BIS Announces New Agreement with China on Authorized Validated End User Program
The Bureau of Industry and Security has issued a press release stating that the U.S. has reached an agreement with China on the Authorized Validated End-User (VEU) Program, adding that with agreement on procedures in place, civilian U.S.-China high-technology trade will benefit from the continued export of certain products to VEU-approved companies without individual licenses.
U.S. Inspectors Would be Required to Give 60 Day Notice Before Review, Chinese Officials Would Participate
A press release from Congressman Ed Markey states that this new Agreement requires U.S. inspectors to give the Chinese government a 60-day notice before conducting on-site reviews of Chinese VEU importers. In addition, on-site reviews will be arranged by the Chinese government and accompanied by Chinese officials.
According to sources at the Government Accountability Office, this new agreement is classified and is not available to the public.
GAO Had Recommended Suspending VEU Program for China Until Agreement Reached
In September 2008, the GAO had issued a report recommending that Commerce suspend the VEU program to China until an amended or new agreement was reached to conduct onsite reviews and VEU-specific procedures for conducting on-site reviews was established.
(GAO notes that in the absence of an agreement specific to the VEU program, Commerce had requested that one on-site review be conducted pursuant to the terms of a 2004 agreement, which would rely on the voluntary compliance of validated end-users to obtain End-User Statements from the Chinese government.)
Chinese Government Had Asked for No New VEUs Until Agreement in Place
GAO's report had also stated that the Chinese government had asked that Commerce refrain from approving any new, additional VEUs until the two sides had agreed on the terms for conducting onsite reviews of validated end-users.
(According to a BIS fact sheet, under the VEU program, certain "trusted customers" with a track record of responsible civilian use of U.S.-controlled technology are able to receive certain items without individual export licenses. The U.S. has established a VEU program for China with five initial validated end-user China importers. The U.S. has also established a VEU program for India; however, the U.S. has not yet listed any validated end-users for India.
The validated end-users for China to date (for certain ECCNs and destinations only) are Applied Materials China, Ltd., BHA Aerocomposite Parts Co., Ltd., National Semiconductor Corporation, Semiconductor Manufacturing International Corporation, and Shanghai Hua Hong NEC Electronics Company, Ltd.)
(See ITT's Online Archives or 06/28/07 news, 07062815, for BP summary of final (third) part on BIS final rule making China eligible for the VEU program, with links to Parts I and II. See ITT's Online Archives or 10/25/07 news, 07102510, for BP summary of BIS correction to the effective date of the final rule.)
See ITT's Online Archives or 10/03/07 news, 07100330, for BP summary of BIS final rule making India eligible for the VEU program. See ITT's Online Archives or 11/02/07 news, 07110225, for BP summary of a new VEU license code added to AES, which also notes that no India VEUs have been named.
See ITT's Online Archives or 10/30/08 news, 08103030, for BP summary of GAO report.)
BIS press release (dated 01/13/09) available at http://www.bis.doc.gov/news/2009/bis_press011320009.htm
Congressman Ed Markey's press release (dated 01/14/09) available at http://markey.house.gov/index.php?option=com_content&task=view&id=3509&Itemid=15
GAO report (GAO-08-1095 (dated September 2008) available at http://www.gao.gov/new.items/d081095.pdf
CFR list of VEUs (15 CFR Part 748, Supplements No., 7), available at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=1566844b05e1561d5427bb97d5447417&rgn=div9&view=text&node=15:2.1.3.4.32.0.1.16.54&idno=15