Panelists Warn of Dangers to US Semiconductor Exporters, Criticize Huawei Blacklisting
Panelists warned against increasingly strict export controls and criticized the Trump administration's handling of the Huawei blacklisting during a June 4 Senate Committee on Banking, Housing and Urban Affairs hearing on “Confronting Threats From China: Assessing Controls on Technology and Investment, and Measures to Combat Opioid Trafficking.” The U.S. is drawing dangerously close to shrinking markets for U.S. semiconductor exporters, the panelists said, a move that could prove devastating for the industry. They also suggested the Trump administration’s restrictions on Huawei are too broad and have hurt U.S. exporters as well as damaged trade talks between the two sides.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Scott Kennedy, a senior adviser for the Center for Strategic and International Studies, said the Chinese market for U.S. semiconductor exporters is a “huge part of the industry” but may face uncertainty with the Commerce Department’s addition of telecommunications network equipment maker Huawei Technologies to the Entity List. “If those markets are closed off for whatever reason,” Kennedy said, “it’s gonna be the Chinese investing and building their supply chains out.” Kennedy said that may lead the Chinese to develop their own semiconductors that would “be dangerous for our industry.”
Kevin Wolf -- Commerce’s former assistant secretary for export administration -- agreed, saying U.S. companies “absolutely need access to all markets.” He warned of potential consequences if U.S. trade wars isolate U.S. exporters from global supply chains and alienate trading partners. Wolf said the U.S. should be careful of overusing foreign policy tools “in order to avoid spooking potential buyers and over-controlling that which doesn't need to be controlled,” Wolf said.
Both Wolf and Kennedy disagreed with how the Trump administration added Huawei to the Entity List, with Kennedy calling the move premature and “too broad.” ”I probably would've waited some time before I went forward with that step because of the huge consequences it can have,” Kennedy said, suggesting the move significantly increased trade tensions and had a “huge effect on the overall trajectory” of the U.S.-China relationship. Kennedy and Wolf said the U.S. should have limited the scope of the restrictions to leave out items such as consumer electronics that are not national security threats and may only hurt U.S. exporters. Wolf also said the U.S. should have carved out the restrictions “we care about, aggressively enforce” them, but leave out the “less sensitive or benign commercial” items “that allow the U.S. to maintain dominance in this area.”
In order to keep markets open to U.S. exporters, Wolf, Kennedy and Richard Nephew, a senior researcher for the Center on Global Energy Policy and former State Department coordinator for sanctions policy, said the U.S. needs cooperation from foreign allies, including multilateral support in placing restrictions on Huawei. The only way that will happen, Kennedy said, is if the U.S. clearly makes China its priority and publicizes -- both domestically and internationally -- the dangers presented by China and state-owned companies such as Huawei. Nephew said that is not happening. “The fact that we are at this point not prioritizing” China and Huawei “amongst our various interests is problematic,” he said. “It makes it hard to dissect what we care about the most.”