This report provides detailed background and legal analysis of the nature of the current European Union embargo on arms exports to China. It also provides detailed background on the European Union’s current Code of Conduct on Arms Exports. A strengthened version of the Code would be one of the control mechanisms that would remain should the EU lift the embargo on arms exports to China. This report also gives information on recent EU arms exports authorized for China. It further summarizes U.S. concerns regarding the lifting of the arms embargo, and notes the prospective timing of EU action on the embargo issue.

China’s economy continues to be a concern to U.S. policymakers. On the one hand, China’s economic growth presents huge opportunities for U.S. exporters. On the other hand, the surge in Chinese exports to the United States has put competitive pressures on many U.S. industries. Many U.S. policymakers have argued that greater efforts should be made to pressure China to fully implement its WTO commitments and to change various economic policies deemed harmful to U.S. economic interests, such as its currency peg and its use of subsidies to support its SOEs. In addition, recent bids by Chinese state-owned firms to purchase various U.S. firms have raised concerns among Members over the impact such acquisitions could have on U.S. national and economic security.