VZCZCXYZ0000
RR RUEHWEB

DE RUEHBJ #8558/01 2472259
ZNR UUUUU ZZH
R 042259Z SEP 06 ZFF4
FM AMEMBASSY BEIJING
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 5878

UNCLAS BEIJING 018558 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 532/BIS/MFOULON 
USDOC FOR 3132/OIO/WZARIT/ADESARRAN 
SECSTATE FOR EAP/CM 
SECSTATE FOR EB 
SECSTATE FOR T AND ISN 
 
E.O. 12958: N/A 
TAGS: BEXP CH ETRD ETTC OTRA PREL
SUBJECT: MOFCOM DELIVERS LETTER FROM VICE-PREMIER WU YI FOR 
SECRETARY  GUTIERREZ; ASSAILS PROPOSED "CHINA RULE" AND 
 
 
SIPDIS 
CHANGES TO U.S.  EXPORT CONTROL REGULATIONS TOWARDS CHINA 
 
REF: BEIJING 16813 
 
¶1. (U)  Embassy's Commercial MinisteruCounselor (SCO) and 
Export Control Officer (ECO) were summoned to a hasty meeting 
with Mdme. WANG Qinhua, Director-General, Department of 
Mechanical, Electronic and High Technology Industries, 
Ministry of Commmerce (MOFCOM). The purpose of this meeting 
was for DG WANG to deliver a letter from Vice-Premier WU Yi 
to U.S. Department of Commerce Secretary Gutierrez, 
expressing her concerns regarding a proposed new regulation, 
which was published for public comment on July 6, 2006.  This 
proposed regulation would impose export licensing 
requirements on certain dual-use commodities when destined 
for military end-uses in China, establish a new Verified End 
User (VEU) program that would eliminate the need for export 
licenses to authorised end-users and expand an existing 
requirement for U.S. exporters to obtain MOFCOM End-User 
Certificates. SCO and ECO met with DG WANG several weeks ago 
to receive MOFCOM's preliminary views on this proposed 
regulation (see reftel). (END SUMMARY) 
 
¶2. (SBU) DG WANG presented SCO and ECO with a letter from 
Vice Premier WU Yi and asked that COMMOFFS transfer this 
letter to U.S. Commerce Secretary Gutierrez at the earliest 
opportunity.  DG WANG characterized this as a "personal 
letter" from Vice Premier WU to Secretary Gutierrez and took 
pains to clarify that this letter should not to be construed 
as China's official position on the proposed "China rule". 
DG WANG noted that MOFCOM has expended a great deal of 
resources on analyzing the proposed regulation and further 
stated that MOFCOM continues to study this closely. As 
before, DG WANG did not rule out a formal response by MOFCOM 
to this proposed "China rule", but indicated that it remains 
under consideration. 
 
¶3. (SBU) Embassy translation of the letter follows: 
 
(BEGIN TEXT) Respected Secretary Gutierrez:  I note that the 
US Department of Commerce recently published a draft "Rule of 
Revisions and Clarification of Export and Re-Export Controls 
for the People's Republic of China; New Authorization 
Validated End-User". This new regulation, which has increased 
the items subject to export controls for China, unilaterally 
expanded the scope that requires issuance of end-user 
certificates by the Chinese Ministry of Commerce, and added 
to the commercial burden of enterprises of both countries, is 
bound to exert an adverse influence on the normal development 
of Sino-US economic and trade relations. This step backwards 
in policy has led to questions and opposition from business 
sectors in both countries. 
 
The trade imbalance is an issue of priority concern to the US 
side in Sino-US economic and trade relations, the proper 
handling of which requires joint efforts from both sides. In 
recent years, China has adopted a series of positive measures 
in order to expand imports from the US, including purchases 
by the Chinese business delegation that accompanied me during 
my visit to the US in April this year. At the same time 
however, the US side is violating the cooperative spirit by 
restricting exports to China. This is not only harmful to the 
US in terms of its comparative advantage in the bilateral 
trade, but will also send to the business communities in both 
countries a wrong signal that US policy toward China has 
retrogressed. I hereby express my strong dissatisfaction with 
regard to these actions of the US side. 
 
I hope that the US side will earnestly attach importance to 
the concerns of the Chinese side, correct mistakes in a 
timely manner, take positive measures, promote Sino-US 
economic and trade cooperation, boost the confidence of 
Chinese and US businesses in pursuing high-tech trade, expand 
US high-tech exports to China, and do things that are 
beneficial to achieving a balance in bilateral trade. Mr. 
Secretary, I hope that you will be able to use your wisdom 
 
SIPDIS 
and influence to promote an early and proper resolution of 
this issue.  Complimentary closing, Wu Yi, Vice Premier of 
the State Council, People's Republic of China (END TEXT) 
 
NOTE: COMMOFFS will transmit original letter including 
courtesy translation by MOFCOM and Embassy translation to the 
Bureau of Industry and Security, US Department of Commerce. 
 
---------------------------------- 
LOOKING AHEAD TO THE WORKING GROUP 
 
 
 
---------------------------------- 
 
¶4. (SBU) DG WANG raised the upcoming first meeting of the 
U.S. - China Strategic Trade and High Technology Working 
Group, slated for September 26 through 28, 2006, in 
Washington, D.C., and expressed high hopes that this meeting 
will be productive. 
 
¶5. (SBU) ECO noted that other MOFCOM officials have suggested 
that Vice Minister WEI Jianguo may lead the MOFCOM delegation 
to the Working Group meeting and asked if this has been 
confirmed.  DG WANG responded that this was "highly likely", 
and stressed again that the important work of this group must 
continue regardless of whether VM WEI attends.  In 
particular, DG WANG stated that she looked forward to meeting 
her counterpart, Mark Foulon, Deputy Under Secretary for the 
Bureau of Industry and Security, and engaging fully in all 
three days of meetings at the Department of Commerce. She 
further noted that ECO and her counterpart, JIANG Qianliang, 
Chief of Export Control Division I, have been engaged in 
working out details of a joint statement of principles. 
 
¶6. (SBU) COMMENT: Post understands that planning for the High 
Technology and Strategic Trade Working Group is well underway 
and that the Chinese delegation will be afforded ample 
opportunity to share their views and seek further 
clarification on specific aspects of the proposed "China 
rule" during this meeting. 
SEDNEY 
 
 
 
 
 
 
SEDNEY