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.
Exports to China
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One panelist said it will take 20 years to know who are the winners and losers of today's tariffs and export restrictions. Another panelist said U.S. factory workers making washing machines and solar panels are clearly winning from the safeguards launched nearly two years ago, as are Vietnam and Mexico. Another panelist said Vietnam and Thailand, and Mexico to a much lesser degree. As moderator Lucas Queiroz Piers said, “It is a confusing moment." The Alston & Bird legal consultant was coordinating a panel called "U.S. Sanctions and Trade War: Winners and Losers," at an American University Washington School of Law International Trade Symposium on Nov. 5.
The Commerce Department plans to release proposed export controls on emerging technologies within the “next few weeks” and an advance notice of proposed rulemaking on foundational technologies before the end of the year, a top Commerce official said. Matt Borman, the Commerce deputy assistant secretary for export administration, suggested Commerce has been eager to release both controls to ease concerns from U.S. trade groups and companies, which have warned the agency against overly broad, unilateral controls.
It is “impossible” for U.S. exporters to fully comply with Commerce Department restrictions on transfers within China because Chinese courts do not enforce the restrictions, according to an Oct. 13 post by Harris Bricken.
Two bills that could affect trade with Hong Kong and two resolutions criticizing Hong Kong and China passed the House by voice vote on Oct. 15. H.R. 4270, the PROTECT Hong Kong Act, would ban the export of tear gas, rubber bullets and pepper spray to Hong Kong, so that U.S. companies aren't complicit with crackdowns on protestors (see 1909190040). The Hong Kong Human Rights and Democracy Act, H.R. 3289, requires the State Department to affirm that Hong Kong still deserves its special status in customs and export controls because the one country, two systems agreement for China and Hong Kong is still in force. That bill would also sanction people involved in human rights abuses and the suppression of “basic freedoms” in China and Hong Kong, and would have an annual evaluation of Hong Kong's export control compliance.
President Donald Trump announced a "very substantial phase 1" deal in the Oval Office Oct. 11, saying the Chinese and American negotiators came to a deal on intellectual property, financial services and agricultural sales. The president said China will buy as much as $40 billion to $50 billion worth of American commodities. He also said good progress had been made on issues around technology transfer from American companies to Chinese partners.
The Commerce Department's Bureau of Industry and Security added 28 entities to its Entity List for their involvement in human rights violations of China’s Uighur population, BIS said Oct. 7. The entities include Xinjiang Uighur Autonomous Region People’s Government Public Security Bureau, 18 of its subsidiaries and eight China-based technology and science companies, including Hikvision, a major supplier of video surveillance products. The announcement takes effect Oct. 9.
U.S. exporters say they are increasingly losing market share in China to European and Japanese companies as the trade war drags on, panelists said during a discussion at a Center for Strategic and International Studies event on Sept. 25. Some U.S. companies are also losing out on Chinese license approvals as foreign competitors get to skip the line, one trade lawyer said.
China’s Foreign Ministry criticized the passage of a bill in a House committee that could change Hong Kong’s special status in customs and export controls. The bill, the Hong Kong Human Rights and Democracy Act (see 1909250053), would also require the Trump administration to assess whether Hong Kong is “adequately” enforcing U.S. export control and sanctions regulations.