European Union's Arms Control Regime and Arms Exports to China: Background and Legal Analysis

Congressional research reportMar 1, 2005

Ask Donna

What actually matters in this document.

Text

Order Code RL32785

CRS Report for Congress

Received through the CRS Web

European Union’s Arms Control Regime

and Arms Exports to China:

Background and Legal Analysis

March 1, 2005

name redacted

Specialist in National Defense

Foreign Affairs, Defense, and Trade Division

name redacted

Senior Foreign Law Specialist

Directorate of Legal Research

The Law Library of Congress

Congressional Research Service ˜ The Library of Congress

European Union’s Arms Control Regime and Arms

Exports to China: Background and Legal Analysis

Summary

In recent months, discussions have been held within the European Union (EU)

on the question of lifting the embargo on arms exports to the People’s Republic of

China that was imposed on China on June 27, 1989. The prospect that the EU would

lift its embargo on arms exports to China has led to a number of on-going discussions

between EU member states and the United States government, which strongly

opposes such an action at this time on human rights and security issues grounds. Key

nations within the European Union, particularly France and Germany, strongly

support lifting of the embargo. And, the United Kingdom has advised the Bush

Administration that it will also support lifting the embargo when the subject is

formally addressed by the EU, most likely during the spring of 2005.

The Council of the EU has stated that if the arms embargo on China were to be

lifted, that action should not result in either a quantitative or qualitative increase in

EU arms exports to China. The United Kingdom has argued that it believes that the

European Union’s Code of Conduct on Arms Exports, while not legally binding on

EU members, with some enhancements, would provide a solid safeguard against

worrisome arms exports by EU states to the Chinese in the future.

The President and senior members of the Bush Administration have lobbied the

European Union to keep the arms embargo on China in place. Many Members of

Congress share the Bush Administration’s concerns about an end to the EU arms

embargo. On February 2, 2005, the House of Representatives passed H. Res. 57, a

resolution strongly urging the EU not to lift the embargo, by a vote of 411-3. Other

Congressional actions on the issue may be taken.

This report provides detailed background and legal analysis of the nature of the

current European Union embargo on arms exports to China. It also provides detailed

background on the European Union’s current Code of Conduct on Arms Exports. A

strengthened version of the Code would be one of the control mechanisms that would

remain should the EU lift the embargo on arms exports to China. This report also

gives information on recent EU arms exports authorized for China. It further

summarizes U.S. concerns regarding the lifting of the arms embargo, and notes the

prospective timing of EU action on the embargo issue. This report may be updated

should events warrant.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

General Background on European Union Embargoes . . . . . . . . . . . . . . . . . . 2

European Union’s Arms Embargo on China . . . . . . . . . . . . . . . . . . . . . . . . . 3

European Union’s Arms Exports Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

European Union Code of Conduct on Arms Exports: Background

and Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Arms Exports Authorized for China by European Union Member States . . . 8

United States Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Status of European Union Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Appendix 1

European Union Code Of Conduct On Arms Exports . . . . . . . . . . . . . . . . . 13

Appendix 2

Brief descriptions of EU Common Military List Categories . . . . . . . . . . . . 19

European Union’s Arms Control Regime and

Arms Exports to China: Background and

Legal Analysis

Introduction

In recent months, discussions have been held within the European Union (EU)

on the question of lifting the embargo on arms exports to the People’s Republic of

China that was imposed on China on June 27, 1989. Following the lead of the

United States, the European Union took this action in the wake of the June 4, 1989

crackdown on Chinese citizens by the Chinese military in Tiananmen Square in

Beijing and the serious infringement of human rights in China that followed. The

prospect that the EU would lift its embargo on arms exports to China has led to a

number of on-going discussions between EU member states and the United States.

The United States government continues to maintain its own arms embargo against

China and the U.S. strongly opposes lifting the EU embargo at this time on human

rights and security issues grounds. Key nations within the European Union,

particularly France and Germany, strongly support lifting of the embargo. And, the

United Kingdom has advised the Bush Administration that it will also support lifting

the embargo when the subject is formally addressed by the EU, most likely during the

early spring of 2005. All 25 members of the EU must agree before the arms embargo

can be lifted.1

The Chinese have been seeking a lifting of the arms embargo arguing that it is

discriminatory. They note that other nations deemed pariahs, such as Sudan or North

Korea, do not have such an embargo imposed on them. The Chinese also view lifting

of the embargo as an important symbolic political act by the EU, as they see the

embargo as a Cold War era relic, and thus an impediment to better relations with

European Union members. France, Germany, and other EU members claim the

embargo hinders stronger EU political and economic relations with China. After

their December 16 and 17, 2004 meeting, EU leaders pledged to address lifting the

“Germany: Schroeder Calls for EU to End China Arms Embargo,” Dow Jones International

News, December 6, 2004; “France reiterates support for end to China arms embargo,”

Agence France Presse, December 6, 2004; “EU arms embargo on China probably lifted

within six months; Britain;” Associated Press, January 19, 2005; Barry Schweid, “Britain’s

Straw, Rice Differ on China Arms,” Associated Press, January 24, 2005. The French

Defense Minister, Michele Alliot-Marie, has argued that lifting the EU arms embargo

against China could be a beneficial step because “China is rapidly developing its industry,

and today our experts say in five years China could make exactly the same arms that we

have today. And they will do it if they cannot import. So maybe if we sell them arms, they

will not make them. And in five year’s time they will not have the technology to make

them.” Peter Spiegel and John Thornhill, “France urges end to China arms embargo,”

Financial Times, February 15, 2005.

CRS-2

embargo.2 The Council of the EU noted that if the arms embargo on China were to

be lifted, that action should not result in either a quantitative or qualitative increase

in EU arms exports to China.3 The United Kingdom has argued that it believes that

the European Union’s Code of Conduct on Arms Exports, while not legally binding,

would, with some enhancements, provide a solid safeguard against worrisome arms

exports by EU states to the Chinese in the future.4 Meanwhile, as the President and

Bush Administration officials have lobbied the European Union to keep the arms

embargo on China in place, many in Congress have also expressed strong concerns

and support for that position. On February 2, 2005, the House of Representatives

passed H. Res. 57, a resolution strongly urging the EU not to lift the embargo, by a

vote of 411-3. Other Congressional actions on the issue may be taken.

This report provides detailed background on the nature and history of the current

European Union embargo on arms exports to China. It also provides detailed

background on the European Union’s current Code of Conduct on Arms Exports.

The EU plans on issuing a strengthened Code, which would be one of the control

mechanisms that would remain should the EU lift the embargo on arms exports to

China. This report also gives information on the level of recent EU arms exports

authorized for China. It further summarizes U.S. concerns regarding the lifting of the

arms embargo, and notes the prospective timing of EU action on the embargo issue.

General Background on European Union Embargoes

Arms embargoes fall within the sanctions or restrictive measures imposed by

the European Union against third countries. In general, EU embargoes are either

adopted to implement UN Security Council resolutions acting under Chapter VII, or

are “autonomous.” In the latter case, embargoes are legally founded in a specific

provision of the treaties establishing the European Union. EU members have full

jurisdiction to decide on imposing arms trade restrictions.5 Prior to 1992, decisions

Marcus Walker, Marc Champion and Scott Miller, “EU Maintains China Arms

Embargo–Pressure to Lift Ban Grows as States Risk Defying U.S. to Cultivate Economic

Ties,” Wall Street Journal Europe, December 9, 2004, p. A1; Daniel Dombey and Peter

Spiegel, “Why Europe is ready to lift its weapons ban on China,” Financial Times, February

9, 2005; Mure Dickie, Guy Dinmore, Daniel Dombay, Kathrin Hille, Demetri Sevastopulo

and Peter Spiegel, “The EU’s ban on selling military equipment to Beijing lacks credibility

but Washington believes any change would be irresponsible,” Financial Times, February

10, 2005; Peter Sparaco and Robert Wall, “Chinese Checkers; Widening business

opportunities drive EU’s review of China arms embargo,” Aviation Week & Space

Technology, December 13, 2004, p. 37.

Council of the European Union, 16/17 December 2004. Presidency Conclusions.

16238/1/04 REV 1, p. 19. Published February 1, 2005.

“Straw defends lifting of China arms ban,” Guardian Unlimited, January 21, 2005; Daniel

Dombey, “EU Finalizes plan to lift arms embargo on China,” Financial Times, February 3,

2005, p. 4. Marc Champion, “EU Aims to Calm U.S. Arms Fears–Officials say likely end

to Sales Embargo on China won’t increase imports,” Asian Wall Street Journal, February

21, 2005, p. A1.

Article 296 of the Treaty Establishing the European Community. Available at

(continued...)

CRS-3

on embargoes were made by the member states through an informal political process,

the so-called European Political Cooperation.6 In several instances, member states

convened as a body, the European Council, adopted declarations to impose

embargoes.7 Within such a context, the embargo on China was imposed in 1989, by

the then twelve members of the European Community, the EU’s precursor. The

objective was to introduce arms trade restrictions against the regime in China in

reaction to the killing of demonstrators in Tiananmen Square.

The introduction of the Common Foreign and Security Policy (CFSP) by the

Treaty on European Union (Maastricht Treaty), effective in November 1993, altered

the procedural basis for EU embargoes. Decisions to impose an embargo still require

unanimity among EU member states, but such decisions are now based on Common

Positions, rather than declarations.8 Often, implementing regulations are also

adopted. Members are required to conform with the provisions or regulations and

Common Positions. Both instruments contain a detailed description of the type of

material covered as well as the terms and conditions of implementation by the

member states. Arms embargoes are also subject to EU standards on arms exports,

such as the 1998 Code of Conduct on Arms Exports (hereafter the EU Code).

Consequently, in the implementation of the arms embargo on China, EU members

are expected not only to abide by the restrictions on arms trade on China but also

with the EU requirements on arms exports. Ultimately, what a given embargo entails

may be viewed differently by different member states. And, as a political statement

by the European Union, the EU Code on Arms Exports is not legally binding on the

EU member states.

European Union’s Arms Embargo on China

On June 27, 1989 the European Council, convened in Madrid, agreed to impose

an arms embargo on China. The entire text of the embargo, which is in the form of

a political declaration, is rather brief. In the first two paragraphs, it condemns the

repression in China and requests that the Chinese authorities cease executions and

respect human rights. The fourth paragraph contains the measures agreed by the

members states. These include the suspension of military cooperation and high-level

contacts, reduction of cultural, scientific and technical cooperation programs and

prolongation of visas to Chinese students. The specific wording of the arms

restrictions on China calls for: “...interruption by the Member States of the

Community of military cooperation and an embargo on trade in arms with China.”9

(...continued)

[http://europa.eu.int/eur-lex/lex/en/treaties/index.htm]

It refers to the informal network of communication and cooperation on foreign policy issues

among the governments of the EC Member states, between the period of 1970-1992.

External Relations, Common Foreign & Security Policy (CFSP), Sanctions. Available

at:[http://europa.eu.int/comm/external_relations/sfcp/sanctions].

Decisions are made based on articles 12 and 15 of the Treaty on European Union. Available

at [http://europa.eu.int/eurlex/lex/en/treaties/index.htm]

Conclusions of the European Council, adopted in Madrid on June 27, 1989, available at

(continued...)

CRS-4

The declaration does not clarify the meaning of the term “military cooperation” nor

does it contain a list of arms that come within the scope of the phrase “trade in arms.”

Neither does it contain exceptions or review clauses. By contrast, other EU

embargoes imposed later in the CFSP context are more elaborate and specific in their

scope and coverage. For instance, the Burma/Myanmar embargo, which was first

adopted in 1991, has been updated and revised a number of times due to the lack of

progress in democratization and continuous violation of human rights, and appears

as a Common Position, which is binding. It contains, inter alia, a ban on technical

assistance related to military activities and the provision, maintenance and use of

weapons and ammunition, paramilitary equipment and spare parts.10

The arms embargo against China has not been interpreted uniformly by the EU

members since it was imposed. This has been attributed to several factors, including

lack of specificity in the political declaration, absence of a legally binding document,

such as a Common Position, as is the case with subsequent embargoes imposed on

other countries and, more importantly, the existing loopholes and weak points in the

EU arms control system. For instance, the UK interpreted the embargo in a narrow

manner, as to include the following items: lethal weapons such as machine guns,

large-caliber weapons, bombs, torpedoes and missiles; specially designed

components of the above, and ammunition; military aircraft and helicopters, vessels

of war, armored fighting vehicles and other weapons platforms; and equipment which

might be used for internal repression.11 The French have interpreted the embargo

similarly.12

Since 1989, European non-governmental organizations have reported that the

embargo on China has been bypassed by several EU members and has been reduced

to a mere “symbolic instrument.”13 One arms trade expert with the Stockholm

International Peace Research Institute (SIPRI) of Sweden has stated that “many

European licenses for the arms trade are actually issued for material which, on paper,

can be used for civilian purposes; what is known as ‘dual usage’… The embargo has

actually been circumvented in this way for years.”14 Amnesty International in its 2004

report, Undermining Global Security: the European Union Arms Exports, contains

several examples of EU members that have made exports to China within the

(...continued)

[http://www.eurunion.org/legislat/Sanctions.htm#China].

Common Position 2004/423/CFSP and Council Regulation (EC) No. 798/2004 Renewing

the Restrictive Measures in Respect of Burma/Myanmar and repealing Regulation No.

1081/2000.

Robin Niblett, The United States, the European Union, and Lifting the Arms Embargo on

China, 10 EURO-FOCUS no. 3 (Sept 30, 2004). Center for Strategic and International

Studies. See also: Amnesty International. Undermining Global Security: The European

Union Exports, at [http://web.amnesty.org/library/index/engact300032004]

EU arms embargo on China. [http://projects.sipri.se/expcon/euframe/euchiemb.htm]

Thijs Papot, “‘A Symbolic Instrument’” the EU’s arms embargo against China,” Current

Affairs, January 25, 2005.

Ibid.

CRS-5

framework of the existing arms embargo.15 For instance, the United Kingdom

exported components for Chinese military aero engines as well as technology,

software and related systems for weapons platforms; an Italian joint venture company

was involved in the manufacture of vehicles reportedly used as mobile execution

chambers in China. In addition, the German Deutz AG diesel engines were

incorporated into armored personnel carriers that were transferred to China.16

European Union’s Arms Exports Regime

To place in context any potential actions European Union members may take

with respect to the Chinese arms embargo, it is important to understand the general

EU regime on arms export controls. The following EU instruments apply to arms

embargoes and arms exports in general: (1) the 1998 European Code of Conduct on

Arms Exports, a non-binding instrument, which lays down minimum standards to be

applied on export licenses17; (2) Regulation (EC) No 1334/2000 setting up a

Community Regime for the Control of Exports of dual-use items and technology;18

and (3) Common Position 2003/468/CFSP on the Control of Arms Brokering.19 The

EU Code of Conduct, analyzed in detail below, establishes eight criteria to be applied

by EU members on the exports of conventional arms, including software and

technology.20 A Common List of Military Equipment was agreed upon in 2000 and

updated recently.21 In general, arms embargoes, unless specific guidance is otherwise

provided, cover at least all the items included in the Common List.22 Regulation No

1334/2000 as amended (whose scope extends to any items that could be used for

civilian and military purposes) is directly applicable to the member states. Under its

provisions, member states grant authorizations for exports, called Community

general export authorization (CGE) of dual–use items. Such authorizations are valid

throughout the Community, subject to certain specific cases for which consultation

is needed among EU members prior to granting or denying an authorization. The

items and technology listed in Annexes I, II and IV of the Regulation are based on

Amnesty International. Undermining Global Security: The European Union Exports.

Available at [http://web.amnesty.org/library/index/engact300032004]

Press Release of Coalition of European NGOs including Saferworld, Oxfam, Pax Christi,

and Amnesty International: “Flimsy Controls Fail to Prevent EU Countries Selling Arms to

Human Rights Abusers.” September 30, 2004. The text of this document can be found at

[http://web.amnesty.org/library/index/ENGACT300152004]

Adopted by the Council of the European Union on June 8, 1998.

2000 O.J. (L159) 1

2003 O.J. (L156) 79

Article XXI of GATT allows the imposition of trade restrictions on arms exports and

imports and military equipment and those imposed by the UN Charter VII resolutions.

List included in the Council Declaration of June 13, 2000. It was issued on the occasion

of the adoption of the common list of military equipment covered by the EU Code of

Conduct on Arms Exports, 2000 O.J. (C 191).

See Guidelines on Implementation and Evaluation of Restrictive Measures (Sanctions) in

the Framework of the EU Common Foreign and Security Policy, at 17, available at EU

Council Website, CFSP Section.

CRS-6

the lists prepared by the international export control regimes. The Regulation

includes a “catch-all” clause which allows controls on goods not included in the

Annex of the Regulation. Under this clause, EU members have the discretion to

impose or not to impose controls on exports and technology not listed in the

Regulation. The objective of Common Position, 2003/468/CFSP, is to control arms

brokering23 in order to prevent circumvention of UN, EU, or Organization for

Security and Co-Operation in Europe (OCSE) embargoes on arms exports and the

criteria established in the EU Code. Under its provisions, Member states are urged

to put in place legal norms for lawful brokering activities, including obtaining a

written authorization prior to engaging in arms brokering and to keep records for at

least 10 years.24

European Union Code of Conduct on Arms Exports:

Background and Assessment

The European Union (EU) Code of Conduct on Arms Exports was adopted on

June 8, 1998, during the Presidency of the United Kingdom.25 The EU Code sets up

eight criteria for the export of conventional arms and a denial notification procedure

obligating EU member states to consult on possible undercutting arms sales one EU

state might make even though another EU state has chosen not to make a comparable

arms export. Under this procedure, member states are required to transmit through

diplomatic channels information on licenses refused and reasons for the denial. Thus,

before a member state authorizes a license which has been refused by another

member state for the same transaction, it is necessary to consult the state that rejected

the license in the first place. If the member state decides to issue the license, it must

inform the state that refused to grant authorization.26

The EU Code’s eight criteria, which are to be utilized by EU members when

reviewing license requests and making decisions whether or not to make an arms

export, can be briefly summarized as follows:

(1) Consistency of export with the exporter’s international commitments arising

from UN, EU, or OSCE arms embargoes;

(2) Risk that export would be used for internal repression or where the recipient

country has engaged in serious violations of human rights;

(3) Risk that export would provoke or prolong armed conflicts;

(4) Risk of recipient using export to undermine regional peace and security;

(5) Effect of export on defense and national security interests of friends and allies;

Regarding arms brokering, the Wassenaar Arrangement should be noted. In December

2003, a group of conventional arms exporting Member states agreed to establish national

legislation to control the activities of those engaged in the brokering of conventional arms.

[http://www.wassenaar.org/docs/]; See EU Common Position 2003/468/CFSP, adopted

June 8, 1998 by the Council of the European Union.

2003 O.J. (L156) 79

The full text of the European Union Code of Conduct on Arms Exports is in Appendix 1.

See Fourth Annual Report According to Operative Provision 8 of the European Union

Code of Conduct on Arms Exports, 2002 O.J. (C319) 1.

CRS-7

(6) Commitment of purchaser to fight terrorism and uphold international law;

(7) Risk of diversion to third parties or to a terrorist organization;

(8) Risk that export would undermine the sustainable development of the recipient

country.

It is important to emphasize that these eight criteria, and the EU Code on Arms

Exports in its entirety, are political statements by the European Union, and not legally

binding on the member states of the EU, although the Code is supposed to represent

a moral imperative that EU member states are expected to uphold and enforce.

Nevertheless, no matter how strong the language of purpose and intent contained in

the Code’s eight Criteria is, the 12 Operative Provisions of the EU Code–the sections

of the Code which set out the manner in which the Code is to be carried out–contain

significant loopholes which militate against it being a strong regime, in its current

form, for the control of conventional arms exports from EU member states. This

circumstance is illustrated by the following examples:

1. While each EU member state is to review export license applications made

to it on a “case-by-case basis” against the eight specific criteria in the EU Code,

Operative Provision 3 of the Code expressly states that “The decision to transfer or

deny the transfer of any item of military equipment will remain at the national

discretion of each Member State.” Thus, each EU member state is free to make an

arms sale based on its own determination regarding whether it is appropriate or not.27

2. Operative Provision 10 provides additional guidance to member states in

application of the EU Code. It states: “It is recognized that Member States, where

appropriate, may also take into account the effect of proposed exports on their

economic, social, commercial and industrial interests, but that these factors will not

affect the application of the above criteria.” A literal reading of that sentence could

mean that those who adopted the EU Code recognized that national economic or

commercial interests would weigh importantly in the decision-making process

regarding any given arms sale, and may even trump the larger stated EU-wide interest

in restricting problematic arms exports. Yet in the same sentence the provision

effectively states that while national economic self-interest may compel a member

state to sell, that state is expected not to do so to remain true to the principles of the

EU Code.

3. A major oversight mechanism within the EU Code is Operative Provision 8,

which requires that a confidential annual report is to be circulated by each EU

member state to the other EU states dealing with its defense exports and its own

implementation of the Code. These reports are to be discussed at an annual meeting

of the member states where the operation of the EU Code is reviewed, and any

“improvements” to it can be recommended to the EU Council. Subsequently, a

Operative provision 6 of the EU Code states that the criteria in the Code and the

consultation procedure provided for in the Code shall apply to “dual-use goods as specified

in Annex 1 of Council Decision 94/942/CFSP as amended, where there are grounds for

believing that the end-user of such goods will be the armed forces or internal security forces

or similar entities in the recipient country.” As with sales of military equipment, the decision

to grant or not grant a license for the sale of “dual-use” equipment is left to each EU nation

to decide on its own.

CRS-8

public report is produced based on the submissions of individual EU members.

However, the complete details of actual arms exports made by EU states are not set

out in this public document, although the published annual reports made pursuant to

Operative Provision 8 of the Code do provide values of arms export licenses issued,

and values of deliveries made, if available, by the exporting country. A supplier list

is also provided, giving a total of sales denials made, but not what specific weapon

sale was denied, nor to whom. Individual states are free to give as much or as little

detail in their national reports as they choose. Most have taken a minimalist

approach. Furthermore, individual states have different arms trade licensing, data

collecting and reporting practices, thus calling into question the accuracy of some of

the data provided in the annual public report. In the most recent EU annual report on

the Code, the Sixth, covering calendar year 2003, categories of military systems are

indicated in the data tables. Yet this standardized reporting is still not universal

among member states, given the varied export licensing systems and practices

individual countries currently employ.28

Arms Exports Authorized for China by European Union

Member States

The European Union has published official documents which provide general

data regarding the total values of EU member states’ arms exports licenses to China.

Some countries provide the total values of actual exports. There is no uniformity in

this reporting across the membership of the EU. As noted above, these annual

reports are made pursuant to Operative Provision 8 of the EU Code. The most recent

two reports provide data for calendar years 2002 and 2003 (the Fifth and Sixth

reports respectively). What follows are the data from those reports for arms export

licenses for China as approved by named EU countries in rank order of their license

values, together with the total license values of the European Union as a whole.29

CY2002: Total value of export licenses approved for China (expressed in Euros):

France–105,431,246

United Kingdom–79,500,000

Italy–22,836,976

Austria–2,025,925

All European Union countries–209,794,157

CY2003: Total value of export licenses approved for China ( expressed in Euros)

France–171,530,641

Italy–127,128,192

United Kingdom–112,455,000

Czech Republic–3,610,819

For details of individual EU member state arms data reporting practices see generally:

Sibylle Bauer and Mark Bromley. The European Union Code of Conduct on Arms Exports:

Improving the Annual Report. SIPRI Policy Paper No. 8. November, 2004. Stockholm

International

Peace

Research

Institute,

found

[http://www.sipri.org/contents/armstrad/PP8]

2003 O.J. December 31, 2003 (C320) 9, 14, 30, 42. The Sixth report is found at Official

Journal C 316, December 21, 2004 pp. 001-215.

CRS-9

Germany–1,096,261

All European Union countries–415,820,913

In the Sixth annual report, made in accordance with Operative Provision 8, the

EU for the first time breaks down the export data by EU Common Military List

category.30 So, for those states whose licensing systems categorize their arms export

licenses in detail, it is possible to get a sense of what general types of military

equipment are being licensed. These data do not provide information on EU

members’ transactions involving dual-use equipment and items–and there is no

publicly available official source that provides details on such transactions. This EU

report does cover the broad spectrum of military equipment licensed for export by the

European Union of EU Common Military List categories. See Appendix 2 for a

detailed descriptive summary of these EU Military List categories. This descriptive

list uses an abbreviation scheme whereby a number is attached to a specific category

of military equipment, and this number/category is given in the license data table to

indicate the value of licenses granted for sales of that specific category. For example,

ML10 is: “‘Aircraft,’” unmanned airborne vehicles, aero-engines and “‘aircraft’”

equipment, related equipment and components, specially designed or modified for

military use.”

The United Kingdom provides no detailed breakdown of its licenses in the Sixth

report since the way its standard export licenses are valued in its licensing system

currently preclude this. The same is true for Italy, and the Czech Republic.

However, France and Germany are able to break down the categories of their licenses

for purposes of the EU report. The data in the report indicate that the largest share

of French license approvals for China in 2003 were in categories ML11– electronic

military equipment (98.5 million Euros), ML10–aircraft and related equipment (45.4

million Euros), and ML15–imaging or countermeasure military equipment (24.1

million Euros). In the case of Germany, its largest share of license approvals for

China in 2003 were in categories ML14–specialized military training equipment or

simulators (528 thousand Euros), ML11–electronic military equipment (433.1

thousand Euros), and ML21–software for items controlled in the EU Common

Military List (134.4 million Euros).

Thus, most of the arms exports authorized for China by EU members have been

made by France, the United Kingdom and Italy. The Czech Republic, Austria, and

Germany granted substantially smaller valued licence approvals.

United States Concerns

As the European Union has moved towards lifting the existing embargo on arms

exports to China in recent months, significant emphasis has been placed by some EU

members on the proposition that the European Union’s Code of Conduct on Arms

Exports, with additional modifications, would be a more effective control device than

the existing embargo on arms exports to China. At the same time, some EU

members have argued that ending the existing arms embargo on China would

acknowledge that some progress has been made in China since the 1989 Tiananmen

Ibid.

CRS-10

Square actions that originally led to the embargo. The U.S. Government, however,

remains skeptical that a strengthened EU Code would provide an effective deterrent

to increased arms sales to China.

The United States’ objections to the lifting of the European Union’s arms

embargo on China center on three major concerns. First, the United States is

concerned that China would use EU member state weapons or weapons technology

to enhance the capability of China’s military by providing them with items they could

not obtain elsewhere, including from their principal arms supplier, Russia, or from

other non-EU suppliers, such as Israel. Such items could include electronic warfare

equipment, command and control systems and technology, advanced communications

equipment, radar, sonar, avionics, and fire control systems. Advanced air-to-sea and

air-to-ground missiles might also be obtained. A number of the above items could

contain advanced, state-of-the-art technology which could be used to upgrade

existing Chinese air and naval weapons systems. Should China obtain high

technology items such as these from EU sources, the United States military operating

in Asia could face a notably increased threat from the Chinese military as they

conduct their operations in areas close to China and to Taiwan, a capability China has

been pursuing in recent years. Second, the United States is concerned that through

EU arms exports, China could secure sufficient enhancement of its military

equipment and capabilities that it could be emboldened to seriously threaten Taiwan

in its continuing dispute over Taiwan’s political status. Such an event could increase

Sino-U.S. tensions and increase the prospects of a military confrontation between the

two countries. Third, the United States believes that China has not seriously

addressed the human rights violations against its own people since the 1989

Tiananmen Square events, and therefore, the arms embargo should not be lifted until

significant steps to improve human rights in China have taken place.31

The President and senior Bush Administration officials have made such

arguments to the European Union membership. During Secretary of State

Condoleezza Rice’s European trip in February 2005, Secretary Rice stated, on

February 9, that with respect to the arms embargo, that “human rights concerns need

to be taken into consideration in any decision that was tied to Tiananmen,” noting

that the status of the 2,000 Tiananmen prisoners had not been resolved. She added

that she had “made clear our concerns about the military balance, the fact that there

are still American forces in that region, and about the need to be concerned about the

transfer of technology that might endanger in some way that very delicate military

Robert J. Saiget, “China will upgrade technology if EU lifts arms embargo,” Agence

France Presse, December 15, 2004; Agence France Presse, December 17, 2004, “EU

leaders hint at June date for lifting China arms ban;” Joe McDonald, “End to European ban

could make little difference to China’s arms ambitions,” Associated Press, February 7, 2005;

John Rossant and Dexter Roberts, “An Arms Cornucopia for China? Europe will probably

lift its embargo, but companies will be careful what they sell,” Business Week, February 21,

2005, p. 26; Eric Schmit, “Rumsfeld Warns of Concern About Expansion of China’s Navy,”

New York Times, February 18, 2005, p. 9; Daniel Blumenthal and Thomas Donnelly,

“Feeding the Dragon, Hurting the Alliance,” Washington Post, February 20, 2005, p. B5.

CRS-11

balance.”32 The U.S. House of Representatives had earlier raised such concerns

through passage of H. Res. 57 on February 2, 2005, in which the House strongly

urged the EU not to lift the arms embargo on China. During his European trip, on

February 22, 2005, President Bush noted that “[T]here is deep concern that a transfer

of weapons [to EU states] would be a transfer of technology to China, which would

change the balance of relations between China and Taiwan....” The President stated

that European leaders had informed him that they could develop a “protocol” that

could address U.S. concerns. He added...”whether they can or not, we’ll see.” The

President also said that when the Europeans settled on the new code of conduct, they

would have to “sell it to the United States Congress.”33 Senator Richard Lugar,

Chairman of the Senate Foreign Relations Committee, in a press interview noted the

implications of not addressing Congressional concerns on the issue, reportedly

stating: “The technology the US shares with European allies could be in jeopardy if

allies were sharing that through these commercial sales with the Chinese.” He

further said that if the lifting of the EU arms embargo on China resulted in such a

diversion, he would support restrictions on sales of American arms technologies to

Europe.34

Status of European Union Action

Based on the directive given to the Luxembourg Presidency of the EU during

the European Council meetings on December 16 and 17, 2004, the EU expects to

review a report on the issue of lifting the Chinese arms embargo during the first half

of 2005, and could address the matter as early as March 2005 at the meeting of the

European Council scheduled for that month. A formal EU decision is not expected

until May or June 2005. Since the European Council has already stated its “political

will to continue to work towards lifting the arms embargo,” the prospects of it doing

so when the issue is formally addressed are high.35 What is not clear, should the EU

lift the Chinese arms embargo, is what will be the nature and scope of “the revised

Transcript of remarks by Secretary of State Condoleezza Rice at February 9, 2005 news

conference with European Commission President Jose Manuel Barroso. Federal Document

Clearing House. CIA Director Porter Goss and Vice-Admiral Lowell E. Jacoby, DIA

Director, in testimony before the Senate Select Committee on Intelligence on February 16,

2005 both took note of Chinese military modernization efforts, which they concluded were

affecting the military balance of power in the Taiwan Strait. This modernization effort, they

said, was improving the capabilities of China’s military to threaten U.S. forces in the region,

as well as its capability to take military action against Taiwan, should China choose to do

so. Statements at the committee’s website: [http://intelligence.senate.gov]

[http://www.whitehouse.gov/news/releases/2005/02/print/20050222-3.html] gives text of

President Bush’s press conference of February 22, 2005 in Brussels at NATO headquarters;

Elisabeth Bumiller, “Bush Voices Concern on Plan to Lift China Arms Embargo,” New York

Times, February 22, 2005, p. A1, A10; For House debate on H.Res. 57 see Congressional

Record, February 2, 2005, pp. H299-H303 [daily edition]. The full text of H. Res. 57 is at

page H299.

Edward Alden and Demetri Sevastopulo, “Lugar makes threat on EU arms sales to China,”

Financial Times, February 21, 2005.

Council of the European Union, 16/17 December 2004. Presidency Conclusions.

16238/1/04 REV 1, p. 19. Published February 1, 2005.

CRS-12

Code of Conduct, and the new instrument on measures pertaining to arms exports to

post-embargo countries”–what is referred to by the EU as the “Toolbox.” The details

of any such changes to the Code of Conduct will not be known until the EU

announces them. Internal consultations among EU members on this question are

continuing. What is reasonably clear is that the issue of lifting the EU embargo on

Chinese arms has become a contentious issue in U.S–EU relations and could have

important implications for future cooperation between the U.S. and EU member

states in the military sphere, if the U.S. becomes convinced that military technology

shared with EU nations could end up being transferred to China in a post-embargo

period.

CRS-13

Appendix 1

European Union Code Of Conduct On Arms Exports

(adopted on 8 June 1998)

COUNCIL OF THE EUROPEAN UNION36

BUILDING on the Common Criteria agreed at the Luxembourg and Lisbon

European Councils in 1991 and 1992,

RECOGNIZING the special responsibility of arms exporting states,

DETERMINED to set high common standards which should be regarded as the

minimum for the management of, and restraint in, conventional arms transfers by all

Member States, and to strengthen the exchange of relevant information with a view

to achieving greater transparency,

DETERMINED to prevent the export of equipment which might be used for internal

repression or international aggression or contribute to regional instability,

WISHING within the framework of the Common Foreign and Security Policy

(CFSP) to reinforce cooperation and to promote convergence in the field of

conventional arms exports,

NOTING complementary measures taken against illicit transfers, in the form of the

EU Programme for Preventing and Combating Illicit Trafficking in Conventional

Arms,

ACKNOWLEDGING the wish of Member States to maintain a defence industry

as part of their industrial base as well as their defence effort,

RECOGNIZING that States have a right to transfer the means of self-defence,

consistent with the right of self-defence recognized by the UN Charter,

HAS DRAWN UP the following Code of Conduct together with Operative

Provisions:

CRITERION ONE

Respect for the international commitments of Member States, in particular the

sanctions decreed by the UN Security Council and those decreed by the

Community, agreements on non-proliferation and other subjects, as well as

other international obligations.

An export licence should be refused if approval would be inconsistent with, inter

alia:

Source: Council of the European Union, European Union Code of Conduct on Arms

Exports, document 8675/2/98 Rev 2, Brussels, 5 June 1998.

CRS-14

(a)the international obligations of Member States and their commitments to enforce

UN, OSCE and EU arms embargoes;

(b) the international obligations of Member States under the Nuclear NonProliferation Treaty, the Biological and Toxin Weapons Convention and the

Chemical Weapons Convention;

Missile Technology Control Regime, the Nuclear Suppliers Group and the Wassenaar

Arrangement;

(d) the commitment of Member States not to export any form of anti-personnel

landmine.

CRITERION TWO

The respect of human rights in the country of final destination.

Having assessed the recipient country’s attitude towards relevant principles

established by international human rights instruments, Member States will:

(a)not issue an export licence if there is a clear risk that the proposed export might

be used for internal repression.

(b)exercise special caution and vigilance in issuing licences, on a case-by-case basis

and taking account of the nature of the equipment, to countries where serious

violations of human rights have been established by the competent bodies of the UN,

the Council of Europe or by the EU;

For these purposes, equipment which might be used for internal repression will

include, inter alia, equipment where there is evidence of the use of this or similar

equipment for internal repression by the proposed end-user, or where there is reason

to believe that the equipment will be diverted from its stated end-use or end-user and

used for internal repression. In line with paragraph 1 of the Operative Provisions of

this Code, the nature of the equipment will be considered carefully, particularly if it

is intended for internal security purposes. Internal repression includes, inter alia,

torture and other cruel, inhuman and degrading treatment or punishment, summary

or arbitrary executions, disappearances, arbitrary detentions and other major

violations of human rights and fundamental freedoms as set out in relevant

international human rights instruments, including the Universal Declaration on

Human Rights and the International Covenant on Civil and Political Rights.

CRITERION THREE

The internal situation in the country of final destination, as a function of the

existence of tensions or armed conflicts.

Member States will not allow exports which would provoke or prolong armed

conflicts or aggravate existing tensions or conflicts in the country of final destination.

CRS-15

CRITERION FOUR

Preservation of regional peace, security and stability.

Member States will not issue an export licence if there is a clear risk that the intended

recipient would use the proposed export aggressively against another country or to

assert by force a territorial claim.

When considering these risks, Member States will take into account inter alia:

(a)the existence or likelihood of armed conflict between the recipient and another

country;

(b)a claim against the territory of a neighboring country which the recipient has in the

past tried or threatened to pursue by means of force;

(c)whether the equipment would be likely to be used other than for the legitimate

national security and defence of the recipient;

(d)the need not to affect adversely regional stability in any significant way.

CRITERION FIVE

The national security of the Member States and of territories whose external

relations are the responsibility of a Member State, as well as that of friendly and

allied countries.

Member States will take into account:

(a)the potential effect of the proposed export on their defence and security interests

and those of friends, allies and other Member States, while recognizing that this

factor cannot affect consideration of the criteria on respect for human rights and on

regional peace, security and stability;

(b)the risk of use of the goods concerned against their forces or those of friends,

allies or other Member States;

(c)the risk of reverse engineering or unintended technology transfer.

CRITERION SIX

The behavior of the buyer country with regard to the international community,

as regards in particular its attitude to terrorism, the nature of its alliances and

respect for international law.

Member States will take into account inter alia the record of the buyer country with

regard to:

(a)its support or encouragement of terrorism and international organized crime;

(b)its compliance with its international commitments, in particular on the non-use of

force, including under international humanitarian law applicable to international and

non-international conflicts;

CRS-16

(c)its commitment to non-proliferation and other areas of arms control and

disarmament, in particular the signature, ratification and implementation of relevant

arms control and disarmament conventions referred to in point (b) of Criterion One.

CRITERION SEVEN

The existence of a risk that the equipment will be diverted within the buyer

country or re-exported under undesirable conditions.

In assessing the impact of the proposed export on the importing country and the risk

that exported goods might be diverted to an undesirable end-user, the following will

be considered:

(a)the legitimate defence and domestic security interests of the recipient country,

including any involvement in UN or other peace-keeping activity;

(b) the technical capability of the recipient country to use the equipment;

(d)the risk of the arms being re-exported or diverted to terrorist organizations (antiterrorist equipment would need particularly careful consideration in this context).

CRITERION EIGHT

The compatibility of the arms exports with the technical and economic capacity

of the recipient country, taking into account the desirability that states should

achieve their legitimate needs of security and defence with the least diversion for

armaments of human and economic resources.

Member States will take into account, in the light of information from relevant

sources such as UDP, World Bank, IMF and OECD reports, whether the proposed

export would seriously hamper the sustainable development of the recipient country.

They will consider in this context the recipient country’s relative levels of military

and social expenditure, taking into account also any EU or bilateral aid.

OPERATIVE PROVISIONS

1.Each Member State will assess export licence applications for military equipment

made to it on a case-by-case basis against the provisions of the Code of Conduct.

2. The Code of Conduct will not infringe on the right of Member States to operate

more restrictive national policies.

3. Member States will circulate through diplomatic channels details of licences

refused in accordance with the Code of Conduct for military equipment together with

an explanation of why the licence has been refused. The details to be notified are set

out in the form of a draft pro-forma set out in the Annex hereto. Before any Member

State grants a licence which has been denied by another Member State or States for

an essentially identical transaction within the last three years, it will first consult the

Member State or States which issued the denial(s). If following consultations, the

Member State nevertheless decides to grant a licence, it will notify the Member State

CRS-17

or States issuing the denial(s), giving a detailed explanation of its reasoning. The

decision to transfer or deny the transfer of any item of military equipment will remain

at the national discretion of each Member State. A denial of a licence is understood

to take place when the Member State has refused to authorize the actual sale or

physical export of the item of military equipment concerned, where a sale would

otherwise have come about, or the conclusion of the relevant contract. For these

purposes, a notifiable denial may, in accordance with national procedures, include

denial of permission to start negotiations or a negative response to a formal initial

enquiry about a specific order.

4. Member States will keep such denials and consultations confidential and not use

them for commercial advantage.

5. Member States will work for the early adoption of a common list of military

equipment covered by the Code of Conduct, based on similar national and

international lists. Until then, the Code of Conduct will operate on the basis of

national control lists incorporating where appropriate elements from relevant

international lists.

6. The criteria in the Code of Conduct and the consultation procedure provided for

by paragraph 3 of these Operative Provisions will also apply to dual-use goods as

specified in Annex 1 to Council Decision 94/942/CFSP (37), where there are grounds

for believing that the end-user of such goods will be the armed forces or internal

security forces or similar entities in the recipient country.

7. In order to maximize the efficiency of the Code of Conduct, Member States will

work within the framework of the CFSP to reinforce their cooperation and to

promote their convergence in the field of conventional arms exports.

8. Each Member State will circulate to other Member States in confidence an annual

report on its defence exports and on its implementation of the Code of Conduct.

These reports will be discussed at an annual meeting held within the framework of

the CFSP. The meeting will also review the operation of the Code of Conduct,

identify any improvements which need to be made and submit to the Council a

consolidated report, based on contributions from Member States.

9. Member States will, as appropriate, assess jointly through the CFSP framework

the situation of potential or actual recipients of arms exports from Member States,

in the light of the principles and criteria of the Code of Conduct.

10. It is recognized that Member States, where appropriate, may also take into

account the effect of proposed exports on their economic, social, commercial and

industrial interests, but that these factors will not affect the application of the above

criteria.

(1)OF L 367, 31.12.1994, p. 8. Decision as last amended by Decision 98/232/CFSP (OJ

L 92, 25.3.1998, p. 1).

CRS-18

11. Member States will use their best endeavors to encourage other arms exporting

states to subscribe to the principles of the Code of Conduct.

12. The Code of Conduct and Operative Provisions will replace any previous

elaboration of the 1991 and 1992 Common Criteria.

ANNEX

Details to be notified

.......... [name of Member State] has the honor to inform partners of the following

denial under the EU Code of Conduct:

Destination country: ...............

Short description of equipment, including quantity and where

appropriate, technical specifications: ..............

Proposed consignee: ..............

Proposed end-user (if different): .................

Reason for refusal: ................

Date of denial: ..................

_________________________________________________________

CRS-19

Appendix 2

Brief descriptions of EU Common

Military List Categories38

ML1 Smooth-bore weapons with a caliber of less than 20 mm, other arms and

automatic weapons with a caliber of 12,7 mm (caliber 0,50 inches) or less and

accessories, and specially designed components therefor.

ML2 Smooth-bore weapons with a caliber of 20 mm or more, other weapons or

armament with a caliber greater than 12,7 mm (caliber 0,50 inches), projectors and

accessories, and specially designed components therefor.

ML3 Ammunition and fuze setting devices, and specially designed components

therefor.

ML4 Bombs, torpedoes, rockets, missiles, other explosive devices and charges and

related equipment and accessories, specially designed for military use, and specially

designed components therefor.

ML5 Fire control, and related alerting and warning equipment, and related systems,

test and alignment and countermeasure equipment, specially designed for military

use, and specially designed components and accessories therefor.

ML6 Ground vehicles and components.

ML7 Chemical or biological toxic agents, “tear gases”, radioactive materials, related

equipment, components, materials and “technology”

ML8 “Energetic materials”, and related substances.

ML9 Vessels of war, special naval equipment and accessories, and components

therefor, specially designed for military use.

ML10 “Aircraft”, unmanned airborne vehicles, aero-engines and “aircraft”

equipment, related equipment and components, specially designed or modified for

military use.

ML11 Electronic equipment, not controlled elsewhere on the EU Common Military

List, specially designed for military use and specially designed components therefor.

ML12 High velocity kinetic energy weapon systems and related equipment, and

specially designed components therefor.

ML13 Armored or protective equipment and constructions and components.

See OJ C 314 of December 23, 2003 for the full EU Common Military List. Sixth Annual

report according to Operative Provision 8 of the European Union Code of Conduct on Arms

Exports. Official Journal C 316, December 21, 2004 pp. 1-215.

CRS-20

ML14 Specialized equipment for military training or for simulating military

scenarios, simulators specially designed for training in the use of any firearm or

weapon controlled by ML1 or ML2, and specially designed components and

accessories therefor.

ML15 Imaging or countermeasure equipment, specially designed for military use,

and specially designed components and accessories therefor.

ML16 Forgings, castings and other unfinished products the use of which in a

controlled product is identifiable by material composition, geometry or function, and

which are specially designed for any products controlled by ML1 to ML4, ML6,

ML9, ML10, ML12 or ML19.

ML17 Miscellaneous equipment, materials and libraries, and specially designed

components therefor.

ML18 Equipment for the production of products referred to in the EU Common

Military List.

ML19 Directed energy weapon systems (DEW), related or countermeasure

equipment and test models, and specially designed components therefor.

ML20 Cryogenic and “superconductive” equipment, and specially designed

components and accessories therefor.

ML21 “Software” specially designed or modified for the “development”,

“production” “use” of equipment or materials controlled by the EU Common Military

List.

ML22 “Technology” for the “development”, “production” or “use” of items

controlled in the EU Common Military List, other than that “technology” controlled

in ML7.

EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the

Library of Congress, charged with providing the United States Congress non-partisan advice on

issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The

reports are not classified, and Members of Congress routinely make individual reports available to

the public.

Prior to our republication, we redacted names, phone numbers and email addresses of analysts

who produced the reports. We also added this page to the report. We have not intentionally made

any other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in

the United States. Any CRS report may be reproduced and distributed in its entirety without

permission from CRS. However, as a CRS report may include copyrighted images or material from a

third party, you may need to obtain permission of the copyright holder if you wish to copy or

otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public

understanding of information that has been provided by CRS to members of Congress in

connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.