The Commerce Department's Bureau of Industry and Security will officially add 33 companies and government agencies to the Entity List on June 5 for their roles in aiding proliferation activities and human rights abuses in China’s Xinjiang province, BIS said in two Federal Register notices. The notices formalize the additions, which were announced in May (see 2005220058).
The Commerce Department's Bureau of Industry and Security corrected the formatting for an April final rule that expanded licensing requirements for certain military-related exports to China, Russia and Venezuela, according to a notice. The corrected format “publishes the full text of each revised Export Control Classification Number on the Commerce Control List,” the notice said. BIS issued the correction because the agency “felt it was easier for compliance purposes,” said Hillary Hess, BIS’s regulatory policy director, speaking during a June 2 Regulations and Procedures Technical Advisory Committee meeting. “It does not change the substance of the rule at all.”
The Commerce Department again renewed an export denial order for Mahan Airways because the airline continues to violate the order and the Export Administration Regulations, according to a May 29 notice. The Iranian airline has been on the banned list since 2008, and the notice renewed the ban for 180 days, until about Dec. 2, 2020, Commerce said. Since last renewing Mahan’s denial order in December (see 1912050032), the U.S. sanctioned a China-based logistics company for operating as a sales agent for Mahan Airways (see 2005190020 and 2005200027).
China reportedly ordered its state-controlled companies to stop buying certain U.S. agricultural products after the U.S. certified last week that Hong Kong no longer qualifies for special trade treatment. The decision also came after President Donald Trump said the U.S. will sanction Chinese officials, increase export controls on dual-use technologies, and end the special customs territory in response to Beijing’s so-called national security law (see 2005290047), which the State Department said threatens Hong Kong’s autonomy (see 2005270026).
The Treasury Department issued a proposed rule to modify mandatory declaration requirements for certain transactions involving critical technologies. Under the rule, transactions would require a declaration if the critical technology would normally be subject to a U.S. export license. This would be a change from certain declaration requirements for the Committee on Foreign Investment in the U.S. outlined under a 2018 pilot program, which based those decisions on whether the transactions met criteria established by the North American Industry Classification System.
The Office of Information and Regulatory Affairs began an interagency review for a final rule from the Commerce Department that will implement certain export control decisions from the 2020 Australia Group meeting. The rule, received by OIRA May 5, will add certain “rigid-walled, single-use cultivation chambers and precursor chemicals” to the Commerce Control List. The rule would also amend the Export Administration Regulations by revising biological and chemical controls on the CCL.
The Commerce Department amended its direct product rule, increasing restrictions on foreign-made chips exported to, and made by, Huawei and its affiliates, the agency said in a May 15 interim final rule. Commerce also said it does not expect to issue another temporary general license extension for the Chinese technology company after its latest 90-day renewal expires Aug. 13.
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 COVID-19 pandemic is causing “significant disruption” for the Wassenaar Arrangement, leading to the cancelation of at least one meeting and creating uncertainty about whether the group can remotely vote on new export controls, two Commerce Department officials said. Wassenaar was forced to cancel its April Experts Group meeting -- which normally addresses issues related to its lists of controlled items -- and is unsure if global travel restrictions will force cancellations of future meetings in June and its annual plenary session in December.
The Commerce Department amended the Export Administration Regulations to expand licensing requirements for exports, re-exports and transfers of items intended for military uses in China, Russia and Venezuela, according to a notice. The rule expands the licensing requirements for exports to China to include military end-users as well as military end-uses, broadens the list of items subject to the licensing requirement and review policy, and expands the definition for military end-use. The rule also “creates a new reason for control” and review policy for certain exports to the three countries, and added new Electronic Export Information filing requirements.