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Securing our Exports to China: New Rules Can Limit Military's Access to High Technology
By
Mario Mancuso
Published:
06/18/2007
China's rise is a signature development of the early 21st century for U.S. economic and national security policy. For U.S. policy on exports, it offers the starkest example of the end of the Cold War when "trusted countries" had good customers for sophisticated U.S. exports and "adversary countries" were home to companies that must be denied U.S. technology and other items.
Now, almost all countries offer attractive opportunities for legitimate trade and security risks. U.S. export control policy toward China should evolve to keep up with these new realities in a manner consistent with our broader foreign policy. The Commerce Department today is publishing updated regulations that support U.S. companies in competing successfully in China while restricting the export of technologies that would contribute to China's military modernization.
China is one of America's most important overseas markets for high-technology items, and U.S. exporters are capturing the opportunity. Last year, U.S. high-tech exports to China grew by 44 percent to $17.7 billion - more than the entire value of U.S. exports to India, Russia and Thailand. The share of these exports subject to Commerce Department export controls is tiny, but important. About $230 million worth of high-tech exports to China - 1.3 percent - required a license in 2006. These were items like sophisticated electronic components that required an extra degree of scrutiny to ensure they were would not be used in ways contrary to U.S. national security or foreign policy.
The United States welcomes a prosperous and peaceful China, integrated into the global economy. But China's rapid and opaque military modernization, punctuated by events such as its January 2007 test of an anti-satellite weapon, demonstrates the continued need to apply additional prudent oversight to a small number of the most sensitive "dual-use" technologies and other items which by definition have both civilian and military applications. The new Commerce Department regulations strike the right balance in our complex relationship with China. First, they facilitate legitimate commercial trade by making it easier for U.S. companies to export items to Chinese companies that have a record of using them responsibly. At the same time, the new regulations place certain restrictions on high-technology items that could contribute to China's military build-up.
Specifically, the new "Validated End-User" program (VEU) will permit trusted customers in China to receive selected technologies and other items without the need for individual export licenses. Under the VEU program, exporters will be able to sell more easily to companies in China that have a responsible record of using sensitive U.S. items for their intended civilian purpose. This innovative new program promises to reduce time, expense and uncertainty in the licensing process and make U.S. exporters more competitive in China. It will also act as a powerful market-based incentive, rewarding responsible practices by the many civilian firms in China that handle sensitive technology with care.
The updated regulations also will enhance U.S. security by imposing new and heightened scrutiny on a focused set of approximately 20 types of products and technologies, such as lasers and radar antennas, when they are intended for use in Chinese weapons systems. As military procurement relies ever more extensively on commercial, off-the-shelf products, this new targeted list of controls, which was carefully developed by the Departments of Commerce, Defense and State, will help to ensure that dual-use products are not a back door to breaking the U.S. arms embargo on China.
The publication of the updated China policy regulations marks an end and a beginning. It is the end of a long debate about how to fine-tune export controls to strike the right balance in our complex relationship with China . This policy is also the beginning of new, enhanced opportunities for U.S. businesses to boost legitimate trade with one of the most important new economies in the world.