Current United States technology export policy is rooted in a Cold War mentality and a misguided notion that America is the sole provider of critical products the world needs. We need to change our outlook and realize that the global economy is making many of our notions regarding exports and technology obsolete.

In particular, we need to re-examine our export control and unilateral sanctions policies. Currently, the United States places strict limitations on the quality of technology products that may be exported for commercial or personal use. Our government has also imposed unilateral sanctions on 75 countries.

Although the United States is currently the world leader in development of new technology and enjoys the world's most successful economy, our strong economy is threatened by our misguided export policy. For the sake of our economic security and national security, we must re-evaluate our export control and unilateral sanctions policy.

The future of our economy depends on exports. From 1988 to 1995, export-related jobs grew four times faster than total employment. Exports accounted for a full one-third of total U.S. economic growth. Export-related jobs are also better paying jobs, paying twelve to eighteen percent more than the hourly wage in the rest of the economy.

New Democrat Values

• New Democrats believe that the United States must continue to participate in the global economy and adopt policies that allow our economy to prosper in the new economy.
• New Democrats believe in either modernizing or discarding policies that have proven to be ineffective and obsolete.

Talking Points

• Export controls on computers and encryption threaten U.S. competitiveness in the technology industry.

  Supercomputers: Computers are becoming more powerful, faster, and smaller every day. In fact, today's $1500 PC has the same computing power as the famous $20 million Cray supercomputers of the 1980s. The United States places export restrictions on supercomputers that are bound for certain countries, because very powerful computers can be used for certain military technologies such as missile development. Nearly everyone agrees that certain high-performance computers should not be exported to every state, but defining "high performance" and improving the lengthy license and shipping process is a major debate between the government and the information technology industry.

  Encryption: The U.S. government also places restrictions on the quality of encryption software, which codes data and makes electronic commerce more secure, that may be exported. Although 128-bit encryption, the best available, is widely offered on the Internet and from countries like Canada and Germany, we do not allow U.S. companies to export it. This is a severe disadvantage for U.S. companies because they are unable to export the highest quality software. New Democrats strongly support the SAFE bill, sponsored by Representatives Bob Goodlatte (R-Va) and Zoe Lofgren (D-Ca) to ease encryption export restrictions.
  

• There are three primary reasons why these export control policies don't make sense:
  • Ironically, export controls have a negative impact on national security. Export controls were originally established to keep technology out of the hands of potential enemies abroad. Proponents of export controls today still argue that allowing export of some kinds of technology would damage our national security.

    The opposite is true. National security and economic security are interrelated. The ability of our national defense system to maintain and increase its technological advantage relies increasingly on the U.S. computer industry's ability to be on the cutting edge of technology. Case in point: prior to the 1980s, 75 percent of military technology was developed through Department of Defense activity. Today, 75 percent of military technology comes from the private sector. If we continue to cripple U.S. technology firms ability to grow and invest in R&D, our national security is compromised.
    

  • Export controls are ineffective. Proponents of export controls argue that we need to shield the rest of the world from technology like encryption or supercomputers because they could potentially be used for certain military technologies. This policy decision is based on two false assumptions:
    • First, these technologies do not necessarily translate into military strength for the nation to which we export. U.S. nuclear weapons, for example, were developed without the aid of supercomputers.
    • Second, it is wrong to assume that U.S. export controls will limit the rest of the world's access to supercomputers or encryption. The technology behind top-quality encryption and supercomputers is readily available throughout the world and even over the Internet. In fact, although U.S. computer companies are the world leaders in the technology industry, there is strong and growing competition from Japan, Europe, and Asia, all of which export supercomputers and encryption. If the government artificially knocks U.S. business out of its competitive position in the technology market, the void will be filled by foreign competitors who have no export limitations. U.S. export controls have not and can not prevent the technology from spreading.
      
  • Export controls result in economic losses for American companies and American workers. The technology industry has been the propeller of the unprecedented economic growth we have recently experienced. More and more of the technology market is outside the United States. If we do not reform and change our export control laws, our companies and workers will face a daunting disadvantage.

    By next year, 72 percent of the world's computers will be outside the United States. Because our government prohibits export of supercomputers and the best encryption software, we are rapidly losing market share.

    For example, the server in most Congressional offices is approximately a 2000 MTOPS computer, similar to high-end PC's and laptops. The United States requires a 10-day notification before shipping this level of computer to many of the world's fastest growing markets, such as India. However, it takes most major computer manufacturers 18 days to complete the paperwork required for the shipping and 12 days for the government to approve the shipping. Foreign competitors, on the other hand, can provide 24-hour shipping. In a market where 65 percent of American computer sales revenue comes from outside the United States, such restrictions are devastating.

• We must also reform our unilateral sanctions policy. Towards that end, New Democrats strongly support legislation sponsored by Representatives Cal Dooley and Philip Crane that reforms the unilateral sanction process.
  
  • Experts agree: unilateral sanctions don't work.In the last two years, over 30 studies have been issued by organizations representing varied ideological persuasions, trade associations and government organizations. They all conclude that U.S. unilateral trade sanctions are overused, ineffective, counterproductive, and often end up hurting U.S. interests more than the target country.

    A study by the Institute for International Economics reported that as of 1992, U.S. unilateral sanctions had been effective in achieving their goals less than 20 percent of the time. That's largely because they lack the broad multilateral support necessary for success.

    For example, the United States accounts for only 20 percent of world exports of agricultural equipment and 16 percent of world exports of telecommunications equipment. It is terribly misguided to believe that other countries can not and will not take our place in world markets should we decide to voluntarily take ourselves out of the game because we impose a unilateral sanction.
    

  • Unilateral sanctions are counterproductive because they shut countries out instead of engaging them.Presidents Nixon, Reagan, and Clinton all agreed that American exports promote freedom and democracy abroad. If we want to help improve human rights and promote democracy abroad, we should engage nations and introduce them to American values instead of shutting them out.

    Ronald Reagan once said: "The freer the flow of world trade, the stronger the tides of human progress and peace among nations."
    

  • Unilateral sanctions hurt America more than the target country both in the short term and the long term.
    Studies of past U.S. unilateral sanctions show that they impose high costs on U.S. companies, workers, and farmers. In 1995, sanctions cost an estimated $15 to $20 billion of lost exports, translating into more than 200,000 jobs.

    In the long run, unilateral sanctions threaten our economic growth by restricting access to the world's fastest growing economies and soiling our reputation as a reliable supplier of goods and services.

     
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