New U.S. export restrictions on six Chinese cities with ties to China’s balloon surveillance program is a “step in the right direction,” but it should have come much sooner, Rep. Michael McCaul, R-Texas, said. “It shouldn’t have taken a flagrant violation of American territorial sovereignty for BIS to take these measures to prevent [the Chinese Communist Party] from using U.S. technology to compromise our national security,” McCaul, who chairs the House Foreign Affairs Committee, said last week in a news release.
The Bureau of Industry and Security added six Chinese entities to the Entity List last week because of their ties to China’s “High Altitude Balloons'' intelligence and reconnaissance activities. BIS said the aerospace and technology entities support China’s military modernization efforts, particularly the People's Liberation Army’s aerospace programs, including “airships and balloons and related materials and components.” The move came days after the U.S. shot down a Chinese surveillance balloon in U.S. airspace.
Last year was a “historically busy” period for new trade controls, and that pace “shows few signs of slowing” this year, Gibson Dunn said in a 2022 export control and sanctions recap released this week. The recap provides an overview of last year’s raft of new sanctions and export controls against Russia, China, Iran and others; the Bureau of Industry and Security’s new administrative enforcement policies (see 2206300069 and 2205230018); the State Department’s new compliance program guidelines (see 2212060015 and 2212210049); Committee on Foreign Investment in the U.S. actions; trade restrictions imposed by the EU and U.K.; and more.
The Bureau of Industry and Security added six Chinese entities to the Entity List because of their ties to China’s “High Altitude Balloons'' reconnaissance activities. The move comes days after the U.S. shot down a Chinese surveillance balloon in U.S. airspace. The aerospace and technology entities require a license for all items subject to the Export Administration Regulations, and BIS will review license applications under a presumption of denial. The additions take effect Feb. 10.
The Biden administration’s implementation of its new China chip export controls (see 2210070049) has been “mixed,” and it remains unclear how far allies will go to impose similar restrictions, said Clete Willems, who was a National Security Council official during the Trump administration. Willems, in written testimony this week to the House Financial Services Committee, said he doesn’t understand why the administration didn’t initially coordinate the October export control rule with allies, a shortcoming that could be hurting U.S. companies now.
The U.S. and its allies should establish a new multilateral export control system to prevent sensitive technologies from being sent to dangerous end-users, including those in China, said Rich Ashooh, a former senior U.S. export control official. Ashooh applauded American efforts so far and said it shouldn’t abandon the existing multilateral control regimes, but he said a more formal system is needed.
Jeannette Chu, a former Bureau of Industry and Security official, joined the National Foreign Trade Council as vice president for national security policy, the NFTC announced Feb. 6. Chu will lead a new effort by the NFTC on national security and global competitiveness by serving as the council’s “lead strategist, expert and advocate on policies surrounding export controls, sanctions, investment screening, critical infrastructure” and more. Chu previously served as a senior policy adviser at BIS and as the senior export control attache at the U.S. embassy in Beijing. She was most recently senior managing director and head of the export controls and trade sanctions team at PricewaterhouseCoopers.
A “scam artist” has been circulating a “fake and fraudulent” request for quotation (RFQ) from the Bureau of Industry and Security, Nagesh Rao, BIS chief information officer, said in a Feb. 4 LinkedIn post. The post includes a link to the Fake RFQ, which has “successfully conned small businesses in fulfilling this order,” Rao said. The order includes a quote request from BIS for computers.
DOJ’s new corporate enforcement policies substantially increase compliance incentives and may lead to more voluntary self-disclosures, law firms said. But they also said much of the new policy will depend on how DOJ implements the changes, and it remains unclear how much of a downstream impact the revisions will have on export control and sanctions cases handled by other agencies.
The Bureau of Industry and Security suspended the export privileges of an Illinois resident for illegally exporting controlled equipment to Pakistan, the agency said in an order last week. BIS said Obaidullah Syed was convicted May 17, 2022, of conspiring to export computers, computer systems and “associated equipment” from the U.S. to the Pakistan Atomic Energy Commission without a Commerce Department license (see 2205200033). Syed was sentenced to one year and one day in prison, one year and one day of supervised release, a $100 assessment and a forfeiture of $247,000. BIS suspended Syed’s export privileges for 10 years from the conviction date.