The Commerce Department should use the Entity List and potentially its anti-boycott regulations to respond to Beijning’s restrictions on U.S. chip company Micron (see 2305220053 and 2305240002), Reps. Michael McCaul, R-Texas, and Mike Gallagher, R-Wis., said in a June 1 letter to Commerce Secretary Gina Raimondo. The lawmakers said it’s time for the U.S. and its partners to “firmly push back” on China’s “economic coercion, adding that it "can no longer sit on the sidelines as the [People’s Republic of China] selectively targets U.S. and allied entities with the goal of intimidating our businesses and harming our economic security.”
Exports to China
Lawmakers this week previewed two bills that could expand U.S. export controls, including one that could require the U.S. to impose new license requirements on certain data exports and another that would require the administration to create a tool to counter economic coercion.
The Bureau of Industry and Security doesn't have a draft rule in place to increase export licensing requirements for Huawei despite rumors this year that new restrictions for the Chinese technology company were imminent, said Thea Kendler, BIS assistant secretary for export administration. Kendler also said the agency has seen a sharp decline in China-related license applications, is spending more time reviewing those applications and is prioritizing reviews of artificial intelligence items, quantum computing technology and biotechnology for new export controls.
The chair of the House Financial Services Committee is asking the Treasury Department for more information about potential outbound investment restrictions in China, including what types of investments in specific technologies would be targeted, whether the Biden administration plans to establish the regime through a national emergency and if the restrictions would be more effective than traditional trade restrictions. Rep. Patrick McHenry, R-N.C., is concerned outbound investment restrictions “would prove futile,” the lawmaker’s news release said, and would “further serve” China’s goal of “limiting the influence of Western firms in Chinese markets.”
The Bureau of Industry and Security has had “more than enough time” to issue a final version of its October China chip export controls, which need to be “strengthened” and “vigorously enforced” to maintain American semiconductor leadership, Sen. Marco Rubio, R-Fla., said in a May 30 letter to Commerce Secretary Gina Raimondo. Rubio asked the agency when it plans to issue the final rule, what changes will be made, whether BIS had “delayed” finalizing the rule and more.
The U.S. should convince the U.N. to harmonize its sanctions lists with U.S. trade blacklists, a House Financial Services subcommittee heard during a hearing last week. Aligning the lists could require the World Bank and other international organizations to adhere to U.S. sanctions, one witness said, and help the U.S. extend the reach of its restrictions against China.
U.S. exports of semiconductors to China fell by about $2.9 billion in 2022, “wiping out” growth the industry saw the year before, the U.S.-China Business Council said in a report this week. The decline was partly due to the Biden administration’s sweeping chip controls released in October (see 2210070049), the report said, adding that the “more frequent use of export controls over the last few years has led Chinese customers to deprioritize American products when there are viable domestic and third-country suppliers.”
The Commerce Department should amend several portions of its proposed guardrails on recipients of Chips Act funding, including measures that could prevent the U.S. chip industry from participating in international standards bodies or inhibit “routine” business activities, trade groups and technology companies said in comments released this week. Some said Commerce should also limit which companies qualify as “foreign entities of concern” and revise the rule’s proposed definition for “legacy semiconductor” to more closely align with export controls.
The State Department needs to answer for media reports that it “held back” human rights sanctions and export controls on China following the U.S. discovery of a Chinese reconnaissance balloon in American airspace earlier this year (see 2302100072), said Rep. Michael McCaul of Texas. McCaul, the top Republican on the House Foreign Affairs Committee, cited a recent Reuters report that said the State Department was trying to “limit damage to the U.S.-China relationship” and pushed back on new trade restrictions.
The Chinese Ministry of Commerce said Japan's export control measures on 23 types of semiconductor manufacturing technology are an abuse of export control measures and departure from international trade rules, according to an unofficial translation. The ministry on May 23 urged Japan to immediately drop the controls, which it says are hindering the normal development of each country's semiconductor industry. Japan imposed the restrictions in late March, aligning with elements of U.S. restrictions on China (see 2303310031). The controls cover six categories of equipment used in chip manufacturing, including cleaning, deposition, lithography and etching.