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Cablegate: Dutch Propose Parts Control Plans for 14-Bit Adc

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

S E C R E T THE HAGUE 003156

SIPDIS

STATE FOR EUR/UBI/HOLLIDAY
STATE PLEASE PASS DOD FOR N.BRELAND

E.O. 12958: DECL: 12/02/2014
TAGS: KSTC ETTC PARM NL CH
SUBJECT: DUTCH PROPOSE PARTS CONTROL PLANS FOR 14-BIT ADC
SALES

REF: 239012

Classified By: Economics Counselor Richard Huff for Reasons 1.4 (B) and
(D).

1. (S) On November 15, Chris Kessler, Export Control
Non-Proliferation office director, Nicole Breland, Department
of Defense export control policy advisor, and embassy econoff
(note taker) briefed the non-paper (reftel) to Dutch ministry
of foreign affairs, economic affairs and defense officials
responsible for dual use technology export policy. George
Bontenbal, director of the Ministry of Economic Affairs'
office of Export Control and Strategic Goods policy led the
Dutch delegation

2. (S) Bontenbal thanked the U.S. side for its information
and remarked that Huawei, for example, was among the largest
telecommunications base station manufacturers in China and a
probable Philips customer. Note: Philips manufactures
14-bit ADCs, but according to the Dutch as yet has not sold
these to Chinese companies. End Note. He thought the USG and
GONL should draw a distinction between Huawei's civilian
telecommunications manufacturing and their defense related
work for the PLA.

3. (S) Kessler countered that it was unreasonable to expect
that the civilian division of a partially PLA-owned company
would not share its western bought technology with the
defense division. Firms that are established defense
contractors to the PLA and have extensive ties to PRC
national security agencies cannot be expected or trusted to
maintain impermeable fire-walls; we know they do not. The
only companies that can be trusted, even on the basis of the
rigorous conditions and parts control plan approach we have
discussed, are those that are strictly focused on the
civilian market, and therefore have strong incentives to
avoid leakage.

4. (S) Nevertheless, Bontenbal said the GONL preferred
requiring end-use conditions and parts control plans,
requiring ADC buyers to track and account for their ADC
inventory, rather than prohibiting altogether ADC sales to
certain companies. It would be hard, he concluded, to
shut out Huawei, one of the biggest players in China's third
generation cell phone program. Bontenbal suggested the Dutch
would agree to require parts control programs for ADC sales
to Chinese companies, rather than excluding the companies all
together. He confided that Philips wants to sell 14-bit ADCs
to Huawei soon. With this in mind, the GONL had been
drafting sales contract language requiring 14-bit ADC buyers
to put parts control programs in place for the converters.
He offered to share the Dutch contract conditions with the
U.S., probably sometime in mid-December.
RUSSEL

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