“Excerpts from Mr. Garcia’s testimony of January 17, 2001 before the U.S.-China Security Review Commission on Export Controls and China.”

Mr. Garcia: The attaché works with the Embassy community, educating Embassy personnel on export control issues. He is the point of contact for the Chinese business community and U.S. businesses operating in China who have questions about U.S. export control issues.

The attaché also provides valuable information to BXA officials and licensing officers back in the United States to ensure that U.S. strategic products are safeguarded. The presence of the attaché also signals to the U.S. and Chinese business community that the Department of Commerce places emphasis on stopping any illegal exports to China.

EE's analysts review BXA licenses and shipping documents to determine which transactions should be the subject of end-use checks, both pre-license and post-shipment, and to recommend the denial or conditioning of licenses in light of specific facts and circumstances. In China, we have an end-use visit arrangement, negotiated between the U.S. and Chinese governments in July 1998, regarding end-use checks. In the past 12 months, BXA has conducted 42 such checks. These checks help to ensure that our national security is not compromised by the exports of controlled goods and technology.

For China, as for 50 other countries, post-shipment checks on all high-performance computers above a specified level of performance are mandated by law. This level has been raised as technology advances, reducing the number of PSVs required for future exports. However, as we interpret the law, Export Enforcement is not relieved of the requirement to conduct post-shipment verifications on previously exported computers that met the prior--lower--control level.

This presents Export Enforcement with a problem. We are being required to conduct checks on computers that are no longer considered advanced enough to be controlled, yet were controlled when exported. The sheer volume of these backlog checks combined with our limited enforcement resources diminishes our ability to choose and conduct those targeted checks, which we believe are most critical to our national security interests. We are actively exploring different avenues for relief from this burdensome requirement.

In addition to analyzing specific transactions involving Chinese entities or individuals, Export Enforcement also reviews applications for visas filed by Chinese nationals to prevent such individuals from illegally acquiring controlled U.S. technology while in the United States. Export Enforcement recommends denial of visas to the United States Department of State when it believes that the applicant poses a particular risk of illegally seeking or gaining access to controlled technology or technical data.

COMMISSIONER WESSEL: And Mr. Mercier talked about the Mutual Assistance Agreement with 50 countries--I don't know whether China is one of those.

But what kind of cooperation are you getting?

MR. GARCIA: Commissioner, I'll tell you what I see as my biggest problem with cooperation on end-use checks in China during my brief time in this position. I think that we have such a list of checks outstanding in China, into the 700s, which are primarily mandated checks on high-performance computers that were mandated at a time when the level was beneath 10,000 MTOPS. If you go to a country that may not be inclined to give you free access, and you say we want to do checks of this kind, I would think that the problem is that we are being given checks on a 6,000-MTOP computer that is at a travel agency, and a check is done.

My biggest problem is to get the strategic checks, the checks that our organization would see as the most important to our national security and the ones we should be doing given, as you said, our limited resources, pushed to the front of the line. And in my view, that is not happening, and I think that that is the biggest improvement we could make in our end-use arrangement and in our end-use cooperation with China.

COMMISSIONER WESSEL: So in part it is a question of the burden you have for the outstanding checks for the low number of MTOP computers. But if you had the strategic ability to choose which products as it applies to Chinese cooperation, do they give you cooperation on the 6,000-MTOP computer but not on the item that you really care about?

MR. GARCIA: Well, here is the example that I would give on that. There is a number, and it is relatively few items, that we have asked for post-shipment verification that do not relate to high-performance computers. We have seen extensive delays in getting those post-shipment verifications done. I think that answers your question.