The $30 Billion Technology Drain

Congressional infighting and conflicting administration interests have stalled efforts to reform the nation's Cold War-era export control laws, which are holding up billions of dollars in high technology sales to foreign countries.

ongressional infighting and conflicting administration interests have stalled efforts to reform the nation's Cold War-era export control laws, which are holding up billions of dollars in high technology sales to foreign countries.

This is the third consecutive year export control reform legislation has been submitted to Congress but left on the cutting- room floor, leaving major sectors of the technology industry furious and frustrated.

Congress' inability to move on this issue "is extremely disappointing," said David Peyton, a vice president with the Information Technology Association of America. "We really need a stem-to-stern statutory overhaul and we are not getting it...not so far, anyway."

Failure to introduce a new export control framework is costing the high-technology industry as much as $30 billion a year, according to a book published last year by the Institute for International Economics. Obsolete legislation that will probably be extended to cover technology exports, the Export Administration Act of 1979, was conceived at the height of the Cold War - when an international consensus on restricting the flow of sensitive technologies to the Eastern Bloc was in place.

This consensus was embodied by the COCOM signatories, which included nearly all of the high-technology powerhouses of the world. This spring, COCOM expired, and with its demise, international agreements restricting the flow of technology anywhere are now basically moot.

But notwithstanding some administrative reforms, which have at least partially been the result of the legislative pressure, high-tech industry has been left to contend with a legal relic of the Cold War.

"The State Department and the Defense Department always cite national security reasons and always insist on having jurisdiction," said one industry source of the executive branch's objections to a more simple and less restrictive export policy.

"We understand that some countries should be embargoed and always should be embargoed and that is up to the government to determine," the source said. "But the issue is that there are currently limits on what we can sell to our closest friends and even some of our new friends. That seems a little out of sync with the realities of the world. If the process were straightforward, industry probably would not object [to the current situation]. But what happens in reality is that these licenses get kicked around all over the place and get delayed, and sometimes our competitors overseas get contracts simply because we can't get them processed through fast enough."

Moreover, restrictions based on the performance of certain technologies have prevented U.S. firms from putting their top technologies in some international competitions.

The environment has been particularly tough on the computer and telecommunications industries, said Joel Johnson, a vice president with the Aerospace Industries Association. Both are industries in which new generations of technology are constantly being introduced. Within his constituency, the manufacturers of satellite communications technology have been hindered most by the current environment.

Thus, at the beginning of the legislative year, an industry task force led by the National Association of Manufacturers (NAM) introduced a series of reforms which among other things called for:

  • Commodity jurisdictions - limiting the number of agencies that would have to approve an export licenses.

  • Indexing - the establishment of a multi-agency review body that would periodically evaluate the state of technology so that performance could be adjusted to reflect market realities.

  • License-free zones -- for the United States' closest trading partners and allies, which would include NATO countries and former signatories to COCOM.

But as Congress adjourned"the whole effort to have a fundamental reform of the system collapsed," said Howard Lewis, who spearheaded the effort for the association.

As incumbents went home to fight for their seats in local elections, many industry observers hoped for some new attitudes in key committees so far unable to push through a more competitive piece of legislation.

In the meantime, industry is going to take a wait-and-see attitude. "It is not clear to me where we are going with this next year. I think we are going to have to see what the new Congress is going to look like," Lewis said.

"Secondly, clearly what the administration wants to do in this area is going to be really important. They are essentially the 800-pound gorilla on the block. If they want to push a bill, then the rest of the gorillas are going to have to follow and play the game. But it is not clear to me the degree to which the administration is going to push a legislative reform effort."


X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.