The Biden administration should reverse a 2020 rule that transferred export controls over certain defense items from the State Department to the Commerce Department (see 2001170030), said Sen. Elizabeth Warren, D-Mass. She said the transfer has allowed the U.S. to approve more weapons sales overseas, contributing to violent crime and corruption.
The Bureau of Industry and Security is conducting a review of the types of semiconductors and chipmaking equipment that can be exported to China to determine whether it needs to tighten those restrictions, BIS Undersecretary Alan Estevez said, speaking during a Senate Banking Committee hearing last week. He said the agency is considering tightening the “cut-off point” of semiconductors that are subject to strict export licensing requirements.
A potential provision in the bipartisan China package (see 2207120049) that would create an outbound investment screening mechanism received more opposition (see 2206280051 and 2201140038) this week, including from lawmakers on the Senate Banking Committee and former U.S. investment screening officials. While opponents of the provision say some form of outbound screening may eventually be necessary to further restrict sensitive technology transfers to China, they also said the current wording is too broad and leaves too many questions unanswered.
Customers and borrowers of financial institutions may start to receive more requests from banks about their export control compliance practices due to a recently issued joint alert by the Treasury and Commerce departments, Crowell & Moring said July 13. The alert also has other implications for customers of certain financial institutions, the firm said, and could hurt their ability to receive lenient penalties from a voluntary disclosure.
The Bureau of Industry and Security recently revoked export privileges for four people after they illegally exported defense items or weapons ammunition.
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A U.S. appeals court on July 8 affirmed a 2020 District of Columbia court ruling dismissing FedEx’s lawsuit against the Bureau of Industry and Security, saying the shipping company failed to show BIS acted outside its authority. The court also rejected FedEx’s claims that the agency was using the Export Administration Regulations to apply overly burdensome liability standards on carriers and penalize them even when carriers do not have knowledge of violations.
It’s unclear whether the Bureau of Industry and Security's decision to stop differentiating between emerging and foundational technologies under the Export Control Reform Act (see 2205200017) will have any real impact on export controls, law firms said. Torres Trade Law said this month that “only time will tell” if the change allows BIS to impose the controls more quickly, but companies should closely monitor the pace of upcoming restrictions, especially if they’re dealing in “cutting-edge technologies.”
The Bureau of Industry and Security on July 7 sent an interim final rule for interagency review that will clarify how export controls are applied in the context of international standards-setting bodies. The rule will specifically authorize certain items and “releases of technology” to entities on the Entity List “for standards setting or development in standards organizations,” BIS said.
The Bureau of Industry and Security's recent shift in enforcement policies and strategy could “significantly” increase risks for companies, law firms said, especially those based in the U.S. The changes could cause businesses to invest more in compliance, they said, and could lead to a more aggressive BIS enforcement posture.