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Exports to China
The Bureau of Industry and Security should harmonize the Entity List with other lists across various agencies to better capture foreign companies that should be subject to strict trade restrictions, lawmakers told BIS Undersecretary Alan Estevez this week. Others said BIS has failed to blacklist Chinese military companies that deserve placement on the Entity List, allowing the Chinese government to continue to buy sensitive American technologies.
The Bureau of Industry and Security is conducting a review of the types of semiconductors and chipmaking equipment that can be exported to China to determine whether it needs to tighten those restrictions, BIS Undersecretary Alan Estevez said, speaking during a Senate Banking Committee hearing last week. He said the agency is considering tightening the “cut-off point” of semiconductors that are subject to strict export licensing requirements.
The EU is ramping up efforts to monitor Russia-related export control evasion and hopes to soon make more progress on sanctions enforcement within the U.S.-EU Trade and Technology Council, said Sabine Weyand, the European Commission’s director general for trade, speaking during a July 13 event hosted by the Center for Strategic and International Studies. She expects EU enforcement to soon pick up because many of the bloc’s wind-down periods for the restrictions are ending.
Although Chinese companies with little international exposure may decide to violate export restrictions against Russia, most of the larger companies likely won’t take the risk, experts said. So far, most Chinese companies are complying with the sanctions and only continuing to buy Russian oil and gas, the experts said, despite strong opposition to Western sanctions by the Chinese government.
The U.S. should closely monitor Chinese attempts to steal sensitive information and technology from universities, but not in a way that will sacrifice open academic exchanges, said Christine Fox, a former Defense Department official, speaking during a July 7 Brookings Institution event. She said the threat of trade theft from China is real, but the number of foreign Chinese students and researchers who try to steal technology is just a small percentage of the total.
Although China hasn’t yet implemented its anti-foreign-sanctions law in Hong Kong, it may only be a matter of time, said Jessica Bartlett, the global head of financial crime legal at Barclays, speaking during a July 6 event hosted by the Center for Strategic and International Studies. She said multinational companies are continuing to face a “challenging” sanctions compliance environment in Hong Kong, which could grow more difficult depending on how the government decides whether and if to penalize firms for complying with foreign sanctions.
The State Department declined to say whether the U.S. will impose financial sanctions against the Chinese companies accused by the Commerce Department last week of helping Russia evade export controls. Rep. Michael McCaul, R-Texas, last week called on the agency to impose the sanctions (see 2206300007) and go beyond Commerce’s move of adding them to the Entity List (see 2206280056).
The U.S. didn’t do enough to penalize the Chinese companies accused by the Commerce Department this week of helping Russia evade export controls (see 2206280056), the top Republican on the House Foreign Affairs Committee said. Rep. Michael McCaul, R-Texas, said the U.S should also have placed financial sanctions on the companies, adding that State Department Deputy Secretary Wendy Sherman told the committee in April that China would face “consequences” if its companies provided support to Russia.
Although the U.S. and allies are discussing creating a new multilateral export control framework, it’s too soon to tell whether those talks will result in a formal regime, said Alan Estevez, undersecretary of the Bureau of Industry and Security. He said the group of countries has “momentum” toward a new framework, but they haven’t yet agreed to establish a formal organization to replace some of the existing multilateral regimes, such as the Wassenaar Arrangement.