DEMARCHE CONCERNING ISNA SANCTIONS ON CHINESE

S E C R E T STATE 028998


E.O. 12958: DECL: 03/07/2017
TAGS: PREL PARM ETTC CH IR SY

SUBJECT: DEMARCHE CONCERNING ISNA SANCTIONS ON CHINESE
CONVENTIONAL ARMS TRANSFERS TO IRAN

REF: STATE 26950

Classified By: EAP DAS Tom Christensen.
Per reasons 1.4 (b) and (d).

SUMMARY
--------------


1. (S/NF) This is an action request. Please see paragraph

4. We want to inform the Chinese government that, under the
Iran and Syria Nonproliferation Act (ISNA),sanctions may be
imposed on two Chinese companies, NORINCO and China
Shipbuilding Industry Corporation (CSIC),for providing
Wassenaar Arrangement-controlled items and assistance to
Iran. The ISNA requires regular reports to Congress
identifying individuals and entities who have transferred to
or acquired from Iran or Syria certain items related to
weapons of mass destruction, ballistic or cruise missiles or
advanced conventional weapons, and also authorizes the
imposition of sanctions. Post is requested to convey the
points below to the Government of China at the earliest
appropriate opportunity and to solicit responses. END
SUMMARY.

BACKGROUND
--------------


2. (S/NF) Under the Iran and Syria Nonproliferation Act
(ISNA),now modified to include North Korea and renamed the
Iran, North Korea, and Syria Nonproliferation Act (INKSNA),
we are required to provide a semi-annual report to Congress
identifying foreign persons as to whom we have "credible
information indicating" the person transferred to or acquired
from Iran, North Korea, or Syria a) equipment and technology
listed on multilateral export control lists (Australia Group,
Chemical Weapons Convention, Missile Technology Control
Regime, Nuclear Suppliers Group, Wassenaar Arrangement); b)
items of the same kind as those on multilateral lists, but
falling below the control list parameters (when it is
determined that such items have the potential of making a
material contribution to WMD or cruise or ballistic missile
systems); c) other items with the potential of making such a
material contribution, when added through case-by-case
decisions; or d) items on U.S. national control lists for
WMD/missile reasons that are not on multilateral lists.
Under the ISNA, sanctions may be imposed on the persons
identified in the reports.

OBJECTIVES
--------------


3. (S/NF) In the interest of transparency, strengthened
dialogue, and enhanced cooperation on nonproliferation
matters, we want to inform Chinese authorities of the
activities by two Chinese entities that may lead to the
imposition of ISNA sanctions and to encourage the PRC to take
all appropriate measures to halt any further such
transactions by these firms.

ACTION REQUEST AND REPORTING DEADLINE
--------------


4. (S/NF) Post is requested to convey the points in this
demarche at the earliest appropriate opportunity and to
report on the Chinese response.

TALKING POINTS
--------------


5. BEGIN TEXT OF TALKING POINTS (S//REL CHINA)

-- As we implement U.S. laws concerning transfers of certain
controlled items to specific countries, we are seeking to
enhance our nonproliferation dialogue and cooperation with
China. Our hope is that an enhanced exchange of information,
including on arms transfers that have triggered U.S.
sanctions, will facilitate increased cooperation and mutual
transparency.

-- You will recall that, under the Iran and Syria
Nonproliferation Act (ISNA),we are required to provide
semi-annual reports to Congress identifying foreign persons
(individuals and entities) as to whom there is "credible
information indicating" the person transferred to or acquired
from Iran or Syria items controlled by one of the
multilateral control regimes (Wassenaar Arrangement, Nuclear
Suppliers Group, Australia Group, MTCR),or other items with
the potential to make a material contribution to WMD, or
ballistic or cruise missile systems. Under the ISNA,
sanctions may be imposed on the persons identified in the
reports.

-- As you are aware, the United States is particularly
concerned about such transfers to Iran at a time when our two
governments are working together at the UNSC on the Iranian
nuclear issue.

-- We would like to make you aware of certain transfers of
Wassenaar-controlled items and assistance to Iran that may
trigger the China, Iran, and Syria Nonproliferation Act
sanctions on Chinese entities. We welcome any information
on actions your Government may have taken or plan to take to
halt these transfers or subsequent proliferation to Iran by
these firms.

-- The following entities may be sanctioned under the Iran
and Syria Nonproliferation Act for providing
Wassenaar-controlled items and assistance to Iran: NORINCO
and China Shipbuilding Industry Corporation (CSIC).

-- We also understand that NORINCO shipped a large quantity
of 7.62x39mm armor piercing ammunition to Iran in January
2006 aboard the cargo vessel Iran Yamin.

-- We have information that the Chinese firm NORINCO shipped
a large quantity of 7.62x39mm armor piercing ammunition to
Iran in April 2006 aboard the cargo vessel Iran Nabuvat.

-- We further understand that NORINCO shipped a large
quantity of 7.62x39mm armor-piercing/armor-piercing
incendiary ammunition to Iran in April-May 2006, probably on
board the cargo vessel Iran Bushehr.

-- We also have information indicating that China
Shipbuilding Industry Corporation (CSIC) delivered six
14-meter guided-missile patrol craft to Iran in January 2006
on board the cargo vessel Iran Yamin and four more, plus two
fire control systems, in June 2006 aboard the cargo vessel
Grant Star.

END TALKING POINTS.


6. (U) Post's assistance in this matter is appreciated.
RICE


NNNN




End Cable Text