BIS Should Add to Entity List, Better Restrict Tech Exports to China, Lawmakers Say
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.
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“Many military firms do not even appear to be on the BIS military end-user list or the Entity List,” Rep. Mark Green, R-Tenn., said during a July 19 House Foreign Affairs Committee hearing, adding that BIS only restricts a “fragment” of technology exports to China. “BIS seems to be basically ignoring what's going on.”
Rep. Claudia Tenney, R-N.Y., said that more than half of the companies on the Defense Department’s Chinese military companies list (see 2106280023) aren’t on the Entity List but should be. “Just a quick search of the internet shows two pages of Chinese entities that probably should be looked into that are not on that list,” Tenney said.
BIS is working to harmonize the Entity List with lists maintained by other agencies, including the Defense Department, Estevez said during the hearing. Although BIS is working with DOD officials so “that we can build off their list and on to our list,” he also said the agency must be cautious before adding more companies because it needs to ensure it can prove the designation in a federal court.
“The Department of Defense has had people around their list sue and win,” Estevez said. “I do not intend to have that happen on the Entity List, because I want to sustain the Entity List as the powerful tool that it is.”
Several lawmakers said the harmonization is long overdue, as are more strict export control policies toward China. Rep. Michael McCaul, R-Texas, a frequent critic of BIS and U.S. export control policy (see 2204150016 and 2205250057), said dual-use technology exports to China “receive little to no scrutiny.”
He pointed to BIS data received by his office last year that showed the agency approved more than a combined $100 billion worth of export licenses for shipments to Huawei and SMIC (see 2110210073). BIS at the time said the statistics didn’t reflect pending applications set to be denied, which would have significantly lowered the percentage of approved applications for both companies (see 2110220037).
“It's clear the current policy and strategies are not working,” McCaul said. “BIS can no longer look the other way or rubber-stamp licenses when companies are transferring sensitive technologies to” China.
McCaul also criticized the administration for not doing more to penalize the Chinese companies added to the Entity List last month for helping to supply Russia’s military in violation of U.S. export controls (see 2206280056). “It only used a standard entity listing for such a serious violation, and there was no denial order, no foreign direct product rule and no sanctions,” McCaul said. “In short, BIS did as little as possible.” The State Department has declined to say whether the U.S. will impose financial sanctions against the companies (see 2207010058).
Estevez has said BIS is reviewing some of its export control policies toward China, including the types of semiconductors and chipmaking equipment that can be exported (see 2207150023). That review is still ongoing, said Estevez, who was confirmed by the Senate in April (see 2204010006).
"Frankly, I'm three months in the job," Estevez said. "I came in and said, what are we doing here?" While BIS is "very concerned over what can go into China," he also said he's “pretty confident” the agency is already capturing and reviewing many of the most sensitive, high-tech microelectronics shipments.
“I need to make sure that we have the restrictions on the highest-end tooling,” Estevez said. “We're working to review our policies around some of the tools that are going on now and stopping them if we believe they will help the Chinese increase their capacity.”
Estevez said he is also reviewing BIS practices to make sure it’s capturing companies that change their name to avoid Entity List restrictions. “I want to make sure that if we see that,” he said, BIS can “take appropriate action.”