LEXIS-NEXIS® Academic Universe-Document

LEXIS-NEXIS® Academic

May 28, 1999, Friday ,City Edition

SECTION: NATIONAL/FOREIGN; Pg. A1

LENGTH: 1059 words

HEADLINE: Mass. firms may find curbs on sales to China

BYLINE: By Aaron Zitner, Globe Staff

BODY:

WASHINGTON - They are found in banks and factories, brokerages and airports - computers that handle the routine tasks of the business world. But in the wrong hands, they can also be used to design a nuclear weapon or a fighter jet.

Now, with anger rising over allegations of Chinese nuclear spying, there is new urgency to the debate over whether and how the United States can keep high-end computers away from potential enemies. The outcome could have a significant impact on Massachusetts, which has seen exports to China more than double in the past year despite the Asian economic slump. Yesterday, the Senate voted to give intelligence agencies a broader role in reviewing export licenses, a move prompted by a congressional report released Tuesday that accused China of conducting a vast campaign to steal US nuclear secrets.

As Congress moves to toughen export laws, however, advances in computer technology threaten to swamp enforcement efforts.

Under federal law, the government can block sales to China of certain high-end computers made by companies such as Compaq Computer Corp. in New Hampshire, Stratus Computer Corp. of Marlborough, and Data General Corp. of Westborough. Because these computers are so fast, they are potentially useful in designing certain weapons.

But high-end computers are about to break into the mainstream, and when they do, observers say, the government will have little ability to control who buys then and how they are used. By next summer, personal computers will be powered by Intel Corp.'s latest Pentium chip, which is so fast that Intel cannot sell it to China without special approval.

"These are really mass-market products, and there is no way to control them," said Richard Cupitt, who tracks exports to Asian nations for the Center for International Trade and Security at the University of Georgia.

Dan Hoydysh, trade policy director for Unisys Corp., noted that Intel sells its chips to computer-makers overseas, who in turn sell finished computers to China and other countries that are not allies of the United States. By one projection, he said, foreign manufacturers will sell 60,000 computers to China in the year 2000 that would have triggered government scrutiny had they been sold by US companies.

"How can you dam half a river?" Hoydysh asked. "If in fact you could get an agreement from everyone who made computers not to sell them to China, OK. But that's not going to happen."

On Tuesday, a House investigative panel led by Representative Christopher Cox, a Republican from California, released a long-awaited report that accused China of using a network of front companies and spies to steal US technology and nuclear secrets.

The 1,000-page report, which had bipartisan support, said that US companies should be able to continue selling computers to China for nonmilitary purposes. But it called for new safeguards to block sales that might help China's military.

Although China accounts for only a tiny portion of sales by Massachusetts computer makers, many of them see the country as a promising new market.

Massachusetts exports to China more than doubled last year to $317 million, a remarkable rise given that total exports fell by nearly 5 percent amid the Asian financial crisis. China is the state's 14th largest trading partner, but exports are growing far faster than to any other large nation.

The Cox report could spell problems for local companies in two ways. First, tougher trade restrictions could limit future sales to China. "Potentially, our shipments this year could be affected, depending on how export controls are strengthened," said Ken Donoghue of Stratus Computer.

"We're not sending tennis shoes to them; we're sending instruments and computer equipment and so on," said Andre Mayer of Associated Industries of Massachusetts. "So, if Congress or the Department of Commerce go overboard, I'm sure our exports would be in trouble."

In addition, the Cox report has made it far less likely that Congress will approve China's entry into the World Trade Organization. Many business leaders say that they will be able to sell more goods to China if it joins the international body.

Under a law that took effect last year, companies must notify the Department of Commerce 10 days before they ship a computer or chip that meets certain speed benchmarks to China, Pakistan, India, Israel or 46 other countries. These so-called "Tier III" countries have failed to sign the nuclear nonproliferation pact or are on a watch list for other reasons.

The government can block sales of certain equipment to these countries. It also tries to inspect US products once they have been purchased by foreign customers, an attempt to make sure they are not put to military uses. But after 15 years of negotiation, US officials said yesterday, only three site visits have been conducted in China - one in 1998, and two this year.

The law applies to any computer system that runs faster than 2,000 MTOPS, or millions of theoretical operations per second. Once, that was considered "supercomputer" speed.

But no longer. Some Compaq computers based on the Alpha chip - the speedy chip made in Hudson, Mass. - run faster than that. So do some Data General and Stratus computers. Moreover, the mass-market Intel computers promised for next year will run at 2,500 MTOPS, Hoydysh said.

Cupitt, citing a 1995 Stanford University report, said a computer running 1,500 MTOPS would be helpful in designing a nuclear weapon of the sort the United States built during World War II, or some of today's warplanes.

But it would take 20,000 MTOPS or so to design a sophisticated submarine or an acoustic system to track subs in shallow water, Cupitt said. And modern battlefield management, which tracks multiple planes, ships and weaponry, requires an even faster computer, he said.

Cupitt said export controls have a limited value, especially when trying to block a product that is freely available.

"Export controls can delay activities related to making weapons of mass destruction, or make them more expensive," he said. "They can buy time for diplomacy, for our own capabilities to improve, in some cases for a change in government to occur. But to give the task to export controls of stopping proliferation - it's not going to happen."

LOAD-DATE: May 28, 1999