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Commerce approves first 5 Chinese firms for VEU status

Commerce approves first 5 Chinese firms for VEU status

The U.S. Commerce Department’s Bureau of Industry and Security announced Thursday that it has approved the elimination of individual export licensing requirements for five Chinese companies under its new Validated End User program.

   “The VEU program for China will make transactions easier, faster and more reliable with customers that meet rigorous security requirements established by an interagency review process, and will help U.S. exporters remain competitive in one of the fastest-growing markets for American companies,” the Commerce agency said in a statement.

   “By removing routine exports to specific, security screened companies from the traditional interagency review process, BIS and other relevant agencies can better focus their resources on review of exports that raise greater security concerns,” the agency added.

   BIS focuses on industry compliance with export controls pertaining to “dual-use” items, or American-made goods with both commercial and military applications. The Bush administration and some members of Congress have voiced concern about China’s rapid military buildup and want to ensure that certain U.S. technologies don’t contribute to it.

   The VEU program, which took effect in June, includes a list of items covering 31 entries on the Commerce Control List, such as aircraft and aircraft engines, avionics and inertial navigation systems, lasers, depleted uranium, underwater cameras and propulsion systems, certain composite materials, and some telecommunications equipment for space communications or air defense. U.S. exporters of electronics, semiconductor equipment and chemicals are expected to benefit most from the China VEU program, BIS said.

   The first Chinese companies approved so far for VEU status include:

   * Applied Materials China, a subsidiary of Applied Materials USA and a maker of semiconductor manufacturing equipment. The approved facilities are located in Beijing, Shanghai and Wuxi, and the approved items include pressure transducers, semiconductor raw materials and spare parts for ion implementation, etching, wafer handling, and lithography equipment.

   * Boeing Hexcel AVIC Joint Venture, a composites manufacturing firm that produces composite parts for secondary structures and interior applications for commercial planes, including the new Boeing 787. The approved facility is located in Tianjin, and the approved items include raw materials for making composite structures and machine tools for composites manufacturing.

   * National Semiconductor Corp., a manufacturer of electronic components. The company operates three sales and marketing offices in China, which are engaged in National Semiconductor products mainly through authorized local distributors. The approved facilities are located in Beijing, Shanghai and Shenzhen, and the approve items are analog-to-digital converters.

   * Semiconductor Manufacturing International Corp., an integrated circuits foundry. The approved facilities are located in Beijing, Chengdu, Shanghai and Tianjin, and the approved items include pressure transducers, chemical handling equipment, chemicals, semiconductor raw materials, and semiconductor manufacturing equipment.

   * Shanghai Hua Hong NEC Corp., another integrated circuits foundry. The approved facility is located in Shanghai, and the approved items include pressure transducers, chemical handling equipment, chemicals, semiconductor raw materials, and semiconductor manufacturing equipment.

   According to Commerce, these companies in 2006 imported about $54.3 million worth of U.S. goods under licenses, or about 18 percent of total U.S. licensed exports to China.

   These companies, which accounted for 150 licenses between 2002 and 2006, were approved for VEU status after “a thorough review of such factors as the entity’s record of exclusive engagement in civil end-use activities; the entity’s compliance with U.S. export controls; the need for an on-site review prior to approval; the entity’s capability of complying with the requirements of authorization VEU; the entity’s agreement to on-site reviews to ensure adherence to the conditions of the VEU authorization by representatives of the U.S. government; and the entity’s relationships with U.S. and foreign companies,” BIS said.

   Companies granted VEU status will also be published in the Federal Register and added to a list maintained in the Export Administration Regulations, the agency said.

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