China’s new export control law (see 2010190033 and 2010220024) is expected to significantly impact trade and may include “very broad” catch-all controls, leading to compliance burdens for companies doing business in China, law firms said. Businesses should review their compliance programs to make sure they are prepared for the regulations and to avoid potential Chinese penalties, firms said, which could be severe.
In a think tank effort that seems to assume a change in Washington, though never explicitly says it, the Peterson Institute for International Economics says there should be a return to more conservative use of export controls and entity lists to manage the threat of Chinese access to advanced technology for nefarious purposes. Martin Chorzempa, a PIIE research fellow, discussed a memo he authored to a future Commerce undersecretary for export controls in the next administration, during an Oct. 22 webinar at PIIE.
China said the U.S. has been harassing and falsely arresting Chinese students at airports amid more U.S. export control oversight relating to university research. Nearly 300 students “experienced U.S. harassment and interrogation” from May to September, a Chinese Foreign Ministry spokesperson said Oct. 21. “Their cell phones, laptops and other personal belongings were arbitrarily examined and even seized,” the spokesperson said. “We lodged solemn representations with the U.S. side many times, urging it to correct mistakes and stop discriminatory behaviors against Chinese students.”
Tension in relations on technology issues between the U.S. and China over data security, privacy and telecom gear are making life complicated for some American companies, experts told the Technology Policy Institute Aspen Forum. They generally agreed that aspects of the current U.S. approach may be unique to this administration and may have shortcomings. Neither the White House nor China's embassy in Washington commented Oct. 21, when the TPI video was released as part of its ongoing conference.
China enacted a new export control law to restrict sales of national security-related goods, mirroring steps taken by the U.S. to strengthen restrictions on sensitive exports to China. The law, which was passed by the National People’s Congress Standing Committee Oct. 17 and takes effect Dec. 1, creates an export control regime with control lists, compliance requirements for industry and a list of prohibited importers and end-users, somewhat similar to the U.S.’s Entity List.
The Bureau of Industry and Security removed 40 entries and added 26 others to its Unverified List, the agency said in a final rule released Oct. 8. BIS removed the 40 entries -- located in China, Hong Kong, Indonesia and the United Arab Emirates -- after verifying their “legitimacy and reliability” relating to the end use of items subject to the Export Administration Regulations or because their companies are no longer “involved in U.S. exports.” BIS added the 26 others -- located in Armenia, Finland, Hong Kong, Germany, Pakistan, Turkey, the UAE, Mexico and China -- because it was unable to verify their “bona fides” through an end-use check. The changes take effect Oct. 9.
The administration should increase export controls and sanctions pressure on China, place more scrutiny on Chinese foreign direct investment and push for the modernization of multilateral export regimes, the House’s Republican-led China Task Force said in a Sept. 30 report. It urged the administration to act quickly, saying China and other U.S. “adversaries” are flouting international export control laws and undermining U.S. technology industries.
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CBP and other export enforcement agencies are increasing detentions of shipments to China and Hong Kong due to a series of recently imposed export restrictions announced by the Trump administration, trade lawyer Doug Jacobson said. Jacobson said he has noticed a “dramatic increase” in detentions and seizures, and said he is spending “a lot of time” working with agencies to provide information on clients’ shipments.
China’s so-called unreliable entity list could present compliance challenges for multinational companies and may be used to retaliate against U.S. export controls and sanctions, trade lawyers said. As a result, companies trying to comply with both U.S. and Chinese regulations may have to choose one over the other, risking sanctions from at least one country, law firms said.