The U.S. should expand export controls against China and study the country’s efforts to dominate emerging technology sectors, the U.S.-China Economic and Security Review Commission said. In its 2019 annual report, the USCC painted a somewhat grim picture for the prospects of U.S technology competition with China, saying China is committed to maintaining a dominant economic role in trade negotiations and is focused on outpacing the U.S. in the artificial intelligence sector -- a key area of concern for upcoming U.S. export control regimes. To combat this, the commission made several recommendations to Congress to safeguard U.S. technologies, improve foreign market access for U.S. exporters and pre-empt Chinese attempts to undercut U.S. companies and sanctions.
Japan and South Korea will hold a second round of World Trade Organization consultations on Nov. 19, Japan’s Ministry of Economy, Trade and Industry said Nov. 8. The two countries will meet in Geneva to discuss their ongoing trade dispute, which stems from Japan’s July decision to restrict exports of three chemicals used to make high-tech goods such as smartphones and semiconductors (see 1907010020). South Korea followed with its own set of export restrictions in August (see 1908120036). The first WTO meeting took place Oct. 11 (see 1910100043).
Commerce Department Huawei export restrictions forced semiconductor maker Xilinx to remove all remaining Huawei-related “revenue expectations” from its financial outlook for fiscal 2020 ending in March, CEO Victor Peng said on a fiscal Q2 call Oct. 23. “Considering the continued trade restrictions with Huawei and the uncertainty presented to our business, we believe it is prudent” to “de-risk” the Chinese company from the forecast, Peng said.
A California resident was indicted for illegally exporting 11 packages of turtles to Hong Kong, the Justice Department said in an Oct. 23 press release. Keri Zhang Wang allegedly placed the box turtles and map turtles inside socks, which she placed inside shoe boxes “with packing materials.” She placed the shoebox “under bags of snacks and chips for shipping” and did not label the packages as containing turtles, the Justice Department said. The turtles are protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, and Zhang Wang did not have the required permits to export them, the press release said. Zhang Wang was charged with four counts of smuggling goods and four counts of Lacey Act false labeling. She faces a maximum 10-year prison sentence and a $250,000 fine.
South Korea and Japan are still far apart in consultations over their trade dispute and don’t expect the U.S. to meditate negotiations, South Korea said.
Co-chairs of the Department of Homeland Security Information and Communications Technology Supply Chain Risk Management Task Force urged House Homeland Security Committee members to consider enacting new liability protections and incentives to encourage companies and foreign governments to share information on threats to the supply chain. Committee leaders appeared interested, during an Oct. 16 hearing, in further protections. They invoked perceived supply-chain threats posed by Kaspersky Lab and Chinese telecom equipment manufacturers Huawei and ZTE.
Although Trump administration officials have expressed willingness to mediate the Japan-South Korea trade dispute, trade experts suggested the administration -- and members of Congress -- are not currently focused on intervening.
The U.S. government lacks technical knowledge and a single, leading voice in its approach to technology competition with China, said Adam Segal, the emerging technologies chair at the Council on Foreign Relations. Segal, speaking during an Oct. 4 Brookings Institution panel about the U.S.-China technology relationship, said U.S. industries are concerned that technology policies, such as certain export controls, are being made without a full understanding of their impacts.
Japan said it allowed exports of hydrogen fluoride to South Korea in August, disputing what it called “incorrect” media reports that said Japan stopped all such the exports, according to a Sept. 27 press release from the Ministry of Economy, Trade and Industry. Japan said “certain amounts of controlled hydrogen fluoride” have been released for export to South Korea, and that it will grant export licenses for fluorinated polyimide, resists and hydrogen fluoride if the exports of those items of concern are “verified as legitimate civil transactions.” In July, Japan added restrictions on exports to South Korea of the three chemicals commonly used in smart chips and other high tech goods (see 1907010020).
The World Trade Organization on Sept. 16 released South Korea’s most recent complaint against Japan in which it requests consultations over the two sides’ trade dispute. The document, dated Sept. 11, outlines South Korea’s issues with Japan’s export restrictions on three chemicals used in the manufacturing of smartphones, TV displays and semiconductors. South Korea said Japan’s restrictions were politically motivated and “unrelated to any legitimate export control considerations.” South Korea also said Japan’s additional moves, including its decision to remove South Korea from a list of trusted trading partners, has caused “unnecessary delay” and “increased scrutiny” for products destined for South Korea. South Korea said it hopes to find a “mutually acceptable date for consultations” with Japan to address the issues.