21 November 2000 Excerpts of Boucher Statement: Sanctions Waived for China But Not Weapons Recipients Pakistan and Iran The United States welcomed China's announcement that it will not help other countries develop ballistic missiles that can be used to deliver nuclear weapons. State Department Spokesman Richard Boucher said November 21 that because of the new Chinese commitment, the United States would "waive economic sanctions required by U.S. law for past assistance," to Pakistan and Iran. Sanctions, however, are being imposed upon Pakistan and Iran, and "the waiver (to China) does not apply to any transfers that might occur in the future," Boucher added. The economic sanctions against Pakistan and Iran are to be imposed on both countries' ministries of defense. Also singled out were Pakistan's Space and Upper Atmosphere Research Commission, Iran's Defense Industries Organization and its armed forces logistics components. Boucher said that the economic impact upon the two countries would be limited, given the preexisting sanctions, but that these new sanctions "do send a strong signal that the United States opposes these countries' missile programs." Following are excerpts from the Boucher briefing at the State Department: Mr. Boucher: Okay. Good afternoon, ladies and gentlemen. I'd like to start out with a statement on China and missiles, and I'll try to go through this very carefully for you, and then answer what questions you have, and then we'll have somebody available at the end of the briefing who can further explain as necessary the areas that I may not be precise on. First of all, we welcome the People's Republic of China Foreign Ministry spokesperson's statement of November 21 regarding China's clear policy commitment not to assist, in any way, other countries to develop ballistic missiles that can be used to deliver nuclear weapons, and to further improve and reinforce its export control system, including by publishing at an early date a comprehensive export control list of missile-related items, including dual-use items. This development can strengthen cooperation between the United States and China to achieve our common objective of preventing the spread of ballistic missiles that threaten regional and international security. In consideration of China's commitment to strengthen its missile- related export control system, we have decided to waive economic sanctions required by U.S. law for past assistance by Chinese entities to missile programs in Pakistan and Iran. Given the relationship between missile nonproliferation and peaceful space cooperation, the United States will now resume the processing of licenses that are necessary for commercial space cooperation between the U.S. and Chinese companies, such as launching U.S. satellites in China. In addition, the United States and China will resume discussions as soon as possible on extending the 1995 U.S.-China agreement regarding international trade in commercial launch services. The U.S. stands ready to continue to cooperate and hold consultations with China and other countries on the issue of nonproliferation, with a view to strengthening their respective export control systems for missile-related equipment and technology. If I can just add at this point, this has been a subject of ongoing discussion with the Chinese for quite some time, many years, in fact. I know there have been reports about China's missile-related activities in the past. What we've done here is to work out an arrangement that commits China not to assist other countries in the development of Missile Technology Control Regime-class ballistic missiles in any way, and to put in place comprehensive missile-related export controls. In exchange, the U.S. side has decided to waive sanctions under U.S. law for past Chinese assistance to missile programs in Pakistan and Iran and to resume certain commercial space interactions with China. Sanctions have been imposed upon Pakistani and Iranian recipients of the Chinese assistance. The effective implementation of China's new commitments would be another important step by China to join the international nonproliferation mainstream, and it would promote international security and further U.S.-China cooperation. China's statement includes broad new commitments on nonproliferation and security importance, but its value ultimately will depend on whether those commitments are implemented fully and conscientiously. In that connection, while the United States is waiving sanctions that would otherwise be imposed for past transfers to missile programs in Pakistan and Iran, the waiver does not apply to any transfers that might occur in the future. We're confident that the next administration will follow this question closely. These discussions with China have been ongoing for some time. I think most recently we had a team go to Beijing after the talks with North Korea in Kuala Lumpur about a month ago. A team went up to Beijing and held some further discussions. This was certainly a topic of the secretary's discussions and the president's discussions in Brunei, where they confirmed the understandings and emphasized the importance of full and complete implementation of the understandings that have been reached So with that introduction, I'll be glad to take your questions. Q: Do you have any new information on the sanctions, which are being waived? Mr. Boucher: Let me try to go through that as much as I can. There's a limit to the amount I can go into this because of the kind of information we have and where we got it. We do have an ongoing process that reviews very carefully all the available information on potentially sanctionable activity. Missile sanctions law imposes a number of requirements that must be met with high confidence in order for the legal standard for a sanctions determination to be met. Moreover, because we do take seriously our responsibility and because of the serious national security, foreign policy, and economic consequences of imposing sanctions, we've always insisted on a high standard of evidence. These factors contributed to the amount of time necessary to make these sanctions determinations. On the activities itself, some Chinese entities and Pakistani entities were involved in transfers of Missile Technology Control Regime Category 1 items -- that is, complete missiles, their major subsystems, or their production facilities -- and of Missile Technology Control Regime Category 2 items, components, and materials used to make Category 1 missiles and subsystems to Pakistani entities that contributed to Missile Technology Control Regime-class missile programs in Pakistan. With regard to Iran, some Chinese entities and Iranian entities were involved in transfers of Missile Technology Control Regime Category 2 items to Iranian entities that contributed to Missile Technology Control Regime-class missile programs in Iran. But that's about as much detail as I can give you in order -- in describing the transfers. Q: Okay. Q: But is it -- I take it that the waiver is allowed under the statute, at the president's prerogative, so Congress does not have to approve the waiver. Mr. Boucher: I'm assuming that's true. I'll have to reconfirm that for you. Q: Do you know -- has -- have leaders in Congress that may be critical of this -- have they been consulted? What kind of congressional -- Mr. Boucher: We've been doing congressional consultations this morning. Q: This morning? Mr. Boucher: This morning. So I don't have a readout yet. Yeah? Q: Richard, one -- the first thing is, do you know why -- how it is that Xinhua actually announced this about 45 minutes ago? (Chuckles.) And -- Mr. Boucher: Do I know how it is? Yeah. We agreed that we'd do it more or less simultaneously, and they wanted to do it before the morning came. Q: Okay. And the second thing is, are there sanctions against Pakistani and Iranian companies that are being lifted, or is this strictly on Chinese entities? Mr. Boucher: No. The sanctions are being imposed upon the Pakistani and the Iranian entities. Q: So why -- (off mike) -- Q: Wait a minute. They're being maintained, or were they imposed -- being newly imposed? Mr. Boucher: Hang on a sec. I've got the entities listed somewhere here. (Pause.) Okay. We determined, under U.S. law, that a number of Chinese entities transferred missile-related equipment and technology to entities in Iran and Pakistan; that those transfers contributed to so-called Category 1 missile programs in Iran and Pakistan, and that all of the entities knew they were involved in Category 1 missile activities. Therefore, under our law, sanctions against these Chinese, Iranian and Pakistani entities are required to be either imposed or waived, as permitted by the sanctions law. In consideration of China's commitment not to assist the development of MTCR-class ballistic missiles in any way, and to strengthen its missile-related export controls, we're waiving the sanctions required against the Chinese entities. We are imposing sanctions against the Iranian and Pakistani entities, and those sanctions will be announced in the Federal Register shortly. The sanctioned entities in Iran are the Defense Industries Organization, the Ministry of Defense, and Armed Forces Logistics, and their sub-units and successors. The sanctioned entities in Pakistan are the Ministry of Defense, and the Space and Upper Atmosphere Research Commission, and their sub-units and successors. Q: Could you go through those again real quickly. Ministry -- in Iran -- Mr. Boucher: In Iran it's the Ministry -- sorry. The Ministry of Defense, the Armed Forces Logistics -- I guess Agency -- Armed Forces Logistics Command, or whatever, and the Defense Industries Organization and their sub-units and successors. In Pakistan it's the Ministry of Defense, the Space and Upper Atmospheric Research Commission, and their sub-units and successors. Okay. We have one back here. Q: So what in effect do these sanctions mean? What happens? I mean, sir, would you stop dealing with them in this field of defense or put a hold on defense purchases or - Mr. Boucher: What they mean is that for a two-year period, all new individual export licenses for commerce or state-controlled items, and all new U.S. government contracts are denied to the Pakistani Ministry of Defense; Space and Upper Atmosphere Research Commission, and their sub-units and successors. In addition, for a two-year period, all imports into the U.S. of products produced by the Pakistani Ministry of Defense and its sub-units and successors will be denied. Finally, for a two-year period, all new individual export licenses for commerce or state-controlled MTCR Annex items and all new U.S. government contracts related to MTCR Annex items are denied to the Iranian entities of Defense Industry Organization, the Ministry of Defense and their subunits and successors. Q: Do you happen to know if -- Mr. Boucher: Because of the ongoing U.S. embargo against Iran, and preexisting U.S. sanctions against Iran and Pakistan, the new sanctions will actually have very limited economic effect. But they do send a strong signal that the United States opposes these countries' missiles programs. Q: Well, what are the current sanctions against Pakistan right now? Mr. Boucher: I'd have to look those up for you, but they generally cover this area of military and dual-use items. Q: Could you elaborate on what you mean by "an entity" and whether, in fact, specifically with regard to China, because so much of the defense industry is run by the government, if in fact the Chinese government itself was aware of these sales? Mr. Boucher: It's a hard question to answer because we all know that there are Chinese entities that have close government connections, including being part of ministries and things like that. So, I don't think at this point I'm able to answer it. What happened was, because the Chinese government itself committed to impose and publish a set of controls that were of the same sort as the Missile Technology Control Regime and agreed to implement these restrictions for the future, we were able to waive the sanctions that might be applied to Chinese entities generally. Q: Could I just follow-up on that? Why does the U.S. think that China felt it necessary to essentially duplicate part of the MTCR and sign that, rather than just signing onto the MTCR? What distinction is there? Mr. Boucher: Well, I mean, first of all, you know, membership in the Missile Technology Control Regime is taken by consensus of the members; there are currently 32 countries. China's new commitments, if they're implemented fully, certainly would constitute major steps towards Chinese membership in the Regime in the future. But, you know, at this point what's important is getting control of the activities that might be considered proliferating. And for China to do this, we think is a major step forward. Q: I'm sorry, does that mean that China would like to join the MTCR but is not eligible right now, or that China - Mr. Boucher: No, I think you have to ask China what their -- you know, what their considerations are in joining or not joining. What's important to us is that China control its missile-related exports, and what we have done here is reached agreement with the Chinese, through many months of very detailed discussion, on the items and the controls and the publication of rules and the means of control, to make sure that China will impose a set of controls that are largely equivalent to the missile technology control regime ones. Q: Richard, from your understanding of what the Chinese are proposing in this, how difficult would it -- for there to be any leakage of this kind of technology from China now, if the rules were applied? And you're pretty confident that this is a hermetically sealed deal? Mr. Boucher: Well, if the rules are applied, there won't be any leakage. How difficult is it to apply the rules? We believe that the Chinese government is capable and, indeed, is committed to applying these new rules and to implementing thoroughly their decisions not to assist other countries in developing missile -- you know, ballistic missiles of this class. And that is why, I think, as I noted, the secretary's discussions with the Chinese foreign minister, with the vice premier; the president's discussions of this topic with the Chinese president in Brunei; focused on the issue of implementation and the need to thoroughly implement the commitments that China is making here. Charlie? Q: You mentioned, I believe, if I heard you correctly, that Iran won't suffer very much economically, because of the current situation. What will the economic effect be on Pakistan? Mr. Boucher: I think I put both Iran and Pakistan in the same sentence there, that because these duplicate other sanctions, the direct economic effect may not be large, but it certainly makes it very clear our position against the development of missiles in these places. Q: Back to Jonathan's question, can you get into any kind of discussion about what sort of verification -- have you set up any sort of verification steps on this? Mr. Boucher: I don't have anything for you on that, except that both China and the United States said that we would remain ready to continue to cooperate in consultations with each other on these matters and, therefore, on the complete and full implementation of these restrictions. And obviously, that is something that we have done all along, and now we will be doing it -- continuing to do it -- in terms of the rules that China is putting in place. Q: You said this statement came from the spokesman's office. Where should we attribute it, in terms of government agency or government official, and -- from China? Mr. Boucher: It's the Chinese Foreign Ministry's spokesman's statement. And I not only have it for you in Chinese, but I also have a translation, which some of you might appreciate. We'll give Andrea the Chinese. Q: (Off mike.) Mr. Boucher: And then we'll have copies of my statement available by the end of the briefing. Q: Can I actually have another question? Mr. Boucher: Okay. Q: Sorry. Can you say, in terms of what -- will now this allow, I guess, U.S. companies -- in terms of what kind of business would it be allowed to do, in just plain terms, with China, now that you've lifted the sanctions? Mr. Boucher: Okay. I think I mentioned in the statement that this will -- we will resume processing certain licenses and resume some discussions with the Chinese on missile launches. Let me go back to a more detailed -- if the sanctions had been imposed upon the Chinese entities, one consequence would have been to preclude commercial space interactions, like launches of U.S. satellites on Chinese rockets. We decided several months ago not to begin negotiations on the new U.S. -- on a new U.S.-China space launch agreement to replace the 1995 agreement that expires next year, and not to conduct normal processing of export licenses for commercial space interactions until the sanctions process had concluded. Now that the sanctions process has been concluded, and due to the fact that China is imposing its own set of controls on exports that contribute to ballistic missile programs, we have been able to make this decision to waive sanctions that otherwise would have been required against Chinese entities. Therefore, we've decided to resume discussions on the launch agreement and to resume the normal processing of commercial space licenses involving China. Now that doesn't require U.S. approval for any specific exports to China. All applications for these export licenses continue to be subject to case-by-case review on the merits of the individual license. They also remain subject to normal requirements for technology transfer restrictions and other things like that. But we will simply be lifting the suspension that's been imposed and return to a case-by-case review. Q: I'm sorry, but could you -- you said you're resuming discussions on a launch agreement. I mean, I don't know, have we ever helped the Chinese launch any satellites, and would this be to launch -- discussions on launching a satellite in China? Mr. Boucher: These are -- this has taken place in the past where U.S.-made satellites have been launched on Chinese boosters, subject to rigorous technology safeguards that are administered by the Department of Defense. And so companies can apply to us to have those -- to have their satellites launched on Chinese rockets, basically. Q: Richard, I believe it was -- was it Hughes that caused the original problem by passing technology that was not allowed? Mr. Boucher: Well, Chinese exports of missile technology is the problem that we've dealt with here. The relation to satellite launches, yes, there were, I think, several companies that were being looked at for the way they had handled the technology safeguards that are required. Those issues continue. Obviously, our licensing takes into account any legal issues that are related to the specific companies. Those aspects are not affected by the new arrangements with China. Q: So will these companies be allowed to deal with China again for satellite launches? Is that what you're saying? Mr. Boucher: That would depend on specific case-by-case review. I don't have a blanket approval of all licenses or of any specific company's license. That will depend on specific applications and how we see the situation. With regard to the company, it's a legal situation, as well as its ability to apply the required technology safeguards. Q: But they can apply like anybody else? Mr. Boucher: They can apply. Q: One final question on this, so that we don't torture Barry too much longer. Is it fair to presume at this point, Richard, that with this now taken care of on Class 1 MTCR missiles, that the U.S. doesn't have any other proliferation concerns with China? Mr. Boucher: Proliferation is a broad area; I'd have to check it. But certainly on the missile issue, we think that this takes care of the need for -- of the need for China to have a system to control exports that contribute to ballistic missile programs. They're instituting a comprehensive set of controls. We think that's important; we welcome that and in return we're waiving sanctions. But, as I've stressed, I think, several times, the key to this is going to be implementation and making sure that implementation is thorough and that all Chinese entities, be they government-associated or not, adhere to this and that the system works. So I'm sure there will be individual instances that we might raise from time to time in order to make sure that these rules are fully implemented. Q: Do you take the question under whatever it is you do and see if there's an answer, or something like -- Mr. Boucher: Do we have other -- I'd have to check on the nuclear area of the missiles and all that other stuff. I'll check and see if we have a broad statement on Chinese proliferation, yeah. .... Q: All right. And I apologize if this has been asked. But there is almost certain to be criticism of this development on China from certain quarters on Capitol Hill to the effect that this is, you know, letting China off the hook, so to speak. Do you -- what's your view on that? What would your response be to that criticism? Mr. Boucher: I would make the argument that the goal here is not to put somebody on the hook or off the hook. The goal here is to end sales of missile and -- of missiles and missile-related components; that if we can stop a program, if we can stop exports of missiles, technology, equipment, parts, whatever, that have been contributing to the develop (sic) of this ballistic missile capabilities around the world, and particularly in places like Iran and Pakistan, which are dangerous enough already, it's very important to us to be able to stop those sales and stop that assistance. So that's the goal, and we have succeeded in that goal, in working out with China arrangements for China to put in place a very comprehensive set of controls on missile sales and exports. And that's what really matters, that's what we've been working on for many years, and that's what we've achieved. Q: Is there any way that talks with Pakistan are also being held on the same subject, on instituting some kind of controls? And secondly, where does India's missile program, which is very well developed, figure in all this, in Chinese-American concerns? Mr. Boucher: Well, we are prepared to discuss with Pakistan the conditions under which a waiver on the Pakistani entities might be warranted. But there's also no basis for waiving the sanctions against Iranian entities. As far as Indians -- you know, in terms of what the Indians think or have to do with this, I think you need to ask the Indian government. We certainly believe that the Indian government would agree with our determination that Chinese entities have made missile- related transfers to Pakistan. We believe that India should welcome the comprehensive and explicit assurances that China has given that no such cooperation will take place in the future. (Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov) Return to the Washington File