Export Controls:

Implementation of the 1998 Legislative Mandate for High Performance Computers

T-NSIAD-00-53: Published: Oct 28, 1999. Publicly Released: Oct 28, 1999.

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Pursuant to a congressional request, GAO discussed the export of high performance computers to countries of concern that might use the computers for military or nuclear proliferation purposes, focusing on whether: (1) exporters' notifications to the Department of Commerce of proposed sales of high performance computers to countries of concern have resulted in any license applications and what action was taken on these licenses; and (2) Commerce is verifying the use of high performance computers after their export to these countries.

GAO noted that: (1) most of the 938 proposed exports of high performance computers to civilian end users in countries of concern from February 3, 1998, when procedures implementing the 1998 authorization act became effective, to March 19, 1999, did not require a license; (2) the agencies that reviewed the exporters' proposals--the Departments of Commerce, Energy, Defense, and State and, until March 1999, the Arms Control and Disarmament Agency--allowed 828 proposed high performance computer exports to continue without a license, but they required license applications for 101 proposed exports; (3) nine export proposals were classified "incomplete" and returned to the exporter; (4) the majority of the agencies' objections to the 101 proposed exports were based on concerns that the proposed end users of the computers might have been involved in military or proliferation-related activities; (5) of the 101 license applications required, 16 were approved and 6 were denied; (6) the remaining 79 were returned to the exporters without action, which essentially blocks the proposed export; (7) licenses that were approved had additional conditions placed on the reexport or end use of the computers; (8) the majority of these applications involved China, India, and Israel; (9) licenses were required in nine cases where the end user had previously received computers without a license before the 1998 National Defense Authorization Act was implemented; (10) the Act contains no time limit for the completion of post-shipment verifications; (11) Commerce stated that all 104 post-shipment verifications were favorable, that is, the computer had been seen during an on-site visit and nothing was inconsistent with the license or license exceptions; (12) however, a verification conducted by Commerce but not yet completed detected the possible diversion of two computers to a military end user in apparent violation of U.S. export control regulations; (13) Commerce is investigating these diversions; (14) of the 286 high performance computer exports where post-shipment verifications had not been completed, almost two-thirds involve exports to China; and (15) according to Commerce, the verifications have not been done because China's policy prior to June 1998 did not permit post-shipment verifications, or the exports did not meet requirements agreed upon in a June 1998 memorandum of understanding between Commerce and China's Ministry of Foreign Trade and Economic Cooperation.

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