Identifier
Created
Classification
Origin
06BEIJING19362
2006-09-13 09:13:00
CONFIDENTIAL
Embassy Beijing
Cable title:  

CUSTOMS' EXPORT CONTROL ENFORCEMENT ROLE IN

Tags:  PARM ETTC PREL MTCR CH 
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O 130913Z SEP 06
FM AMEMBASSY BEIJING
TO SECSTATE WASHDC IMMEDIATE 6843
INFO CHINA POSTS COLLECTIVE
C O N F I D E N T I A L BEIJING 019362 


DEPT FOR T, ISN, EAP/CM

E.O. 12958: DECL: 09/08/2036
TAGS: PARM ETTC PREL MTCR CH

SUBJECT: CUSTOMS' EXPORT CONTROL ENFORCEMENT ROLE IN
SHANGHAI

Classified By: Political External Unit Chief Edgard D. Kagan. Reasons
1.4 (b/d).

C O N F I D E N T I A L BEIJING 019362


DEPT FOR T, ISN, EAP/CM

E.O. 12958: DECL: 09/08/2036
TAGS: PARM ETTC PREL MTCR CH

SUBJECT: CUSTOMS' EXPORT CONTROL ENFORCEMENT ROLE IN
SHANGHAI

Classified By: Political External Unit Chief Edgard D. Kagan. Reasons
1.4 (b/d).


1. (C) Summary: The PRC's General Administration of Customs
(GAC) utilizes a risk management system to identify "certain
countries and regions" and "certain goods" to be subject to
physical inspection before export, Customs officials at
Shanghai's Waigaoqiao Port told Poloff during a September 7
meeting. The GAC officers said that they receive information
on shipments of concern via the U.S. Container Security
Initiative and from GAC Headquarters in Beijing, noting that
they would not necessarily know that the source of any
Beijing-supplied information was the United States. "Recent
cases" at the port include discoveries of smuggled aluminum
alloy rings, graphite, zirconium powder and hydrogen fluoride
potassium, they said. The Customs officials could not
describe what percentage of the goods exported from the port
are "sensitive goods," saying only that the number is "quite
high." The port employs three container scanners. Poloff
also attended the opening ceremony of an export control and
nonproliferation training program at the Shanghai Customs
College, although the MFA and Ministry of Commerce sessions
were closed to foreigners. End Summary.


2. (SBU) Poloff traveled to Shanghai September 7 to observe
an export control and nonproliferation training program for
Chinese Customs officers and to gain a better understanding
of the role GAC plays in export control enforcement.

Waigaoqiao Port Operations
--------------


3. (SBU) At Shanghai's Waigaoqiao Port, an all female team of
GAC officials, including the port's Deputy Director and
inspection, export control and anti-smuggling chiefs,
provided Poloff with an overview of the port's operations and
its export control responsibilities. The Customs officers
said that 224 employees are responsible for inspecting and
clearing cargo at the port's 16 berths that handle 70 percent
of Shanghai's cargo container traffic, which amounts to 12.7
million TEU's annually. Customs officials at the port
receive 2,500 import and export customs declarations per day,
of which 1,000 are for shipments transiting Shanghai mostly
from one Chinese city to another, the GAC officials claimed.



4. (C) According to the Customs officers, the Ministry of
Commerce (MOFCOM) does not pre-notify Customs officers at
Waigaoqiao Port that an export license has been issued to an
exporter planning to ship cargo via the port, although GAC
has computerized access to MOFCOM-issued licenses. The
officials told us that GAC "sometimes" phones MOFCOM to
verify the authenticity of licenses. Exports at the port are
cleared electronically. A GAC official told Poloff
separately that, aside from China's small, rural Customs
stations, such as those along the Laos and Burma borders, all
of China's Customs stations are fully automated and linked by
computer.

Analyzing Risk
--------------


5. (C) Customs utilizes a "Risk Management Platform" to
determine what cargo should be subject to physical
inspection, the Shanghai Customs officials stated. "Certain
countries and regions" and "certain goods" alert officers of
the need for inspection. They said GAC officers also compare
paper documentation filed by the exporter with documentation
submitted electronically and if inconsistencies are detected,
the cargo is inspected. The officers stated that they
receive information on shipments of concern directly from the
United States via the U.S. Container Security Initiative and
from GAC Headquarters in Beijing, noting they would not
necessarily know that the source of any Beijing-supplied
information was the United States. According to the
officials, "recent cases" at the port include discoveries of
smuggled aluminum alloy rings, graphite, zirconium powder and
hydrogen fluoride potassium. When asked several times what
percentage of the cargo exported from the port is classified
as sensitive goods, the Customs officials responded only by
saying that the number is "quite high." (Note: A PRC
official attending a training program at the University of
Georgia reportedly claimed that GAC maintains records of
exports based on the product's 10-digit Harmonized Tariff
classification. End Note.) The officers claimed that
sensitive goods are exported by both sea and air.


6. (C) The GAC officers explained that if smuggling is
suspected at the port, the matter is referred to GAC's
Anti-Smuggling Unit for further investigation. The port
employs three H986 scanners that have been in operation since

2000. The officers said that 160 containers are scanned
daily. They had no data on the number of violations detected


other than to state that mis-declarations are discovered
every day, but most are "not serious."


7. (SBU) Waigaoqiao occupies four square kilometers and is
separated from the main road by an approximately 100-meter
field of green grass. A white fence without barbed wire runs
along the road and along the port boundary, making the field
a "no-man's land." Poloff did not see any cameras along the
fence line, but was only able to observe about a half-mile of
the port's perimeter. Access to the port is via several
manned toll-like booths.

Training China's Future Customs Officers
--------------


8. (SBU) At the export control and nonproliferation training
program opening ceremony, Customs Commissioner Yu Shen,
addressing a packed auditorium of GAC officials, noted the
importance of export controls and China's commitment to
prevent the proliferation of weapons of mass destruction.
MFA Arms Control and Disarmament Missile Division Director Ma
Shengkun kicked off the training program's first session with
an overview of China's nonproliferation policies. However,
Ma's session and MOFCOM's afternoon session on export control
licensing procedures were closed to foreign observers.
Poloff noticed that approximately 30 uniformed GAC cadets,
who sat together in the upper corner of the auditorium and
never moved from their seats following the opening ceremony,
were joined by 20 to 30 casually dressed officials for Ma's
presentation.


9. (SBU) While Ma spoke, Poloff and two export control
experts from the University of Georgia participating in the
second day of the training program toured the Shanghai
Customs College, a diploma-issuing institution with 1,500
students. Customs Commissioner Yu, who is also the school's
dean, explained that 30 percent of GAC's 50,000 active
officers are graduates of the college, which also provides
continuing education to GAC officials. The curriculum
includes, inter alia, Harmonized Tariff classification,
customs audits and customs brokerage and logistics. Yu said
that he exposes his cadets to China's export control laws and
regulations and discussed future cooperative ventures with
the University of Georgia experts.


10. (U) According to Yu, students are attracted to the
university because they believe that a government job offers
long-term economic security. However, before starting a
career with GAC, graduates must pass China's civil service
exam. If they fail, Yu said, graduates can "always find jobs
in business." The college is undergoing expansion and
renovation, including construction of new dorms and
classrooms, as well as a World Customs Organization training
center for the Asia-Pacific region. The campus will include
canals and lakes and, Yu hopes, someday a golf course. New
administration buildings, a three-story library with a
wood-paneled lounge and an athletic center complete with an
Olympic-size swimming pool and retractable roof have already
been built. When asked how a government agency can afford
these amenities, a Chinese nonproliferation expert stated
that, because it is a revenue raising agency, the PRC "just
throws money at Customs."
RANDT


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End Cable Text