Many companies are grappling with how best to comply with the Commerce Department’s foreign direct product rule, “one of the key areas” still “unaddressed” by the agency’s regulations and guidance, said Kim Strosnider, a trade lawyer with Covington. She said Commerce’s compliance expectations for the FDP rule are rising despite due diligence challenges faced by industry, pointing to the agency’s record $300 million penalty against Seagate Technology in April (see 2305080029 and 2304190071).
Exports to China
A Republican-backed bill in the Senate could require the Bureau of Industry and Security to adopt a license review policy of presumption of denial for controlled exports to “any end user” in China or Russia and to notify Congress before approving a license to either country. After notifying Congress, lawmakers would be able to block BIS from granting the license, which will help “create additional safeguards to ensure sensitive technology does not flow to our adversaries,” the bill’s introducers’ press release said.
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.
Sen. Marco Rubio, R-Fla., speaking at an American Compass event this week on Capitol Hill, said he's worried that the pervasiveness of U.S. sanctions could move Brazil, Argentina, Saudi Arabia, India and others away from using the dollar. "And I've been a supporter of sanctions," he said. "But at some point, you sanction enough people, and you create this entire marketplace that's sanctioned," and that creates an incentive to try to find a way around the sanctions by buying goods in China's yuan.
House Select Committee on China Chair Mike Gallagher, R-Wis., is asking the Commerce Department for export licensing information involving Chinese companies with ties to Beijing’s expanding “signals intelligence” presence in Cuba. In a June 20 letter to Commerce and the Office of the Director of National Intelligence, Gallagher said China’s reported effort to expand its military and spy facilities in Cuba (see 2306130062) is likely being “aided” by Chinese telecommunications companies, including those that have violated U.S. export controls to acquire American intellectual property.
A European human rights advocacy group recently filed a complaint with the German government against BMW, Mercedes-Benz and Volkswagen alleging the three automakers aren’t meeting German Supply Chain Act due diligence requirements that their supply chains are free from forced labor.
A dispute panel at the World Trade Organization ruled this week that China's antidumping duties on stainless steel products from Japan violated global trade commitments. The ruling held a mix of findings for and against Japan's claims, leading each side to claim some form of victory.
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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.
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.