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U.S. Controls Hamper Trade With Allies

WASHINGTON—The Japanese buy infrared, optical lasers from the American firm of Spectra-Physics for the cutting, welding and heat treating of various manufactured products. But each time any of its lasers need servicing or spare parts, Spectra-Physics has to navigate the slow and complex U.S. export licensing procedure that was created for another purpose, namely, to ensure that certain types of advanced technology do not pass to the Soviet Union and its allies. Although the San Jose-based

By | February 9, 1987

WASHINGTON—The Japanese buy infrared, optical lasers from the American firm of Spectra-Physics for the cutting, welding and heat treating of various manufactured products. But each time any of its lasers need servicing or spare parts, Spectra-Physics has to navigate the slow and complex U.S. export licensing procedure that was created for another purpose, namely, to ensure that certain types of advanced technology do not pass to the Soviet Union and its allies.

Although the San Jose-based company usually manages to satisfy its customers, said President Herbert Dwight Jr., the export controls have hurt its relationship with some clients and cost it additional sales in Japan and throughout Europe. "I support the need to deny the Soviets access to critical technology," said Dwight, an electrical engineer who founded the company in 1961. "But by doing it unilaterally we're shooting ourselves in the foot. And in the process we're restricting trade with our Western allies."

Last month a panel of the U.S. National Academy of Sciences concluded that the present export controls are not working as they were meant to because they "fail to promote both military security and economic vitality." The panel, on which Dwight served, said small and medium businesses (SpectraPhysics had annual sales last year of $220 million and employs 2,500 people) have been particularly hard-hit because their size makes them less able to invest the resources needed to cope with the regulations and because the process takes longer and is more cumbersome for smaller firms.

The report recommended placing greater emphasis on an organization of 16 Western nations (the Coordinating Committee on Multilateral Export Controls, known as CoCom) to achieve greater uniformity in what items are proscribed and how licenses will be granted. Within the United States, it proposed a larger role for the Department of Commerce and said the ascendence of the Defense Department during the Reagan administration has tipped the balance toward military concerns in making decisions about trade.

"The present system is an irritation to our allies," Lew Allen Jr., director of the Jet Propulsion Laboratory in Pasadena, Calif., and chairman of the 21-member panel, declared at apress conference here. "It discourages our allies' use of U.S. components."

A separate study commissioned by the panel estimated that the current controls have cost American firms $9.3 billion in lost sales, reduced R&D spending and administrative costs, and resulted in 188,000 fewer jobs. About 40 percent—$62 billion—of the $162 billion in nonmilitary manufactured goods that were exported in 1985 were shipped under a license that required prior approval.

The controls, the report concluded, are most useful when applied to a narrow range of products that can be adapted readily to military uses. On the other hand, panelists noted, controls are imposed needlessly on low-technology items, such as personal computers, that are widely available elsewhere.

The panel, formed by the Committee on Science, Engineering and Public Policy within the national academies of sciences and engineering and the Institute of Medicine, was asked to examine the role that commerce plays in the international transfer of technology. It contained several members from the military intelligence community—Allen and another member, Bobby Inman, are former directors of the National Security Agency, and Melvin Laird is a former secretary of defense—as well as from business and academia.

Despite that diversity, the Defense Department cut its contribution in half and withdrew prematurely from participation in the 18-month study, which was funded by several government agencies, professional and industrial trade associations and foundations.

The panel sees its report as one element in a growing movement to encourage the Reagan administration to revise its regulatory procedures, said panelist Tom Christiansen, manager of international trade relations for Hewlett Packard. Such internal changes, he said, are preferable to tackling the problem legislatively as one small part of the larger trade issue being debated by Congress.

A host of trade associations are working in concert to achieve such changes. And they see the recent decision to lift controls on selling oil and gas drilling equipment to the Soviet Union as a sign that the balance is shifting in their favor.

"In the end," observed Howard Lewis, assistant vice president for the National Association of Manufacturers, "it's going to take some awareness within the administration that we've setup a duplicative process within DOD and Commerce for licensing exports. And that's just crazy."

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