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Technology Stocks : Loral Space & Communications -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (5232)	2/2/1999 3:25:00 AM
From: djane	Respond to of 10852

WSJ. Report by House Panel on China Trade Backs Curbs on Supercomputer Exports February 2, 1999 By DAVID S. CLOUD and CARLA ANNE ROBBINS Staff Reporters of THE WALL STREET JOURNAL WASHINGTON -- A special House committee on high-technology trade with China is calling for tighter controls on exports of supercomputers, greater security at U.S. nuclear weapons labs and stricter monitoring of foreign investment in defense-related industries. The classified committee report, according to U.S. officials, details a 20-year effort by China through trade and espionage to acquire U.S. nuclear secrets and other sensitive technologies. Even so, the committee's recommendations are far less sweeping than many high-tech companies feared when the panel, whose chairman is Republican Christopher Cox of California, began its work last year. The report contains information on China's acquisition from U.S. weapons labs of sensitive nuclear-design information, including critical design secrets for the most modern U.S. warhead. The Clinton administration sent its response to the panel's recommendations to Capitol Hill Monday. The tone of the bipartisan findings is remarkably nonaccusatory -- in large part because some of the worst violations occurred long before President Clinton took office and under both Democratic and Republican administrations. Mixed Reaction The administration said it agreed broadly with the committee's findings, including that China's acquisition of U.S. technology had harmed U.S. national security, but it had a mixed reaction to the report's 38 recommendations. White House spokesman David Leavy said the administration would conduct its own formal assessment of the damage. The administration, Mr. Leavy said, "welcomes the recommendations of the committee. They provide useful proposals for our common objectives." Congress seized on concerns about China acquiring U.S. technology for military purposes following news reports that two U.S. satellite makers -- Loral Space & Communications Co. and Hughes Electronics Corp. -- may have helped China improve its missiles' reliability in helping analyze the explosion of two rockets carrying U.S. satellites. Hughes and Loral deny wrongdoing. The panel's report largely refrains from specific calls for new procedures for government licensing of sensitive technologies with military uses, such as machine tools and encryption software. Indeed, the lawmakers seem at times to go out of their way to reassure U.S. business that, despite calls for tougher scrutiny of high-tech sales, they don't favor more cumbersome licensing procedures that could cost sales. Surprise Inspections In one of its toughest recommendations, the report calls for the reduction or a cutoff in sales of high-speed computers to China if Beijing refuses to accept surprise inspections to verify the computers' end users. In response to fears that China's nuclear establishment may be using the computers, Beijing agreed this past summer to allow announced, on-site inspections of computers. In its response to the Cox report, the administration warns that China would see a demand for surprise inspections as "an infringement of its sovereignty." Congress last year enacted a law that shifted licensing of commercial satellites from the Commerce Department to the State Department, which reviews sales only for their effect on national security. Several of the recommendations are aimed at ensuring that the administration implements the intent of that law, which limits the involvement of the pro-export Commerce Department. The report also calls for Congress to pass legislation that would require U.S. companies involved in "national security-related business" to notify the federal government "of any merger, acquisition, or takeover" by a foreign entity or its U.S. subsidiary. Currently, there is voluntary government notification, and the administration warned that mandatory disclosure might "chill legitimate foreign investment." To counter China's espionage efforts, the committee recommends as an urgent priority the tightening of security and counterintelligence efforts at U.S. nuclear weapons labs, including review of whether the labs should remain under Department of Energy control. Return to top of page \| Format for printing Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.