Lawmaker questions new export controls for China

WASHINGTON (Reuters) - A U.S. government program that makes it easier to sell items with potential military uses to selected Chinese companies should be scrapped if it helps China's army, an American lawmaker said on Tuesday.

The Validated End-User program, created by the U.S. Commerce Department last year, allows approved companies in China to import some high-tech goods for civilian uses without obtaining individual export licenses.

Rep. Edward Markey, a Massachusetts Democrat who co-chairs the House of Representatives Bipartisan Task Force on Nonproliferation, wrote to Commerce Secretary Carlos Gutierrez seeking a response to concerns raised about the program earlier this month by a disarmament watchdog group.

"We cannot give China's military an open pipeline to advanced U.S. technologies that have rightly been restricted," Markey said in a statement.

"If the VEU program results in allowing the Chinese military to improve its weapons systems with U.S. technologies, as has been reported, this program may very well need to be scrapped."

A January 2 report by the Wisconsin Project on Nuclear Arms Control said the VEU program should be suspended because it increased the risk that American goods could be illicitly sold to Syria or Iran or help China improve its armed forces.

The report identified two of five Chinese companies selected in October for the plan as having close ties to China's military industry sector or to firms that have been targeted by U.S. government sanctions for proliferation.

The policy was created to address U.S. firms' concerns about being locked out of China's fast-growing market for technology items.

A spokesman for the Commerce Department's Bureau of Industry and Security called the VEU system "a good program that will help boost safe, secure U.S. exports."

The program entails vetting by the Pentagon, the State Department and the Energy Department, as well as "rigorous on-site inspections and continued oversight," the spokesman said.

(Reporting by Paul Eckert, editing by Chris Wilson)