Removing US Export Shackles Will Increase Profits and Jobs
AMERICA'S high-technology exporters are caught in a time warp. Despite the end of the cold war and renewed emphasis on winning the international economic competition, Congress may be backing away from its plan to reform the export-control bureaucracy that costs the United States billion of dollars in lost sales while doing little to ensure that dangerous technology stays out of the hands of dictators.
Later this week both houses of Congress vote on the Export Administration Act, which was originally designed to keep our high-tech secrets out of communist hands. With few remaining communist governments, removing trade shackles ought to be as high a priority for legislators whose constituents clamor for good jobs as for the US's manufacturers.
Last year, approximately half of US high-technology exports needed government approval to leave the country. In a just-completed survey of manufacturers, nearly 1 in 3 ranked the issue as a top priority. No wonder. Countless agencies oversee 1,500 pages of regulations that have been changed 300 times in the last three years alone. Even for the simplest exports, more than two dozen different licenses can come into play.
Studies indicate that our export-control system costs upwards of $20 billion in foreign sales and an estimated 380,000 jobs. It especially hobbles the high-technology industry, the shining star of US exports, which accounts for 25 percent of overseas sales today compared with 18 percent a decade ago. Earlier this year, a Chinese customer told a major US machine tool supplier that Americans were not invited to bid on a project ``because of the difficulty in getting export licenses.'' The Chinese company said it was planning to send a delegation to Europe instead.
The high cost in jobs and profits would be worth it to protect our national security. No one wants to see critical components for weapons of mass destruction fall into the hands of Iraq's Saddam Hussein. Manufacturers support a ban on technology that could be used for military purposes to designated terrorist countries and stronger multilateral export-control regimes, while preserving the ability of the US to act alone when necessary.
But some members of Congress want to go back to the cold-war era. One proposal would give the Pentagon, with its bias in favor of restrictions, effective authority over the export-control system. It would recontrol sales of computer and telecommunications equipment that were recently liberalized. Without an American monopoly on critical technology, it is hard to see how a go-it-alone policy restricting commercial exports does anything but undercut our competitive advantage.
Take the argument over encryption software, which is designed to prevent outsiders from reading computer-generated transmissions. US intelligence wants to bar sales of the technology to many overseas users, fearing that widespread dissemination will complicate efforts to eavesdrop on international computer communications.
BUT the cat is already out of the bag. As Sen. Patty Murray (D) of Washington said earlier this year, ``It's incredible that I can go to [a discount retailer] and get Windows or Lotus, and these packages are restricted by US controls.'' She said she had recently downloaded from the easily accessible Internet a program containing the data encryption standard that is subject to US munitions export controls.
For more than 40 years, American manufacturers served on the front lines in the cold war. In the name of national security, nearly half of all commercial exports were subjected to an immense regulatory system that often hurt sales, reduced profits, and cost American jobs. With the cold war won, government policy should be encouraging, not discouraging exports. It's time to get back to the future.
* Jerry J. Jasinowski is president of the National Asssociation of Manufacturers.