If Republicans retake control of the House after the midterm elections in November, the chamber’s Foreign Affairs Committee will initiate a review of the Bureau of Industry and Security and its export control procedures, said Rep. Michael McCaul, R-Texas. McCaul said the review would examine BIS’ progress in restricting emerging and foundational technologies under the Export Control Reform Act and study whether U.S. export control authority should be moved to a different agency.
Exports to China
Although the current congressional proposal for a new outbound investment screening mechanism faces some hurdles, it could be incorporated into the upcoming National Defense Authorization Act. Sen. Pat Toomey, R-Pa., said he has concerns with some of the provisions but hopes to work with bill’s sponsors to include some type of outbound screening measure in the fiscal year 2024 defense spending bill, which could be passed this year.
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Although President Joe Biden’s recent executive order on foreign direct investment isn’t expected to significantly change review outcomes, it sends a clear signal to industry about the U.S.’s FDI priorities and could help companies better understand whether they should submit a voluntary filing, law firms said this month. One firm said the Committee on Foreign Investment in the U.S. may use the order as further reason to reach out to businesses about non-notified transactions.
A Bureau of Industry and Security official last week confirmed the agency sent letters to specific companies restricting their ability to export certain artificial intelligence-related chips to China, and said more restrictions may be coming. In the agency’s first public comments on the matter, Thea Kendler, BIS’s assistant secretary for export administration, said the agency hopes the letters help inform industry about the types of exports the agency is scrutinizing.
While the Biden administration hasn't yet decided whether to establish an outbound investment screening regime, officials believe more investment screening could help fill certain gaps in semiconductor-related export controls, said Peter Harrell, a National Security Council official. Harrell said an outbound regime also could provide the U.S. with more information about global semiconductor investments, which could be useful as the U.S. seeks to stop China from acquiring advanced chip equipment.
A new Commerce Department rule aimed at making it easier for certain U.S. technologies to be shared at standards-setting bodies will “undermine” U.S. efforts to protect those sensitive technologies from being acquired by China, Rep. Michael McCaul, R-Texas, said. Although the rule, issued last week (see 2209080038), sought to allow the participation of U.S. companies in international standards bodies that have members on the Entity List, McCaul said it also undermines U.S. export restrictions. “Companies that are entity-listed are threats to national security, and we need real safeguards to ensure sensitive technology is not transferred to these bad actors,” said McCaul, the top Republican on the House Foreign Affairs Committee.
The Commerce Department is planning to expand export controls over certain semiconductor items destined to China (see 2208010011) next month, including those used for artificial intelligence and chipmaking tools, Reuters reported Sept. 11. Commerce already outlined some new restrictions in letters earlier this year to KLA, Lam Research and Applied Materials, Reuters said, which include new export licensing requirements on chipmaking equipment to Chinese factories capable of making chips more advanced than 14 nanometers. The new rules would also codify restrictions outlined by Commerce in letters to NVIDIA and AMD last month (see 2209010059), the report said.
New multilateral export controls on certain electronic computer-aided design (ECAD) software won’t have an immediate effect on semiconductor companies and are unlikely to cause wide concern in the short term, industry officials said. The controls, announced by the Bureau of Industry and Security Aug. 15 (see 2208120038) and effective in October, seek to restrict an emerging technology that may not be commercially available for at least two years, although officials say it remains unclear what exactly the restrictions will cover.
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