The five companies announced by the Commerce Department's Bureau of Industry and Security (BIS) are: Applied Materials China, Boeing Hexcel AVIC I Joint Venture, National Semiconductor Corp., Semiconductor Manufacturing International Corp. (SMIC) and Shanghai Hua Hong NEC Corp.

The end-user program will "make U.S. exporters more competitive in China," Mario Mancuso, undersecretary of commerce for industry and security, said during a conference call on Friday (Oct. 19). Mancuso added that the agency's resources can now be shifted to other regions to "enhance security elsewhere."

Being designated by the U.S. government as a validated end-user means individual export licensing requirements will be removed on shipments of controlled items to the five companies. In return, the companies agreed to on-site audits by U.S. officials and strict record-keeping requirements.

Mancuso said he expects other U.S. companies operating in China to be added soon to the list. The program will soon be expanded to India, he added.

The five companies accounted for 150 export licenses between 2002 and 2006. BIS said the companies were approved based on, among other criteria, their non-military business operations in China and previous compliance with U.S. export controls.

Listing the five companies as validated end-users is a first step in implementing a new U.S. export control policy toward China announced in June designed to tighten restrictions on dual-use technology exports. Among the technology covered under the new export policy are avionics, composite materials and telecommunications equipment with military applications.

While Mancuso stressed close consultations with Chinese officials in developing the export policy, critics of the initiative have questioned the level of U.S.-Chinese cooperation. They point to a recent directive by China's Ministry of Commerce requiring that companies in China must receive goverment approval before submitting to U.S. on-site audits. The rub, critics said, is that validated end-users have already agreed to U.S. audits.

By: DocMemory
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