Export Controls

Statutory Reporting Requirements for Computers Not Fully Addressed Gao ID: NSIAD-00-45 November 5, 1999

The U.S. government controls the export of high-performance computers to some countries because of foreign policy and national security concerns. The Commerce Department considers a high-performance computer to be one that exceeds a defined performance threshold, thus requiring an export license. In a July 1999 report, the executive branch described its plans to change the controls on the exports of high-performance computers by increasing the level of computing performance for which export licenses would be required. Congress required the executive branch to issue a report justifying the proposed change to export controls on computers. This report determines (1) whether the executive branch's July 1999 report to Congress satisfied the requirements of the law; (2) whether the report was factually supported; and (3) how many high-performance computers at the current control levels have been approved for export to sensitive countries, such as Russia and China, and how many have been approved for export since 1997 to military or other sensitive end-users.

GAO noted that: (1) the President's July 1999 report to Congress did not fully satisfy the reporting requirements of section 1211 of the Fiscal Year 1998 Defense Authorization Act; (2) the report did address two of the three requirements--to determine the availability of high performance computers in foreign countries and the potential for use of the newly decontrolled computers for significant military use; (3) it did not, however, assess the impact of such military use on the national security interests of the United States; (4) instead, the report discussed the economic importance of a strong U.S. computer industry to U.S. national security; (5) a 1998 Department of Defense- and Commerce-sponsored study and data from the U.S. computer industry generally provided evidence to support the report's statements that the capabilities of high performance computers and their related components are increasing; (6) however, the President's report implied that there is a greater level of foreign supply of high performance computers than is supported by evidence in the Commerce- and Defense-sponsored study; (7) the study found that U.S. companies and their international business partners overwhelmingly dominate the international market for most high performance computers; (8) further, GAO was unable to assess the justification for the new export control levels because the President's report did not define key terms or explain how they were applied; (9) from November 1997 through August 1999, the United States approved for export 4,092 high performance computers, as defined under the current export control levels, to certain sensitive countries such as China and Russia; (10) China, by far the largest importer of high performance computers, received 1,924 of these approvals; (11) 141 of the computers going to certain sensitive countries, or 3.4 percent of the total, required a license; and (12) the requirement for a license is an indication that the end-use or -user might be connected to the military or a proliferation related end-use or -user.


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