NSA FAILURES



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MOTOROLA

NOVEMBER 23, 1994

Theodore McNamara
Assistant Secretary of State
Bureau of Political-Military Affairs
Department of State
2201 C Street, N.W.
Washington, DC  20520

Dear Mr. McNamara:

This is to request that your office initiate action to obtain a
waiver from requirement for individual export license
notifications to Congress for wireless mobile communications
systems containing encryption for China.  Such a waiver was
issued by the President in September of this year for civilian
satellite systems and encrypted products for use by American
firms operating in China.

The commercial/consumer telecommunications industry has become a
truly global arena, and China represents a large potential
market.  The major suppliers of wireless systems, offering
comparable or identical technologies, are engaged in a constant
struggle to capture and retain market share.  Currently, US
companies are at a significant competitive disadvantage in the
marketing and selling of digital communications systems with
encryption in China because our competitors are allowed to
market and sell such systems while US manufacturers are
prohibited from doing so.

The cellular phone market highlights the problem that also
exists for other telecommunications providers.  European firms,
including Nokia, Ericsson, Alcatel and Siemens, have for a
number of months been able to market and sell GSM cellular
systems with A5-2 encryption in China as a result of a decision
taken by the UK intelligence agency, GCHQ.  I understand that
our National Security Agency is aware of this change in GCHQ's
position and would support our request for a change in US
requirements for export licenses for China.  The NSA has agreed
that there should be a "level playing field" in regard to China
and would concur with allowing US firms to supply A5-2 GSM
systems to that market.

All such export transactions in China involving encryption would
continue to be subject to the usual strict compliance
requirements of the State Department's ITAR regulations, and NSA
would continue their participation in the license review
process.  The only change we are requesting is for the
requirement for Congressional notification for each and every
export of these technologies.

We request waiver authority for "all commercial cellular, PCS
(personal communications systems) and other telecommunications
system hardware and software."

Please let me know if I can provide further information on this
subject.  Because of the competitive disadvantage suffered by
Motorola under the current export control constraints, I request
your urgent attention to this matter.

Sincerely,

Richard C. Barth, PhD.
Assistant Director, International Trade Relations

cc:      Assistant Secretary Dan Tarullo
         Deputy Assistant Secretary Martha Harris
         Lou Giles
         Bill Clements
         Will Lowell
         Karen Hopkinson
         Ray Mislock




UNITED STATES DEPARTMENT OF STATE

ASSISTANT SECRETARY OF STATE
FOR POLITICAL-MILITARY AFFAIRS

WASHINGTON, D.C.  20520

DECEMBER 2, 1994

Dr. Richard C. Barth
Assistant Director, International Trade Relations
Government Relations Division
Motorola
1350 I Street, N.W., Suite 400
Washington, DC  2005-3305

Dear Dr. Barth:

I am replying to your letter of November 23, in which you
requested that my office initiate action to obtain a waiver of
the requirement for individual export license notifications to
Congress for exports to China of wireless mobile communications
systems containing encryption.

As you know, there are important issues that must be considered
carefully, in light of the post-Tiananmen sanctions.  The
President recently renewed the Administration's commitment to
these sanctions when he de-linked MFN and human rights issues.
Government policies regarding exports of US Munitions List items
are covered by these Congressionally mandated sanctions.  We
shall of course take into account the new information you have
provided regarding the recent decision in Europe to allow the
export of A5-2 encrypted GSM cellular systems as we continue to
review our policies toward China.

We have begun consulting within State and with other concerned
agencies on various aspects of this issue.  We may need to
contact you for additional information as we continue these
consultations.

If you wish to have further discussions on the issue, I suggest
that you contact Dr. Martha Harris, the Deputy Assistant
Secretary of State who is directly responsible for our work in
this area.  Dr. Harris can be contacted here in the Bureau of
Political-Military affairs at (202) 647-6977 (FAX: (202)
647-4232).  Alternatively, you may contact Cesare Rosati, the
action officer in the Bureau for encryption policy, at (202)
647-0397 (FAX:  (202) 647-4232).

Sincerely,

Thomas E. McNamara







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