CASE STUDY: Garrett Engines
The redundancy inherent in the PRCĖs three-track approach to advancing its military jet engine capabilities began to bear fruit in the early 1990s.106
The Cold WarĖs end and a liberalization of Cold War-era export controls on dual-use products and technologies opened new opportunities for the PRC to acquire advanced jet engines and production capabilities. A notable opportunity developed in 1991 when, as part of an overall liberalization of export controls by the Coordinating Committee for Multilateral Export Controls (COCOM), the Commerce Department decontrolled a popular jet engine manufactured by Allied SignalĖs Garrett Engine Division.
Prior to 1991, the Garrett engine required an individual validated license that included restrictive conditions.
The Commerce DepartmentĖs decision that Garrett jet engines were decontrolled ensured that they could be exported to the PRC without a license or U.S. Government review. The decision also opened the way for a jet engine co-production arrangement sought by the PRC.
Negotiations for a co-production deal between Allied Signal and PRC officials progressed until July 1992, when the Defense Department learned of the plan.107 The Defense DepartmentĖs reaction to the news sparked an interagency review of the Commerce DepartmentĖs decision to decontrol the Garrett engines.
The co-production deal was terminated after the review demonstrated the potential national security implications of transferring jet engine production capabilities to the PRC.108
PRC Targeting of Garrett Engines
The PRCĖs reported motivation for initiating the Garrett engine purchase was the PRCĖs requirement for a reliable, high-performance Western engine for its developmental K-8 military aircraft.109
The K-8, depicted below, is a multi-role aircraft that can serve as a trainer, fighter, or light ground attack bomber.110 The K-8 project was initiated by the PRC around 1987, and later became a joint effort with Pakistan.
PRC aerospace organizations involved in the project included:
The PRCĖs access to the Garrett TFE-731, depicted below, may have influenced its choice of small jet engines in general, and K-8 propulsion in particular. The PLA purchased a fleet of Learjets from the U.S. on the understanding that the aircraft would be for civil use. It is suspected, however, that the PLA diverted both the aircraft and the engines for military purposes, including PLA reconnaissance missions.112
U.S. Government Approval of the Initial Garrett Engine Exports
In August 1989, Allied Signal applied for an export license to sell a variant of the TFE-731, the TFE-731-2A-2A, to the PRC. Four engines and spare parts were to be shipped.113 The U.S. Federal Aviation Administration (FAA) had certified the TFE-731-2A-2A as a "civil" engine.114
According to Iain S. Baird, then-Deputy Assistant Secretary of Commerce for Export Administration, the Commerce Department had licensing authority for the civil engine regardless of its military (i.e., the PLAĖs K-8 military aircraft) application.115
The 1989 application for the export of the Garrett engines to the PRC raised concerns among officials at the Defense Technology Security Administration, which was the focal point for export policy guidance and license reviews within the Defense Department.116
A Defense Technology Security Administration technical analysis, for instance, indicated that the TFE-731-2A-2A had "some design and manufacturing technical data÷common to the÷TFE1042 and TFE1082," both of which are combat aircraft engines.117
Given this Defense Department judgment, a condition was placed by the Commerce Department on the export license for the TFE-731-2A-2As:
There is to be no transfer of engine design or manufacturing technical data provided with this transaction. 118
The case was also reviewed by COCOM. Subsequently, the Commerce Department issued an Individual Validated License (number D032648) for the Garrett engines on May 30, 1990.119
In December 1990, Allied Signal asked the Commerce Department for approval to sell an additional 15 TFE-731-2A-2A engines to the PRC.120
These engines were reportedly to be used for the first production run of the PLAĖs K-8 military aircraft, which were to be sold to Pakistan. The Defense Department and COCOM again reviewed the license application, and Defense requested conditions that would forbid the release of TFE-731-2A-2A "design methodology, hot section repair/overhaul procedures and manufacturing information." 121
On June 12, 1991, the Commerce Department granted Individual Validated License D130990, which included the Defense DepartmentĖs recommended
Commerce Department Decontrol of the Garrett Jet Engines
In August 1991, Allied Signal requested that the FAA re-certify the TFE-731-2A-2A engine with a digital electronic engine controller.123 The FAA had certified the engine in 1988 with an analog engine controller.124
It is unclear from the available information whether the PRC requested this upgrade of the engine to include the digital electronic engine controller, or whether Allied Signal decided to upgrade the engine on its own initiative.125
On September 1, 1991, the Commerce Department published revisions to the Export Administration Regulations to reflect liberalized export controls that had been agreed to by the United States and its COCOM partners.126 The revised regulations decontrolled many jet engines, but continued to control exports of engines equipped with full authority digital engine control (FADEC) systems.127
These militarily-sensitive systems control jet engine operations to permit, among other things, maximum propulsion performance for manned and unmanned military air vehicles.128
According to Defense Department records, Allied Signal sent a one-page document to the Commerce Department on September 30, 1991 explaining that the TFE-731-2A-2A did not use a FADEC system, but instead used a less capable digital electronic engine controller (DEEC). For this reason, Allied Signal officials believed the TFE-731-2A-2A was completely decontrolled under the revised Export Administration Regulations and COCOM controls.129
Technical experts at the Defense Technical Security Agency had already presented their analysis to Commerce Department officials, countering that the TFE-731-2A-2A contained a FADEC and therefore remained controlled under COCOM and U.S. regulations.130
On October 1, 1991, one day after receiving the Allied Signal document regarding the FADEC issue, the Commerce Department ruled that the TFE-731-2A-2A did not contain a FADEC. The Commerce Department then informed Allied SignalĖs Garrett Engine Division that it could export TFE-731-2A-2A jet engines to the PRC under an EAR General License (a so-called G-DEST license) pursuant to the Export Administration Regulations as long as production technology was not transferred.131
Defense Department records indicate that officials at the Defense Technology Security Administration concurred with the Commerce Department decision to permit this export, but mistakenly believed it was still under an Individual Validated License arrangement Û that is, with the requested Defense Department conditions.132
Subsequently, the Commerce Department amended the October 1, 1991 decision and notified Allied Signal on November 25, 1991 that it had decontrolled the TFE-731-2A-2A entirely.133
Engine production technology could now be exported to the PRC without a license.134 According to Defense Department records, Commerce Department officials relied exclusively on Allied SignalĖs September 30, 1991 technical assessment of the engine controller for the TFE-731-2A-2A Û that is, that the controller was not a FADEC and was thus no longer controlled.135
Bruce C. Webb, then a senior analyst at the Commerce DepartmentĖs Office of Nuclear Controls, recalls that a U.S. Government advisory group had reviewed the Allied Signal document and agreed with the companyĖs assertion that the TFE-731-2A-2A was not equipped with an embargoed FADEC.136 However, the Commerce Department was unable to provide the Select Committee with any records of any technical reviews that it may have conducted.137
The Interagency Review of the Proposed Export of Garrett Engines
Iain Baird, then-Deputy Assistant Secretary of Commerce for Export Administration, claims that the Commerce Department coordinated with appropriate agencies before making the General License determination in November 1991. However, the Commerce Department was unable to provide the Select Committee with any documentary evidence to this effect.138
A Defense Technology Security Administration staff member suggests that other agencies learned of the decision by chance, or "dumb luck." 139 In addition, according to a December 29, 1992 Defense Department memorandum for the record:
Commerce approved, with DoD and CoCom concurrence, the sale of 15 Garrett TFE-731-2A-2A engines to the PRC for incorporation into military trainers being exported to Pakistan.
In July 1992 DTSA [Defense Technology Security Administration] learned from cable traffic that the PRC and Garrett were negotiating an arrangement to coproduce this engine in China [the PRC] for use in PLA military trainers.
We learned shortly thereafter that Department of Commerce had determined in November 1991 that the engine did not require an Individual Validated License (IVL) for shipment to the PRC. Department of Commerce, without consulting with Department of Defense, classified the engine and technology decontrolled (or "G-DEST") under the CoCom Core List implemented on 1 September 1991. DTSA believes the export requires an IVL [Individual Validated License].140
After receiving a copy of the July 1992 cable, the Defense Technology Security administration initiated an interagency review of the Commerce Department General License decision regarding the Garrett engines.141 The Commerce Department agreed to suspend its decision pending the outcome of the review.
Officials at the Defense Technology Security Administration reportedly were especially concerned over any transfer of jet engine production technology to the PRC. They were also surprised that the Commerce Department opted not to coordinate its decision, given the agencyĖs oft-repeated concerns over any transfer of jet engine production technology to the PRC.142
The Commerce DepartmentĖs decision to decontrol Garrett engine technology was considered in the context of several U.S. policies. Two policies in particular dominated the interagency debate: the 1991 Enhanced Proliferation Control Initiative (EPCI), and COCOM controls on jet engine technologies.
Consideration of Enhanced Proliferation Control Initiative Regulations
The Enhanced Proliferation Control Initiative was established by the Bush Administration to provide a non-proliferation "safety net." It was intended to restrict the export of technologies usable for chemical and biological weapons or missiles, regardless of whether such technologies were controlled under existing international agreements (for example, under the 1987 Missile Technology Control Regime).
As explained by the Commerce Department:
Foreign policy controls are being imposed on certain exports by adopting a policy of denial for items that already require a validated license, for any reason other than short supply, where the export is determined to be for a facility involved in the development, production, stockpiling, delivery, or use of chemical or biological weapons or of missiles.
The purpose of these controls is to prevent American contribution to, and thereby distance the United States from, the proliferation of chemical and biological weapons and missile development.
These controls serve to demonstrate U.S. opposition to the spread of these weapons and provide specific regulatory authority to control exports from the United States of commodities or technology where there is a significant risk that they will
be used for these purposes. 143
According to the August 1991 interim Enhanced Proliferation Control Initiative regulations, the Commerce Department should have conducted a "case-by-case" review of Allied SignalĖs proposed export to determine whether it "would make a material contribution to the proliferation of missiles." If the export were "deemed to make such a contribution, the license [would] be denied." 144
Baird states that an Enhanced Proliferation Control Initiative review was not conducted for the engines, but was conducted for the production technology: "As far as the engines went, sending the whole engine up, we didnĖt feel it raised EPCI concerns. As far as the technology went, we did." Baird did not further explain the basis for the Commerce Department decision that the Garrett engines themselves did not require an Enhanced Proliferation Control Initiative review; nor did he explain why the technology did raise EPCI concerns.145
The Department of Commerce was unable to provide the Select Committee with any records of the Enhanced Proliferation Control Initiative review it conducted for the Garrett engine production technology.146
Allied SignalĖs partners in the Garrett engine transaction included the China National Aero-Technology Import-Export Corporation (CATIC), China Nanchang Aircraft Manufacturing Company, and the China National South Aero-Engine and Machinery Company. A 1992 U.S. Government review of these proposed end users found that the export of Garrett engine production technology to the PRC could pose a national security threat to the United States.
The review found that PRC co-production of Garrett TFE-731-2 engines would enable Beijing to develop higher quality turbojet and turbofan engines for use in military and civilian aircraft and in cruise missiles. PRC access to this production process would also give Beijing the means to extend the range of its cruise missiles. This was of special concern because PLA missiles, rockets, and aircraft are produced at facilities also used for civilian production.
A Garrett representative confirmed that the Zhuzhou South Motive Power and Machinery Complex was the intended producer of the Garrett TFE-731-2 engine. There was concern that a flow-through of applicable production technologies to the PRCĖs cruise missile engine program was almost inevitable.147
The PLAĖs HY-4 cruise missile is reportedly now powered by a copy of a U.S. turbojet engine.148
In addition, the conditions placed on the export of the Garrett engine technology of course would not prevent the PRC from reverse engineering the engine if that were the PRCĖs intent.149
Each of the PRC participants in the Garrett engine co-production venture produces military hardware. Despite the assurances of Allied signal that the engines it proposed to produce in the PRC would be used entirely for commercial purposes, PLA personnel were prominent in the negotiations with Garrett. The CATIC representatives were prominent in the Committee on Foreign Investment in the United States (CFIUS) case involving the attempted purchase of MAMCO, a Boeing contractor, by CATIC. This was the only CFIUS case in which the President reversed the sale on national security grounds.150
Because the PRC could incorporate complete TFE-731-2A-2A engines or modified variants, directly into cruise missile airframes, export to the PRC of the engines themselves Û as well as the production technology Û presented a national security threat.151