RESPONSE TO GERMAN INQUIRY ON U.S. LICENSING

S E C R E T BERLIN 000101

SIPDIS

SIPDIS

E.O. 12958: DECL: 01/24/2018
TAGS: ETTC MTCRE KSCA KNNP PARM PREL CH GM
SUBJECT: RESPONSE TO GERMAN INQUIRY ON U.S. LICENSING
PRACTICES CONCERNING TECHNOLOGY TRANSFERS TO CHINA

REF: A. STATE 5669

B. BERLIN 15

Classified By: Economic Minister-Counselor
Robert A. Pollard for reasons 1.4 (b) and (d)


1. (S) Global Affairs Counselor presented Ref A talking
points January 18 to MFA Export Control Division Desk Officer
Nancy Reck. Reck thanked us for the information on U.S.
licensing practices, noting that the information we provided
would be useful for the German Government in making a final
determination on the application in question. Reck expressed
understanding for our inability to provide a complete answer
absent additional information regarding the isostatic
graphite production technology, the particular end-use, and
the identity of the Chinese end-user. She noted that the MFA
had pushed for release of additional information in initial
discussions of the case in the German interagency export
comtrol working group, and indicated that our request for
additional information would be useful in the MFA's future
discussion of the case with representatives of the Federal
Office of Economics and Export Controls (BAFA),who --
according to Reck -- had expressed reservations about the
extent of information to be provided.


2. (S) Reck provided additional details about the proposed
transaction. She noted that the production of isostatic
graphite consists of four main phases, of which Phase 1 (the
production of graphite "green body") is the most critical.
Reck assured us that the German company did not/not plan to
transfer to its Chinese subsidiary the technology for the
production of the graphite "green body." The German company,
said Reck, considered the precise composition of its green
body to be a trade secret. Reck described phases 2-4 as
comprising processing procedures to burn and compress the raw
graphite blocks. She indicated that, in the transaction in
question, the German company had already transferred (with
appropriate export licenses) Phases 3 and 4 to its Chinese
subsidiary and has now applied to transfer the more critical
Phase 2. According to Reck, the end product will also be
distributed in China by the German company's subsidiary.
Reck indicated that the German Government is considering
requiring the German firm to supply a list of all proposed
end-users as a condition to a grant of an export license.


3. (S) Reck also provided an English-language non-paper with
the following additional technical data concerning the
technology in question:

Begin text of German Government non-paper

The technology to be exported is intended for the production
of MTCR- and NSG-listed isostatic graphite with the following
specifications:

-- NSG-listed nuclear grade graphite with a boron equivalent
(BE) of less that 5 ppm and with a density of greater than
1.5 g/cm3 for use in a nuclear reactor

-- MTCR-listed fine grade graphite with a bulk density of at
least 1.72 g/cc measured at 15 degrees C and having a grain
size of 100 x 10(-6) or less, usable for rocket nozzles and
re-entry vehicle nose tips, which can be machined to any of
the following products:

a. Cylinders having a diameter of 120 mm or greater and a
length of 50 mm or greater;

b. Tubes having an inner diameter of 65 mm or greater and a
wall thickness of 25 mm or greater and a length of 50 mm or
greater;

c. Blocks having a size of 120 mm x 120 mm x 50 mm or
greater.

End text of non-paper
TIMKEN JR