The U.S. should be mindful of not harming the U.S. technology industry as it seeks to impose export restrictions on semiconductor shipments to China, said James Andrew Lewis, director of the technology policy program at the Center for Strategic and International Studies. Those restrictions could cut the U.S. off from consumers, leading foreign companies to design U.S. components out of their products and build alternate supply sources, Lewis said in a May 5 CSIS post.
The Commerce Department’s new export restrictions on military end-users may significantly raise due diligence requirements for industry, leading to licensing delays and a burdensome vetting process for technology companies, law firms said. If Commerce's Bureau of Industry and Security does not clarify the scope of the rule to limit its impact, the rules are likely to damage the semiconductor, telecommunications and aircraft sectors, the law firms said. “This could have a detrimental impact on a broad swath of U.S. industry,” Baker McKenzie said in an April 30 blog post. “A universe of transactions triggering license requirements could significantly increase.”
The Commerce Department Bureau of Industry and Security is still planning to hold its annual conference in Washington, D.C., this summer, and officially opened registration for the event on April 30. BIS said it is “closely monitoring” COVID-19 updates and will notify industry of any changes to the June 29-July 1 conference. The conference's agenda includes sessions on license exceptions, semiconductors, end-use checks, updates on export controls, export enforcement and more.
The Commerce Department has drafted a regulation that will address the ability of U.S. companies to participate in 5G standards setting bodies involving Huawei, a top Commerce official said. The rule is still being discussed within Commerce and has not yet been cleared for interagency review, Matt Borman, Commerce’s deputy assistant secretary for export administration, said during an April 29 Information Systems Technical Advisory Committee meeting.
The Council on Foreign Relations said that U.S., European and Japanese pushback over Made in China 2025, at least the part on high performance medical devices, may ebb after the coronavirus pandemic has passed -- because other countries will want to implement their own versions. “If any country knows a little bit about reducing industrial dependence on the rest of the world through conscious industrial choices, that would be China,” said Brad Stetser, a CFR senior fellow for international economics, during a webinar April 16. He said China is displacing imported semiconductors, but has been less successful in displacing imported aircraft.
The U.S. should introduce support measures for U.S. technology industries that are “too critical to fail,” especially those competing for market share with China, the Information Technology and Innovation Foundation said in an April 13 report. As the Commerce Department seeks to restrict sales of emerging technologies to counter Chinese technology theft (see 2004010007), Congress should task the administration with expanding funding for research in those key fields -- including robotics, artificial intelligence and semiconductors -- and target it to “maximize commercialization” of the technologies in the United States. Congress should also support an “industrial investment bank” to increase advanced production in the U.S. and “encourage” the relocation of critical technology production from China to the U.S., the ITIF said.
Technology and semiconductor trade groups are objecting to increased export restrictions under consideration by the Trump administration, saying the controls could lead to industry uncertainty with significant impacts on semiconductor companies. In an April 6 letter to Commerce Secretary Wilbur Ross, the groups urged the administration to request industry input before finalizing the rule, which reportedly includes three measures to tighten restrictions on China’s ability to obtain advanced U.S. technology (see 2004020012).
Senior Trump administration officials agreed to three measures that will tighten restrictions on China’s ability to obtain advanced U.S. technology, according to an April 1 Reuters report. The measures, agreed to during a March 25 meeting (see 2003260036), will “introduce hurdles” to block Chinese companies from buying U.S. optical materials, radar equipment and semiconductors, the report said. It is unclear if President Donald Trump will sign off on the new rules, Reuters said. It is also unclear how these measures relate to potential changes to the Direct Product Rule and the de minimis rule that administration officials have been considering for months (see 2003050041, 2003130037 and 1912100033).
Senior administration officials agreed to new measures to further restrict foreign exports of chips to Huawei (see 2003050041), according to a March 26 Reuters report. The measures would alter the Foreign Direct Product Rule to restrict foreign sales that contain U.S. chip making equipment, Reuters said, although it remains unclear if President Donald Trump will sign off on the change. Trump has said that he wants to ease restrictions on exports and sell more to China (see 2002180057). The change, which has been discussed within the administration for months (see 1912100033, 1912130052 and 2002050047) has been met with criticism from the semiconductor industry (see 2002180060). The White House and the Commerce Department Bureau of Industry and Security did not comment.
Senate Finance Committee Chairman Sen. Chuck Grassley, R-Iowa, told reporters that the coronavirus outbreak's impact on China's factories has shown policymakers that the U.S. is too dependent on China for imports. “There ought to be more manufacturing in the United States, but that isn't just on pharmaceuticals, but that could be on anything you're having these supply chains are being interfered with,” he said March 11 in his office at the Capitol.