Jeannette L. Chu

1

U.S. EXPORT CONTROLS HIGH TECHNOLOGY TRADE
102nd China Import and Export 17 October 2007 -
Guangzhou, China

• Jeannette L. Chu
• Export Control Attaché
• U.S. Embassy Beijing

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U.S. Export Control Policy

• Facilitate U.S. exports for authorized civilian
  end uses
• Prevent U.S. exports that contribute to Chinas
  military modernization
• Chinas Conventional Weapons
• Chinas WMD/Missile Technology
• Onward Proliferation to Third Countries
• Tiananmen Sanctions - Crime Control

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Illegal Acquisition of U.S. Technology by China
Violation of U.S. Law Illegal acquisition of
Missile Test Equipment on May 24, 2006, a
Federal Grand Jury in the Northern District of
California indicted the General Manager for the
China Division of Data Physics Corporation with
unlawfully aiding the unauthorized exports of
vibration test equipment to China.
License Denials electronic anti-submarine
warfare, intelligence gathering, force
projection,onward proliferation to Entity-List
end-users/end-uses
Violation of U.S. Law On May 1, 2006,
criminal sentences were handed down against four
former employees of Manten Electronics in
connection with their illegal exports of millions
of dollars worth of sensitive national security
controlled items, with application in radar,
electronic warfare and communications systems, to
state-sponsored institutes in China.
1/3 of criminal Investigations involve Illegal
exports to China
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Export Controls in Perspective

• Total Value of BIS export licenses for China in
  2006 308 million approximately 1400-1500
  licenses)
• Total Value of Total U.S. exports to China in
  2006 54.3 Billion
• Total Value of U.S. imports from China in 2005
• 242.6 Billion

licensed exports
1.3
lt98
U.S. exports to China no license required
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License Decisions And U.S. Policy
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No License Required High Technology Exports
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U.S. Export Licensing
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Validated End-User Program
validated end-users

• Validated End-User or VEU is a new
  market-based incentive for export compliance
• Builds on bilateral export control cooperation to
  date
• Eliminates licensing requirements for exports to
  approved end-users
• Streamlined application process
• less than IVL/SCL
• Will free up 100 million in
• licensed trade

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• The Validated End-User program, or VEU, will
  enable participating entities to receive multiple
  shipments of controlled items, from multiple
  suppliers (U.S. exporters), without having to
  obtain individual export licenses.

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End-Use Visits

• Determines suitability of an end-user to receive
  U.S. controlled items
• Conducted by Office of Export Enforcement
• Export Control Attaches (Russia, U.A.E., India,
  Hong Kong, China)
• Sentinel trips
• Foreign Commercial Officers
• In FY 2005, approximately 600 visits were
  conducted by Export Control Attaches less than
  5 were in China

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Roles Responsibilities

• Exporter know your customer inform your
  customer! Know your distributor educate your
  distributor!
• Agent/distributor understand and disclose
  license requirements and conditions to the end
  user(s)
• End-user transparency, full-disclosure,
  consistency and coherency does the purchase and
  stated use of the commodity fit into the business
  plan?

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Preparing for an End-Use Visit

• Make sure the right people attend Exporter? Who
  will actually use the item? Who will be
  responsible for maintaining control of the item?
  Who can speak to corporate governance/finance
  issues? Knowledge of other parties to the
  transaction?
• Where will the item be kept? Where/how will it
  be used?
• Have corporate literature available brochures,
  annual reports
• Record-keeping logs, sales records
• Be prepared to explain corporate structure,
  governance, financing, business plan, technology
  roadmap
• If acting as a distributor, maintain a list of
  trade events where the item is displayed and/or
  demonstrated
• CONSISTENCY TRANSPARENCY

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Understanding End-Use Visits

• a snapshot in time, not the entire photo album
• a piece of the puzzle, not the whole picture
• based on the totality of the circumstances no
  one deciding factor

BIS Assistant Secretary Darryl Jackson at the
China Meteorological Association, May 2006
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Top Ten

• Fake brochures and websites
• Yes, we have no bananas! (inflated claims)
• We make anything you want to mil spec! Why??
• Were full-service well sell to anyone!
• We dont need no marketing plan! What about
  customer screening?
• License conditions? Whats that??
• We moved this equipment just for you (where else
  has it been?)
• . And its our stuff so well keep it anywhere
  we want to!
• Hes not a threat, just a little mentally
  unstable
• CREDIBILITY COUNTS

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Export Control Cooperation

• Bringing the export control
• community together
• Commodity Identification
• Training February 2006
• Bilateral expert-Level exchanges on capacity-
  
• building initiatives including training and
• industry outreach
• Joint participation in international forums
• TRACKER export management software

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A New Era in U.S. - China Cooperation

• The United States Department of Commerce is
  pleased to have agreed with the Ministry of
  Commerce of the Peoples Republic of China on
  procedures to strengthen end-use visit
  cooperation and help insure that U.S. exports of
  controlled dual-use items are being used by their
  intended recipients for their intended purposes.
  

Exchange of Letters on End-Use Visit
Understanding Joint Commission On Commerce
Trade 21 April 2004
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End-Use Visits in China

• Conducted jointly by the U.S. Embassy Export
  Control Attaché and the Ministry of Commerce
• Approximately 100 end--use visits conducted since
  Exchange of Letters on End-Use Visit
  Understanding
• Approximately 30 end-use visits conducted since
  first High Technology Strategic Trade Working
  Group meeting in September 2005
• Total trade value of Pre-License Checks lt40
  million

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Results of the EUVU

• Provides a mechanism for conducting end use
  checks
• timeliness transparency
• Facilitates licensing decisions
• processing times for licenses have dropped by 30
• Builds knowledge base of reliable end-users
• Serves as a foundation for strengthening
  cooperation on export control
• End-use visits are essential to the
• QUALITY of our strategic trade!

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Bilateral Cooperation InitiativeHigh-Technology
Strategic Trade Working Group

• Signed at the 17th JCCT, April 11, 2006
• Builds on the End-Use Visit Understanding
• Expands export control cooperation
• Provides a mechanism for furthering bilateral
  civilian high technology trade

BIS Under Secretary David McCormick and MOFCOM
Vice Minister Ma Xiuhong
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U.S. Export Controls and Trade Relations

• Export controls do not impede trade export
  licenses make high technology strategic trade
  possible nearly 100 million in PLCs.
• Export controls are an important part of an
  overall foreign policy and nonproliferation
  agenda.
• Multi-lateral and industry-government cooperation
  are essential to the effectiveness of export
  control programmes.

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Thank You!
Jeannette L. Chu Export Control Attaché U.S.
Embassy Beijing (86)(10)8529-6655