The Bureau of Industry and Security’s proposal to reduce the number of countries eligible for license exception Additional Permissive Reexports (APR) (see 2004270025) could damage U.S. competitiveness and lead to overly broad export restrictions, trade groups and industry said in comments released this month. If BIS follows through on the change, commenters suggested that it first limit the scope of the rule, which could potentially restrict more than 20 countries from receiving certain U.S. reexports that are controlled for national security reasons.

The U.S. needs to increase funding to support “collaborative, pre-competitive R&D” in the semiconductor industry and offer “incentives” for boosting domestic production, the Information Technology and Innovation Foundation reported Sept. 17. It should invite participation of semiconductor enterprises “headquartered in like-minded nations,” ITIF said. The increasing cost, complexity and scale required to innovate and manufacture semiconductors “means that no single nation or enterprise can go it alone,” it said. “In the face of challenges from China, allied cooperation in semiconductors is critical.” China views the semiconductor sector as the linchpin of its digital development and “broadest-scale economic growth plans,” ITIF said. It has shown it’s willing to use “every tool at its disposal in its efforts to develop a world-class semiconductor industry,” it said.

The U.S. needs a clearer approach to its export control regime and should coordinate more closely with allies to counter China’s technological rise, Sen. Mark Warner, D-Va., said, adding that the U.S. needs to better communicate to industry about the risks of doing business with China and its government-sponsored human rights abuses.

Export Compliance Daily is providing readers with the top stories for Sept. 8-11 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

China has seen a steady increase in demand for imports of semiconductors since January, China’s Commerce Ministry told reporters Sept. 10, according to an unofficial translation of a press conference transcript. A ministry spokesperson said China imported 15% more semiconductors from January to August compared with the same period last year, citing the COVID-19 pandemic and greater demand for computers, tablets and “medical electronics” due to distance working and learning. China has also been “actively stocking and increasing procurement efforts” of semiconductors as the U.S. has increased export restrictions on chips to Huawei (see 2008210045). The spokesperson said China’s increased demand has been “the main driving force for the growth of the global semiconductor market.”

The Bureau of Industry and Security added, revised and made technical changes to export controls in the Export Administration Regulations (EAR) to implement changes under the 2018 Wassenaar Arrangement (see 2007220015). Per a final rule released Sept. 10, BIS revised 28 Export Control Classification Numbers, altered license exceptions for four ECCNs, made technical changes to eight ECCNs and created one new ECCN for certain masks and reticles used for sensors. The rule follows a May 2019 rule that added controls to five technologies under the 2018 Wassenaar (see 1905220051).

China is growing increasingly confrontational on trade issues and may be more willing to respond to U.S. sanctions with restrictions of its own, experts told the U.S.-China Economic and Security Review Commission Sept. 9. As China mulls retaliation against the U.S., the Trump administration should focus on areas in which it has leverage over China by continuing to push for purchases under the phase one trade deal and restrict Chinese attempts to develop advanced technologies, the experts said.

The Trump administration is considering placing export controls on China’s top chipmaker, the latest move in a campaign of restrictions aimed at Chinese technology companies. The controls would target the Semiconductor Manufacturing International Corporation by placing it on the Commerce Department’s Entity List, Reuters said in a Sept. 4 report. The effort is being spearheaded by the Defense Department, the report said, which petitioned Commerce’s End User Committee last week to add SMIC to the Entity List.

Export Compliance Daily is providing readers with some of the top stories for Aug. 24-28 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

While industry welcomed the U.S. June decision to allow companies to more easily participate in standards-setting bodies in which Huawei is a member (see 2006160035), the administration should expand the rule to exempt all businesses on the Entity List, companies and trade groups said in comments last month. If the Bureau of Industry and Security does not expand the rule, companies will still be hampered at international standards bodies and could continue to cede technology leadership to China, they said.