Export Controls: Challenges with Commerce's Validated End-User Program May Limit Its Ability to Ensure That Semiconductor Equipment Exported to China Is Used as Intended
GAO-08-1095
Published: Sep 25, 2008. Publicly Released: Oct 27, 2008.
Skip to Highlights
Highlights
Semiconductors are key components in weapons systems and consumer electronics. Since semiconductors have both civilian and military applications, U.S. export control policy treats the equipment and materials used to manufacture semiconductors as "dual-use" items, and controls the export of these items through licensing requirements to sensitive destinations such as China. You requested that we update our 2002 report on China's semiconductor manufacturing capabilities to address the (1) evolution of China's capabilities since 2002, (2) changes to U.S. export control policies over the sale of semiconductor manufacturing equipment and materials to China since 2002, and (3) the advantages and limitations of these changes.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Commerce | To better promote the Validated End-User program's objective of trade facilitation and enhanced oversight, the Secretary of Commerce should suspend the Validated End-User program to China until a VEU-specific agreement and procedures are established for on-site reviews. Specifically, Commerce should negotiate a VEU-specific agreement with the Chinese government to conduct on-site reviews or amend the 2004 EUVU to include the Validated End-User program. |
In response to GAO recommendations, Commerce reached an agreement with China in January 2009 regarding on-site reviews (the agreement is classified). Commerce officials told us they began such reviews of facilities in the Validated End-User program to confirm their compliance with the program requirements. On January 13, 2009, Commerce announced full implementation of the Validated End-User program for the People's Republic of China. With agreement on procedures to ensure the program?s secure and efficient operation, civilian and U.S.-China high-technology trade will benefit from the continue export of certain products to VEU-approved companies without individual licenses.
|
| Department of Commerce | To better promote the Validated End-User program's objective of trade facilitation and enhanced oversight, the Secretary of Commerce should suspend the Validated End-User program to China until a VEU-specific agreement and procedures are established for on-site reviews. Specifically, Commerce should develop procedures for conducting on-site reviews that are applicable to all validated end-users. |
In response to GAO recommendations, Commerce reached an agreement with China in January 2009 regarding on-site reviews (the agreement is classified). Commerce officials told us they began such reviews of facilities in the Validated End-User program to confirm their compliance with the program requirements. On January 13, 2009, Commerce announced full implementation of the Validated End-User program for the People's Republic of China. With agreement on procedures to ensure the program?s secure and efficient operation, civilian and U.S.-China high-technology trade will benefit from the continue export of certain products to VEU-approved companies without individual licenses.
|
Full Report
Topics
Export regulationExportingForeign corporationsForeign governmentsForeign trade agreementsForeign trade policiesInternational agreementsInternational relationsInternational tradeInternational trade regulationInternational trade restrictionLicensesManufacturing industryProgram evaluationProgram managementRestrictive trade practicesSecurity policiesSecurity regulationsTechnologyTrade policiesTrade regulation