The U.S. is considering an outbound investment regime that could restrict capital flows in the advanced semiconductor, artificial intelligence and quantum computing sectors, a senior Treasury Department official said this week, the administration’s first public confirmation of a potential scope for upcoming restrictions that have been under construction for months. Paul Rosen, the head of the Committee on Foreign Investment in the U.S., said the government is still working on the mechanism and declined to provide a release date, but stressed those three sectors are a priority.
Exports to China
A bipartisan bill recently introduced in the Senate could expand sanctions against China for human rights abuses against Uyghurs in the Xinjiang province. The Uyghur Genocide Accountability and Sanctions Act, introduced by Sens. Marco Rubio, R-Fla., and Jeff Merkley, D-Ore., could revise the Uyghur Human Rights Policy Act of 2020 by expanding the types of sanctionable activities and requiring the president to consider sanctions against foreign people or companies that knowingly provide “significant goods, services, or technology” to people sanctioned under the Uyghur Human Rights Policy Act.
The EU-U.S. Trade and Technology Council agreed on export control and investment screening concepts, but no specific policies were arrived at during the fourth meeting of the group that ended May 31 in Sweden.
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The Bureau of Industry and Security has had “more than enough time” to issue a final version of its October China chip export controls, which need to be “strengthened” and “vigorously enforced” to maintain American semiconductor leadership, Sen. Marco Rubio, R-Fla., said in a May 30 letter to Commerce Secretary Gina Raimondo. Rubio asked the agency when it plans to issue the final rule, what changes will be made, whether BIS had “delayed” finalizing the rule and more.
The chair of the House Financial Services Committee is asking the Treasury Department for more information about potential outbound investment restrictions in China, including what types of investments in specific technologies would be targeted, whether the Biden administration plans to establish the regime through a national emergency and if the restrictions would be more effective than traditional trade restrictions. Rep. Patrick McHenry, R-N.C., is concerned outbound investment restrictions “would prove futile,” the lawmaker’s news release said, and would “further serve” China’s goal of “limiting the influence of Western firms in Chinese markets.”
The Office of Foreign Assets Control this week sanctioned 17 people and entities involved in selling equipment used to make illegal drugs, including seven entities and six people based in China and one entity and three people in Mexico. The designations target companies that supply pill press machines, die molds and other equipment used to “impress counterfeit trade markings of legitimate pharmaceuticals onto illicitly produced pills,” including China-based Youli Technology Development Co. and Yason General Machinery along with Mexico-based Mexpacking Solutions. The agency also sanctioned the owners and employees of those companies and others.
U.S. Trade Representative Katherine Tai said she and Australia’s Trade Minister Don Farrell, meeting on the margins of the Asia-Pacific Economic Cooperation trade ministers' meeting, agreed the negotiations on the trade pillar of the Indo-Pacific Economic Framework for Prosperity have been constructive.
The U.S. District Court for the Eastern District of New York dismissed a suit from a group of investors that accused Ericsson of misleading them about elements of a Foreign Corrupt Practices Act proceeding. Judge William Kuntz sided with Ericsson, ruling that the investors failed to claim that the company made misstatements since the alleged lies were "immaterial as a matter of law" or not false when made (In Re Telefonaktiebolaget LM Ericsson Securities Litigation, E.D.N.Y. # 22-1167).
The U.S. should convince the U.N. to harmonize its sanctions lists with U.S. trade blacklists, a House Financial Services subcommittee heard during a hearing last week. Aligning the lists could require the World Bank and other international organizations to adhere to U.S. sanctions, one witness said, and help the U.S. extend the reach of its restrictions against China.