The Biden administration could first release its outbound investment screening regime as a trial period and then expand the restrictions to cover broader investments after the initial year, said Anna Ashton, director of China corporate affairs at the Eurasia Group. Ashton, speaking during an April 21 event hosted by the University of Virginia's Miller Center, also said current U.S. chips subsidies will fall far short of making up for lost U.S semiconductor exports to China, while other experts said they fear U.S. chip export controls (see 2210070049) will continue to cause foreign companies to “design-out” American technology and software.
The U.S. should work with China in select artificial intelligence areas instead of imposing sweeping export controls that create financial incentives for companies to “design-out” U.S. technology, Paul Scharre, vice president and director of studies at the Center for a New American Security, said in an April 18 opinion article for Time Magazine. While current U.S. restrictions on semiconductors exports to China are “narrowly targeted,” he said they will “de facto grow over time as chips advance and the threshold for export controls remains the same.”
The U.S. is still “considering” a new outbound investment screening regime, Treasury Secretary Janet Yellen said this week, stressing that any restrictions would be “narrowly scoped and targeted to clear objectives.”
The U.S. and Mexican governments have reportedly made progress toward better aligning their Authorized Economic Operation programs, according to a "mid-year review" fact sheet on the U.S.-Mexico High-Level Economic Dialogue, released April 19. In the last six months, CBP provided training for the Mexican AEO team and in February, the Customs-Trade Partnership Against Terrorism and AEO Mexico representatives worked together to modify the Minimum-Security Criteria requirements for Mexico’s AEO program, which Mexico anticipates will be published in April after its legal review and approval by the Mexican Secretariat for Home Affairs, the fact sheet said.
Nations allowing the export to Russia of dual-use products that have military as well as commercial applications are on notice, Commerce Deputy Secretary Don Graves said April 19 at the Space Foundation's 2023 Space Symposium. "Any country ... that seeks to backfill the Russian war machine ... does so at their own peril," he warned. Export controls by the U.S. and 38 other nations aimed at dual-use products such as semiconductors and lasers are "hobbling" the Russian war effort in Ukraine, he said.
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The Bureau of Industry and Security should reform its Entity List process and its licensing procedures to more effectively prevent China from acquiring sensitive U.S. technologies, said Cordell Hull, former acting BIS undersecretary. Hull also suggested that BIS increase its penalties for export violations, and said he isn’t convinced creating a new multilateral export control regime is the best way to counter China.
The U.S., the Netherlands and Japan need to prepare for “expanded” Chinese retaliation as a result of their pact to impose new export controls on advanced semiconductor equipment (see 2303310031 and 2303090032), the Center for Strategic and International Studies said in a commentary this week, adding that China has “long put national security goals above those of market efficiency.”
The Biden administration’s October semiconductor chip controls against China (see 2210070049 and 2211010042) are expected in the short term to “constrain” the country’s access to the most advanced chips “used in computationally intensive subfields” of artificial intelligence, the International Institute for Strategic Studies said in an April report. But the controls could spur Chinese AI researchers toward “subfields that are less computationally demanding” and lead them to develop “new competitive advantages” in those areas, the report said.
Public U.S. companies should update their China-related risk disclosures to factor in a range of potential trade restrictions on the horizon, including possible U.S. sanctions against Beijing for aiding Russia and new outbound investment restrictions, said Carl Valenstein, a trade lawyer with Morgan Lewis.