Encryption Export To Red China

CHINESE LONG MARCH & CSS ICBM

The following materials have been obtained using the Freedom of Information Act. The first document is a Feb. 1995 letter to Ron Brown seeking his assistance for a Presidential waiver for encryption technology to China written by Motorola CEO Gary Tooker. This letter was obtained from the U.S. Commerce Dept.

One suggestion that Tooker made to Brown was "Delegate to the export control officer appropriate authority for reviewing certain classes of controls, e.g., encryption export controls administered by the State Department at the behest of the National Security Agency (NSA) should NOT be referred for endless delay to the human rights bureau and myriad others in State."

The second document is a fax letter from Motorola's Dr. Richard Barth which was cc'd to various players such as George Tenet inside the White House National Security Council (NSC). This document was obtained from the White House National Security Council.

Richard Barth sought a Presidential waiver for Motorola to sell encrypted radios to China. Barth wrote "I urge you to get in writing to the State Department asap language that seeks a waiver for 'cellular, PCS and two way radio systems,' as recently agreed".

Furthermore, Barth also opened the door for additional encryption systems. Barth wrote "while we now are not yet applying for licenses for encrypted systems for satellite system positioning, we may within months be applying for such licenses for our Iridium systems."


MOTOROLA

February 2, 1995

Secretary Ron Brown
Department of Commerce
14th & Constitution Ave., NW
Washington, DC 20230

Dear Secretary Brown:

I want to reiterate my appreciation to you for including me on
the recent Presidential trade mission to India. While the trip
was quite productive for Motorola from a business standpoint, I
am also glad that I had the opportunity to witness first hand
the strong leadership you have given to the U.S. government's
advocacy on behalf of U.S. companies overseas.  Supporting U.S.
exporters is perhaps one of the most significant actions our
government can take to increase exports and thereby the number
and quality of new jobs in our economy.

For many U.S. companies, including Motorola, having the best
product at the best price is generally the way to build market
share.  In some markets, however, the added support of the
government is the critical additional factor that can put us
over the top and win new and expanded business.  You, and your
exceptional staff, have established a very positive model for
providing strong advocacy that is deeply appreciated by
industry.


I also want to take this. opportunity to raise for your
consideration two requests. First, as you may know, I am very
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business.  My Washington office has already provided John Ost
all the relevant background material supporting this request.

Corporate Offices

Secretary Ron Brown
Page Two
February 2, 1995

My second interest is in the export control system. I recognize
that you and the President have taken some bold steps in
decontrolling many items.  However, Motorola finds that it
remains seriously disadvantaged in several areas.  First, the
controls on semiconductors have not been changed to reflect the
significant liberalization of computer controls.  We thus find
ourselves in the position of being able to export high
performance computers to destinations such as China while the
controls on semiconductors deter the export of computer
components that are two generations older than the personal
computer you probably have on your desktop.

Even more critical to Motorola, however, is the system of
controlling exports of products containing encryption. I do not-
wish to get involved in the debate regarding which U.S. agency
controls these exports, but the simple fact remains that the
controls are administered in a manner that causes us serious
competitive harm.  A recent example brought to my attention
indicates that the  XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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Despite our repeated appeals to the concerned agencies, however,
Motorola is in a position of not even being able to market such
systems with any probability of getting export approval.  This
could seriously disrupt our business prospects in that important
market.  The enclosed paper briefly outlines some simple
management solutions that could radically alter industry's
perception of this problem, and I urge you to use your good
offices to rectify this problem.


Again, thank you for your continued support to Motorola.

Sincerely,

Gary Tooker

Attachment

Encryption Export Controls

Problem Statement:  The organization and implementation of the
USG's export control regime for encryption is cumbersome, slow,
unpredictable and costly.  For example, interagency referral of
licenses can take days for a license to make its way from the
State Department to the Defense Department and then on to other
agencies.  While average license processing time may appear
reasonable at about 15 days, this figure masks the numerous,
high dollar value licenses that can take three years or more to
be resolved.  And even the 15 day cycle time is far longer that
the 2 day commitment that we understand was made by the State
Department.  Taking a few administrative steps could
significantly reduce the costly burden of these delays on
industry and reduce costs to the government as well.

Proposed Solutions:  Without legislative action, the President
could direct several steps that could improve the responsiveness
of the myriad organizations that deal with export controls in
the government, for example:

Delegate to the export control officer appropriate authority for
reviewing certain classes of controls, e.g., encryption export
controls administered by the State Department at the behest of
the National Security Agency (NSA) should NOT be referred for
endless delay to the human rights bureau and myriad others in
State; and

Reallocate staff to meet the workloads, e.g., the single NSA
detailee who handles all encryption export licenses for the
State Department handles a workload approximating that dealt
with by hundreds of other export control-related employees in
other agencies.  Immediate detailing to State of professional
and support staff should be mandated to improve the licensing
cycle time for encryption exports.

In addition, improvements in the overall export control system
could take place if the following were implemented:

Co-locate all export control staff, especially the Defense,
State, Energy and Commerce staff who waste considerable time
coordinating workloads.  Co-location of these agencies would
force more rational resource management and facilitate improved
automation; and

Eliminate all unilateral controls on items that are available
from any other destination.  Such availability makes the control
ineffective and a waste of resources.



(*** transcribers note ***  hand written CC at top)

                                                    CC: GEORGE
                                                        BXXXXX
                                                        ED
MOTOROLA
FAX COVER SHEET
1350 I STREET N.W.
SUITE 400
WASHINGTON, DC  20005
OFFICE Number:  202-371-6900
FAX Number:  202-842-3578

To:      Sue Eckert                 482-3911
         Charlotte Kuepper          301-688-8183
         Julie Kavanaugh            647-4232
         George Tenet               456-9340
         Ron Lee                    301-688-4546

From:    Richard Barth
         Motorola - Washington, DC

Re:      See attached

You should receive 6 pages including this cover sheet.  If you
do not receive all the pages, please contact Shannon Ibey on 202
371-6919.

================================================================

Check appropriate POPI classification of information being sent:

Motorola General Business Information __X__
Motorola Internal Use Only _____
Motorola Confidential Proprietary _____

Pages: 6 (including cover sheet)

March 22, 1995

Note for Julie Kavanaugh
         Charlotte Knepper

Please forgive the informality of this note, but I want to move
the process along here and not stand on formalities.  As you can
see for the attached, Motorola has been trying to clarify the
policy regarding sales to China of telecom systems containing
encryption for several months now.  We currently have about $100
million worth of two way radio business tied up by the lack of a
waiver for China and face losing a market of about $500 million
in GSM infrastructure sales alone over the next five years if we
cannot sell systems that GCHQ in the UK has already approved
last summer for export from Europe.  On top of that are hundreds
of millions worth of cellular phone sales that could be lost.

You requested a brief summary of why Motorola was requesting
broad waiver authority.  First, such a waiver would not reduce
NSA's oversight over all encryption containing exports to China.
Current controls remain, only the need to notify Congress of
each sale is removed.

Second, we only request a level playing field.  This does not
now exist when our key competition, Erisson, Siemens, Alcatel,
etc., are able to sell two way radios, cellular and PCS systems
to China and we are denied that ability by current US policy.

Third, as you well know, this technology is not standing still.
While we NOW are only at risk of losing perhaps a billion worth
of sales, the future systems that may be announced in a month or
a year or more may require going back for a new waiver.  Why
waste all that time applying for waivers for that which is in
the US Government's best interest.

Finally, while we now are not yet applying for licenses for
encrypted systems for satellite system positioning, we may
within months be applying for such licenses for our Iridium
systems.

The bottom line is that getting a waiver through the system
today, as we requested on November 23, 1994, for "all commercial
cellular, PCS (personal communications systems) and other
telecommunications systemhardware and software," is realistic
and appropriate for today's markets and those in the immediate
future.  However, we are getting quite anxious about getting
this waiver through asap because of the risk of lost business, so
if this request for the broadest possible waiver will further
slow down the process, I urge you to get in writing to the State
Department asap language that seeks a waiver for "cellular, PCS
and two way radio systems," as recently agreed.  Then we can
start all over again for the additional waiver coverage...

Thanks and please call me if there are any further data I can provide.

Rich Barth
Assistant Director, International Trade Relations

cc:      Sue Eckert
         George Tenet
         Ron Lee

(***  transcriber's note ***  the following is hand written)
Charlotte/Julie

I hope this can be
moved more quickly now.

Rich