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Introduction OVERVIEW An important instrument of U.S. national security and foreign policy is the set of legal controls on what can be exported to certain countries, particularly those in the Council for Mutual Economic As- sistance (CMEA, including the USSR, other Warsaw Pact nations, Viet Nam, Cuba, and Mongolia).i The controls have been put in place by the United States and other countries within the Coordinat- ing Committee for Multilateral Export Controls (CoCom, including Japan and all the member nations of the North AtIantic Treaty Organization [NATO] except Iceland). They are intended to pro- tect military advantages arising from superior technology in CoCom countries. Export controls cannot prevent Western technology from passing to CMEA countries, because some technology can be and is transferred through both illegal and legal channels (e.g., through countries acting outside of the CoCom control framework). But at a minimum, controls are a potent means of slowing the pace and raising the cost of technology transfer from CoCom to CMEA. iFor a broad examination of national security export controls and their ramifi- cations, see the Allen Report (Panel on the Impact of National Security Controls on International Technology Transfer, Committee on Science, Engineering, and Public Pol- icy, 1987~. 6

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INTROD ACTION 7 Computer technologies are prominent among controlled tech- nologies. The U.S. Department of State estimates that some 50 percent of applications to export under the CoCom control regime involve the export of computer technologies. This situation reflects the fact that computers are becoming pervasive in CoCom countries, where they are creating enormous economic as well as military ben- efits. Meanwhile, political and economic relations among countries within and between ad regions of the world are changing, stimulat- ing international technology transfer through a variety of commercial and other means. Markets for the computer products of CoCom and other non-CMEA countries are growing, and so is competition among countries to serve those markets. Technical, market, and geopolitical factors combine to make an inquiry into computer technology trends timely. The interrelated development of computer technologies and their markets poses a dilemma for policymakers, namely, how can transfer of these technologies be controlled for national security purposes with- out retarding innovation and commercial development in the field? The problem is complex and multidisciplinary, but important in- sights can be gained from an examination of how computer technol- ogy is evolving in different parts of the world. The Committee to Study International Developments in Computer Science and Tech- nology was commissioned by the Department of State to conduct such an examination, and this is its final report. The report addresses the supply of computer technology and how it is evolving. As such, it complements the efforts of other parties concerned with exports of computer technology. The most vigor- ous such efforts come from the U.S. Department of Defense (DOD) and the intelligence community, which study computer technology trends from a clemand perspective: they focus on computer tech- nology needed for U.S., CoCom, and CMEA military systems (see, for example, Technology Transfer Assessment Center tTTAC], 1988~. While demand-oriented analyses are fundamental to the CoCom con- trol effort, they present only part of the picture. ORGANIZATION OF THE REPORT The report consists of a set of individual technology assess- ments focusing on conditions in CoCom countries, an assessment of computing in CMEA countries, and a culminating presentation of

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8 GL OBA L TRENDS IN COMP UTER TE CHNOL O G Y conclusions and recommendations. The chapter organization is as follows: Computer Hardware Chapter 2 Manufacturing of Computer Systems Chapter 3 Software- Chapter 4 Computer Networks Chapter 5 Computing in CMEA Countries Chapter 6 Conclusions and Recommendations Chapter 7 The term "technology" is used to represent not only tangible products but also know-how and processes. Chapters 2 through 5 concentrate on the state of the art and anticipated developments. They are intended in part to illuminate technologies that will be- come increasingly available in or sought by non-CoCom countries during the next few years. Each of these chapters outlines technol- ogy trends, major players, potential breakthroughs, and prospects for protectability. The discussion of computers in CMEA countries in Chapter 6 concentrates on available technology; it is particularly difficult to ascertain what is under development in those countries. The report addresses the needs of two different types of readers concerned with export controls: policymakers (including government officials and business executives) and technology analysts. The ma- terial in Chapters 2 through 5 is aimed at technology analysts; a glossary is provided to explain terms and acronyms for nontechni- cal readers (see Appendix F). Chapter 6 combines technical and politicoeconomic analyses of conditions in CMEA countries, and its technical discussions are extensive. Chapter 7 should be read by everyone interested in the report's subject matter; it synthesizes and builds on the material presented in the preceding chapters. FO CUS AND [IMITATIONS The committee addressed the broad spectrum of computer tech- nologies, but focused on selected elements and trends in selected countries; selection was necessary because of the limited time and resources available to the committee. Although a broad international perspective was attempted, much of the discussion centers on trends in the United States and the USSR. Conditions are described in several countries in the Far East, Western Europe, and the CMEA bloc, especially for technologies in which those countries are partic- ularly strong. Even had greater resources been available, however,

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INTROD UCTION 9 the committee could not have overcome the fact that comprehen- sive, up-to-date, and reliable data covering ah aspects of computer science and technology in a] countries were not available to it and may not even exist. Nevertheless, the committee extended its in- quiry beyond the requested focus on advanced Western nations and CMEA countries to consider some developments in newly industri- aTizing countries; in the computer area, the conventional East-West dichotomy does not adequately reflect the dynamics involved. The committee recognized that export control policy decisions are informed by a variety of considerations. its report was designed to contribute to those decisions by illuminating what computer tech- nology trends imply for how the control effort should be directed. CROSS-CUTTING ISSUES On the basis of its technical evaluations, the committee identi- fied a number of cross-cutting issues for consideration in reassessing export controls for computer technologies. It is useful to group the issues under four broad questions: 1. How is computer technology itself evolving? 2. What is the global impact of computer science and technology as it evolves in different countries? 3. What is the intrinsic controllability of computer technology, in particularfor those elements that are valued and desired by CMEA countries? 4. What are the technological, economic, and political impacts of attempts to control exports of computer science and technology, and how should they be balanced against impacts on national security? Issues fading under each question and subsidiary questions are outlined briefly below to provide some perspective on the technical assessments and conclusions of the report. That some of the issues fad under more than one question illustrates the complexity of the problem at hand. The Evolution of Computer Technology Trends and Pace The central issue in computer science and technology is the pace of technological change. That pace reflects a combination of numer- ous and frequent incremental changes (e.g., further miniaturization of

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10 GL OBAL TRENDS IN COMP UTER TECHN~OL OG Y circuitry) and occasional breakthroughs. How can control programs keep abreast of technologies characterized by rapid innovation? What are the preconditionsfor innovation? Where is innovation most likely to occur and what are its sources ? Interdependencies Computer systems tend to be composed of many modules and subsystems that are interrelated or layered on top of each other. Some elements are more important than others in terms of the ca- pability they provide to the user and, therefore, their relevance to national security. What do interdependencies imply for the valuation of individual elements of computer technology for purposes of control strategy ? Commoditization A growing number of computer technologies have become widely available, inexpensive, and in many cases substitutable, and the trend will only accelerate. Such technologies are commonly called commodities, to underscore how easy they are to obtain. Which computer technologies should be considered commodities? Row is the pool of commodity technology changing, and at what rate? To what extent do computer technologies regarded as commodities tend to be subject to standardization, de facto or otherwise ? How floes commodi- tization affect market development and the health of the U.S. computer sector ? What does commoditization imply for controlia bility ? Stan(lards Technical standards facilitate the spread of computer technology, although they can also slow movement toward new but nonconform- ingtechnologies. How does the presence or absence of standards af- fect the rate, direction, and location of computer technology change among the various elements? How does the stanclar~l-setting pro- cess which is typically international and characterizes! by openness because standards must be published to be effective also affect those variables? How does standardization affect market development? How floes standardization affect controllability of computer technology?

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INTROD ACTION Globalization 11 Global Impact of Computer Technology Computer technology today still draws heavily on theory and products that originated in the United States, but it has become increasingly global. Availability of computer technology to for- eign countriesa key factor shaping any control effortis growing. Where do innovations tend to occur, and how is the geographic inci- dence changing? What does it mean to be a world leader in computer technology, and how sustainahie is leadership? How broadly dis- tributefd is computer technology production, and where are the major centers of production? How has glo~oalization shaped concerns about U.~. computer competitiveness, and what do these concerns imply for controls? In view of glo~oalization, what new challenges in foreign relations emerge that impinge on control efforts? -a rim Ab sorb ability -an The value of computer technology to a country depends on how easily and effectively it can be absorbed. How easily and effectively has computer technology been absorbed into CMEA economies for civilian and military use? What is the linkage between civilian and military use of computer technology, and on what does it dNepend? What are the prerequisites for effective use of computer technology, and to what degree do they exist in CMEA countries? What does absorba~oility imply for controls? Conditions in CMEA Countries The CMEA countries are the principal targets of existing export controls. What are the indigenous computer capabilities of CMEA countries? How are those capabilities likely to change? What has been the history of computer technology transfer from CoCom to CMEA nations? How have export controls affecter! the development of computer science and technology in CMEA countries? Military Importance Computers have made and will continue to make major contribu- tions to national security, sometimes through commercially available technology and often through special systems specific to military applications. Tow close are military and civilian functionality for

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12 GL OBAL TRENDS IN COMP UTER TECHNOL OG Y computer technologies? How easily can civilian applications be con- verted to military ones? How does purely civilian development and use of computer technology affect military capabilities? What is the impact of the separation of military and commercial technology de- velopment on the U.S. computer industry in particular and on the development of computer technology overall? Intrinsic Controllability Protectability Technologies chider in their intrinsic amenability to control ef- forts. What are the factors that make technology difficult or easy to control? How do these factors apply to different computer-related technologies? Bow do computer technology trends affect the control- [abiiity of these technologies? Interdependencies The different pieces of a computer system vary in the ease with which they can be controlled. Are there a few pieces that, if con- trolled carefully, would in effect result in control over whole computer systems? How do computer technology interdependencies affect mar- ket structure and the availability of computer technology to foreign countries? Have the breadth and complexity of computer technology advanced so milch that they militate against a broad-based control system ? Transfer Mechanisms The global spread of computer technology is achieved by many means, of which exports are only one. How important a means of technology transfer are exports? Should other transfer mechanisms be a source of equal or even greater concern? Impacts of Controls Definitions The rapid pace of technological change poses problems for the export control process. Control programs must identify and define what is and is not subject to controls. Given that administration and enforcement would benefitirom precise definitions, how can computer

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INTROD ACTION 13 technologies be cleaned wit ~ sufficient flexibility to reject changes in technical qualities and availability? How can current technologies be distinguished from emerging technologies for purposes of control? Military Importance Export controls are intended to help keep militarily significant technologies from the West's adversaries. Have controls succeeded in meeting that goal? How easily can the military criticality of computer technology be identified? How much dfo computer technologies vary in their relevance to national security, especially from the perspective of military criticality? Competitiveness Controls are both meaningful and controversial today because the United States has technologies worth protecting, technologies that people in other countries want to obtain. The ability of this country to continue to generate such technologies depends on the competitiveness of the U.S. computer sector, which in turn depends on many other factors. How do controls Allot the ability of U.S. computer companies to compete in world markets? Do controls vary in their impact on the U.S. computer sector? How can the interests of national security and industrial health he balanced most effectively in the area of export controls? *** The committee makes no pretense of answering ah of the above questions. In the course of its report, the committee addresses most of the above issues to varying clegrees. Some are raised in the tech- nology assessment chapters. Others, building on deliberations of the committee about the report as a whole, are addressed primarily in the conclusions in Chapter 7. Subsumed in much of the discussion is concern about the competitiveness of the U.S. computer sector and the possibility that some approaches to export control are more harmful to competitiveness than others. This was a strong concern within the committee, and it is one that cads for further, explicit study.