- The Washington Times - Sunday, December 3, 2006

Business groups are upset about a Bush administration move to strengthen restrictions on exports to China. They said the controls will not keep the communist country from acquiring sensitive technologies and will cost too much to implement.

In July, the Commerce Department proposed tighter restrictions on exports of certain high-technology products.

“The administration has not demonstrated that this proposed change would provide any additional security benefit and has not articulated a clear purpose for it,” a group of 24 trade associations — ranging from the General Aviation Manufacturers Association to the American Chamber of Commerce in Hong Kong — said Thursday in a letter to the Commerce Department.

The proposal would cover specified software, machine tools, computers, marine equipment and other exports.

If the purpose is to deny access to China’s military, “it is destined to be ineffective due to widespread foreign availability … including production in China, and the fact that all indications thus far are that it will be unilateral,” said the letter, released Friday.

Executives say they also are concerned about the cost of compliance.

Business Software Alliance President Robert Holleyman said the rule would impose “stifling financial costs on American companies seeking to comply.”

High-technology business groups often comment on this type of regulation, but Dirk Van Dongen, president of the National Association of Wholesaler-Distributors, said his organization has not been involved in other export-control issues.

The proposed changes “will shut down markets for American firms without denying Chinese buyers the products they desire,” he said.

The administration is committed to the proposal, said Assistant Commerce Secretary Christopher A. Padilla, who was in Berlin on a trip to discuss the controls with European allies.

He said the proposal is “motivated by fundamental national security concerns and it’s consistent with basic U.S. foreign policy toward China, which is to encourage legitimate civilian trade while discouraging China’s double-digit, rapid military modernization.”

The administration encouraged companies to submit evidence that the technologies were available in China, he said, and would examine ways to ease the compliance burden without endangering national security.

Mr. Padilla said businesses have dealt with more stringent nonproliferation controls, but business representatives insisted that the China proposal would be more difficult to handle.

One European telecommunications company has determined that its compliance cost alone would be $165 million, several sources said.

Larry M. Wortzel, chairman of the bipartisan, congressionally mandated U.S.-China Economic and Security Review Commission, said business had legitimate concerns about restricting only U.S. companies and about the compliance burden.

The proposed controls could hold U.S. businesses accountable if the Chinese government conceals a company affiliation, he said.

“When this all sorts out, I hope that the government will not require business to do the sorts of intelligence work to figure out what subsidiaries in China might be really defense-related or hidden parts of the government, when for itself the government really can’t do that effectively with its own intelligence apparatus,” he said.

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