Chinese Nonproliferation Policy and Export Control Practice Taibei August 28, 2013

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1 Chinese Nonproliferation Policy and Export Control Practice Taibei August 28, 2013 LI Hong Vice President & Secretary General China Arms Control & Disarmament Association (CACDA) 1

2 China s View on Proliferation posing a serious threat to international peace and security, de-stabilizing element to regional/global situations; de-gradating mutual trust, affecting cooperation; NOT in the interest of any country including China; Increasingly pressing with severe challenges; Complicated causes: international security environment, regional situations and national security strategy, etc; 2

3 China s export control: policy dimension China resolutely opposes to proliferation of WMDs and their means of delivery. Not encourage, support or assist in any way, any country for development WMD China strictly abides by its obligations under relevant international laws and UN resolutions. China actively participates in international & regional non-proliferation efforts. 3

4 China s views on Solution for Proliferation Peaceful means: dialogue and cooperation; Regime building: fair, pragmatic and nondiscriminatory; Norm setting: international instrument; balance between non-proliferation and peaceful use. Export controls are crucial means for fulfilling the non-proliferation goals Careful on Sanctions 4

5 Export Control Principle Based on Law, Regulations and Internaitonal obligations List Control Export registration system Licensing system End-use and end-user certificate Catch-all 5

6 International obligation NPT 1992 CWC 1997 BWC 1984 IAEA Safeguard Agreement 1989 IAEA Safeguard Protocol 2002 UNSCR Other UNSC Resolutions 6

7 List Control covering nuclear, biological, chemical and missile relevant items and technologies widely adopting the current international standards and practices making constant amendments according to international obligations and practical needs 7

8 Legal Framework Laws Foreign Trade Law Customs Law Criminal Law 8

9 Regulations 1995,Regulations on Administration of Controlled Chemicals of PRC 1997,Regulations on Nuclear Export Control of PRC 1998,Regulations on Export Control of Nuclear Dual-use Items and related Technologies of PRC, revised Jan , Regulations on Arms Export of PRC, Revised in , Regulations on Export Control of Missiles and Missile- Related Items and Technologies of PRC 2002, Regulations on Export Control of Dual-Use Biological Agents and Related Equipment and Technologies of PRC 2002, Measures on Export Control of Certain Chemicals and Related Equipment and technologies of PRC 9

10 Ministerial Decrees Measures on the Administration of Export Registration for Sensitive Items and Technologies Measures for the Administration on Import and Export License for Dual-use Items and Technologies Measures for Classified Administration of the Export of Civil Aviation Spare Parts Measures on General License for Export of Dual-Use Items and Technology 10

11 China s export control: enforcement dimension Key points: Rule of law & administrative enforcement Inter-agency coordinating system Enforcement, investigation & penalties Social awareness & internal compliance 11

12 Main Relevant Governmental Organs: At central government level: Ministry of Foreign Affairs (MFA) Ministry of Commerce (MOFCOM) Ministry of Industry and Information Technology (MIIT) Ministry of Health (MOH) Ministry of State Security (MSS) State Administration of Science, Technology and Industry for National Defense (SASTIND) General Administration of Customs (GAC) At local level 12

13 Licensing System and Procedures Publicly accessible licensing regulations and procedures, supported by the December 2003 white paper on China s nonproliferation policy, outline in detail the process of licensing controlled exports. The promulgation of these regulations represents a significant step forward for the Chinese export control system, further anchoring China s export control system to a law-based framework and making clear to both Chinese and foreign enterprises and governments the rules upon which China s export control system is based. 13

14 Agencies in export control 14

15 License Procedure 15

16 Role of Agencies in Licensing Procedure 16

17 MOFCOM The Export Control Division (ECD) of the Science and Technology Department in the Ministry of Commerce is the main licensing and regulatory body for dual-use export controls. In 2003, MOFCOM restructured the Export Control Division into two sections, making the office s two functions distinct and reportedly more efficient. Export Control Division I assumed the specific duties of responding to other states requests for end-user certificates and end-use guarantees, as well as other matters relating to foreign countries export control requirements (as they relate to Chinese imports). Export Control Division II retained all of the regulatory functions for licensing exports of controlled goods from China. 17

18 MFA The Department of Arms Control (DAC) in the Ministry of Foreign Affairs (MFA) participates in the interagency licensing review process and leads the coordination of international policy on nonproliferation and export controls for the Chinese government, including the adoption and implementation of China s international commitments and treaty obligations. 18

19 NCWCIO The principal chemical export licensing body is the National CWC Implementation Office (NCWCIO). NCWCIO is responsible for implementing China s CWC obligations, including submitting annual reports to the international Organization for the Prohibition of Chemical Weapons (OPCW), facilitating OPCW inspections in China, and regulating the production, import, and export of chemicals according to China s Controlled Chemicals List (identical to the CWC control list). The export or import of any of these chemicals requires a license, and the NCWCIO serves as the principal license review body for these exports. 19

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21 CAEA The China Atomic Energy Authority (CAEA) is the government s nuclear industry regulatory body, and its mandate includes administering nuclear export controls. One of CAEA s five departments, the Department of International Cooperation, is responsible for licensing nuclear imports and exports and issuing governmental assurances to foreign nuclear regulatory bodies.109 This office serves as the principal licensing office for exports of nuclear materials and equipment and technology for nuclear power reactors, in addition to being responsible for issuing Chinese governmental assurances regarding the end-users and enduses of nuclear materials and technologies imported into China. 21

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23 SASTIND The main licensing body for administering conventional weapons export controls is the State Administration of Science, Technology and Industry for National Defense (SASTIND) The Arms Trade Division of SASTIND s Department of International Cooperation receives and vets licenses for conventional military exports, as well as for some missilerelated items. 23

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26 Dual Use Item Control Article 2 The term export of nuclear dual-use items and related technologies in these Regulations means the trade for export of equipment, materials, software and related technologies included in the Nuclear Dual-Use Items and Related Technologies Export Control List (hereinafter referred to as the Control List), as well as the transfer of such equipment, materials, software and related technologies to other countries and regions by offering them as gifts, holding exhibitions, promoting scientific and technological cooperation, providing assistance or services, and so on. 26

27 Dual Use Item Control --Measures Beyond the regulation Article 3 The State shall tightly control the export of nuclear dual-use items and related technologies...for the purpose of safeguarding State security and international peace and security, the State may take any necessary measures regarding nuclear dual-use items and related technologies export. 27

28 Dual Use Item Control --Recipient Guarantee Article 6 The licensing of nuclear dual-use items and related technologies export shall be based on the following guarantees made by the receiving party: (1) The receiving party guarantees not to use the nuclear dual-use items and related technologies supplied by China, or any reproductions thereof, for nuclear explosions or for purposes other than the end-use it has declared; (2) The receiving party guarantees not to use the nuclear dual-use items and related technologies supplied by China, or any reproductions thereof in nuclear fuel cycle activities not under International Atomic Energy Agency safeguards. and (3) The receiving party guarantees not to transfer to a third party other than the end-user it has declared the nuclear dual-use items and related technologies supplied by China, or any reproductions thereof, without the consent of the Chinese Government. 28

29 Dual Use Item Control --Applying Licenses Article 7 All exporters of nuclear dual-use items and related technologies shall be registered with the Ministry of Commerce. Article 8 the exporter shall apply to the Ministry of Commerce, and submit the following documents: (1) identifications of the applicant s legal representative, principal managers and the persons handling the matter; (2) a copy of the contract or agreement; (3) technical specifications or testing reports of the nuclear dual-use items and related technologies; (4) certificates of the end-user and the end-use; (5) the guarantee documents provided for in Article 6 of these Regulations; and (6) other documents required by the Ministry of Commerce. 29

30 Dual Use Items Control ICP, Catch All, Temporary Measures Article 18 An exporter shall establish a sound mechanism for internal control of the export of nuclear dual-use items and related technologies, and properly keep contracts, invoices, bills, and business letters and so on for at least five years. Article 19 Where an exporter knows or ought to know, or is informed by the Ministry of Commerce, that the equipment, materials, software and related technologies to be exported have nuclear proliferation risks or might be used for nuclear terrorism, the exporter shall be subject to the provisions of these Regulations even if the said equipment, materials, software and related technologies are not included in the Control List. Article 20 Upon approval by the State Council, the Ministry of Commerce may, jointly with the departments concerned, temporarily decide to exercise control in accordance with these Regulations over the export of specific nuclear dual-use items and related technologies not included in the Control List. 30

31 Dual Use Item Control --Penalty Article 23 in violation of shall be penalized in accordance with the provisions of the Customs Law. the Ministry of Commerce shall give the exporter a warning and impose thereupon a fine of not less than the amount of the illegal turnover but not more than five times that amount; if the illegal turnover is less than 50,000 yuan, the said Ministry shall impose thereupon a fine of not less than 50,000 yuan but not more than 250,000 yuan; and the illegal income, if any, shall be confiscated. If a crime is constituted, criminal liability shall be investigated for in accordance with law. Article 24 Anyone who counterfeits, alters, buys or sells an export liense Article 25 Where a State functionary neglects his duties, commits illegalities for personal gain or abuses his power, he shall be investigated for criminal liability in accordance with law if his act constitutes a crime, or shall be given a sanction in accordance with law if such act does not constitute a crime. 31

32 Export Control Policies and License Application 32

33 China s export control: enforcement dimension (cont.) Clear division of responsibility Close coordination and cooperation: inter-agency coordinating system (policy review, licensing, enforcement, etc.) fast reaction mechanism (for suspected cases calling for immediate reaction) expert supporting-team 33

34 Priorities in export control enforcement Enforcement Capacity Building More advanced equipment and technology Training program for law enforcement officials, esp. frontline Industry Outreach Situation and policy briefings to industry Guidance on ICP Better interaction between government and industry Role of NGO and industry association 34

35 International cooperation and exchanges Basic principles: On an equal footing Two-way exchanges Mutual benefits Cooperation oriented 35

36 International cooperation and exchanges (cont.) -- Participation in international and regional efforts Joining all relevant international laws in the field of NP Supporting and Seriously Implementation of UN Security Council Resolutions relevant with export controls Active participation in discussion on export controls at international and regional forum 36

37 Notification of Ministry of Transportation on UNSC

38 Industry Proactively Implementing the UNSC May, 2013 Bank of China notified DPRK Foreign Trade Bank to close the latter s account in the former and suspend all cash transfer business DPRK Foreign Trade Bank is under US sanction and not on UNSC sanction entities lists 38

39 International cooperation and exchanges (cont.) -- Relations with certain plural-lateral export control regimes 1997: joined the Zangger Committee 2004: joined the Nuclear Suppliers Group 2004: applied for membership of the Missile Technology Control Regime (MTCR) 2004 till now: dialogues with MTCR, Australia Group and Wassenaar Arrangement 39

40 International cooperation and exchanges (cont.) -- Bilateral exchanges Export control exchanges with EU and US: learn from each other & experience sharing Bilateral arms control consultations with dozens of countries, covering non-proliferation export control items 40

41 Strategic Trade Control Challenges Rapid growth of Industries: more than 800,000 companies engaged in import/export trade Unenlightened legislature: separated regulations and ministerial decrees weak or ambiguous linkage to law; Enforcement difficulty: lack of resources short of expertise liability implication 41

42 Thank you! 42