U.S. Computer Industry Forms Coalition On Computer Export Control Policy

Coalition Unveils New Study Detailing Foreign Availability and Capability

Washington, D.C. -- Today, Lewis E. Platt, chairman, president and CEO of Hewlett-Packard Company and Lawrence A. Weinbach, chairman and CEO of UNISYS Corporation announced the formation of the Computer Coalition for Responsible Exports (CCRE), an alliance of U.S.-based computer companies and allied associations. The coalition was established to work with U.S. policymakers to help develop export control policies that reflect the rapid changes and advancements in computer technology, the growing competition from foreign companies, and the need to protect U.S. national security interests.

Public Education Effort Announced

In an effort to help policymakers better understand the rapid changes occurring in the computer industry, CCRE officials outlined the first steps of a public education effort. With the launch of the initiative, CCRE released a new industry study that identifies foreign competition for business computers, and a primer on the U.S. computer industry.

Calling the current export control system implemented in 1996 "outdated," Platt stated that "we must face the fact that yesterday`s supercomputer, has become today`s laptop."

Under current U.S. regulations, the government must approve the export of commercial computers that perform above 2,000 million theoretical operations per second (MTOPS) to some 50 designated "Tier III" countries. A single Pentium III chip operates at close to 1200 MTOPS. When the Pentium III chip is used in a dual or two-processor server -- a popular entry level business computer -- the computer power will exceed the 2000 MTOPS export control threshold. In the year 2000, single commodity chips are expected to perform over 2000 MTOPS.

"Based on today`s export control levels, by the end of 1999, the U.S. industry will be required to seek approval for the export of tens of thousands of business computers," Platt said. "What is particularly troubling, is that these same computers will be readily available from any number of foreign manufacturers."

"The U.S. computer industry supports export controls on sensitive technology to protect U.S. national security," said Weinbach. "But, we wonder if export control policies that control widely available business computers really enhance our national security. In fact, our current policies may have the reverse effect. If we cede foreign markets to foreign manufacturers whose rules are not as stringent, we may be negatively impacting our nation`s security."

Weinbach noted that every Administration over the past four decades has adjusted export controls to reflect technological reality. "If export control limits are not revised to reflect the realities of today`s market, the U.S. industry will lose sales to foreign competitors -- prompting an inevitable decline in our technological leadership . . . and the nation`s security."

New Study Released

CCRE released a study conducted by the GartnerGroup, an independent information technology research and consulting company, that demonstrates that foreign competition is growing and that foreign capability is increasing rapidly.

"The GartnerGroup study confirmed that we are controlling technology that is already out of the box," Weinbach said. "Last year, the Commerce Department processed approval for the sale of 390 computers to Tier III countries; this year it could be over 300 a day. The bottom line is that foreign competition is serious, technologically advanced, and poised to challenge U.S. market leadership."

The report identifies eight major foreign computer companies that in 1997-1998 sold computer servers and workstations that operate close to or above the 2000 MTOPS export control threshold.

The report also forecasts that in 1999 foreign computer manufacturers will sell over 20,000 computer systems that can be configured with up to eight microprocessors, over 120,000 systems configurable with four microprocessors, and over 650,000 with two microprocessors.

The GartnerGroup data projects that in 1999 over 170,000 multiprocessor computers will be sold to China, with over one-quarter of them coming from foreign manufacturers.

The report also provided information about the growing capability of foreign manufacturers to produce business computers.

Industry Primer

As part of its education effort, CCRE also released a primer on the U.S. computer industry. Entitled, Computers and Export Controls: Balancing America`s Needs, Promoting America`s Interests, the primer outlines the contributions the U.S. industry makes to the U.S. economy, describes the rapid advances in computing technology, provides an overview of the global market place, and gives a brief history of U.S. export controls.

"The U.S. computer industry, much like the U.S. economy, depends on exports to grow and remain healthy," Weinbach continued. "Over 50 percent of revenues come from sales outside the United States. By the year 2000, 72 percent of the world`s computers -- the vast majority -- will be outside the United States. We risk losing critical markets if the United States does not adjust outdated export controls to reflect new technology and market realities."

"It should be no surprise that the growth of the U.S. computer industry has been a major force in the growth of the U.S. economy," Weinbach said. "To continue to create jobs for the future and contribute to the overall economic health of the country, U.S. computer companies need the freedom to innovate, grow, and export." He concluded by pointing out that the U.S. computer industry is the driving force behind the information technology (IT) industry, which has accounted for 35 percent of the nation`s growth between 1995-1997.

CCRE is committed to promoting and protecting U.S. national security interests, and seeks to work in close partnership with the U.S. government to ensure that America`s economic, national security, and foreign policy goals are realized. Members of CCRE believe that a strong, competitive computer industry is critical to U.S. national and economic security and contributes significantly to U.S. economic and technological leadership.

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).

For more information about CCRE and the issues surrounding export controls, visit the CCRE website at: www.ccre.net.