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### Viewing cable 04THEHAGUE1145, DUTCH VIEWS ON ADC LICENSE HARMONIZATION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04THEHAGUE1145 | 2004-05-10 13:01 | 2011-01-24 17:05 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy The Hague

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 02 THE HAGUE 001145

    SIPDIS

    SENSITIVE

    STATE FOR EUR/UBI/HOLLIDAY

    E.O. 12958: N/A
    TAGS: KSTC ETTC PARM NL CH
    SUBJECT: DUTCH VIEWS ON ADC LICENSE HARMONIZATION

    REF: STATE 77513

    ¶1. (U) This message is sensitive but unclassified. Please
    protect accordingly.

    ¶2. (SBU) On May 7 econoff received the GONL response to
    reftel non-paper. The response came in the form of a letter
    to AS Wolf from Dirk Bruinsma, DG of Foreign Economic
    Relations of the Ministry of Economic Affairs. Text of the
    letter follows in para 4.

    ¶3. (SBU) Bruinsma,s letter restates the Netherlands,
    desire to reach an understanding with the U.S. on controlling
    the export of high-speed 14-bit ADCs to China (10th para) and
    comments favorably on most of the conditions suggested by the
    U.S. for inclusion in such an understanding (fifth para).
    The letter takes issue, however, with the idea of
    differential conditions for fully- and non-fully-PRC-owned
    manufacturers (sixth and seventh paras), and suggests that a
    flat non-reexport clause would be preferable to identifying
    specific countries for such a prohibition (eighth and ninth
    paras).

    ¶4. (SBU) BEGIN TEXT.
    The U.S. Embassy in The Hague presented me on April 14th 2004
    a non-paper titled &U.S. VIEWS ON ADC LICENSE HARMONIZATION
    UNDERSTANDING8. In reply I would like to give the following
    reaction.
    Let me first assure you that the Netherlands export control
    authorities are equally pleased to work closely with their
    U.S. colleagues on a wide range of issues. Be it issues of
    mutual concern, of common interest or both. This applies to
    our efforts within the framework of the Wassenaar Arrangement
    as well as to our work on issues that might be more
    fruitfully approached and dealt with on a bilateral basis.
    As to the conditions that could be attached to supplies of
    high speed 14 bit ADCs to manufacturers of telecommunications
    equipment in China, we have been studying whether it would be
    reasonable and feasible to impose robust and yet viable parts
    control plans on the recipients of such supplies.
    Both the U.S. and the Netherlands have come to the conclusion
    that withholding high speed 14 bit ADCs from the Chinese
    efforts to create a 3rd generation mobile telecommunication
    infrastructure is neither a desirable nor ) considering the
    pace of development in this area ) a credible option.
    Therefore, our common focus is not to prevent foreign
    supplies, but to limit the risk of diversion of supplied ADCs
    from manufacturers of telecommunications equipment to
    military applications.
    In this respect we have appreciated a previous U.S.
    non-paper, provided to us in the wake of the visit of U.S.
    officials last October, that described the kind of elements
    of parts control plans that could be envisaged to deal with
    such a risk. We equally appreciate the opportunity to
    include the ) in part ) additional conditions presented in
    the current non-paper in our studies. Especially the
    proposed conditions a,, b,, c,, d,, f,, g,,
    and i, will be taken into account in our assessment.
    The U.S. proposal to seek only an understanding to apply
    these or similar conditions to supplies to
    non-wholly-PRC-owned enterprises does not meet our support.
    In the Netherlands view such an understanding would have to
    cover the conditions attached to supplies of high speed 14
    bit ADCs to any and all manufacturers of telecommunications
    equipment in China. Either a parts control plan limits the
    risk of diversion to a sufficient degree or it does not.
    A distinction between State owned or partially private or
    even partially foreign owned manufacturers hardly provides
    for additional assurances or safeguards but could at the same
    time very well limit the Chinese ADC market for foreign
    supplies to the extent that competition is unreasonably
    impeded.
    As to the proposed conditions e, and h, of the current
    non-paper, it is our view that the concerns we might have
    over possible diversion of ADCs within China or elsewhere
    will most likely be more effectively alleviated by a
    straightforward non-re-export-clause than by including
    elaborate conditions to possible re-export.
    The Chinese efforts to create a 3rd generation mobile
    telecommunication infrastructure to cover the whole or at
    least the most relevant part of the PRC is destined to drive
    the production capacity of existing Chinese manufacturers of
    telecommunications equipment to the limit. Therefore, a more
    strict non-re-export-clause attached to foreign supplies
    should not present a problem for any of the current license
    applications.
    Finally, the Netherlands export control authorities, once the
    appropriate conditions to be fulfilled by Chinese recipients
    of significant quantities of high speed 14 bit ADCs have been
    identified and declared applicable, are interested to come to
    some sort of bilateral license harmonization understanding
    with the U.S.
    An exchange of letters at the appropriate level, describing
    the conditions decided upon as well as identifying the
    consignees and end-users that have declared to abide by these
    conditions, would in my view be adequate to structure and
    ensure such a harmonization of policy. This exchange of
    letters should of course also constitute an understanding
    that any changes in our respective policies towards this
    particular concern would have to be communicated to each
    other well in advance of being applied.
    END TEXT.
    SOBEL

`