Of Red Parakeets and Dragon Fire: The Nonproliferation Case for Maintaining the EU Arms Embargo on China

Despite remarkably strong opposition from the United States, momentum is growing within the European Union to lift its 15-year-old embargo on arms sales to China. In January, U.K. Foreign Secretary Jack Straw said that it was "more likely than not" that the embargo would be lifted by July. Responding to international concerns that lifting the embargo would loosen controls of arms sales to China, Straw was quick to add that changes to the European Code of Conduct on Arms Sales would offset the effects of ending the embargo. "If it is lifted we will end up with as effective arms controls in relation to China as we have now," he promised.¹

But even if Straw can deliver on that promise - a big "if" - lifting the embargo is still problematic and begs the question, why now? Beijing's human rights record - the original raison d'etre for the embargo - is still poor, and China if anything seems closer to a military confrontation with Taiwan.² Equally alarming is China's arms export record, which remains flawed despite constant goading by the United States.

In recent years, the Chinese government has taken steps towards complying with international nonproliferation norms and reining in its arms manufacturers. In 2002 for example, China published a comprehensive export control list of missile-related items that Assistant Secretary Paula DeSutter praised as "a significant and welcome step."³ Such steps should be applauded and in some cases rewarded, but not with additional military hardware. The Chinese still have a lot of work to do.

The U.S. intelligence community has long tagged China as a prominent proliferator of dangerous military technologies. In 1997 the Central Intelligence Agency identified China as "the most significant supplier of WMD-related goods and technology to foreign countries" during the last half of 1996.⁴ Beijing's efforts to stem these exports have yielded some results, but Chinese firms continue to engage in problematic transfers. In March 2004 the Director of Central Intelligence George Tenet testified that "Chinese firms continue to be a leading source of relevant [ballistic missile] technology and continue to work with other countries on ballistic missile-related projects."⁵

Indeed, troubling transfers of Chinese military and dual-use equipment are numerous. In 1996, an 16-month Federal sting dubbed "Dragon Fire" culminated in the confiscation of 2,000 fully automatic Chinese AK-47 assault rifles that had been illegally imported into the United States from China. Massive arms shipments interdicted on U.S. soil are usually en route to Latin American guerrillas or drug cartels. Not this time. According to customs officials, the dealer (a Chinese immigrant reportedly working with two large Chinese defense firms) thought the ultimate recipients were "gang bangers" in the United States. The dealer also reportedly offered 60 mm mortars, rocket launchers, and "Red Parakeet" shoulder-fired surface-to-air missiles to undercover agents, who told him that they would be sold to right wing radicals in the U.S. and terrorists in Ireland and Latin America.⁶

During the investigation, the dealer repeated that the "Chinese government knew exactly what was going on."⁷ This claim has not been substantiated, but court documents indicate that officials from two large, state-controlled Chinese companies were involved in the deal. Commenting on role of China North Industries Corporation (NORINCO), the Department of Justice stated that "[t]he shipment of weapons from the Dalian plant of NORINCO involved the active participation of that firm's PRC-based vice president, export manager and other officials."⁸

NORINCO has come under fire for other transfers, including the sale of missile technology to Iran. In May 2003 the Bush administration slapped a two-year ban on NORINCO imports as punishment for engaging in "missile technology proliferation activities." The ban reportedly cost NORINCO $100 million a year in lost U.S. sales.⁹ DeSutter, the Assistant Secretary of State for Verification and Compliance, has described NORINCO as a "serial proliferator" that escapes punishment from Beijing despite the exasperated pleas of U.S. officials. "For some time, we have been alerting the Chinese Government to our concerns about the activities of NORINCO," Sutter testified in July 2003. "Nonetheless, the Chinese government has taken no action to halt NORINCO's proliferant behavior."¹⁰

As mentioned earlier, the Chinese have adjusted their arms export policies and practices in several significant ways. Too often, however, these improvements come only after the U.S. brandishes the stick of economic sanctions. The EU embargo is a crucial diplomatic tool for prompting long-term reform. China resents being lumped together with international pariahs like Burma and Zimbawe, both of which are also under European arms embargos, and is anxious to shed the stigma associated with the embargo.¹¹ Lifting it before China makes necessary changes to its arms export practices needlessly eliminates a key incentive for doing so.

Until China's track record on arms exports improves dramatically and consistently, the embargo should be maintained.

Matthew Schroeder is the Manager of the Arms Sales Monitoring Project at FAS.

1. Stephen Fidler, George Parker and Frederick Studemann, "UK Expects Brussels to Lift China Arms Ban," Financial Times, 13 January 2005.
2. In December 2004, China released a defense white paper that reportedly threatened to "thoroughly crush" a Taiwanese move toward formal independence "at any cost." Caroline Cluck and Richard McGregor, "China 'Will Crush Taiwan Independence Moves'," Financial Times, 28 December 2004.
3. China's Record of Proliferation Activities," testimony of Paula DeSutter, Assistant Secretary for Verification and Compliance, before the U.S.-China Commission, 108th Congress, 24 July 2003. See also Jonathan Davis, Export Controls in the People's Republic of China: 2005, Center for International Trade and Security, University of Georgia, 13 January 2005.
4. Director of Central Intelligence, "The Acquisition of Technology Relating to Weapons of Mass Destruction and Advanced Conventional Munitions July - December 1996," June 1997, available at http://www.fas.org/irp/cia/wmd.htm.
5. "The Worldwide Threat 2004: Challenges in a Changing Global Context," testimony of George J. Tenet, Director of Central Intelligence, before the Senate Armed Services Committee, 108th Congress, 9 March 2004.
6. Richard Cole, Associated Press, 24 May 1996.
7. "Massive Seizure of New Automatic Weapons Illegally Smuggled by PRC Weapons Producers," Press Release, United States Attorney, Northern District of California, U.S. Department of Justice, 23 May 1996, available at http://www.courttv.com/archive/legaldocs/misc/smuggle.html.
8. Ibid.
9. Shirley A. Khan, "China and the Proliferation of Weapons of Mass Destruction," Congressional Research Service, 20 May 2004.
10. DeSutter, "China's Record of Proliferation Activities."
11. Rana Forhoohar, "Arms Embargo: No Lift in Sales," Newsweek, 7 March 2005.