By Graham Earnshaw

TOKYO, Sept 4, Reuter – Japan tightened controls on exports of technology to communist countries on Friday to help prevent a recurrence of the recent Toshiba scandal.

The bill was immediately welcomed in Japanese business circles, but securities analysts said the changes may not be enough to head off anger in the U.S. Congress over Toshiba Machine Company’s illegal sale of technology to Moscow.

Toshiba sold machines which U.S. officials say were used by the Soviet Union to make ultra-quiet submarine propellers, breaking rules laid down by COCOM, a body which aims to stop the export of sensitive technology to Soviet-bloc countries.

Parliament approved a bill which raises prison sentences for export violations from three to five years and gives the Foreign Ministry a role in vetting applications for the export of high-technology to communist countries.

The bill also increases administrative punishments, including bans on exports by a violating company. The maximum ban has been raised from one year to three years.

A spokesman for the Keidanren, Japan’s top business organisation, said the association strongly endorsed the strengthening of COCOM-related export controls.

But analyst Peter Wolff of Prudential-Bache Securities said he did not think it would go very far to assuage the U.S. Congress, which is considering legislation that would ban all Toshiba imports to the United States.

“This bill is pretty much what the U.S. was looking for, but Congress is hopping mad and I don’t think they are going to let Toshiba off,” he said.

A senior U.S. official said earlier this week that the new bill was a step in the right direction, but said it remained to be seen how rigorously it was implemented.
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