Out of Control?
The surprising Senate fight over high-tech sales to China

May 14, 2001

By Ellen Bork

President Bush seems to be settling into a comfortable relationship with his party over China. His handling of the surveillance plane episode met with widespread support, and his pledge to do "whatever it took" to defend Taiwan bucked up even conservatives. In late April, however, a fight broke out among senior Senate Republicans over deregulating technology exports to China. What looked like a consensus between the White House and Capitol Hill to loosen controls on the export of "dual-use" items (civilian technologies that also have military applications) ran into surprising opposition on the Senate floor.

In part, the opposition was provoked because majority leader Trent Lott jumped the gun with his sudden introduction of the bill championed by Banking Committee chairman Phil Gramm and Wyoming's Mike Enzi, his committee colleague. Their measure reauthorizing the Export Administration Act would limit the influence of security-minded officials at the Pentagon and the State Department in controlling dual-use exports. Lott's maneuver annoyed a group of senators who chair committees overseeing national security issues and who thought they had Lott's agreement to consult them before acting on the bill. The senators-Richard Shelby, Fred Thompson, Jesse Helms, John McCain, John Warner, and Jon Kyl-felt blindsided. "I reflected, as I approached the chamber," said Warner, chairman of the Armed Services committee, "that in my 23 years in the Senate, I don't know if I have ever opposed my leader on a motion to proceed."

The concerns, though, were more than procedural. Passage of the export bill would reflect a decision by Congress and the Bush administration, which supports the bill, to make commercial considerations paramount in regulating the export of advanced technologies, including supercomputers, encryption programs, stealth technology, and machine tools. Lott, said Kyl later, "utterly failed to appreciate the depth of concern" about the bill. After five hours of scrimmaging, the bill was pulled from the floor and action postponed until later this year.

While proponents insist they only want to free America's high technology industries from anachronistic restrictions, the bill is actually, as Thompson said on the floor of the Senate, another China trade bill. Businesses, as he put it, want to export high-tech goods to China "without having to apply for a license… . That is what this is all about." But should we really be selling China the technologies it seeks for its military, the same military that has just plundered our downed reconnaissance plane for its secrets and which U.S. forces may confront one day in a conflict in the Taiwan strait?

Strange to say, but the United States has been doing just that for three decades. China has been acquiring sophisticated technologies from the United States since the earliest days of the U.S.-China relationship. Building up China's military as a counterweight to the Soviet Union was U.S. policy from Nixon forward. The flow of dual-use items even accelerated under the anti-Communist hero Ronald Reagan.

However, even as the Soviet Union disintegrated, export of dual-use equipment and technology continued. Under the Clinton administration, the National Security Council became so associated with loosening export controls that bureaucrats who monitor technology transfer nicknamed it "Commerce West."

The Clinton administration cited the end of the Cold War as a rationale for loosening America's export controls. But in fact, the disappearance of the Soviet threat ended the need for a U.S.-China strategic alliance and any ostensible reason for selling Beijing advanced dual-use technologies. It also enabled China to reorient its military toward regional goals such as retaking Taiwan and countering U.S. influence in Asia. In recent years, China has increased dramatically its defense budget and explicitly taken aim at the U.S. presence in the region.

Of course, there was always another rationale: campaign contributions, one of the biggest scandals of the Clinton years. Oddly enough, it ended up acting as a brake on technology sales. As one industry lobbyist told the National Journal, "The problem under Clinton was that he was of one party and Congress was of another, so whatever Clinton did was subject to close scrutiny by the Republicans who did not trust Clinton because of the [alleged] campaign contributions from China." Now, with a Republican in the White House, there may be less willingness among Republicans on Capitol Hill to carp about exports to China.

During the campaign, Bush promised to get rid of "export controls that do not serve any clear national-security purpose." At a White House meeting with high-tech business leaders on March 28, the president called the measure "a good bill." A top lobbyist for the computer industry allowed that he was "pleasantly surprised" by the administration's willingness to see the bill go forward so quickly. He said they had "acted professionally."

Old hands at technology transfer disagree with this definition of professional. The bill, they complain, lacks the "checks and balances" that ensure departments with the relevant expertise have standing in the interagency process to affect decisions. A former senior defense department official says the Bush administration "missed a great opportunity. They should have asked for a delay to give the intelligence agencies" the task of assessing the threat posed by China's acquisition of dual-use items and then devised a bill to address that threat. Instead, "the people who advised this were from the Clinton administration. Not one outside expert from any other administration" was consulted.

Publicly, the bill's opponents on Capitol Hill have been careful not to criticize administration officials over their handling of the bill. Privately they express astonishment. "For reasons that I frankly don't understand, they chose to conduct this review in an extraordinarily quick fashion," complains one senator. "They couldn't possibly have examined all the ramifications, and they had to have relied on people left over" from the Clinton administration.

Thus, the bill reported out of the Senate Banking Committee allows the Commerce Department to decide whether an item needs a license that requires referral to the Pentagon and other departments for review. When there is an interagency dispute, the resolution process established by the bill is weaker than the current process, and is dominated by Commerce. Appeal to higher levels must be made by a presidential appointee. The ultimate authority is the president. Under such a process, the secretaries of state and defense will have to weigh an objection to a particular export license against all of the other priorities they want to take up with the president. This will deter agencies besides Commerce from making objections. Gramm insists it's a workable system of controls. But a Senate staffer experienced in export-controls legislation says Gramm has "established a dispute resolution mechanism like Potemkin established a village."

Other provisions of the bill allow for products to avoid review at the discretion of the Commerce Department if they can be described either as "mass market" or "foreign availability" products. The "mass market" designation would exempt from control items produced in "volume" in the United States. "Foreign availability" would allow the export of items available from "sources outside" the United States.

These exclusions could allow Commerce on its own, or at the request of a company seeking to export, to obviate licensing restrictions on a whole range of items, from laptop computers to components of nuclear triggers. While there may be cases in which these sorts of items would find their way around controls to China or other controlled destinations, these new categories would make it impossible for the United States to restrict America's often superior technology, or simply to make a moral judgment that it doesn't want to be the source of commodities used in weapons of mass destruction, or conventional weapons used against our allies, or even against ourselves. Once again, only the president can act to set aside such a finding.

Can the bill still be fixed? The national security official says the Pentagon's support "has always been conditioned on an executive order" that addresses its concerns. But the administration has not made final such an executive order or even shared a draft with senators. Indeed, a National Security Council spokesman says that an executive order does not exist.

Not surprisingly, the computer industry is pleased with the bill, which removes current licensing standards and congressional notification requirements for high performance computers. These requirements have been the only way that congressional committees with national security oversight can demand a justification for a decision to decontrol ever more powerful computers.

Indeed, some suggest the clout of the high-tech sector explains much about the quick progress of the bill. According to the Center for Responsive Politics, during the 2000 election cycle, the computer industry ranked as the seventh largest political contributor, up from 55th in 1990. The perception that too much of this money was going to the Clinton White House caused concern to at least one of the export act's prime movers, Phil Gramm. At a meeting to try to persuade his Republican colleagues to support last year's version of the legislation, the senator said it was necessary to deprive the Democrats of an "intolerable advantage" in fund-raising. "We all walked out of there thinking, 'I feel dirty,'" says one participant. Gramm rejects the suggestion that he is motivated by campaign contributions. "Not only has that never come out of my lips, it has never crossed my mind."

Gramm insists that his record on national security is rock solid, and cites, for example, his father's Army service and his role in the defense budget increase of 1981. He objects, however, to doing "feel good" things that hamper business and says he prefers to "build a higher wall around fewer things."

That makes it sound as if lots of exports are being controlled now, when in fact only slightly more than 4 percent of applications for exports of dual-use goods to China are denied. As for the value to American industry of the new bill, even the Commerce Department says it's not going to be that much. According to the most recent report of the Bureau of Export Administration, "the dollar value of trade with controlled destinations has [historically] been low," less than 3 percent of U.S. exports in 1998.

When the export act comes up for debate again, the six Republicans who have made national security rather than trade their top priority will face an uphill fight. Given how far Fred Thompson and his colleagues went in objecting to their leader's motion, says one Senate staffer, "if this comes up without having their concerns met, there will be a Republican bloodbath on the floor of the Senate." Is that what the Bush administration wants?

This article is reprinted with the permission of The Weekly Standard, it first appeared on May 14, 2001. For more information on subscribing to The Weekly Standard please call 1-800-283-2014 or visit the website http://www.weeklystandard.com.

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