Several US business groups have come out against a proposed regulation that would place further control exports on China for fear that Beijing will use US technology to modernise its military. The groups say the plan is unrealistic and unworkable.

Dozens of business associations called on US Secretary of Commerce Carlos M Gutierrez to withdraw the proposed export control regulation for China. In a letter distributed to the media, the groups which include the National Foreign Trade Council (NFTC), the Business Roundtable and the Business Software Alliance said the rule would place excessive compliance burdens on US corporations, while failing to advance the country’s national security interests.

The groups argued in their letter to the Bureau of Industry and Security (BIS) that the proposed rule would be unilateral and bypass diplomatic efforts and warned of its negative impact. “We believe that the regulations could well have a serious deleterious impact on the significant political, military and foreign policy relationships developed with China as well as the bilateral economic relationship,” said the 42-page letter.

Among the requirements that US businesses fear could hinder their operations is that it requires US firms to obtain information from their customers about their intentions for purchased goods downstream. The regulation would also impose additional certification burdens on the Chinese government.

The Commerce Department said in a release that the “Revisions and Clarification of Export and Re-export Controls for the People’s Republic of China” requires exporters to obtain an “End-User Certificate”, issued by the Chinese Ministry of Commerce, for all transactions in which the total value of items exceeds $5,000. It also bans a list of items defined as “subject to the military end-use license requirement” with the goal of denying Chinese military access to those items.

But the groups which represent major US corporations faulted the proposal on many grounds. The proposed export controls will not involve other nations or US allies. Already Britain, Germany and Italy say they are not bound by US restrictions on trade to China. This has worried the business groups, who argue that the rule will lose its effectiveness while penalising US firms and rewarding their competitors.

“Requiring China to issue end-user certificates of Chinese customers for any licensed sale over $5,000 goes far beyond anything being required by our allies,” said John Frisbie, president of the US-China Business Council. “We need to protect our legitimate security concerns, but not unnecessarily undermine our competitiveness.”Depriving China of military products will not work, they argue.

“The realities of the global marketplace make it highly unlikely that the new controls will have any impact on China’s access to the items in question as they are already widely available from non-US sources,” said John Engler, president of the National Association of Manufacturers.

The heavyweight business leaders said a better approach to China would establish a special advisory group to examine all the issues relevant to advanced technology trade with China including economic, foreign policy and national security concerns. — IPS