The U.S. needs to pour more funding and resources into the Bureau of Industry and Security to allow it to better address China-related national security risks, said Gregory Allen, a technology policy expert with the Center for Strategic and International Studies and a former Defense Department official. Although BIS is charged with implementing some of the U.S.’s most sensitive trade restrictions, its export control functions have “had a flat budget for the better part of a decade,” Allen said during a U.S.-China Economic and Security Review Commission hearing last week. “It has been profoundly neglected” and subject to an “appalling mismanagement of resources.”
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.
About 10% of critical raw materials, as measured by value, faced export restrictions in the last decade, according to a new report from the Organization for Economic Co-operation and Development -- and the use of restrictions grew five-fold in the 2017-2019 period, compared with the two-year period 10 years earlier. Export taxes are the most frequent restriction, the authors said, adding: "This may be related to the fact that, under WTO rules, quantitative restrictions on exports are generally prohibited while export taxes are not."
The upcoming expiration of the Bureau of Industry and Security's temporary general license outlined in the China-related chip controls from October presents “good opportunities to see” how the agency will “interpret and enforce the new restrictions,” Lee, Tsai & Partners said in a recent client alert. The TGL expires April 7, when BIS has said it will begin reviewing license applications for activities that were covered by the TGL on a case-by-case basis (see 2301270026).
G-7 trade ministers stressed the importance of export controls this week and said they will continue to work together to counter evasion tactics. The countries, including the U.S., Japan, Germany, the U.K., France, Italy and Canada, said export controls are a “fundamental policy tool to address the challenges posed by the diversion of technology critical to military applications,” adding that they “continue to work with other states” to strengthen the restrictions.
Japan recently loosened export restrictions on shipments of hydrogen fluoride, fluorinated polymide and resists to South Korea following the end of a long-running trade dispute between the two countries. Japan's Ministry of Economy, Trade and Industry said it added the three items, which are high-tech materials used in smartphone displays and chips, to the scope of its "Special General Bulk Export License system," effectively lifting the restrictions. The announcement, which took effect March 23, comes after South Korea withdrew its dispute complaint at the World Trade Organization (see 2303240044 and 2303170015).
The Bureau of Industry and Security is preparing new proposed export controls on automated peptide synthesizers, building off a September advanced notice of proposed rulemaking (see 2209120021). The agency sent the proposed rule for interagency review March 29.
The Biden administration will soon announce a new “code of conduct” to improve export controls on goods and technology that could be used for human rights abuses, an effort being rolled out as part of the second Summit for Democracy this week, a senior administration official said during a March 29 call with reporters. The code, which the U.S. said it was “working to develop” during the first democracy summit in 2021 (see 2112090030), “commits subscribing states to better integrate human rights criteria in their export control regimes,” the White House said in a fact sheet.
U.S. defense export regulations are the “biggest speed bump” and need to be addressed to foster closer technology collaboration between the U.S. and allies, former Navy Secretary Richard Spencer said this week. Spencer, speaking at the National Press Club of Australia, said the International Traffic in Arms Regulations “has to be addressed; it will be addressed,” according to a March 20 report from InnovationAus.