IRAN AND SYRIA NONPROLIFERATION ACT --

S E C R E T STATE 203803


E.O. 12958: DECL: 12/28/2031
TAGS: PARM MTCRE PREL MNUC ETTC CH

SUBJECT: IRAN AND SYRIA NONPROLIFERATION ACT --
NOTIFICATION OF SANCTIONS AGAINST THREE CHINESE ENTITIES
(C)

REF: 05 STATE 112901

Classified By: EAP DAS THOMAS CHRISTENSEN
FOR REASONS 1.4 (B),(D),and (H).


1. (U) This is an action request. Embassy Beijing please
see paragraph 5.


2. (S) Background: The Iran and Syria Nonproliferation Act
(ISNA) requires periodic reports to Congress identifying
foreign entities with respect to whom there is credible
information indicating that they have transferred to or
acquired from Iran or Syria items on multilateral lists
(Australia Group (AG),Chemical Weapons Convention (CWC),
Missile Technology Control Regime (MTCR),Nuclear Suppliers
Group (NSG),and the Wassenaar Arrangement (WA)) or other
items with the potential to make a material contribution to
missile, WMD, or certain other weapons programs. The USG has
determined that China National Electronic Import-Export
Company (CEIEC),China National Aero-Technology Import and
Export Company (CATIC),and Zibo Chemet Equipment Company
have engaged in activities, as noted above, that warrant the
imposition of measures pursuant to Section 3 of the ISNA. We
have raised on several occasions with the Chinese government
our concerns about Zibo Chemet Equipment Company,s transfers
of glass-lined chemic
al processing equipment to Iran, most recently in July 2006.


3. (S) Accordingly, pursuant to the provisions of the ISNA,
the following penalties are imposed on these entities, (or
individuals),their subunits, subsidiaries, and successors:

a. No department or agency of the United States Government
may procure, or enter into any contract for the procurement
of any goods, technology, or services from them;

b. No department or agency of the United States Government
may provide any assistance to them, and they shall not be
eligible to participate in any assistance program of the
United States Government;

c. No USG sales to them of any item on the United States
Munitions List are permitted, and all sales to them of any
defense articles, defense services, or design and
construction services under the Arms Export Control Act are
terminated; and

d. No new individual licenses shall be granted for the
transfer to them of items, the export of which is controlled
under the Export Administration Act of 1979 or the Export
Administration Regulations, and existing such licenses are
suspended.

These measures, which will take effect shortly, will remain
in place for two years. We want to provide advance notice to
the Chinese Government of this decision, note that this
determination will be published soon in the Federal Register,
and make clear that the penalties are only on the entities or
individuals. End Background.


4. (S) Purpose/Objective: To inform the host government of
the sanctions determination prior to its publication in the
Federal Register. Post should make clear that the U.S. will
continue to raise cases of proliferation concern with the
Government of China and look for opportunities to cooperate
in halting proliferation.


5. (S) Action request: Post is requested to provide the
following suggested talking points to appropriate Chinese
government officials and report response. Talking points
also may be provided as a non-paper.


6. (S//REL CHINA) Suggested Talking Points:

-- The United States has determined that there is credible
information indicating that China National Electronic
Import-Export Company (CEIEC),China National Aero-Technology
Import and Export Company (CATIC),and Zibo Chemet Equipment
Company transferred to or acquired from Iran since January 1,
1999, or transferred to or acquired from Syria since January
1, 2005, items on a multilateral control list, or other items
that have the potential to contribute materially to WMD,
missile, or certain other weapons programs in Iran or Syria.

-- Based on these transfers, we have imposed certain measures
against these entities as provided in the Iran and Syria
Nonproliferation Act (ISNA).

-- We are not in a position at this time to describe the
activities which led to this determination.

-- We have, however, raised on past occasions our concerns
about Zibo Chemet Equipment Company,s transfer of chemical
weapons-related equipment to Iran, including shipments of
glass-lined equipment in April 2005.

-- As we have discussed on numerous occasions, we view
military- and proliferation-related transfers to Iran very
seriously, particularly in light of Iran's continuing refusal
to meet IAEA and UN requirements with regard to its nuclear
program: a statement which it recently repeated following the
passage of UN security Council Resolution (UNSCR) 1737,
imposing targeted sanctions on Iran,s nuclear and missile
program.

-- Continued proliferation to Iran and Syria undermine our
joint, diplomatic efforts to resolve the Iranian nuclear
weapons issue and the crisis in the Middle East.

-- Accordingly, pursuant to the provisions of the ISNA, the
following measures are imposed on these entities, (or
individuals),and their successors, subunits, and
subsidiaries:

a. No department or agency of the United States Government
may procure, or enter into any contract for the procurement
of any goods, technology, or services from them;

b. No department or agency of the United States Government
may provide any assistance to them, and they shall not be
eligible to participate in any assistance program of the
United States Government;

c. No USG sales to them of any item on the United States
Munitions List are permitted, and all sales to them of any
defense articles, defense services, or design and
construction services under the Arms Export Control Act are
terminated: and

d. No new individual licenses shall be granted for the
transfer to them of items, the export of which is controlled
under the Export Administration Act of 1979 or the Export
Administration Regulations, and existing such licenses are
suspended.

-- These measures will take effect shortly and will remain in
place for two years.

-- This determination will be published soon in the Federal
Register.


7. (U) Please slug any reporting on this issue for ISN/MTR
and EAP/CM. A response is requested as soon as possible.
Department point of contact is Ralph Palmiero, ISN/MTR,
202-647-3737 (palmierorm@state.sgov.gov).
RICE


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