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U.S. Tech Licensing Rules Eased For Five Chinese Firms

Companies areĀ granted 'validated end-user' status as part of a program aimed at boosting U.S. trade with China; will notĀ need individual export licenses to import sensitive goods.

WASHINGTON (Dow Jones/AP) ā€” A handful of Chinese firms can now more easily import sensitive technologies from the United States, the Commerce Department said Thursday.
The agency's Bureau of Industry and Security said five Chinese firms were granted ''validated end-user'' status as part of a program aimed at boosting U.S. trade with China.
The designation means the firms ā€” including units of Applied Materials Inc. and National Semiconductor Corp. ā€” will no longer need individual export licenses when importing certain sensitive goods into China.
''It recognizes China as a very important market, and that we can't just look at geographic boundaries when assessing risk,'' said Mario Mancuso, undersecretary in Commerce's Bureau of Industry and Security.
The announcement came as part of a broader shift in U.S. foreign and economic policy toward China. Mancuso said the United States needs to facilitate free trade with China and its bustling economy, and ''make U.S. exporters more competitive overseas.'' At the same time, he said, the U.S. needs to be wary of exporting technologies that could contribute to a ''rapid and opaque military buildup.''
The five companies, which were screened by a number of federal agencies, fulfill that goal, he said.
''These are companies that have a demonstrable record of using sensitive U.S. technologies in the past,'' Mancuso said.
The five companies designated Thursday were Applied Materials China, Boeing Co. joint venture Boeing Hexcel AVIC I, Semiconductor Manufacturing International Corp., National Semiconductor and Shanghai Hua Hong NEC Corp.
The announcement was received with mixed emotions by Bill Reinsch, president of the National Foreign Trade Council.
''Anything you can do to speed up or streamline the licensing process is a good thing,'' Reinsch said. ''But we had been expecting more than five companies.''
Reinsch said his group, which represents a number of multinational corporations, had hoped for as many as 20 companies to be chosen for the program. Reinsch said he hopes Thursday's announcement will soon be followed by more.
Mancuso declined to speculate on when the Commerce Department might designate more firms under the program, and said the agency ''has no interest in rubber-stamping VEU status.'' But, he added, the agency does have a ''pipeline of companies'' that have applied and are being screened by the U.S. government to qualify for the special status.
None of the five companies designated Thursday is a wholly owned domestic Chinese firm. Mancuso said the ownership of the firms is one of the criteria federal agencies look at when deciding whether to ease export rules, but said where a company is based is not necessarily a disqualifying factor.
''We don't rule out domestic Chinese companies from being chosen for VEU,'' Mancuso said. ''There's no litmus test.''
Reinsch, however, said designating a Chinese firm as part of the program would grant it more legitimacy.
''The real test is if they approve an indigenous Chinese company,'' Reinsch said. ''It won't be a big deal until they do.''
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