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