TECHNOLOGY AND THE TYRANNY OF EXPORT CONTROLS Whisper Who Dares Also by Stuart Macdonald REVOLUTION IN MINIATURE: The History and Impact of Semiconductor Electronics (with Ernst Braun) THE TROUBLE WITH TECHNOLOGY (edited with Tom Mandeville and Don Lamberton) Technology and the Tyranny of Export Controls Whisper Who Dares Stuart Macdonald Reader in Economics, University of Queensland, Brisbane and Research Fellow, the City University, Londnn Palgrave Macmillan ISBN 978-1-349-10901-2 ISBN 978-1-349-10899-2 (eBook) DOl 10.1007/978-1-349-10899-2 © Stuart Macdonald, 1990 Softcover reprint of the hardcover 1st edition 1990 978-0-333-49374-8 All rights reserved. For information, write: Scholarly and Reference Division, St. Martin's Press, Inc., 175 Fifth Avenue, New York, N.Y. 10010 Frrst published in the United States of America in 1990 ISBN 978-0-312-04085-7 library of Congress Cataloging-in-Publication Data Macdonald, Stuart, 1946- Technology and the tyranny of export controls: whisper who dares /Stuart Macdonald. p. em. ISBN 978-0-312-04085-7 I. High technology industries-United States. 2. High technology industries. 3. Export controls. 4. Technology transfer. I. Title. HCI IO.H53M33 1990 382' .4562--<lc20 89-29463 CIP For Noel who knows, who knows what she wants, who wants to be wise Contents List of Figures IX List of Tables X Acknowledgements XI 1 Overview 1 PART ONE CAUSE 2 The Development of Export Controls 9 Two systems - perhaps three 9 The development of CoCom 11 The development of US export controls 18 3 Derring-do and Petty Politics 30 The fascination of export controls 30 The plot thins 37 The Toshiba affair 39 Petty politics 43 4 High Technology and Information 54 High technology policy 54 Characteristics of high technology 56 Information in high technology 58 5 Information and US Export Controls 64 The Bucy report and information 64 Controlling information 65 Problems in implementation 67 Control of information within the United States 70 Extension of controls 73 Implications for industrial innovation 76 US controls on information overseas 78 Success in failure 82 VII viii Contents PART TWO CONSEQUENCE 6 The Impact of Export Controls on the United 91 States Primitive logic 91 The Defense Perspective 92 Balancing the National Interest 95 Screening 106 US competitiveness in high technology 111 7 The Impact of Export Controls on the Allies 117 Suspicions 117 The official stance 117 Troubled firms 120 Compliance 128 Counting the cost 146 8 Controlling the World 155 Negotiating with friends 155 Co Com 158 The example of Australia 160 China 163 9 The Impact of Export Controls on the Soviet Bloc 167 The perceived threat 167 Soviet bloc technology 168 Technology transfer to the Soviet bloc 171 Soviet acquisition programmes 176 Export controls appropriate to the Soviet bloc 184 10 Who Wins? 193 The problem 193 The obvious solution 195 Less obvious obstacles 196 Pressure for change 199 Index 203 List of Figures 2.1 Sample page of British version of the CoCom 14 International List 2.2 Proposed organisation of CoCom Secretariat, 1983 16 3.1 Administrative responsibilities for export controls, 37 Department of Defense, 31 December 1984 3.2 Relative US/USSR technology level in deployed 49 military systems, 1985 5.1 Definition of technical data in US Export 79 Administration Regulations 6.1 Sample page of List of Denials 104 6.2 Compliance leaflet for Varian employees 107 7.1 Letter from Margaret Thatcher to Paddy Ashdown, 121 11 August 1988 7.2 Letter from Margaret Thatcher to Paddy Ashdown, 124-5 11 November 1988 7.3 Letter from IBM (UK) to leasing agents in UK, 130-1 22 December 1983 7.4 Letter from Texas Instruments Limited to UK 132 customers, May 1984 7.5 First and last pages of a telex from US Department of 135 Justice organising the arrest of Brian Butcher in Italy 7.6 US Department of Commerce Red Flag checklist 138 7.7 Export control assurance required from UK 139 customers by Control Data Limited 7.8 Export control assurance required from UK 140-1 customers by Texas Instruments Limited 7.9 Control Data checklist used in UK 144 7.10 Charges levelled by US Department of Commerce 147 at Systime in the UK 9.1 The US-USSR technology gap, 1985 170 9.2 Soviet technology acquisition programmes and 178 weapons development 9.3 VPK technology requirements satisfied, 1976-80 179 9.4 US universities targeted in Soviet acquisition 182 programme 9.5 Soviet military research projects benefiting from 185 Western technology, early 1980s IX