Tuesday, January 13, 2009

US says reached dual-use trade deal with China

WASHINGTON, Jan 13 (Reuters) - The United States has reached a deal with China clearing the way for full implementation of a trade program for dual-use technology goods, the Commerce Department said on Tuesday.

"We are pleased to have reached this milestone agreement," Commerce Under Secretary Mario Mancuso said in a statement just one week before the Bush administration leaves office.

"U.S. exporters now have a more streamlined way to export to companies in China who have a record of using U.S. technology responsibly," Mancuso said.

The agreement is good news for U.S. aircraft manufacturer Boeing Co. (BA.N) and Applied Materials Inc. (AMAT.O), the world's biggest supplier of machines used to make semiconductors.

The two companies have partners in China cleared to import certain advanced technology goods that also have potential military uses.

The Commerce Department in 2007 imposed new export controls on a targeted list of high-tech goods sought by China's military, such as lasers, high-performance computers, extreme temperature telecommunications equipment and airborne communication and inertial navigation systems.

At the same time, it established a new "validated end user" program to allow pre-screened civilian companies in China to import certain controlled items without having to obtain an individual Commerce Department license.

Last month, Mancuso said the Commerce Department was considering suspending the program because it had not reached an agreement covering surprise inspection procedures for the five companies in China approved to participate.

The two countries have now reached a pact that "will maximize the security and trade-enhancing benefits of the VEU program and continue a promising chapter in civilian U.S.-China high technology trade," Mancuso said.

(Reporting by Doug Palmer)

China, U.S. Reach Accord on Advanced Technology Trade Program
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By Mark Drajem

Jan. 13 (Bloomberg) -- The U.S. and China reached an agreement on a trade program for advanced technology that may aid companies such as Boeing Co. and Applied Materials Inc.

The agreement clears the way for American officials to conduct surprise inspections of the facilities of Chinese companies that want to be pre-screened for the program. If approved, the companies can receive advanced technology for civilian use, such as aircraft parts and computer hardware, which could be exploited for military purposes.

The Commerce Department had threatened to suspend the existing program without an agreement on surprise inspections.

“We are pleased to have reached this milestone agreement with China, one of our nation’s most important trading partners,” said Mario Mancuso, the top Commerce Department official for the export controls.

Saving the program would help Boeing, the world’s No. 2 commercial-plane maker, and Applied Materials, the largest maker of chip-production machinery, which had partners in China cleared to buy their equipment.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

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