Chemical and Biological Programs

Since the early 1990s, U.S. officials have identified firms in China as suppliers
of Iran's chemical weapons program, although some U.S. officials attributed the
assistance to Iran to a lack of export controls by China's government. On May 22,
1997, Secretary of State Albright imposed U.S. sanctions, under the Chemical and
Biological Warfare Elimination Act of 1991 (P.L. 102- 182), on two PRC firms
(Nanjing Chemical Industries Group and Jiangsu Yongli Chemical Engineering and
Technology Import/Export Corp.), five PRC citizens, and one Hong Kong firm
(Cheong Lee Ltd.) for knowingly and materially aiding Iran's chemical weapons
programs. The Clinton Administration said there was no evidence the PRC
government was aware of the transfers. On June 10, 1997, the State Department
announced suspension of an Exim Bank loan for a U.S. firm's exports to the Nanjing
firm above. In June 1998, China appeared to address U.S. concerns by expanding
chemical export controls to include ten chemicals not banned for export under the
Chemical Weapons Convention but included in the more restrictive "Australia
Group" chemical export control list. The sanctions on the entities remain in effect.

The Bush Administration clearly believes that entities in China are assisting
Iran's chemical weapons program. In four separate determinations, the Bush
Administration has imposed sanctions on several chemical firms based in China ­
June 14, 2001; January 16, 2002; May 9, 2002; and July 9, 2002. In the first three
cases, the sanctions were imposed pursuant to the Iran Nonproliferation Act of 2000.
In the latest case, sanctions were imposed pursuant to the Iran-Iraq Arms
Nonproliferation Act and the nonproliferation provisions of the Arms Export Control
Act and the Export Administration Act. One firm sanctioned by the Bush
Administration is the Jiangsu Yongli Chemicals and Technology Import-Export
Corporation, the same firm sanctioned by the previous administration. Other
sanctioned entities with names that clearly indicate their involvement in the chemical
industry include: Liyang Chemical Equipment Company, and the Zibo Chemical
Equipment Plant.