Israel Aerospace Industries Eitan Drone. Photo: WikiCommons.

After pressure from Israeli defense and technology firms to intervene with the U.S. government to allow them to increase exports to China, Israel’s Economy Ministry is examining the guidelines for dual-use exports and discussing ways to ease export restrictions, while still complying with international treaty obligations, Israeli business newspaper The Marker reported on Tuesday.

Israeli manufacturers want to expand exports for more dual-use technologies with civilian and military applications, or to sell older defense technology to China, such as the previous generation UAVs, since Beijing could now acquire them from many other countries freely.

The revelation comes on the heels of the resignation of the Israeli Defense Ministry’s Head of Defense Export Control, Meir Shalit, after the U.S. expressed its displeasure when a miniature cooling system used for missiles that was sold in Europe, then found its way to China.

With that convoluted exception aside, Israeli firms all follow the U.S. export guidelines for selling defense and dual-use technology, which precludes the latest technology from reaching China, India, Russia and many Eastern European countries. But manufacturers are now looking for ways to increase sales to make up for defense cuts in Israel and an unfavorable foreign exchange rate, while not impinging on U.S. defense protocols.

Israel television channel i24 News said the Asia-Pacific region is Israel’s largest defense export market, but companies now fear for their reputations in the U.S. defense market if their products are used by the Chinese military even when they were sold to civilian customers.

In 2009, Washington cleared Israel to jointly produce UAVs with Russia, but, a year later, blocked state-owned Israel Aerospace Industries from bidding on a contract to upgrade Indian jet fighter aircraft although American companies were bidding, i24 News said.