A Republican-backed bill in the Senate could require the Bureau of Industry and Security to adopt a license review policy of presumption of denial for controlled exports to “any end user” in China or Russia and to notify Congress before approving a license to either country. After notifying Congress, lawmakers would be able to block BIS from granting the license, which will help “create additional safeguards to ensure sensitive technology does not flow to our adversaries,” the bill’s introducers’ press release said.
Many companies are grappling with how best to comply with the Commerce Department’s foreign direct product rule, “one of the key areas” still “unaddressed” by the agency’s regulations and guidance, said Kim Strosnider, a trade lawyer with Covington. She said Commerce’s compliance expectations for the FDP rule are rising despite due diligence challenges faced by industry, pointing to the agency’s record $300 million penalty against Seagate Technology in April (see 2305080029 and 2304190071).
The Bureau of Industry and Security is considering tweaking regulatory language that calls on exporters to conduct a five-year review of activities that preceded their voluntary self-disclosures. The change could make it so the language only applies to more serious disclosures, said the top BIS export enforcement official, Maththew Axelrod, and would represent another step in the agency’s effort to draw more BIS and industry resources toward addressing significant violations as opposed to minor or technical ones.
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The Bureau of Industry and Security is working “day-in and day-out” on a final rule that will make tweaks to its China-related chip export controls released in October (see 2210070049), said BIS Senior Export Policy Analyst Sharron Cook. But a public release of the rule isn’t imminent -- the agency hasn’t yet sent the changes to be reviewed by other agencies, said Hillary Hess, regulatory policy director at BIS.
The Bureau of Industry and Security last week issued a correction to its June 14 final rule that added 43 entities to the Entity List, including various Chinese companies that support the country’s military (see 2306120030). BIS said it mistakenly included an entity in its “preamble justification” for the additions “but inadvertently did not instruct, nor provide regulatory text for, the addition of the entity to the Entity List.”
Although the Bureau of Industry and Security last month said it doesn’t have a draft rule in place to increase export licensing requirements for Huawei, exporters would be wise to still expect a tightening of restrictions against the Chinese telecommunications company, industry officials said this week. They also didn’t rule out BIS soon increasing export controls against China in other ways, including by potentially adding more items to the scope of its military end-use and end-user (MEU) rule requirements.
The Bureau of Industry and Security recently revoked export privileges for seven people after they illegally exported or tried to export controlled items, including military equipment, firearms and ammunition.
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A ramping up of U.S. export enforcement efforts is causing companies to revisit their compliance practices, particularly as the Bureau of Industry and Security conducts more outreach to exporters, said Alan Enslen, a trade lawyer with Womble Bond. He said companies are more frequently auditing their export compliance programs amid a number of signs that the Biden administration is increasing scrutiny on potential export violations, including a multi-agency memo issued in March that Enslen said was a “shot across the bow” for U.S. exporters.