A State Department official this week denied allegations that the agency has held back sanctions and export controls in an effort to limit damage to the U.S.-China relationship, saying the Biden administration continues to enforce a range of human rights-related trade restrictions against Beijing. But the official also said the administration hasn’t yet imposed mandatory sanctions under the Uyghur Human Rights Policy Act of 2020 and was accused by at least one lawmaker of failing to comply with a congressional subpoena that sought information on sanctions against China.
Exports to China
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The Biden administration’s potential outbound investment screening program could feature a combination of notification requirements and, in some cases, outright prohibitions on American investments in China, Treasury Secretary Janet Yellen said this week. She also offered the administration’s strongest comments to date in support of a new investment screening regime, saying there’s a “good chance” the U.S. issues the rules.
The U.S. may need to address export control loopholes to better prevent China and others from acquiring sensitive technologies, Sen. Mark Warner, D-Va., said, but he also cautioned the U.S. against imposing controls that are too broad and said they need to be coordinated with allies.
Rep. Michael McCaul, the top Republican on the House Foreign Affairs Committee, subpoenaed the State Department for “key documents” relating to the agency’s reported “obstruction of the use of national security tools” against China, his office said in a July 12 press release. McCaul signed the subpoena about two months after he originally requested the documents from the State Department, citing news reports that the agency held back sanctions and export controls against China in an effort to limit damage to the U.S.-China relationship (see 2305240041).
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.
Treasury Secretary Janet Yellen said no decision has been made yet on whether there will be an executive order limiting outbound investment in China. "It's still something being discussed in the administration and the timing of it is not yet certain," she said on "Face the Nation" from China, before she returned from a diplomatic visit there. "But I wanted to explain to my Chinese counterparts that if we go forward with this executive order, that we will do so in a transparent and narrowly targeted way." She said what's being considered is only for "very narrow high technology areas," and should not significantly impact overall investment in China.
Treasury Secretary Janet Yellen said she is “concerned” about China’s new export controls on critical minerals used to produce semiconductors (see 2307060053), saying the U.S. is still assessing the impact but that they “remind us of the importance of building resilient and diversified supply chains.” Speaking during a July 7 roundtable with American businesses in China, Yellen said the administration is working to make sure U.S. companies are competing with China on a “level playing field.”
The U.S. “firmly” opposes export controls by China on certain metals used to produce semiconductors, a Commerce Department spokesperson said July 6. “These actions underscore the need to diversify supply chains,” the person said in an email. “The United States will engage with our allies and partners to address this and to build resilience in critical supply chains.”
As the U.S. continues to expand its chip export controls, South Korean and other multinational firms with semiconductor investments in China “face an uncertain future,” the Peterson Institute for International Economics said in a report this week. The report, authored by PIIE senior fellow Martin Chorzempa, outlines both the “collateral damage and new opportunities” for South Korean companies as a result of the Commerce Department's Oct. 7 controls (see 2210070049), saying Korean firms “have been some of the most impacted non-Chinese firms due to their large memory chip production facilities in China.” The report also recommends the U.S. do more to “reduce uncertainty” for allies operating in the region.