The Bureau of Industry and Security revised the Commerce Control List and the Export Administration Regulations to implement changes made during the 2019 Wassenaar Arrangement plenary, the agency said in a final rule released March 26. Along with revising various Export Control Classification Numbers and correcting language in the EAR, the rule eliminated certain reporting requirements for encryption items, which BIS expects to “reduce the regulatory burden” for U.S. exporters. The changes take effect March 29.
The Office of Foreign Assets Control sanctioned two more Myanmar entities, issued four new general licenses and published two new frequently asked questions to provide guidance on certain exempted transactions with Myanmar. The sanctions and guidance, issued March 25, came days after OFAC designated entities and officials associated with the country’s military-led coup last month (see 2103220036) and about three weeks after the Commerce Department increased export restrictions for shipments to Myanmar (see 2103040075).
U.S. measures to expand foreign investment screening are having an increasingly chilling impact on Chinese companies’ willingness to invest in the U.S., said Jingyuan Shi, a media and technology lawyer with Simmons & Simmons. As the Biden administration continues to implement its China strategy, including its administration of the Committee on Foreign Investment in the U.S., some Chinese technology companies “are adopting a wait-and-see attitude,” especially amid the U.S.-China “trade tension atmosphere,” Shi said during a March 24 webinar hosted by the law firm.
The U.S. should be doing more to restrict Chinese semiconductor companies from buying U.S. equipment, which is strengthening China’s military and ceding U.S. technology leadership, researchers said. Although the U.S. should bolster domestic policies to help the semiconductor industry -- including through supply chain, manufacturing and research incentives (see 2102240052) -- the researchers said the Commerce Department’s export controls include loopholes for companies that sell advanced technologies to China.
The recent U.S. decision to increase sanctions and export controls on Russia, although largely narrow, could have significant implications for exporters doing business in Russia, law firms said. U.S. companies should pay close attention to new restrictions on certain controlled services and the potential impacts of the restrictions on disclosure and reporting requirements, the firms said.
The U.S., the European Union, the United Kingdom and Canada announced sanctions against China for human rights abuses in an internationally coordinated effort to condemn China’s treatment of its Uyghur population. The sanctions, announced March 22, target officials and an entity in the Xinjiang Uyghur Autonomous Region for leading the repression and detention of Muslim minorities.
The Bureau of Industry and Security is planning to issue another set of emerging technology controls this year and hopes to propose them for multilateral control in 2022, said Matt Borman, BIS’s acting assistant secretary for export administration. Borman also said he hopes BIS can fall into a more predictable “sequence” for its emerging and foundational technology control effort and move past last year’s disruptions to multilateral regimes caused by the pandemic.
Companies will continue to see a rise in global scrutiny of foreign direct investments as European countries try to match the U.S.’s investment screening regime, which has set the standard for investment reviews, trade lawyers said. Several countries, including the United Kingdom and Germany, are quickly bolstering their regimes while the U.S. is continuing to expand its jurisdiction to keep China and sanctioned countries from acquiring critical technologies, the lawyers said.
The U.S. sanctioned 24 Chinese and Hong Kong officials responsible for interfering in Hong Kong’s autonomy, building on previous designations issued last year. The new sanctions, announced March 17, target 14 vice chairs of the National People’s Congress Standing Committee and officials in the Hong Kong Police Force’s National Security Division, the Hong Kong and Macau Affairs Office and the Office for Safeguarding National Security.
The U.S. issued a series of increased export controls against Russia for the poisoning of Russian political opposition leader Alexei Navalny, including tighter restrictions on license exceptions and national security-controlled goods. The restrictions, first announced earlier this month (see 2103020067) but outlined in more detail in notices released March 17, will introduce new conditions and restrictions over sensitive exports to Russia and end certain U.S. arms sales to the county, the Commerce and State departments said. The restrictions take effect March 18.