Export Controls

The government's 1996 decision to relax the export controls for high performance computers was based on a Stanford University study with significant limitations. That study lacked evidence to support its conclusion that high performance computers were uncontrollable based on (1) worldwide availability and (2) insufficient resources to control them. Moreover, the study did not assess how countries of concern could use high performance computers for military or other national security ends. The 1996 revision to high performance computer export controls had three key consequences. First, the number of computer export licenses issued declined from 395 in fiscal year 1995 to 42 in 1997. Second, U.S. exporters of high performance computers assumed responsibilities that were previously the government's, including screening and reporting on the end use and end users of high performance computers. In essence, exporters now had to decide whether a license was required. This determination can be particularly troublesome in cases such as China, where distinguishing between a civilian and military end user can be difficult. Third, the regulation required manufacturers to keep records of the end users of all their high performance computer exports of more than 2,000 millions of theoretical operations per second. So far, the information reported to the government on these exports has been incomplete.

GAO noted that: (1) a Stanford University study on foreign availability of HPCs was a key element in the decision to revise HPC export controls; (2) however, GAO's analysis of the study showed that it had 2 significant limitations; (3) first, the study lacked empirical evidence or analysis to support its conclusion that HPCs were uncontrollable based on worldwide availability and insufficient resources to control them; (4) second, the study did not assess the capabilities of countries of concern to use HPCs for military and other national security applications; (5) the study's principal author said that U.S. government data were insufficient to make such an assessment, and the study recommended that better data be gathered so that such an analysis could be done in the future; (6) the executive branch did not undertake a threat analysis of providing HPCs to countries of concern, but raised the computing power thresholds for HPC export controls and established a four-tier control structure; (7) the 1996 revision to HPC export controls had three key consequences; (8) the number of computer export licenses issued declined from 395 in fiscal year 1995 to 42 in 1997; (9) U.S. HPC exporters were charged with responsibilities previously conducted by the government, including screening and reporting on the end use and end user of HPCs; (10) the regulation required HPC manufacturers to keep records of the end users of all their HPC exports over 2,000 million theoretical operations per second (MTOPS); (11) to date, information on these exports reported to the government has been incomplete; (12) responsibility for postshipment verification (PSV) checks remained with the government; (13) however, because of how PSVs for computers are implemented, their value is reduced because they verify the physical location of a HPC, but not how it is used; (14) subsidiaries of U.S. computer manufacturers dominate the overseas HPC market, and they must comply with U.S. controls; (15) three Japanese companies are global competitors of U.S. manufacturers, two of which told GAO that they had no sales to tier 3 countries such as Russia and China; (16) Japan, Germany and the United Kingdom each have export controls on HPCs similar to those of the United States, according to foreign government officials; (17) Russia, China, and India have developed HPCs, but the capabilities of their computers are believed to be limited; and (18) thus, GAO's analysis suggests that HPCs over 2,000 MTOPS are not readily available to tier 3 countries from foreign sources without restrictions.

Recommendations

Our 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.

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