[EXCERPTS] U.S. Department of State

Daily Press Briefing

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QUESTION: Are you concerned at all about this computer missile technology that two US companies are said to have passed on to China, in light of the fact of the State Department's efforts in this area with the Chinese Government? And do you think that this in any way undermines the work that you are ongoing with them.

MR. RUBIN: Let me say this - the question of whether an unauthorized transfer of any information or know-how to China occurred is a subject that's under investigation. Therefore, to get into it in any detail is not possible from this podium.

However, we did make clear - and I can make clear for you again today - that we do believe that our licensing system and our process for ensuring that the US technology and know-how is not transferred to China allowed us to provide a second license to one of the companies involved. That is because the licenses in the second case tightened up or eliminated any uncertainty on the question that there must be no contribution to China's capability to design, develop, operate, maintain, modify or repair a launch vehicle. This policy was developed during past Administrations, and the US and China memorialized the understanding in a bilateral satellite technology safeguards agreement.

There was an issue of whether an after-action report was shared with the Chinese; and I can assure you that we felt confident that such an event was not going to occur again in the light of the discussions that were going on. So we take nonproliferation as seriously as we can. We push very hard to make sure that while advancing America's interest in allowing American companies to compete in the global marketplace by placing satellites in space in an efficient way, we are not undermining our determination to prevent unauthorized technology from going to China.

We believe we've been doing that. Obviously, there is a case that's under discussion, but in no circumstance do we believe that the policy of allowing China to launch American satellites is ipso facto providing China technology that will enhance their capabilities. The short way of understanding this is that when one of these satellites is placed on a Chinese booster rocket, it's essentially in a black box and the Chinese don't have access to that satellite or its mechanisms. What the Chinese do is boost the satellite cheaply, and frankly, from locations that provide orbital advantages for where the satellite ends up in the orbit.

That is the reason why we think there is a way to advance America's economic interests by allowing these satellites to be launched without harming our nonproliferation goals.

QUESTION: So you don't think in any way this information, should it be proven that it was indeed passed on --

MR. RUBIN: You've got to be more specific, you're just --

QUESTION: Well, the information from, let's see, the two companies: Loral Space and Communications --

MR. RUBIN: That's under investigation.

QUESTION: -- and Hughes Electronics. Now, I understand it's under investigation.

MR. RUBIN: Right.

QUESTION: But should you have a concrete, hard and fast conclusion that this information helped the Chinese in their ballistic missile program - the information that was passed on from the two companies to China - wouldn't that indeed undermine the work that you're doing now with them?

MR. RUBIN: That's what we call, in this business, a hypothetical question. What I can say to you is that we believe that the tight safeguards we build into these systems deter the unauthorized transfer of technology.

The fact that all of this discussion is going on about a potential violation demonstrates the stringency of our control system. No control system is perfect, and what we have to do is weigh the risks of not allowing the Chinese to launch American satellites and damaging the economic interests of the United States and its companies against what we consider to be minimal risks as a result of these tight safeguards on technology transfer. That is how governments make policy. People afterwards can always know that it was wrong to weigh the risk one way or another; but what we do is balance the risks of not allowing these satellites to be launched against the tight safeguards that we have in place.

QUESTION: I believe you said that you went ahead and issued a second license.

MR. RUBIN: Correct.

QUESTION: To either Loral or Hughes, if you could clear that up.

MR. RUBIN: Right. Loral.

QUESTION: To Loral, after you found out that they did share the after-action report with the Chinese?

MR. RUBIN: No, I referred to that as a reported situation in the newspapers. What I'm saying is that is under investigation.

But whatever might have happened in the first case, in answering the question of why we think the safeguard system is a good system, I'm indicating that even though there was a question raised, we went ahead and allowed an additional launch because we were weighing, again, the risks of not allowing American companies to have access to space -- which is an area of competitive advantage for the United States that makes us the global superpower that we are because we can exploit the high tech advantages of satellites in space. It would undermine our national security if we weren't able to exploit fully the opportunity to have satellites in space. We weighed that against the risk of unauthorized transfer with the safeguards that we put in place to prevent that, and we went forward with that second launch.

QUESTION: How long had you known - maybe this is too much detail, but at what point were you in the investigation when you issued the second launch --

MR. RUBIN: I'd have to get someone to answer that specifically, but they'll probably tell you that it's under investigation.

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(The briefing concluded at 1:50 P.M.)

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