Title: China's Non-Proliferation Export Control
1China's Non-ProliferationExport Control
- Li Genxin
- Secretary General
- China Arms Control and Disarmament Association
(CACDA)
2Presentation Outline
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key Elements of China XC
- Case Study ICP in NORINCO
3Presentation Outline
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key Elements of China XC
- Case Study ICP in NORINCO
4China's Basic Policy and Position on
Non-Proliferation
- China firmly opposes WMD proliferation and their
means of delivery - China believes that proliferation of WMD has
complicated root causes. In order to prevent
their proliferation, an integrated approach must
be adopted to address both the symptoms and the
root causes. - Chinese Government has adopted comprehensive
measures to implement non-proliferation and
export control obligation.
5Presentation Outline
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key Elements of China XC
- Case Study ICP in NORINCO
6Actively Participating in International
Non-Proliferation Efforts
- NPT Since joining NPT in 1992, China has
faithfully honored all its obligations and
dedicated itself to maintaining and enhancing the
universality, effectiveness and authority of the
NPT. - IAEA China joined IAEA in 1984. In early 2002
formally completed the domestic legal procedures
necessary for the entry into force of the
Additional Protocol, thus becoming the first
nuclear-weapon state to complete the relevant
procedures. - BWC China acceded to the BWC in 1984, and has
always supported and actively participated in the
multilateral endeavors aimed at strengthening the
effectiveness of the Convention. - CWC As an original State Party to the CWC, China
has made positive contributions to the effective
implementation of the Convention and promotion of
its universality. China has established and been
constantly improving its national legislation and
other measures for implementation of the
Convention, as well as enhancing the capabilities
of its National Authority. By the end of June
2005, China has received 95 on-site inspections
by the OPCW, the conclusions of which have all
demonstrated that China has strictly implemented
its obligations under the Convention.
7Developing Relations with Multinational Export
Control Regimes
- Zangger Committee (October 1997)
- Nuclear Suppliers Group (June 2004)
- MTCR (Sept 2004 application for membership)
- Australia Group (keep contacts and exchanges)
- Wassenaar Arrangement (April 2004 and May 2005,
China held two rounds of dialogues with AG in
Vienna) - Dialogue and consultation with all
concerned countries, e.g. US, UK, FR, GE,SW, IT,
JP, AU, ROK, etc. - Participation in international and
regional conferences and seminars
8Presentation Outline
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key Elements of China XC
- Case Study ICP in NORINCO
9Key Elements of China XC
- Legal framework
- Licensing system
- Control list
- Inter-agency coordinating system
- End-use and end-user guarantee
- Catch-all principle
- Enforcement
- Social awareness and compliance
10Legal System on Non-Proliferation Export Control
- Since the mid-1990s, China has gradually set up a
comprehensive legal system for export controls of
nuclear, biological, chemical, missile and other
sensitive items and technologies as well as all
military products.
11XC Laws and Regulations
- 1994 Foreign Trade Law Of PRC, Revised in 2004
- 1995 Regulations on Administration of Controlled
Chemicals of PRC - 1997 Regulations on Nuclear Export Control of PRC
(Under review) - 1998 Regulations on Export Control of Nuclear
Dual-use Items and related Technologies of PRC
(Under review) - 1998 Regulations on Arms Export of PRC, Revised
in 2002 - 2002 Regulations on Export Control of Missiles
and Missile-Related Items and Technologies of PRC - 2002 Regulations on Export Control of Dual-Use
Biological Agents and Related Equipment and
Technologies of PRC (Amended in July 2006) - 2002 Measures on Export Control of Certain
Chemicals and Related Equipment and technologies
of PRC - 2002 Measures on the Administration of Export
Registration for Sensitive Items and Technologies - 2003 Provisional Measures on the Administration
of Export Licenses on Sensitive Items and
Technologies
12Recent XC legal developmentsand temporary
measures
- 2004 Foreign Trade Law Of PRC, Revision
- 2005-01-01 Measures for the Administration of
Licenses for the Export of Goods (MOFCOM Order
No.28) - 2005-12-01 Reform of the Administrative Approval
System for the Import and Export of Sensitive
Items and Technologies (MOFCOM Circular No. 548) - 2006-01-01 Measures for the Administration on
Import and Export License for Dual-Use Items and
Technologies (MOFCOM and GAC Order No. 29) - 2006-07-27 Notice No.50 on Nuclear Dual-Use Items
(COSTIND and GAC) - 2006-07-31 Regulations on Export Control of
Dual-Use Biological Agents and Related Equipment
and Technologies of PRC (Amended in July 31, 2006
MOFCOM Notice No.61) - 2006-08-01 Management of Civil Aviation Parts
Export Classification (MOFCOM and GAC Order No.6) - 2006-09-07 Regulations on the Management of
Verification of Import and Export of Precursor
Chemicals (Public Security Bureau, MOFCOM Order
No.8)
13Legal Obligations
- Without registration, no one or unit can export
- Submitted application materials should be true
and complete. All records of a transaction
should be kept for at least 2 years - Exporting controlled items or technologies
without being licensed or exceeding the license
scope is prohibited - Forging, altering, buying and selling the license
is prohibited - Obtaining the license by fraud or other illegal
means is prohibited - Violators will get administrative punishment or
criminal judgment. (Shanghai and Jilin open
cases)
14Basic Principles Set in the Regulations
- Exporter Registration System
- Licensing System
- List Control with HS Code
- End-user and End-use Guarantee
- Catch-all Principle
- Legal Obligations and Penalties
15Export Registration System
- Exporter must get registered at government
department - Without registration, no individual or entity
could export sensitive items and technologies. - (Arms, Nuclear and Some Controlled Chemical
Items are Monopolized or exclusive) - (A lot of area are governed by double register
system license for qualification, license for
export item)
16Licensing System
- Export means service, technical exchange, foreign
assistance, etc. as well as physical transaction - All export of SGT should be licensed by a
competent government agency in concurrence with
other agencies concerned - Applications are handled on a case-by-case basis
- Dispute resolution system (escalating system)
- Legal time limit for licensing is 45 days. ( Not
applicable to those submitted to State Council) - Adoption of a website-based electronic system to
facilitate application
17Control List
- Nuclear Fully matched with NSG ZC lists
- Biological Fully matched with AG list (2002.6)
- Chemical Fully matched with AG list (2002.6)
- Missile Compatible to MTCR list
18End-user and End-use Guarantee
- The end-user must guarantee
- not to use the imported items and technologies
for purposes other than the declared end-use - Not to transfer the imported items and
technologies to any third party other than the
declared end-user without consent of the Chinese
government
19Catch-All Principle
- Where the exporter knows or should know that the
missile-related items and technologies to be
exported will be used by the receiving party
directly in its program for developing missiles
and other delivering systems listed in the
Control List that can be used to deliver weapons
of mass destruction, the export shall be subject
to the provisions of these Regulations even if
the items or technologies are not listed in the
Control list. - --- Article 16 in the Missiles Export Control
Regulations
20GOVERNMENT COORDINATION
- In May 2004, the Chinese Government established
an inter-agency contingency mechanism for export
control and spelt out in detail the
responsibilities, division of labor and work
procedures of relevant export control departments
in dealing with emergency cases in this respect. - Inter-agency coordinating system
- (licensing, intelligence, enforcement and
expertise support) - Fast reaction system
- (for suspected cases calling for immediate
action)
21GOVERNMENT AGENCIES CONCERNED
- Ministry of Commerce (MOFCOM)
- Ministry of Foreign Affairs (MFA)
- National Development and Reform Committee (NDRC)
- Commission of Science and Technology Industry of
National Defense (COSTIND) - Ministry of Agriculture (MOA)
- Ministry of Health (MOH)
- Customs, and etc.
22Non-Proliferation Export Control Organs
- China's non-proliferation export control involves
many of the government's functional departments.
So far, a mechanism for a clear division of
responsibility and coordination has been
established among these departments. - MOFCOM The export of nuclear dual-use items,
dual-use biological agents, certain chemicals,
and the missile-related dual-use items and
technology for civilian use is under the control
of the Ministry of Commerce (MOFCOM), in
coordination with other government departments
concerned. - COSTIND Among them, the export of nuclear
dual-use items and missile-related dual-use items
and technologies is subject to examination by the
MOFCOM, in coordination with the Commission of
Science and Technology and Industry for National
Defense (COSTIND). - MOA The export of dual-use biological agents and
technologies related to animals and plants is
subject to examination by the MOFCOM, in
coordination with the Ministry of Agriculture
(MOA) if needed. - MOH The export of dual-use biological agents and
technologies related to humans is subject to
examination by the MOFCOM, in coordination with
the Ministry of Health (MOH) if needed. - SDRC The export of equipment and technologies
related to dual-use biological agents and of
equipment and technologies related to certain
chemicals is subject to examination by the
MOFCOM, in coordination with the State
Development and Reform Commission (SDRC) if
needed. The export of controlled chemicals is
subject to examination by the State Development
and Reform Commission, in coordination with the
MOFCOM - MFA The export of sensitive items and related
equipment and technologies that relate to foreign
policy is subject to examination by the
above-mentioned competent departments, in
coordination with the Ministry of Foreign Affairs
(MFA). - GAC The General Administration of Customs (GAC)
is responsible for supervision and control of the
export of the above-mentioned items and
technologies, and it also participates in
investigating and handling cases of illegal
exports. - State Council Where the export items entail
significant impact on national security and
public interests, the competent departments
shall, jointly with other relevant departments,
submit the case to the State Council and the
Central Military Commission for approval
23NUCLEAR MATERIALS
24NUCLEAR EQUIPMENT NON-NUCLEAR MATERIAL USED FOR
REACTORS
25NUCLEAR DUAL-USE ITEMS TECHNOLOGIES
26CONTROLLED CHEMICALS
27SENSITIVE DUAL-USE ITEMS TECHNOLOGIES
(Including Biological, chemical and missile)
28Rigorous Implementation of Laws and Regulations
on Non-Proliferation Export Control
- In January 2004, the MOFCOM and the GAC jointly
launched a computer control system for the export
of sensitive items and technologies by connecting
within the same network different agencies that
approve and issue the license with the
supervision branch of the Customs. - Based on control lists for nuclear, biological,
chemical and missile exports, the MOFCOM and the
GAC jointly compiled the Export Licensing
Catalogue of Sensitive Items and Technologies
covering 658 items and technologies, of which 68
have had their customs code determined. - China's Customs also extensively apply hi-tech
equipment in various links in the process of
supervision and control of customs clearance,
which has significantly upgraded the capacity of
on-site law enforcement and efficiency of
examination - Since the end of 2002, the Chinese Government has
dealt with scores of cases of various types
concerning illegal export of sensitive items and
technologies. Competent authorities have put the
companies involved in these cases on a "watch
list" so as to prevent the recurrence of similar
activities. - Relevant competent authorities have set up a
"national expert supporting system for export
control" that engages experts from nuclear,
biological, chemical and missile fields to assist
competent authorities in making correct and
scientific judgments on relevant items during the
process of export examination and approval
29Outreach and Education
- A very important part of the whole XC system
- Co-efforts contributed by government and industry
to nonproliferation - Help to detect and avoid possible proliferation
in advance - foster and maintain a good interactive relation
with industries - Objectives of Outreach
- To raise public awareness of XC
- To guide and assist firms understand and abide by
national policies and regulations - To help firms to establish ICP, and assist them
to analyze and decide the risk of a suspected
transaction - To listen to the industry need and recommendation
on XC regulations and procedures for improvement - To consult industries on actual item for
professional and expertise opinions
30Outreach Channels
- Government Publications (Gazette)
- Website (MOFCOM/MOFA)
- Hotline
- Training Courses
- Seminars
- Individual Contacts (Upon request)
- Contacts through chambers and industry
associations (imp/exp chambers, machinery
industry association, CACDA, etc.)
31Major Activities
- Training of Officials from Local Commerce
Departments and Customs Officers - Training of Exporters Dealing with SGT exports
- Seminars with Technical Experts
- Seminars with Think-Tanks
- On-site visit to Individual Companies
- Co-hosted XC Seminars with USDOC in 2000 and 2003
- Organizing Industries to Participate in
International Meetings and Seminars
32Greater Publicity for Laws and Regulations on
Export Control and Education for Enterprises
- The Chinese Government attaches importance to
educating and training law enforcement officials
for export control, especially those at the
grass-roots level, so as to raise their policy
awareness and capability to exercise export
control according to law. - After the release of relevant laws and
regulations on export control, the MOFCOM carried
out comprehensive training programs on policies,
laws and regulations for commerce officials at
local levels. - In places prone to cases of illegal export, the
MOFCOM also holds, on non-regular basis, special
training courses on policies, laws and
regulations and law-enforcement of export
control. - The GAC, jointly with relevant organs in charge
of non-proliferation export control, conducted
training programs for on-site customs officials
across the country on policies, laws and
regulations with regard to the export control of
sensitive items and technologies.
33Greater Publicity for Laws and Regulations on
Export Control and Education for Enterprises
- To publish the full text of laws and regulations
on export control on the web sites of competent
government departments - To get export enterprises familiarized, by
organizing regular training courses and lectures
and distributing pamphlets, with policies, laws
and regulations on export control as well as the
procedures for export examination and approval to
ensure that the enterprises implement them in
real earnest and run their business according to
law - To set up a hotline to timely clear up doubts or
questions from the enterprises and to
investigate and punish illegal exporters and make
them public. - To encourages and guides the enterprises to build
their own internal mechanisms for
non-proliferation export control and implement
accountability for non-proliferation in
accordance with their own specific situations. - Some enterprises have set up offices for
non-proliferation export control to disseminate
information of relevant national policies and
legislation, draw up specific measures for
implementation within the enterprises, and
supervise their own scientific research,
production and business operations so as to
ensure that the enterprises abide by national
laws and regulations.
34Future Priority
- General training and education
- Licensing related consulting (regulations and
procedure) - ICP
35Presentation Outline
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key elements of China XC
- Case Study ICP in NORINCO
36NORINCO Introduction
- China North Industries Corporation (NORINCO) ,
formally established in 1980 with approval of the
Chinese government, is a giant enterprise group
engaged in both products operation and capital
operation, integrated with RD, manufacturing,
marketing, and services. NORINCO mainly deals
with defense products, petroleum mineral
resources exploitation, international engineering
contracting, optoelectronic products, civilian
explosives chemical products, sports arms
equipment, vehicles and logistics operation, etc.
NORINCO has been ranked among the forefront of
Chinas 500 largest state-owned enterprises in
terms of total assets and revenue.
37NORINCO ICP Elements
- Management Commitment
- Concrete Measures
- ICP Offices
- Export Compliance Instruction Manual
- ICP Intranet
- ICP Training
- Management System
- Screening System
- Recordkeeping
- Auditing
- Encouragement and Penalty
38The Commitment on Nonproliferation Export
Compliance Signed by the President of NORINCO
- NORINCO holds firmly the position that
proliferation of WMD and their means of delivery
is conducive neither to world peace and
stability, nor to Chinas security, and is
absolutely in contrary to its value of a
responsible corporation for the benefit of
international community. - NORINCO affirms its unequivocal and emphatic
support for Chinese governments policies
regarding non-proliferation of Weapons of Mass
destruction (WMD) and their means of delivery. As
an authorized defense products and services
supplier, in recognition of the sensitive nature
of its core business, its responsibility of
non-proliferation and its obligation of export
control compliance, NORINCO commits to abide by
Chinese governments non-proliferation and export
control laws and relevant law enforcement fully
and uncompromisingly. - Effective export controls must be a combined
effort between governments and companies. In
response to Chinese governments endeavor to
strengthen non-proliferation and export control
law enforcement, NORINCO chooses to take the lead
of non-proliferation and export control
compliance on corporate level. - Under the guidance of Chinese government
agencies, specifically Ministry of Foreign
Affairs, Commission of Science, Technology and
Industry for National defense (COSTIND) and
Ministry of Commerce (MOFCOM), by adopting
international best practice, NORINCO actively
pursues a sound internal compliance programs
(ICP), which prove to be a major improvement for
corporate internal control in compliance with
Chinese governments law enforcement
requirements, such as export registration,
license, end-user and end-use certification,
control list and relevant export control
examination and approval. - All NORINCO employees will actively assist in the
achievement of the corporate goal of export
compliance. In particular, NORINCO employees
involved in the export of the companys products,
technology, and services will be familiar with,
and strictly abide by, all applicable provisions
of export control laws and regulations. NORINCO
holds all executives of export-related divisions
and subsidiaries account for the responsibility
of non-proliferation and export control
compliance. - By taking catch-all principal for export control,
NORINCO attaches clear-cut and unambiguous
priority to the goal of non-proliferation of WMD
and their means of delivery over commercial
interests. In practice, this means that even if a
particular export transaction is legal according
to export control laws and regulations, NORINCO
in accordance with its corporate policy of
voluntary self-restraint in export matters will
neither directly nor indirectly supply products,
technology or services if NORINCO has reason be
believe that such items could be used by its
customer or end-user for the development or
production of WMD and their means of delivery.
- In order to ascertain what products, technology
and services, as well as which customer and
end-user, should be regarded as sensitive,
NORINCO will establish and maintain contact with
all responsible Chinese government agencies,
relevant NGOs and non-proliferation and export
control experts for information, instruction and
advice. - Proliferation of WMD and their means of delivery
represents a global challenge, NORINCO deems it a
necessity to confront the challenge through
international cooperation. International
community should enhance mutual understanding
through confidence building. NORINCO attaches
importance to and actively participates in
international best practice sharing and
cooperation on non-proliferation. For the purpose
of continuous improvement of its internal
compliance programs, NORINCO is open to cooperate
and share compliance knowledge with its
international peers, non-proliferation research
institutes as well as foreign - government agencies.
- This policy applies to all divisions and
subsidiaries of NORINCO worldwide. The principles
incorporated herein have been fully implemented
within the framework of NORINCOs existing
internal compliance programs. This policy will
continuously be reviewed and audited in order to
incorporate the latest development of
non-proliferation and export control.
39Concrete Measures
- Authorizing ICP Office with Veto Power
- Drawing up Guidance Advice of NORINCO on
Nonproliferation Export Control - 1, Improving the importance on export
compliance, and doing business on the basis of
nonproliferation - 2, Founding and advancing ICP in NORINCO
- 3, Strictly implementing the regulations,
and attaching primary importance to high risk
fields - 4, Strengthening the training and education
on nonproliferation export control. - Signing the Letter of Responsibility on
Nonproliferation Export Control
40ICP Offices
41Offices Responsibilities
- ICP Council
- ICP Council is the top management body in
NORINCO on nonproliferation export compliance.
The members of ICP Council include vice
presidents and managers of the departments
related export, such as ICP Office, Strategic
Management Department, Finance Department and
Legal Affairs Department. In charge of overseeing
regulations and work goals on nonproliferation
export compliance, determine the principles and
plans on how to deal with serious compliance
failure and authorize ICP Office to strictly
manage high risk businesses. - ICP Office
- ICP Office is the standing body to implement
the compliance program and address the day-to-day
export control issues. Its responsibilities - 1, Following the development of
international nonproliferation and studying the
impact on international military products trade. - 2, Grasping the laws, rules and regulations
of the government on nonproliferation export
control and keeping all employees of NORINCO
updated on regulatory changes - 3, Drawing up the regulations on
nonproliferation export compliance, and
implementing them after the approval of ICP
Council. - 4, According to the instruction of
President and ICP Council, ICP Office checks the
sensitive business, and exercises the power of
veto. - 5, Appointing the functional personnel to
screen export contracts related sensitive
countries, regions and sensitive items. - 6, Applying for registration of dual-use
items and technology export from MOFCOM - 7, Organizing the internal training on
nonproliferation export control, and enhancing
the communication with relevant governments and
NGOs
42Export Compliance Instruction Manual
- NORINCO has compiled Manuals on Nonproliferation
Export Compliance since 2003, which have been
distributed to all employees. - The manuals contain all international conventions
on nonproliferation, all relevant laws,
regulations and control lists issued by Chinese
government, as well as the policies and
procedures of export compliance in NORINCO. - The manuals contain all international conventions
on nonproliferation, all relevant laws,
regulations and control lists issued by Chinese
government, as well as the policies and
procedures of export compliance in NORINCO. - ICP Office closely follows up the scent of
international and internal - nonproliferation and keeps the manuals current.
43ICP Intranet
- NORINCO sets a column on nonproliferation in the
intranet which will be updated. - The column contains the electronic version of the
Manuals on Nonproliferation Export Compliance,
the latest tendency of nonproliferation and new
measures taken by the company, which provides
evidence for the - employees to consult the laws and rules they need
while a problem arise. - Export compliance intranet is a platform of
training on export compliance
44ICP Training
- ICP Office organizes trainings on
nonproliferation export control for all employees
involved in export annually. - 1, New Employees / Once a Year
- 2, Employees Involved in Defense Export /
Twice a Year - 3, Employees Involved in Export from
Subsidiaries / Once a Year - 4, Employees of Overseas Branches / Once a
Year - 5, Retired Employees / Once a Year
- Assigning employees at various level
- to receive professional training
- by the government or NGOs.
- Assigning employees from administra-
- tion, sales and law units to go abroad
- for professional training.
45Some Practices
- NORINCO has to apply for export license from
government agencies in charge of export control
according to Regulations of the PRC on
Administration of Arms Export. - NORINCO has standardized business processes, and
put a high emphasis on inquiry as starting point
of process. - Cooperating with famous company abroad, NORINCO
has implemented advanced ERP system to
standardize business processes. - NORINCO actively interacts with the government
ministries and places itself under guidance. - NORINCO has actively used government resources,
and founded the experts consultant system on
nonproliferation export control.
46Management System
- ERP Management System
- Cooperating with famous company abroad,
NORINCO has imported and implemented the
international standard ERP system. - Screening System
- 1, As for export contracts related sensitive
countries, items or technologies, NORINCO will
strictly examine the information of buyers and
end-user and end-use certificate in order to
prevent the diversion risk of these items or
technologies. - 2, The sensitive business is
- handled and screened on
- the case-by-case basis.
- All inquiries and offers are
- evaluated and monitored.
47Screening System
- Customer Screen System
- Order Screen System
- Products Screen System
48Customer Screen System
49Order Screen System
50Products Screen System
51Recordkeeping
- NORINCO has founded Documents Management Office,
and identified specific persons to maintain all
records of transactions. - NORINCO continuously improves the information
management systems and perfects the database of
export in which the history transactions can be
easily found out. - 1, Keep specific records eternally
- 2, For common transactions, identify the
period of time records must be kept according to
relevant regulations - 50 years 15 years
52Auditing
- NORINCO audits defense transaction every year.
- 1?Audits on ICP.
- 2?Random audits on the transactions related
sensitive countries and items. - ICP Office regularly audits the export
transactions of subsidiaries with Audit
Department of NORINCO. - China Arms Control and Disarmament Association
(CACDA) assess the effect of ICP in NORINCO every
year.
53Encouragement and Penalty
- The work of export compliance at different levels
must be reflected in their performance
evaluations. - The employee who doesnt comply with the
companys regulations will be subject to the
heavy penalty. If he violated Chinas export
control laws and rules, he should be subject to
criminal or civilian penalties.
54Conclusion
- Basic Policy
- Relations with Multinational XC Mechanisms
- Key Elements of China XC
- Case Study ICP in NORINCO
55Thank You !
- My Contact
- Mr. Li Genxin
- Secretary General
- China Arms Control and Disarmament Association
- 3, Toutiao, Taijichang, Beijing, 100006
- Telephone86-10-85119632
- Email ligenxin_at_hotmail.com