The Bureau of Industry and Security's recently issued advanced chip guidance appears to raise compliance expectations for industry, especially for banks and forwarders that may be indirectly or inadvertently violating export controls on China, lawyers said.
Commerce Secretary Howard Lutnick confirmed June 5 that the Commerce Department is reviewing a Biden administration interim final rule that increased restrictions on firearms exports.
The recent departure of many career employees at the Bureau of Industry and Security and other government agencies hasn’t necessarily translated into less export control and sanctions enforcement activity, lawyers said last week.
The Bureau of Industry and Security is suspending and revoking existing export licenses for a range of items destined to China, including chip-related design software and civil aviation items, two people familiar with the matter said.
Although the Trump administration relaxed a range of sanctions against Syria last week, existing export controls still present risks for people and companies carrying out transactions with the country, law firms said this week.
Although adopting a 50% rule for the Entity List could allow U.S. export controls to capture more bad actors, it could also cause unintended business consequences and may make it more challenging for the Bureau of Industry and Security to add companies to the list, said Matthew Axelrod, the agency’s former export enforcement chief.
Beijing this week threatened to penalize any person or company that complies with new export control guidance from the Bureau of Industry and Security about advanced Huawei chips, saying the guidance constitutes “discriminatory restrictive measures against Chinese companies.”
Although the Bureau of Industry and Security announced last week that it won’t be enforcing the Biden-era AI diffusion rule, companies should reassess their due diligence practices to prepare for a replacement rule and make sure they’re complying with existing chip controls, law firms said, which they expect the Trump administration to aggressively enforce.
The Bureau of Industry and Security quietly revised its announcement of new guidance on Huawei Ascend chips to remove language that said using those chips “anywhere in the world” is a violation of U.S. export controls.
The Bureau of Industry and Security officially announced this week that it plans to rescind the Biden administration’s AI diffusion export control rule and issue a “replacement rule in the future.” The agency also issued new guidance about how using Huawei Ascend chips and other Chinese chips likely violates U.S. export controls, published recommendations for companies to protect their supply chains against “diversion tactics,” and outlined the types of activities involving AI chips and AI models that may trigger a license requirement.