I

103D CONGRESS

1ST SESSION H. R. 3534

To amend the Export Administration Act of 1979 with respect to export

controls on computers.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 18, 1993

Mr. EDWARDS of California (for himself and Mr. COX) introduced the

following bill; which was referred to the Committee on Foreign Affairs

A BILL

To amend the Export Administration Act of 1979 with

respect to export controls on computers.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION. 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Computer Equipment

5 and Technology Export Control Reform Act’’.

6 SEC. 2. ANNUAL REVIEW OF CONTROLS ON COMPUTERS.

7 Section 4 of the Export Administration Act of 1979

8 (50 U.S.C. App. 2403) is amended by adding at the end

9 the following new subsection:
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1 ‘‘(h) REVIEW OF EXPORT CONTROLS ON COMPUTER

2 EQUIPMENT AND TECHNOLOGY.—

3 ‘‘(1) IN GENERAL.—In order to ensure that re4 quirements of validated licenses and other licenses

5 authorizing multiple exports are periodically removed

6 as computer equipment, computer communications

7 and networking equipment, computer software, and

8 related technology, that are subject to such require9 ments become obsolete with respect to the specific

10 objectives of the export controls requiring such li11 censes, the Secretary shall conduct periodic reviews

12 of such controls. The Secretary shall complete such

13 a review not later than 6 months after the date of

14 the enactment of this subsection, and not later than

15 the end of each 1-year period thereafter.

16 ‘‘(2) REVIEW ELEMENTS.—In conducting each

17 review under paragraph (1), the Secretary shall do

18 the following with respect to the export controls re19 quiring a license described in paragraph (1):

20 ‘‘(A) OBJECTIVES OF CONTROL.—The Sec21 retary shall identify the specific objectives of

22 the export controls, for the 12-month period be23 ginning on the date on which the review is com24 pleted, for each country for which a validated li25 cense is required. When an objective of an ex-
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1 port control is to defer the development of a

2 specific capability in such country, the Sec3 retary shall specify for what period of time the

4 controls are expected to defer such capability.

5 ‘‘(B) QUANTITY AND PERFORMANCE.—The

6 Secretary shall estimate, for the 12-month pe7 riod described in subparagraph (A), the quan8 tity and performance (measured in Composite

9 Theoretical Performance or other relevant per10 formance metrics) of computer systems that

11 must be obtained by each country for which a

12 validated license is required in order to defeat

13 the objectives of the export controls.

14 ‘‘(C) AVAILABILITY TO CONTROLLED DES15 TINATIONS.—The Secretary shall evaluate the

16 effectiveness of the export controls in achieving

17 their specific objectives, including explicit de18 scriptions of the availability, during the 12-

19 month period described in subparagraph (A), to

20 controlled countries of computer equipment,

21 computer communications and networking

22 equipment, computer software, and related

23 technology on which the export controls are in

24 effect—
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1 ‘‘(i) from sources that do not control

2 the export of such items, and from sources

3 from which no effective export controls on

4 such items exist;

5 ‘‘(ii) as a result of actual or potential

6 diversion, including potential diversion of

7 software over international computer or

8 telephone networks;

9 ‘‘(iii) as a result of export license au10 thorizations from countries other than the

11 United States;

12 ‘‘(iv) as a result of indigenous produc13 tion in controlled countries; and

14 ‘‘(v) as a result of United States regu15 lations permitting exports to such coun16 tries of items with minimal United States

17 content by value.

18 ‘‘(D) ECONOMIC IMPACT.—The Secretary

19 shall evaluate the economic impact, during the

20 12-month period described in subparagraph

21 (A), of the export controls on exporting compa22 nies, including estimates of lost sales, loss in

23 market share, and administrative overhead.

24 ‘‘(3) INCREASE IN THRESHOLDS.—After com25 pleting each review under this subsection, the Sec-
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1 retary shall increase, if warranted by the findings of

2 the review, the following export control thresholds,

3 consistent with the obligations of the United States

4 under bilateral and multilateral agreements:

5 ‘‘(A) The performance levels at which com6 puter systems are eligible for delivery under a

7 distribution license.

8 ‘‘(B) The performance levels at which com9 puter systems may be shipped under a general

10 license to countries other than controlled coun11 tries.

12 ‘‘(C) The performance levels defining a

13 ‘supercomputer’.

14 ‘‘(D) The performance levels at which a

15 validated license is required for the export to a

16 controlled country of computer systems and pe17 ripherals, software, parts, and communications

18 equipment normally supplied with such com19 puter systems.

20 In any recommendation or publication for such in21 crease, the Secretary shall include the specific ra22 tionale for the increase.

23 ‘‘(4) DEFAULT PROVISIONS.—If on the date by

24 which a review under this subsection must be com25 pleted, the review is not completed or a report on
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1 the review has not been transmitted to the Congress

2 under paragraph (5), the performance levels de3 scribed in paragraph (3) then in effect, stated in

4 terms of Composite Theoretical Performance or

5 other relevant performance metrics, shall double, ef6 fective 90 days from that date. No change in regula7 tions or notice in the Federal Register shall be re8 quired to implement such increase in performance

9 levels.

10 ‘‘(5) REPORT.—The Secretary shall transmit to

11 the Congress and to the Computer Systems Tech12 nical Advisory Committee (or successor technical ad13 visory committee) a report on the findings of each

14 review conducted under this subsection, addressing

15 each requirement set forth in paragraph (2). Within

16 60 days thereafter, the Computer Systems Technical

17 Advisory Committee (or successor technical advisory

18 committee) shall transmit to the Congress a concise

19 statement specifying its concurrence or

20 nonconcurrence with each matter contained in the

21 Secretary’s report, along with specific reasons for

22 such concurrence or nonconcurrence.

23 ‘‘(6) HEARINGS.—The Secretary shall conduct

24 public hearings not less than once each year in order

25 to solicit information from all interested parties on
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1 all matters to be addressed in each review conducted

2 under this subsection.’’.

3 SEC. 3. DE MINIMIS DECONTROL OF COMPUTER SYSTEMS.

4 Section 4 of the Export Administration Act of 1979

5 is amended by adding at the end the following new sub6 section:

7 ‘‘(i) REMOVAL OF CONTROLS ON COMPUTER SYS8 TEMS VALUED AT LESS THAN $5,000.—

9 ‘‘(1) IN GENERAL.—No validated license shall

10 be required under this Act for the export or reexport

11 to any controlled country of any digital computer

12 having a net value of less than $5,000.

13 ‘‘(2) DEFINITION OF NET VALUE.—As used in

14 paragraph (1), the ‘net value’ of a digital computer

15 means the actual selling price of the computer, less

16 transport charges, to the customer abroad, or the

17 current market price of the computer to the same

18 type of customer in the United States.

19 ‘‘(3) NO QUANTITY LIMIT.—No limit may be

20 placed under this Act on the number of computer

21 systems to which paragraph (1) applies that may be

22 exported or reexported at any one time or on the

23 number of shipments of such computer systems to

24 any controlled country or end-user in a controlled

25 country.’’
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1 SEC. 4. DECONTROL OF MASS-MARKET COMPUTER EQUIP2 MENT.

3 Section 4 of the Export Administration Act of 1979

4 is amended by adding at the end the following new sub5 section:

6 ‘‘(j) REMOVAL OF CONTROLS ON MASS-MARKET

7 COMPUTER EQUIPMENT.—

8 ‘‘(1) MASS-MARKET COMPUTER EQUIPMENT DE9 FINED.—For purposes of this subsection, the term

10 ‘mass-market computer equipment’ means any com11 puter system, computer networking equipment, pe12 ripheral to a computer system, part or subassembly

13 of a computer system, or combination thereof, on

14 which export controls are in effect under this Act,

15 and which will have been installed for end-use out16 side the United States in a quantity exceeding

17 100,000 units over a 12-month period, as deter18 mined under paragraph (2).

19 ‘‘(2) ANTICIPATORY REVIEW OF MASS-MARKET

20 COMPUTER EQUIPMENT.—Not later than—

21 ‘‘(A) 6 months after the date of the enact22 ment of this subsection, and

23 ‘‘(B) the end of each 1-year period occur24 ring thereafter,

25 the Secretary shall, in consultation with the Com26 puter Systems Technical Advisory Committee (or
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1 successor technical advisory committee), industry

2 groups, and computer equipment producers, identify

3 those items (including computer systems differen4 tiated in terms of Composite Theoretical Perform5 ance) that will be installed for end-use outside the

6 United States in a quantity exceeding 100,000 units

7 during the 12-month period beginning on the appli8 cable date described in subparagraph (A) or (B). Es9 timates of numbers of items installed shall be based

10 on reliable estimates provided by producers of such

11 items.

12 ‘‘(3) ACTION BY THE SECRETARY.—Not later

13 than 30 days after an item is determined by the Sec14 retary under paragraph (2) to be mass-market com15 puter equipment, the Secretary shall either—

16 ‘‘(A) eliminate export controls on such

17 equipment and publish a notice of such action

18 in the Federal Register; or

19 ‘‘(B) in the case of an item controlled

20 under the terms of an export control regime in

21 which the United States participates with 1 or

22 more other countries, propose the elimination of

23 controls on such equipment in accordance with

24 the procedures of the appropriate regime and
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1 publish a notice of such proposal in the Federal

2 Register.’’.

3 SEC. 5. IDENTIFICATION OF PROLIFERATION END-USERS.

4 Section 4 of the Export Administration Act of 1979

5 is amended by adding at the end the following new sub6 section:

7 ‘‘(k) IDENTIFICATION OF PROLIFERATION END8 USERS.—

9 ‘‘(1) PROLIFERATION END-USER DEFINED.—

10 For purposes of this subsection, the term ‘prolifera11 tion end-user’ means any entity that is engaged, di12 rectly or indirectly, in the design, development, or

13 production of nuclear, chemical, or biological weap14 ons or missiles and is located in a country that is

15 not party to a bilateral or multilateral agreement the

16 purpose of which is to limit the spread of such weap17 ons and activities and to which the United States is

18 a party.

19 ‘‘(2) PUBLICATION OF PROLIFERATION END20 USERS.—The Secretary shall, within 10 days after

21 communicating to any United States exporter (in22 cluding by denying an export license to such ex23 porter) that any entity has been identified as a pro24 liferation end-user, publish in the Federal Register

25 the name and specific validated license requirements
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1 for exports to such proliferation end-user. If such

2 publication is not made, such entity shall be deemed

3 not to be a proliferation end-user and exports or re4 exports to such entity shall not require an individual

5 validated license solely because of activities described

6 in paragraph (1).

7 ‘‘(3) CUSTOMER SCREENING.—The Secretary

8 shall not require, as a condition of granting any gen9 eral or validated license for the export of goods or

10 technology to any end-user in a country, that infor11 mation by the export license applicant be provided

12 regarding activities described in paragraph (1) by

13 such end-user, unless—

14 ‘‘(A) the Secretary has identified such

15 country as engaged in the design, development,

16 or production of nuclear, chemical, or biological

17 weapons or missiles; or

18 ‘‘(B) the Secretary has determined that

19 there is a specific risk that the exports will be

20 diverted to a country for use in activities de21 scribed in subparagraph (A).’’.

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