home Export Controls, Israel Chinese Acquire Controlled US Technology, Again. Shakes Up Israel’s Export Control Agency

Chinese Acquire Controlled US Technology, Again. Shakes Up Israel’s Export Control Agency

The Chinese industrial espionage machine has, once again, successfully secured sensitive US micro-cooling systems that may be headed to Iran for use in its missile program. It will also add another item in China’s growing arsenal of stolen US technology and know-how. Details are sparse, however,  there are a few clues detailing what may have happened.

According to a report produced by the Israeli government, the Chinese picked up some electro-optical equipment from a European source. This European company appears to have received the device in a legal way and the Chinese moved in for the kill (or may have set up the unlawful transaction to begin with). The item in question appears to have been developed and/or sold by a U.S. subsidiary of an Israeli company called Ricor USA of Ricor Cryogenic and Vacuum Systems.

The unlawful dual-use re-export/re-transfer to the Chinese must have been for something really sensitive because the fellow who discovered the problem, the very Director of Israel’s Defense Export Control Agency (DECA), Meir Shalit, was unceremoniously replaced this week.  This comes a few weeks after an Israeli government audit of DECA found issues with enforcement and other administrative functions. And this is after U.S.-taxpayer monies, millions, invested to improve DECA. It will also be interesting to see how Netanyahu addresses it since they’ve been aggressively trying to improve economic relations with China.

Alright, China stole our technology. Now what? Displeasure and some sort of political or economic pain should be equally fired off to Beijing. The best I could find in the public arena was this curiously timed story from Voice of America (play close attention to the headline) that did not even make mention of this new development: Chinese Military’s Secret to Success: European Engineering. Congress? Tumbleweed. The State Department? Nada.

There is only so much the United States can do with regards to the Chinese, Israel, or the Europeans. But there is a lot that needs to be done to double and triple our regulatory system as well as enforcement mechanism to get a better handle on how China continues to steal U.S. technology of all kinds. It is not just the Chinese. Add Russia and many other military powers to the list, allies included.

If you’re a frequent reader of this blog, you know that we strongly believe that new government regulations, of any sort, these days is bad news. They rarely meet intended goals, think ObamaCare; and only make things worse for people and companies that are forced to comply. The local, state, and federal regulatory systems have become too onerous. They stifle innovation throughout the economy. It is a freedom-killer.

All that said, even the most ardent free-market advocate should agree that access to U.S. dual-use and military technology needs policing. If the U.S. wants to maintain global military and economic superiority, controls are needed. The current export controls and economic sanctions regulatory scheme is alright. While it could be much better, warts and all, it remains the gold standard and other countries have tried to emulate it. Why? Because we have the market power, the toys and, at times, political will to make it work.

Congress should take a closer look. That means more than a perfunctory unclassified staff briefing that results in a one-page memo that Members of Congress will likely not bother reading. At some point, hopefully this year, Congress will take a closer look at incident such as these and do something the American people have not seen in some time, fulsome Congressional oversight. The type of oversight that does not concern itself with partisan, or in this case, diplomatic sensibilities.

Even if a reformed U.S. export control system becomes a paragon process other countries can adopt, it will only be as effective as the next link in the supply chain. If our allies have a weak system, U.S. technology and know-how is at risk and, as this case demonstrates, will continue to fall into the wrong hands.

Finally, why should you or I care about any of this?

I don’t know about you but Americans have worked too hard to simply hand over technological and military crown jewels to China or any foreign power. We landed a man on the moon. Placed rovers on Mars. Successfully used dual-use technology to fight the ongoing war against terror. Construct the most advanced missile systems, bar none. Cyberspace pioneers. Launched a civilian outer space program that will rival any in the world, at least for now. And the list goes on and on. Some of us would like to keep up that information and technological edge and, when America is ready, share the technology. Legally and for a price.

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