Citing a Financial Times report that Chinese artificial intelligence developers are evading controls on advanced semiconductors by using cloud services, members of the House introduced a bill to stop those practices, called Closing Loopholes for the Overseas Use and Development of Artificial Intelligence (CLOUD AI). The bill was introduced last month, and its text published this week.
Lawmakers, business groups and think tanks gave a mixed bag of immediate feedback on the Biden administration’s executive order restricting outbound investments in China, with some applauding the government’s initial, cautious approach, and others expressing frustration that the restrictions don’t go far enough.
As the Biden administration this week marked the one-year anniversary of the enactment of the Chips Act, which provides incentives and funding opportunities for the chips sector, the semiconductor industry urged the White House and lawmakers to keep foreign markets open and “advance policies that enhance this historic accomplishment.”
The Biden administration this week unveiled its plans for a new outbound investment screening regime, which will restrict investments in three advanced technology sectors in China and set notification requirements for other sensitive outbound investments. The new screening regime, outlined in an executive order signed Aug. 9 by President Joe Biden, will come into force after the Treasury Department writes regulations. The agency is soliciting public comments on how it should implement the program, set certain definitions, impose due diligence requirements and more as part of an advance notice of proposed rulemaking released along with the order.
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The European Council on Aug. 3 added another 38 individuals and three entities to its Belarus sanctions regime, further extending export bans to cover goods for the firearms, aviation and space industry. The listings include "penitentiary officials responsible for the torture and ill-treatment of detainees," members of the judiciary, cogs of civil society and journalists, the council said.
The Biden administration’s upcoming outbound investment screening rules should restrict both private and public investments, starting with “five to six priority sectors” but eventually expanding to more, said Rep. Mike Gallagher of Wisconsin, the top Republican on the House Select Committee on China. Gallagher said the rules should stop Americans from investing in Chinese entities connected to the country’s military, human rights abuses or “technological rise,” should require Chinese companies to meet the same due diligence standards as U.S. firms, and shouldn't be adjudicated through a case-by-case process, which would cause uncertainty for American investors.
House Republicans this week urged the Biden administration not to strike a deal with Beijing after Chinese officials reportedly offered to restart counter-narcotics activities with the U.S. in exchange for lifting certain trade restrictions. Beijing asked the U.S. to lift restrictions on the Ministry of Public Security’s Institute of Forensic Science, The Wall Street Journal recently reported. The institute was added to the Entity List in 2020 for its ties to human rights violations.
Two U.S. semiconductor companies said they still see opportunities to sell into the Chinese market despite sweeping export controls announced by the U.S. in October (see 2210070049) and potentially more restrictions coming soon.
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.