ACCESSION NUMBER:00000
FILE ID:97062302.ECO
DATE:06/23/97
TITLE:23-06-97  CHALLENGES TO COMPUTER, ENCRYPTION, SANCTIONS POLICY ADVANCE

TEXT:
(Exports to China especially stir up Congress)  (1140)
By Bruce Odessey
USIA Staff Writer

Washington -- As the House of Representatives prepares to vote on
repealing normal U.S. trade relations with China, it has already voted
to recontrol exports of computers to China and many other countries.

The computer provision passed the House late June 19 332-88 in a
defense bill. A similar provision has been introduced in a Senate
defense bill, but opponents in the Senate are likely to delay a vote
on it there for some weeks.

The House provision would reverse a relaxation of computer export
policy implemented by executive orders signed by President Clinton
starting in 1995.

It would require individual export licenses for all shipments to a
group of about 50 countries of U.S.-made computers capable of 2,000
million operations per second (MTOPS).

Under existing policy U.S. exporters need individual licenses for
exports of 2,000 MTOPS computers only to military users in that group
of countries; the licensing threshold for civilian users there is
7,000 MTOPS.

The group of countries includes not only China and Russia, but also
countries in the Middle East (including Israel), South Asia, Africa
and Eastern Europe.

Controversy over administration policy took off early in 1997 when the
Russian nuclear weapons research agency disclosed that it had obtained
a high-performance computer from a U.S. manufacturer. That sale, made
without the required license, is under criminal investigation by the
Justice Department.

Controversy surged upon disclosure that China has acquired 47
high-performance U.S.-made computers for civilian use while denying
U.S. officials entry to check whether they have been diverted to
military use. Some of the computers have allegedly ended up at the
Chinese Academy of Sciences, which conducts nuclear weapons and
missile research among other work.

Representative Floyd Spence, Republican chairman of the House National
Security Committee and co-sponsor of the legislation, said in House
debate that with the newly acquired U.S. computers the Chinese could
design more efficient, lighter nuclear warheads.

Spence said the legislation "would put government officials back to
where they belong, protecting our security interests instead of
remaining on the sidelines while Russia, China and other nations of
proliferation concern go on a shopping spree."

Administration officials and industry opponents of the legislation
argue that, with high-performance computers now so widely available,
the House bill would not prevent any country that wants one from
getting it, but would effectively shut U.S. manufacturers out of a
vast, rapidly growing market segment.

"It's going to have a very good chance in the Senate," Paul
Freedenberg, former under secretary of commerce, said in a June 23
interview. Now a trade consultant for a Washington firm, Freedenberg
reflects the views of some U.S. electronics manufacturers.

"The Congress is worked up about China mainly," he said. "With China
as the bogeyman, it's easy to get that kind of recontrol even though
the evidence isn't there that there's been any misuse of computers in
China."

On a related issue, the House was scheduled to vote June 24 on
legislation overturning President Clinton's one-year extension of
most-favored nation (MFN) normal trading relations with China.

While some members of Congress are attempting to tighten
administration export control policy on computers, others are
attempting to relax export control policy on encryption.

Under existing policy, promoted by U.S. law and enforcement and
intelligence agencies, all U.S. manufacturers can export without
license message-scrambling encryption software up to 40-bit keys.

But only those companies pledging to cooperate in developing key
recovery programs -- with which government agencies having court
permission could unscramble encrypted messages -- are allowed to
export 56-bit software.

The software industry, which wants to export 128-bit products,
supports companion bills in the House and Senate that would decontrol
all mass-market encryption software and eliminate the key-recovery
rule. The House bill has been approved in the Judiciary Committee; it
has a good chance for approval also in the International Relations
Committee, which is expected to consider it in July before the full
House votes on it in August or September.

Over on the Senate side, what sponsors called a compromise bill was
approved June 19 in the Commerce Committee. It would allow
unrestricted exports of 56-bit software, but continue the key-recovery
rule for higher-level encryption exports. It would allow further
decontrol for products that industry can show are widely available on
the global market from non-U.S. producers.

No date for consideration by the full Senate has been set for the
so-called compromise bill, which the industry opposes as inadequate.

"The administration still doesn't like the bill" either, Freedenberg
said. "How much effort they're going to make to try to stop it is up
in the air."

Any differences between House- and Senate-passed bills would have to
be resolved by a House-Senate conference committee.

The opposite impulses in Congress -- tighter controls on computers,
looser controls on encryption -- do not surprise Freedenberg.

"There's no single idea that's sweeping Congress," he said, "and it's
not even clear that the members themselves are aware of their
contradictions."

Another bill advancing in the House would require the administration
to impose economic sanctions against Syria and Sudan.

House members are unhappy with Treasury Department regulations of
August 1996, which they argue reverse congressional intent in the
Antiterrorism and Effective Death Penalty Act of 1996.

That law prohibits all U.S. financial transactions with countries
designated by the State Department as supporting terrorists.

As five of the seven countries on the terrorism list -- Cuba, Libya,
North Korea, Iran and Iraq -- are already subject to comprehensive
economic sanctions, the immediate impact of the law related to Syria
and Sudan.

The Treasury Department regulations interpret the 1996 law to allow
all transactions with Syria and Sudan except those posing a risk of
promoting domestic U.S. terrorism.

While Clinton administration officials argued they need flexibility in
implementing the law -- for example, to encourage continued Syrian
participation in the Middle East peace process -- House members said
administration policy simply defies the will of Congress.

A bill approved without opposition June 18 in the House Judiciary
Committee would eliminate that flexibility, instead listing exceptions
from the ban on financial transactions only for routine diplomatic
relations, news reporting, humanitarian assistance and a few other
reasons.

"It does screw up the State Department's foreign policy, but that's
never been a deterrent to Congress," Freedenberg said.

Passage of the bill by the full House is expected in July.

All of these bills require passage in the full House and Senate before
going to President Clinton for his signature or veto.
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