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    Greater China
     Dec 5, 2006
Washington's schizophrenic China policy

By Donald Alford Weadon Jr and Carol A Kalinoski

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

Next week, pragmatic US Treasury Secretary Henry Paulson Jr and Federal Reserve chairman Ben Bernanke will lead an unprecedented pride of US cabinet secretaries (notable among

them the secretaries of commerce, labor, energy, health and human services, and Trade Representative Susan Schwab) who will land in Beijing for a week of high-level, high-stakes consultations. The topics will include market access, intellectual-property protection and the remarkable US trade deficit with China.

But accompanying them like an odiferous dark cloud will be the prospect of the China Military Catch-All Rule (see US blunders on with China military-export rule, Asia Times Online, September 22), now concluding the last days of an extraordinary 150-day public-comment period before being acted upon by the proposing Bureau of Industry and Security (BIS) of the US Department of Commerce.

The pendency of this roundly disparaged proposal is truly a wrench in the works for any consistent US trade policy with China, and represents the undiminished power of post-Cold War attitudes toward China that, despite the recent congressional election mandate, still energizes elements of the US administration.

While Paulson, all too familiar with China, well knows that atmospherics are critical to effective, high-level negotiations, it is telling that he has neither commented on the dysfunctional rule nor insisted that the plug be pulled on what even Larry Wortzel, chairman of the congressionally chartered (and generally Sinophobic) US-China Security Review Commission, has recently termed a poorly crafted and ineffectively unilateral regulation.

The stated objective of the proposed rule is to embargo generally available US goods otherwise eligible for sale to China that could make an otherwise undefined "material contribution to [China's] military capabilities". There is a growing body of informed comment, both in academia and industry, that modernization of the Chinese military is not exactly a bad thing in a global community.

Multilateral export controls can contain significant military advances, but it is clear that the unilateral embargo of decontrolled and ubiquitous dual-use goods and technologies that have no essential military character is a strategic misstep. While it may make the US administration's anti-China cabal feel good, it will wreak havoc on ordinary commercial and financial relationships between the United States and China, as well as those between the US and its trading allies doing robust business with China.

That the United States has been unable to achieve any consensus among the Wassenaar Arrangement [1] nations on this issue is an indication of how benighted an idea the proposed catch-all really is. Certainly, if it had any utility, the US would have been able to obtain "buy-in" from at least one allied government over the past two and a half years during which BIS alleges it has sought consensus.

But nothing attains momentum in Washington, DC, like a bad idea, and the stakes are high for BIS and the administration in making this proposal "stick". While earlier BIS China initiatives have been hastily withdrawn (the extension of the Deemed Export regime to individuals born in China, regardless of their citizenship, was recently withdrawn after harsh criticism and tossed to a blue-ribbon panel), it has been made clear by BIS and the administration from the outset that the military catch-all would be rammed down the throats of industry regardless of the damage it would do to the US economy or trade relations with China.

In fact, the newly confirmed assistant secretary of BIS, Chris Padilla, insisted both in confirmation hearings and as recently as last month that the roll-out of the final catch-all rule was a "done deal".

But industry comments lodged thus far have been aggressively negative on all fronts and urge withdrawal and collegial re-engineering of the rule. A few comments, though, are curious. Anxious not to rile BIS and possibly fearful of a denial of "access" and other retaliation by upset BIS caretakers (BIS has been without an under secretary for more than six months), one group merely laid out yards of negatives and dysfunctions, but failed to call for withdrawal, a most unusual situation: in other US regulatory regimes, the mere recitation of only a few of the identified disasters in the proposed rule would mandate withdrawal.

By all accounts, however, the rule is due for withdrawal and significant structural overhaul after detailed consultation with the Wassenaar allies, US industry and the BIS technical advisory groups - something lacking in the preparation and initial roll-out of the proposed catch-all rule.

But regardless, the Chinese do read the US Federal Register daily, can easily access the public comments, and have been acutely aware of the manifold problems and industry opposition to the proposed rule well before the initial publication on July 6.

And having concluded that the United States is not capable of creating a consistent and sustainable position on trade issues where there is a glimmer of "mutual benefit", the Chinese will, as they have done before with other hapless US emissaries (Alexander Haig, George Shultz and others), quietly divide and conquer, sending Paulson and his fellow emissaries home with a scintilla of dignity but absolutely no results.

The US taxpayer and the all-important US-China relationship - which will dominate this century - deserve better coordination, consultation and tending.

1. The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is an arms-control arrangement with 40 participating states that replaced the Cold War-era Coordinating Committee for Multilateral Export Controls, or CoCom, in 1996. It was established in Wassenaar, Netherlands.

Donald Alford Weadon Jr is a Washington, DC-based international lawyer. An expert in trade controls and China trade, he has counseled firms in export controls and customs issues in China for nearly three decades, and can be reached at dweadon@weadonlaw.com. Carol A Kalinoski chaired the BIS Operating Committee, the principal US government export-control dispute-resolution panel, for nearly nine years. She practices law at Carol A Kalinoski & Associates in Washington, DC, and can be contacted at kalinoski2003@yahoo.com.

(Copyright 2006 Donald Alford Weadon Jr and Carol A Kalinoski. Used by permission.)

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing.

China sings an old refrain for Paulson (Sep 23, '06)


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