EXPORT CONTROL BILATS BETWEEN FRANCE AND DOC ASSISTANT

C O N F I D E N T I A L PARIS 007705

SIPDIS

DOC FOR BIS A/S CPADILLA/MDIPAUL-COYLE
DEPT FOR PM/DDTC
SIPDIS

E.O. 12958: DECL: 12/06/2021
TAGS: ETTC EINV FR

SUBJECT: EXPORT CONTROL BILATS BETWEEN FRANCE AND DOC ASSISTANT
SECRETARY CHRISTOPHER PADILLA

SIPDIS

Classified by Econ Counselor Stuart Dwyer for Reasons 1.5 (d)
and (e).


1. (C) Summary. On November 30, Assistant Secretary of Commerce
for Export Administration Christopher Padilla met with a GOF
interagency group to discuss a wide variety of export control
issues and strategic trade issues. The two sides addressed the
U.S. Government's proposed China Licensing Policy Rule,
implementation of United Nations Security Council Resolution
1718, a proposal to establish a working-level group to discuss
controls regarding night vision technology, and concerns over
illicit diversion through the United Arab Emirates. The
Secretariat General for National Defense (SGDN) Director of

SIPDIS
Technology and Sensitive Transfer, Jean-Luc Vo Van Qui, led the
GOF delegation. End Summary.

French and U.S. Export Control Systems
--------------


2. (C) Vo Van Qui explained that the SGDN, which belonged to the
Prime Minister's Office, coordinated the export control of
military equipment and sensitive scientific exports. Ministries
that participated in the GOF interministerial export control
group were the Ministry of Defense, Ministry of Foreign Affairs,
and the Ministry of Economy, Finance, and Industry. GOF law
applies to the export control of military equipment, while
European regulation covers dual use items. In July 1995, the EU
Council of Ministers adopted a dual-use export control system
for all member countries. The EU adopted a harmonized list of
dual-use goods and technology that require a license if exported
from the EU. Companies that want to export dual use items
should apply to the French customs authorities. Customs sends
the application to the ministry that overseas that sector. The
relevant ministry either approves the application or discusses
with the SGDN, Defense Ministry, and Ministry of Foreign Affairs
if there is a problem. In such cases, SGDN makes the final
decision about whether to approve the license.


3. (SBU) Padilla explained thhe U.S. licensing system, including
the division of responsibilities between the Departments of
State and Commerce, and the role of the Departments of Defense,
Energy and the intelligence community in reviewing applications.



4. (C) Vo Van Qui said that France is now reviewing procedures
for dual use licensing and asked whether DOC could receive a GOF
delegation from various ministries that were compiling a report
on international best practices. Padilla agreed to host a
delegation in 2007.

Export Controls to China
--------------


5. (C) Padilla noted that, in December 2003, the 33 members of
the Wassenaar Arrangement agreed upon a Statement of
Understanding (SOU) that requires member countries to take
appropriate measures to ensure that a government authorization
is required for exports of non-listed, dual-use items for
military end uses in destinations that are subject to a binding
United Nations Security Council (UNSC) Arms embargo or any
relevant regional or national arms embargo. The USG is drafting
two regulations to implement this SOU: one specifically for
China, and one for all the other countries subject to arms
embargos. In both regulations, the DOC will require a license
for otherwise uncontrolled goods and technologies when the
exporter knows that the export has a military end-use.


6. (C) The Commerce Department decided to implement a separate
regulation, towards China (published in proposed form in July
and to be finalized in early 2007) to better address the unique
U.S. - China bilateral economic and political relationship.
Padilla noted that it has been longstanding U.S. policy to
encourage legitimate civilian high technology trade with China
while restricting exports that could contribute to the country's
military modernization. The proposed China rule both addresses
U.S. commitments under the 2003 Wassenaar Arrangement SOU and
further clarifies this long-standing U.S. policy. Importantly,
the proposed rule does not impose a broad military "catch all"
on exports to China. Rather, it will impose new licensing
requirements on 47 specific items and technologies that could be
incorporated into Chinese weapons systems. (Padilla shared the
list with the GOF.) Padilla urged the GOF to work with the USG
to ensure that the Chinese military could not obtain such
systems from other Wassenaar countries, as it is the USG's view
that the export of these technologies and their incorporation
into weapons systems undermines the EU arms embargo. He urged

the GOF to implement similar controls as part of its Wassenaar
Arrangement commitments.


7. (C) Vo Van Qui replied that France handled some of the items
on the U.S. list through its military equipment export control
procedures and could more easily control those. GOF
representatives would scan the list to see how many items fell
into this category. The GOF was noncommittal on whether or how
it would work with the EU to adopt similar controls. Padilla
pressed, arguing that to allow unlisted exports to military
end-uses is both contrary to the Wassenaar understanding and
would undermine the EU arms embargo. GOF officials argued that
because the EU embargo is "limited," they did not agree that the
2003 SOU applied to China.


8. (C) Padilla continued that the China regulation would also
include a new authorization for validated end-users (VEU),or
trusted customers. This authorization would allow the export of
certain controlled items to specified, pre-vetted end-users
without a license. The trusted customer concept could greatly
facilitate civilian commercial trade with PRC end-users that
have an established record of engaging only in civil end-use
activities. The DOC and other relevant agencies will evaluate
prospective validated end-users on a range of factors, including
history of compliance with U.S. export controls and agreement to
periodic visits by USG officials.


9. (C) Commerce hopes to include a list of initial candidates
that could be eligible for VEU status when the regulation is
published in early 2007. The VEU concept has the potential to
take out of the licensing system several hundred routine
licenses to China worth hundreds of millions of dollars. If
successful, this program could be expanded to other countries.
Vo Van Qui asked to be apprised of how implementation proceeds.
He noted that France would not be able to adopt a similar
regulation since European Council Regulation 1334 governs such
exports. The GOF would not be able to change its regulations
without consultation and agreement with other EU partners.


10. (C) Padilla then noted that the second regulation will
implement a military end-use control to other countries against
which the U.S. maintains arms embargoes. These countries
include Afghanistan, Belarus, Myanmar, Cote d'Ivoire, Cuba,
Haiti, Iran, Liberia, Libya, North Korea, Somalia, Syria,
Vietnam, and Zimbabwe. Padilla noted that this regulation will
apply to all items listed on the Commerce Control List, and that
the regulation will be published in interim final form later in

2006. The USG will report on this regulation at the meeting of
the Wassenaar Arrangement the following week.

Thermal Imaging Cameras
--------------


11. (C) A/S Padilla then turned to the issue of thermal imaging
cameras, controls of which are particularly important given
their variety the military and potential terrorist uses.
Thermal imaging cameras provide significant advantage in the
areas of targeting, surveillance, and force mobility, and DOC
issued more licenses for thermal imaging cameras than any other
product. However, civilian uses for thermal imaging cameras
have grown considerably and are now used for such civil end-uses
as search and rescue, firefighting, search and rescue, and
maintenance of high voltage lines.


12. (C) The EU was the largest importer of U.S.-origin thermal
imaging cameras, accounting for approximately 65 percent of all
export applications. Padilla noted some concerns over the
export of certain cameras from the EU, citing British-origin
sensitive night-vision equipment that had been recovered from
Hezbollah fighters during the war in Lebanon. Not all thermal
imaging cameras were equally sensitive, and major exporting
countries should coordinate to decide which low-end cameras did
not require export controls, and which high-end ones should have
stricter controls.


13. (C) Padilla proposed a working level dialogue among U.S.,
French, British, German and Swedish experts focused on sharing
best practices and other information related to the licensing
and enforcement of exports of thermal imaging cameras. The
dialogue could specifically address licensing conditions,
controls on the most sensitive items, concerns related to
specific end-users, transshipment concerns, and enforcement
actions that relate to EU entities. Padilla proposed organizing
the first meeting in Europe during the first half of 2007.


14. (C) Vo Van Qui lamented that French industry and "certain

elements of the French administration" accused him of being
"excessively strict" on night vision equipment exports and urged
using more lax dual use procedures. These same GOF parties
wanted to loosen controls on thermal imaging cameras, night
vision goggles, detectors, and similar gear. The GOF used its
more strict military equipment export controls for nearly all
such equipment. This means that French companies must have
prior approval at each stage of their business transactions:
discussing such exports, signing contracts, and shipping the
equipment. Often, the GOF granted licenses with conditions.
The GOF usually ships the most sensitive equipment to NATO
members, Japan, Australia, and New Zealand. The GOF ships
sensitive items to other countries on a case by case basis. For
some less sensitive low end equipment, the GOF will ship to
almost any country. Vo Van Qui supported consultations
indicating interest in a consistent approach to simplifying
procedures without increasing the risk of diversion. Padilla
promised a proposal for dates, venue, and level for talks.

United Arab Emirates - Port of Diversion
--------------


15. (C) Turning to illicit diversion, Padilla briefed the French
group on USG concerns about the diversion and proliferation of
dual use items transiting the United Arab Emirates (UAE). The
UAE lacks an export control system and is a key regional
transshipment hub. The USG has found evidence of diversion of
goods controlled by multilateral regimes routinely diverted from
Dubai to Syria and Iran. UN Security Council Resolution (UNSCR)
1540 obligates all Member States to criminalize weapons of mass
destruction (WMD) proliferation and establish effective export
controls and strong enforcement measures. In its December 2004
report on UNSCR 1540 implementation, the UAE Government (UAEG)
committed to enacting an umbrella export control law in the
"very near future." The USG has worked with the UAEG since 2001
on capacity building, but the UAEG has not made progress on
establishing an export control system. It has asserted for more
than a year that its draft law is delayed in its legislature.
If the UAE makes no progress in the next month or two, the USG
may impose more restrictive licensing on the UAE. It would be
useful for the GOF to weigh in with the UAEG over the latter's
failure to pass an export control law, consistent with UNSCR
1540, 1696, and 1718.


16. (C) Ministry of Foreign Affairs Security Strategy and
Disarmament Ballistics Specialist David Bertolotti said that the
EU had sent a mission to the UAE two weeks previously. The
European Council and European Commission decided to establish a
dual use pilot project in UAE (along with Russia, China, Serbia,
and Montenegro) because of the risk of diversion in UAE and to
help it build capacity. The EU also warned the UAEG that the EU
would take into account diversion risk if the UAEG did not pass
an export control law. The UAEG believes, however, that passing
an export control law would cause trade to shift to Oman, which
Bertolotti said had a close relationship with Iran and Syria.
The EU is training the UAE police in risk-based management of
export controls. The EU also has a forum for discussing
security concerns with the UAE and is raising the need for an
export control law in that forum. The EU is at an earlier stage
in its efforts with the UAEG, and GOF officials remarked that
they would press the UAEG, but would give them "more time."


17. (C) Padilla responded that federal UAE authorities
understand the importance of an export control law, but the
ability to influence the Sultan of Dubai, who has extensive
business interests in Dubai port, is limited. The USG is
concerned that the UAEG's constant requests for training has
been an excuse for delay in passing the export control law. The
USG has suspended further export control assistance until the
UAEG passes an export control law. The DOC posted an export
control officer to the American Embassy in Abu Dhabi to conduct
end-use checks, counsel companies, and work to encourage the
UAEG to improve its export controls. The rate of unfavorable
checks for Abu Dhabi is double that of the next worse location.


18. (C) In addition, the USG is concerned about the activities
of UAE firm Mayrow General Trading and related entities. Mayrow
has acquired electronic components and devices capable of being
used to construct improvised explosive devices (IEDs) that are
continuing to be used against coalition forces in Iraq and
Afghanistan. Vo Van Qui requested a nonpaper on Mayrow, and
Padilla promised to send him one.

Sanctions on North Korean Luxury Goods
--------------


19. (C) Turning to North Korea, Padilla noted that on November
13, the USG submitted its report on implementation of UNSCR
1718, which calls for sanctions on North Korea because of its
test of a nuclear bomb. This report included the list of luxury
items that the USG was banning for export to North Korea. The
U.S. list does not include food items or those used by ordinary
North Koreans, as President Bush has made it clear that the US
would not use food as a weapon. Contrarily, the U.S. list
included items used by Kim Jong-il and those he used to award
elites for their loyalty. For example, motor scooters that many
North Koreans used for transportation are not on the U.S. list,
while Harley Davidson motorcycles, too expensive for all but the
most politically well-connected, are. The USG does not want the
UN to debate a common list of luxury items since such a process
would be time-consuming and would provide an excuse to delay
UNSCR 1718 implementation on more important provisions
concerning the export of armaments, dual use, and other service
items to North Korea.


20. (C) Ministry of Foreign Affairs Security Strategy and
Disarmament Ballistics Specialist Arnaud Mentre said that the
GOF shares the USG concern that debating a list of luxury items
in the UN Sanctions Committee could delay implementation.
However, the Sanctions Committee could usefully discuss
guidelines in drawing up such lists. On November 20, 2006, the
EU adopted a common list, but it will not be promulgated until
the EU is ready to issue the regulation implementing UNSCR 1718,
to which the list will be attached as an appendix.


21. (C) Padilla added that the U.S., Japan, and the EU were
adopting similar lists of luxury goods, and should work together
in the Sanctions Committee to persuade other members to adopt
similar lists. However, this does not mean debating the
contents of a positive list of luxury goods. The U.S. and EU
could also usefully exchange information on proliferators.

Follow-up Action
--------------


22. (C) Vo Van Qui then summarized key points and follow up
action from the meeting:

-- The GOF took note of U.S. points on the 2003 Wassenaar
Agreement SOU mandating government authorization for exports of
non-listed dual-use items for military end uses in destinations
subject to UNSC or regional arms embargos.

-- The USG agreed to receive a GOF delegation studying dual use
licensing.

-- Technical experts would meet in early 2007 to discuss export
controls on thermal imaging cameras. (Padilla responded that the
USG will send the GOF a letter proposing logistics shortly.)

-- The GOF took note of the USG request for support in
pressuring the UAEG to publish export control regulations.

-- The GOF looked forward to receiving a paper on diversions
from UAE, including on Mayrow General Trading. (Vo Van Quie
noted that the two governments should share such information
liberally to ensure that such end users could not continue to
"trick" various Western governments.)

-- The GOF also took note of the USG position on UNSCR 1718 on
export controls on North Korean luxury goods.

-- The GOF would appreciate regular exchanges on export controls
with U.S. counterparts. (Padilla agreed.)

Participants
--------------


23. (U) The following participated in the discussion.

United States Government:

Commerce Assistant Secretary for Export Administration
Christopher Padilla
Commerce Policy Advisor for Export Administration Michael P.
DiPaula-Coyle
Foreign Commercial Officer James Koloditch
Economic Officer Harry Sullivan (notetaker)

Government of France:

Secretariat General for National Defense (SGDN):

SIPDIS

Director of Technology and Sensitive Transfer, Jean-Luc Vo Van
Qui
Proliferation, Science and Technology Deputy Director Patrick
Beau
Armaments Export Deputy Director Philippe Leonard
International and Strategic Affairs Advisor Herve Auffret
Ballistic Dual Use Expert Bruno Chable
Biological Dual Use Goods Expert Christophe Bossuet
Nuclear Dual Use Expert Alain Munier

Ministry of Defense:
Strategic Affairs Advisor Jean Hamiot
Dual Usage Section Chief Anne Diaz de Tuesta

Ministry of Foreign Affairs:
Ministry of Foreign Affairs Security Strategy and Disarmament
Ballistics Specialist David Bertolotti
Security Strategy and Disarmament Ballistics Specialist Arnaud
Mentre
Export Control Assistant Deputy Director Jacques Raharinaivo

Ministry of the Economy, Finance, and Industry (Industry
Directorate-General)
International Industrial Cooperation Deputy Director Etienne
Coffin
Dual Use Chief Alain Nicaud
Dual Use Expert Guy Lusetti


24. (U) Assistant Secretary Padilla cleared this cable.

STAPLETON