Capitol clash on bill controlling high-tech exports

An export-control bill that has Reagan administration departments at odds with each other is being held up in Washington because House and Senate conference committee members can't agree on the Defense Department's role.

The result, affecting billions in foreign sales by US high-technology firms, could be no revision this year of the Export Administration Act, under which the Commerce Department regulates exports for reasons of national security, foreign policy, and short supply.

A conference committee meeting ended in stalemate Sept. 12 after House members voted 14 to 1 against an aspect of the measure's national-security section. The deadlock came over whether the new version of the act will mandate an expanded role for the Defense Department in determining which sensitive American high-technology products can and can't be shipped to Western trading partners.

Senate conferees are said to be firm in their requirement that the expanded Defense Department role remain in the bill. House conferees have been equally firm in their opposition to it.

Industry observers initially viewed the expanded Pentagon role under the new bill as a necessary evil to be endured in order to keep provisions beneficial to exporters in the act.

Now, however, industry spokesmen are questioning whether the expanded Pentagon role may ultimately outweigh the expected gains, thus making the possibility of no agreement on a new law more attractive to business.

The current law, which expired last year but has been extended, permits Pentagon review only of license applications for goods bound for communist-bloc nations. The proposed bill would broaden Pentagon review powers, forcing the Commerce Department to share its licensing review authority even on applications for goods bound for America's Western allies.

Industry officials voice concern that Pentagon reviews will only further complicate and drag out the license-review process.

They complain that lengthy delays in licensing are reducing the competitiveness of American firms in foreign markets. They say they favor a bill that would leave it up to the White House to determine if the administration wanted an expanded role for the Pentagon in the process.

Though President Reagan has indicated he favors such an expanded role, the White House had also indicated it would prefer that that expanded role not be written into the law by Congress. This is also the preference of the Commerce Department, which has primary jurisdiction over export control matters.

Industry officials agree. "No one objects to a Defense Department role if that role is kept in perspective," says Peter McCloskey, president of the Electronic Industries Association. "The concern is that by legislatively establishing that role that it will be difficult to keep that perspective."

Pentagon officials maintain that an increasing amount of US high technology is finding its way to the Soviet Union and its allies through dummy firms based in Western Europe and elsewhere. Defense spokesmen have questioned whether Commerce is able to effectively carry out its double mandate of promoting exports on one hand while policing high-technology trade on the other.

The committee also failed to reach agreement on a measure to provide contract sanctity to US companies. The provision, proposed under the foreign policy section of the draft act, would make it more difficult for the US government to abrogate private-sector contracts on grounds that they conflicted with US foreign policy objectives.

The most cited example is the Soviet gas pipeline project in Europe, which American companies were prohibited from participating in because of Reagan administration opposition.

The joint conference committee is scheduled to meet again Sept. 18 to deal with another set of issues. It is not clear whether committee members will attempt to hammer out agreement on other issues, such as trade with South Africa and limits on shipments of nuclear-power equipment, or tackle the national-security issues again.

Other provisions of the proposed national-security section include the elimination of the need for export licenses to ship low-level technology to America's chief allies and trading partners who are members of the Coordinating Committee on Export Control (Cocom).

It also calls for the imposition of a 15-day deadline for Commerce action (with a possible 15-day extension) on license applications for shipments to Cocom-member nations.

The proposal also calls for transfer to the US Customs Service of essentially all authority to conduct overseas investigations.