US embassy cable - 03THEHAGUE2137

C O N F I D E N T I A L THE HAGUE 002137 
 
SIPDIS 
 
 
NP/ECNP FOR C.KESSLER AND R.GAREL 
 
E.O. 12958: DECL: 08/22/2008 
TAGS: ETTC, NL, PARM, ECON 
SUBJECT: NETHERLANDS RESPONSE TO ADC DEMARCHE 
 
REF: STATE 193984 
 
Classified By: DCM Daniel R. Russel for reasons 1.5 (b) and (d) 
 
1.     (U) Please see action request paragraph 4. 
 
2.     (C) Summary.  The Netherlands Ministry of Economic 
Affairs confirms that Dutch electronics manufacturer Philips 
plans to ship 14-bit ADCs to China, but has not completed the 
transaction.  The GONL has not yet made a determination on 
the export license, but is leaning toward approving the sale. 
 The GONL requests consultations with USG officials.  End 
Summary. 
 
3.     (C) On August 22, Jan Huner, Senior Export Control 
Official at the Netherlands Ministry of Economic Affairs, 
forwarded a message to EconOff regarding Analog-to-Digital 
Converters (ADCs).  The message is in response to ref A and 
the July 15 visit of ECNP Director Kessler to the Hague. 
 
Begin Text: 
 
Title:  Reply by the Netherlands to the United States note on 
exports of analog-to-digital converters (ADC's). 
 
The Netherlands has examined the concerns expressed by the 
United States on the possible export by Philips Electronics 
N.V. of 14-bit ADC's to China for use in base stations for a 
mobile telecommunications network. 
 
We have discussed the issue both with Philips Electronics and 
with experts of the Royal Netherlands Air Force (RNLAF). 
 
Philips confirms that there is a distinct possibility that it 
may supply large numbers of 14-bit ADCs to China for use as 
indicated above.  It is aware that these converters are 
subject to export controls.  No contracts have been signed as 
yet. 
 
Experts of the RNLAF confirm that the 14-bit ADCs as produced 
by Philips represent the most advanced ADCs that are 
commercially available at this moment.  They also confirm 
that such advanced ADCs play an important role in radar 
systems for combat aircraft.  However, it is not yet clear 
which performance requirements will apply to the ADCs for the 
JSF radar system. 
 
In examining a possible application license for exports of 
14-bit ADCs to China, the above considerations will clearly 
play a role.  However, as things stand now, it is doubtful 
whether these considerations would provide sufficient grounds 
to refuse such an export license.  There is no indication of 
a risk of unwarranted military application of these 
commercially available ADCs.  Also, it is very difficult to 
demonstrate that allowing exports of these ADCs to China 
would pose a risk to the effectiveness of the JSF. 
 
We would, however, welcome an opportunity to discuss this 
issue with our counterparts in the U.S.  We would therefore 
like to invite a delegation of U.S. experts to come to The 
Hague to further explore the possible risks of allowing 
exports of 14-bit ADCs to China. 
 
End Text 
 
4.    (U) Action Request:  Post recommends Department respond 
directly to MEA Official Huner regarding the invitation for 
bilateral consultations.  Post stands ready to assist in 
making arrangements.  Embassy POC is EconOff Robert Gerber at 
Tel:  31 70 310-9274 or Email:  gerberrw@state.gov. 
SOBEL