International Trade Law News

Published by Jacobson Burton Kelley PLLC

Last week, the U.S.-China Economic and Security Review Commission (USSC) held a hearing examining China’s military modernization and the utility and effectiveness of U.S. national security controls on exports to China of dual-use technologies. The witnesses testifying at the hearing included several members of Congress, members of the Bush Administration and several leading experts on China and export controls from the private sector.

Several members of the USSC expressed their concern that the Bush administration, in its desire to boost trade with China, could be turning a blind eye to national security concerns when it approves exports to China of dual-use technology.

The panel on the "Efficacy of U.S. Export Control Regimes" included Beth McCormick, acting Deputy Undersecretary of Defense for Technology Security Policy and Darryl Jackson, Assistant Secretary of Commerce for Export Enforcement. Ms. McCormick said that that the Defense Technology Security Administratin (DTSA) received about 1,000 dual-use export license applications from China annually for the past four years and approved about 70% of the applications. The remainder were denied or returned without action.

Ms. McCormick said most of the applications have been for chemical manufacturing equipment, toxic gas monitoring systems, equipment used in handling biological materials and technology and electronic and semiconductor equipment. She indicated that DTSA approved only a few of the more sensitive munitions export license applications for China in the last two years. She noted that the "approvals include an explosive ordnance disposal containment vessel for Chinese security training in preparation for the Beijing Summer Olympics, an inertial reference system for use in railway track curvature measurements and several commercial satellite licenses."

Commission chairman Larry Wortzel questioned why the administration approved technology to support China's railway, which he says will play a key role in the country's military modernization. "As China moves to mobile, strategic intercontinental ballistic missile systems that can put warheads [aimed] on the United States, it is going to transport a lot of that stuff by rail," said Mr. Wortzel. "As China increases that military buildup against Taiwan and threatens Taiwan with shorter-range missiles by the second artillery, the principle way that the second artillery moves those missiles from plants to storage and moves its conventional and nuclear warheads is by rail."

In his testimony, Undersecretary Jackson stated that China is "in the midst of an accelerated expansion and modernization of its armed forces, and has a mixed record on nonproliferation of weapons of mass destruction issues." Mr. Jackson noted that "of particular interest to BIS investigations are Chinese efforts to obtain U.S. technology to further its command, control, communications, computers, intelligence, surveillance and radar systems and Maritime programs." With respect to enforcement actions, Mr. Jackson said that in "Fiscal Year 2005 BIS investigations led to 14 criminal convictions and 13 civil penalties for export control violations related to China" and BIS had 136 open investigations involving China as of March 3 of this year."

Edmund Rice, President of the Coalition for Employment Through Exports, stated in his testimony that since "China has virtually unfettered access to dual-use items and technology everywhere in the world except the U.S. and Japan, U.S. controls have virtually no effect in restricting dual-use technology transfer to China, including U.S.-origin items." As a result, he stated that "dual-use export controls cannot be relied upon as a tool for carrying out U.S. policy goals with respect to China."

The written testimony presented by most of the witnesses at the hearing can be found on the USCC's website.