Graphite export decision a boost for US business

PUBLISHED : Thursday, 03 August, 2006, 12:00am
UPDATED : Thursday, 03 August, 2006, 12:00am

Observers welcome Bush's move on dual-use material

Monday's decision by the Bush administration to authorise the export to China of more than 900 tonnes of bulk graphite, used for making plastics, comes as the US reviews policies governing the export of goods and technologies to the mainland which have been controlled for reasons of national security and foreign policy.

Approval of the sale of dual-purpose graphite, which can also be used to produce technology for the space launch industry, had to go through a lengthy and complicated process, and analysts said the decision might have been made by US President George W. Bush himself.

'Whoever wanted to sell the graphite must have worked through a lengthy export control process in a manner perhaps similar to [former] president [Bill] Clinton's approval of the launching of certain US-built satellites on Chinese rockets in the latter half of the 1990s,' said Robert Kapp, president of a China business consulting company.

In an official letter to the Speaker of the House, Mr Bush certified that the export approval was 'not detrimental to the United States' space launch industry, and that the material and equipment, including any indirect technical benefit that could be derived from such exports, will not measurably improve the missile or space launch capabilities of the People's Republic of China'.

The letter listed the names of specific Chinese companies that would use the graphite for non-military purposes.

The US Commerce Department published proposed rules governing export regulations for China in the US Federal Register last month for public comment.

Mr Kapp said the proposed rules appeared aimed at improving the approval process. He said the White House had not approached the implementation of the new regulations by emphasising the military threat China posed to America, but by claiming the new regulations would ensure that the policy of not materially contributing to China's military activities would be fully enforced and the export of goods would be made 'more smooth and efficient'.

Mr Kapp said Mr Bush's decision could help to reduce concerns among American businesses regarding the proposed rules.

'Certainly, one of the staple arguments of the section of the US business community most concerned about these proposed expanded control regulations is that products proposed for prohibition under US regulations would be available from other international suppliers in the end-user country targeted by US controls,' he said. 'It [Mr Bush's decision] may be somewhat heartening to the business community.'

He said it was possible the decision was made amid the debate on the new China export regulations 'as a reassurance that the new regulations will not be used to defy common sense if and when they are deployed'.

According to US Commerce Department statistics, American companies exported approximately US$41 billion of items to China last year, with US$2.4 billion worth of goods licensed for export to China and US$12.5 million worth denied.

Wang Yong, director of the Centre for International and Political Economy at Peking University, expressed cautious optimism about the approval.

'I have not seen enough signs of a relaxation of export controls,' he said. 'An individual case does not necessarily represent a total change in the export policy of the American government.'

Mr Wang said the authorisation might have been prompted by US businesses keen to export to China. 'I'm not surprised to see such a decision,' he said.

He welcomed the move, however, saying it could help to improve strained relations between the two countries, which he said were exacerbated by the export controls.