Regulatory intelligence for US exporters

BIS, CBP Hoping to Improve Reviews of Exports Subject to China Chip Controls, Official Says

NEW ORLEANS -- The Bureau of Industry and Security is working with CBP to try to speed up reviews of exports that may be subject to the October China chip controls (see 2210070049), said Teresa Telesco, a BIS official. Telesco, speaking April 25 during the National Customs Brokers & Forwarders Association of America’s annual conference, urged freight forwarders and other parties handling exports to take steps to make sure their semiconductor-related shipments aren’t being delayed, including by having technical information “on hand” to show CBP agents.

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Telesco said BIS knows the controls are “complicated. We also know that they have ultimately caused some confusion, particularly when they were first implemented" (see 2302020034, 2211010042 and 2212140038). She said the agency is working with CBP to “try to enforce these controls but also to try to improve the review process that the shipments are going through.”

She specifically pointed to exporters using BIS authorization letters, which were given to some companies to allow them to continue exporting certain goods or continue certain chip activities within China (see 2302240008). If forwarders or export handlers are asked to move a shipment that is being exported under a BIS authorization letter, the forwarder should first ask to see the letter, Telesco said. Not only will this help the forwarder “make sure they actually are eligible” to export the shipment, she said, it could speed up a potential CBP inspection.

“You'll also have it on hand should there be an issue at the port,” Telesco said, and “you can turn it over very quickly and not have to spend time going back to your client to get that letter.”

Forwarders also should ask the exporter to provide any technical information related to the item’s technology node or its capability to help China produce advanced node semiconductors, Telesco said, which may subject it to a license requirement. Forwarders should try to get that information “even if you don't know what that node is and what that means,” Telesco said. “Even if you just have that piece of paper from your client saying ‘it's at this node,’ we will be able to tell very quickly whether or not it falls under these controls. And if it doesn't, then we can move that much faster.”

The “best recommendation” Telesco said she can give forwarders is “to have all of your paperwork in order.” And “if the shipment is detained, you can hand that over and try to shorten the amount of time that that shipment may be held up.”

Telesco also touched on various Russia-related red flags that exporters and forwarders should be monitoring, including foreign customers that suddenly change the destination country for a shipment after they realize a license would be required for the original country. In one recent case, the two destination countries were “so far apart,” she said. “They are countries you would never even think to try to pair together.” BIS found that “very concerning,” Telesco said, “and it did turn out that there was something going on there.”

She also said she recently came across a transaction where the ultimate consignee was the “exact same name” as a party on the Entity List but was listed in a different country. That is “likely just a front (company), or it's likely just a new company opened up to try to originally and unimaginatively get around the Entity List listing,” Telesco said. “And that is something we have seen, so please keep an eye out for that.”

Telesco also said BIS is working to update the freight forwarder guidance on its website, adding that she was “ashamed to admit it is over 10 years old.” She said the agency hopes to issue updated guidance “soon” but declined to give a time frame.