Thread: COMMERCE DEPT SEEKS TOUGHER REGULATION OF FOREIGN TECH WORKE

Valley companies view proposed national security rules warily
COMMERCE DEPARTMENT SEEKS TOUGHER REGULATION OF FOREIGN TECH WORKERS
By John Boudreau
Mercury News
Article Launched: 01/20/2008 01:38:36 AM PST



Just before Christmas, a U.S. Commerce Department advisory committee quietly recommended tougher enforcement of regulations of foreign nationals working with technology deemed sensitive to national security, a move some observers believe could entangle Silicon Valley companies in costly red tape.

The recommendation for tighter enforcement flows from fears that sophisticated technology will end up aiding adversaries. But many Silicon Valley companies are concerned that a clampdown on tech exports, including products and knowledge passed on to non-permanent U.S. residents, will weaken their positions in the fiercely competitive global market.

Final decisions on the proposed changes have not been made, and it remains unclear how many companies and employees will be affected. But the proposal has drawn criticism from executives who don't want additional restrictions. Meanwhile, a related new program that aims to ease export restrictions on some politically sensitive technology has drawn fire from non-proliferation groups that think the new rules are too lax.

Mario Mancuso, the Commerce Department's undersecretary overseeing the proposal, said the report's "analysis was persuasive" during an interview last week, when he came to the valley to drum up support for the changes.

The recommendations, which will require companies and universities to engage in more extensive background checks on foreign nationals, are being reviewed by numerous other federal agencies, including the Defense Department and the State Department. Though not finalized, the proposals already have sent ripples of worry across the valley, where companies rely on engineers from around the world to drive research.
"It suggests that the process of assessing any foreign national will be a lot more complex," said Greta Lichtenbaum, a partner at O'Melveny & Myers' Washington office and an expert on international trade.

Mancuso defended a component of the program that eases some restrictions on sales of sensitive technology - including telecommunications equipment and aircraft parts - to pre-screened Chinese companies that receive a seal of validation by the Bush administration.

The Wisconsin Project for Nuclear Arms Control, a non-profit research organization opposed to spreading military technology, has criticized the Commerce Department's new vetting process and said two of the five companies approved so far have ties to the Chinese government and other organizations suspected in the past of having connections to Iran and Syria.

The program "is not a rubber stamp," Mancuso said last week at a conference on export controls sponsored by industry group TechNet. "Each of the five companies went through security screening that included publicly available information, as well classified information."

While many of the rule changes concern the export of sensitive technologies and products, so-called "deemed export" regulations are more pressing to many Silicon Valley companies. They require companies and universities to obtain licenses for foreign-born individuals with temporary visas gaining knowledge about certain technologies - such as sophisticated semiconductor equipment, high-level chips, stealth technology and encryption software.

Underlying the proposed regulations are fears that foreign nationals who are temporary residents in the United States could take that information back to their homeland. Applying for a license can take six weeks.

Companies and universities are bracing for more rigorous regulations that could require them to do a more thorough examination of foreign national employees or students, including a review of past countries of residences and an "assessment of probable loyalty."

While the new regulations would reduce the scope of technology for which individuals must be reviewed, they also expand "the universe of who would be reviewed and put in what, in essence, is a loyalty test," said William Reinsch, president of the National Foreign Trade Council, which promotes international trade.

"Where individuals lived could be a factor, where they were born, where they worked," added Reinsch, who oversaw export controls as an official in the Commerce Department in the Clinton administration. "It's a significant expansion of the number of licenses, three or four times. It would be huge."

The proposed new regulation would create a volunteer program, dubbed "Trusted Entities," in which companies and academic institutions review overseas organizations they work with on high-level technology with no "significant" military applications to qualify for a more streamlined export license process.

"Companies are not going to want to buy into a program like that," Lichtenbaum said. "There are huge costs associated with certifying a company."

Mancuso said he understands that some businesses aren't going to be happy with some of the rules.

"We care a lot about the technology community in this country because it's so important to our own economic interests, our security interests," he said in an interview. "But I take a much broader view."

Mancuso added, "My job is not to balance trade and security. I don't think there is a good or comparable worth that comes close to national security."

However, he acknowledged that U.S. competitiveness and a strong economy are crucial components of national security. Mancuso said the new rules would narrow the technologies and products affected by export controls but would strengthen enforcement efforts.

Enforcement of the current regulations on foreign nationals, he added, has been lax. "There was a fair amount of non-compliance," he said, adding that a handful of valley companies account for about 50 percent of the applications for deemed export licenses.

Companies discovered to be violating the regulations are subject to fines.

Following the rules can be costly, as well.

Sometimes companies lose a prized job candidate who doesn't want to wait for a license to be approved.

"They end up going home or to employers in other countries where the transfer of technology to an employee is not 'deemed' to be an export," said Karen Murphy, senior director of trade at chip-equipment maker Applied Materials.

Even now, getting a license for a foreign national is not an easy process, Steven Kott, chip maker Advanced Micro Devices' manager of global trade, told people attending the TechNet conference.

"Make sure just about every week of that individual's life is accounted for," he said. "You need to have that detail. We are doing our homework upfront. What if they don't get their license? That person is going to be very unhappy. And you are not going to let this person keep surfing the Net while paying his salary."




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Contact John Boudreau at jboudreau@mercurynews.com or (40 278-3496.
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a U.S. Commerce Department advisory committee quietly recommended tougher enforcement of regulations of foreign nationals working with technology deemed sensitive to national security

Wasn't aware foreign nationals worked with technology related to our national security--that is dangerous in my opinion.

"This is our culture - fight for it. This is our flag - pick it up. This is our country - take it back." - Congressman Tom Tancredo

It's about time someone looked at high-tech foreigners around here. When I was taking the light rail to work, I saw an amazing amount of Indians getting off at stops like Cisco. I didn't see anyone who wasn't Indian get off at these stops. I had friends with great IT backgrounds who couldn't find jobs for ages. They were very depressed and demoralized. One is looking at real estate marketing now instead.

Hopefully, this law will bypass big business and get passed, documentation and loyalty have to be accounted for.