Hearing on Emerging Technology Issues and Reauthorization of the Export Administration Act


Prepared Testimony of Mr. Eric L. Hirschhorn
Executive Secretary
Industry Coalition on Technology Transfer (ICOTT)


10:00 a.m., Thursday, June 17, 1999

Mr. Chairman and Members of the Committee, the Industry Coalition on Technology Transfer (ICOTT) appreciates your interest in the important issue of export controls and your invitation for ICOTT to express its views. We understand that the Committee soon will release draft legislation to revive the Export Administration Act (EAA). Because we have not yet seen this bill, however, we have limited our statement to the principles we believe should underlie any EAA renewal.

ICOTT is a group of major trade associations--the American Electronics Association (AEA), American Association of Exporters and Importers (AAEI), Electronic Industries Alliance (EIA), Semiconductor Equipment and Materials International (SEMI), and Semiconductor Industry Association (SIA)--whose thousands of individual member firms export controlled goods and technology from the United States. Our organization was founded in the early 1980s. Its principal purposes are to advise U.S. Government officials of industry concerns about export controls, and to inform ICOTT's member trade associations (and in turn their member firms) about the federal government's export control activities.

Much has changed in the past few years. If the United States ever had a corner on high technology, it is long gone. Technology is spreading ever faster across the globe. It may be that we can protect some especially sensitive technology, but we currently are attempting to control far more than we effectively can control. There have been some reductions in controls over the past few years but our reach still vastly exceeds our grasp. Justice Potter Stewart wrote that when everything is classified, nothing is classified. So too for export controls. We still are not focusing our energy on protecting the most sensitive items. As a result, we end up covering so much that private sector compliance erodes and the government's enforcement personnel spend far too much time protecting technologies that are widely available to ordinary consumers and thus impossible to control. Congress has required, for example, that all sales of workstations to China and the other "Tier 3" countries be the subject of post-shipment verification by the Commerce Department, even though many such sales pose no risk of diversion.

By way of example, we control exports of Microsoft Office 97, which is available in tens of thousands of retail outlets throughout the United States, because it contains 128-bit encryption. We treat computers containing two Pentium III chips as "high performance" and require elaborate Security Safeguard Plans for workstations.

Our domestic economy no longer is the sole support of our high technology sector. Access to global markets is essential to our economic security. The Electronic Industries Alliance, one of ICOTT's member associations, testified in March that more than $150 billion worth of United States electronic products--one third of the output of the domestic electronics industry--was exported in 1997. This means in turn that more than a half million employees of that industry owe their jobs to exports. The acquisitions side of the Defense Department is busily encouraging exports of new high technology items as a way of reducing the per unit cost of such items to DOD. At the same time, other elements of DOD are taking a strict view of what ought to be controlled. This produces the specter of an agency at war with itself--hardly a prescription for good or efficient government.

Only last week, Deputy Secretary of Defense John Hamre spoke before a government-industry group about export controls. He said that just because we can control something doesn't mean that we should control it. We cannot afford, he added, a nostalgic trip back to the '60s in which we apply inappropriate solutions to complex problems and end up hurting United States industry without providing any benefit to national security.

We see four points as paramount:

ICOTT has noted with dismay the growing propensity toward unilateral controls and controls on items that are widely available inside and outside the United States. Far too many of these controls, which are ineffective in harming their foreign targets but devastating to United States industry, are statutory in origin. We worry that the attempt to renew the EAA may leave the national interest worse off than it is today. There is nothing mysterious or secret about industry's view of reviving the EAA: If renewal legislation does not improve the lot of United States exporters, many in industry would prefer taking their chances with the existing, essentially standardless control system that is authorized by the International Emergency Economic Powers Act (IEEPA). This is the concern that has caused industry's reluctance to support renewal efforts during the past decade.

If the EAA is to be revived, we believe that the legislation should at a minimum accomplish the following.





I began by asking whether we need an EAA at all. Capitol Hill is littered with the bones of previous renewal bills that did not answer this question positively. ICOTT supports the concept of resurrecting the EAA, but only if the renewal legislation addresses most, if not all, of the concerns we have expressed here today.

Again, ICOTT appreciates the Committee's interest and I would be happy to respond to any questions you may have.




Notes:

1. Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, 104 Stat. 890 (codified at 28 U.S.C. 2461 note).

2. Iran Air v. Kugelman, 996 F.2d 1253 (D.C. Cir. 1993).


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