July 6th, 2012

Dual-use regulation and calculated risks

There are those who question the correctness of regulationg ‘dual-use’ technologies. However in the case of Pratt & Whitney Canada, the reasoning for it becomes clear: To do otherwise allows targeted countries like the People’s Republic of China to game the system.

Says the Commerce Department:

Dating back to the 1980s, China sought to develop a military attack helicopter.  Beginning in the 1990s, after Congress had imposed the prohibition on exports to China, China sought to develop its attack helicopter under the guise of a civilian medium helicopter program in order to secure Western assistance.  The Z-10, developed with assistance from Western suppliers, is China’s first modern military attack helicopter.

Even worse, Pratt & Whitney marketing people commented about the ‘sudden appearance’ of the commercial helicopter program. They knew it was a military purpose. They sold engines anyway.

They called this choice a ‘calculated risk.’ That risk resulted in the Chinese developing their helicopter, which is why the US Attorney General’s office became involved with the case. The result: a conviction and $75 million settlement.

The US Government makes its job be to ensure those risk calculations should have only one result: following the law. Because even Canada-based corporations are not out of reach.