Activist Chips Away U.S. Support for Liberal Trade

The Asian Wall Street Journal, Weekly Edition
March 22-28, 1999, p. 4.

Gary Milhollin Has Made Career Out of Exposing Illicit Dealings With China, India and Others.

Headline-spawning reports of Chinese technology theft may be one reason U.S. support for free technology trade is eroding. But another is the work of Gary Milhollin, a privately funded foe of arms proliferation.

His whistle-blowing on an unlicensed shipment of a U.S. supercomputer to the China Academy of Sciences two years ago was a blow that helped force the usually business-friendly Clinton administration to back off from its liberal export-control policies. “How smart is it to sell a supercomputer to an entity that helped develop nuclear warheads aimed at U.S. cities?” asks the University of Wisconsin law professor, with his usual flair for the attention-getting turn of phrase. (The U.S. and China last year signed an agreement not to target each other.)

Since then, U.S. authorities have made it tough for Chinese research entities to order similar equipment without extensive checks into its prospective use. Other setbacks for U.S. exporters have followed, including most recently the rejection of Hughes Electronics Corp.’s application to sell a $450 million communications satellite to China.

Tactical Allies

Mr. Milhollin, who runs the Wisconsin Project on Nuclear Arms Control on $500,000 a year, doesn’t give himself too much credit for China’s fall from grace. He instead sees the Clinton administration in retreat from a politically untenable policy. “The issue blew up in their faces, and now they’re trying to cut their losses,” he surmises.

The solemn-faced Indiana native insists that he doesn’t “lobby” the U.S. Congress. But he’s a regular fixture at congressional hearings, where he preaches tighter controls on technology sought by countries with suspect agendas. In frequent newspaper and magazine opinion pieces, he denounces what he considers the U.S. Commerce Department’s inclination to put trade ahead of national security in its licensing decisions.

While Mr. Milhollin’s campaign shows how a private citizen can put his mark on one of the U.S. government’s most sensitive functions, he doesn’t do it alone. He has tactical allies in the U.S. State and Defense departments who remain suspicious of China’s ambitions or are simply trying to preserve their own turf. His critics believe that he gets tips from intelligence-community individuals who aren’t happy with President Clinton’s policies; Mr. Milhollin acknowledges that some of his informants have to remain nameless.

Rep. Christopher Cox, the chairman of a House select committee that raised the alarm about possible Chinese acquisition of U.S. nuclear secrets, has joined his cause, too. The committee recently endorsed what Mr. Milhollin and other nonproliferation activists have advocated for years: that the Commerce Department, which is responsible for licensing the export of technology with both civilian and military uses, should be better prepared to heed to the judgment of other agencies directly concerned with national security.

U.S. Exporters’ Complaints

U.S. exporters complain that the furor created by the Cox committee’s spy hunt is poisoning an otherwise legitimate debate over the appropriate thresholds for technology exports. “You can have a liberal technology-transfer policy and yet be very tough against espionage,” says Paul Freedenberg, a former Commerce Department export administrator who handles government matters for the U.S. machine-tool industry. “The two issues don’t have to be merged.”

Mr. Milhollin says he is simply driven by a desire to block the flow of supplies to entities suspected to be developing nuclear, chemical and biological weapons and the missiles that can convey them. To make his point that seemingly innocuous civilian products can kill, he has provided U.S. newspapers with documents on how scores of German, Swiss, British, French and American firms contributed wittingly or otherwise to Iraq’s nuclear and missile arsenal.

But the $550-billion-a-year U.S. electronics industry argues that it’s futile to seek to control access to technology that’s rapidly becoming available world-wide. “I don’t think Milhollin’s arguments are sustainable in the real world,” says Ed Black, president of the Washington-based Computer and Communications Industry Association.

The Risk Report

Mr. Milhollin, 61 years old, took leave from his university to open a Washington office in 1985. An engineering degree from Purdue University and 10 years as a U.S. Nuclear Regulatory Commission administrative judge have given him some credibility to operate in this field. And his opponents can’t easily accuse him of having a philosophical quarrel with big business: Another of his previous stints was as a Wall Street lawyer looking after the interests of General Motors Corp. and DuPont Co.

With private funding for nonproliferation in decline, Mr. Milhollin has learned how to make his avocation pay. While most of the funding for the Wisconsin Project comes from philanthropies such as the Ford Foundation, the Alton Jones Foundation and the John Merck Fund, the project’s single-biggest revenue source is a private intelligence service called the Risk Report.

The Commerce and Defense departments, the Customs Service, the Central Intelligence Agency and the Defense Intelligence Agency are among the U.S. government agencies that subscribe to this bimonthly CD-ROM product, which contains updates on the development of weapons proscribed by various international protocols. A number of U.S. multinational corporations also use the report to check up on the legitimacy of their foreign buyers.

“I don’t know how Gary does it, but there’s some information in (the Risk Report) that the government itself can’t get,” says a Defense aide who monitors the technology trade.

Sniffing Around

Mr. Milhollin takes pride in the fact the list of Indian and Pakistani entities identified by the Commerce Department as potentially problematic buyers of technology late last year was almost identical to the one the Risk Report had published earlier.

He says he relies for the most part on public sources. Mr. Milhollin writes to companies for their annual reports and marketing brochures. He periodically checks what foreign agencies like the Chinese Institute for Aeronautics Information and the Indian Space Research Organization are reporting on missile development. He digs out news reports and pulls data from corporate Internet sites.

Mr. Milhollin sniffed out the unlicensed computer shipment to the China Academy of Sciences simply by scanning its Web site. One day he saw an academy write-up about its acquisition of a powerful computer from Silicon Graphics Inc. The arms-trade sleuth figured that the capacity of the machine exceeded the limits allowable for U.S. computer transfers to Chinese entities with possible involvement in weapons design or production. Official Chinese publications acknowledge that some of the academy’s 123 institutions work in atomic energy and other militarily sensitive fields.

The U.S. government subsequently investigated the sale, although Silicon Graphics said its machine wasn’t being used for military purposes. Beijing insisted there were no grounds for the investigation. The Commerce Department hasn’t reported the outcome of the investigation.