[EXCERPTS] DoD News Briefing

Mr. Kenneth H. Bacon, ASD(PA)
Thursday, April 24, 1997 - 1:30 p.m.

Q: Yesterday Kurt Campbell was asked about the illegal diversion of
U.S. machine tools by China. He said he'd have to see what the party
line was and recommended that we ask you.

Is the Pentagon concerned about this diversion of machine tools to a
military factory?

A: The Pentagon is concerned about any violation of export control
laws that may affect improperly a country's defense production
capacity. This was mainly a commercial operation. It was licensed by
the Commerce Department, as I understand it. It's one we've been
following very closely. And we, of course, reviewed it at the time and
we will continue to review such sales and make recommendations on
them. But this was done for commercial reasons. The allegation is that
the machinery has been used now for military reasons, and...

Q:  Is that in fact the case?

A: That's what the allegation is. As I say, this is not something the
Pentagon has primary responsibility on. This is a Commerce Department
issue, and they're the people you should direct your question to.

Q: I understand the Pentagon opposed the initial sale for just these
concerns, that they could be diverted. Was that, in fact, the case,

A: We reviewed it, and in the end we recommended approval of the
export subject to safeguards, and the safeguards were designed to
ensure that the material was used for civilian use. If those
safeguards have failed or if they've been diverted, then we made it
clear that we were not for that. We wanted this to be a commercial
sale, not a military sale.

Q:  When you say safeguards, what are you talking about?

A: The safeguards were when and how it was supposed to be used. They
were safeguards designed to ensure that they were used for commercial
purposes, in other words, the stated purposes. As you know, the whole
thing is under investigation. There's a Grand Jury investigation going
on, and I think we should wait for a final court ruling or legal
system ruling on what exactly happened here. But we made it very clear
that we felt this was appropriate only for commercial purposes.