EXPORT CONTROLS: COMMERCE U/S MCCORMICK'S MARCH 9

S E C R E T SECTION 01 OF 03 TEL AVIV 001220

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COMMERCE FOR UNDER SECRETARY DAVID MCCORMICK
STATE FOR UNDER SECRETARY ROBERT JOSEPH
STATE FOR ISN/ECC DIRECTOR (VAN-SON) AND NEA/IPA (MAHER)
PENTAGON FOR OSD ISRAEL DESK OFFICER (ANDERSON)

E.O. 12958: DECL: 03/27/2016
TAGS: ETTC PREL PINS IS ECONOMY AND FINANCE ISRAEL RELATIONS LABOR AND COMMERCE
SUBJECT: EXPORT CONTROLS: COMMERCE U/S MCCORMICK'S MARCH 9
MEETING AT THE MFA

Classified By: Political Counselor Norm Olsen. Reasons: 1.4 (b, d).

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SUMMARY
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1. (C) At his March 9 meeting at the Israeli Ministry of
Foreign Affairs (MFA),Commerce Under Secretary for Industry
and Security David McCormick was told by MFA Deputy Director
General Miriam Ziv and her team that the MFA is committed to
seeing Israel's export control system improved through new
export control legislation, legislation or regulations on
dual-use items, and an enhanced role for the MFA in Israel's
export control system. The Israeli side stressed that
Foreign Minister Livni takes a personal interest in the
export control issue and the MFA's role in it, and pointed to
the creation, last fall, of an export control department
within the MFA as evidence of this. Ziv offered her own
assurances that the MFA will make every effort to ensure that
Israelis exporting to China adhere to Israel's commitments to
the USG. She confirmed that debate continues between the MOD
and MFA about the MFA's ultimate role in the export control
system, and admitted that the MFA is dependent upon the MOD
for status updates on the proposals to change Israel's export
control system. Ziv said the MFA will continue negotiations
with the MOD on the principles that (a) every opportunity for
the MFA to review an export control case is viewed as an
opportunity to shape policy; and (b) the MFA will never be
the ministry responsible for holding up processing of an
export control case. Ziv stressed that the MFA brings unique
value-added to the inter-ministerial review process due to
its strategic view of foreign relations.


2. (C) Under Secretary McCormick reinforced the importance
that the USG places on this issue. He also reviewed the
USG's process of interagency consultation on export control
cases and dispute resolution, and encouraged the MFA to push
for a formal, transparent dispute resolution process that is
clearly described in new legislation. He noted the USG's
strong interest in seeing Israel adopt the remaining
Wassenaar Arrangement categories as soon as possible, and
reiterated that this is the beginning of a long process. END
SUMMARY.

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MFA UNDERSCORES ITS COMMITMENT TO EXPORT CONTROLS
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3. (U) Commerce Under Secretary McCormick's final meeting on
March 9 (see septels reporting on his meetings at the MOD and
MOITAL) was at the MFA. MFA Deputy Director General and
Strategic Affairs Division Director Miriam Ziv led the
Israeli side. Her team included Dan Arbell, director, First
North American Department; Hillel Newman, policy adviser to
the Minister of Foreign Affairs; Haim Waxman, director,
Export Control Department; Keren Shahar-Ben Ami, counsel,
Office of the Legal Adviser; and Alon Bar, director, Arms
Control Division.


4. (C) Ambassador Ziv noted her pleasure at having the Under
Secretary visit, and underscored the MFA's commitment to

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seeing export control legislation passed and implemented.
The MFA wants Israel's export control system to be
transparent, and is working hard with the MOD and MOITAL both
on the export control legislation and on legislation
concerning dual-use items. Newman added that Israeli FM
Livni attributes great importance to the export control issue
and the MFA's role in Israel export control system. FM Livni
has discussed the issue on one occasion with DefMin Mofaz,
and is ready to raise it with him again, if necessary. It
was also one of the first issues she discussed with the
Ambassador Jones. Under Secretary McCormick stated his
understanding that it is on the U.S. Ambassador's list of top
three issues in the U.S.-Israel bilateral relationship.

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DISCUSSION OF THE MOD VS. THE MFA ON EXPORT CONTROLS
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5. (C) Responding to Ambassador Ziv's question about how
Under Secretary McCormick viewed the MOD's presentation
earlier in the day, the Under Secretary said that the details
were encouraging. The main question, he said, is whether
Israel can see the process through to conclusion. The Under
Secretary noted his interest in three particular issues:

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(a) Dispute Resolution -- Under Secretary McCormick advised
that the process be formally laid out so that disputes can be
raised to higher levels for resolution, as necessary. He
noted that in the U.S., disputes can be raised to the
President. The Under Secretary noted that he raised this at
the MOD.

(b) China -- The Under Secretary noted that his understanding
of the emerging plan is that all products destined for the
PRC will be considered as heading to military end-users, and
thus processed by the MOD.

(c) Timetable for Implementation -- The Under Secretary asked
when all nine remaining categories of the Wassenaar
Arrangement would be adopted.


6. (C) Under Secretary McCormick noted that the MOD had
acknowledged that there was some debate on the role of the
MFA within the export control system. He recounted the MOD's
current thinking that the MFA would have "some role to play"
in specific categories of controlled items, on an ad hoc
basis.


7. (C) Ambassador Ziv said Israel is very aware of the U.S.
position on China. She said that Israel wants its
businessmen to do business in China, but only in accordance
with commitments Israel made to the U.S.


8. (C) MFA Export Control Department Director Haim Waxman
said that the MFA places great importance on export controls
and created a new department in the MFA the previous summer
because of this. He stressed that the current situation was
a "once in a lifetime moment" for the MFA on the export
control issue, and that the MFA views its ultimate role in
the export control system as an issue of vital importance.
Waxman confirmed that the MFA currently sees license
applications and agrees that an interagency process yields
better results. The MFA ultimately views each case as a
piece of policy -- as a case is decided upon, it sets
precedent. If the MFA does not deal with an actual, specific
case, then it is out of the policy. Waxman suggested that
this principle will guide the MFA in its negotiations with
the MOD and MOITAL on proposed export control legislation and
regulations.


9. (C) On adopting the nine remaining Wassenaar Arrangement
categories, Waxman said that the dual-use aspect of Wassenaar
is new to the MFA, and that the MFA's Legal Department is
working hard on the issue, soliciting input from Israeli
Customs when appropriate.


10. (C) On the dispute resolution mechanism, Waxman said that
the MFA is trying to have it inserted into the new
legislation. On dual-use issues, the MFA is willing to
accept what MOITAL proposes (e.g., resolving disputes, if
possible, at a panel comprised of the directors general of
the MFA, MOD and MOITAL, before referring them to the Prime
Minister as a last resort).


11. (C) Ambassador Ziv said that the MFA raised these issues
at the January meeting of the U.S.-Israel Joint
Political-Military Group (JPMG). She stressed that the MFA
brings certain strengths to the table that no other GOI
ministry can bring: it manages foreign relations, and it has
a strategic viewpoint. Ambassador Ziv confirmed that the
MFA's legal advisers are working together with the MOD and
MOITAL's legal advisers, and that their respective directors
general are consulting each other.

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DISCUSSION ON CONSULTATION AND DISPUTE RESOLUTION
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12. (C) Under Secretary McCormick reviewed the process of
consultation and dispute resolution in the U.S.: For every
100 dual-use licenses the USG issues, some small percentage
involve differing views. Sometimes compromise can be reached
through stipulations that are attached to the license. Those
cases that are not resolved go to an Operating Committee
chaired by a career civil servant from the Commerce
Department. A decision is then rendered. It can be appealed
and sent to a political appointee at the assistant secretary
level for review. The Advisory Committee on Export Policy
(ACEP) usually resolves the issue. If it is not resolved
there, the case can be sent to the Export Administration
Review Board (EARB) for a cabinet-level decision. If
necessary, disputes can be elevated to the President, but
this is very rare. Under Secretary McCormick said that this
dispute resolution process works fairly well. Two to three
weeks can be added to the application process if a dispute is
elevated to the ACEP.

13. (C) Waxman said that the MFA is still discussing how much
time to stipulate for each stage in the application review
process. The MFA wants to give itself ample time to review
both dual-use and arms exports cases. Ambassador Ziv
stressed, however, that the MFA will never be the ministry
responsible for holding up a transaction.

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ZIV ON ESTABLISHING A NEW DIRECTORATE AT THE MOD
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14. (C) Ambassador Ziv stressed that the MFA knows only what
the MOD tells it, and admitted that the MFA is not intimately
involved in the MOD's work on Israel's new export control
system. She suggested that the MOD might be facing some
difficulty in the project, but acknowledged that the MOD
understands that there must be real change, and that the MOD
will have to adopt a "regulator mindset."


15. (S) On implementing Israel's commitments under the August
2005 Statement of Understanding (SOU),Ambassador Ziv avoided
nailing down a timetable, but stressed instead that Israel is
"high in understanding" but requires time for legislation to
be passed. (NOTE: This comment echoed those made earlier at
the Under Secretary's meetings at the MOD and MOITAL. END
NOTE.) She said that consultations between the MFA and MOD
are "far from where they should be," and stressed that the
MFA wants to work more closely with the MOD. She made it
clear that it is not a prestige issue for the MFA. Under
Secretary McCormick responded by noting that he reinforced in

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his earlier meetings at the MOD and MOITAL the importance of
having the MFA involved (a) due to its strategic perspective,
and (b) because a genuine interagency process yields better
results. McCormick added that both the State and Commerce
Departments conduct pre-license and post-shipment
verifications, and that some U.S. embassies have full-time
export control attaches assigned to them. (NOTE: The March
29 edition of the major daily, Ha'aretz, features an article
on page 15 citing the MFA's displeasure with the MOD
regarding the role envisioned for the MFA in the draft
Defense Export Control Act. The authors notes that the draft
DECA is to be submitted to the inter-ministerial legislative
committee on March 29. END NOTE.)

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UNDER SECRETARY MCCORMICK'S CONCLUDING POINTS
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16. (S) At the end of the meeting, Under Secretary McCormick
made the following points:

(a) The USG is placing growing importance on export controls
as part of its overall nonproliferation agenda.

(b) A better export control system increases the likelihood
of increased trade in sensitive technologies between the U.S.
and Israel.

(c) It is clear that Israel has taken initial steps in
implementing an export control system that serves Israel's
and America's interests.

(d) Implementing an effective plan consistent with the SOU is
important.

(e) The USG is ready to assist. The Commerce Department can
help.

(f) The USG believes that the MFA can play a very important
role in export controls. In the U.S., the State Department
takes the lead on export license applications involving
munitions. The Commerce Department takes the lead on export
license applications on dual-use items.

(g) A genuine interagency process yields better results.


17. (U) Under Secretary McCormick has cleared this cable.

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