1:17pm Waiting for what could prove to be one of the more lively sessions of the day to begin.
1:22 While we're cooling our heels, you can reach some ECB's past China coverage and the proposed rule to restrict exports to Chinese military end-uses.
1:29 Bernard Kritzer, Director of the Office of National Security and Technology Transfer Controls, begins by introducing some of the current and former China trade hands in the room, including the current export controls attache in Beijing, Jeanette Chu.
1:32 $2.4 billion of the $38.9 billion in exports to China last year were shipped under BIS license. There were about $12.5 million in denials.
1:37 Kritzer claims numerous improvements to China license processing time, government-level interaction w/Chinese government, etc. over the past few years.
1:39 BIS extending comment period of proposed reg another 30 days to early December.
1:42 The new rule clarifies that the policy is to deny the export of National Security controlled items to Chinese military end-use. Also creates new authorization Validated End User (VEU) -- a whitelist of sorts for vetted Chinese entities. You could think of this as an "open" Special Comprehensive License (SCL). Open in the sense that it's use wouldn't be restricted to a single applicant like a SCL.
1:44 One largely overlooked provision of the proposed rule increases the frequency with which US exporters will need to obtain an end-use certificate from the Chinese Ministry of Commerce to any licensed export valued at more than $5000.
1:48 State Department representative, Foreign Service Officer Peter Secor, begins by noting that China now has an embassy in Grenada, the location of his last assignment.
1:58 This is big picture stuff -- important, no doubt -- but I wonder just how interesting to this quite practical audience.
2:02 Q: Will BIS have the resources to follow-up on this? What does China think of the rule? A: Shorter Chu: yes.
2:03 Q: Can other US citizens do PSVs? A: Yes, as long as her name is Jeanette Chu (cue symbol crash).
2:06 Q: MOFCOM end-user certificate originates in local Chinese trade bureau. Also, check out MOFCOM's website which has English instructions on how to get a cert.
2:09 Q: Is there a primary category of the 47 ECCNs subject to the new rule? A: Not really, but Cat. 3, 4, and 9 are among the more significant ones.
2:10 Q: Will VEU cover technology transfer? A: Specify in VEU advisory opinion request what you want, but BIS doesn't envision VEU covering technology as a general rule.
2:12 Q: How long will it take to get an entity approved under VEU? A: Once rule is final, exporters can begin to apply. We'll try to get started quickly.
2:14 Q: How will the US determine foreign availability given that the US is the only country interpreting the Wassenaar military catch-all so strictly toward China. A: "Specific technical facts" -- point us to the evidence and we will consider it.
2:15 Q: How will the rule affect the Chinese ARJ program? A: If OEMs are commercial entities, we'll consider them, but if they have a military pedigree not so much.
2:16 Q: Will the rule impact civil aircraft flying Chinese leaders? A: Tough one, we've received a number of comments about this.
2:18 Q: The definition of military end-use sounds a lot like the ITAR. Is this rule redundant? A: We are only looking at end-use, not end-user.
2:19 Q: What's the status of Hong Kong? A: Status quo -- one country, two systems. That goes for the EAR, too. HK maintains a "first rate and very responsive" export control system.
2:21 Q: Doesn't the US understand the structure of the Chinese Government? Could you give us some more information to help us? A: We don't understand the PRC's bureaucracy as well as you think we do. You don't have to determine if every entity you deal w/is related to the PLA. The issue is end-use not end-user.
2:24 Q: How will you consider past licensing w/China? A: If the record of the end-users on your previous licenses has been good in PSVs, that could well help you with VEU.
2:25 Q: Can the exporter send a rep or can their distributor send a rep to an end-use visit? A: Sure, it's largely up to the end-user. Chinese Gov't reps always go along with the BIS attache.
2:28 Q: Do you expect US subsidiaries in China to have any easier time than other Chinese companies in qualifying for VEU? A: We'll see, but they still need to meet our standards.
2:30 Q: Will the recent hacking of BIS by the Chinese affect the reg? A: No, unless we find out who they are and they want to be a VEU in which case they're SOL.
Shorter Kritzer: we love you guys.
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