The U.S. needs to modernize its approach to export controls and expand disclosure requirements for foreign investment screening to maintain its technology dominance over China, a U.S. national security commission said in a report this week. The commission called current U.S. export controls outdated, urged the Commerce Department to more quickly control emerging and foundational technologies, and said the Committee on Foreign Investment in the U.S. should review a broader set of transactions to protect sensitive technologies.

Export Compliance Daily is providing readers with the top stories for Feb. 22-26 in case you missed them. You can find any article by searching on the title or by clicking on the hyperlinked reference number.

A Chinese businessman in Hong Kong allegedly conspired to steal technology from General Electric to create his own startup company, the Justice Department said Feb. 26. The agency charged Chi Lung Winsman Ng with plotting with a GE engineer to steal trade secrets from the company to manufacture and sell “silicon carbide metal-oxide semiconductor field-effect transistors,” or small electronic semiconductors. Ng and the engineer allegedly developed a business plan for their startup that they planned to present to potential Chinese investors for what they said would become a $100 million company. The Justice Department did not name the engineer. It said it has “no evidence that there was an illegal” technology transfer to any Chinese company and said it has not yet arrested Ng. If convicted, he faces up to 10 years in prison and a maximum fine of $250,000.

In written questions to U.S. trade representative nominee Katherine Tai, she was pressed to argue for U.S. agricultural export interests around the world, and asked how China could be moved to meet more of its promises to buy American exports, agricultural and otherwise.

President Joe Biden signed an executive order Feb. 24 to address supply chain shortages of semiconductor chips, personal protective equipment, medicine and other critical goods. The order calls for a 100-day review of U.S. supply chains to pinpoint “vulnerabilities” impacting a range of goods, including certain pharmaceutical products, critical minerals such as rare earths, semiconductors and large-capacity batteries. The order also calls for a one-year review that will examine issues in a broader set of U.S. supply chains, including those impacting the defense industrial base, the public health base, the information and communications technology sector base, the energy sector industrial base, the transportation industrial base and the agricultural sector.

Senate Majority Leader Chuck Schumer, D-N.Y., said he directed lawmakers this week to begin crafting legislation to strengthen the U.S. semiconductor industry to out-compete China. The legislation will include a bipartisan bill introduced by Schumer and other lawmakers last year that would increase U.S. investment in technology, research and high-tech manufacturing (see 2006010011), Schumer said, adding that the legislation will also include other semiconductor industry initiatives. Schumer said he plans to call for a vote on the legislation this spring. “[W]e need to get a bill like this to the president's desk quickly to protect America's long-term economic and national security,” Schumer said Feb. 23. The Semiconductor Industry Association applauded Schumer’s comments and said investing in U.S. innovation is “key” to out-competing China (see 2102180062). “We urge the Biden administration and Congress to invest boldly in domestic semiconductor manufacturing and research,” SIA President John Neuffer said.

A broad coalition of trade associations including representatives from the semiconductor manufacturing industry wrote a letter Feb. 18 to President Joe Biden urging him to back the funding for the crucial technology authorized in the CHIPS for America Act in the fiscal year 2021 National Defense Authorization Act. The letter made the groups' case for greater funding for semiconductors and called for an investment tax credit in the upcoming infrastructure and economic recovery proposal. Notable signatories to the letter include the National Association of Manufacturers, SEMI and the Semiconductor Industry Association, as well as the Information Technology Industry Council and the Alliance for Automotive Innovation.

Sen. Tom Cotton, one of the most prominent China hawks in Congress, thinks that the Bureau of Industry and Security is buried within an organization “hostile to the aggressive use of export controls,” and so it should be moved from the Commerce Department to the State Department, because, he says, that department puts national security first. Cotton, who has published a lengthy report on what he calls the economic long war with China, discussed his views during an online program at the Reagan Presidential Foundation on Feb. 18.

The semiconductor, chemicals, medical devices and aviation industries could be especially hurt by decoupling, according to a new U.S. Chamber of Commerce report attempting to quantify the costs of stopping or slowing sales to China, and in the case of chemicals, high tariffs on Chinese inputs used by U.S. chemical plants. Some of the actions modeled in the report have already happened, such as 25% tariffs on chemicals from China, and China's retaliatory tariffs on chemical exports. But while semiconductor exports to ZTE, Huawei and Fujian Jinhua have been restricted, there has not been a complete ban on the export of chips to China, which is what the report modeled.

The U.S. needs to swiftly implement industrial policies to counter China’s technology rise and compete against Chinese state-owned companies or risk lagging behind in innovation, experts said. Without targeted policies, the U.S. could quickly cede technology leadership to China in a variety of sectors, the experts said during a Feb. 16 Center for Strategic and International Studies event.