Controls eased on exports to China

The Bush administration late yesterday eased its proposal to tighten restrictions on high-technology exports to China.

The Commerce Department said the amended plan would make it easier for businesses to sell some high-tech products to the communist nation, but initial business reaction was tepid.

Commerce Secretary Carlos Gutierrez said the new rule “strikes the right balance in our complex relationship with China,” and represents a “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.”

The rule would make exports to certain trusted customers in China easier. It also would require licenses for certain high-technology exports if they are destined for Chinese military use, including equipment that is originally sold to European or other non-Chinese customers.

The change has been in the works since last year and business groups have objected to it on the grounds that it would not keep China from acquiring sensitive technology and would cost too much to implement.

The administration’s modified proposal includes reducing the number of categories of technology subject to the new control, to what Commerce Department officials say are the most sensitive types of items that might contribute to Chinese military efforts.

The list includes 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.

William A. Reinsch, president of the 300-member National Foreign Trade Council, acknowledged that the changes represented progress, but said problems remain. “They’ve made a number of improvements in it, they’ve narrowed the list, but it is still a flawed regulation that imposes an enormous compliance burden on business without producing measurable gains in national security,” he said.

Paul Freedenberg, vice president of the Association for Manufacturing Technology, said the proposal is a good proposal “if you have to have a proposal,” but objected to any regulations at all.

“The Chinese will take that as a sign that the U.S. is toughening up” and will avoid U.S. vendors, he said.

The administration has not been able to get other countries to agree to similar controls. Business officials have said in the past that without cooperation from U.S. allies, the proposed regulations would hurt U.S. business more than the Chinese because China can obtain the products elsewhere or internally.

Mr. Reinsch said the lack of cooperation from other countries was important but not a surprise “because they’ve said consistently that they were not going to go along.”

“What it means is that once again, the United States is going to be tying the hands of its businesses while our European and Asian allies are not going to be constraining theirs,” he said.