The Bureau of Industry and Security stressed the importance of increased due diligence measures in a guidance (see 2004280052) on its new export licensing restrictions for military-related exports, saying industry must be careful to avoid shipping goods to entities with any nexus to the Chinese military. The newly issued guidance touches on due diligence best practices and addresses shipments to distributors and universities but does little to address the “unmanageable” compliance burdens industry said the rule will cause (see 2006150031, 2006180035 and 2005050035). BIS also did not grant a request by at least 20 industry groups to delay the rule’s effective date (see 2006150031). The rule took effect June 29.

The U.S. will suspend certain export license exceptions for shipments to Hong Kong and ban exports of U.S.-origin defense goods to the region, the Trump administration said June 29. The administration also plans to further restrict sales of dual-use technologies to Hong Kong to bring those measures in line with restrictions imposed on exports to mainland China. The administration said it is imposing the restrictions because of China’s infringement in Hong Kong’s autonomy (see 2005290047).

It's unclear how a President Joe Biden would try to use policy to shape the global supply chain, but the Atlantic Council's Asia Security director said that since Biden prefers a multilateral approach, he “might be less likely” to impose tariffs or export controls. Miyeon Oh, who was speaking during an Atlantic Council webinar June 26, said he might try to get allies to coordinate an effort “to rebalance the global supply chain,” and he might seek to use American participation in the Trans-Pacific Partnership as a way to do so.

The Office of Foreign Assets Control likely did not understand the industry burdens imposed by the update to its reporting, procedures and penalties regulations (see 1906200036) and will probably narrow their scope, said Jason Rhoades, a KPMG sanctions lawyer and former OFAC compliance officer. The regulations, which were updated last year, expanded the scope of transactions that must be reported to OFAC, including for non-financial institutions. The update was met with widespread criticism from industry, which called them confusing, unclear and overly burdensome (see 1907290015 and 1907230054). OFAC issued a set of frequently asked questions in February to try to clarify the new requirements (see 2002200057).

The Bureau of Industry and Security postponed the effective date for certain filing requirements outlined in an April rule on military-related exports (see 2004270027). The agency said this week it will not require Electronic Export Information filings for some exports captured under the rule until Sept. 27 -- a three-month extension from the original June 29 effective date. Other EEI filing requirements described under the rule take effect June 29.

U.S. and Chinese trade tensions could last for years and require a more clear, consistent approach from the U.S., experts told the U.S.-China Economic and Security Review Commission June 24. The U.S. should not address competition challenges through decoupling, they said, but should instead invest more heavily in technology research, pursue more involvement at international standards bodies and work with trade partners to counter China’s rise.

Export Compliance Daily is providing readers with some of the top stories for June 15-19 in case you missed them.

One of the nominees for director general of the World Trade Organization, Hamid Mamdouh, told the Washington International Trade Association that the failings of the appellate body are because the WTO has abandoned negotiations. This is the same view held by the U.S., which has brought the issue to a head by killing the appellate body. Mamdouh, a senior counsel at King & Spalding, was speaking during a WITA webinar June 23.

The Committee on Foreign Investment in the U.S. is closely monitoring Chinese investors who are trying to take advantage of struggling U.S. companies, trade lawyers said. CFIUS is also focusing on the semiconductor sector, where Chinese entities are hoping to evade recent U.S. rules that impose more strict license restrictions on sales of semiconductors and other technology to China and Huawei (see 2005150058), the lawyers said.

Less than a week after signing a bill that will sanction Chinese officials for human rights abuses, President Donald Trump said he had held off on the sanctions so as not to interfere with the U.S.-China trade deal, a June 21 Axios report said. The report comes amid a series of U.S. and China steps that have further deteriorated the trade relationship, including threats of U.S. sanctions and moves by China to reduce agricultural purchases.