The U.S.-EU Trade and Technology Council agreed to several export control and investment screening initiatives during the TTC’s second meeting in Paris this week, including measures to better harmonize export licensing decisions and share information on screening practices (see 2205130071). The U.S. and the EU said these measures will help both sides continue their “unprecedented cooperation on export controls” against Russia and urged the working groups to “implement concrete actions” before the next ministerial meeting.
The U.S. and the EU this week plan to announce a range of new initiatives through the Trade and Technology Council, including more collaboration on export controls and additional efforts to secure semiconductor supply chains, a senior administration official said. The official, speaking to reporters May 13 ahead of the TTC's second meeting May 15-16 in Paris, said the two sides will “deepen the partnership and announce a number of key outcomes.”
Companies need to stay on top of their compliance because significant escalation of Russia-related sanctions is possible, KPMG experts said. The "dramatic increase in the use of sanctions and other controls" over the past two months will likely continue to expand in complexity, said Jason Rhoades, KPMG senior manager-trade and customs services, during a May 11 webinar. Because Russian behavior toward Ukraine has not changed, "we expect [the use of sanctions] to continue to grow," Rhoades said. "There is significant room still out there for [sanctions] escalation."
The U.S. and EU should use the upcoming Trade and Technology Council meeting to further harmonize their export controls and strengthen cooperation in semiconductor supply chains, the American Chamber of Commerce to the EU (AmCham EU) said in May 10 recommendations. While government officials have said the two sides have already surpassed some of the TTC’s short-term goals (see 2204130045), the chamber said it can still make progress outlining “clear deliverables” and better defining the scope of the council’s working groups.
The U.S. needs to be careful when imposing export controls on emerging technologies to avoid hurting U.S. research and innovation, said Robert Blair, Microsoft's senior director-5G and external affairs. Blair, speaking during a May 10 event hosted by the Task Force on American Innovation, said industry wants to help the administration stem the proliferation of technologies to bad actors while also avoiding hurting the competitiveness of U.S. companies, specifically those working on quantum technologies.
Legislation from Senate Foreign Affairs Chairman Bob Menendez, D-N.J., would direct the administration to impose export controls on semiconductor manufacturing equipment, and asks that the government "develop a strategy to diplomatically engage the governments of the Netherlands, Japan, and other appropriate countries ... to formulate export controls on semiconductor manufacturing equipment" so that China couldn't purchase the equipment. The Economic Statecraft for the Twenty-First Century Act's text was published May 6. The bill also directs the administration to review the economic, diplomatic and security effects of implementing export controls on semiconductor manufacturing equipment, and how such a policy would affect China's semiconductor industry.
The U.S.-China competition will be the “geopolitical challenge for this generation,” Cordell Hull, principal at WestExec Advisors, told an online symposium May 5 on Indo-Pacific geopolitics hosted jointly by the Asia programs of the Foreign Policy Research Institute (FPRI) and the Wilson Center. “I certainly hope it can be managed,” and that it “doesn’t lead us into places where neither country really wants to go,” he said.
A lack of guidance from the Bureau of Industry and Security on its recent Russia-related foreign direct product rules is creating compliance “chaos” for companies operating in the region (see 2203070039), Torres Trade Law said in an April alert. The firm said businesses have been “left to fend” for themselves “when it comes to compliance with the new FDP rules,” partly because BIS hasn’t yet published any enforcement actions or settlements for either rule.
The U.S. is looking into whether Chinese semiconductor manufacturer Yangtze Memory Technologies Co. violated U.S. export controls by supplying chips to Huawei, the Financial Times reported April 27. The report said the Bureau of Industry and Security received a “credible” report by TechInsights, a semiconductor analysis firm, that Huawei is using YMTC memory chips in a new smartphone. The chips were reportedly made in February 2021, several months after the U.S. applied its foreign direct product rule to Huawei, which restricts its ability to import foreign-produced goods made with certain levels of U.S.-origin content or technology (see 2005150058).
Commerce Secretary Gina Raimondo told senators repeatedly during her testimony at a Commerce Committee hearing that the conference process for the House and Senate's China packages needs to get done as soon as possible, because other countries are offering funds to chipmakers, and companies are looking to plan new plants, because demand is so high. Raimondo said she's spoken with all the American chipmakers, and it's clear to her that if Congress doesn't act, those companies will invest in Germany, Singapore, France or Spain rather than Ohio or Arizona. Raimondo said, "They want to operate in our country, but they cannot wait. They are going to build, and if we don’t act quickly with USICA, they’ll build elsewhere."