U.S. Plan Curbs Exports to Chinese Military

Sept. 21, 2005: Visitors look at model helicopters on the opening day of the China Aviation Expo in Beijing. Photo: AFP/Peter Parks

China has criticized a U.S. plan to limit exports for military use, but U.S. officials argue that the plan will boost high-tech sales to civilians.

In a proposed rule published on July 6, the U.S. Department of Commerce said it wants to revise existing regulations “to facilitate legitimate U.S. technology exports to China, while ensuring that sensitive U.S. technologies do not increase Chinese military capabilities.”

The new proposal announced by the Commerce Department’s Bureau of Industry and Security would make U.S. companies responsible for verifying that importers of 47 types of high-tech products would not use them for military purposes.

The expanded list of items includes civilian aircraft and certain software and machine tools, along with biological and other items that could be used in weapons programs.

New debate on exports

But the plan has touched off a new debate about the costs and benefits of restrictions on sales to China. Beijing continues to argue that the United States should eliminate all curbs to reduce the U.S.-China trade imbalance.

In an interview with Radio Free Asia, Matthew Borman, deputy assistant secretary of Commerce for export administration, underscored the program’s benefits.

For the first time, we’ve created a mechanism whereby foreign customers—in this case in China—can be publicly identified as being certified civilian end-users,

“For the first time, we’ve created a mechanism whereby foreign customers—in this case in China—can be publicly identified as being certified civilian end-users,” Borman said.

Borman said his agency has identified several hundred million dollars’ worth of trade that could benefit from the new program. And that figure could multiply once the program gets under way.

“Once the Chinese customers who are on the [approved] list see that being on the list makes it easier for them to get the U.S. products that they’re really interested in, I think they’re then likely to buy more of it.”

At the same time, added Borman, Chinese customers not on the list would see its advantages and would seek civilian end-user certification of their own. This “would also facilitate trade from U.S. companies,” Borman said.

Possible problems

But critics see problems with the proposed changes.

William Reinsch, a former Commerce undersecretary and now president of the Washington-based National Foreign Trade Council, called the new program “a little bit of sugar to make the medicine go down.”

“It’s not clear what the benefits would be,” he said. “It’s not clear how it would work, and we think there would be significant negative consequences.”

Reinsch said that under the new rule, a U.S. exporter might submit a Chinese customer’s name for listing as a trusted importer, only to have the application rejected not only for a specific sale but for all items in the future.

That outcome would lead to a loss of business, he added.

Reinsch said he is also concerned that the increased burden of certifying civilian end-use in China would fall heavily on U.S. companies.

“That’s going to drastically increase the compliance burden, particularly on small companies, and put them in the very difficult position of trying to figure out exactly what the Chinese customer’s intention is.”

Adam Segal, senior fellow for China studies at the Council on Foreign Relations in New York, described the proposed plan as reflecting continued U.S. concern about China’s military buildup and its intentions.

“Clearly, we still have deep suspicions about the intentions and capabilities of the Chinese military. And on the high-tech front, I think we’re going to want to prevent these critical technologies from getting in their hands.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.