China’s recent restrictions on Micron products are having broader than expected consequences for U.S. exporters, a trade industry conference heard last week, and may portend how future Chinese retaliatory actions will affect U.S. companies.

The EU this week released an economic security strategy, detailing plans to improve export controls over sensitive technologies and study whether it needs better guardrails around inbound investments and new restrictions around outbound investments. The strategy could lead to new proposals surrounding export controls and investment restrictions by the end of the year.

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.

Even as Europe comes to see China as a systemic rival, the entanglement of the German and Chinese economies continues unabated, and what "de-risking" should look like is hotly contested, witnesses told the U.S.-China Economic and Security Review Commission at a hearing late last week.

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.

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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.

The European Union needs to better coordinate with its member states on potential export controls against China’s chip industry, said Noah Barkin, a Europe-China relations expert with the Rhodium Group. Barkin, speaking during a Senate Foreign Relations subcommittee hearing this week, said the EU is still grappling with how to best impose dual-use export controls and isn’t yet at a place where it can match U.S. restrictions.

Think tank scholars said the World Trade Organization isn't well suited to deal with technology sharing restrictions, but that the G-7 and coordinated bilateral actions have been effective so far.

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