Commerce releases China export control regulation
The U.S. Commerce Department’s Bureau of Industry and Security released its long-awaited regulation this week establishing a “validated end-user” program for Chinese companies seeking to buy certain U.S.-made technologies and products.
The department called the program “an innovative way to facilitate exports to trusted customers in China.” The rule also promises fewer administrative burdens for U.S. shippers who would otherwise require a license to export to these Chinese firms.
The rule was published in the June 19 Federal Register ( http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/E7-11588.htm ).
“This new rule strikes the right balance in our complex relationship with China,” said Commerce Secretary Carlos M. Gutierrez in a recent statement. “It is a common-sense approach that will make it easier for U.S. companies to sell to pre-screened civilian customers in China, while at the same time denying access to U.S. technology that would contribute to China’s military.”
Here’s basically how the VEU process will work:
* Chinese companies may apply directly, or exporters may initiate the application process on their behalf.
* Applicants will be required to submit general business information such as ownership structure, nature of business, items to be imported, plans to transfer or re-export the items, and internal control and recordkeeping procedures.
* A U.S. government End-User Review Committee will decide on applications, considering factors such as the applicant’s record of engagement in civil end-uses; compliance with U.S. export controls; agreement to allow on-site reviews by U.S. government officials; and relationships with U.S. and foreign companies.
The Commerce Department expects to publish an initial list of approved validated end-users in China as soon as next month.
The regulation imposes new restrictions on “dual-use” technologies destined for military end-use. The Commerce Department defines dual use as items with potential for both commercial and military applications.
The regulation also establishes new controls on a focused list of items if they are destined for military end uses in China. The list covers about 20 distinct products, technologies and software, such as machine tools, program validation software, certain lasers and aircraft. (The complete list is available on the BIS Web site at http://www.bis.doc.gov/.) The Commerce Department said licenses will be required for these items if the exporter knows that they are destined for a military end-use in China.
The rule was widely reviewed with concern by major U.S. shippers and industry groups. BIS said it received 57 comments, amounting to more than 1,000 pages.