Identifier
Created
Classification
Origin
08HONGKONG1763
2008-09-23 11:53:00
SECRET
Consulate Hong Kong
Cable title:
EXPORT CONTROL REGIME DENIAL INFORMATION: SHARING
how-toP 231153Z SEP 08 FM AMCONSUL HONG KONG TO NSC WASHDC PRIORITY SECSTATE WASHDC PRIORITY 5852 SECDEF WASHINGTON DC PRIORITY INFO AMEMBASSY BEIJING PRIORITY
S E C R E T HONG KONG 001763
E.O. 12958: DECL: 09/22/2033
TAGS: PARM ETTC MTCRE PREL HK CH
SUBJECT: EXPORT CONTROL REGIME DENIAL INFORMATION: SHARING
WITH HONG KONG
REF: A. 99 STATE 20313
B. 06 HONG KONG 4332
C. HONG KONG 0966
Classified By: CONSUL GENERAL JOE DONOVAN, FOR REASONS 1.4 (B) AND (D).
S E C R E T HONG KONG 001763
E.O. 12958: DECL: 09/22/2033
TAGS: PARM ETTC MTCRE PREL HK CH
SUBJECT: EXPORT CONTROL REGIME DENIAL INFORMATION: SHARING
WITH HONG KONG
REF: A. 99 STATE 20313
B. 06 HONG KONG 4332
C. HONG KONG 0966
Classified By: CONSUL GENERAL JOE DONOVAN, FOR REASONS 1.4 (B) AND (D).
1. (S) Summary: Since 1999, the USG has undertaken to share
with the Hong Kong government (HKG) consolidated information
regarding U.S. denials of trade of sensitive
proliferation-linked technologies. This has contributed to a
useful two-way exchange of information with an effective
licensing agency and customs service, and has resulted in
specific cases of interdiction or denial of trade in
controlled items (paras 8-12). In addition, Hong Kong has
taken the initiative to ask for advice from the Commerce
Department's export control officer (ECO) at Post for
questionable license requests, even when not on our lists.
No agency at Post possesses evidence that the Hong Kong
government has passed regime denial information to mainland
China. This cable reviews the current functioning of the
USG's mechanism to share regime denial information with Hong
Kong. End summary.
--------------
BACKGROUND
--------------
2. (C) Each of the four major non-proliferation regimes
(Australia Group, Missile Technology Control Regime, Nuclear
Suppliers Group, and Wassenaar Arrangement) has a "no
undercut" policy, according to which members notify one
another of proposed exports denied pursuant to the objectives
of the regime. Thus, members will not allow an export
essentially identical to the one notified, without first
consulting with the original denying member. Prior to Hong
Kong's return to China in 1997, the Hong Kong government
(HKG) routinely received regime denial information through
the British government, which had control over Hong Kong and
was a party to the non-proliferation agreements. When Hong
Kong became a Special Administrative Region of the PRC in
1997, it lost the direct and automatic information access it
received through Britain. In order to maintain effective
trade controls, the HKG began to ask individual member
governments for their lists. The USG had to decide whether
and how to begin to share information directly with Hong
Kong; the policy decision to do so was rendered in Ref A in
1999, which determined that it was in USG interests to
encourage Hong Kong to continue to guard against trade
through or from Hong Kong of previously denied technologies.
According to Ref A, information from all four regimes was to
be consolidated and scrubbed in a way that Hong Kong would
not be able to link end users and items sought. The British
government similarly has continued to provide its own regime
denial information to the HKG, to the present day. A survey
of all relevant USG agencies at Post, as well as
consultations with colleagues at the British Consulate
General here, did not uncover any evidence of Hong Kong's
passing regime denial information to mainland China.
-------------- --------------
HOW THE INFORMATION SHARING WORKS
-------------- -------------- --------------
3. (SBU) The State Department, through the Economic and
Political Section in Consulate General Hong Kong, annually
provides the Hong Kong Trade and Industry Department (HKTID)
a subset of the denial information that the USG submits to
the various multilateral export control regimes. HKTID is
the HKG's strategic goods licensing division. In practice,
Post conveys the information to HKTID at the Assistant
Director General level during an in-person meeting.
4. (C) In furtherance of its stated "no undercut" policy,
HKTID confirms it will not issue licenses for import/export
of strategic commodities where such action would undercut the
licensing policies of its trading partners. When HKTID
receives information about specific companies of concern from
the USG, HKTID places those names in its licensing database.
If it receives a license application implicating one of those
companies, it will confer with the USG on the details and
give more substantial scrutiny to that transaction. The
decision to issue or decline to issue a license is made in
that context, on a case-by-case basis.
5. (C) The Commerce Department,s Bureau of Industry and
Security (BIS),through its export control officer (ECO)
here, also separately provides licensing data to HKTID,
including BIS worldwide license denials and Hong Kong and
mainland China license approvals. This information sharing
typically occurs on a quarterly basis. In addition, BIS and
other agencies may share export control-related information
with HKTID on an ad hoc basis in support of investigations or
to request the assistance of HKTID and Hong Kong Customs with
certain interdiction and other matters.
-------------- --------------
--------------
GENERAL BENEFITS OF INFORMATION SHARING TO THE USG
-------------- --------------
--------------
6. (C) The USG receives a range of benefits as a result of
providing export control related information to HKTID,
including regime denial information. In addition to the
specific case examples cited below, HKTID provides to BIS on
a semi-annual basis a list of all license approvals for
U.S.-origin strategic commodities that are licensed for
import to Hong Kong and for export from Hong Kong. This
information is used in BIS,s own review and analysis of
trade with Hong Kong.
7. (S) Additionally, from time to time, HKTID and Hong Kong
Customs provide, at USG request, information concerning the
trade declarations of Hong Kong companies. That information
includes the dates and consignees of shipments. This type of
assistance may even occur in circumstances where no specific
violations of Hong Kong law have been alleged. For example,
HKTID in recent years provided trade declaration data
concerning companies that had allegedly shipped low-level
electronic components believed to be used in the production
of IEDs in Iraq.
--------------
-------------- --------------
EXAMPLES OF USG BENEFITS FROM INFORMATION SHARING
--------------
--------------
8. (SBU) The list of examples below is not designed to be
exhaustive but rather gives a sense of the types of benefits
that accrue to the USG when it shares information with the
HKG (whether regime denial information or other information
concerning shipments and entities of concern).
9. (C) In July 2007, HKTID requested BIS input concerning a
license application it had received for the export of
encryption hardware and software to mainland China. That
proposed shipment was apparently destined for China Petroleum
Chemical Corporation. HKTID noted that it was requesting
guidance because this company was listed in 2003 regime
denial information provided to HKTID by the USG. HKTID
eventually declined to issue this license.
10. (C) In May 2007, HKTID requested BIS,s views of a
pending license for the export to mainland China of
encryption hardware and software to a company related to
Guangzhou GRG Metrology and Test Technology Ltd. GRG
Metrology had been the subject of a BIS license denial in
2006. HKTID had been informed of the denial through BIS,s
information sharing arrangement with HKTID.
11. (C) In August 2006, September 2007 and November 2007,
HKTID provided BIS with information concerning the
prosecution of three Hong Kong companies for failure to
obtain required Hong Kong export licenses. In the 2006 case,
the prosecution of Hong Kong Mitron resulted from information
provided by BIS and concerned the export to mainland China of
multilaterally controlled microwave amplifiers. In the
September 2007 case, Litamos Electronic Limited, was
prosecuted for the unlicensed export of a harmonic mixer to
Iran. In the November 2007 case, Centre Bright Electronics
was prosecuted for the export of electronic components to
mainland China based on information provided to HKTID by BIS.
12. (C) In August 2008, HKTID informed BIS,s ECO at Post
that it had declined to issue a license for export of
electronic components to mainland China (that had originated
in Malaysia) as a result of information provided to HKTID by
BIS. That information had resulted from various end-use
checks conducted by the ECO in Hong Kong. In addition, Hong
Kong Customs is presently investigating multiple Hong Kong
companies on the basis of information provided by the ECO
uncovered during BIS end-use checks. The majority of these
cases involve the export of multilaterally controlled
electronic components through Hong Kong to mainland China
(Ref C).
DONOVAN
NNNN
End Cable Text
E.O. 12958: DECL: 09/22/2033
TAGS: PARM ETTC MTCRE PREL HK CH
SUBJECT: EXPORT CONTROL REGIME DENIAL INFORMATION: SHARING
WITH HONG KONG
REF: A. 99 STATE 20313
B. 06 HONG KONG 4332
C. HONG KONG 0966
Classified By: CONSUL GENERAL JOE DONOVAN, FOR REASONS 1.4 (B) AND (D).
1. (S) Summary: Since 1999, the USG has undertaken to share
with the Hong Kong government (HKG) consolidated information
regarding U.S. denials of trade of sensitive
proliferation-linked technologies. This has contributed to a
useful two-way exchange of information with an effective
licensing agency and customs service, and has resulted in
specific cases of interdiction or denial of trade in
controlled items (paras 8-12). In addition, Hong Kong has
taken the initiative to ask for advice from the Commerce
Department's export control officer (ECO) at Post for
questionable license requests, even when not on our lists.
No agency at Post possesses evidence that the Hong Kong
government has passed regime denial information to mainland
China. This cable reviews the current functioning of the
USG's mechanism to share regime denial information with Hong
Kong. End summary.
--------------
BACKGROUND
--------------
2. (C) Each of the four major non-proliferation regimes
(Australia Group, Missile Technology Control Regime, Nuclear
Suppliers Group, and Wassenaar Arrangement) has a "no
undercut" policy, according to which members notify one
another of proposed exports denied pursuant to the objectives
of the regime. Thus, members will not allow an export
essentially identical to the one notified, without first
consulting with the original denying member. Prior to Hong
Kong's return to China in 1997, the Hong Kong government
(HKG) routinely received regime denial information through
the British government, which had control over Hong Kong and
was a party to the non-proliferation agreements. When Hong
Kong became a Special Administrative Region of the PRC in
1997, it lost the direct and automatic information access it
received through Britain. In order to maintain effective
trade controls, the HKG began to ask individual member
governments for their lists. The USG had to decide whether
and how to begin to share information directly with Hong
Kong; the policy decision to do so was rendered in Ref A in
1999, which determined that it was in USG interests to
encourage Hong Kong to continue to guard against trade
through or from Hong Kong of previously denied technologies.
According to Ref A, information from all four regimes was to
be consolidated and scrubbed in a way that Hong Kong would
not be able to link end users and items sought. The British
government similarly has continued to provide its own regime
denial information to the HKG, to the present day. A survey
of all relevant USG agencies at Post, as well as
consultations with colleagues at the British Consulate
General here, did not uncover any evidence of Hong Kong's
passing regime denial information to mainland China.
-------------- --------------
HOW THE INFORMATION SHARING WORKS
-------------- -------------- --------------
3. (SBU) The State Department, through the Economic and
Political Section in Consulate General Hong Kong, annually
provides the Hong Kong Trade and Industry Department (HKTID)
a subset of the denial information that the USG submits to
the various multilateral export control regimes. HKTID is
the HKG's strategic goods licensing division. In practice,
Post conveys the information to HKTID at the Assistant
Director General level during an in-person meeting.
4. (C) In furtherance of its stated "no undercut" policy,
HKTID confirms it will not issue licenses for import/export
of strategic commodities where such action would undercut the
licensing policies of its trading partners. When HKTID
receives information about specific companies of concern from
the USG, HKTID places those names in its licensing database.
If it receives a license application implicating one of those
companies, it will confer with the USG on the details and
give more substantial scrutiny to that transaction. The
decision to issue or decline to issue a license is made in
that context, on a case-by-case basis.
5. (C) The Commerce Department,s Bureau of Industry and
Security (BIS),through its export control officer (ECO)
here, also separately provides licensing data to HKTID,
including BIS worldwide license denials and Hong Kong and
mainland China license approvals. This information sharing
typically occurs on a quarterly basis. In addition, BIS and
other agencies may share export control-related information
with HKTID on an ad hoc basis in support of investigations or
to request the assistance of HKTID and Hong Kong Customs with
certain interdiction and other matters.
-------------- --------------
--------------
GENERAL BENEFITS OF INFORMATION SHARING TO THE USG
-------------- --------------
--------------
6. (C) The USG receives a range of benefits as a result of
providing export control related information to HKTID,
including regime denial information. In addition to the
specific case examples cited below, HKTID provides to BIS on
a semi-annual basis a list of all license approvals for
U.S.-origin strategic commodities that are licensed for
import to Hong Kong and for export from Hong Kong. This
information is used in BIS,s own review and analysis of
trade with Hong Kong.
7. (S) Additionally, from time to time, HKTID and Hong Kong
Customs provide, at USG request, information concerning the
trade declarations of Hong Kong companies. That information
includes the dates and consignees of shipments. This type of
assistance may even occur in circumstances where no specific
violations of Hong Kong law have been alleged. For example,
HKTID in recent years provided trade declaration data
concerning companies that had allegedly shipped low-level
electronic components believed to be used in the production
of IEDs in Iraq.
--------------
-------------- --------------
EXAMPLES OF USG BENEFITS FROM INFORMATION SHARING
--------------
--------------
8. (SBU) The list of examples below is not designed to be
exhaustive but rather gives a sense of the types of benefits
that accrue to the USG when it shares information with the
HKG (whether regime denial information or other information
concerning shipments and entities of concern).
9. (C) In July 2007, HKTID requested BIS input concerning a
license application it had received for the export of
encryption hardware and software to mainland China. That
proposed shipment was apparently destined for China Petroleum
Chemical Corporation. HKTID noted that it was requesting
guidance because this company was listed in 2003 regime
denial information provided to HKTID by the USG. HKTID
eventually declined to issue this license.
10. (C) In May 2007, HKTID requested BIS,s views of a
pending license for the export to mainland China of
encryption hardware and software to a company related to
Guangzhou GRG Metrology and Test Technology Ltd. GRG
Metrology had been the subject of a BIS license denial in
2006. HKTID had been informed of the denial through BIS,s
information sharing arrangement with HKTID.
11. (C) In August 2006, September 2007 and November 2007,
HKTID provided BIS with information concerning the
prosecution of three Hong Kong companies for failure to
obtain required Hong Kong export licenses. In the 2006 case,
the prosecution of Hong Kong Mitron resulted from information
provided by BIS and concerned the export to mainland China of
multilaterally controlled microwave amplifiers. In the
September 2007 case, Litamos Electronic Limited, was
prosecuted for the unlicensed export of a harmonic mixer to
Iran. In the November 2007 case, Centre Bright Electronics
was prosecuted for the export of electronic components to
mainland China based on information provided to HKTID by BIS.
12. (C) In August 2008, HKTID informed BIS,s ECO at Post
that it had declined to issue a license for export of
electronic components to mainland China (that had originated
in Malaysia) as a result of information provided to HKTID by
BIS. That information had resulted from various end-use
checks conducted by the ECO in Hong Kong. In addition, Hong
Kong Customs is presently investigating multiple Hong Kong
companies on the basis of information provided by the ECO
uncovered during BIS end-use checks. The majority of these
cases involve the export of multilaterally controlled
electronic components through Hong Kong to mainland China
(Ref C).
DONOVAN
NNNN
End Cable Text