Team Infidel
Forum Spin Doctor
New York Times
January 2, 2008 By Steven R. Weisman
WASHINGTON — Six months ago, the Bush administration quietly eased some restrictions on the export of politically delicate technologies to China. The new approach was intended to help American companies increase sales of high-tech equipment to China despite tight curbs on sharing technology that might have military applications.
But today the administration is facing questions from weapons experts about whether some equipment — newly authorized for export to Chinese companies deemed trustworthy by Washington — could instead end up helping China modernize its military. Equally worrisome, the weapons experts say, is the possibility that China could share the technology with Iran or Syria.
The technologies include advanced aircraft engine parts, navigation systems, telecommunications equipment and sophisticated composite materials.
The questions raised about the new policy are in a report to be released this week by the Wisconsin Project on Nuclear Arms Control, an independent research foundation that opposes the spread of arms technologies.
The administration’s new approach is part of an overall drive to require licenses for the export of an expanded list of technologies in aircraft engines, lasers, telecommunications, aircraft materials and other fields of interest to China’s military.
But while imposing license requirements for the transfer of these technologies, the administration is also validating certain Chinese companies that may import these technologies without licenses.
Five such companies were designated in October, but as many as a dozen others are in the pipeline for possible future designation.
Mario Mancuso, under secretary of Commerce for industry and security, said the new system of broadening the list of technologies that require licenses, but exempting some trustworthy companies from the license requirement, results in more effective protections.
“We believe that the system we have set up ensures that we are protecting our national security consistent with our goal of promoting legitimate exports for civilian use,” he said in an interview. “We have adopted a consistent, broad-based approach to hedging against helping China’s military modernization.”
But the Wisconsin Project report, made available to The New York Times, asserts that two nonmilitary Chinese companies designated as trustworthy are in fact high risk because of links to the Chinese government, the People’s Liberation Army and other Chinese entities accused in the past of ties to Syria and Iran.
One of the Chinese companies, the BHA Aero Composites Company, is partly owned by two American companies — 40 percent by the American aircraft manufacturer Boeing and 40 percent by the aerospace materials maker Hexcel. The remaining 20 percent is owned by a Chinese government-owned company, AVIC I, or the China Aviation Industry Corporation I.
“In principle, you could find companies that would be above suspicion, but in this case they haven’t done it,” said Gary Milhollin, director of the Wisconsin Project. “If you just look at the relations these companies have, rather than be above suspicion, they are highly suspicious.”
The Wisconsin Project report also charges that both Boeing and Hexcel have been cited for past lapses in obtaining proper licenses for exports.
Spokesmen for Boeing and Hexcel said in interviews that they are fully confident that BHA has no ties to the Chinese military and that its use of aircraft parts and materials were strictly for commercial and civilian ends.
“Boeing is not involved in any defense activities in China,” said Douglas Kennett, a company spokesman. “All our activities in China are in compliance with U.S. export laws and regulations.”
Both companies also say that the past failure to get proper licenses has led to tighter controls and, in any case, was the result of improper paperwork affecting products that continue to be exported as licensed.
Mr. Milhollin said that research by his staff had uncovered several links with the Chinese military establishment involving both BHA and another of the five companies, the Shanghai Hua Hong NEC Electronics Company.
AVIC I, the Chinese government entity that owns a minority share of BHA, also produces fighters, nuclear-capable bombers and aviation weapons systems for the People’s Liberation Army, the report says. The State Department has cited another AVIC subsidiary, the China National Aero-Technology Import & Export Corporation, for links to arms sales to Iran and Syria.
The report also says that Shanghai Hua Hong NEC Electronics is majority owned “through a corporate chain” by the China Electronics Corporation, which the report says is a government conglomerate that produces military equipment along with consumer electronics. It has a unit, the report says, that procures arms for the military.
Mr. Milhollin said that the new policy granting companies the right to import some technologies without prior licenses was adopted quietly as “a stealth attack on export controls.”
But Mr. Mancuso, the Commerce Department official who oversees the program, noted that the department proposed it publicly in mid-2006 and adopted it a year later after lengthy public comment by interested parties and members of Congress.
In addition, he said, no Chinese company can receive certain technologies — as part of a category known as “validated end-users” — without a vetting of its record by the State, Energy and Defense Departments and by relevant intelligence agencies. The five companies designated in October, he said, were approved without dissent by these units of the government.
In general, the Commerce Department tries to make it easier for American companies to export to markets overseas, and there has been a particular emphasis on selling to China. The United States is expected to show a trade deficit with China of nearly $300 billion in 2007.
At the same time, at least since the 1990s, Democratic and Republican Congressional leaders have called on the Bush administration, and the administration of President Bill Clinton, to exercise more vigilance toward China as it seeks to modernize its aerospace defense network.
“China is a huge market for our commercial technology exports,” said Mr. Mancuso. “Yet there are real security risks we are mindful of. We take that concern very, very seriously.” Only those companies that have “a demonstrable record of using sensitive technologies responsibly” are approved, he said.
Beyond that, he said companies for which licensing rules have been lifted are subject to additional disclosure obligations, including on-site visits by American government personnel.
Groups that advocate greater technology-sharing with China in civilian aeronautics and other areas say the administration has been cautious in its policy, choosing Chinese companies with American partners or owners.
The three other Chinese companies named “validated end-users” in October are Applied Materials China, a subsidiary of Applied Materials, a maker of semiconductors based in California; Chinese facilities operated by the National Semiconductor Corporation, another American company; and the Semiconductor Manufacturing International Corporation, based in Shanghai.
William A. Reinsch, head of the National Foreign Trade Council, which promotes international trade, said the administration over all had tightened controls on China and called the lifting of license requirements on only five firms “a spoonful of sugar to make the medicine go down.”
Mr. Reinsch administered export controls as an official in the Clinton administration.
A House Republican staff member had a similar view. “We were told by Commerce that they were going to make some very safe choices,” he said, speaking anonymously because of the delicacy of the subject.
The Commerce Department says that, out of $55 billion in American exports to China in 2006, only $308 million were items requiring licenses to make sure the Chinese military could not use them. The five companies named as “validated” accounted for $54 million of those goods.
January 2, 2008 By Steven R. Weisman
WASHINGTON — Six months ago, the Bush administration quietly eased some restrictions on the export of politically delicate technologies to China. The new approach was intended to help American companies increase sales of high-tech equipment to China despite tight curbs on sharing technology that might have military applications.
But today the administration is facing questions from weapons experts about whether some equipment — newly authorized for export to Chinese companies deemed trustworthy by Washington — could instead end up helping China modernize its military. Equally worrisome, the weapons experts say, is the possibility that China could share the technology with Iran or Syria.
The technologies include advanced aircraft engine parts, navigation systems, telecommunications equipment and sophisticated composite materials.
The questions raised about the new policy are in a report to be released this week by the Wisconsin Project on Nuclear Arms Control, an independent research foundation that opposes the spread of arms technologies.
The administration’s new approach is part of an overall drive to require licenses for the export of an expanded list of technologies in aircraft engines, lasers, telecommunications, aircraft materials and other fields of interest to China’s military.
But while imposing license requirements for the transfer of these technologies, the administration is also validating certain Chinese companies that may import these technologies without licenses.
Five such companies were designated in October, but as many as a dozen others are in the pipeline for possible future designation.
Mario Mancuso, under secretary of Commerce for industry and security, said the new system of broadening the list of technologies that require licenses, but exempting some trustworthy companies from the license requirement, results in more effective protections.
“We believe that the system we have set up ensures that we are protecting our national security consistent with our goal of promoting legitimate exports for civilian use,” he said in an interview. “We have adopted a consistent, broad-based approach to hedging against helping China’s military modernization.”
But the Wisconsin Project report, made available to The New York Times, asserts that two nonmilitary Chinese companies designated as trustworthy are in fact high risk because of links to the Chinese government, the People’s Liberation Army and other Chinese entities accused in the past of ties to Syria and Iran.
One of the Chinese companies, the BHA Aero Composites Company, is partly owned by two American companies — 40 percent by the American aircraft manufacturer Boeing and 40 percent by the aerospace materials maker Hexcel. The remaining 20 percent is owned by a Chinese government-owned company, AVIC I, or the China Aviation Industry Corporation I.
“In principle, you could find companies that would be above suspicion, but in this case they haven’t done it,” said Gary Milhollin, director of the Wisconsin Project. “If you just look at the relations these companies have, rather than be above suspicion, they are highly suspicious.”
The Wisconsin Project report also charges that both Boeing and Hexcel have been cited for past lapses in obtaining proper licenses for exports.
Spokesmen for Boeing and Hexcel said in interviews that they are fully confident that BHA has no ties to the Chinese military and that its use of aircraft parts and materials were strictly for commercial and civilian ends.
“Boeing is not involved in any defense activities in China,” said Douglas Kennett, a company spokesman. “All our activities in China are in compliance with U.S. export laws and regulations.”
Both companies also say that the past failure to get proper licenses has led to tighter controls and, in any case, was the result of improper paperwork affecting products that continue to be exported as licensed.
Mr. Milhollin said that research by his staff had uncovered several links with the Chinese military establishment involving both BHA and another of the five companies, the Shanghai Hua Hong NEC Electronics Company.
AVIC I, the Chinese government entity that owns a minority share of BHA, also produces fighters, nuclear-capable bombers and aviation weapons systems for the People’s Liberation Army, the report says. The State Department has cited another AVIC subsidiary, the China National Aero-Technology Import & Export Corporation, for links to arms sales to Iran and Syria.
The report also says that Shanghai Hua Hong NEC Electronics is majority owned “through a corporate chain” by the China Electronics Corporation, which the report says is a government conglomerate that produces military equipment along with consumer electronics. It has a unit, the report says, that procures arms for the military.
Mr. Milhollin said that the new policy granting companies the right to import some technologies without prior licenses was adopted quietly as “a stealth attack on export controls.”
But Mr. Mancuso, the Commerce Department official who oversees the program, noted that the department proposed it publicly in mid-2006 and adopted it a year later after lengthy public comment by interested parties and members of Congress.
In addition, he said, no Chinese company can receive certain technologies — as part of a category known as “validated end-users” — without a vetting of its record by the State, Energy and Defense Departments and by relevant intelligence agencies. The five companies designated in October, he said, were approved without dissent by these units of the government.
In general, the Commerce Department tries to make it easier for American companies to export to markets overseas, and there has been a particular emphasis on selling to China. The United States is expected to show a trade deficit with China of nearly $300 billion in 2007.
At the same time, at least since the 1990s, Democratic and Republican Congressional leaders have called on the Bush administration, and the administration of President Bill Clinton, to exercise more vigilance toward China as it seeks to modernize its aerospace defense network.
“China is a huge market for our commercial technology exports,” said Mr. Mancuso. “Yet there are real security risks we are mindful of. We take that concern very, very seriously.” Only those companies that have “a demonstrable record of using sensitive technologies responsibly” are approved, he said.
Beyond that, he said companies for which licensing rules have been lifted are subject to additional disclosure obligations, including on-site visits by American government personnel.
Groups that advocate greater technology-sharing with China in civilian aeronautics and other areas say the administration has been cautious in its policy, choosing Chinese companies with American partners or owners.
The three other Chinese companies named “validated end-users” in October are Applied Materials China, a subsidiary of Applied Materials, a maker of semiconductors based in California; Chinese facilities operated by the National Semiconductor Corporation, another American company; and the Semiconductor Manufacturing International Corporation, based in Shanghai.
William A. Reinsch, head of the National Foreign Trade Council, which promotes international trade, said the administration over all had tightened controls on China and called the lifting of license requirements on only five firms “a spoonful of sugar to make the medicine go down.”
Mr. Reinsch administered export controls as an official in the Clinton administration.
A House Republican staff member had a similar view. “We were told by Commerce that they were going to make some very safe choices,” he said, speaking anonymously because of the delicacy of the subject.
The Commerce Department says that, out of $55 billion in American exports to China in 2006, only $308 million were items requiring licenses to make sure the Chinese military could not use them. The five companies named as “validated” accounted for $54 million of those goods.