U.S. suspends three firms' export privileges for alleged illegal exports to China

·2-min read
The Department of Commerce building is seen in Washington, DC

By David Shepardson and Karen Freifeld

WASHINGTON (Reuters) -The U.S. Commerce Department on Wednesday suspended the export privileges of three U.S.-based firms for 180 days for what it said was the illegal export of satellite, rocket and defense technology to China.

Quicksilver Manufacturing Inc, Rapid Cut LLC and U.S. Prototype Inc received technical drawings and blueprints from U.S. customers and sent them to manufacturers in China to 3-D print satellite, rocket, and defense-related prototypes without authorization, the department said.

The three companies, which share the same Wilmington, North Carolina, address, could not immediately be reached for comment.

"Outsourcing 3-D printing of space and defense prototypes to China harms U.S. national security," Assistant Secretary of Commerce for Export Enforcement Matthew Axelrod said in a statement.

"By sending their customers' technical drawings and blueprints to China, these companies may have saved a few bucks, but they did so at the collective expense of protecting U.S. military technology."

Liu Pengyu, a spokesperson for the Chinese Embassy in Washington, said the United States was using export controls as a tool of "economic bullying." Its actions damaged international trade and free-trade rules, and posed a serious threat to global supply chains, he said.

The Commerce Department said the information illegally sent to China included sensitive prototype space and defense technologies and that the 180-day export suspension could be renewed.

It did not identify the companies who had contracted with the North Carolina firms. But, according to the department's June 7 order denying export privileges, a U.S. aerospace and global defense technology company notified the department in February 2020 of a third-party supplier's unauthorized export of controlled satellite technology.

The department's investigation revealed that Quicksilver got an order in July 2017 for satellite parts for the aerospace company's prototype space-satellite. To make components, Quicksilver was given about a dozen technical drawings and 3-D graphic/computer aided drawing files.

A company employee signed a non-disclosure agreement, which included that the work be conducted in compliance with U.S. export control regulations, the order said. Those regulations required licenses that likely would have been denied.

But Quicksilver fulfilled the order that August without seeking a license, and included an invoice that indicated the products had been shipped from China, the order said.

The Commerce Department said it had discovered a similar violation last July by Rapid Cut, whose ownership and personnel are also related to Quicksilver, involving technology that is controlled for national security.

Quicksilver was also involved in a violation relating to a third U.S. company, an advanced science and engineering company with contracts with the Department of Defense, the department said.

(Reporting by David Shepardson in Washington, Karen Freifeld in New York and Costas Pitas in Los Angeles; Editing by Tim Ahmann, David Gregorio and Richard Pullin)

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