Agreement with China gives a 60-day window before inspections can occur

WASHINGTON, D.C. – Representative Edward J. Markey (D-Mass.), chairman of the Subcommittee on Energy and the Environment and a senior member of the Homeland Security Committee, today decried a last-minute agreement between the Bush administration and China to fast-track exports of sensitive U.S. technologies to companies affiliated with the Chinese government. The long-criticized Validated End-User (VEU) program will allow selected Chinese companies to import critical American dual-use technologies without a traditional export license. Export control licenses are used to prevent diversion of such sensitive technologies to military users.

"In its waning days, the Bush administration has been racing to lock in failed policies across the board," said Markey. "The misguided decision to implement the Validated End User program allowing Chinese companies to import dual-use equipment without licenses is dangerous and detrimental to our national security."

"Just a few weeks ago, it appeared the Bush administration would abandon this dangerous program due to its inability to ensure that the stated end-user was, in fact, the actual recipient of the equipment. Now, at the 11th hour, the Bush administration is moving forward with the program without providing Congress a clear and detailed explanation of how it will verify whether or not a VEU company is fulfilling its obligations as promised."

The new agreement with China requires US inspectors to give the Chinese government a 60-day notice before conducting on-site reviews of Chinese VEU importers.  In addition, the on-site reviews will be arranged by the Chinese government and accompanied by Chinese government officials.

"Under the Bush administration's agreement with China, companies would have a 60-day head start on hiding any improper transfers or information from American inspectors.  It is curious that the Bush administration would choose China, which has a long record as a pathological proliferator of equipment that could be used for military purposes, to be first in line for this more lenient policy. Historically, China has been a key supplier to Pakistan's covert nuclear weapons program.  We know that high-tech smuggling, such as the A.Q. Khan nuclear ring, is an enormous threat to US security.  But the Bush Administration is making the problem worse.  It appears that this is an example of the Bush Administration putting commerce over commonsense." Rep. Markey concluded.

In 2007, the Department of Commerce designated five Chinese corporations as "Validated End-Users," a new designation authorizing them to import certain sensitive U.S. technologies without an export control license. The Commerce Department had intended to expand the VEU program to other countries besides China.  It is not yet clear whether the Department has also altered that plan.

Rep. Markey's January 29, 2008 and March 20, 2008 correspondence with the Department of Commerce about the VEU program is available here: http://markey.house.gov/index.php?option=com_content&task=view&id=3298

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