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Cablegate: Extrancheck: Post Shipment Verification:

VZCZCXYZ0003
RR RUEHWEB

DE RUEHHK #2339 2530412
ZNR UUUUU ZZH
R 100412Z SEP 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 2860
RHMFIUU/HQ BICE INTEL WASHINGTON DC

UNCLAS HONG KONG 002339

SIPDIS

USDOC FOR 532/OEA/LHINES/ADYSON
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR
WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION:
HONG KONG DRAGON AIRLINES LTD.

REF: A) USDOC 06988 B) EXP.LIC. D328589 C) HK
03591 D) HK 07053 E) HK 04648

1. Unauthorized disclosure of the information
provided below is prohibited by Section 12C of the
Export Administration Act.

2. As per reftel A and at the direction of the
Office of Enforcement Analysis (OEA) of the USDOC
Bureau of Industry and Security (BIS), Export
Control Officer Philip Ankel (ECO) was requested
to conduct a post shipment verification (PSV) at
Hong Kong Dragon Airlines Ltd, L2 Dragonair House,
11 Tund Fai Road, Hong Kong Int'l Airport, Lantau,
Hong Kong (Dragonair). In fact, as further
explained below, the PSV was conducted at Hong
Kong Aircraft Engineering Company Limited (HAECO),
80 South Perimeter Road, Hong Kong International
Airport, Lantau Island, Hong Kong (more
information at www.haeco.com). The item in
question is an inertial navigation system that is
the subject of export license D328589. The export
control classification number (ECCN) of the item
is 7A103 and it is controlled for missile
technology reasons (MT). The exporter was
Intertrade (a Rockwell Collins, Inc. company) of
Cedar Rapids, Iowa.

3. Dragonair is an affiliate of the Cathay
Pacific Group of companies. Dragonair flies a
range of planes throughout the Asia Pacific region
including six Boeing 747s and 31 Airbus aircraft.
HAECO provides a range of aeronautical engineering
services to the Cathay Pacific Group. Parts for
Dragonair aircraft are actually held (on
Dragonair's behalf) at HAECO's facilities.
Therefore, the PSV was conducted at HAECO.

4. HAECO is a longstanding Hong Kong company
providing comprehensive aeronautical engineering
services to airlines/operators since 1950. It was
the subject of a favorable checks referenced in
reftel C and E. Related company, Hong Kong Aero
Engine Services Limited (HAESL), was the subject
of a separate favorable check referenced in reftel
D.

5. On September 6, 2007, the ECO visited HAECO at
the address above and met with Mr. Moon Chor Chan,
Supplies Officer. Mr. Chan stated that Dragonair
owns the item and it is dedicated to Dragonair
planes. The item was actually in the warehouse on
its way to be serviced and so was not installed in
an aircraft. ECO inspected the item and notes that
its product and serial numbers match those
provided in Reftel A, namely 463001-8130-0413 and
1734 respectively. As noted in Reftel C and E,
HAECO is quite familiar with the export control
rules associated with such items. The exporter
also made HAECO and Dragonair aware of the license
conditions contained in license D328589, as
required by this license.

6. HAECO and Dragonair appear to be suitable
recipients of the subject controlled item since
HAECO cooperated fully with the PSV and provided
substantial information on Dragonair's use of the
item in Hong Kong. In addition, Dragonair and
HAECO operate lines of business that are
consistent with the use of the item. The ECO
recommends that this PSV be classified as
Favorable.

Cunningham

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