SOVIET CLANDESTINE COLLECTION OF EMBARGOED TECHNOLOGY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83M00171R001200080005-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 33
• Document Creation Date: December 19, 2016
• Document Release Date: November 30, 2001
• Sequence Number: 5
• Publication Date: December 27, 1976
• Content Type: NOTES

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. INTELLIGENCE COMMUNITY STAFF
DOC Declassification/Release
Instructions on FiOTE FOR: Chief, OPEI/HRD
Chief, OPEI/PAID
SUBJECT : Soviet Clandestine Collection of
Embargoed Technology
1. I would like PAID and HRD jointly to develop
a response to the attached letter on the above
subject -- by 7 January 1977, if possible.
2. Also, prepare a longer-term plan for
Community examination and handling of the problem.
Such a plan would necessarily involve production
offices such as OER and key collectors, principally
DDO. We might usefully task the CCPC on this
effort.
"N Review Completed"
Attachment:
Ltr fm Gorog to DCI dtd 12/21/76,
ER 76-4525
ACTION
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r'a~ Jr~ 197t
RtO7f -1 c e
D/DCI/I
27
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Ch. Sj2L riff
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When circled - cy has been
furnished.
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Routing Slip
ACTION
INFO.
ACTION
INFO.
1
DCI
11
LC
2
DDCI
X
12
IG
3
S/MC
13
Compt
4
DDS&T
14
Asst/DCI
5
DDI
X
15
AO/DCI
6
DDM&S
16
Ex/Sec
DDO
17
8
D/DCI/IC
X
18
D/DCI/NICE
X
19
10
GC
20
Please develop response.
DCI/RD 4x
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EXECUTIVE OFFICE OF THE PRESIDENT
COUNCIL ON INTERNATIONAL ECONOMIC POLICY
WASHINGTON, D. C. 20500
December 21, 1976
Dear George:
For the past several years the Council on International
Economic Policy has addressed the issue of technology
transfer to the Soviet Union. One of our main efforts
was a study of computer exports to Communist countries,
a project in which CIA was a principal and valuable
participant. As a consequence of that study, the export
to the USSR of technology, integrated circuit equipment,
and computer manufacturing know-how was precluded.
The policy is specified in National Security Decision
Memorandum 247.
One of the issues that still concerns this office is
the Soviet program to covertly obtain those devices and
techniques explicitly embargoed for export understanding
policy. CIEP has worked with CIA to forestall attempted
clandestine acquisition by the USSR, but this works
only when adequate and timely information is available.
It appears to CIEP that attempted acquisitions coming
about by espionage and covert trade are discovered
largely as a by-product of existing collection efforts.
To ensure the carrying out of NSDM 247, I believe it
would be helpful if CIA's collection efforts could
address the issue of clandestine acquisition of embargoed
know-how and manfacturing equipment. It would be
even better if positive steps could be taken to inter-
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I very much appreciate any help CIA can give us.
liam F. Gorog
The Honorable George Bush
Director of Central Intelligence Agency
Washington, D. C. 20505
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SECRET - GDS
National Security Decision Memorandum 247
X r~
~3'c;?4'S '__iv
Council on International Economic Policy Decision Memorandum 22
The Secretary of the Treasury
The Secretary of Defense
The Secretary of Commerce
The Chairman, U. S. Atomic Energy Commission
The Director of Central. Intelligence
The Deputy Secretary of State
The Director, National Security Agency
The Director, National Science Foundation
SUBJECT: U. S. Policy on the Export of Computers to
Communist Countries
The President has reviewed the findings and recommendations of the
interagency study (CIEPSM 25) and has decided that:
1. The power of computers to be exported to Communist countries
under the present "easy access" procedure shall be raised from
its present level of a Processing Data Rate (PDR) of 8 million bits
per second to 32 million bits per second, to be designated as the
limit of the "Special Administrative Exception" procedure (thus ending
the easy access terminology). The conditions of sale are specified in
the attachment. Exports of computers exceeding this power shall be
reviewed on a case-by-case basis and strictly limited to demonstrably
peaceful applications.
2. The export of completed hardware for use as part of computer systems
.produced by Communist countries shall be restricted in number,
performance, and presale conditions as specified in the attachment.
Electromechanical peripheral equipment shall be decontrolled; spares
for the equipment shall also be decontrolled, except where otherwise
embargoed. .
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SECRET- GDS 2
3. The export or transfer of computer technology, production facilities,
specialized programs and comprehensive programming services shall
continue to be restricted. These restraints shall include those placed
on the means to design, develop, and produce computers, peripheral
storage devices and storage media, displays, high speed memories,
and electronic components. The permitted levels for the sale of
production technology for magnetic peripherals and final system
configuration are specified in the attachment. Technology uniquely
related to electromechanical peripheral equipment shall be decontrolled,
except where such technology is otherwise embargoed.
4. The differential practiced against the People's Republic of China in
computer exports shall be removed so that export restrictions against
the PRC shall be identical to those applied to East European countries
and the Soviet Union.
The President has directed the further study of technical and administrative-
issues relating, in particular, to safeguard procedures and the means to
control the export of technical information, training services, and software.
The purpose of these studies will be to determine what measures are
effective and economically feasible so that export restraints might then be
appropriately modified.
The President believes that a reduction in the administrative burden
associated with processing license applications for computer exports is
needed. Accordingly, he has directed that arrangements be worked out
between the Department of Commerce and other Departments to simplify
the administrative procedures for processing license applications for
computers and associated equipment. The Department. of Commerce shall
also continue its effort to improve its internal procedures for reviewing
computer license applications.
The President has directed the preparation of a comprehensive U. S. position
for the 1974 COCOM computer list review, including a determination of those
parameters left unspecified in the attachment.. This effort shall be conducted
by the Economic Defense Advisory Committee and the staffs of the council
on International Economic Policy and the National Security Council.
Attachment
Henry A. Kissinger
~~tLi.:1 X1'11, I'1.aniaan
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DEFINITIONS OF TERMS
I - Computer Equipment Performance Parameters
1 - Central. Processing Units
a - Processing Data Rate
b - Internal Memory Capacity
Peripheral Memory Devices Other Than
Magnetic Tape
a - Peripheral Performance Factor
(Restatement of comparison factor)
7 or 9 track, 1/2 inch tape
Effective Bit Transfer Rate
c - Number of Magnetic Tape Peripherals
4 Remote Communications (Terminal Devices)
a - Total Effe ;tive Bit Transfer Rate
IL-1565 Reference
IL-1565 I IL-1565 Not,
(d)
4 (b)
1)
3)
NA 1
2)
3)
4) iv)
4) ii)
4) iii)
4) iv)
4) iv)
4) .iii)
NA
4) iii)
4) iii)
4) i)
4) i )
PPF = Y
(average access time in seconds)-572x103
b - Effective Bit Transfer Rate
c - Memory Capacity
Magnetic Tape Peripherals
a - Longitudinal Bit Packing Density for
II.- Special Administrative Exception
Exports of computer systems below the given performance levels
would be autornatically approved 28 days after submission to COCOM for
review provided (1) the individual governments had assured COCOM that
the end-use/end-user conditions were satisfied; (2) that the seller would
visit (and' report on the continuing end-use) the computer facility monthly
(quarterly for lower performance computers in this range); and (3) the
individual government submit a signed statement from the importing
agency or end-user providing assurance of peaceful end-use, the right
of access to the computer facility, and the assumption of the responsibility
to 'report any significant change to the -facts presented.
III -Pre-Sale End-Use/End-User Information
Level I - The present requirement for the purchaser or end-user
to provide sufficient information to the licensing government to permit
assessment of the transaction. In the COCOM International List, this
requirement is stated as permitting government to export the specified
equipment provided that:
The *Government of the exporting country has assured itself
that the equipment is primarily used in non-strategic applications;
The Government of the exporting country is reasonably satisfied
.that the equipment will be used primarily for the specific non-
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Memor Capacity in million of bits
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strategic applications for which the export would be approved
and that the number, type and characteristics of such equipment
are normal for the approved use..
In addition, U. S. Export Control Regulations require the purchaser or
end-user to sign a statement (Form FC-842) agreeing (1) to report in
the future any material and substantive changes in the facts presented
in the export request; and (2) not to dispose of the exported equipment
without prior written approval of the Department of Commerce.
Level Ia - A modification of the present end-use/end-user conditions
when considering sales of production quantities of products and for the
disposition of products produced with Western licensed production
technology to provide for post- facto reporting of ultimate end-use/
end-user information. This modification is necessary in many instances
since the original shipments are made to a Communist plant under a
general assurance of non-strategic use and only at the time of shipment
to the ultimate destination, can specific end-use/end-user be provided
to the licensing government (see the present ad hoc procedures for
handling OEM exports).
Level II - The present U. S. requirement for the purchaser or
end-user to provide more complete and detailed end-use/end-user infor-
mation for assessing requests for exports under the exceptions procedure.
(see the ACEP Interpretation 1). Although there is no formal require-
ment in COCOM to provide this additional information, the UK has
agreed on a bilateral basis to provide this information for their exceptional
cases.
Level Ha - This is a new proposal which requires, in addition to
the information provided in II above, the submission to COCOM by the
licensing government of a signed statement by the Communist importing
agency or end-user providing assurance of peaceful end-use, the right
of access to the computer facility and the assumption of the responsibility
to report any significant change to the facts presented (see Form FC-842).
Level IIb - A modification of the end-use/end-user conditions of II
above for Communist produced computers using equipment imported
from the West or produced from Western. production technology. Also
.included is a signed statement from the importing agency or production
facility providing assurances of peaceful end-use, the right of access
to the production facility and the assumption of the responsibilities
to report any significant change to the facts presented.
IV.-Post-Sale Safeguards
Level I
A - The end-user granting. Western representatives of the
vendor the right of free access to the computer facility
and providing information on the utilization.of the computer.
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B - Monthly visits (quarterly for lower performance computers
in this range) by Western representatives of the vendor
to assess that. the computer is still being used for the
approved purposes and that it has not been moved from
the authorized location.
C - The vendor submitting reports on the results of their
periodic visits to the appropriate licensing authorities.
V - Sale of Production Technology
Exports of technology, including transfer of skills and data, necessary
for fabrication, assembly and check-out of equipment of performance
given in the Table under Sale of Production Technology are permitted
provided certain conditions* are satisfied. (Design technology and
technology to produce embargoed or specially designed tools and test
equipment are embargoed.)
A - Technology for the manufacture of electromechanical
peripherals excluding technology for electronic logic
and memory elements.
B . Technology for the manufacture of magnetic tape transport
drive mechanisms excluding technology for tape capstan
drive and/or clamping mechanism, magnetic heads and
tape.
C - Technology for the manufacture of magnetic disc drive
mechanisms excluding technology for magnetic heads,
servos and magnetic surfaces.
m Item IL 1565, Note 3 and Statement of Understanding thereto as may
be modified to reflect decisions on options recommended in this study.
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or Release 2006/1
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1200080V
05-1
",hlc.of Pormitterl
Central
PerI
heral Memory
Remote
t're-Sale
t r,?ls (See following
Processing
Devic
es other than
Magnetic Tape
Comm.
End-Use
Nominal
S, st(:::s `
ages.for definition
Units
Magn
etic Tape
Peripherals
TE13TR
End-Use
Post-Sale
Supported
f terms)
PDR
Memo r
PPI
Trans.
Total
Packing
Trans Number
b/s
Condition
Safeguards
Per Year
L
A /s
10bits
RatelO
Ca . 10
Density
Rate
bits/in.
10b/s-
ale of Computer System
s
Administrative
. Exception
TBD*
TBD
TBD
1.5
TBD
TBD
1. 5 12
TBD
I
none
NA?.=*
. Special Admin-
istrative Exception
32
4. 72
TBD
TBD
TBD
---
1. 5 12
9600
I Ia
I
N A
ale of Production
)tv. of Products
Electro-Mechanical
Peripherals
--
---
---
----
----
---
--- ----
---
none
none
NA
Magnetic Peripherals
--
---
32
1. 5
2 3 5
1600
0. 96 ----
---
TBD
none
Permitted final
system configuration
8
Z. 36
32
1. 5
950
---
1. 5 6
2400
TBD
none
TBD
,ale of Production
7echnoloev
Manuf. Electro-Mech.
Peripherals
--
---
---
----
----
----
--- ----
---
none
none
NA
ti.anuf, Magnetic
Peripherals
--
---
8
1 . 5
60
1600
0. 9 6 - - -
- --
Ia
none
Permitted Final
,.~
System Configuration
8
2. 36
3 2
1. 5
950
- --
1. 5 6
2400
I Ib
none
200
To Be Determined
Not Applicable.
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NATIONAL SECURITY COUNCIL
WASHINGTON. D.C. 20500
SRJ i GDS
MEMO FOR
SUBJECT:
October 12, 1976
The Secretary of State
The Secretary of the Trca.eury
.The Secretary of Defense
The Secretary of Commerce
The Administrator, Energy Research and
Development Administration
Exception'to National Security Doci aion
Memoaandurn 24.7/Council. on"Int;crriatigrzal
Economic Policy Decision Memorandum ZZ
11190. P.
Cato" from the Chairman of the Exp`t r717 n stration Review
Bo.-rd, regarding sale of a Control Data Corporation computer system.
to the People's Republic of China (PRC) and, has decided that:
--~ The proposed' computer sale is approved subject to the conditions
of Annexes I and II of the Chairman' a September Z7 menmoranclurn.
--~ This decision is taken in the knzowledge that the terms of the sale
do net. meet the safeguards requirements or the requirement for id6nticai
treatment of the PRG and the USSR provided for in NSDIvt 247/CIEPD:.M 2-u
An exception to that directive is granted for the following reasons:
a The Sec zeta.=y of State has concluded that the aalc is in. the
iorcian policy interests of the United States.
o The Secretary of Defense, .,,ho in respozisible for providi.n.g
rational. security advice on export control matters, has concluded that
he proposed transaction -- if subjected to the-specific, conditions of
Anncxes I and 11 of the-Chairman's memorandum which are designed to'.
detect and inhibit diversion -- will not make a significant contribution
to the military potential of the PRG which would prove. detrimental to
the n iti.onal security of the United States.
The requi rcr_ eats of NNSDM 2 =7/CIEPD:M:t 22 remain in force, and
the c:;eeption 7,r.tnted in this caac does not establish a precedent for the
SIC t T 3DS
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.~ :~. Rt 7 GDS
rc.axation of c-;isting requiroments 3pplicd to computer export saleq
to the USSR or other Communist countries, including the PAC.
Brent Scowvcro#t
cc: The Director of Central Intelligence
Acting Executive Director, Council on International
Ecozvrt ie :Policy
Sr.( c2:E.T GUS
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ER
Joa ne
Mril
Destroy
CY TO:
SENT:
FILE
NOTES:
called (11;2,6) on this. He
wants you to look over and give him
a call to disc -who and how to answer.
He'll be wai g for your call before he
assigns ac on.
Eileen: Double-checked with FE 12/29 --
this is still on line, per his note.
The note from McMahon was added after
FE's note went to HRD and PAID -- but
it makes no difference. ern a-P7,7%
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MEMORANDUM FOR:
Subject: Technology Drain Issue
Attached as requested:
? Talking Points
e Excerpts from Draft-EARB Compliance
Study
? Gorog Memo to the DCI
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? There are two principal aspects to the controversy over what
should be the role of the Intelligence Community in helping
to stem the drain of advanced U.S. technology to the USSR:
a. Collection of evidentiary information needed by enforce-
ment officials to abort or prosecute attempts to circumvent
the Export Administration Act of 1969, as amended.
? Possibilities for increased Intelligence Community contribution
to the collection aspect are discussed in a Commerce report
on the e ectiveness of the Export Control Compliance Program,
now being drafted for the Export Administration Review Board
(EARB). Involved here is domestic as well as foreign policy
and the targets of enforcement action are, in every instance,
U.S. citizens. Commerce may recommend that the Intelligence
Community examine the feasibility of a larger intelligence
role in this activity.
? The 21 December 76 letter to the DCI from William F. Gorog,
Executive Director of the Council on International Economic
Policy (CIEP),addresses solely the action aspect of the
controversy. Recently the OAG working group took this
issue under advisement, which is continuing. The DCI's
representative on the OAG working group is the CIA Deputy
Director for Operations.
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Background
1. The U.S. compliance program derives its basic
statutory authority from the Export Administration Act of
1969, as amended. The Act authorizes both civil and
criminal penalties for violations of the Act and the
regulations under it, grants powers of investigation,
and establishes administrative proceedings.:which include
a hearing process and an appeals procedure.. Administrative
penalties may take a number of forms including revocation
of export licenses, general denial of export privileges,
and monetary penalties.. ' Criminal penalties include
substantial fines or imprisonment for up to five years
(or both), for knowing violations.
2. The Compliance Division of the Office of Export
Administration, Department of Commerce, reviews information
obtained from the intelligence agencies, the Foreign Service,
the trade and other sources, conducts investigations, takes
preventive action, and proposes sanction and corrective
measures. In addition, physical examinations of export
shipments are made under a limited program of spot checking,
and large numbers of shippers' export declarations are
reviewed. Cases deemed sufficiently serious to merit
criminal prosecution are of course referred to the Department
of Justice.
3. Over one-half of the cases to 'date originated with
information obtained from the trade. The originating informa-
tion for nearly a quarter came from other government agencies,
including the intelligence services. About one-third of the
cases concerned violations in the U.S., and nearly eighty
percent revealed illegal activities in Western Europe. Most
of the cases involved electronic equipment, primarily computers,
semiconductors and semiconductor manufacturing equipment. The
average time to complete the five of the 51 cases which were
closed out after formal action was just under 14 months.
4. There is difficulty in producing sufficient
evidentiary material where violations with respect to U.S.-
origin commodities occur abroad. These difficulties stem
from less stringent enforcement policies on the part of other
COCOM countries, from slowness in conducting investigations
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in these countries, from reluctance or inability to release
information to the U.S. while they have investigations in
process, and from an unwillingness on their part to permit
parallel U.S. investigations within their borders. There
is a basic predisposition on the part of other COCOM countries
to minimize controls over trade with the Communist countries.
It would be unrealistic to expect agreement now on any broader
or more definitive multilateral compliance devices. A majority
of diversions occur in Western Europe after export from the
U.S. under validated export license.
5. While the Compliance Division is effective in initiating
action on leads brought to it by other Government agencies or
by the trade, it has no major and systematic means available
to uncover deliberate diversionary activities. The only means
available for guaranteeing that illegal shipments from the
U.S. would be stopped completely is regular routine inspection
of most export shipments of industrial goods. Such a solution
is of course completely unrealistic. Furthermore, since most
diversions occur in Europe after export from the U.S. under
validated license, for such a program to be effective parallel
steps would need to be taken in other COCOM countries -- an
even more unlikely possibility.
6. The Compliance Division acquires intelligence reports
from the CIA, the Defense Intelligence Agency, and the FBI on
matters pertaining to actual or proposed exports which are
possibly headed for proscribed destinations. The Division
also reviews information provided by U.S. firms, businessmen
and others. This intelligence reporting and information pro-
vides the basis on which preliminary inquiries are undertaken
to determine whether a violation of the Export Administration
Act has or is about to take place.
7. In the intelligence acquisition area, there is no
program specifically designed to meet the requirements of
the compliance program. Use in the compliance work of some
of the pertinent intelligence that is collected is prevented
or limited by classification problems. However, some of the
information contained in documents so limited is released
and provides a starting point for investigations.
8. A compliance program would need to be backstopped
by a far-reaching intelligence acquisition effort by CIA
r
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and other intelligence agencies, tailored to the needs of
the program. Information thus acquired would have to be ti
fully and immediately available to the Compliance Division
of Commerce for analysis and appropriate action.
9. Whether illegal activity occurs in the U.S. or
abroad, the investigative process must be effective enough
.to produce in a timely manner all of the evidentiary material
necessary for remedial action. A successful compliance pro-
gram must incorporate provision for the certain application
of a scale or administrative and criminal sanctions sufficiently
severe to act as an effective deterrent to wrongdoing.
Commerce's Recommendation
10. An interdepartmental committee should be established
consisting of representatives of Commerce, State, and
appropriate intelligence agencies, to plan and coordinate
a program of intelligence acquisition for compliance purposes.
This program should place emphasis on the specific needs of
the compliance program, should be focussed on commodity areas
known to be of special current interest to the Communist
controlled countries, and it should particularly place emphasis
on maximum availability of pertinent intelligence to compliance
officials.
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Statistical Data
a. Cases
Three professional employees were responsible for
the review of 2,324 intelligence reports during FY-1975. At
the beginning of the year, 118 preliminary inquiries were
pending. During the year 64-new inquiries were opened,
six of which were converted to full-scale investigations
and 39 of which were closed on the basis of no probable
violation. Twenty-nine pre-licensing checks and 76 post-
shipment checks were conducted to establish the bona fides
of proposed transactions.
b. Sources of Intelligence
The original information upon which the 51 investiga-
tions were based came from the following sources:
Department of Commerce
11
Compliance Division
3
OEA Licensing Divisions
3
OEA Operations Division
1
OEA Policy Planning Div.
2
Bur. of East-West Trade
1
Office of Export Devel-
opment
1
CIA
Foreign Service
Treasury Dept. Foreign Assets
Control
Bureau of Customs
The trade
c. Locale of Violation
2.
In 18 of the 51 cases there were violations of the
Regulations within the U.S. In addition, there were 58 instances
of violations in foreign countries, as follows:
Austria
4
Hong Kong
3
Panama
1
Belgium
1
Italy
1
Spain
1
Canada
6
Luxembourg
1
Switzerland
8
Denmark
1
Malaysia
1
UK
7
FRG
17
Netherlands
2
Yugoslavia
1
France
2
Norway
1
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There is a. greater number of violations than cases because
some cases involved violations both in the U.S. and abroad,
others in more than one foreign country.
d. Commodity Focus
The 51 cases fell into the following general
commodity categories:
Computers and Computer-related equipment 18
Electronic Equipment (e.g., test equipment,
semi-conductor) 15
Aircraft and related equipment 1
Capital goods (e.g., machine tools, semi-
conductor manufacturing equipment) 15
Photographic equipment 4
(Two cases fell in two categories.)
e. Strategic Significance
Forth-six of the 51 cases had strategic significance
in the sense that they involved shipments of COCOM-controlled
strategic commodities and the ultimate destinations were one
or more proscribed Communist countries. The numbers and total
value for each country were as follows:
Number/
Value?/
Bulgaria
6
$1,133,840
Czechoslovakia,
3
57,000
GDR
1
3/
Hungary
3
42,175
PRC
6
127,245
Poland
12
772,035
USSR
17
J4,643,600
"Eastern Europe" or
combination of 2 or
more countries
2,697,840
$9,473,735
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 DCI DIX
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a~tg Slip
Please develop 'response.
DCI/&D- ix
ACTION
INFO.
ACTION
INFO.
1
DCI
11
LC
2
DDCI
X
12
IG
3
S/MC
13
Compt
4
DDS&T
Asst/DCI
5
DDI
X
r
AO/ DCI
6
DDM&S
16
Ex/Sec
DDO
17
8 ,
'D/DCI/IC
X
18
D/DCI/NICE
x
19
10
GC
20
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 Approved For Release 2006/10/18: CIA-RDP83M00171 R001200080005-1
ENCUTIVE OFFICE OF THE PRESSrwv NT
COUNCIL ON INTERNATIONAL ECONOMIC POLICY
WASHINGTON, D. C. 20500
December 21, 1976
Dear George:
For the past several years the Council on International
Economic Policy has addressed the issue of technology
transfer to the Soviet Union. One of our main efforts
was a study of computer exports to Communist countries,
a project in which CIA was a principal and valuable
participant. As a consequence of that study, the export
to the USSR of technology, integrated circuit equipment,
and computer manufacturing know-how was precluded.
The policy is specified in National Security Decision
Memorandum 247.
One of the issues that still concerns this office is
the Soviet pros:am to covertly obtain those devices and
techniques explicitly embar oed for export understanding
policy. CIEP has worked wi - h CIA to forestall attempted
clandestine acquisition by the USSR, but this works
only when adequate and timely information is available.
It appears to CIEP that attempted acquisitions coming
about by espionage and covert trade are discovered
largely as a by-product of ;existing collection efforts.
To ensure the carrying out of NSDM 247, I believe it
would be helpful if CIA's collection efforts could
address the issue of clandestine acquisition of embargoed
know-how and manfacturing equipment. It would be
even better if positive steps could hn tnkpn to int-pr-
SECRET
awl C
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 Approved For Release 2006/10/18: CIA-RDP83M00171 R001200080005-1 'Mw INW
SECRET
I very much appreciate any help CIA can give us.
illiam F. Gorog
The Honorable George Bush
Director of Central Intelligence Agency
Washington, D. C. 20505
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 Approved Fb(Release 2006/10/18: CIA-RDP83MOO17'1 R001200080005-
THE WHITE HOUSE
SECRET - GDS
National Security Decision Memorandum 247
Council on International Economic Policy Decision Memorandum 22
MEMORANDUM FOR
The Secretary of the Treasury
The Secretary of Defense
The Secretary of Commerce
The Chairman, U. S. Atomic Energy Commission
The Director of Central. Intelligence
The Deputy Secretary of State
The Director, National Security Agency
The Director, National Science Foundation
SUBJECT: U. S. Policy on the Export of Computers to
Communist Countries
The President has reviewed the findings and recommendations of the
interagency study (CIEPSM 25) and has decided that:
1. The power of computers to be exported to Communist countries
under the present "easy access" procedure shall be raised from
its present level of a Processing Data Rate (PDR) of 8 million bits
per second to 32 million bits per second, to be designated as the
limit of the "Special Administrative Exception" procedure (thus ending
the easy access terminology). The conditions of sale are specified in
the attachment. Exports of computers exceeding this power shall be
reviewed on a case-by-case basis and strictly limited to demonstrably
peaceful applications.
2. The export of completed hardware for use as part Of computer systems
.produced by Communist countries shall be restricted in number,
performance, and presale conditions as specified in the attachment.
Electromechanical peripheral equipment shall be clecontrollccl; spare-
for the equipment shall also be decontrolled, except where otherwise
erobar.goed. .
SECRET - GDS
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SECRET_WPI .1
3. The export Or transfer of computer technology, production facilities,
specialized programs and comprehensive programming services shall
continue to be restricted. These restraints shall include those placed
on the means to design, develop, and produce computers, peripheral
storage devices and storage media, displays, high speed memories,
and electronic components. The permitted levels for the sale of
production technology for magnetic peripherals and final system
configuration are specified in the attachment. Technology uniquely
related to electromechanical peripheral equipment shall be decontrolled,
except where such technology is otherwise embargoed.
4. The differential practiced against the People's Republic of China in
computer exports shall be removed so that export restrictions against
the PRC shall be identical to those applied to East European countries
and the Soviet -Union.
The President has directed the. further study of technical and administrative-
issues relating, in particular, to .safeguard procedures and the means to
control the export of technical. information, training services, and software.
The purpose of these studies will be to determine what measures are
effective and economically feasible so that export restraints might then be
appropriately modified.
The President believes that a reduction in the administrative burden
associated with processing license applications for computer exports is
needed. Accordingly, he has directed that arrangements be worked out
between the Department of Commerce and other Departments to simplify
the administrative procedures for processing license applications for
computers and associated equipment. The Department of Commerce shall
also continue its effort to improve its internal procedures for reviewing
computer license applications.
The President has directed the preparation of a comprehensive U. S. position
for the 1974 COCOM computer list review, including a determination of those
parameters left unspecified in the attachment. This effort shall be conducted
by the Economic Defense Advisory Committee and the staffs of the Council
on International Economic Policy and the National Security Council.
Attachment
Henry A. Kissinger
7 .
i?t~ii!'.Z Flanigan
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 Approved For Release 2006/10/18: CIA-RDP83M001AR001200080005-1
DEFINITIONS OF TERMS
Computer Equipment Performance Parameters
1 - Central Processing Units
a -? Peripheral Performance Factor
(Restatement of comparison factor)
Mernor Capacity in million of bits
IL-1565 IL-1565 Riot
(d) 4 (h)
1) 2)
3) 3)
b - Effective Bit Transfer Rate
4) ii)
4) iii)
c - Memory Capacity
4) iv)
4) iv)
Magnetic Tape Peripherals
a - Longitudinal Bit Packing Density for
7 or 9 track, 1 /2 inch tape
4) iii)
NA
Effective Bit Transfer Rate
4) iii)
4) iii)
c - Number of Magnetic Tape Peripherals
4) i)
4) i)
Remote Communications (Terminal Devices)
a - Total Effective Bit Transfer Rate
6) i)
_5) i)
PPF= Y
(average access time in seconds) j72x103
II.- Special Administrative Exception
Exports of computer systems below the given performance levels
would be automatically approved 28 days after submission to COCOM for
review provided (1) the individual governments had assured COCOM that
the end-use/end-user conditions were satisfied; (2) that the seller would
visit (and' report on the continuing end-use) the computer facility monthly
(quarterly for lower performance computers in this range); and (3) the
individual government submit a signed statement from the importing
agency or end-user providing assurance of peaceful end-use, the right
of access to the computer facility, and the assumption of the responsibility
to 'report any significant change to the -facts presented.
III --Pre-Sale End-Use/End-User Information
Level I - The present requirement fox' the purchaser or end-user
to provide sufficient information to the licensing government to permit
assessment of the transaction. In the COCOM International List, this
requirement is stated as permitting government to export the specified
equipment provided that:
The'Government of the exporting country has assured itself
that the equipment is primarily used in non-strategic application
a - Processing Data Rate
b - Internal Memory Capacity
Peripheral Memory Devices Other Than
. Magnetic Tape
The Government of the exporting country is reasonably satisfied
.that the equipment will be used primarily for the specific non-
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strategic applications for which the export would e approved
and that the number, type and characteristics of such equipment
are normal for the approved use.
In addition, U. S. Export Control Regulations require the purchaser or
end-user to sign a statement (Form FC-842) agreeing (1) to report in
the future any material and substantive changes in the facts presented
in the export request; and (2) not to dispose of the exported equipment
without prior written approval of the Department of Commerce.
Level Ia - A modification of the present end-use/end-user conditions
when considering sales of production quantities of products and for the
disposition of products produced with Western licensed production
technology to provide for post- facto reporting of ultimate end-use/
end-user information. This modification is necessary in many instances
since the original shipments are made to a Communist plant under a
general assurance of non-strategic use and only at the time of shipment
to the ultimate destination, can specific end-use/end-user be provided
to the licensing government (see the present ad hoc procedures for
handling OEM exports).
Level II - The present U. S. requirement for the purchaser or
end-user to provide more complete and detailed end-use/end-user infor-
mation for assessing requests for exports under the exceptions procedure.
(see the ACEP lntcrpreta.tion 1). Although there is no formal require-
ment in COCOM to provide this additional information, the UK has
agreed on a bilateral basis to provide this information for their exceptional
cases.
Level Ila - This is a new proposal which requires, in addition to
the information provided in II above, the submission to COCOM by the
licensing government of a signed statement by the Communist importing
agency or end-user providing assurance of peaceful end-use, the right
of access to the computer facility and the assumption of the responsibility
to report any significant chancre to the facts presented (see Form FC-842).
Level IIb - A modification of the end-use/end-user conditions of II
above for Communist produced computers using equipment imported
from the West or produced from Western.prOduction technology. Also
Included is a signed statement from the importing agency or production
facility providing assurances of peaceful end-use, the right of access
to the production facility and the assumption of the responsibilities
to report any significant change to the facts presented.
IV ?.-Post-Sale Safeguards
Level I
A - The end-user granting Western representatives of the
vendor the right of free access to the computer facility'
and providing information on the utilization of the computer.
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 11 -- Monthly visits (quarterly for lower performance computers
Ap(icttoC Rem)5t)06k#ilriQ6@Rft+71R@11Q@C)O@R@s
to asses's""''that. the computer is still being used for the
approved purposes and that it has not been moved from
the authorized location.
C - The vendor submitting reports on the results of their
periodic visits to the appropriate licensing authorities.
V - Sale of Production Technolog
Exports of technology, including transfer of skills and data, necessary
for fabrication, assembly and check-out of equipment of performance
given in the Table under Sale of Production Technology are permitted
provided certain conditions are satisfied. (Design technology and
technology to produce embargoed or specially designed tools and test
equipment are embargoed. )
A d Technology for the manufacture of electromechanical
peripherals excluding technology for electronic logic
and memory elements,
l3 - Technology for the manufacture ofmagnetic tape transport
drive mechanisms excluding technology for tape capstan
drive and/or clamping mechanism, magnetic heads and
tape,
C - Technolog;- for the manufacture of magnetic disc drive
mechanisms excluding technology for magnetic heads,
servos and magnetic surfaces.
Item 77 1565, Note 3 and Statement of Understanding thereto as may
be modified to reflect decisions on options recommended in this study.
S 1 QR ET -- G IBS
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DP83M00171.R001
00800
1
P
T~l?'.?.~f Po.rmtterl
Central
Perip
heral Memory
Remote
re-Sate
;., t?r?l (See following
Processing
Devic
es other than
Magnetic
Tape
Comm.
End-Use
Nominal
Sys,(-nns'
pa;cs?for definition
Units
Maan
etIc Ta e
P t'iq~itcr
als
TEI3TR
End-Use
Post-Sale
Supported
terms)
PDR Memor
PP I
Trans.
Total
Packing
Trans Number
b/s
Condition
Safeguards
Per Year
U
10 b/s lObits
Rate 10
Can. 101
Density
Rate
bits/in.
10 b/S
Sale of Cornvuter System
s
Administrative
1. Exception
TBD
TBD I
TBDI
1. 5
TBD
TBD
I. 5 12
TDD
I
none
NA
~. Social Admin.
istrativc Exception
3Z
4. 72
TBD
TBD
TBD
---
1. 5 1 2
9 6 00
IIa
I
NA
Sale of Production
Otv. cf Prociucts
1. Eiectro-'v ccila .ical
Pc r iphcrals
--
---
---
-. -
--_
{ ---
--- ---
---
none
none
NA
Z. Magnetic Peripherals
--
---
32
1. 5
235
16 0 0
0. 9 6 ----
---
TBD
none
3. Permitted final
system configuration
8
Z. 36 1
32
1. 5
950
---
1. 5 6
2 4 0 0
TBD
none
TBD
Sale of Production
Technoioey
1. Manuf. Electro-Mech.
"
Peripherals
-- r
---
---
----
----
----
--- ----
---
none
none
NA
Z. Manuf. Magnetic
Peripherals
--
---
8
I. 5
60
1 6 0 0
0. 96 ---
- --
Ia
none
3. Permitted Final
S
C
2
6
32
1
5
950
~
1. 5 6
2400
I Ib
none
200
ystem
onfiguration
8
. 3
.
- -
To Be Determined
Not Applicable
SECRET-GDS
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 rr
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NATIONAL SECURITY COUNCIL
WASHINGTON, D.C. Z05C0
SEC RN. 1'.. T GDS
2VfEM00 A DUM FOR
SUBJECT:
October 12, 1976
)f.?4i(ivo tlegiatry
The Secretary of State
The Secretary of the Treasury
.The Secretary of Defense
The Secretary of Commerce
The Administrator, Energy Research and
Development Administration '
Erception'to National Security Decialon
Memorandum 247/ Council: orn''lntc rriatigi:ral
Economic Policy Decision 2emora.ndum. Za
The President has reviewed the memoranda of September 27,and
Cetc~l;~~x ~ 7c, frori the Chairman of the Exiac`~S`t("~i is:anisLratioi: Reviev.-
Board rc?ardin`' sale of it Control Data Corporation computer system
to the People's Republic o! China (PRC) and has decided that;
~'- The proposed computer sale is approved* subject to the co" djtions
of Arzae :cs I and li of the Chairrn4 n' fl September, Z7 memorandum.
-- This deci-;ion is taken in the knowledge that the terms of the sale
do net meet th .afeguards requirements or the requirement for identical
treatment o,` the PRC and the USSR provided! for in NSDIvL 247/CLEPDM 2'2.
An exception to that directive is granted for the following reasons;
o The Secrcta?y of State hits concluded that the :tale is in, the
foreign policy interests of the United States. -
o The Secretary of Defense, who in responsible for providing
national. security- sadvice on export control matters, has concluded that
the propose:? transaction --.if subjected to thc..spccific conditions of
~a: neXes I and ii of the?Chairrnan's nlemorandu n which are designed to
detect and in'hibi( diversion -- will not make a significant coftri.buLion
to the military -:lter.tial of the PRO which would prove. detrlrrtcntal to
:hF n:iti.onal security of the United States. .
The requ_ rerc:eats of NSD?M Z47/CIEPM.t ZZ remain in fore c, and
th c::certhon gp,~nted in this case does not establish a preccdcnt for the
S -,c p T DS
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 Approved Fbr Release 2006/10/18: ClA-RDP83M00171 R001200080005=1 '
rc.:.axatio:i of ex stingy requirements applied to computer export Hales
to the USSR or ot:icr Communist countries, including the PRC.
Brent Scowcroft L ??
cc; The Director of Central Intelligence
-Acting .Executive Director, Council on International
Eco:no mic:. Policy .
Sr-.((T GDS
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 Approved -For Release 2006/10/18: CIA-RDP83M00171 R001200080005-1
C O t- 1 w -p rc --P [' c ~' ? ~' / 3 4-c- f ? fc-
S trt T-4 o'6i ai T bt-' r
L i - )" e -P /44L4 V-ATE:?
f ~ p
~ - y~ ve ec ?,z..
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