The Bureau of Industry and Security added 60 entities to the Entity List, including 24 entities for helping the Chinese military build artificial islands in the South China Sea. BIS also designated entities in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland and the United Arab Emirates for a range of activities, including illegal exports to Iran, submitting false information to BIS, contributing to Russian biological weapons programs and more. BIS also revised five existing entries under Canada, Germany, Hong Kong, Iran and the UAE.
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 Trump administration will likely continue to impose restrictions on transactions with large Chinese technology companies, particularly as the Committee on Foreign Investment in the U.S. places more scrutiny on Chinese investments involving personal data, trade lawyers said. Industry should prepare for more announcements similar to President Donald Trump’s executive orders on TikTok and WeChat (see 2008070024), one lawyer said.
The Commerce Department’s lengthy rollout of export controls over emerging and foundational technologies may be impeding congressionally mandated export control reform measures and the work of the Committee on Foreign Investment in the U.S., the Congressional Research Service said in a report Aug. 21. Commerce’s effort, mandated by the Export Control Reform Act of 2018, has resulted in several export control notices, including on geospatial imagery software (see 2001030024) and items agreed to by multilateral control bodies (see 2006160034). But Commerce has yet to release its advance notice of proposed rulemaking for foundational technologies (see 2008040008), and the pace of the controls has frustrated some in industry (see 2002040057 and 1911070014).
TikTok, the video-sharing application owned by China-based ByteDance, sued the Trump administration for banning U.S. transactions with the company (see 2008070024), saying the administration’s decision was heavily politicized and lacked due process. TikTok also said it was the subject of a non-transparent review by the Committee on Foreign Investment in the U.S., and called the administration’s ban a “misuse” of the International Emergency Economic Powers Act.
The semiconductor industry was surprised by the U.S.’s increased restrictions on Huawei (see 2008170029) and expects significant short-term supply chain disruptions, industry officials and experts said in interviews. Officials also thought the initial version of the rule, issued in May (see 2005150058), was sufficient, and were frustrated that the Bureau of Industry and Security did not ask for feedback on the new requirements.
China again criticized U.S. restrictions on Huawei, TikTok and WeChat but said the measures will not affect an expected call between officials from the two countries to discuss the phase one trade deal. The call, originally scheduled for Aug. 15 (see 2008170022), will be held “in the near future,” a Chinese Ministry of Commerce spokesperson said Aug. 20, according to an unofficial translation. The call is expected to serve as a six-month compliance check on both countries’ commitment to the phase one agreement. The Office of the U.S. Trade Representative did not comment.
A top U.S. intelligence official urged companies to avoid supply chains involving Huawei, and said there is a strong push within the administration to bolster domestic production of 5G technologies. Constance Taube, National Counterintelligence and Security Center deputy director, said U.S. companies should approach Huawei and other Chinese state-controlled companies with a high degree of skepticism, saying their supply chains will ultimately benefit from more trusted actors.
Companies across the world are increasingly struggling to expand their exports due to a rise in trade retaliation, trade experts said. Although exporters can find some stability by diversifying their markets, they should continue to expect unpredictability, particularly as countries react to changing U.S. tariffs. “You have to love riding roller coasters right now as a trade professional,” said Kim Campbell, president of MKMarin Trade Services, a Canadian trade consulting firm. “If you don't have that temperament, I think you're just going to be nothing but frustrated and heartbroken most of the time.”
The Department of Justice’s recent changes to its voluntary disclosure policies (see 1912130047) could lead to complications for companies and were met with backlash from other enforcement agencies, said Robert Clifton Burns, an export control lawyer with Crowell & Moring. The guidance, which outlined benefits for companies that disclose export control and sanctions penalties, can be interpreted as saying industry should first submit their voluntary disclosures to the Justice Department instead of to other agencies, Burns said.
The Bureau of Industry and Security on Aug. 17 added 38 Huawei affiliates to the Entity List and refined a May amendment to its foreign direct product rule, further restricting Huawei’s access to U.S. technology, the agency said in an Aug. 17 final rule. BIS also modified four existing Huawei entries on the Entity List, amended language in the Export Administration Regulations and said it will continue one cybersecurity-related authorization under its temporary general license for Huawei. The remainder of the license expired Aug. 13.