Encryption Export To Red China
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 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXX DATA WITH HELD BY U.S. COMMERCE DEPT. XXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 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 XXXXXXXXXXXX DATA WITH HELD BY U.S. COMMERCE DEPT. XXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 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