High-tech's task: boosting security, staying competitive
Boston — When spies steal valuable technology from American companies, who's to blame?
This fall Sen. Daniel P. Moynihan bemoaned the sinking of the 1979 SALT II treaty by spies who gave the USSR secrets to US satellites that would verify compliance.
But he didn't spend all his wrath on the two young Americans convicted of selling the information. Equal venom was reserved for the TRW corporation, which , one of the spies said, had such lax security that a special piece of equipment intended for destroying codes was used to mix drinks.
On the CBS news magazine ''60 Minutes,'' the New York Democrat called the responsibility of TRW for the lost secrets ''massive'' and added that he didn't see how the US government could ''ever again give a security-sensitive contract to TRW.''
For American high-technology firms, already encountering a cooler economic climate, the prospect of such publicity is chilling. Should they commit critical time and energy to security in an industry known for its razor-sharp competition? Should they carefully watch their exports to keep them from falling into the wrong hands?
''Companies may be concerned about national security, but in this kind of economy they're going to think of their own profits and shareholders first,'' answers Sanford Sherizen, a professor of criminology at Boston University who also acts as a security consultant to corporations.
''I'm not saying they're going to sell out,'' he adds. ''I don't think that's the case. What will happen, however, is that they will balance what will be their immediate needs, their balance sheet, vs. some of the ifs, ands, and maybes these pesky people from Washington and these paranoid people from their security staffs keep raising.''
The problem is wider than just sloppy security, Professor Sherizen says. ''Many companies, including those with enlightened chief executive officers, are always running into the problem, 'How do you have creativity and meet business competition at the same time you protect what needs to be protected?' And in an information age, what you need to protect is information.''
When technologies are strictly military in nature, the need for security seems obvious. But today more and more high-tech is for ''dual use,'' in the living room as well as the military arsenal.
Defining just what is strategically valuable technology is a point on which industry leaders and Washington bureaucrats don't always agree. Leaders of many firms and their trade associations argue that export controls on technology run the risk of restricting US markets overseas and stunting research at home with their strictures on export of technology and technical data.
''Obviously, the electronics industry does not want to jeopardize the safety and independence of the United States by promiscuously exporting technology that could play a decisive role in shifting the balance of strategic power,'' says William R. Thurston, president and chief executive officer of GenRad Inc. of Waltham, Mass., and chairman of the American Electronics Association (AEA). But he points out that many Western allies, who are also industrial competitors, have adopted much less stringent controls on exports. The Eastern bloc ''can often buy from our allies the technology our own government prohibits us from selling.''
''Moreover, our allies are thus building up their domestic industries, making them stronger competitors in the world markets,'' he says. ''This obviously works against us in the long run.''
The AEA has joined with four other high-tech trade associations to call for a better defined list of technologies restricted by the Defense Department's Militarily Critical Technologies List (MCTL). These form part of the Export Administration Act, the principal check on dual-use exports, which is administered by the Commerce Department.
''Once a technology is on the list, it is administered rather blindly,'' says Franklin Lindsay, a former executive at Itek Corporation in Lexington, Mass., who studied export controls as part of a National Academy of Science panel. The panel's report, released this fall, recommended ''a drastic streamlining of the MCTL by reducing its overall size to concentrate on technologies that are truly critical to national security.''
''There's been no purging of the list,'' Mr. Lindsay explains. ''Once something's on, it's pretty hard to get off. It puts (the Commerce Department) in an awful spot. It's hard to administer without being an expert on the technologies involved.''
''The rules fall hopelessly out of date quickly and can be very difficult to understand and follow,'' adds Don Sackman, a Boston-area export consultant who chairs the Computer Systems Technical Advisory Committee, a group with members from both industry and government. Smaller firms that may not have heard of the rules until they decide to export are often puzzled.
High-tech export regulations are already a bottleneck, Mr. Sackman says. ''And it's probably going to get much worse.''
That forecast is seconded by Arthur T. Downey, a Washington-based lawyer who follows export control and high-tech trade. The US is more likely to step up, rather than scale down, its regulation of high-technology trade, he says. Exporters, he told a National Association of Manufacturers meeting in Boston in December, can expect ''much greater control of transfer of technology, including West-West'' in the year ahead. This could mean ''more headaches for some'' businesses, he said.
The next step, many industry officials say, is to get the NATO allies and Japan to agree on similar controls through COCOM, an informal group of 15 countries set up in 1949 to monitor exports to the USSR.
Meanwhile, government officials watching for illegal exports argue that companies should have no trouble with export regulations if they learn the rules. Certain technologies must have licenses to be exported to a long list of embargoed nations (including the Warsaw Pact countries and others like Libya, Iran, and Iraq). If questionable, shipments are detained. If in violation, they are seized and the exporter may be fined.
''Manufacturers know, or they should know, that they should have their ducks all lined up,'' says US Customs special agent Phillip Brady in Boston. ''Even on a new product, they can get license advice from the government first.'' After more than 300 detentions and 76 seizures at Boston's Logan International Airport in 1982, agent Brady says, the word is getting around to high-tech firms that the government means business.
Even when companies send technology legally to the Soviet Union the situation can end in misery, warns FBI spokesman Lyle Theisen in Washington. ''US companies have been duped in the past by the Soviets. They'll ask for all the information on a company's product as though they are interested in buying it. Then they say, 'No thanks.' Three years down the road they have it themselves. France, West Germany, and England are realizing this has happened to them, too.''
Illegal diversions, or second-party sales, are difficult for the government or manufacturer to monitor. West Germany, Canada, and Japan are favorite locations from which ''front'' companies reship legally bought US technology to Soviet-bloc countries.