Export Controls
More Thorough Analysis Needed to Justify Changes in High Performance Computer Controls Gao ID: GAO-02-892 August 2, 2002For national security and foreign policy reasons, U.S. export control policy seeks to balance economic interests in promoting high technology exports with national security interests to maintain a military advantage in high performance computers over potential adversaries. In January 2002, the President announced that the control threshold--above which computers exported to countries such as China, India, and Russia--would increase from 85,000 millions of theoretical operations per second (MTOPS) to 190,000 MTOPS. The report justifying the changes in control thresholds for high performance computers focused on the availability of such computers. However, the justification did not fully address the requirements of the National Defense Authorization Act of 1998. The December 2001 report did not address several key issues related to the decision to raise the threshold: (1) the unrestricted export of computers with performance capabilities between the old and new thresholds will allow countries of concern to obtain computers that they have had difficulty constructing on their own, (2) the United States is unable to monitor the end-uses of many of the computers it exports, and (3) the report does not acknowledge the multilateral process used to make prior changes in high performance computer thresholds.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-02-892, Export Controls: More Thorough Analysis Needed to Justify Changes in High Performance Computer Controls
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Report to Congressional Committees:
August 2002:
export controls:
More Thorough Analysis Needed to Justify Changes in High Performance
Computer Controls:
GAO-02-892:
Contents:
Letter:
Results in Brief:
Background:
Report Does Not Adequately Justify Changes in Control
Threshold:
Other Key Issues Relevant to the Decision to Raise Control Thresholds
Not Addressed in the Report:
Conclusions:
Matter for Congressional Consideration:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendixes:
Appendix I: Comments from the Department of Commerce:
Appendix II: Comments from the Department of Defense:
Appendix III: Comments from the Department of State:
Appendix IV: GAO Contact and Staff Acknowledgements:
Table:
Table 1:
Figure :
Figure 1: Changes in the U.S. Export Control Threshold for High
Performance Computers, 1993-2002 (Measured in MTOPs):
Abbreviations:
MTOPS: millions of theoretical operations per second:
Letter:
August 2, 2002:
The Honorable Carl Levin
Chairman
The Honorable John W. Warner
Ranking Minority Member
Committee on Armed Services
United States Senate:
The Honorable Paul S. Sarbanes
Chairman
The Honorable Phil Gramm
Ranking Minority Member
Committee on Banking, Housing, and Urban Affairs
United States Senate:
The Honorable Robert Stump
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives:
The Honorable Henry J. Hyde
Chairman
The Honorable Tom Lantos
Ranking Minority Member
Committee on International Relations
House of Representatives:
The United States controls the export of high performance computers for
national security and foreign policy reasons. U.S. export control
policy seeks to balance U.S. economic interests in promoting high
technology exports with national security interests in maintaining a
military advantage over potential adversaries. High performance
computers have both civilian and military applications, operate at or
above a defined performance threshold (measured in millions of
theoretical operations per second [MTOPS]), and require an export
license to particular destinations such as China, India, and Russia.
The President has periodically changed, on the basis of technological
advances, the threshold above which licenses are required.
In January 2002, the President announced that the control threshold
above which computers exported to countries such as China, India, and
Russia would increase from 85,000 MTOPS to 190,000 MTOPS. When the
President changes the threshold, the National Defense Authorization Act
of 1998[Footnote 1] requires that the President provide a justification
to Congress. The justification should, at a minimum, address the extent
to which computers capable of performance between the established and
newly proposed level of performance are available from other countries,
address all their potential military uses, and assess the impact of
such uses on U.S. national security interests. A related law also
requires that we assess the executive branch‘s proposed
changes.[Footnote 2] The justification for the President‘s January 2002
change to the control threshold for high performance computers was
presented in a December 28, 2001, report to Congress. Thus, we (1)
assessed the President‘s justification for the decision as presented in
the December 2001 report and (2) identified other issues relevant to
the decision to change the control threshold.
To address these issues, we reviewed the statutory requirements for the
justification, the documentation used by executive branch officials to
support the conclusions presented in the report, and export control
regulations pertaining to high performance computers. In addition, we
obtained information from the 10 manufacturers listed in the
President‘s report on the availability of high performance computers
having the specifications described in the report. The information
obtained from the manufacturers was supplemented with additional
information obtained from a leading information technology industry
market research organization. We also interviewed officials from the
Departments of Commerce, Defense, and State who were responsible for
producing the President‘s report.
Results in Brief:
The report justifying the changes in control thresholds for high
performance computers focused on the availability of high performance
computers. However, we found that the justification did not fully
address the requirements of the National Defense Authorization Act of
1998.
* The report‘s prediction that computers capable of performing at the
new threshold will be widely available through foreign and domestic
companies by early 2002 has not materialized. We found that only 1 of
10 companies cited in the report produces computers with this
capability. Other companies do not plan to do so until 2003, or later,
and some do not plan to do so at all. The President‘s report was not
supported by an assessment of foreign availability of high performance
computers.
* The report contains little relevant analysis of the potential
military uses of computers with performance capabilities between the
old and new thresholds.
* The report does not adequately address what impact computers that
perform at levels between the old and new thresholds would have on
national security. The report states that high performance computers
would be of little or no value to countries of concern not having the
requisite knowledge and experience in using these computers to advance
their military capabilities. However, the report did not discuss the
usefulness of these computers to countries such as China and Russia
that have already demonstrated the ability to use high performance
computers. Finally, the report lacks potentially valuable information
on the national security impact of the new threshold because the
executive branch has not completed mandated national security
assessments of the impact of the transfer of technology, including high
performance computers.
Although not required by law, the December 2001 report did not address
several key issues related to the decision to raise the threshold.
* The report did not mention that the unrestricted export of computers
with performance capabilities between the old and new thresholds will
allow countries of concern to obtain computers that they have had
difficulty constructing on their own.
* The report also did not mention that the United States has been
unable to monitor the end-uses of many of the computers that it exports
to destinations such as China. Consequently, the true end-uses and end-
users of these computers and their impact on U.S. national security are
unknown.
* The inadequacies of the report are further compounded by continued
use of a flawed measure, MTOPS. As noted in our prior report,[Footnote
3] U.S. government officials and industry officials said this measure
is outdated and does not adequately account for the performance
capability in today‘s computers.
* The report does not acknowledge the multilateral process used to make
prior changes in high performance computer control thresholds. Changes
in control thresholds on dual-use goods (that is, goods with both
military and civilian uses) are coordinated through the Wassenaar
Arrangement--a voluntary forum of 33 countries established to reach
multilateral agreements about which dual-use goods merit special
scrutiny and reporting.[Footnote 4] Since the United States
unilaterally raised the control threshold without obtaining the
consensus of other Wassenaar Arrangement members, State Department
officials said it may become more difficult in the future to reach
multilateral consensus on other important export control issues.
In responding to our draft report, the Department of Commerce disagreed
with our findings and conclusions and stated that the administration
conducted a thorough review prior to raising the licensing thresholds
on high performance computers. We disagree and note that the
President‘s justification focused on only one of three elements
required by law--the market availability of high performance computers.
Further, we found that the market availability assessment was not
adequate since only 1 of 10 companies capable of producing high
performance computers at the higher threshold planned to market such
computers in 2002. More importantly, the justification did not address
the two remaining elements required by law--an analysis of all the
potential military uses of high performance computers and the impact of
such uses on U.S. national security interests.
The Department of State agreed that several shortcomings exits in the
President‘s justification. However, State said these shortcomings do
not invalidate the key finding that high performance computer can no
longer be effectively controlled because countries can cluster or link
computers together to achieve higher capabilities. State‘s position,
which was not reflected in the President‘s report, contrasts with an
October 2001 Department of Defense analysis that concluded that a
clustered system does not provide comparable capabilities as a stand-
alone high performance computer.
The Departments of Commerce, Defense, and State did not comment on our
draft report recommendation that they comply with existing statutes and
complete a thorough assessment of availability, military significance,
and the national security impact of the changes to high performance
computer controls. The Department of Commerce did not respond to our
recommendation. The Department of Defense did not address our findings
or conclusions but stated that its ongoing study of export control
issues was consistent with our recommendations. The Department of State
said it did not agree with certain recommendations but did not specify
which of our recommendations it agreed or disagreed with. The
departments have also not complied with similar recommendations made in
prior GAO reports.[Footnote 5] Accordingly, in the report, we have
included a Matter for Congressional Consideration. To help ensure that
a thorough assessment of these issues is completed, Congress may wish
to consider requiring that the executive branch fully comply with
existing statutes before the executive branch alters or eliminates the
export control threshold for high performance computers.
Background:
The United States controls high performance computers and related
components (for example, microprocessors) through the Export
Administration Act of 1979 and the implementing Export Administration
Regulations.[Footnote 6] The act authorizes Commerce to require firms
to obtain licenses for the export of sensitive items that may be a
national security or foreign policy concern. The Departments of
Defense, Energy, and State assist Commerce, which administers the act,
by reviewing export applications and supporting Commerce in its reviews
of export control policy.
Since 1993, the President has revised U.S. export control levels for
high performance computers seven times, including the revisions
announced in January 2002. These revisions have resulted in a nearly
thousandfold increase in the export control threshold over the 8-year
period; most of these changes have occurred over the last 2 years (see
fig. 1). The latest effort to revise the threshold was initiated in
response to a letter from the Computer Coalition for Responsible
Exports.[Footnote 7]
Figure 1: Changes in the U.S. Export Control Threshold for High
Performance Computers, 1993-2002 (Measured in MTOPs):
[See PDF for image]
Note: The use of separate MTOPS levels for military and civilian end-
users was discontinued in 2000.
Sources: GAO analysis of prior reports used to justify changes in the
control threshold and U.S. Export Administration Regulations.
[End of figure]
Beginning in 1996, the executive branch organized countries into four
computer ’tiers,“ with each tier above tier 1 representing a
successively higher level of concern related to U.S. national security
interests. Current U.S. export control policy places no license
requirements on tier-1 or tier-2 countries, primarily those in Western
Europe, Japan, Asia, Africa, Latin America, and Central and Eastern
Europe.[Footnote 8] Exports of computers above a specific performance
level to tier-3 countries such as China, India, Israel, Pakistan, and
Russia require a license. Exports of high performance computers to
tier-4 countries such as Iran, Iraq, and North Korea are essentially
prohibited.
To help inform congressional decision makers about changes in U.S.
export controls on computers, the National Defense Authorization Act of
1998 requires that the President report to Congress the justification
for changing the control threshold for exports of high performance
computers to certain sensitive countries.[Footnote 9] The report must,
at a minimum, (1) address the extent to which high performance
computers with capabilities between the established level and the newly
proposed level of performance are available from foreign countries, (2)
address all potential uses of military significance to which high
performance computers between the established level and the newly
proposed level could be applied, and (3) assess the impact of such uses
on U.S. national security interests.
In addition, section 1402 of the National Defense Authorization Act of
2000 requires the President to annually assess the cumulative impact of
licensed transfers of military-sensitive technologies to countries and
entities of concern and possible countermeasures that may be necessary
to overcome the use of such technologies. Section 1406 requires the
President, in consultation with the Secretaries of Defense and Energy,
to conduct a comprehensive review of the national security implications
of exporting high performance computers to China with annual updates
through 2004.[Footnote 10] In January 2000, the President delegated the
responsibility for producing these reports to the Secretaries of
Defense and Energy.[Footnote 11]
As required by law, we reviewed prior justifications for changing the
export control thresholds on high performance computers. We found that
the changes were not adequately justified. For example, previous
reports failed to address all uses of military significance to which
high performance computers could be applied at the new thresholds, or
the impact of such uses on national security, as required by law. In
response to these deficiencies, we recommended that the Secretary of
Defense report on the national security threat and proliferation impact
of U.S. exports of high performance computers to countries of concern.
[Footnote 12]
Report Does Not Adequately Justify Changes in Control Threshold:
The Department of Commerce stated that the December 2001 decision to
raise the control threshold for high performance computer exports was
based on thorough analysis. However, we found the justification did not
adequately meet the three criteria required by law. First, the report
stated that computers based on Intel Corporation‘s Itanium processor
and capable of performing at the 190,000 MTOPS level would be widely
available in early 2002.[Footnote 13] This assertion was not based on
any formal analyses and has proven to be inaccurate. Second, the report
provided little analysis of all the potential military uses of these
computers. Third, the report did not assess the impact of the uses of
these computers on U.S. national security. Although the report asserts
that high performance computers would be of limited value to countries
of concern not having the demonstrated knowledge and experience in
using these computers, the report did not discuss the national security
implications of exporting computers to countries of concern, such as
China and Russia, that have a demonstrated ability to use them.
Further, several laws and a Defense Department directive have mandated
other studies that could be used to better understand the national
security implications of the export of high performance computers and
other technologies; however, the Department of Defense has not
completed such studies.
190,000 MTOPS Computers Are Not Widely Available:
The December 2001 report inadequately addressed the first criterion of
the National Defense Authorization Act of 1998 in its discussion of the
extent to which high performance computers with capabilities between
the established level and proposed level of performance are available
from other countries. The executive branch‘s report stated that the
decision to raise the licensing threshold level to 190,000 MTOPS was
based on the wide availability by early 2002 of new computer servers
containing 32 Intel Corporation Itanium processors.[Footnote 14] Such
servers approach a composite theoretical performance of 190,000 MTOPS.
Contrary to assertions made in the report, however, Itanium-based
computers
with performance capabilities in the 190,000 MTOPS range are not widely
available. We found that the report‘s finding of availability was not
based on an independent analysis but rather on information provided by
industry. According to Defense officials responsible for producing the
report, industry representatives told them that (1) the market would be
flooded with 32-way, Itanium-based servers in early 2002, (2) the
People‘s Republic of China is the long-term market of importance, and
(3) U.S. industry is concerned that, if the threshold is not raised,
foreign competitors will capture the market.
Although not required by law, Commerce could have independently
verified industry‘s assertions as to the availability of the servers by
conducting foreign availability assessments. Foreign availability
assessments identify foreign sources of items subject to U.S. national
security export controls, such as high performance computers, and are
the principal mechanism recognized in the U.S. Export Administration
Regulations for determining the availability of controlled items. These
assessments determine whether items of comparable quality are available
in quantities from non-U.S. sources that would render U.S. export
controls on the items ineffective.[Footnote 15] Commerce officials
stated that no foreign availability study was conducted because
industry had made its case informally.[Footnote 16] Instead of
conducting a study to establish that these servers would be widely
available by early 2002, Commerce stated that it conducted interagency
meetings and discussions with industry as well as an analysis of the
worldwide availability of high performance computers. Commerce stated
that it also reviewed the Internet sites of the computer manufacturers
mentioned in the report. In commenting on a draft of our report, the
Department of Commerce asserted that it completed a market analysis of
the worldwide availability of high performance microprocessors and
computer clustering capabilities, and held discussions with other
executive branch agencies and foreign governments. However, the
President‘s report did not cite or include this market analysis nor did
the department provide additional information to document this
completed analysis in response to our request.
We reviewed the documentation that Commerce obtained from the Internet
and other sources and found little additional evidence about the
availability of 32-way, Itanium-based servers beyond the information
contained in the Computer Coalition for Responsible Exports‘ August
2001 letter requesting a change in the export control threshold. The
information provided did not indicate that the 10 companies listed in
the President‘s report planned to introduce 32-way servers or that the
servers would be widely available in early 2002. We also contacted the
companies listed in the report and found that, as of May 2002, only one
of the companies--Unisys Corporation--was producing a 32-way, Itanium-
based server (see table 1).
Table 1: Companies Cited by the President‘s December 2001 Report as
Producing 32-way, Intel Itanium-based Servers in Early 2002:
Company: Bull; Country: France; Is the company producing a 32-way,
Itanium-based server?: No.
Company: Compaq; Country: United States; Is the company producing a 32-
way, Itanium-based server?: No.
Company: Dell; Country: United States; Is the company producing a 32-
way, Itanium-based server?: No.
Company: Fujitsu-Siemens; Country: Japan/Germany; Is the company
producing a 32-way, Itanium-based server?: No.
Company: Hitachi; Country: Japan; Is the company producing a 32-way,
Itanium-based server?: No.
Company: Hewlett Packard; Country: United States; Is the company
producing a 32-way, Itanium-based server?: No.
Company: IBM; Country: United States; Is the company producing a 32-
way, Itanium-based server?: No.
Company: Mitsubishi; Country: Japan; Is the company producing a 32-way,
Itanium-based server?: No.
Company: NEC; Country: Japan; Is the company producing a 32-way,
Itanium-based server?: No.
Company: Unisys; Country: United States; Is the company producing a 32-
way, Itanium-based server?: Yes.
Sources: President‘s December 2001 report to Congress and GAO analysis.
[End of table]
Information obtained from the companies listed in the President‘s
report contradicts the assertion that 32-way, Itanium-based servers
will be widely available in early 2002. Representatives we interviewed
stated that their companies would not introduce these servers in 2002
or had no plans to manufacture these servers due to the lack of
software and a market for such powerful servers. An official from a
leading information technology market research firm stated that
Itanium-based technology is far too new to allow a reasonable
determination of its impact on the server market. Furthermore,
according to the research firm‘s information, no 32-way, Itanium-based
servers were shipped in the first quarter of 2002.
Finally, the report noted that a significant market exists for high-end
servers of up to 32 processors. However, Commerce data indicate that
the market for computers with performance capabilities in the 190,000
MTOPS range in countries of concern is small and that the loss of sales
in these countries should not materially affect U.S. manufacturers. In
2001, Commerce received 16 export license applications for computers
with performance capabilities at or above 85,000 MTOPS; all but one was
approved. Six of the approved applications were for sales to China.
Moreover, Japan--the other leading exporter of high performance
computers--did not sell any of these systems to China, Russia, or India
in 2001, according to the Department of Defense.
Report Did Not Assess All Potential Uses of Military Significance:
As in previous reports used to justify changes in the control
threshold, the December 2001 report did not meet the second criterion
of the National Defense Authorization Act of 1998: to address all
potential uses of military significance to which computers with
performance capabilities between the old control threshold and the new
threshold could be applied. The report stated that the U.S. government
uses computers in virtually all military and national security
applications, including the design, development, and production of
weapon systems, military operations, cryptoanalysis, and nuclear
weapons design and simulation. Defense officials to whom we spoke
stated that Defense does not maintain an inventory of all U.S. national
security-related computer applications, that the value of such a list
is questionable, and that it may be impossible to construct such a
list. The President‘s report provides little information about which
military applications can be run on computers with capabilities between
the old and new threshold. The report pointed out that the majority of
U.S. military and national security applications are run on computers
below 190,000 MTOPS. Using information provided by Defense, we found
that computers operating at or below 190,000 MTOPS meet
98 percent of Defense‘s military computational requirements. Defense
officials responsible for preparing the report said that the level of
control selected--190,000 MTOPS--was driven by the market and what the
administration believes it can control, not by the military and
national security applications that could be run on high performance
computers.
Assessment of Impact on National Security Not Conducted:
The President‘s report did not discuss the impact on U.S. national
security of countries such as Russia and China obtaining high
performance computing power up to the new control threshold, as
required by law. Such a national security assessment has been a long-
term, executive branch requirement. For example, section 1402 of the
National Defense Authorization Act of 2000 requires the President to
annually assess the cumulative impact of licensed transfers of
military-sensitive technology to countries and entities of concern and
to identify possible countermeasures that may be necessary to overcome
the use of such technologies. In addition, section 1406 of the act
requires assessments of the national security implications of exporting
high performance computers to China with annual updates through 2004.
In addition, a 1985 Department of Defense directive requires annual
assessments of the total effects of technology transfers.[Footnote 17]
We found that Defense had not completed the studies required by the law
or its directive. Moreover, Defense has not yet implemented our prior
recommendation to report on the national security threat and
proliferation impact of U.S. exports of high performance computers to
countries of concern.[Footnote 18] Although the Departments of Defense
and Commerce stated that they are already engaged in reviews of similar
issues, the agencies could not furnish plans or other documentation on
how they are implementing our recommendation.
Instead of addressing the national security implications associated
with the export of high performance computers, the President‘s report
simply stated that high performance computers would be of little or no
value to countries of concern not having the requisite knowledge and
experience in using these computers to advance their military
capabilities. However, the report did not discuss the usefulness of
these computers to countries such as China and Russia that have
demonstrated the ability to use high performance computers. The
report‘s assertion that countries of concern will not benefit from the
acquisition of high performance computers also contradicts statements
made in other reports published by the executive branch and statements
made by Defense officials responsible for producing the President‘s
report, as indicated in the following examples.
* Reports published in 2000 that were used to justify previous
increases in the export control threshold for high performance
computers stated that Russia and China have the expertise necessary to
use these computers for national security applications such as the
construction of submarines, advanced aircraft, composite materials, or
a variety of other devices.[Footnote 19]
* A 2001 report by the Department of Energy‘s National Nuclear Security
Administration concluded that the availability of overall computing
power to a nuclear weapons design program is critical.[Footnote 20]
Acquisition of computers with higher performance levels allows a
nuclear weapons program to conduct studies faster and enables studies
that cannot be conducted on systems of lower performance, thus
shortening the time for design and development to full-scale testing.
The report further concludes that computers with an effective
performance of
10,000 MTOPS or greater would be of significant use to China‘s
designers in examining likely gaps in their nuclear weapons programs.
* A 2001 executive branch assessment concluded that the increased use
of high performance computers in the weapons of mass destruction
programs of countries of concern could severely complicate U.S. efforts
to monitor and assess such programs.[Footnote 21] The use of these
computers can reduce and even eliminate many traditional observable
weapons production activities such as large manufacturing operations
and live weapons tests.
According to the Defense officials responsible for preparing the
December 2001 report, the level of computing power used to solve a
particular problem is based on the level of computing power available.
If more powerful computers are available, they are used. The greater
the power of the available computer, the faster the problem can be
solved. Consequently, the computers exported under the new threshold
will allow countries of concern to solve more quickly more complex
problems in weapons systems design.
Other Key Issues Relevant to the Decision to Raise Control Thresholds
Not Addressed in the Report:
Although not required by law, the President‘s December 2001 report did
not address several key issues related to the decision to raise the
threshold. These issues include the ability of countries of concern to
construct high performance computers on their own, U.S. government
difficulties in monitoring the end-use of computers exported to
countries of concern, the use of MTOPS as a measure of individual
computer performance, and the impact of establishing a new licensing
threshold outside the Wassenaar Arrangement process.
The report did not acknowledge the difficulty that some countries of
concern have encountered in clustering smaller machines together to
achieve greater computing power. However, as we have reported before,
it may be more difficult to operate custom-built clustered systems than
to build them, according to experts.[Footnote 22] For example, without
vendor-supplied software to automate key functions on a clustered
system, everything must be done manually, making computing labor
intensive and less reliable than if it were performed on a vendor-
manufactured system. With the higher thresholds, countries of concern
will not have to rely on more inefficient clustered systems to obtain
greater computing capabilities.[Footnote 23]
* The report did not address the difficulty that the U.S. government
has had in effectively monitoring the high performance computers that
are exported to countries of concern.[Footnote 24] Monitoring exported
equipment for proper use is a key element of the U.S. export licensing
process. Approved export licenses for high performance computers
typically stipulate conditions, such as where the computer must be
located and how it should be used. The conditions are designed to deter
the end user from using the computer inappropriately or from
transferring the computer to another location. Monitoring of these
conditions is to be accomplished through required end-use checks
conducted by U.S. government personnel.[Footnote 25] In our prior
report, we found that U.S. government personnel in China tasked with
this job have been unable to conduct many checks.[Footnote 26] In
testimony before the U.S.-China Security Review Commission on January
17, 2002, Commerce‘s Assistant Secretary for Export Enforcement stated
that the Chinese government dictates the schedule for conducting end-
use checks.[Footnote 27] As a result, more than 700 outstanding checks
remain to be completed, according to Commerce.
* The inadequacies of the President‘s report are compounded by the
continued use of MTOPS to determine the performance capabilities of
computers. Although industry and government no longer consider MTOPS a
valid measure of computer performance, the executive branch continues
to use it. In our 2000 report on high performance computers, we
recommended that executive branch agencies comprehensively assess ways
to address the shortcomings of computer export controls,
including the development of new performance measures.[Footnote 28] The
President‘s December 2001 report stated that the executive branch is
conducting a comprehensive review of export controls on computer
hardware. According to the report, this interagency review will, among
other things, attempt to identify a controllable class of high-end
computer systems of greater military sensitivity and alternative
metrics for controlling such systems. However, Defense officials stated
that the study has no deadline and no formal terms of reference.
* The report did not acknowledge the multilateral process established
under the Wassenaar Arrangement--a forum of 33 countries established in
1996 to reach multilateral agreements on which dual-use goods merit
special scrutiny and reporting. Changes to control thresholds on dual-
use goods are coordinated through the Wassenaar Arrangement. The
arrangement uses a consensus-based approach to establish control
thresholds on these goods. The United States unilaterally raised the
MTOPS licensing threshold to 190,000 without first obtaining the
consensus of other Wassenaar Arrangement members. Due to actions taken
by the United States, the U.S. licensing threshold is now
190,000 MTOPS, while the control thresholds of other Wassenaar member
states remain at 28,000. Consequently, U.S. exporters have a
competitive advantage over their international competitors because U.S.
exporters are not required to obtain an export license for a wider
range of computers. According to State Department officials, the
unilateral U.S. action may complicate future efforts to reach consensus
in the Wassenaar forum on other important export control issues.
Conclusions:
The report justifying the decision to decontrol high performance
computers was not based on a thorough analysis and did not fully
address the requirements of the National Defense Authorization Act of
1998. Since the report‘s conclusions are based on inaccurate
information provided by the computer industry and an inadequate
assessment of national security issues, the decision to raise the
export control threshold is analytically weak and appears to be
premature, given market conditions. By providing greater access to more
powerful computers through the removal of any export-licensing
requirement, the United States could allow countries of concern to
pursue computer applications having military uses with a greater degree
of rigor and reliability. A more thorough analysis of the foreign
availability and the national security impact of transferring
technology to countries of concern would have provided a better
analytical basis for making changes in the control threshold. Given the
level of high performance computing power that the United States
approves for export, such studies of the cumulative effect of computer
and related technology exports will be increasingly important in
determining the impact of such exports on U.S. national security and in
making future decisions about adjusting export control thresholds.
Matter for Congressional Consideration:
In our draft report, we recommended that the Departments of Commerce,
Defense, and State comply with existing statutes and complete a
thorough assessment of the foreign availability, military significance,
and the national security impact of changes to high performance
computer controls. Prior GAO reports have made similar recommendations.
Since the departments have not responded to our earlier recommendations
on this issue or clearly indicated whether they agreed with the
recommendations made in our draft report, we have included a Matter for
Congressional Consideration.
To help ensure that a thorough assessment of these issues is completed,
Congress may wish to consider requiring that the executive branch fully
comply with the provisions of the National Defense Authorization Acts
of 1998 and 2000 before the executive branch alters or eliminates the
export control thresholds for high performance computers.
Agency Comments and Our Evaluation:
We received written comments on a draft of this report from the
Departments of Commerce, Defense, and State, which are reprinted in
appendixes I, II, and III. The Commerce Department disagreed with our
findings and conclusions and said that the executive branch conducted a
thorough review of U.S. export controls on high performance computers
prior to the President‘s January 2002 decision to raise the licensing
thresholds. Commerce stated that this review included significant input
from all relevant agencies, consultations with other Wassenaar
Arrangement partners, as well as an analysis of the worldwide
availability of high performance computers and computer clustering.
Commerce also said the United States continues to seek a means to
control computers of the greatest strategic importance. The Department
of Defense said it is conducting a study of computer export controls
consistent with our recommendations and the requirements of law. The
Department of State said it agreed that several shortcomings exist in
the executive branch‘s justification to raise the licensing thresholds
for high performance computers. While agreeing that there were some
gaps in the study, State said it did not believe that these
shortcomings invalidated a key finding that high performance computers
can no longer be controlled effectively, due to advances in clustering
computers together to achieve higher capabilities.
We have added information to the report to more fully describe the
information that Commerce gathered from industry. However, we disagree
that the administration conducted a thorough review of U.S. export
controls prior to the President‘s January 2002 decision to raise the
licensing thresholds. As noted in our report, the President‘s
justification focused on only one of three elements required by law--
the availability of high performance computers. Additionally, the
availability assessment was not adequate since only 1 of 10 companies
capable of producing high performance computers planned to market such
computers in 2002. As noted in Commerce Department data, the current
market for computers at the 190,000 MTOOPS level is relatively small
and is not developing as quickly as anticipated. Accordingly, the
disparity between market conditions and industry‘s assertions about the
widespread availability of such computers should have prompted Commerce
to conduct an independent foreign availability assessment as allowed by
the Export Administration Regulations. However, Commerce did not
conduct this important analysis because senior Commerce officials
informed GAO that the department did not have the resources to complete
such assessments.
The President‘s report did not fully address the two remaining elements
required by law--identifying all potential uses of military
significance and the national security implications of high performance
computer exports. As noted in our report, Defense Department
information shows that computers operating at or below 190,000 MTOPS
meet 98 percent of Defense‘s military computational requirements.
Therefore, the President‘s justification to raise the MTOPS licensing
threshold should have included an assessment of the effects on national
security.
The State Department‘s comments clearly articulated the executive
branch‘s position on high performance computers--“high performance
computers can no longer be controlled effectively“ because high
performance computing capacity is widely available. While our report
found State‘s assertion on availability is not supported by current
market conditions, State‘s comments demonstrate that preceived market
conditions and related trends in computer clustering served as the
primary basis for the decision to raise the control threshold for high
performance computers. Regarding State‘s comments on computer
clustering, we note that State‘s position contrasts with an October
2001 Department of Defense analysis that concluded that a clustered
system does not provide comparable capabilities as a stand-alone high
performance computer. The State and Commerce Departments cited no
analysis as to how these powerful computers could enhance the military
capabilities of countries of concern or affect U.S. national security
interests. These important analyses are required by law but not
addressed in the President‘s report.
Scope and Methodology:
To assess the President‘s justifications for raising the export control
threshold from 85,000 MTOPS to 190,000 MTOPS, we reviewed the statutory
requirements related to the President‘s justification and the
regulations that pertain to the export of high performance computers.
Further, we reviewed documentation used as the basis for the report‘s
assertions. The documentation included the letter and associated
attachments addressed to Commerce from the Computer Coalition for
Responsible Exports that prompted the change in the threshold. We also
examined information available on the Internet about the computer
server products offered by the 10 manufacturers mentioned in the
President‘s report and contacted the manufacturers to obtain additional
information. The information obtained from the manufacturers was
supplemented with information obtained from a leading information
technology industry research organization, including reports
pertaining to the availability of Intel Itanium-based servers. Finally,
we interviewed Commerce, Defense, and State officials responsible for
producing the report. The National Security Council, which plays a key
role in coordinating the interagency process for changing export
controls on high performance computers, declined to discuss the
President‘s report with us.
We performed our work from February 2002 through July 2002 in
accordance with generally accepted government auditing standards.
We are sending this report to interested congressional committees and
the Secretaries of Commerce, Defense, and State. We will also make
copies available to other interested parties on request. In addition,
the report will be available at no charge on the GAO Web site at http:/
/www.gao.gov.
Please contact me at (202) 512-8979 if you or your staff have any
questions concerning this report. Another GAO contact and staff
acknowledgments are listed in appendix IV.
Joseph Christoff, Director
International Affairs and Trade:
Signed by Joseph Christoff:
[End of section]
Appendixes:
[End of section]
Appendix I: Comments from the Department of Commerce:
THE SECRETARY OF COMMERCE Washington, D.C. 20230:
JUL 16 2002:
Mr. Joseph A. Christoff:
Director, International Affairs and Trade United States General
Accounting Office Washington, D.C. 20548:
Dear Mr. Christoff:
Thank you for the opportunity to comment on the draft General
Accounting Office (GAO) report entitled Export Controls: More Thorough
Analysis Needed to Justify Changes in High Performance Computer
Controls (Job Code 320102).
The Bush Administration conducted a thorough review of U.S. export
controls on high performance computers (HPCs) prior to the President‘s
January 2002 decision to raise the licensing threshold on HPC exports
to Tier 3 countries. This review included significant input from all
relevant agencies, including the Departments of State and Defense, on
the national security impact of modifying existing controls. The
Administration‘s review also involved consultations with our Wassenaar
Arrangement partners, as well as an analysis of the worldwide
availability of HPCs, including comparable computing capability based
on widespread availability of high performance microprocessors and
computer clustering capabilities, and an analysis of the computer
industry in the global marketplace.
As President Bush announced in January 2002, the change in the control
threshold from 85,000 million theoretical operations per second (MTOPS)
to 190,000 MTOPS advances the goal of updating the U.S. export control
system so that it protects national security and, at the same time,
allows America‘s high-technology companies to compete in the current
global marketplace.
In addition to this interim step of raising the control level for HPC
exports to Tier 3 countries, the Administration is continuing a more
comprehensive review of export controls on computer hardware. As you
know, however, statutory change is needed to replace or eliminate the
MTOPS control metric.
Enclosed are more detailed comments. Thank you again for requesting the
Department of Commerce‘s views on the draft report.
Sincerely, Donald L. Evans:
Signed by Donald L. Evans:
Enclosures:
Department of Commerce Comments on the Draft GAO Report ’Export
Controls: More Thorough Analysis Needed to Justify Changes in High
Performance Computer Controls“:
General Comments:
The Department of Commerce disagrees with the GAO draft report‘s
conclusion that the Bush Administration‘s decision to change the
threshold for the licensing of High Performance Computers (HPCs) was
based on inadequate analysis. Prior to making that decision, the
Administration considered the criteria specified in the National
Defense Authorization Act of 1998 (NDAA). It also considered additional
factors that Commerce believes are also highly relevant in determining
the effectiveness of export controls for HPCs.
Over the past three years, Commerce has regularly consulted with an
industry advisory panel, the Information Security Technical Advisory
Committee (ISTAC), on HPC market and technological developments. We
augmented these ongoing consultations with meetings with specific
companies, reviews of foreign competitors based on publicly available
information, and interagency consultations, including discussions with
the intelligence community. In addition, we have continued to consult
with our Wassenaar Arrangement partners on the issue of the export
licensing threshold for HPCs. The Administration‘s review of control
levels has taken into account these various consultations and
additional information.
Commerce‘s analysis identified a number of emerging trends that are
driving the world computer market. Technological factors, such as the
ease with which lower performance computers can be clustered together
to achieve higher performance and rapid increases in the capabilities
of mass produced, off-the-shelf microprocessors, have emerged as key
market and technology drivers. The fact that companies can cluster
together large numbers of low-level computers to achieve performance
above current control levels renders the controls less effective. The
GAO recognized this in a recent report, stating that ’the current
export control system for high performance computers, which focuses on
controlling individual machines, is ineffective because it cannot
prevent countries of concern from linking or clustering many lower
performance, uncontrolled computers to collectively perform at higher
levels than current export controls allow.“ (Export Controls: System
for Controlling Export of High Performance Computing Is Ineffective, ’
GAO-01-10, December 18, 2000, at S.) Thus, the ability to cluster low-
level computers has had a profound effect on the ability of the United
States to effectively control the export of high performance computing
power. However, the static review criteria of the NDAA do not address
these emerging trends.
The issue of controllability of computer hardware in today‘s world of
rapid technological advancement and global production is reflected in
the fact that the majority of Wassenaar Arrangement participants are in
favor of removing computer hardware from the Wassenaar control list
altogether. In contrast, the U.S. position has been to continue to seek
a means to control computers of the greatest strategic importance.
Other Comments:
* The draft report fails to acknowledge a basic premise of the
President‘s report - that the volume production of Intel‘s 64-bit
Itanium processor, coupled with readily available computer clustering
equipment and software, provides widespread high performance computing
capability. While the market for such products may not have
materialized as quickly as anticipated, effective controls must take
into account widespread computing capability.
* The draft report states that the executive branch continues to use
MTOPS to determine the performance capabilities of computers, despite
the fact that MTOPS is no longer a valid measure of computer
performance. While the Administration is continuing to explore
alternatives to the MTOPS control metric, GAO should note that the use
of the MTOPS control metric is statutorily required by the NDAA.
* The draft report states that the President‘s report does not
acknowledge the process in the Wassenaar Arrangement for revising
controls. While there is no statutory requirement to address
multilateral controls, it should be noted that the vast majority of
Wassenaar participants favor computer decontrol. The draft report also
incorrectly states that the United States unilaterally raised its
computer control threshold to 190,000 MTOPS, while the Wassenaar
control threshold remains at 28,000 MTOPS. In fact, the U.S. control
threshold remains consistent with the Wassenaar level, with a license
exception available for exports of HPCs of up to 190,000 MTOPS to a
certain group of countries (Tier 3). Moreover, at the Wassenaar Plenary
in December 2001, the U.S. Government informed its partners that it
could not support the European Union proposal to entirely eliminate the
MTOPS control parameter for HPCs because, in part, we are required by
the NDAA to use MTOPS as the control parameter. Instead, we urged other
members to support raising the Wassenaar control level to 190,000
MTOPS.
* The most recent review of export controls on HPCs was not prompted
solely by a request from a trade association representing the computer
industry, as stated in the draft report. The review also was prompted
by a proposal of a majority of Wassenaar participants to remove
multilateral export controls on HPCs and by the Administration‘s
continuing desire to adjust export controls to changing global,
economic, and technological circumstances.
* While the President‘s report does not mention the monitoring of end
users of HPCs, the U.S. Government is committed to such monitoring for
HPCs, and other items, that it exports to countries such as China.In
fact, Commerce recently conducted post-shipment verifications on
several more HPC exports to China.
* More generally, our commitment to monitoring the end-uses of a
variety
of sensitive items is evidenced by the notice published in the Federal
Register on June 14, 2002, listing certain persons in foreign countries
for which we have been unable to conduct pre-license checks or post-
shipment verifications for reasons beyond our control.Identification on
this list constitutes a ’red flag“ that exporters should consider
before engaging in business transactions with the persons listed.Nine
of the eleven entities on this list are located in China.
* We offer no specific comments on the part of your draft report
concerned with the military uses of high speed computers and the impact
that such uses may have on the national security, because this topic is
more appropriately addressed by the Department of Defense.
[End of comments]
The following are GAO‘s comments on the Department of Commerce‘s letter
dated July 16, 2002.
GAO Comments:
1. We disagree that the Commerce Department conducted a thorough review
of U.S. export controls prior to the President‘s January 2002 decision
to raise the licensing thresholds. As noted in our report, the
President‘s justification focused on only one of three elements
required by law--the availability of high performance computers. The
justification did not adequately identify uses of military significance
or the national security impact of changing the thresholds.
2. We agree that this raises a legal issue, which we mentioned in our
testimony on high performance computers on March 15, 2001. Once a new
measure is decided upon, the executive branch could work with Congress
to allow use of other measures. Section 221 of H.R. 2581, would repeal
the National Defense Authorization Act provisions dealing with export
controls on high performance computers. These controls are expressed in
MTOPS.
3. We agree that countries of concern can cluster or link together
lower performance computers to achieve higher computing capabilities.
However, clustering still comes at a cost in terms of speed and
difficulties in operating the clustered systems. Raising the control
threshold to 190,000 MTOPS effectively eliminates these costs and
allows countries of concern to easily purchase high performance
computers.
4. Defense Department officials stated that high performance computers
performing at or below 190,000 MTOPS meet 98 percent of the Department
of Defense‘s computational requirements. Therefore, it is difficult to
understand Commerce‘s assertion that the United States continues to
seek a means to control computers of the greatest strategic importance.
5. This comment acknowledges that Commerce used market conditions as
the sole criterion for changing the control thresholds for high
performance computers. The act also requires an assessment of how these
powerful computers could enhance the military capabilities of countries
of concern or affect U.S. national security interests. These topics
were not addressed in the President‘s report.
6. We disagree. The practical effect of raising the U.S. license
exception level to 190,000 MTOPS is to raise the control threshold to
this level since computers below this level (190,000 MTOPS) do not
require an export license. Further, according to Commerce officials,
not all Wassenaar members have license exception provisions in their
regulations. Consequently, a disparity exists between U.S. licensing
requirements and the control thresholds used by other Wassenaar member
countries, as we noted in our report. Finally, according to State
Department officials and official documents we reviewed, other
Wassenaar members complained that the United States unilaterally
increased its export control threshold by raising the licensing
exception level to 190,000 MTOPS.
7. Commerce and Defense officials responsible for preparing the
President‘s December 2001 report confirmed that the effort to formally
change the licensing threshold and prepare the justification was
prompted by the letter from industry.
8. Commerce data indicate that there are more than 700 outstanding
post-shipment verifications that have not been conducted in China.
9. When implemented, the Department of Commerce‘s effort to ’red flag“
persons for which it has not been able to conduct prelicense checks or
post-shipment verifications may prove to be a useful first step in
improving its ability to counter problems associated with conducting
checks and verifications.
[End of section]
Appendix II: Comments from the Department of Defense:
OFFICE OF THE UNDER SECRETARY OF DEFENSE 2000 DEFENSE PENTAGON
WASHINGTON, DC 20301-2000:
JULY 8, 2002:
Mr. Joseph A. Christoff:
Director, International Affairs and Trade U.S. General Accounting
Office:
441 G Street, N.W. Washington, D.C. 20548:
Dear Mr. Christoff:
This responds to the GAO draft report, ’Export Controls: More Thorough
Analysis Needed to Justify Changes in High Performance Computer
Controls,“ dated June 25, 2002 (GAO Code 320102/GAO-02-892).
Consistent with GAO‘s recommendation and the provisions of the National
Defense Authorization Act for Fiscal Year 2000, the Department of
Defense, in consultation with the Central Intelligence Agency, the
National Security Council and others, is conducting a review of
computer export controls including evaluating alternative metrics for
measuring computer performance.
Thank you for the opportunity to comment on this draft report.
Lisa Bronson:
Deputy Under Secretary of Defense, Technology Security Policy and
Counterproliferation:
Signed by Lisa Bronson:
[End of section]
Appendix III: Comments from the Department of State:
United States Department of State:
Washington, D.C. 20520:
JUL 19 2002:
Dear Ms. Westin:
We appreciate the opportunity to review your draft report, ’…EXPORT
CONTROLS: More Thorough Analysis Needed to Justify Changes in High
Performance Computer Controls,“ GAO-02-892, GAO Job Code 320102.
The Department‘s comments are enclosed for incorporation, along with
this letter, as an appendix to the GAO final report.
If you have any questions regarding this response, please contact
Michael McCamman, International Economist, Bureau of NonProliferation
on (202) 647-4724.
Sincerely,
Christopher B. Burnham Assistant Secretary and Chief Financial
Officer:
Signed by Christopher B. Burnham:
Enclosure:
As stated.
cc: GAO/IAT - Mr. Bruno State/OIG - Mr. Berman State/NP - MS. Burk:
Ms. Susan S. Westin, Managing Director, International Affairs and
Trade, U.S. General Accounting Office.
Export Controls: More Thorough Analysis Needed to Justify Changes in
High Performance Computer Controls (GAO code 320102).
Department of State Comments on GAO Draft Report:
We believe that the GAO report identifies several shortcomings in the
analysis substantiating the conclusions of the President‘s 2002 report
to Congress justifying a decision to raise the MTOPS level for export
controls. While agreeing that there are some gaps in the study, the
Department does not share the evident GAO view that these shortcomings
invalidate the key finding that High Performance Computers can no
longer be controlled effectively. Nor do we believe that the GAO
comments related to ’other important issues related to the decision to
raise the threshold“ fully reflect the factors and the degree to which
the capabilities we seek to control for export are in fact now beyond
effective control.
The GAO report points out that all but a very small percentage of DOD
requirements are met by computers falling below export control limits,
but does not proceed from that point to its implications for the nature
of any continuing controls.
While GAO correctly points out the important nuclear applications for
controlled computers, nuclear applications, and applications such as
weapons design, do not require massive real-time processing capability
to be accomplished effectively. The vast majority of such applications
have been and continue to be do-able on uncontrolled computers,
although it may take slightly longer than if a +190,000 MTOP mainframe
is used. In this regard, the Los Alamos and Livermore National
Laboratories have moved from centralized mainframe computers to
distributed networks and are working to implement larger clustered
systems, composed of generally-available workstations.
GAO recommends continued analysis of alternative control metrics other
than MTOPS, a matter the Executive Branch agencies and industry groups
have been investigating for over 15 years. The general consensus among
other experts, both industry and government, is that adjusted Gflops
has the same problems as MTOPS. Industry experts state that adjusted
Gflops would introduce bias among existing technical approaches to
advanced computing capacity, favoring some vendors over others. For
this reason and others, it has already been established that a control
approach based on adjusted Gflops would be unacceptable to Wassenaar
Arrangement (WA) partners.
GAO points out that some countries of concern have encountered problems
in clustering smaller machines together to achieve greater computing
power. It is argued that proprietary software and technology are often
necessary to aggregate uncontrolled computers to the point where they
could be considered directly comparable to a +190,000 MTOPS mainframe.
This is true, but does not mean that those seeking to create clustered
computing capability to perform tasks for which they cannot import
larger machines will not achieve that objective successfully.
It is well established that clustered computers can provide
functionally equivalent capabilities to those provided by controlled
machines in the vast majority of applications, although there are a few
algorithms that do not lend themselves to efficient performance via
clustering. Ironically, some countries subject to the existing controls
may be among the most adept at developing this type of software and
technology.
In summary, State accepts some of the GAO‘s critique of the procedures
used in the analysis behind the 2002 Report to Congress, and agrees
that U.S. law must be enforced. However, it is our view that the GAO‘s
judgments on the substance of the regulatory question do not accurately
reflect the reality that effective high performance computers are no
longer controllable. The GAO‘s own examples illustrate this point. For
this reason and as noted above, we do not agree with certain of the GAO
recommendations.
[End of comments]
The following are GAO‘s comments on the letter from the Department of
State dated July 19, 2002.
GAO Comments:
1. We are encouraged that executive branch agencies continue to explore
alternatives to the current MTOPS metric. We believe the results of
this analysis should be shared with Congress.
2. We agree that some countries subject to the existing controls may be
among the most adept at developing clustering software and technology.
However, this point was not included in the President‘s report. The
report simply stated that the impact of clustering will be assessed in
the course of the executive branch‘s review of computer export
controls.
3. While computer clustering complicates efforts to maintain effective
export controls, this point was not used as the basis for raising the
export control thresholds for high performance computers. Also, the
executive branch continues to debate the extent that clustering has
rendered the current export control system ineffective. An October 2001
Defense study found that clustered systems do not match the overall
performance capabilities of the stand-alone systems supplied by U.S.
vendors. This study concluded that foreign country‘s use of clustered
systems should not be used as a justification for decontrolling all
classes of high performance computers.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Stephen Lord (202) 512-4379:
Acknowledgments:
In addition to the individual named above, David M. Bruno, Claude T.
Adrien, and Lynn Cothern made key contributions to this report.
[End of section]
FOOTNOTES
[1] Public Law 105-85, sections 1211, 111 stat. 1932-35.
[2] Public Law 106-554, appendix B, section 314, 114 stat. 2763A-123.
[3] See U.S. General Accounting Office, Export Controls: System for
Controlling Exports of High Performance Computers Is Ineffective, GAO-
01-10 (Washington, D.C.: Dec. 18, 2000).
[4] The 33 participating states of the Wassenaar Arrangement are
Argentina, Australia, Austria, Belgium, Bulgaria, Canada, the Czech
Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland,
Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Poland,
Portugal, the Republic of Korea, Romania, the Russian Federation, the
Slovak Republic, Spain, Sweden, Switzerland, Turkey, Ukraine, the
United Kingdom, and the United States.
[5] See U.S. General Accounting Office, Export Controls: Inadequate
Justification for Relaxation of Computer Controls Demonstrates Need for
Comprehensive Study,
GAO-01-534T (Washington, D.C.: Mar. 15, 2001) and GAO-01-10.
[6] 50 U.S.C. appendix sections 2401 and 15 C.F.R. sections 730. Since
it was terminated on August 20, 1994, several executive orders and one
law have extended application of the Export Administration Act of 1979.
Most recently, application of the act has been extended by Executive
Order 13222, August 17, 2001 (66 Fed. Reg. 44025).
[7] The Computer Coalition for Responsible Exports is an alliance of
American computer companies and information technology associations
established to inform policymakers and the public about the nature of
the computer hardware industry--its products, market trends, and
technological advances. The cochairmen of the coalition are the
Director of Government Affairs for Unisys Corporation and the President
of the Information Technology Industry Council. The council represents
the leading U.S. providers of information technology products.
[8] In 2001, tiers 1 and 2 were merged. This report refers to tier-3
countries as ’countries of concern.“
[9] The Departments of Defense, Commerce, State, and Energy prepare the
President‘s report under the coordination of the National Security
Council.
[10] Public Law 106-65, 113 stat. 798, 801.
[11] The Department of Defense is responsible for producing the section
1402 report. The section 1406 report is to be prepared jointly by the
Departments of Defense and Energy.
[12] See U.S. General Accounting Office, Export Controls: Information
on the Decision to Revise High Performance Computer Controls, GAO/
NSIAD-98-196 (Washington, D.C., Sept. 16, 1998).
[13] The term ’widely available“ is not defined in the President‘s
report or in the Export Administration Regulations.
[14] Intel Corporation produces the Itanium processor. A server is a
computer that manages information resources. For example, a computer
network server is a computer that manages the flow of transactions over
a network. The term ’32-way“ refers to the number of microprocessors
that can be linked within a given computer server.
[15] 50 U.S.C. app. section 2404 (f); 15 C.F.R. section 768.2.
[16] While conducting related studies of export control issues, we
found that the semiconductor equipment industry had made a similar case
about foreign availability. Commerce did not accept its findings, even
when industry representatives provided evidence that proved that
foreign competitors were selling equipment to controlled destinations.
See U.S. General Accounting Office, Export Controls: Rapid Advances in
China‘s Semiconductor Industry Underscore Need for Fundamental U.S.
Policy Review, GAO-02-620 (Washington, D.C.: Apr. 19, 2002).
[17] The 1985 Defense directive states that the department shall assess
annually the total effect of transfers of technology, goods, services,
and munitions on U.S. security regardless of the transfer mechanisms
involved. (Department of Defense Directive 2040.2, sections 5.1.7 and
7.1.15, January 1984, reissued incorporating change 1, July 5, 1985.)
[18] See U.S. General Accounting Office, Export Controls: Inadequate
Justification for Relaxation of Computer Controls Demonstrates Need for
Comprehensive Study,
GAO-01-534T (Washington, D.C.: Mar. 15, 2001) and GAO-01-10.
[19] Summary of Findings with Respect to Criteria Set Forth in
Subsections 1211(d) and (e) of the National Defense Authorization Act
for Fiscal Year 1998 (P.L. 105-85) (Washington, D.C. February 2000).
Summary of Findings with Respect to Criteria Set Forth in Subsections
1211(d) and (e) of the National Defense Authorization Act for Fiscal
Year 1998 (P.L. 105-85) (Washington, D.C. August 2000).
[20] U.S. Department of Energy, National Security Implications of
Exporting High Performance Computers to the People‘s Republic of China:
Nuclear Weapons Review, Report Submitted to Congress Pursuant to
Section 1406 of the National Defense Authorization Act for Fiscal Year
2000 (Washington, D.C.: Office of Arms Control and Nonproliferation,
National Nuclear Security Administration, U.S. Department of Energy,
April 2001).
[21] Defense Intelligence Agency High Performance Computer Assessment
(Washington, D.C., 2001).
[22] GAO-01-10.
[23] Officials within the Defense Department disagree over the extent
to which clustering has rendered current export controls on high
performance computers ineffective. Officials in the Department of
Defense‘s Offices of the Deputy Under Secretary for Science and
Technology and the Deputy Under Secretary for Technology Security
stated that commercially available clustering technology has advanced
to the point that it can be used by countries of concern to construct
computers with performance capabilities that exceed 190,000 MTOPS, thus
making controls on all high performance computers ineffective. Defense
Intelligence Agency and Defense Technology Security Administration
officials disagree with this view and believe that countries of concern
still face significant obstacles in clustering computers, making
controls on high performance computers still effective.
[24] Licenses for exports and reexports of high performance computers
for end-users and end-uses--other than nuclear, chemical, biological,
missile, or military in countries of concern--will generally be
approved. (15 C.F.R. sections 742.12(b)(3)(i)(A) and
742.12(b)(3)(iii)). For the People‘s Republic of China, the general
licensing policy is to approve applications; however, items that would
make a direct and significant contribution to electronic and
antisubmarine warfare, intelligence gathering, power projection, and
air superiority receive extended review or denial. Items may be
approved, even though they may contribute to Chinese military
development. (15 C.F.R. section 742.4(b)(7)).
[25] Public Law 105-85, section 1213, 111 stat. 1934.
[26] GAO-02-620.
[27] End-use checks in China are conducted on the basis of an
arrangement for end-use visits negotiated between the U.S. and the
Chinese governments in 1998.
[28] GAO-01-10.
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Fax: (202) 512-6061
To Report Fraud, Waste, and Abuse in Federal Programs:
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Public Affairs:
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U.S. General Accounting Office, 441 G Street NW, Room 7149:
Washington, D.C. 20548.
