The U.S. needs to create a formal doctrine to outline guardrails for deploying sanctions, export controls and other economic statecraft tools, said Daleep Singh, President Joe Biden’s former deputy national security adviser, speaking during an April 25 Atlantic Council event. He also said the U.S. needs to conduct an assessment of its past use of those trade and financial measures to determine when they worked best and make sure they aren’t being overused.
The Bureau of Industry and Security should add the Commercial Aircraft Corporation of China (COMAC), a state-owned aerospace manufacturer, to its Military End-User List, Florida Sens. Marco Rubio and Rick Scott said in an April 24 letter to BIS Undersecretary Alan Estevez. The Republican lawmakers said COMAC works closely with the Aviation Industry Corporation of China (AVIC), which is already included on the Entity List and MEU list and holds a minority stake in COMAC.
Companies should expect China to increase the use of its so-called Unreliable Entity List following the addition of U.S. defense companies Lockheed Martin and Raytheon to the list in February (see 2302160064 and 2304180029), Beijing-based Zhong Lun law firm said in an April client alert posted by Lexology. The firm said “we anticipate” that the “trade ban rules may be developed into a full-fledged and well-designed mechanism with increased enforcement of the UEL Provisions in the future,” saying Chinese companies should make sure they're running “effective compliance programs” to comply with the list.
The Bureau of Industry and Security on April 19 fined Seagate Technology $300 million for violating U.S. export controls against Huawei in what it said is the “largest standalone administrative penalty in BIS history.” The agency said the California-based company and its branch in Singapore sold more than 7 million export-controlled hard disk drives to Huawei in violation of the BIS foreign direct product rule.
Chinese companies should “strengthen” their due diligence procedures to make sure they’re not doing business with U.S. defense companies Lockheed Martin and Raytheon, which were placed on China’s so-called Unreliable Entity List in February (see 2302160064), China’s Ministry of Commerce said this week. Both firms are blocked from “engaging in import and export activities related to China,” which will “prevent Chinese products from being used in their military business,” a ministry spokesperson said April 18, according to an unofficial translation.
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.
China condemned the recent U.S. inclusion of 12 Chinese companies on the Entity List for their aid to Russia's war against Ukraine. All 12 companies were accused of backing Russia's military or defense industrial base (see 2304120039). A spokesperson for China's Ministry of Commerce said the U.S. has no basis in international law to carry out the sanctions, and the move is a "typical unilateral sanction" that damages the legitimate rights of Chinese companies, according to an unofficial translation. The spokesperson called for the immediate cessation of the sanctions, adding that China will safeguard the interests of its companies.
The Bureau of Industry and Security should reform its Entity List process and its licensing procedures to more effectively prevent China from acquiring sensitive U.S. technologies, said Cordell Hull, former acting BIS undersecretary. Hull also suggested that BIS increase its penalties for export violations, and said he isn’t convinced creating a new multilateral export control regime is the best way to counter China.
Public U.S. companies should update their China-related risk disclosures to factor in a range of potential trade restrictions on the horizon, including possible U.S. sanctions against Beijing for aiding Russia and new outbound investment restrictions, said Carl Valenstein, a trade lawyer with Morgan Lewis.
The U.S. this week announced new Russia-related trade restrictions, adding 28 entities to the Commerce Department’s Entity List and more than 100 entries to the Treasury Department’s Specially Designated Nationals List. The measures target people and companies either operating in Russia, aiding the country’s war against Ukraine or helping Moscow evade sanctions.