GAO

United States General Accounting Office

Report to Congressional Requesters

November 1999 EXPORT CONTROLS

Statutory Reporting 

Requirements for 

Computers Not Fully 

Addressed

GAO/NSIAD-00-45

Page 1 GAO/NSIAD-00-45 Computer Export Controls

Contents

Letter 3

Appendixes Appendix I: Computers Approved by the U.S. Government for 

Export to Tier 3 Countries From November 18, 1997, Through 

August 27, 1999 20

Appendix II: Comments From the Department of Defense 23

Appendix III: Comments From the Department of Commerce 25

Tables Table 1: Estimated Performance Capabilities of Single and 

Multiprocessor Computers Available in 1999 and the Year 2000 11

Table 2: Performance Levels of Computers That Support 

Applications of Military Significance 14

Figures Figure 1: Percent of Approved Tier 3 High Performance Computer 

Exports That Required a License and May Be Going to a Sensitive 

End-Use or End-User, November 18, 1997, Through August 27, 1999 16

Abbreviations

AMD Advanced Micro Devices

DOD Department of Defense

MTOPS millions of theoretical operations per second
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United States General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-283964 Letr

November 5, 1999

The Honorable Thad Cochran

Chairman, Subcommittee on International Security,

Proliferation, and Federal Services

Committee on Governmental Affairs

United States Senate

The Honorable Michael B. Enzi

Chairman, Subcommittee on International

Trade and Finance

Committee on Banking, Housing, and Urban Affairs

United States Senate

The U.S. government controls the export of high performance computers to 

certain countries based on foreign policy and national security concerns. 

The Commerce Department considers a high performance computer to be 

one that exceeds a defined performance threshold, thus requiring an export 

license. In a July 1999 report,1

 the executive branch described its plans to 

change the controls on the exports of high performance computers by 

increasing the level of computing performance for which export licenses 

would be required. The executive branch last modified controls on high 

performance computers in January 1996. In the Fiscal Year 1998 National 

Defense Authorization Act (P.L. 105-85, sec. 1211, Nov. 1997), Congress 

required the executive branch to provide a report justifying proposed 

changes to export controls on computers. The act requires the report, at a 

minimum, to (1) address the extent to which high performance computers 

with capabilities between the established level and the new proposed level 

of performance are available from other countries, (2) address all potential 

uses of military significance to which high performance computers at the 

new levels could be applied, and (3) assess the impact of potential military 

uses on U.S. national security interests.

As you requested, we determined (1) whether the executive branch’s July 

1999 report to Congress satisfied the requirements of the act; (2) whether 

1 Summary of Findings With Respect to Criteria Set Forth in Subsection 1211 (d) of the 

National Defense Authorization Act for Fiscal Year 1998, attachment to letter sent to 

Congress, July 23, 1999 (Washington, D.C.: The White House).
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the report was factually supported; and (3) how many high performance 

computers at the current control levels have been approved for export to 

certain sensitive countries, for example, Russia and China, and how many 

have been approved for export since 1997 to military or other sensitive 

end-users (for example, entities suspected of being engaged in proliferation 

activities).

Results in Brief The President’s July 1999 report to Congress did not fully satisfy the 

reporting requirements of section 1211 of the Fiscal Year 1998 Defense 

Authorization Act. The report did address two of the three requirements—

to determine the availability of high performance computers in foreign 

countries and the potential for use of the newly decontrolled computers for 

significant military use. It did not, however, assess the impact of such 

military use on the national security interests of the United States. Instead, 

the report discussed the economic importance of a strong U.S. computer 

industry to U.S. national security.

A 1998 Department of Defense- and Commerce- sponsored study and data 

from the U.S. computer industry generally provided evidence to support 

the report’s statements that the capabilities of high performance computers 

and their related components are increasing. However, the President’s 

report implied that there is a greater level of foreign supply of high 

performance computers than is supported by evidence in the 

Commerce- and Defense-sponsored study. The study found that U.S. 

companies and their international business partners overwhelmingly 

dominate the international market for most high performance computers. 

Further, we were unable to assess the justification for the new export 

control levels because the President’s report did not define key terms or 

explain how they were applied.

From November 1997 (the date of the act) through August 1999, the United 

States approved for export 4,092 high performance computers, as defined 

under the current export control levels, to certain sensitive countries such 

as China and Russia. China, by far the largest importer of high performance 

computers, received 1,924 of these approvals. One hundred and forty-one 

of the computers going to certain sensitive countries, or 3.4 percent of the 

total, required a license. The requirement for a license is an indication that 

the end-use or -user might be connected to the military or a proliferation 

related end-use or -user.
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We make a recommendation in this report to clarify the criteria used in 

establishing the export control thresholds for high performance 

computers.

Background High performance computers and related components (for example, 

processors) are controlled under the Export Administration Act.2

 The act 

establishes authority to require licenses for the exports of sensitive items 

that may pose a national security or foreign policy concern. The 

Department of Commerce administers the Export Administration Act. The 

Departments of State, Energy, and Defense assist Commerce by reviewing 

export applications and providing support to Commerce in its reviews of 

export control policy. High performance computers are regulated based on 

their performance as measured in millions of theoretical operations per 

second (MTOPS).

Since 1993, the President has revised U.S. export control requirements for 

high performance computers three times, including the revisions 

announced in July 1999. The export control policy implemented in January 

1996 removed license requirements for most exports of computers with 

performance levels up to 2,000 MTOPS (an increase from 1,500 MTOPS).3

The policy also organized countries into four computer “tiers,” with each 

tier after tier 1 representing a successively higher level of concern related 

to U.S. national security interests. The policy placed no license 

requirements on tier 1 countries, primarily those in Western Europe and 

Japan. Exports of high performance computers above 10,000 MTOPS to 

tier 2 countries in Asia, Africa, Latin America, and Central and Eastern 

Europe continued to require licenses. A dual-control system was 

established for tier 3 countries. There are 50 tier 3 countries including 

China, Russia, India, and Israel. For tier 3 countries, high performance 

computers up to 7,000 MTOPS could be exported to civilian end-users 

without a license, while exports for potential military end-uses at and 

above 2,000 MTOPS required a license. Exports of high performance 

computers with performance capabilities above 7,000 MTOPS to civilian 

2

 The Export Administration Act terminated on August 20, 1994. Pursuant to Executive 

Order 12924, issued on August 19, 1994 (59 Fed. Reg. 43437) the President, to the extent 

permitted by law, extended the application of the act indefinitely.

3

 We evaluated several aspects of the 1996 relaxation of controls. See Export Controls 

Information on the Decision to Revise High Performance Computer Controls

(GAO/NSIAD-98-196, Sept. 16, 1998).
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end-users for all tier 3 countries required a license. High performance 

computer exports to countries in tier 4 (for example, Iran, Iraq, and Libya) 

were essentially prohibited because of national security and foreign policy 

concerns about these countries.

Section 1211 of the Fiscal Year 1998 National Defense Authorization Act 

requires an exporter to notify the Commerce Department that it proposes 

to export high performance computers that perform above 2,000 MTOPS to 

end-users in tier 3 countries. The Departments of Commerce, Defense, 

State, and Energy review these notifications, and if any of these agencies 

objects to the export, the exporter must submit a license application.4

According to National Security Council guidance, agency objections shall 

state whether the proposed export represents a risk of diversion to a 

military end-user or end-user of proliferation concern. Exporters that want 

to ship high performance computers above 2,000 MTOPS to military 

end-users in tier 3 countries must apply directly to Commerce for a license; 

they do not go through the notification process.5

 The act also required the 

President to submit a report to Congress justifying any changes to the 

control levels for high performance computers.

On July 27, 1999, the President proposed changes to the current export 

control levels for high performance computers and submitted a report to 

Congress, as required by the act. According to a statement by the President, 

changes were needed because of the extraordinarily rapid rate of 

technological change in the computer industry. These changes were as 

follows:

• Four countries–Hungary, Poland, the Czech Republic, and Brazil–were 

moved from tier 2 to tier 1.

• The tier 2 licensing level was raised from 10,000 MTOPS to 20,000 

MTOPS, effective immediately.

• The two-level system for tier 3 countries was retained, and the licensing 

level for civilian end-users was raised from 7,000 to 12,300 MTOPS, 

effective immediately. The licensing level for military end-users is to be 

raised from 2,000 to 6,500 MTOPS, effective January 2000. A level of 

4

 In addition to reviewing notifications, State, the Department of Defense (DOD), and 

Energy also review export license applications that are submitted directly to Commerce.

5

 For more information on the Fiscal Year 1998 National Defense Authorization Act and its 

provisions, see Export Controls: 1998 Legislative Mandate for High Performance Computers 

(GAO/NSIAD-99-208, Sept. 24, 1999).
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6,500 MTOPS was also established for the notification requirement, also 

effective January 2000.

Two studies commissioned by the Departments of Commerce and Defense 

and completed in 1995 and 1998 were key sources of information for the 

executive branch’s review of computer export controls. These studies 

examined trends in high performance computing and their applications and 

provided much of the background analysis the executive branch used as a 

basis for deciding to relax export controls on high performance 

computers.6

President’s Report 

Addressed All but One 

Reporting Requirement

The President’s report to Congress was responsive to two requirements of 

the 1998 Defense Authorization Act but was not responsive to the third. 

The report discussed the extent to which high performance computers with 

capabilities at the proposed level of decontrol are available in other 

countries and generally described the potential uses of the newly 

decontrolled computers for significant military applications. However, the 

report did not assess how U.S. national security interests might be affected 

by other countries’ potential military uses of the newly decontrolled 

computers.

Report Addressed 

Availability of High 

Performance Computers in 

Foreign Countries

The President’s report noted that while U.S. firms control the market in 

processors (computer chips) and currently dominate the high performance 

computer market, there is some foreign competition from firms in Asia and 

Europe. It should be noted, however, that the law does not require a finding 

that these computers are currently available from non-U.S. producers or 

with non-U.S. origin processors and parts. The report stated that due to the 

rapid advances in processor speeds and related technologies, customers, 

including those in foreign countries, can acquire very powerful computers 

that can be easily assembled or upgraded by adding up to eight processors 

to increase computing performance levels. The report stated that the 

6

 See Seymour E. Goodman, et al., Building on the Basics: An Examination of 

High-Performance Computing Export Control Policy in the 1990's (Palo Alto, CA: Stanford 

University, Center for International Security and Arms Control, 1995) and High-Performance 

Computing, National Security Applications, and Export Control Policy at the Close of the 

20th Century (Palo Alto, CA: Stanford University, Center for International Security and Arms 

Control, 1998).
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capability of these computers would exceed the current export control 

thresholds.

Report Addressed Potential 

Military Uses of High 

Performance Computers

The report stated that high performance computers at all levels, including 

performance levels below current export control levels, are used in 

virtually all military applications, including the design, development, and 

production of weapon systems; military operations; cryptography; and 

nuclear design and simulation. The President’s report determined that all of 

these applications are militarily significant and concluded that it is 

impossible to establish a limit below which computers could not be used 

for significant military applications.7

 Consequently, the new control levels 

are not based on an assessment that these new computing levels do not 

involve national security applications but rather that computers in this 

performance range are so widely available that they are uncontrollable.

Report Did Not Assess 

Impact of Military Uses on 

National Security

The President’s report did not discuss how U.S. national security interests 

might be affected by potential military uses of high performance computers 

with greater capabilities. The report noted that because of widespread 

availability of high performance computers, tier 3 countries can obtain 

computers in the 6,500 MTOPS performance range or the necessary 

components to build such computers. However, the report did not say how 

other countries’ use of high performance computers that operate between 

2,000 and 6,500 MTOPS would affect U.S. national security.

Specifically, the President’s report did not discuss the impact of any 

significant military applications of high performance computers on the 

national security interests of the United States nor did it cite past or 

ongoing studies of this issue. The President’s report concluded in response 

to the second reporting requirement that there are militarily significant 

applications in the new control range, and, if not for their widespread 

availability, these applications would need to be controlled. These 

applications include advanced aircraft design, antisubmarine warfare 

sensor development, and radar applications. However, the President’s 

7

 The report noted that while some applications are currently being performed with 

computers at a given performance range, this typically reflects the ability of users to obtain 

the fastest machine within their budget constraints rather than the demands of any 

particular application. As with commercial applications, the report noted that demand for 

computing power tends to rise to what is available to the user.
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report provided no assessment of how computers sold under the new 

control levels could impact national security.

Furthermore, the President’s report did not cite any past or ongoing 

government studies that have examined or are examining the national 

security impact of the availability of high performance computers, even 

though such studies are available. For example, a June 1998 study by the 

Department of Energy assessed the potential contribution of high 

performance computers to the nuclear weapons programs of China, Russia, 

India, Pakistan, and Israel and countries suspected of proliferating 

weapons of mass destruction. This report found that the impact of high 

performance computing capability depends on the complexity of the 

weapon being developed and the availability of high quality, relevant test 

data. Also, in the spring of 1999, both the Energy Department and the 

Central Intelligence Agency began a study on the impact of exports of high 

performance computer exports in response to a directive from the National 

Security Council, as recommended by the House Select Committee on U.S. 

National Security and Military/Commercial Concerns with the People’s 

Republic of China. According to a National Security Council official, this 

study is not yet completed.

Instead of discussing the act’s requirement, the President’s report assessed 

the economic importance of marketing and developing U.S. high 

performance computers and processors. It also discussed the importance 

to U.S. national security interests of ensuring that the United States retains 

its technological advantage in the design, development, and production of 

processors and computers. The President’s report concluded that failure to 

adjust U.S. export requirements for computers and processors would have 

a significant negative effect on the U.S. computer industry and harm the 

industry’s ability to produce products with military applications.8

8

 The report also noted that because of the widespread availability of high performance 

computers, tier 3 countries can obtain systems in the 6,500 MTOPS performance range, or 

the necessary components, and manufacture higher performance computer systems on 

their own. Although this statement offers a rationale for raising the export control level, it 

does not say anything about how militarily significant applications of high performance 

computers between 2,000 and the new control level of 6,500 MTOPS would affect U.S. 

national security.
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Report Findings Were 

Generally Supported

The report’s statement that the capabilities of high performance computers 

and related components, from both domestic and foreign sources, are 

generally increasing was supported. However, while the report implied that 

high performance computers are readily available from foreign sources, a 

1998 study sponsored by DOD and Commerce found that the United States 

dominates the international computer market, at least in the mid- and 

high-range performance categories. Furthermore, we were unable to assess 

the justification for the new export control levels for tier 3 because the 

report did not define key terms or explain how they were applied.

Report’s Statements on 

Increases in Computing 

Capabilities Supported

The report’s conclusion that the capabilities of high performance 

computers are increasing was supported. The executive branch based its 

conclusion that these capabilities are widely available and are therefore 

uncontrollable on the ability of foreign countries to obtain high 

performance computers directly or indirectly from a vendor, a reseller, or 

another third party or to assemble such a computer using U.S. processors 

and components. The conclusion that faster processors and related 

components9

 are widely sold was supported because the United States 

does not generally control the export of the processors and components. 

Under current regulations, processors that perform up to 1,900 MTOPS can 

be directly exported to civil end-users in many tier 3 countries, including 

China and Russia. Exports of processors to such users in many other tier 3 

countries, such as Israel and Saudi Arabia, are not subject to any MTOPS 

limit. Exports of other key components for computer systems with four 

and eight processors are also not generally controlled; these parts can be 

shipped to tier 3 countries for civilian end-users, which could then use 

them to support the assembly of computers.

Table 1 shows the speed of processors introduced in 1999 and those 

expected to be introduced by mid-2000. Single processors introduced in 

1999 by Motorola and Advanced Micro Devices (AMD) already exceed the 

export licensing control threshold of 2,000 MTOPS for tier 3 countries. 

Table 1 also shows estimated performance levels for computers using more 

than one processor and shows that an eight-processor computer using an 

Intel Pentium processor available since October 1999 exceeds the civilian 

export control licensing level of 7,000 MTOPS. The control levels 

announced in the President’s report roughly match the expected 

9

 Related key components include chipsets, circuit boards, and memory cards.
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performance levels of computers using four and eight Intel Pentium 

processors that are expected to be on the market in July 2000.

Table 1: Estimated Performance Capabilities of Single and Multiprocessor 

Computers Available in 1999 and the Year 2000

Note: The above performance levels are estimates provided by the manufacturers and are subject to 

change.

a

 These processors are not presently capable of being configured to this level.

b

 According to Motorola and DOD officials, the G4 is multiprocessor capable. However, the DOD official 

is aware of only two companies making such computers, and each uses a proprietary design.

c

 According to Intel officials, the Willamette processor will eventually be configured for use in four and 

eight processor systems.

Source: U.S. computer processor manufacturers, October 1999.

Estimated performance levels (in MTOPS)

Processor

Single

processor

Two

processors

Four

Processors

Eight

processors

Available October 1999

Intel Pentium III 

733 Megaherz (Mhz) 1,710 3,177 a a

Pentium III (Xeon) 

550 Mhz 1,283 2,383 4,584 8,983

AMD Athlon (K7) 

700 Mhz 2,130 a aa

Motorola G4 

400 Mhz 2,469 b bb

Estimated available by December 1999

AMD Athlon (K7) 

750 Mhz 2,282 a aa

Motorola G4 

550 Mhz 3.395 b bb

Estimated available by July 2000 

Intel Pentium III (Xeon) 

750 Mhz 1,750 3,250 6,250 12,251

Motorola G4

750 Mhz 4,630 b bb

Estimated available second half of 2000

Intel Willamette 

1,000 Mhz 2,667 5,000 c c
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Foreign Supply of High 

Performance Computers 

More Limited Than Report 

Implied

The report’s discussion of foreign sources of high performance computers 

implied that there is a higher level of foreign competition than is factually 

supported by available evidence. The 1998 study that the Defense and 

Commerce Departments sponsored stated that the controllability of high 

performance computer systems is not greatly influenced by their 

availability in foreign countries, except Japan, because U.S. companies and 

their international business partners overwhelmingly dominate the 

international market for computers, at least in the mid- and high-range 

performance categories. This conclusion is consistent with what we 

reported in our 1998 report, where we found that the only global 

competitors for general computer technology were three Japanese 

companies, two of which compete for sales of high-end computer systems 

sold in small volumes and performing at advanced levels.10

Controllability Difficult to 

Assess

While we found evidence supporting the report’s conclusion that 

computers with greater capabilities and related components are becoming 

increasingly available, we were unable to assess the report’s determination 

that computers rated below the new control levels are widely available and 

by implication are uncontrollable. An assessment of controllability involves 

critical assessments of when and in what quantities an item should be 

considered so widely available as to be uncontrollable. However, “widely 

available” and “uncontrollable” are not terms defined in current export 

control laws or regulations, and nothing that has been offered in support of 

the proposed relaxation of controls defines how these concepts have been 

applied in setting the new control levels.11Defense and Commerce 

Department officials stated that the analysis they prepared in support of 

the President’s report relied on a definition of controllability used in their 

sponsored studies of high performance computers. However, the 

discussion of controllability in these studies is general. The 1998 study, for 

example, cites the following general factors “influencing” controllability:

10 See Export Controls Information on the Decision to Revise High Performance Computer 

Controls, (GAO/NSIAD-98-196, Sept. 16, 1998).

11In contrast, under the Export Administration Act, “foreign availability” is more specifically 

described as goods or technology available without restriction from sources outside the 

United States in sufficient quantities and comparable quality to those produced in the 

Untied States so as to render the controls ineffective in achieving their purposes.
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1. the performance of computing platforms that have qualities (size, price, 

numbers installed, vendor distribution channels, age, and dependence on 

vendor support) that make them difficult to monitor;

2. the ability to increase the capability of a computer system incrementally 

by adding processors; and

3. the performance of systems available from foreign sources not 

supporting U.S. export control policies.

The President’s report did not explain how these factors were considered 

in setting the new control levels. The establishment of 12,300 MTOPS as the 

licensing level for civilian end-users in tier 3 countries12 illustrates the 

difficulties in making a judgment about controllability.

• The President’s report, as well as Commerce and Defense Department 

officials, indicated that computers with both four and eight processors 

are or will be sold in such volumes that they are uncontrollable. 

However, computers with eight Intel Pentium processors were just 

introduced to the market in the summer of 1999 and have been and will 

likely be sold in much smaller quantities than systems with either two or 

four processors. 

• The President’s report suggested that computers can be upgraded with 

up to eight processors and maintained without vendor support. 

However, according to three of the largest companies selling computers 

using eight Intel Pentium processors, customers must return to the 

company for modifications to the Pentium III processor before it can be 

added to the computer. In other words, the widespread availability of 

the Pentium III processor is not sufficient to enable anyone to upgrade a 

multiprocessor system without some company assistance.

• The President’s report cited German and Japanese firms that produce 

high performance computers as examples of foreign availability. 

However, like the United States, Germany, and Japan maintain export 

controls on high performance computers. These controls appear to 

afford protections similar to U.S. regulations and would likely limit 

exports of high performance computers to sensitive countries.

12 According to DOD and Commerce officials, the new licensing level of 12,300 MTOPS was 

based on the expected performance capability of an eight-processor computer using an 

Intel-based chip expected to be on the market in mid-2000.
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Without more specific criteria and a clear explanation linking these criteria 

to the new control levels, it is not possible to determine whether sales of 

computers with eight processors are produced in sufficient quantity to 

make them uncontrollable or if the level of vendor involvement in 

upgrading computers or the current level of foreign supply makes such 

computers controllable.

The President’s report noted that high performance computers perform 

sensitive military applications and it is only because of their widespread 

availability that the control levels are being changed. Table 2 lists examples 

identified in the DOD- and Commerce-sponsored study of these 

applications and the performance levels of the computers that support 

these applications. These examples highlight the importance of having 

clear criteria for determining whether a commodity is or is not 

controllable.

Table 2: Performance Levels of Computers That Support Applications of Military 

Significance

Source: High-Performance Computing, National Security Applications, and Export Control Policy at the 

Close of the 20th Century.

Computer performance 

level (MTOPS) Applications 

4,000 to 6,000 Joint Attack Strike Aircraft design; nonacoustic 

antisubmarine warfare sensor development; and 

advanced synthetic aperture radar computation

8,000 to 9,000 Bottom-contour modeling of shallow water in submarine 

design; some synthetic aperture radar applications; and 

algorithm development for shipboards’ infrared search and 

track

10,000 to 12,000 Global and regional weather-related applications, image 

processing, and moderate-sized particle dynamics 

problems

15,500 to 17,500 Computational fluid dynamics applications to model the 

turbulence around aircraft under extreme conditions

20,000 to 22,000 Weather forecasting; impact of blasts on underground 

structures; advanced aircraft design
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Small Percent of 

Exports to Tier 3 

Countries Are 

Licensed and May Go 

to Sensitive End-Users

From November 18, 1997, when the 1998 authorization act was enacted, 

through August 27, 1999, the United States approved the export of 4,092 

high performance computers13 to tier 3 countries.14 China, the largest 

importer among tier 3 countries, received approvals for 1,924 high 

performance computers. Russia, Israel, and Saudi Arabia were the next 

three largest authorized importers of U.S. high performance computers. 

The high performance computers approved for export had an average 

performance capability of 3,568 MTOPS. Saudi Arabia received approval to 

import the most powerful computer, with a capability of 28,980 MTOPS. 

China received approval to import the next most powerful computer, with a 

capability of 24,750 MTOPS. (App. I lists the countries that imported U.S. 

high performance computers and their MTOPS capabilities.)

Our analysis of Commerce data shows that 141 high performance 

computers, or about 3.4 percent of all exports approved to tier 3 countries, 

may have been going to sensitive end-uses or end-users (see fig. 1).15 This 

number is an estimate based on the number of high performance computer 

exports that required an individual validated license. The requirement for a 

license is an indication that the end-user may be connected to the military 

or the end-use may be sensitive.16 Licenses are required for high 

performance computers if the end-use or -users are known by the exporter 

to be connected to the military. Licenses are also required if, after a 

proposed export is notified to the Commerce Department, any of the 

reviewing agencies object based on information that the end-use or -user

13 These high performance computer exports included complete computers as well as 

processors to replace or be added to existing computers. These processor upgrades are 

treated as high performance computers for export control purposes when the performance 

capabilities enabled by the new processors exceed the MTOPS control thresholds.

14 Because exporters do not always use approved export licenses, the quantities actually 

shipped to these countries may be less.

15 U.S. exports to tier 3 countries are a fraction of total U.S. exports of high performance 

computers. Data from January 1996 through September 1997 indicates that about 94 percent 

of U.S. high performance computer exports went to countries in tiers 1 and 2.

16 Commerce regulations state that a license is required to export or reexport computers 

rated above 2,000 MTOPS to countries in tier 3 to military end-users and end-uses and to 

nuclear, chemical, biological, or missile end-users.
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might be connected to the military or some other sensitive end-use 

or -user.17

Figure 1: Percent of Approved Tier 3 High Performance Computer Exports That 

Required a License and May Be Going to a Sensitive End-Use or End-User, 

November 18, 1997, Through August 27, 1999

Notes:

1. Approved exports to possible sensitive end-users or -uses include approved licensed exports of 

computers (and processor upgrades) rated between 2,000 and 7,000 MTOPS.

2. All other approved exports include approved exports of computers rated above 2,000 MTOPS that 

did not require a license and approved licensed exports of computers rated above 7,000 MTOPS.

Source: GAO analysis of Commerce Department licensing data.

Conclusion Key terms of widespread availability and controllability used by the 

administration in setting the new export control levels are not defined in 

regulations or explained in the President’s report. Future reports to 

Congress explaining additional changes to the control levels for high 

17 If no objection is raised, the exporter may ship the high performance computer without a 

license.
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performance computers would be more useful if these terms were clearly 

defined.

Recommendation To clarify the basis for future changes to the export control levels for high 

performance computers, we recommend that the Secretary of Commerce 

develop specific criteria defining both “widely available” and 

“controllability.”

Agency Comments and 

Our Evaluation

The Departments of Commerce and Defense provided written comments 

on a draft of this report (see apps. II and III, respectively). State reviewed a 

draft of this report but did not take an overall position on its content. DOD, 

Commerce, and State provided technical comments, which we 

incorporated where appropriate.

In regard to our recommendation that the Secretary of Commerce define 

the terms “widely available” and “controllability” that were used in 

justifying the proposed changes in control levels for high performance 

computer exports, Commerce noted that these terms require judgment. 

Commerce said that as it works with Congress to renew the Export 

Administration Act, it would explore the utility of defining these terms. We 

continue to believe that our recommendation has merit. A clear 

understanding of these terms and how the administration has applied them 

will be essential for Congress to assess future proposed changes in 

computer control levels. The Department of Defense did not comment on 

our recommendation.

DOD and Commerce said that in their view, the President’s report responds 

to the legislative requirement to discuss the national security impact of the 

new control levels. They note that the President’s report concedes that 

computers have many military applications and that computers at all 

performance levels are used in virtually all military applications. For this 

reason, the President’s report identifies the most serious national security 

issue: the reliance of the U.S. military on the high performance computer 

industry and the need to ensure that the industry is able to maintain 

worldwide market share to stay at the forefront of technological 

innovation. As we point out in our report, this focus is not responsive to the 

specific reporting requirements of section 1211(d)(3) of the Fiscal Year 

1998 Defense Authorization Act. While the health of the economy overall, 

and the computer industry in particular, is an important element of national 
B-283964

Page 18 GAO/NSIAD-00-45 Computer Export Controls

security, the act requires that the President’s report assess the impact of 

potential military uses of computers at the new control levels on U.S. 

national security interests. The President’s report notes that computers in 

the performance range affected by the change in control levels have 

numerous military applications, but the report does not discuss the 

possible impact on national security from the use of these computers for 

such military applications.

Commerce also commented that our estimate of the number of computers 

approved for export to sensitive end-uses is misleading since it is based on 

license applications and notifications to which the reviewing agencies 

objected. Our figures are estimates based on license application data. As 

we note in the report, the requirement for a license is an indication that the 

end-use or -user may be connected to the military or a proliferation-related 

activity.

Scope and 

Methodology

To address whether the President’s report satisfied the three reporting 

requirements of section 1211 of the Fiscal Year 1998 National Defense 

Authorization Act (P.L. 105-85), we reviewed the President’s report and 

compared it to the requirements in the law. We also interviewed officials 

from the Departments of Defense, Commerce, and State and the National 

Security Council to discuss the report’s treatment of these reporting 

requirements as well as the discrepancies we noted in our analysis.

To assess the factual support for the President’s report, we reviewed copies 

of the studies and other documentation used in preparing the report. We 

interviewed officials from the Departments of Defense, Commerce, State, 

and Energy; the Central Intelligence Agency; and the National Security 

Council to identify the support used as the basis for the report. We also 

interviewed officials from the major computer and processor 

manufacturers and the trade group representing the computer industry, and 

we obtained computer sales data from a consulting firm. We also relied on 

our previous work on high performance computers.

To identify how many high performance computers were exported to tier 3 

countries, we obtained licensing records from the Department of 

Commerce. We began this analysis in November 1997, when Public Law 

105-85 was enacted, and continued through August 27, 1999, when the data 

was provided to us. We included in our analysis all approved licensed 

exports and all exports that exporters notified to Commerce and were 
B-283964

Page 19 GAO/NSIAD-00-45 Computer Export Controls

effectively approved for export after no objections were raised by 

Commerce or the other reviewing agencies.

We determined the number of approved high performance computer 

exports for military end-users or -uses going to tier 3 countries by 

identifying all the exports that required an individual validated license. 

These included those that were initially submitted to Commerce as license 

applications and those that were submitted as notifications and later 

converted to formal license applications based on an objection from one of 

the reviewing agencies. We did not include in our estimate license 

applications that were denied or returned to the exporter without action. 

We also did not include in our estimate license applications for computers 

with performance capabilities above 7,000 MTOPS because those 

computers always require a license regardless of the end-use or -user. Due 

to the time constraints on our review, we did not attempt to review each 

export license to determine which were going to military end-uses or other 

sensitive destinations.

We conducted our review from August 1999 through October 1999 in 

accordance with generally accepted government auditing standards.

Unless you publicly announce the contents of this report earlier, we plan no 

further distribution of this report until 30 days from its issue date. At that 

time, we will send copies of this report to other congressional committees; 

the Honorable William S. Cohen, Secretary of Defense; the Honorable 

Madeleine K. Albright, Secretary of State; the Honorable Willliam M. Daley, 

Secretary of Commerce; and the Honorable William Richardson, Secretary 

of Energy. Copies will also be made available to others upon request.

If you or your staff have any questions concerning this report, please call 

me or Jim Shafer at (202) 512- 4128. Key contributors to this assignment 

were David Trimble, Eugene Beye, and Claude Adrien.

Benjamin F. Nelson

Director, International Relations and Trade Issues
Page 20 GAO/NSIAD-00-45 Computer Export Controls

Appendix I

Computers Approved by the U.S. Government Apendxies

for Export to Tier 3 Countries From 

November 18, 1997, Through August 27, 1999 ApendxiI

Total approved exportsa

Approved licensed exports that may be going to 

sensitive end-users or -usesb

Country Quantity

Average

MTOPS

Highest

MTOPS level Quantity

Percent of

total

exports

Average

MTOPS

Highest

MTOPS level

China 1,924 3,610.6 24,750.0 48 2.49 3,111.4 6,436.6

Russia 503 3,624.4 16,063.0 3 0.60 2,791.8 3,062.5

Israel 458 3,857.8 10,440.0 4 0.87 4,956.2 6,287.2

Saudi Arabia 212 9,973.2 28,980.0 2 0.94 3,958.8 5,296.3

United Arab Emirates 191 3,519.6 12,063.0 1 0.52 2,675.0 2,675.0

Algeria 117 2,228.1 5,460.0 0 0 0 0

India 113 3,449.5 11,873.0 79 69.91 3,182.6 6,008.8

Egypt 67 3,803.6 9,661.0 2 2.99 2,062.5 2,062.5

Romania 53 3,280.8 9,143.8 0 0 0 0

Kuwait 52 3,110.8 6,804.0 0 0 0 0

Vietnam 35 2,408.2 3,843.0 0 0 0 0

Kazakhstan 32 7,836.5 21,630.0 0 0 0 0

Oman 24 6,260.4 11,063.0 0 0 0 0

Qatar 31 3,545.7 6,500.0 0 0 0 0

Estonia 28 8,710.3 14,868.0 0 0 0 0

Lebanon 28 3,089.8 5,296.2 0 0 0 0

Ukraine 28 2,391.4 4,063.0 0 0 0 0

Bahrain 26 2,749.6 5,460.0 0 0 0 0

Latvia 26 2,937.7 4,612.6 0 0 0 0

Croatia 23 2,832.5 5,296.3 0 0 0 0

Bulgaria 20 3,471.5 6,780.0 1 5.0 3,461.6 3,461.6

Lithuania 19 4,275.9 8,553.0 0 0 0 0

Jordan 16 2,626.9 6,500.0 0 0 0 0

Angola 14 4,150.3 6.520.2 0 0 0 0

Morocco 11 2,305.7 2,475.0 0 0 0 0

Macedonia 8 2,666.2 4,166.6 0 0 0 0

Yemen 8 2,736.6 4,166.9 0 0 0 0

Serbia 5 2,527.7 2,772.0 0 0 0 0

Azerbaijan 3 3,213.2 5,100.0 0 0 0 0

Belarus 2 2,456.3 2,850.0 0 0 0 0

Bosnia-Herzogovina 2 3,497.8 4,612.6 0 0 0 0

Cambodia 2 2,372.9 2,372.9 0 0 0 0

Continued
Appendix I

Computers Approved by the U.S. Government 

for Export to Tier 3 Countries From 

November 18, 1997, Through August 27, 1999

Page 21 GAO/NSIAD-00-45 Computer Export Controls

Note: Data includes authorized exports of computers and processors for computer upgrades. The 

quantities actually shipped to these countries may be lower.

a

 Total approved exports include authorized exports of computers (and processor upgrades) rated 

above 2,000 MTOPS that did not require a license and approved licensed exports of computers (and 

processor upgrades) rated above 2,000 MTOPS.

b

 Approved licensed exports that may be going to sensitive end users include approved licensed 

exports of computers (and processor upgrades) rated between 2,000 and 7,000 MTOPS. The 

requirement for a license is an indication that the end-use or -user might be sensitive. Exports of 

computers rated between 2,000 and 7,000 MTOPS to countries in tier 3 generally do not require an 

individual export license unless the export is to military end-users and end-uses or to nuclear, 

chemical, biological, or missile end-users.

Source: GAO analysis of Commerce Department licensing data.

Total approved exportsa

Approved licensed exports that may be going to 

sensitive end-users or -usesb

Country Quantity

Average

MTOPS

Highest

MTOPS level Quantity

Percent of

total

exports

Average

MTOPS

Highest

MTOPS level

Cyprus 2 2,223.6 2,372.9 0 0 0 0

Georgia 2 3,300.0 3,300.0 0 0 0 0

Mauritania 2 2,166.7 2,166.7 0 0 0 0

Tunisia 2 3,166.8 4,166.8 0 0 0 0

Turkmenistan 2 3,023.5 3,300.0 1 50.0 2,747.0 2,747.0

Uzbekistan 1 2,166.7 2,166.7 0 0 0 0

Pakistan 0 0 0 0 0 0 0

Total 4,092 3,567.6 28,980.0 141 3.45 3,216.3 6,436.6

Continued from Previous Page
Page 22 GAO/NSIAD-00-45 Computer Export Controls
Page 23 GAO/NSIAD-00-45 Computer Export Controls

Appendix II

Comments From the Department of Defense ApendxiI

Note: GAO comments 

supplementing those in the 

report text appear at the end 

of this appendix.

See comment 1.

See comment 2.

See comment 3.

See comment 4.
Appendix II

Comments From the Department of Defense

Page 24 GAO/NSIAD-00-45 Computer Export Controls

The following are GAO’s comments on the Department of Defense’s (DOD) 

letter dated October 27, 1999.

GAO Comments 1. Our report found that while the capabilities of processors are clearly 

increasing, the source of this supply is largely from generally unrestricted 

exports from U.S. manufacturers. As DOD notes, the source of this 

increasing capability comes from U.S. manufacturers and their business 

partners in other countries. Availability from foreign suppliers is not a 

critical factor in the administration’s decision to change the control levels.

2. It is unclear from DOD’s response and the President’s report how the 

administration determined that four and eight-processor-capable 

computers are uncontrollable. DOD’s response states that these systems 

will be produced in the millions. Data from a 1998 industry study used by 

DOD and Commerce, however, shows that expected sales in the year 2000 

of eight-processor-capable systems will be below 200,000 units and 

four-processor units will be about 550,000 units. Other factors also suggest 

that these systems may be controllable: the large majority of these sales 

will be in the Untied States and tier 1 countries that appear to have similar 

export control regulations; the U.S. companies and their foreign 

subsidiaries are subject to U.S. export control regulations; and, customers 

wishing to add additional processors to such systems must return to the 

vendor for assistance.

3. Economic security is an important element of national security. The 

reporting requirement in section 1211 of the Fiscal Year 1998 Defense 

Authorization Act, however, specifically requires an assessment of the 

potential military uses of the newly decontrolled computers on U.S. 

national security.

4. The President’s report did not provide evidence to show how requiring 

licenses for exports of high performance computers would be a significant 

burden for industry or compromise its leadership in the design, 

development, and production of computers and processors. We noted that 

exports to tier 3 countries are a fraction of U.S. exports of high 

performance computers. Between January 1996 and September 1997, only 

6 percent of U.S. high performance computer exports went to tier 3 

countries.
Page 25 GAO/NSIAD-00-45 Computer Export Controls

Appendix III

Comments From the Department of 

Commerce ApendxiI

Note: GAO comments 

supplementing those in the 

report text appear at the end 

of this appendix.
Appendix III

Comments From the Department of 

Commerce

Page 26 GAO/NSIAD-00-45 Computer Export Controls

See comment 1.
Appendix III

Comments From the Department of 

Commerce

Page 27 GAO/NSIAD-00-45 Computer Export Controls

See comment 2.

See comment 3.

See comment 4.

See comment 5.

See comment 6.
Appendix III

Comments From the Department of 

Commerce

Page 28 GAO/NSIAD-00-45 Computer Export Controls

See comment 7.

See comment 8.

See comment 9.
Appendix III

Comments From the Department of 

Commerce

Page 29 GAO/NSIAD-00-45 Computer Export Controls

The following are GAO’s comments on the Department of Commerce’s 

letter dated November 3, 1999.

GAO Comments 1. Section 1211 of the National Defense Authorization Act for Fiscal Year 

1998 requires that the President’s report to Congress “at a minimum . . . 

address all potential uses of military significance to which high 

performance computers at the new control level could be applied; and 

assess the impact of such uses on the national security interests of the 

United States”[emphasis added]. The President’s report concluded that 

there are militarily significant applications in the new control range, but it 

did not assess the impact of these applications on the national security 

interests of the United States. Instead, the report discussed the national 

security interest of ensuring the country’s technological advantage in 

computers and discussed the impact a failure to adjust the control levels 

could have on U.S. industry.

2. Economic security is an important element of national security. 

However, the reporting requirement in section 1211 of the Fiscal Year 1998 

Defense Authorization Act specifically requires an assessment of the 

potential military uses of the newly decontrolled computers on U.S. 

national security. Furthermore, the President’s report does not provide 

evidence to show how requiring licenses for exports of high performance 

computers would be a significant burden for industry or compromise its 

leadership in the design, development, and production of computers and 

processors. Exports to tier 3 countries are a fraction of U.S. exports of high 

performance computers. Between January 1996 and September 1997 only 

6 percent of U.S. high performance computer exports went to tier 3 

countries.

3. The information on processor performance speeds was provided by 

industry for inclusion in this report. The information presented in this 

report on license applications is aggregate data, and thus its use is 

consistent with section 12c of the Export Administration Act.

4. We agree with Commerce’s observation that the President’s report does 

not provide evidence of significant foreign sources of high performance 

computers. As Commerce indicates, the President’s report cites “potential 

competitors” and suggests that the proposed changes in control levels are 

based, in part, on potential foreign availability. The President’s report, 

however, does not explain in what time frame this potential competition 

might develop, how contingent its development is on U.S. technology, or 
Appendix III

Comments From the Department of 

Commerce

Page 30 GAO/NSIAD-00-45 Computer Export Controls

how likely it is to occur given the large capital investments needed to 

develop certain technologies.

5. The President’s report does not provide information on the effectiveness 

of other countries’ export control systems to assess whether they 

effectively limit the widespread availability of high performance 

computers. The export licensing practices of other countries is a critical 

factor in assessing the administration’s conclusion that high performance 

computers are widely available and are therefore uncontrollable. Without 

such information and definitions of “widely available” and “controllability,” 

it will be difficult to assess the basis for any future changes in the export 

control levels for high performance computers. 

6. We have incorporated the suggested changes to make clear that our data 

refers to license applications and notifications for high performance 

computers and processor upgrades and not actual shipments.

7. Our data on the numbers of export applications for exports going to 

sensitive end-users or -uses is an estimate. We believe our approach in 

developing this estimate is sound. The requirement for a license is an 

indication that the end-user may be connected to the military or the 

end-use or -users are sensitive. As our report notes, licenses are required if 

the end-use or -user is connected to the military. Further, a license is 

required if State, DOD, Energy, or Commerce objects to an export 

notification. According to guidance from the National Security Council, 

agency objections shall state whether the proposed export represents a 

risk of diversion to a military end-user or end-user of proliferation concern. 

8. We disagree with Commerce’s statement that objections to export 

notifications from DOD, State, Energy, and Commerce are usually based on 

a lack of information about the end-user. In a 1999 review, we examined the 

notification process for high performance computers and the objections 

raised by the reviewing agencies.1

 We reported that of the 939 notifications 

we examined, agencies raised objections to 101 of the proposed exports. 

The majority of the agencies’ objections to the 101 proposed exports were 

based on concerns that the end-users of the computers might have been 

involved in military or proliferation-related activities. Furthermore, our 

review of the data does not support Commerce’s suggestion that once 

1

 See Export Controls: 1998 Legislative Mandate for High Performance Computers

(GAO/NSIAD-99-208, Sept. 24, 1999).

a
Appendix III

Comments From the Department of 

Commerce

Page 31 GAO/NSIAD-00-45 Computer Export Controls

dditional information is gathered, these exports are no longer determined 

to be sensitive. Of the 101 license applications that were required after 

reviewing the notifications, only 16 were subsequently approved. 

Seventy-nine were returned to the exporters without action, which 

essentially blocks the proposed export, and 6 were denied. Moreover, the 

licenses that were approved had additional conditions placed on the 

reexport or end-use of the computers.

9. The terms “sufficient quantity” and “comparable quality” are used in the 

Export Administration Act to define foreign availability. The President’s 

report, however, does not define either “widely available” or 

“controllability” or explain how these terms were applied in setting the 

proposed control levels. Applying these terms clearly requires judgment. 

However, Congress will neither be able to understand nor assess the 

judgments reached unless Commerce develops specific criteria defining 

these terms.

(711449) Letr
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