LEXIS-NEXIS® Academic Universe-Document

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February 14, 2000, Monday

SECTION: EDITORIAL/OPINION; Pg. 7

LENGTH: 957 words

HEADLINE: Suddenly, breakthroughs on export controls

BYLINE: Trade Scene - RICHARD LAWRENCE

BODY:
The Clinton administration must be positively blushing over the back- to-back huzzahs from some of its severest critics on export-control policy.

Its decontrol of encryption-product exports last month brought applause from the Business Software Alliance, representing the nation's computer software manufacturers. And this month there was more applause, from the Computer & Communications Industry Association, for the administration's easing of curbs on high-performance computer exports.

The two actions are likely to bolster U.S. exports by billions of dollars. For years, despite industry protests, the administration had imposed strict export controls on encryption software, offering modest concessions only if manufacturers agreed to share their codes with federal authorities. But last month, as if in an epiphany, the administration virtually dismantled the controls, no code access asked.

Its subsequent easing of high-performance computer-export curbs was less sensational, though widely welcomed. Further decontrol will be needed this summer to help keep U.S. exports competitive, industry leaders warn. Apparently acknowledging this, President Clinton has directed a new inter- agency review of computer controls as early as April.

And yet another export-control breakthrough looms: enactment of a new export administration law, which has eluded the government for a decade.

Since 1994, when the old Export Administration Act expired, the administration has been imposing export controls, for national security and foreign policy purposes, without a basic controls statute. The administration has been relying on a stop-gap measure, the International Emergency Economic Powers Act. To do this, the president must certify annually that the United States faces an international emergency.

This obviously is no way to run a program, especially one affecting many billions of dollars a year in exports. Moreover, it makes the government vulnerable to lawsuits. A successful judicial challenge to the use of the International Emergency Economic Powers Act for export-control purposes could trigger chaos in U.S. - and world - trade.

Still, despite repeated attempts (close to a dozen, by one count), Congress has failed to enact a new Export Administration Act. Differences over whether to tighten or liberalize controls, inter-agency strife over balances of power, and a wary business community have all contributed to the impasse.

Now, however, prospects for a new act look better than at any time since at least 1996, when the House passed a modernizing bill but then-Senate Banking Committee Chairman Alfonse D'Amato chose to ignore it.

In stark contrast, Sen. Phil Gramm, R-Texas, the current Banking Committee chairman, is leading a drive for a new Export Administration Act. His bill has cleared the committee by an extraordinary 20-0 vote.

Perhaps reflecting that vote, the bill comes about as close to balancing U. S. security and commercial interests as appears possible.

To beef up security, for example, it would sharply raise export-control violation penalties. For example, a company could be fined $10 million or more for a violation, compared with $50,000 under current law. Many more investigators would be hired to check post-shipment use of licensed U.S. exports, to make sure controls are working.

For business, the bill offers a host of helpful provisions. Controls would be dropped on items of potential military use, such as personal computers, sold in world markets in ""mass'' quantities. More generally, the administration would have to consider foreign availability before restricting exports on national security grounds.

The bill also requires administration cost-benefit analyses before implementation of foreign policy controls, and it tightly restricts embargoes on agricultural and medical exports.

The Clinton administration stops short of voicing outright support for the bill, though the committee has taken into account many of its original objections. Some concerns remain, says Undersecretary of Commerce William Reinsch, but none is ""a show-stopper.'' He expects further accommodations as the bill moves along.

The bill, says Paul Freedenberg, an Association for Manufacturing Technology executive and former Commerce undersecretary, offers major improvements over existing law.

Surprisingly, there is still no broad, unified effort by business to lobby for it, though Freedenberg's association and the Aerospace Industries Association, among others, favor it. Some groups, such as the American Electronics Association, are not taking a position until the bill is voted on the Senate floor.

There is widespread fear among executives that some floor amendments - such as tighter controls on technology exports to China and reducing Commerce's export-control role while enhancing that of the Defense Department - could make the bill unsupportable.

Meantime, on the House side, work is quietly under way in two committees, International Relations and Armed Services, to draft new Export Administration Act provisions, though perhaps not as broadly as the Senate committee has done. A final deal could come in a House-Senate conference.

What are the chances of Congress finally enacting a new export-control law that Clinton would sign? Freedenberg stands by an earlier estimate of less than 50-50.

But Edmund Rice, president of the Committee for Employment through Exports, who heads an ad hoc business work group focusing on export-control legislation, thinks chances are good, if by spring the Senate passes the pending bill.

If he's right, consider the ramifications: That long-standing international emergency may be going out of business.

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