Case Overview, Export Controls on Computers

This document provides background information and summarizes the debate over export controls on computers. The links to the left will lead you to public documents that we have found.


           The United States has the world's most technologically advanced computer industry. American firms produce a steady stream of new computer products with innovative features, increased capacity, and faster processing speeds. The export of high end computers is a lucrative market and companies in the industry are highly sensitive to restrictions on foreign sales. The underlying problem is that the most powerful computers have applications for the development of sophisticated weaponry, including nuclear bombs and related delivery systems. There are many countries in the world that the United States would prefer to be restrained in the types of weapons they possess in their arsenals. Consequently, the government regulates the sale of the most powerful computers to countries that are not strong allies.
          An inherent difficulty with export controls is that technology quickly outpaces policymaking. The processing speed of the most powerful computers can leap forward by a significant magnitude in the space of just six months. As industry representatives are fond of telling legislators and regulators, "Yesterday's supercomputer is today's laptop." The current regulatory scheme is centered around speed, measured in MTOP's (or Million Theoretical Operations Per Second). No sooner does the government set a new and higher MTOP standard, only below which computers can be sold to countries whose defense capabilities concern the United States (such as China), than new computers with higher speeds are introduced. Although companies in the United States are in the forefront of innovation, it doesn't take long for foreign competitors to match what the American companies can produce.
          The effort to change the current regulatory structure, tied to the National Defense Appropriations Act of 1997, has been spearheaded by two industry coalitions. The Computer Coalition for Responsible Exports (CCRE) is composed largely of computer hardware manufacturers like Apple, Dell, Intel, and IBM. The 30 members of the Information Technology Industry Council come from a range of high tech companies, including AOL Time Warner,, eBay, IBM, and Microsoft. Despite the impressive roster of both these coalitions, and the active lobbying by them as well as by individual firms and other trade associations, terminating export controls on computers has turned out to be a tough sell.
          The computer coalitions and companies have pushed many arguments forward to try to convince government officials to change this policy. One is that the kind of computers that can truly be used for simulating advanced weapons are mostly custom-designed and not available for export. Another is the lost revenue for computer companies. Overseas markets represent a large proportion of revenue for most information technology companies. Although only some of those sales are subject to government review, regulatory restraints still represent significant dollars lost. Said one industry lobbyist, "If [a foreign vendor buys] a high end computer from an American as opposed to a European or Japanese manufacturer, they may be subject to State Department reviews and, all in all, it's just a lot of hassle for them to put up with. Why would they when they can buy from the others?" Nevertheless, national security concerns make some lawmakers hesitant, and it's been particularly difficult for the computer companies to overcome opposition on the House Armed Services Committee.