U.S.-China Economic and Security Review Commission, "Hearing: Impact Of Military And Dual-Use Technology Exports To China," January 17, 2002

January 17, 2002
Room 106 Senate Dirksen Building
1st & Constitution Ave., NE
Washington, D.C. 20510

OPENING REMARKS OF VICE CHAIRMAN MICHAEL LEDEEN

Good morning. I am Michael Ledeen, Vice Chairman of this Commission, which is charged with investigating the overall strategic relationship between the United States and the People’s Republic of China.

Today and tomorrow, we will hold the last in a series of hearings on various aspects of that relationship, from commercial and financial to political and military.

Today’s hearing deals with export controls, which has long been one of the most contentious issues. During the Cold War, when we agreed that we had a determined enemy, there were still many who argued that wide-open trade, even in dual-use technologies, could only ease tensions and eventually pave the way for peace.

When President Reagan instructed his Cabinet secretaries to design a method to deny the Soviet Union access to advanced technology, much of the academic and business community believed it was folly, both strategically ill conceived and practically impossible. Yet COCOM was a considerable success, as demonstrated by the desperate attempts of Soviet leaders to weaken or destroy it.

Nobody is smart enough to know whether the People’s Republic of China will be friend or foe 10 or 20 years from now, which makes the evaluation of technology transfer more difficult. Some believe that free trade in and of itself contributes mightily to other forms of freedom, including a free political system. Some believe that it really makes our trading partners wealthier. Others believe that if we permit China to become militarily more powerful by de-controlling militarily valuable technologies, we risk facing a mighty antagonist sometime in the future, while others still argue that in a globalize world, no one can control technology anymore and that if we don’t sell it, somebody else inevitably will.

As we have learned in previous hearings, still others believe that money itself is a component in strategic trade and, consequently, that we should consider limiting access to our own capital markets.  

As is our practice, we have strained to find effective advocates for different points of view so that the Commission will hear a full and open debate. Here, at least, there will be no controls on anything our expert witnesses believe we should hear, and we will be grateful for their candor and their passion.

Today’s hearing will be jointly chaired by Commissioners Stephen Bryen and William Reinsch, with Commissioner Reinsch taking the chair for this morning’s session.

Thank you all for coming. I am looking forward to it.

Commissioner Reinsch, please.

OPENING REMARKS OF CO-CHAIRMAN WILLIAM A. REINSCH

Thank you.

I’m glad we’re doing this. This is an important hearing and one that was unfortunately postponed, and I appreciate the forbearance of the witnesses in coming back. It is very hard to have an export control discussion without talking about China, so I think it is particularly appropriate that we are going to spend some time on this topic which, as the witnesses at the table in particular know, has been controversial in the past.

The last Administration, which I was honored to serve in, spent a lot of time trying to ‘‘revision’’ this issue and figure out how export controls could work best in an environment where our defense depends more on electronics and information technology than it ever has before and where, in turn, the purveyors of those goods are civilian companies, not military prime contractors, and they are companies in turn whose profits and therefore their ability to do further R and D depends on exports and certainly not on defense sales and in significant part not on domestic sales.

How do you integrate those realities into an export control system without crippling the very companies that you want to be at the cutting edge in order to maintain our national security?

That is a complex question, and I am hoping that our witnesses, particularly our Government witnesses, can reflect a little bit on what the new Administration thinks about that, what they are doing about it, and how they are approaching some of the difficult conundrums in this field that we face particularly with respect to China.

With that, Steve, do you have a statement?

OPENING REMARKS OF CO-CHAIRMAN STEPHEN BRYEN

I don’t have an opening statement. I agree with you it is a very difficult problem that is not just export controls. If you limit it there, you miss a lot of what is going on. It’s just an element of the broader picture of whether or not there is an active effort to take from this country a lot of the know-how, whether it is technology or other know-how that can be used by a potential adversary. So I want to look at that a bit this morning as we go through the testimony and then try to see where we are going with our policy.

I welcome the witnesses this morning and look forward to their testimony. I am sure it will be interesting, and I know the Panel will have a lot to contribute to the dialogue.

Thank you.

U.S. Export Policy to China
Mr. James J. Jochum, Assistant Secretary of Commerce for Export Administration
Ms. Lisa Bronson, Deputy Under Secretary of Defense for Technology Security Policy and Counterproliferation
Mr. Vann H. Van Diepen, Acting Deputy Assistant Secretary of State for Nonproliferation

U.S. Export Enforcement Policy
Mr. Michael Garcia, Assistant Secretary, Department of Commerce, Office of Export Enforcement
Mr. Richard Mercier, Executive Director, Investigative Programs, U.S. Customs Service

Export Controls - Problems, Impacts and Solutions
Dr. Donald Hicks, President, Hicks and Associates
Dr. James Lewis, Director, Technology Policy, Center for Strategic and International Studies
Mr. Daryl Hatano, Vice President, Semiconductor Industry Association
Mr. David Rose, Director of Export, Import and Information Security Affairs for Intel Corp
Mr. Chip Storie, Vice President Marketing, Cincinnati Machines
Ms. Kathleen A. Walsh, Senior Associate, Henry L. Stimson Center

China's Advanced Technology Acquisition Program
Dr. Paul Godwin, Professor of International Affairs, National War College, Retired
Dr. Gary Milhollin, Director, Wisconsin Project