. national security as well as U.S. economic security.
END

LOAD-DATE: March 17, 1999