The Bureau of Industry and Security published a set of frequently asked questions to provide industry guidance on its summer update to the foreign direct product rule, which increased restrictions on certain foreign-made items (see 2009170026). The guidance, issued this week, features FAQs that cover how the restrictions apply to companies and products, and how they impact prior exports, manufacturing plants, supply chains, prior licenses and more. BIS also outlined how the restrictions may apply to various scenarios faced by industry, including licensing responsibilities and due diligence requirements.
The Bureau of Industry and Security added 77 entities and people to the Entity List, including China’s top chipmaker, to further prevent China and other countries from acquiring sensitive U.S. technologies, the agency said Dec. 18. Along with China’s Semiconductor Manufacturing International Corporation, the Entity List additions include China-based DJI, one of the world’s largest drone makers, and companies in Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia and the United Arab Emirates.
As the U.S. increasingly relies on sanctions, export controls and trade restrictions as foreign policy tools, it should expect China to follow its example, former U.S. government officials said. While other countries are beginning to mimic U.S. trade strategies, the policies are most notably taking hold in China, the officials said, which recently rolled out an export control regime (see 2010190033), has increased threats of sanctions for foreign interference in Hong Kong and Taiwan (see 2012100022 and 2010260017) and issued regulations for its unreliable entity list (see 2009210017).
The Bureau of Industry and Security will add China’s Semiconductor Manufacturing International Company and more than 60 companies to the Entity List for actions “deemed contrary” to U.S. national security. BIS said SMIC, China’s top chipmaker, has concerning ties to China’s government and risks transferring imported U.S. technology to the country’s military. Other companies will be added to the Entity List for human rights abuses, for supporting China’s militarization of the South China Sea, for diverting U.S. products to China’s military and for the theft of U.S. trade secrets. BIS did not immediately say when the restrictions will take effect.
The Commerce Department published its fall 2020 regulatory agenda for the Bureau of Industry and Security, including new mentions of rules to amend Hong Kong under the Export Administration Regulations, releases of controlled technologies to standards setting bodies and a range of new technology controls.
Leaders of a congressional commission on China asked Intel and Nvidia to explain whether they knew their technology exports to China would help the government conduct mass surveillance of Muslim minorities and eventually lead to human rights violations. In Dec. 4 letters, Rep. James McGovern, D-Mass., and Sen. Marco Rubio, R-Fla., chair and co-chair, respectively, of the Congressional-Executive Commission on China, said they are concerned that sales of the companies’ computer chips are helping to power a Chinese supercomputer being used to suppress minorities in the Xinjiang region, The New York Times reported Nov. 22.
As China continues to gain ground in technology competition with the U.S., Congress should pursue more investment and visa restrictions to prevent China from accessing sensitive U.S. technologies, the U.S.-China Economic and Security Review Commission said in a Dec. 1 report. Commissioners said China’s access to U.S. technologies is helping it innovate and export surveillance tools and other advanced technologies globally.
The Bureau of Industry and Security expects to roll out a more multilateral approach to export controls under the Joe Biden administration but does not expect any major changes to its China policies or Entity List decisions, a senior Commerce Department official said. The official pointed to the strong bipartisan support among lawmakers for Chinese sanctions and export controls, which likely will continue under a new administration. “I don't see that going away. I think the Hill is engaged. I think at least from what President-elect Biden has announced with his Cabinet, these are folks who are familiar with the national security issues,” the official, who declined to be named in order to speak candidly about BIS, said in an interview last week. “So I don't expect a lot of substantive change.”
Cordell Hull, who has led the Bureau of Industry and Security for the last year (see 1911180040), will resign next month ahead of the incoming Joe Biden administration. His last day will be Dec. 4, a BIS spokesperson said. “I am proud of what we have achieved on important issues of national security at BIS and I have decided to look for the next challenge in the private sector,” Hull said in a Nov. 19 statement. “I am grateful to Secretary [Wilbur] Ross for giving me this opportunity to serve.”
When the Joe Biden administration takes office, it will likely continue the Commerce Department's emphasis on export controls and entity listings to stay ahead in technology competition with China, said Eric Sayers, an Asia-Pacific policy expert with the Center for a New American Security. Although both tools have been heavily used by the Trump administration, Biden might do more to convince allies to also impose those restrictions, especially as the U.S. fights to maintain commercial leadership in the semiconductor sector, Sayers said.