Tags: China | Thumbing | Nose | Trade | Agreements

China Thumbing Nose at Trade Agreements

Thursday, 19 February 2004 12:00 AM

According to the GAO report, China is still refusing to allow inspections of exported "dual use" equipment to verify that they are not being used for military purposes. Dual use items require a license for export and verification inspections by U.S. law because they can be used for military purposes.

"The Department of Commerce approved 26,340 licenses for the export of dual use items during fiscal years 2000 to 2002. Twenty eight percent (7680) licenses involved dual-use exports to countries of concern such as China, India, and Russia," notes the GAO report.

"However, Commerce conducted checks on few of these licenses. We found that, during fiscal years 2000 to 2002, Commerce completed Post Shipment Verification (PSV) checks on 428, or about 6 percent, of dual-use items it approved for countries of concern," states the GAO report.

"Some countries of concern, most notably China, limit the U.S. government's access to facilities where dual-use items are shipped, making it difficult to conduct a PSV," noted the GAO.

"The Chinese government requires that Commerce follow a set of protocols for arranging and conducting PSVs. Commerce officials stated that the Chinese government limits the number of checks each year. A Chinese Ministry of Commerce official we met with in Sept. 2003 stated that the scope of items that can be subject to PSVs will be expanded under the terms of an end-use arrangement currently under negotiation with the United States."

In contrast, the GAO noted that India and Russia both allow inspections with little or no notification from U.S. officials.

"In May 2003, the Indian government allowed PSVs and gave Commerce's special agents access to all the facilities they requested," states the GAO report.

"The Russian government does not require the United States to notify it of plans to conduct PSVs or limit the types of items on which the United States may conduct checks. Based on our review of trip reports and documentation from Russian companies, Commerce was always allowed access to conduct PSVs, although government entities sometimes required advanced clearance," states the GAO report.

However, the GAO noted that a great part of the problem rests inside the U.S. Commerce Department. The Commerce Department is ill equipped to conduct verification inspections and frequently covers up "unfavorable" reviews to prevent political fallout.

"Commerce places all companies that receive unfavorable PSVs on its Watch List. Commerce placed 53 companies on its Watch List in response to 81 unfavorable PSV checks worldwide, between fiscal years 2000 and 2002," states the GAO report.

"However, the list is not public, and end users and potential U.S. exporters would not know if a company had been placed on the list."

The current situation with Beijing is not unfamiliar. It seems that the U.S. and China go through the same illegal stalling tactic year after year with no resolution. All the while, sensitive U.S. technology continues to flow into China.

In December 1997, U.S. Commerce officials sought permission to inspect Xian Jiatong University prior to the export of a high performance computer made by Digital Corp. (DEC). Commerce inspectors wanted to verify the Chinese university was not in violation of U.S. export control laws but were denied access by the PRC government.

In a letter written to Liu Hu, Director General for Science and Technology of MOFTEC (Ministry of Foreign Trade & Economic Cooperation) U.S. Commerce Department officials noted that they were not given permission to perform the license check.

"We were disappointed at MOFTEC's decision not to allow an on-site end use check and refusal to permit an Embassy representative to travel to Xian Jiatong University at the university's invitation... Because we were unable to work through MOFTEC, we gathered information on the end-user through other sources and have approved the license."

It remains undisclosed what the officials meant by "other sources," but it appears the Department of Commerce is only too willing to help Beijing save face rather than comply with the congressionally mandated law.

In addition, the December 1997 letter to MOFTEC's Liu Hu reminded the Chinese government of the requirements that U.S. representatives do a "post" export follow up inspection.

However, U.S. Commerce officials were reduced to seeking "help" from the Chinese communist government in performing the post export inspections and sought another meeting to discuss the issues.

In January 1998 the Commerce Department again contacted the Chinese government, seeking approval for verification inspections. The Commerce Department arranged for Bureau of Export Administration Chief Counsel, Hoyt Zia, to meet with China's MOFTEC to discuss the denied pre and post export checks on U.S. super-computers.

U.S. Customs Service officials also requested that they attend the January meeting. U.S. Customs Service officer David Brenner asked Commerce Official Mark Bayuk if he could attend the meeting.

Commerce's Bayuk wrote in a email to Commerce official Matthew Borman "I told him rather flatly and abruptly, no."

Bayuk described Customs Service Officer Brenner as "not happy" because Bayuk felt that Customs had no reason to attend the January meeting.

Commerce counsel Hoyt Zia's meeting in January 1998 with China's MOFTEC official, Zhou Ruojun, failed to obtain Chinese permission for the inspections. Commerce documentation of the meeting noted that the Chinese denied all end use inspection checks. Chinese MOFTEC officials argued that there "was no formal agreement between the two governments on conducting these checks."

The Chinese delegation also claimed that a 1983 U.S. trade letter agreeing to the checks "was unsigned" in the Commerce December 1997 complaint letter. MOFTEC's Zhou considered the matter "inappropriate" because the letter was unsigned.

U.S. officials dropped the end use inspection issue "rather than engage in a fruitless discussion of the U.S.-side's 'understanding' of the 'intent' of the signed exchange of letters."

The Chinese diplomatic stall also continued for pre-export verification inspections as well. MOFTEC representative Zhou stated that she was "not in a position to talk too much about this." The Commerce document notes, "she was unwilling to discuss this (pre-license inspection) issue any further."


In the end, the 1997 approval for the export to Xian University turned out to be one of many U.S. super-computers sent directly to Chinese Army weapons labs. Chinese Army engineers are currently using the U.S. made computer to develop advanced biological and chemical weapons.

It would seem the lesson learned in 1997 is still lost on Commerce officials. The continued export of dual use items to China with no inspection requirement is a violation of President Reagan's first rule of super power negotiations - "Trust but verify."

There is one thing that is certain - without verification we can trust the Chinese Army to abuse U.S. technology for military purposes.

* * * * * *


© 2019 Newsmax. All rights reserved.

1Like our page
According to the GAO report, China is still refusing to allow inspections of exported "dual use" equipment to verify that they are not being used for military purposes. Dual use items require a license for export and verification inspections by U.S. law because they can be...
Thursday, 19 February 2004 12:00 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
© Newsmax Media, Inc.
All Rights Reserved