The U.S. needs to modernize its approach to export controls and expand disclosure requirements for foreign investment screening to maintain its technology dominance over China, a U.S. national security commission said in a report this week. The commission called current U.S. export controls outdated, urged the Commerce Department to more quickly control emerging and foundational technologies, and said the Committee on Foreign Investment in the U.S. should review a broader set of transactions to protect sensitive technologies.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
The Bureau of Industry and Security recently expanded its commodity classification request process to include the Department of Defense, which is expected to slightly increase processing times and potentially require more thorough submissions of classification requests, an agency official said. The Defense Department began participating in the process late last year as part of BIS’s implementation of the 2018 Export Control Reform Act, said John Varesi, an official in BIS’s Sensors and Aviation Division. ECRA “required that there would be an interagency effort in terms of the commodity classifications,” Varesi said during a March 2 Sensors and Instrumentation Technical Advisory Committee meeting. “This is basically the implementation of that requirement.”
The U.S. sanctioned a host of Russian officials and agencies, will add 14 entities to the Entity List and will increase restrictions on exports of military-related goods to Russia in response to the poisoning and imprisonment of Russian opposition leader Alexei Navalny. The increased export controls will also remove certain license exceptions for shipments to Russia and will impose stricter license review policies for certain sensitive goods, the State Department said March 2.
The State Department is expected to follow through with a rule that would permanently revise the International Traffic in Arms Regulations to allow employees involved in ITAR-related activity to work remotely. The rule, crafted under the Trump administration, was sent for interagency review in December but was withdrawn in January as part of the Biden administration's regulatory freeze on the previous administration’s pending regulations (see 2101210013).
The Bureau of Industry and Security's effort to control emerging and foundational technologies is creating “substantial uncertainty” in the technology sector, Microsoft President Brad Smith told the Senate Armed Services Committee Feb. 23, according to his prepared testimony. Smith urged BIS and the Commerce Department to create a “balanced and coherent framework” to protect U.S. technologies without “isolating” U.S. companies, including from working with China.
The maritime shipping industry is struggling to find a short-term solution to the unprecedented congestion occurring at U.S. ports, which continues to impose large costs on traders and further clog the global supply chain, industry representatives said. Although work is being done by the Federal Maritime Commission and Congress to provide relief, they said many of those efforts will do little to ease port issues in the near future.
The Office of Foreign Assets Control imposed sanctions at a record pace during the Trump administration but saw a significant decline in enforcement actions and relied more heavily on voluntary disclosures as opposed to its own investigative resources, researchers said. Under President Donald Trump, OFAC also shifted its focus away from large financial institutions and instead targeted businesses in trade, manufacturing, travel and technology sectors, a trend that could promote more sanctions compliance across various industries.
The Biden administration plans to coordinate more closely with Congress on U.S. weapons sales than the previous administration did, including on potentially controversial exports to Saudi Arabia and other Gulf states, said Rep. Gregory Meeks, D-N.Y., chairman of the House Foreign Affairs Committee. Closer coordination on weapons sales would be a departure from some sales under the Trump administration, which was criticized by House and Senate Democrats for stonewalling congressional oversight of emergency arms transfers (see 2008110027).
Adewale Adeyemo, President Joe Biden’s nominee for deputy treasury secretary, said he is open to continuing unilateral sanctions against China but stressed that he prefers multilateral sanctions and closer coordination with allies. Adeyemo also said he plans to conduct a “top-to-bottom” review of the agency’s sanctions procedures (see 2101190060) and examine whether the U.S.’s foreign investment screening tools should be strengthened.
The Biden administration has a range of pressing trade- and sanctions-related issues to address in the Middle East, including charting a path to restoring the Iranian nuclear deal, ensuring sanctions are not hindering humanitarian aid and recruiting Middle East allies to counter Chinese technology competition, experts said.