The Commerce Department is planning to issue multiple guidance documents on its blacklisting of Huawei Technologies due to the large number of questions from U.S. exporters, Commerce officials said during the Bureau of Industry and Security's annual export controls conference July 9-11 in Washington. Officials said the guidance will address the most common questions BIS has received from U.S. industries.
As the Trump administration pushes for export controls on certain firearms to be transferred from the State Department to the Commerce Department, top Commerce officials said the move should not be a cause for concern and said they are welcoming feedback from the public and members of Congress.
After more than 25 industry associations urged the Commerce Department to grant more time for comments on its next advance notice of proposed rulemaking for foundational technologies, top Commerce officials said it will consider the request but suggested that U.S. industries have had ample time to prepare comments.
Commerce’s Bureau of Industry and Security and the Census Bureau plan to issue a proposed rule for routed export transactions during the summer or fall of 2019, said Sharron Cook, a senior export policy analyst with BIS, at BIS’s annual export controls conference on July 10. The long-awaited proposed rule is expected to update parties’ responsibilities under the Export Administration Regulations in a routed export transaction.
Huawei will remain on the Commerce Department Bureau of Industry and Security's Entity List but "we've opened the door, relaxed a bit the licensing requirements from the Commerce Department where there are not national security influences or consequences," White House Chief Economic Adviser Larry Kudlow said at a CNBC Capital Exchange event July 9. For example, "some of the chip companies would be permitted to sell on a limited basis to Huawei," he said. Those may be parts for "general merchandise" that ends up in countries "where we don't hold any great cachet," such as South Korea or Vietnam, he said. "That's the sort of thing that will be opened up that was closed." Kudlow also noted that China and the U.S. aren't far apart in their trade talks, but said that sometimes the last pieces can be the most difficult to resolve. China has resisted U.S. requests for change in Chinese laws and for enforcement provisions, he said.
An Office of Foreign Assets Control official said the agency within the Treasury is trying to “expedite” responses on license applications but does not have the resources to lift certain compliance burdens that have caused headaches for U.S. companies, such as regulations that require businesses to determine which companies are owned 50 percent or more by a sanctioned party. “That’s something were trying to work on,” said Susan Demske, OFAC’s assistant director for regulatory affairs.
The Commerce Department is reviewing export license applications to sell to Huawei in order to “mitigate as much of the negative impacts of the entity listing as possible” and hopes to have decisions “soon,” said Nazak Nikakhtar, Commerce undersecretary for the industry and security.
Commerce’s Bureau of Industry and Security banned export privileges for a man who was convicted of illegally exporting gas turbine parts in 2018, Commerce said in a June 28 order. Commerce said the man, Olaf Tepper, violated the International Emergency Economic Powers Act after he exported parts to Germany that were intended for an end-user in Iran. Tepper did not have the proper export license from the Treasury's Office of Foreign Assets Control. Tepper was sentenced to two years in prison and a $5,000 fine in addition to the export ban, which included revoking all of Tepper’s BIS-related licenses. The ban will last 10 years after his conviction date of Aug. 3, 2018, Commerce said.
More than 25 industry associations are asking the Commerce Department to allow more time for public comments on Commerce’s next advance notice of proposed rulemaking for foundational technologies, which is expected in the coming weeks. The associations asked for a 90-day comment and review period in a June 27 letter to Commerce Secretary Wilbur Ross.
Commerce’s Bureau of Industry and Security is looking to make more use of the enforcement authorities it was granted under the Export Control Reform Act of 2018, including more undercover operations, wiretapping and investigations, said Adrienne Frazier, a lawyer for BIS. Speaking on a panel during the American Association of Exporters and Importers Annual Conference in Washington on June 27, Frazier said BIS previously had the ability to conduct investigations in coordination with federal law enforcement. But ECRA gave BIS more individual authorities and investigative abilities, she said. “I think that those are going to be things the agency looks to do more of. It’s something that I think the agency is keen to do.”