GERMAN VIEWS ON U.S. COUNTERPROPOSALS FOR MTCR

C O N F I D E N T I A L BERLIN 001466

SIPDIS

STATE FOR ISN/MTR AND EUR/AGS
SIPDIS

E.O. 12958: DECL: 07/26/2032
TAGS: MTCRE MNUC PARM ETTC KSCA TSPA GM
SUBJECT: GERMAN VIEWS ON U.S. COUNTERPROPOSALS FOR MTCR
DENIAL NOTIFICATIONS

REF: A. BERLIN 1031


B. STATE 60588

C. BERLIN 598

D. BERLIN 541

E. STATE 28937

F. BERLIN 281

Classified By: Acting Minister-Counselor for Economic Affairs Douglas B
. Neumann, for reasons 1.4 (b) and (d).


1. (U) This is an action request -- see paragraph 9.


2. (C) Officials from the German Ministries of Foreign
Affairs and Economics and Technology passed the following
English-language non-paper to Global Affairs officer July 24.
The non-paper is a response to U.S. follow-up comments (see
ref B) on Germany's revised proposal for denial notifications
in the Missile Technology Control Regime (MTCR) (see ref C).


3. (C) Markus Klinger, deputy office director of the MFA's
Export Control Division, discussed several points of the U.S.
follow-up comments. Under the heading ///BASIC ELEMENTS///,
the USG recommended that the word "formal" be deleted from
the first sentence under "Decisions on Transfers" concerning
MTCR Partners' notification of a denial in response to an
inquiry. Klinger said the German Government agrees with this
point and favors the USG's revised text, which reads: "1.
Partners should advise the Point of Contact of a denial in
response to an inquiry or a request for export license within
four weeks after the final decision, or as soon thereafter as
practicable."


4. (C) Klinger added, however, that the German Government has
questions concerning the USG comment: "The U.S. has never
initiated consultations pursuant to the Aide Memoire and
hopes no Partner considers it necessary to do so." Germany
would like to know the U.S. rationale for never initiating
these consultations and why the USG hopes no Partner will
consider it necessary to do so, especially since Germany has
initiated the most consultations, Klinger said.


5. (C) Klinger and Guenther Sproegel, office director of the
Economics Ministry's International Export Control Regimes
Division, also rejected the U.S. suggestion that the
definition of an "essentially identical" transfer should
include an item with the same specifications, same end-user,
and same end-use. They said Germany prefers to keep its
original definition of an "essentially identical" transfer as
including an item with the same specifications and same
end-user. According to Klinger, the same specifications and
same end-user are "objective" pieces of data, but an end-use
statement, which could be misleading, vague, or even
falsified, is "subjective." Sproegel said the idea behind
denials is to give Partners an opportunity to consult one
another. If the MTCR adopts the U.S. definition of
"essentially identical" transfers, Sproegel argued, "less
serious" Partners could use a differently worded end-use
statement to consider a transfer not essentially identical to
one denied by another Partner and therefore avoid consulting
that Partner. Sproegel said Germany's proposal is an attempt
to introduce some discipline into the MTCR so that Partners
will be compelled to consult on denials.


6. (C) Addressing the U.S. concern that the German definition
of "essentially identical" transfers would lead to too many
consultations and pose an undue burden on exporters like the
United States, Sproegel argued that the number of
consultations would not be excessive. He said the German
Government is compiling data on consultations and will
publicize the results of its study in the MTCR. Moreover,
Sproegel said, Germany has arranged a procedure for
consultations with the U.S. -- if one party does not respond
to the other's denial notification within a four-week period,
then no consultations are needed.


7. (C) Sproegel said Germany hopes to receive a response from
the USG by August 15, so that Germany can revise its denial
notifications proposal and submit it to the POC well before
the November 5-9 plenary in Athens.


8. (SBU) Begin text of English-language German non-paper:

German views on US recommendation for "essentially identical
transfer"
(Ref.: German MTCR Discussion Paper "Denial Notification and
Related Procedures" (doc. POC 053); US Non Paper dated 4 May
2007)

Germany highly appreciates US feedback on its discussion
paper. In its bilateral feedback dating 4 May 2007 the US
proposed a wording, whereby a transfer is essentially

identical, if the item, end-use, and end-user of a transfer
match that of a denial issued by another Partner. In view of
the potential impact of the proposed wording on the no
undercut policy and on the level of case-based co-ordination
and information exchange amongst Partners, allow us to share
some of our concerns:

The MTCR no undercut policy is intended to ensure that MTCR
Partners are following a common approach to controls on
MTCR-related exports. If one Partner denies an export of a
MTCR-listed item for MTCR non-proliferation reasons, all
other members agree not to approve essentially identical
transfers without first consulting the Partner that issued
the denial.

The wording proposed by the US would imply that the no
undercut policy does not apply in cases where item and end
user are identical,

-- but the Partner assumes there is a different end use, or

-- where the Partner has reasonable doubts, whether the end
use of the transfer actually matches that of a denial.

For Germany as a country that issues a substantial amount of
MTCR denial notifications, these implications would pose a
considerable problem for the following reasons:

The wording proposed by the US could be misinterpreted and
lead to inadvertent disregard of denials which do concern
essentially identical transfers. In addition, Partners would
have difficulties to verify, whether the end-use of a
transfer matches that of a denial issued by another Partner:

-- Partners may be inclined to refer to the "stated end-use"
in a denial notification when comparing the end-use of a
transfer with that of a denial. However, in many cases, the
information in the denial on the "stated end-use" is no
suitable reference information to decide whether the no
undercut policy applies or not. Where the reason for denial
is risk of diversion, the denial is based on general
information related to the end-user rather than the "stated
end-use". Moreover, in sensitive cases the end-use stated by
the end user requires close scrutiny.

-- Information in the denial about the reason for the denial
(usually "risk of diversion" or "risk of use in program of
concern") is too vague to check whether the end-use of a
transfer actually matches that of a denial. And consultation
only in those cases where Partners share the general
proliferation concerns expressed in a denial is of little
added value from a non-proliferation perspective.

The responses to the survey show that the vast majority of
countries currently understands the term "essentially
identical transfer" to include cases, where the item and the
end-user are essentially identical. We feel that the Best
Practices should not question the current level of bilateral
co-ordination and information exchange amongst Partners.

We hope that these explanation will facilitate the
preparation of a consensus decision to be reached at the
Athens Plenary, and would be grateful for your early
comments, if possible by August 15.

End text.


9. (U) Post requests guidance to respond to the German
Government by the requested deadline.
TIMKEN JR