Tracking Number:  300647

Title:  "China, Pakistan Hit by US Sanctions for Missile Deal." The US imposed trade sanctions on government entities in China and Pakistan August 25 for a 1992 transfer of missile technology and components that violates US law and the guidelines of the international Missile Technology Control Regime. (930825)

Date:  19930825


(Evidence of technology transfer unambiguous) (1930) By Edmund F. Scherr and Russell Dybvik USIA Diplomatic Correspondents Washington -- The United States imposed trade sanctions on government entities in China and Pakistan August 25 for a 1992 transfer of missile technology and components that violates U.S. law and the guidelines of the international Missile Technology Control Regime (MTCR).

State Department spokesman Michael McCurry said the sanctions mandate a two-year ban on U.S. government contracts with and U.S. licensed exports to the defense ministries of both nations and to several other Chinese entities.

Lynn Davis, under secretary of state for international security affairs, met with the ambassadors of China and Pakistan August 25 and told them the U.S. government had determined "that certain Chinese and Pakistani entities had engaged in missile-related transfers that required the imposition of sanctions under U.S. law," McCurry said. U.S. officials later said the transfer from China to Pakistan is believed to have taken place in November, 1992.

The spokesman emphasized that the "determination" follows "a close examination of a growing body of evidence over several months." He said U.S. officials had repeated contacts with both governments in an attempt to clarify numerous reports from many sources about an M-11 missile-related transfer from China to Pakistan, but responses from the two governments were unsatisfactory.

"United States law calls for the imposition of sanctions on foreign persons who knowingly transfer to a non-MTCR country missile control technology regime annex items that contribute to the development of missiles capable of carrying a payload of 500 kilograms a distance of 300 kilometers," McCurry explained.

"In this case, the United States government has decided to impose what are called Category II sanctions," he said, explaining those apply to transfers of "certain items in the MTCR annex which contribute to missile development."

For many months, U.S. officials examined "the question of whether a certain shipment in 1992 contained items that are sanctionable under the relevant U.S. law," McCurry said. The final determination was reached late August 24. Once a determination is made that a transfer has occurred that violates the MTCR guidelines, U.S. law requires the immediate imposition of sanctions, he noted.

The determination "relates to a single, sanctionable transfer," the spokesman said. "There are limits on what we can say publicly about what we know about the shipment...because it all involves sensitive procedures for collecting information and evaluating information," he told questioners. "The shipments clearly contained missile-related technology and components that led to the conclusion that a sanctionable event had occurred," he said.

Chinese and Pakistani officials have essentially maintained "that their commitment to adhere to MTCR guidelines has not been violated by any of these transfers," McCurry said.

The sanctions affect the entities that were engaged in the transaction and their subsidiaries, he said. Those are the Ministry of Aerospace Industry in China, which includes the China Precision Machinery Import-Export Corporation, and the Ministry of Defense. Since the imposition of sanctions also relates to some of their sub-units and subsidiaries, a total of 10 different entities in China were included in the determination, he said. The Ministry of Defense was the only Pakistani entity affected by the sanctions, he said.

Category II sanctions require a denial of any new export licenses for items on the MTCR annex list, which are regulated by the State Department's munitions control list and dual-use items on the Commerce Department's Export Administration Act control list. The sanctions will last for two years. The sanctions also require denial of U.S. government contracts relating to MTCR annex items with the sanctioned entities for two years.

The principal impact of the U.S. sanctions on China will be the prohibition of sales of satellites and U.S.-licensed satellite technology which Beijing has been seeking, McCurry said. In the case of Pakistan, there has been "very little commercial activity that qualifies under the MTCR guidelines," he said.

While it is difficult to gauge the dollar impact of the new sanctions on trade with China, the spokesman said, "it's our estimate that somewhere between $400 million and $500 million a year of commercial activity will be affected by the sanctions that are imposed today." In the 1992 fiscal year, the most recent year for which complete annual statistics are available, the commercial value of items in the categories affected by the sanctions was roughly $370 million.

The sanctions will affect only U.S. exports to China. Category I sanctions would have an impact on Chinese exports to the United States, he explained.

"Of course, that's a significant cost that we pay," the spokesman acknowledged. "But it reflects the seriousness with which we look at the issue of proliferation," he said, "probably the most important arms control issue in the 1990s."

"The United States does feel very strongly about proliferation of this nature in a region of the world in which there is great potential for conflict and destabilization," the spokesman declared.

The review of the missile technology transfer began under the Bush administration, and President Bush charged the State Department with heading the investigation. However, there was "extensive interagency work" and the White House "has been actively involved every step along the way," he said.

There is no latitude in deciding what sanctions to impose once sufficient evidence of a transfer has been found, McCurry explained. The law mandates what sanctions must be imposed.

He said Under Secretary Davis "found that there is unambiguous evidence that a Category II transfer has occurred, but there's ambiguity on the question of whether or not a Category I transfer has occurred."

McCurry explained that "Category I items are complete rocket systems, in effect. They're missiles. They are complete subsystems, including rocket stages, rocket engines, guidance sets. The items that are in Category II are subject to some technical parameters.

"They include things like rocket propellant, mechanisms for separating rocket stages, rocket motor cases, insulation and nozzles, instrumentation and navigation equipment, flight control systems, such as altitude control equipment, avionics equipment such as radar and global positioning systems, instrumentation and navigation equipment, launch support equipment, such as vehicles for transporting or launching rockets and tracking systems, certain types of computers and software, and testing facilities and equipment such as wind tunnels, and production equipment or technical data related to the above equipment," he said.

While U.S. firms would lose future contracts under the sanctions regime, McCurry said it was his understanding that contracts now in effect will remain in effect. "This affects new licenses for exports," he said of the sanctions.

"We have repeatedly raised with both the government of China and the government of Pakistan our concerns about this particular transfer," McCurry said, including Secretary of State Christopher's meeting with the Chinese foreign minister in Singapore on July 25th and Davis's meeting with senior Chinese government officials in Beijing on July 29th, as well as meetings with the acting prime minister of Pakistan in Washington and subsequent contacts with the Pakistani government.

In those "extensive diplomatic contacts," he said, both governments were asked "very specific questions that would help the United States analyze and evaluate the information that we gathered. And the response in every case to those repeated inquiries has been unsatisfactory," the spokesman said.

America's partners in the MTCR will be notified of the U.S. determination, "and it will have substantial impact on commercial activity that other countries engage in," he said. Some of the U.S.'s closest partners have known for some time of the investigation and they "will want to examine their own export control procedures as a result of this determination," he said.

"Because it's a cooperative effort in the international community," he said, "this does resonate beyond just the commerce involving the United States."

The spokesman said President Clinton will not consider the missile technology transfer when he considers renewing China's most-favored-nation trading status next year. When Clinton signed an executive order May 28 renewing MFN for one year, McCurry recalled, "he set aside exactly these questions of proliferation so that they could be looked at, examined, and then the relevant U.S. law could be enforced separate from the decision or the review next year of Most Favored Nation status."

The spokesman emphasized that proliferation issues, which the U.S. takes very seriously, are "not the sum and substance of our relationship" with China. "We would certainly hope that there would be additional opportunities to work closely with the Chinese on a wide variety of other issues. But this issue required this very direct response under U.S. law," he said.

In her meeting with the Chinese and Pakistani envoys, Davis offered "to work together to examine this issue in the future during the next two years to see if we could resolve our concerns and comply with the goals of U.S. export laws," McCurry said. "We are willing to work with them to seek any new information or to evaluate any new information that's made available and the offer with them on this particular issue is genuine," he said.

"Outside this proliferation issue we have a wide range of security concerns, economic concerns, trade relationships, cultural exchanges, things like that which, of course, we would hope will continue and would reflect the positive aspects of our bilateral relations with both China and Pakistan," the spokesman said. "But on this issue, on this particular matter, U.S. law is clear and we have enforced the law as we are required to do."

Later Under Secretary Davis told reporters that the United States wants to work with China on the whole non-proliferation agenda and noted that "there are a variety of avenues in which our non-proliferation goals are working very much in parallel."

Davis said she has proposed to the Chinese ambassador that "we begin as soon as possible negotiations" at the technical and political levels to understand the provisions of the MTCR and "how we each interpret those provisions."

She said that the sale of a U.S. super computer to China is still being considered since "it is not directly affected" by the sanctions.

Davis noted that Pakistani leaders "by their own words and statements" have been seeking missiles and missile technology "because of the fears they see for their security in their part of the world."

She told questioners that if "we had conclusive evidence that Pakistan had a M-11 missile, we would have made (the more serious) Category I determination. We do not have evidence that Pakistan has a M-11 missile. We have conclusive evidence that they have received from China items related to a M-11 missile" which exist on the MTCR annex list of controlled items.

She noted that U.S. legislation and a U.S. determination about a nuclear-weapons program in Pakistan have already placed sanctions on Pakistan. So the effect of the new sanctions on that nation would be "minimal."

Davis said that sanctions that fall under the so-called Helms amendment -- sanctions against non-market economies that are not former Warsaw Pact nations -- have already been imposed in response to Bejing's crackdown on the democracy movement.

She noted that the United States has been "pleased" to begin discussions with the new Pakistani government on a whole range of issues and "hopes that we can put behind us the past concerns" of the United States about the nuclear development program.