The Trump administration should be doing more to restrict sales of emerging technologies to China, lawmakers said in interviews earlier this month. Senators commended the administration for increasing foreign direct investment restrictions (see 2002260042) and going further than previous administrations in confronting China’s unfair trade practices, but said they will continue pushing for tighter restrictions.
The COVID-19 pandemic may lead to an increase in electronic trade documentation as both governments and industries are increasingly forced to communicate online, said Kevin Shakespeare, director of stakeholder engagement at the Institute of Export and International Trade. Although there has already been a global shift toward online customs and trade procedures, the coronavirus spread may cause that process to speed up, Shakespeare said during a March 26 webinar hosted by the institute.
The COVID-19 pandemic may hinder the United Kingdom and the European Union from striking a deal before the Brexit transition period ends in December, potentially creating export control confusion for companies, according to a trade lawyer. The U.K. has formed sanctions regimes for its official departure from the EU, but the two sides have not made much progress on export control regulations, which could have substantial impacts on supply chains, said Ross Denton, an export control lawyer with Baker McKenzie.
European Union countries should closely monitor attempts to acquire European medical goods and technology through foreign direct investment and should increase investment screening tools, the European Commission said March 25. The EU’s “openness to foreign investment” needs to be “balanced by appropriate screening tools … now more than ever,” the commission said in guidelines to EU member states. The commission urged member states to be “vigilant” and “use all tools available … to avoid that the current crisis leads to a loss of critical assets and technology.”
Countries will more strictly review transactions involving foreign direct investment as the COVID-19 pandemic continues, especially the U.S., which could increase scrutiny and export controls in the biotechnology sector, trade lawyers said. The Committee on Foreign Investment in the U.S. may increase reviews of transactions involving health care technology to keep critical virus-fighting resources in the U.S., said Aimen Mir, a trade lawyer with Freshfields Bruckhaus Deringer. Mir, who also formerly served as the Treasury Department’s deputy assistant secretary for investment security, said the pandemic will also cause CFIUS and other agencies to increasingly look to prevent transfers of pathogen-related technologies and to maintain technology leadership in the biotechnology sector.
More progress has been made on China’s agricultural commitments under the U.S.-China phase one trade deal, including an agreement relating to poultry exports and an updated list of U.S. facilities eligible to export beef and grain to China, the Office of the U.S. Trade Representative said March 24. The progress shows China is “moving in the right direction” to fulfill its purchase agreements, Agriculture Secretary Sonny Perdue said in a statement. USTR Robert Lighthizer released an update on Chinese agricultural commitments earlier this year (see 2002250055).
Companies will likely be faced with a reshuffled supply chain after the novel coronavirus COVID-19 pandemic subsides, placing greater importance on maintaining sound trade compliance programs even as business uncertainty increases, said Kerry Contini, an export control and sanctions lawyer with Baker McKenzie. As supply chain actors struggle to stay in business and as new parties enter and leave the supply chain, companies may face a host of new suppliers or customers, Contini said, a transition that will likely affect global industries on a large scale.
European governments are skeptical about the use of U.S. export controls to restrict transfers of sensitive technologies even as the U.S. ramps up attempts to convince them to adopt similar measures, according to a March 18 report from the Mercator Institute for China Studies. As the U.S. has taken an increasingly aggressive approach to restricting emerging technology sales to China, Europe increasingly sees export controls as a “blunt instrument” for tackling technology risks, the report said, viewing them instead as a U.S.-driven effort to contain China's rise.
The European Union will allow exports of protective medical equipment to additional countries and territories less than a week after announcing it was restricting exports to countries outside the EU (see 2003160047). Export authorizations will be exempt for shipments to Norway, Iceland, Liechtenstein, Switzerland, the Vatican, Andorra, the Faroe Islands, San Marino and territories that have “special relations” with Denmark, France, the Netherlands and the United Kingdom, the EU said in a March 20 guidance. The EU released further guidance detailing the amendment, a “guideline” for the changes and an annex containing templates for export authorization applications and member state notifications. The change took effect March 21.
Agricultural exporters and shippers are losing “hundreds of millions of dollars” due to shipping uncertainty and cargo detention penalties caused by the response to the coronavirus pandemic, said Peter Friedmann, executive director of the Agriculture Transportation Coalition. Friedmann was critical of the Federal Maritime Commission, which has yet to finalize a proposed rule issued last year that would provide guidance about how the FMC assesses the fairness of demurrage and detention practices. The rule’s public comment period ended in October.