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Concerns Over High Performance Computer
Exporters' Ability to Review End-Users in the PRC
Prompted the
Requirement for Prior Notification
The January 1996 revisions to the Export Administration Regulations
governing HPCs made several other important changes. Most importantly,
they made exporters responsible for determining whether an export license
is required, based on the MTOPS level of the computer, and for screening
end users and end uses for military or proliferation concerns.134
Thus, U.S. companies that wish to export HPCs are now authorized to
determine their own eligibility for a license exception.135
Prior to this change, only U.S. HPC exports to Japan were allowed
without an individual license. At that time, a violation of the Export
Administration Regulations could be identified by an export of an HPC that
occurred without a license.
Since the change, in order to prove a violation of the regulations, the
Commerce Department must demonstrate that an exporter improperly used the
Composite Theoretical Performance license exception and knew or had reason
to know that the intended end user would be engaged in military or
proliferation activities.136
Also, the revised Export Administration Regulations required that
exporters keep records and report to the Commerce Department on exports of
computers with performance levels at or above 2,000 MTOPS. In addition to
existing record-keeping requirements, the regulations added requirements
for the date of the shipment, the name and address of the end user and of
each intermediate consignee, and the end use of each exported computer.
Although these records have been reported to the Commerce Department on a
quarterly basis for the past two years, some companies have reported
inconsistent and incomplete data for resellers or distributors as end
users.137
Since U.S. HPCs obtained by countries of proliferation concern could be
used in weapons-related activities, the Congress enacted a provision in
the Fiscal Year 1998 National Defense Authorization Act138 that required
exporters to notify the Commerce Department of all proposed HPC sales over
2,000 MTOPS to Tier 3 countries. The Act gives the U.S. Government an
opportunity to assess these exports within 10 days and determine the need
for a license. Following such notification, the Departments of Commerce,
State, Defense, and Energy, and the U.S. Arms Control and Disarmament
Agency, can review a proposed HPC sale and object to its proceeding
without an export license. The Commerce Department announced regulations
implementing the law on February 3, 1998.139
A November 1998 Defense
Department study, however, identified potential problems with the 10-day
notification procedure. The study noted that the Defense Department
provides comments on export notices referred to it regarding those end
users for which the Defense Department has information. The study also
noted that:
The operating assumption is that, if there is no information on
the end-user, then the end-user is assumed to be legitimate. This is
probably true in most cases; however, there is no means to verify that
high performance computers are not making their way to end-users of
concern to the United States.140
Furthermore, the Defense Department study expressed concern that
foreign buyers might circumvent current Export Administration Regulations
provisions requiring attestation to the buyer's knowledge that the export
will have no military or proliferation end user or end use.141 By
designating a company in the United States to act on its behalf, the
foreign company could have its U.S. designee submit the HPC notification
to the Commerce Department; the U.S. designee and not the foreign buyer
would then be responsible for all compliance with notification
procedures.142 The U.S. designee would be responsible only for shipping
the item and would not take title of the item.143
Under the Export Administration Regulations, the U.S. designee could
complete the notification to its knowledge, which might be useless if the
U.S. designee is in fact ignorant of the actual end use. The Defense
Department study noted the obvious problems with this system.
The study also observed that the 10-day notification period was
insufficient to ensure that U.S. designees and foreign buyers are
providing accurate and complete information.144
Finally, the Defense Department study warned that foreign buyers of
U.S. computer technology might circumvent the notification procedure by
notifying the Commerce Department that they are purchasing a system that
is not above the 7,000 MTOPS threshold, but later upgrading the system
with processors that are below the 2,000 MTOPS level. There would be no
requirement to notify the Commerce Department of the acquisition of the
lower than 2,000 MTOPS upgrades to the previously-notified system.145
The U.S.
Government Has Conducted Only One End-Use Check for High Performance
Computers in the PRC
The Fiscal 1998 National Defense Authorization Act now requires the
Commerce Department to perform post-shipment verifications on all HPC
exports of HPCs to Tier 3 countries with performance levels over 2,000
MTOPS.146
Post-shipment verifications are important for detecting and deterring
physical diversions of HPCs, but they do not always verify the end use of
HPCs.147
The PRC traditionally has not allowed the United States to conduct
post-shipment verifications, based on claims of national sovereignty,
despite U.S. Government efforts since the early 1980s.148 This obduracy
has had little consequence for the PRC, since HPC exports have continued
to be approved and, in fact, have increased in recent years.
In June 1998, the PRC agreed with the United States to cooperate and
allow post-shipment verifications for all exports, including HPCs.149 PRC
conditions on the implementation of post-shipment verifications for HPCs,
however, render the agreement useless.150 Specifically:
· The PRC considers requests
from the U.S. Commerce Department to verify the actual end-use of a U.S.
HPC to be non-binding
· The PRC insists that any
end-use verification, if it agrees to one, be conducted by one of its
own ministries, not by U.S. representatives
· The PRC takes the view that
U.S. Embassy and Consulate commercial service personnel may not attend
an end-use verification, unless they are invited by the PRC
· The PRC argues scheduling of
any end-use verification - or indeed, whether to permit it at all - is
at the PRC's discretion
· The PRC will not permit any
end-use verification of a U.S. HPC at any time after the first six
months of the computer's arrival in the PRC
The Select Committee has reviewed the terms of the U.S.-PRC agreement
and found them wholly inadequate. The Clinton administration has, however,
advised the Select Committee that the PRC would object to making the terms
of the agreement public. As a result, the Clinton administration has
determined that no further description of the agreement may be included in
this report.
According to Iain S. Baird, Deputy Assistant Secretary of Commerce for
Export Administration within the Bureau of Export Administration,
post-shipment verifications are conducted by the PRC's Ministry of Foreign
Trade and Economic Cooperation for U.S. computers having over 2,000 MTOPS
that are exported to the PRC. He says such verifications are done in the
presence of the U.S. commercial attaché.151
Commerce reported on November 17, 1998, that no post-shipment
verifications would be performed on HPCs that were exported to the PRC
from November 18, 1997 through June 25, 1998 because the PRC/U.S.
agreement applies only prospectively from June 26.
Since June 26, the Commerce
Department reported, only one post-shipment verification has been
completed and one was pending as of November 12, 1998. Commerce also
stated that "Post shipment verifications were not done on most of the
others [HPCs] because the transactions do not conform to our arrangement
with the PRC for end use checks."152
Thus, post-shipment verifications will not be done on any HPCs exported
to the PRC prior to the agreement, nor on any HPCs shipped that are
exported in the future under the Composite Theoretical Performance license
exception (that is, those between 2,000 and 7,000 MTOPS) to civilian end
users.
According to Commerce Department Under Secretary for Export Enforcement
William Reinsch, a pending regulatory change will instruct HPC exporters
to seek end-use certificates from the PRC Government. Where PRC end-use
certificates are obtained, this regulation purportedly would allow more
post-shipment verifications to be requested consistent with the PRC-U.S.
agreement.153
Reinsch stated that the PRC has indicated that it would be willing to
issue end-use certificates. However, the PRC office in question reportedly
has a staff of five, which would severely limit the number of
post-shipment verifications it could implement.154
According to a September 1998 report from the General Accounting
Office, U.S. Government officials agreed that the manner in which
post-shipment verifications for computers traditionally have been
conducted has limited their value because they establish only the physical
presence of an HPC, not its actual use. In any event, according to
national weapons laboratory officials within the Energy Department, it is
easy to conceal how a computer is being used.155
Even when U.S. Government officials perform the post-shipment
verification, the verifying officials have received no specific computer
training and are capable of doing little more than verifying the
computer's location. It is possible to verify an HPC's use by reviewing
internal computer data, but this is costly and intrusive, and requires
sophisticated computer analysis.156
The General Accounting Office report also noted that the U.S.
Government makes limited efforts to monitor exporter and end-user
compliance with explicit conditions that are often attached to HPC export
licenses for sensitive end users. The U.S. Government relies largely on
the HPC exporters to monitor end use, and may require them or the end
users to safeguard the exports by limiting access to the computers or
inspecting computer logs and outputs.157
The end user may also be required to agree to on-site inspections, even
on short notice, by the U.S. Government or exporter. These inspections
would include review of the programs and software that are being used on
the computer, or remote electronic monitoring of the computer.158
Commerce officials stated to GAO that they may have reviewed computer
logs in the past, but do not do so anymore, and that they have not
conducted any short-notice visits. They also acknowledged that they
currently do not do any remote monitoring of HPC use anywhere and that,
ultimately, monitoring compliance with safeguards plans and their
conditions is the HPC exporter's responsibility.159
Some U.S. High
Performance Computer Exports
to the PRC Have Violated U.S.
Restrictions
During the 1990s, there have been several cases of export control
violations involving computer technology shipments to the PRC. One ongoing
case concerns the diversion of a Sun Microsystems HPC from Hong Kong to
the PRC.160
On December 26, 1996, a Hong Kong reseller for Sun Microsystems,
Automated Systems Ltd., sold an HPC to the PRC Scientific Institute, a
technical institute under the Chinese Academy of Sciences - a State
laboratory specializing in parallel and distributed processing. At some
point after the sale but before delivery, the computer was sold to
Changsha Science and Technology Institute in Changsha, Hunan Province. The
machine was delivered directly to that Institute in March 1997.161
Automated Systems of Hong Kong claimed to Sun officials in June 1997
that it had understood that the Changsha Institute was "an educational
institute in Wuhan Province providing technological studies under the
Ministry of Education." The end use there, according to Automated Systems,
was to be for "education and research studies in the college and sometimes
for application development for outside projects." Sun was recommended to
contact the end user, the Changsha Institute, for more specific end-use
information.162
The HPC sale came to the attention of the Deputy Assistant Secretary
for Export Enforcement, Frank Deliberti. He queried the U.S. Embassy in
Beijing about the Changsha Institute. Deliberti gave the information he
obtained to Sun Microsystems, which then initiated efforts to have its
computer returned.163
During the same period, the Foreign Commercial Officer at the U.S.
Embassy in Beijing consulted his contacts at the PRC's Ministry of Foreign
Trade and Economic Cooperation. The Ministry denied that the Changsha
Institute was affiliated with the PRC military.164
Subsequently, the Ministry called
the FCO to inform him that the actual buyer of the computer was an entity
called the Yuanwang Corporation, and that Sun Microsystems had been aware
of this corporation's PRC military ties. Reportedly, Yuanwang is an
entity of the Commission on Science, Technology, and Industry for National
Defense (COSTIND). So far as the PRC's Ministry of Foreign Trade and
Economic Cooperation reportedly could determine, the end-use statements
that had been provided to Sun through Automated Systems of Hong Kong were
totally fictitious. The Changsha Science and Technology Institute,
according to the Ministry, did not exist.165
The official position of the Ministry of Foreign Trade and Economic
Cooperation was that the PRC Government would not help to obtain the
return of the computer. The role of the PRC Government, the Ministry
asserted, had been merely to help two private parties rectify a
misunderstanding. In any event, the computer was returned to the United
States on November 6, 1997.166 The Commerce Department investigation
reportedly is continuing.167
A number of other violations of U.S. laws and regulations concerning
computers exported to the PRC have been investigated by the Commerce
Department:
New World Transtechnology
On December 20, 1996, New World Transtechnology of Galveston,
Texas, pled guilty to charges that it violated the export control laws and
engaged in false statements by illegally exporting controlled computers to
a nuclear equipment factory in the PRC in August 1992. The company was
also charged with attempting to illegally export an additional computer to
the PRC through Hong Kong in October 1992. The company was sentenced to
pay a $10,000 criminal fine and a $600 special assessment fee.168
Compaq Computer Corporation
On April 18, 1997, the Commerce Department imposed a $55,000
civil penalty on Compaq Computer Corporation of Houston, Texas, for
alleged violations of the Export Administration Regulations. The Commerce
Department alleged that, on three separate occasions between September 17,
1992 and June 11, 1993, Compaq exported computer equipment from the United
States to several countries, including the PRC, without obtaining required
export licenses. Compaq agreed to pay the civil penalty to settle the
allegations.169
Digital Creations
On June
12, 1997, Digital Creations Corporation of Closter, New Jersey, was
sentenced to pay an $800,000 criminal fine for violating the Export
Administration Act and Regulations in connection with exports of computers
to the PRC. Digital had previously pled guilty in December 1994 to charges
that it had violated the Export Administration Regulations by illegally
exporting a Digital Equipment Corporation computer to the PRC without
obtaining the required export license.170
Lansing Technologies Corporation
On June 17, 1997, Lansing Technologies Corporation, of
Flushing, New York, pled guilty to charges that it violated the Export
Administration Regulations in 1992 by exporting a Digital Equipment
Corporation computer vector processor and a data acquisition control
system to the PRC without obtaining the required export licenses from the
Commerce Department.171
Other serious violations of HPC export control laws and regulations
have occurred in recent years, but these concerned Russia. On July 31,
1998, for example, the Department of Justice announced that IBM East
Europe/Asia Ltd. entered a guilty plea. IBM received the maximum allowable
fine of $8.5 million for 17 counts of violating U.S. export laws through
the sale of HPCs to a Russian nuclear weapons laboratory known as
Arzamus-16. In another example, an ongoing U.S. Government investigation
of Silicon Graphics Incorporated/Convex is examining whether a violation
of law occurred in a sale of HPCs to another Russian nuclear weapons
laboratory, Chelyabinsk-70.172
High Performance Computers
at U.S.
National Weapons Laboratories
Are Targets for PRC Espionage
No other place in the world exceeds the computational power found
within the U.S. national weapons laboratories. For this reason, both the
computational power and the data it can generate have been the focus of
the PRC's and other countries' intelligence collection efforts.
The desire for access to this computing power and data, in turn, is one
of the reasons so many foreign nationals want to visit the
laboratories.
According to David Nokes, the network administrator at Los Alamos
National Laboratory, all operating systems have vulnerabilities that can
be exploited by a knowledgeable, valid user.173 Nokes also says that there
are a few solutions to issues of HPC network security. These include:
· Allowing only U.S. students
to use the networks
· Limiting physical access to
high performance computer networks at universities
· Enhancing physical security
and security education at universities174
U.S. National
Weapons Laboratories Have Failed
to Obtain Required Export Licenses
for
Foreign High Performance Computer Use
When foreign nationals use the U.S. national weapons laboratories'
HPCs, their activities should generally be considered "deemed exports."
The "deemed export" rule [15 CFR 734.2 (b) (ii)] covers those situations
in which an export-controlled technology or software-source code
information is released to a visiting foreign national, for which a
license would have been required. In such situations, an "export" is
"deemed" to have occurred.
The Select Committee is concerned that HPC system managers in the U.S.
national weapons laboratories lack an essential understanding of the
deemed export rule. This lack of understanding was substantiated by
interviews with representatives from the Department of Commerce who had no
recollection of ever having seen an application for a deemed export from
any of the U.S. national weapons laboratories.
When PRC nationals visit and use the HPCs at a U.S. national weapons
laboratory, their access should be limited to the same computing
capabilities to which the PRC itself is restricted, especially for
military uses.175 The Select Committee discovered, however, that the
laboratories do not even measure the computational power of their HPCs in
MTOPS. Moreover, many of the laboratories have difficulty in converting to
MTOPS from the units they use to measure the power of an HPC.
The Department of Commerce could
not recall a laboratory ever having sought guidance on how to compute an
HPC's MTOPS rating. Significantly, the Select Committee discovered
that a rather modest HPC (by Department of Energy standards) in a U.S.
National Laboratory used by foreign nationals had a substantially higher
MTOPS rating than the controlled threshold. No licenses, however, had ever
been obtained.
The "deemed export" rule also applies in those instances in which a PRC
national or entity accesses an HPC remotely via the Internet.
In the absence of an effective audit system, which monitors the codes
being run by the PRC user, the U.S. national weapons laboratories cannot
verify that they are in compliance with the law, or that PLA or PRC
intelligence is not using the HPCs for the design or testing of nuclear or
other weapons.
PRC Students
Have U.S. Citizen-Like Access To High Performance Computers at the
National Weapons Laboratories
The U.S. national weapons laboratories rely upon nuclear weapons test
simulation software and computers provided by the Accelerated Strategic
Computer Initiative (ASCI). Five major U.S. universities support ASCI
through the Academic Strategic Alliances Program (ASAP).
As a result, hundreds of research students and staff at these
universities have access to the HPCs used by the national weapons
laboratories for U.S. nuclear weapons research and testing. As many as 50
percent of these research students and staff are foreign nationals, some
of whom may have foreign intelligence affiliations.
Holders of Immigration and Naturalization Service "green cards" - PRC
nationals who have declared their intent to remain permanently in the U.S.
- are treated as U.S. citizens for export control purposes. They are then
given U.S. citizen-like HPC access, free to return to the PRC once their
objectives are fulfilled.
In November 1998, the Secretary of Energy issued an Action Plan that
includes a task force to review HPC usage by foreign nationals and provide
a report to the Secretary within six months. The Department of Energy is
currently preparing an implementation plan to address counterintelligence
issues identified in a July 1998 report, entitled "Mapping the Future of
the Department of Energy's Counterintelligence Program," including HPC
usage by foreign nationals.
Many Types of Computer Technology
Have
Been Made Available to the PRC
That Could Facilitate Running Programs
Of National Security Importance
One of the bases for the 1996 increase in export control thresholds was
that individual PCs were widely available on the open market in the United
States, but not able to be exported to the potentially huge PRC market.176
What was an HPC in 1993 (those capable of 195 or more MTOPS) was no longer
even considered necessary to control for weapons proliferation
concerns.177
By 1997, PCs and workstations assembled in the PRC captured
approximately 60 percent of the PRC's domestic market.178 All of these
locally-assembled computers used imported parts - over 70 percent
contained United States-produced Pentium microprocessors.179
Three of the largest manufacturers in the PRC were affiliates of IBM,
Hewlett Packard, and Compaq, with a combined market share of approximately
21 percent.180 A large share (but probably not more than 20 percent) of
the PC assembly in the PRC was done by small, independent assembly
shops.181
The largest individual producer of PCs and workstations in the PRC is
the Legend enterprise, a spin-off of the Chinese Academy of Sciences.182
This domestic computer assembly industry dovetails well with Beijing's
overall plans for economic modernization. Beijing reportedly desires an
independent PRC source of most high-technology items to avoid reliance on
foreign providers for these goods.
To participate more fully in the
PRC market, United States firms have been pressured by the PRC government
to relinquish technological advantage for short-term market opportunities.
The PRC requires that foreign firms be granted access to the PRC
market only in exchange for transferring technology that would enable the
state-run enterprises to eventually capture the home market and begin to
compete internationally.
However, the PRC's strategy of coercing technology from foreign firms
has not enabled state-run industries to close the technology gap with more
developed nations. In the context of establishing domestic production of
computers for sale in the PRC, this PRC "technology coercion" policy
appears to have worked.183 The PRC now has a growing industrial base of
small computer assemblers. For the most part, these companies are not
State-run. The technology that was "coerced" from U.S. computer
manufacturers as a cost of entering the PRC market apparently better
serves the expansion needs of small, relatively independent enterprises
and not the intended needs of central planners in Beijing.
90 percent of PRC consumers of PCs and workstations are business,
government, and educational entities, with individual purchases accounting
for only 10 percent of the PRC's PC market.184 To illustrate the size of
the individual purchaser segment of the PRC's market, it is estimated that
only 5 million individuals out of the PRC's 1.2 billion have the
expendable funds required to purchase a low-end PC in the PRC.185
Despite the limited number of individual purchasers, the actual size of
the PRC PC and workstation market was 2.18 million units in 1996; 3
million units in 1997; and 4.5 million units in 1998. It is anticipated
the PRC PC and workstation market will grow at the rate of 1.5 million to
2 million units per year through the year 2000. According to figures
provided by the Asia Technology Information Project, an independent
research foundation, non-PRC manufacturers of PCs and workstations,
including U.S. manufacturers, could expect to partake of a portion of the
almost 2 million units expected to be imported for sale in the PRC in
1998.186
The PRC Has a Limited Capability to Produce
High Performance Computers
The PRC has demonstrated the capability to produce an HPC using
U.S.-origin microprocessors over the current threshold of 7,000 MTOPS. The
PRC "unveiled" a 10,000 MTOPS HPC - the Galaxy III - in 1997 based on
Western microprocessors.
But PRC HPC application software lags farther behind world levels than
its HPC systems. Also, despite the existence of a few PRC-produced HPCs
based on Western components, the PRC cannot cost-effectively mass-produce
HPCs currently. There really is no domestic HPC industry in the PRC
today.
While it is difficult to ascertain the full measure of HPC resources
that have been made available to the PRC from all sources, available data
indicates that U.S. HPCs dominate the market in the PRC.187
Although the PRC has a large market for workstations and high-end
servers, there is a smaller market for parallel computers which is
entirely dominated by non-PRC companies such as IBM, Silicon
Graphics/Cray, and the Japanese NEC. However, there continues to be
significant market resistance to Japanese HPC products in Asia, especially
as U.S. products are beginning to have significant market penetration.188
U.S. High Performance Computer Exports
To the PRC Are Increasing Dramatically
A review of Commerce Department information regarding the total of HPC
license applications that were received for the time frame January 1, 1992
to September 23, 1997, revealed the following:
· Only one HPC export license
to Hong Kong (with a value of $300,000) was rejected
· 100 HPC export licenses to
the PRC (with a total value of $11,831,140) were rejected by
Commerce
· 37 HPC export licenses to
Hong Kong (with a total value of $55,879,177) were approved
· 23 HPC export licenses to the
PRC for HPCs within the 2,000 to 7,000 MTOPS range (with a total value
of $28,067,626) were approved
· Two of the 23 HPC export
licenses to the PRC for HPCs within the 11,000 to 12,800 MTOPS range
(with a total value of $2,550,000) were approved in
1998189
The approximate total value of the HPCs exported, of whatever
description, to both Hong Kong and the PRC, for the six-year period ending
September 23, 1997, was only $86 million.190
The nine-month period between January 1998 and September 1998, however,
saw U.S. exporters notify the Commerce Department of their intention to
export 434 HPCs (in the 2,000 to 7,000 MTOPS range) to the PRC (total
value $96,882,799).191 Nine times the number of HPCs were exported in
one-ninth the time.192
During approximately the same time frame (calendar year 1998) it is
estimated that 9,680,000 individual PCs and workstations were sold in the
PRC. The market share that U.S. exporters could reasonably expect to
benefit from was approximately 3,872,000 units, worth approximately $1.8
billion.193
Apparently, the proximate cause of U.S. computer manufacturers
aggressively lobbying for the raising and maintaining of export thresholds
above the PC level was to capture this $1.8 billion per year market
share.
The United States dominates the PRC's HPC market, but U.S. exports
clearly do not dominate the PRC's personal computer and workstation
market.194 The difference between the 460-unit, $100 million HPC market
described above, stretched over a six-year period, and the yearly 3.8
million-unit PC and workstation market, with a value of $1.8 billion, is
dramatic.
The performance levels of U.S. HPCs reported to be exported to the PRC
over the past year continued to be predominantly in lower-end machines, as
shown in the following table. For example, 77 percent of U.S. HPCs (a
total of 388 machines) have performance levels below 4,000 MTOPS.
The PRC Is Obtaining Software
From U.S.
and Domestic Sources
In June 1997, it was estimated that 96 percent of software programs
sold in the PRC were pirated versions of commercially available U.S.
programs. These programs were designed for use on PCs and workstations,
and are not considered useful for the very sophisticated programming done
on HPCs.
Some major U.S. software producers have begun contracting with PRC
programming firms. These PRC software firms are comprised of
recently-graduated PRC university students. They are attempting to write
programs in Chinese to capitalize on a huge domestic market.196
Two factors mitigate against the success of the PRC developing its
domestic programming industry.
The first factor is that street-level "software pirates" sell dozens of
U.S. computer programs at a time on one CD-ROM for a small fee (reportedly
$20). In other words, one can meet most or all of one's programming needs
in the PRC for a nominal fee. It is anticipated that it will be difficult,
if not impossible, for a domestic software industry to recoup the start up
costs associated with just one software program, let alone the dozens
needed to compete with the street level dealers.
The second factor is that these pirated U.S.-produced, English language
programs are more mature, widespread, and robust than PRC programs.197 It
is axiomatic that any new product will have "bugs in the system." It is
considered unlikely that new, unproven, and possibly weak software
programs will effectively compete with cheap, proven, and robust software
that is widely available at such nominal fees. It is conceivable that the
PRC will abandon instituting a domestic programming industry
altogether.198
Potential Methods of
Improving End-Use
Verification
According to a 1996 RAND study, there are non-intrusive and intrusive
approaches to assessing the manner in which a buyer is actually applying
dual-use technologies. Among the non-intrusive methods are:
· Memoranda of understanding
and agreements
· National technical means of
verification
· Limitations designed into the
transferred technologies
· Transparency
measures
Among the intrusive methods are:
· Inspections
· Tagging199
Tagging
Tagging is achieved by attaching an active system to the item that is
to be exported, rather than just a passive tag for identification during
an inspection. The active system would both monitor the object tagged and
communicate that information back to the United States. The RAND study
noted that in practice, this means the objects to be tagged must be
physically large systems, such as a machine-tool cell, or a major
component of some larger system, such as a turbine engine in a
helicopter.200
According to the RAND study, the tag should be capable of at least
communicating information about the item's physical location. Some sensors
may provide other kinds of information, as well. The information could be
communicated to a satellite or over a data link. Early versions of such
devices were already in use in 1996 to monitor nuclear materials and
technologies.201
These "smart" tags exploit the potential of several technologies,
according to the RAND study. They combine encryption, the Global
Positioning System, and emerging global wireless communications systems,
such as Iridium or Orbcomm. These technologies would allow the tags to
report back on the status and location of the tagged object. In principle,
such tags could report the position of an object at any given time in
order to verify limitations on their location. Such tags could also report
on the activities of a "smart" system to which they are attached. For
example, a machine-tool cell could report whether the machine had been
used to make parts resembling aircraft components.202
Such tags could have many applications in a cooperative regime. Their
application and use in a prohibited environment would be more difficult
and consequential.203
The RAND study cautioned that all sellers of a particular technology
must participate in the tagging and that this would probably also require
cooperation of the buyers. Otherwise, buyers would gravitate to untagged
items, if they were available. Attempts to conceal system location or
deviate from a pattern of cooperation would be considered evidence of a
potential failure of performance by the buyer. The study concluded that
tagging may become an important oversight method for controlling
technology transfers, but that it should never become the sole means of
oversight.204
Technical
Safeguards
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