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December 17, 2008 

BIS Points Out Inaccuracies in Washington Times Report on Suspension of VEU Program

Under Secretary of Commerce for Industry and Security Mario Mancuso made the following statement today in response to the Washington Times article entitled “U.S. to Tighten Export Rules on 5 Firms in China (see yesterday's post on this story here):”

First, the Validated End User (VEU) program was designed to ensure that U.S. products are used for commercial purposes consistent with our broader foreign policy towards China. It does not provide companies with access to ‘strategic military equipment.’ The items approved for export under VEU are dual-use in nature and are used for strictly commercial purposes.

Second, VEU does not allow companies to obtain U.S. technology without the formal security checks required for an export license. In fact, companies approved for VEU undergo a much more rigorous and demanding interagency review than that required for an individual export license.

Third, it is incorrect to report that the Commerce Department has been unable to conduct checks of facilities in China. Commerce does have the ability to conduct checks and recently conducted such checks under a pre-existing framework.

The five VEU companies currently authorized have an established licensing history and a proven track record of using U.S. products for commercial purposes. Among other requirements, VEU companies must maintain comprehensive compliance programs and agree to allow on-site reviews.

We continue to work on an agreement that would formalize procedures for VEU-specific on-site reviews. The absence of such procedures does not pose a security risk. However, the lack of an agreement diminishes VEU’s trade enhancing benefits, and Commerce is evaluating all options related to the program for China, including suspension.

The U.S.-China relationship is critical to the prosperity of both countries, and Commerce will continue to consider ways to expand commercial high technology trade with China consistent with our national security interests.




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