The U.S. and China saw an uptick in trade restrictions during the first few months of 2021, and companies should expect more compliance challenges as they continue to contend with a variety of export controls and sanctions issues from both countries, law firms said.
The U.S. placement of seven Chinese supercomputing entities on the entity list (see 2104080011) is an attempt to “unscrupulously and maliciously suppress Chinese high-tech companies,” a Foreign Ministry spokesperson said April 9 during a regular press conference, according to a transcript provided. The spokesperson decried the placement as driven by U.S. “desire to maintain” its scientific edge over China and an abuse of the “national security concept.” Despite these punitive measures to development, China said, it has become a tech innovator in the field of supercomputing due to its “independent innovation.” The spokesperson said the U.S. measures will only make China more determined to innovate in this field. The comments were in response to a question from a Bloomberg reporter, according to the transcript.
A brief sketch of President Joe Biden's budget priorities, released April 9, proposes increasing Commerce Department funding by 28%, or $2.5 billion. In a bullet list of where extra funding would go, without line-item details, the administration said it would like to guarantee “Commerce has additional staff and resources to analyze export control and Entity List proposals, enforce related actions, and implement executive actions related to export controls and secure telecommunications.”
The Bureau of Industry and Security added seven Chinese entities to the Entity List for procuring U.S.-origin items in a way that harms U.S. national security, BIS said in an April 8 final rule. The seven “supercomputing entities” also support China’s military and help it develop modern weapons, the Commerce Department said.
Commerce Secretary Gina Raimondo suggested her agency has no plans to remove Huawei from the Entity List and said she will aggressively use trade tools to compete with China. But she also said she will prioritize efforts to invest in U.S. technology industries over imposing more export restrictions. “My broad view is what we do on offense is more important than what we do on defense,” Raimondo told reporters April 7. “To compete in the long run with China, we need to rebuild America in all of the ways we're talking about.”
The Bureau of Industry and Security added seven Chinese “supercomputing” entities to the Entity List for procuring U.S.-origin items in a way that harms U.S. national security and supports China’s military, BIS said in a final rule that takes effect today. The rule imposes a license requirement for all items subject to the Export Administration Regulations, and BIS will impose a license review policy of presumption of denial. No license exceptions will be available.
The Bureau of Industry and Security last week added a new section to its website to consolidate guidance and rulemaking documents related to human rights. The section includes links to recent Entity List additions related to human rights violations, and advisories for companies operating in China’s Xinjiang region (see 2007010040) and involved in exporting surveillance equipment (see 2009300056).
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.