DATE=10/22/1999
TYPE=BACKGROUND REPORT
TITLE=EXPORT CONTROLS
NUMBER=5-445602
BYLINE=JON TKACH
DATELINE=WASHINGTON
CONTENT=
VOICED AT:
INTRO: The U-S government has indicted (Tuesday)
American aerospace giant McDonnell-Douglas and a
Chinese firm on charges of violating U-S export
controls. Prosecutors say that during the mid-1990s,
the companies conspired to send surplus machine tools
to a Chinese defense factory that makes cruise
missiles, instead of a civilian aviation plant. The
companies deny wrongdoing. As Jon Tkach reports from
Washington, the case highlights a growing conflict
between American business and national security
interests.
TEXT:
/// DEBUSK ACT ///
In the end, firms that sacrifice American
security for profit will ultimately pay a price.
/// END ACT ///
Commerce official Amanda Debusk says McDonnell-Douglas
broke export control laws designed to keep military
technology out of the hands of nations that pose a
threat to the United States.
She says the company knew early on that the Chinese
wanted to use the equipment in a military project -
but hid this information in order to secure the deal.
But Boeing, the company that now owns McDonnell-
Douglas, says the company followed all export laws and
had no reason to believe the machine tools would be
diverted for military use.
The machine parts McDonnell Douglas sold to the
Chinese fall into the category of what officials call
"dual use" goods - products that can be used for both
civilian and military ends. U-S companies are
obligated to get a license from the Commerce
Department to export such equipment so the government
can make sure the trade does not conflict with U-S
security interests.
But, an export consultant based in Washington, E-J
Pryor, says things can get really murky when it comes
to dual use goods.
/// PRYOR ACT ///
There are materials, valves, storage tanks, that
can hold shampoo, toothpaste or other items like
that. If they are lined with a very high
content nickel alloy, those may very well
require an export license from the Department of
Commerce. Because those items could be used to
make chemical weapons.
/// END ACT ///
Furthermore, he says, the foreign company that
originally buys the apparently harmless equipment may
be legitimate, but five years down the line:
/// PRYOR ACT ///
They may have a fire sale and sell their old
equipment and who may the buyers be but Pakistan
or Iran or Iraq or who knows where.
/// END ACT ///
Current export laws help guide U-S firms, but American
executives say the system is not foolproof. They say
"red flags" - or possible danger signals - are not
always that clear when a deal is underway. Aerospace
Industry Association president John Douglas:
/// DOUGLAS ACT ///
Red Flags are a matter of perception and
sometimes what's a red flag to you isn't a red
flag to me. What if every time you bought a car
for example and it turned out to be a lemon and
instead of enforcing the warranty on the car,
the courts would say well you should have known
that was a crappy dealer? Business just doesn't
work that way.
/// END ACT ///
But Ms. DeBusk of the Commerce Department says the
system is set up so that companies do not have to make
those judgment calls and the guidelines are clear.
She says McDonnell-Douglas plainly hid warning signs
from U-S export officials that the Chinese aviation
firm CATIC (China National Aero-Technology Import
Export Corporation) might misuse the equipment.
But Boeing spokesman Larry McCracken says such claims
are untrue. In fact, he says McDonnell-Douglas
officials were the ones who alerted the government -
just months after the five-million dollar deal was
signed - that the parts were not where they were
supposed to be.
Arms control analysts say the McDonnell-Douglas case
highlights weaknesses in the government's security
controls. They say the government needs to focus more
on tracking sensitive equipment once it goes overseas
- and not to leave it up to U-S companies to ensure
that the equipment goes where it is supposed to go.
Also, Rick Hurst with the Washington-based Wisconsin
Project, an anti-nuclear proliferation group, says the
wrong agency is in charge of regulating the sale of
dual use technology.
/// HURST ACT ///
We have a fox guarding the hen house situation
with export controls being primarily under the
jurisdiction of the Commerce Department.
/// END ACT ///
He says the Commerce Department's main role is to
promote U-S business interests, and that export
controls often conflict with those interests.
But Commerce's Amanda Debusk points to the fact that
McDonnell-Douglas is under indictment as proof that
the system works.
But the problem may be bigger than licensing what
equipment goes abroad.
Aerospace Industry Association President John Douglas
says there is a fundamental irony in doing business
with countries that pose a strategic threat.
/// DOUGLAS ACT ///
In one sense China is viewed by the United
States as a tremendous marketing opportunity,
and in another sense there are political people
in the U-S who have a great fear of China.
/// END ACT ///
But Mr. Douglas says few people would want to
economically isolate countries such as China. He says
trade that does not directly assist China militarily
actually helps bring Beijing's interests more in line
with those of the United States.(signed)
NEB/JON/JP
22-Oct-1999 19:39 PM EDT (22-Oct-1999 2339 UTC)
NNNN
Source: Voice of America
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