TECHNOLOGY TRANSFER POLICY TOWARDS THE PEOPLE'S REPUBLIC OF CHINA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85M00364R001001540015-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 21, 2016
• Document Release Date: June 20, 2008
• Sequence Number: 15
• Publication Date: November 10, 1983
• Content Type: MEMO

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'4TES OF
November 10, 1983
FRflT4? T-1 u ni..-
UNITED STATES DEPARTMENT OF COMMERCE
The Under Secretary for International Trade
Washington, D.C. 20230
SECRET NOFORN SENSITIVE
MEMORANDUM TO: Secretary Baldrige j/
SUBJECT: ' Technology Transfer Policy Towards the People's
Republic of China
The major foreign policy initiative by this Administration towards the
People's Republic of China, that of identifying the PRC as a "friendly,
non-allied nation" and thereby increasing the permissable levees of
sophisticated technology which can be exported from the West to the PRC,
in my judgment, is in danger of foundering because our COCOM partners
are not yet prepared to accept this dramatic change or its implications.
Thus, our policy may not be implemented. with the speed, efficiency
and predictability that the Administration has been assuring the Chinese
(and the U.S. business community) it will be, because almost every license
application -- even "Green List" items (those which Commerce will clear
within 10 days without U.S. interagency review) -- still. requires COCOM
approval and COCOM can take 60-90 days, or longer. Moreover, China's
highest priorities, computers, telecommunications and micro-electronics,
may well be given a degree 'of scrutiny or outright resistance in COCOM
that could develop into the very kind of contentious delay which has
characterized this issue for the last several years.
I have argued that it was risky to change the PRC's licensing category
until we were assured of having the practical ability to deliver on the
.expectations that would arise with this change in the regulations. You'll
recall Premier Zhao Ziyang told you in May that he didn't want the promise
of change without accompanying substance: "China doesn't want to be in
reality a small 'P' (its old category) within a big 'V' (the category of
friendly nations)," he said.
To avert this risk we have tried to bring along our COCOM allies through
various briefings. Technical presentations have not yet been made, certainly
not at the political level, of precisely what we propose authorizing because
the Chinese Government only recently provided us with the written assurance
we require against diverting to other countries that which is transferred
to them.. Immediately after interagency clearance of the letter of assurance
received just this week from the PRC, our technical regulations will be
Not referred to DOC. Waiver applies.
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SECRET NOFORN SENSITIVE
published in the Federal Register (I expect this will occur by November .18).
It is my belief that, unless COCO1,1 creates a "Green List" or its equivalent
(e.g. authorizing COCOM members to deal with a given level of technology
for the PRC as a matter within the national discretion of each COCOM
member), a backlog will develop of pending applications. which will quickly
clog the system, thwart implementation of our policy.and deflate the high
expectations that have built up.
To test the possibility of COCOM adopting the U.S. Green List approach, on
November 8 while in Paris I put the question to a respected, experienced
and COCOM-committed French Government official. Whereas I. had been led. to
believe that COCOM reluctance to go along with U.S. export licensing policy
towards the PRC was based on either selfish commercial motives or European
and Japanese unwillingness to antagonize the Soviets by drastically
differentiating between the two, the issue is more complex. -
The French official gave me these personal views that are worth considering
as possibly representative of the thinking within 000OM;-
(1) There is a-worry about what the PRC will become in 5-10-15-
years, in-terms of possible threat to world or regional
stability. U.S. perceptions of China's future attitudes
towards the West and its likely behavior in general have
not been adequately articulated. "What is the U.S. up to?"
was asked not in an antagonistic or accusatory-manner, but
in genuine puzzlement.
.(2) The Chinese are intent upon obtaining technology with military
applications, notwithstanding that their inquiries are cloaked
in the guise of requests for civilian use products (the PRC
Vice Minister for Electronics Industry recently presented to
French Government officials and industry representatives a -list
of a few hundred items relating to telecommunications that
have clear military relevance, even while he explained that
.his Ministry has little to do with telecommunications).
(3) There is a strong bias against a separate list for the PRC
.-because while it would mean speedy treatment for the PRC it
could result in even lengthier delays than now occur for all
other COCOM license reviews. Especially because the process of
reducing the size of the COCOT11 list (now about 200,000 items)
has been so feeble in recent years, this dramatic approach by the
U.S. towards the PRC can't help but fuel: European-cynicism
regarding U.S. motives ("the U.S now has more than 100 times
the number of PRC applications pending than anyone else").
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(4) "What is the U.S. up to?" was asked again in the context
of our stated, common objective to staunch the flow of dual-
use technology to potential adversaries. COCOM's attention
to the "truly critical" is surely being impaired by the
..continuing failure to pare the control list as it applies to
the Soviet Union. It is difficult to comprehend a huge list
for the USSR and the Bloc, on the one hand, and an outpouring
of technology for the PRC on the other hand. In other words,
perhaps a great deal of what the U.S. proposes to authorize
for the PRC could also be..authorized for the USSR without any.
strategic risk.
On one level, these comments are reassuring for they reveal a sincere concern
for the hazards to Western security which can result -- and has resulted --
from unwise technology transfers. But cynicism would be a terrible attitude
.to have to contend with as we continue our laborious and partially successful
efforts, at strengthening COCOM, possibly an even more fundamental foreign
policy objective of this Administration than is our new approach towards
China. We can achieve both objectives, I firmly believe, but a lot of
shoring-up needs to be done, and soon.
There are more than 400 China cases pending in COCOM and as soon as our
regulations are made public (which the private sector is anxiously awaiting)-
we anticipate a surge of many more. I would not be surprised to see our PRC
COCOM workload increase from. 890 in 1983 to 4000 in 1984. Because of superb
cooperation between Commerce, Defense, State and the NSC, we will handle this,
on the U.S. side, smoothly. But while efforts are being made to temporarily
increase the technical staff in COCOM's Paris headquarters, this gesture may
quickly prove to be inadequate. Absent a political-level intervention leading
to major alterations in how COCOM member states deal with China, the system
could become dysfunctional early in 1984.
If you agree, I will send this memo to Allen Wallis, Bill Schneider and Fred
Ikle with the suggestion that principals get briefed and meet as soon as
possible thereafter.
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