Sun, Jul 27, 2003 - Page 11 News List

China's trade hurt by sanctions

VICTIMS OF POLITICS?Some companies are complaining that they were given no lead time to plan for the sanctions and have shipments enroute

NY TIMES NEWS SERVICE , NEW YORK

A boat plys the water of Dong Hu at sunset in the central Chinese city of Wuhan, Friday, while new factories and highrise office buildings are being built in the background. The US decision to implement sanctions against several Chinese conglomerates for alleged weapons sales could do extensive damage to development and investment in China, as companies seek to avoid violating the regulations, which requires US customs agents to seize products related to the banned firms.

PHOTO: REUTERS

Business has been lively and growing at the 828 International Trading Co in the six years since Jim Shepherd and his partner began selling area rugs imported from a half-dozen countries around the globe. But now a large batch of colorful cotton rugs that they recently had shipped from China has been ensnared by a Bush administration measure imposed in May to punish Chinese companies accused of supplying ballistic missile technology to Iran.

Unwittingly, 828 International Trading, based in Greenville, South Carolina, is just one of an unknown number -- and variety -- of American businesses that have been tripped up by the measure, which banned all shipments by five Chinese companies to the US for two years to penalize them for violating the Iran Nonproliferation Act of 2000.

Among the five is the China North Industries Corp, the state military-industrial conglomerate better known as Norinco. And unluckily for 828 International Trading, its Chinese agent had contracted with Norinco to ship the latest rug order. The container with 1,300 rugs, worth an estimated US$100,000, has been seized by US customs agents and is currently in a warehouse in Charleston, South Carolina.

The ban, which also covers one North Korean company, requires the Bureau of Customs and Border Protection to deny shipments by the six companies into this country -- no exceptions, said Christopher Bentley, the agency's spokesman in Baltimore.

The wrinkle for Shepherd and some others, like Peigeng Lu, of the Nichem Co, a New Jersey supplier of activated carbon for water treatment plants, was that their goods were already in transit when the ban was announced on May 23.

Also, other government agencies list sanctioned countries on their Web sites, but the State Department's Bureau of Nonproliferation lists such countries only in the Federal Register, said Timothy Rolland, a customs law specialist at Gatti & Associates in Haddonfield, New Jersey, who represents a client with goods seized under the measure. And that is "a publication that is not usually read by everyone," he said.

American companies that had goods shipped by the Chinese companies after the ban was announced could face hefty fines and possible criminal penalties; their property will also be destroyed, Rolland said.

In announcing the ban, the US State Department said only that the Chinese companies' shipments had the "potential to make a material contribution to weapons of mass destruction or missiles."

Anthony Pinson, a spokesman for the Bureau of Nonproliferation, said the bureau "was very tightly constrained in explaining our decisions because there is intelligence involved."

After the measure was announced, Norinco, one of China's biggest import-export enterprises and a major supplier to the Chinese military, said it was "strongly against and dissatisfied with the US government saying that we assisted Iran's weapons program," and denied helping countries develop "this kind of missile."

Norinco was investigated by US officials for automatic weapons smuggling in the 1990s and accused of selling banned military hardware.

Li Guodong, a manager at the Taian Foreign Trade General Corp, another company sanctioned under the new ban, said in an interview: "In 2001, we had exported a chemical radiator to a company in Iran. That company produces agricultural pesticide." And although Taian is "very angry" over the sanctions, he said, it does less than 10 percent of its business with the US.

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