It's unclear how a President Joe Biden would try to use policy to shape the global supply chain, but the Atlantic Council's Asia Security director said that since Biden prefers a multilateral approach, he “might be less likely” to impose tariffs or export controls. Miyeon Oh, who was speaking during an Atlantic Council webinar June 26, said he might try to get allies to coordinate an effort “to rebalance the global supply chain,” and he might seek to use American participation in the Trans-Pacific Partnership as a way to do so.
Exports to China
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The Committee on Foreign Investment in the U.S. is closely monitoring Chinese investors who are trying to take advantage of struggling U.S. companies, trade lawyers said. CFIUS is also focusing on the semiconductor sector, where Chinese entities are hoping to evade recent U.S. rules that impose more strict license restrictions on sales of semiconductors and other technology to China and Huawei (see 2005150058), the lawyers said.
Less than a week after signing a bill that will sanction Chinese officials for human rights abuses, President Donald Trump said he had held off on the sanctions so as not to interfere with the U.S.-China trade deal, a June 21 Axios report said. The report comes amid a series of U.S. and China steps that have further deteriorated the trade relationship, including threats of U.S. sanctions and moves by China to reduce agricultural purchases.
The Bureau of Industry and Security's increased restrictions on shipments to military end-users (see 2004270027) presents “significant questions” for industry, which may struggle to comply with the new due diligence expectations, said Ajay Kuntamukkala, an export controls lawyer with Hogan Lovells and a former BIS official. Kuntamukkala said the rule will “significantly impact business transactions” with Chinese entities.
Amid rising U.S.-China technology competition, Congress will continue to push for increased restrictions on inbound Chinese investment, said Rep. Darin LaHood, R-Ill. LaHood also said the Trump administration -- which has experienced success using tariffs and export controls to gain ground in trade negotiations -- will likely continue to leverage those measures, particularly against China.
A Chinese national was sentenced to three years in prison after trying to illegally export a radio designated as a defense article to China, the Justice Department said in a June 12 press release. Qingshan Li bought the export-controlled radio -- a U.S. military Harris Falcon III AN/PRC 152A -- in the U.S. and picked it up from a San Diego storage unit last year. Li intended to take the radio to Tijuana, Mexico, in order to ship it to China from there because of Mexico’s lack of export control rules. Li was eventually stopped by U.S. authorities, who found the radio and other military equipment in his bag, the Justice Department said. Li said he knew the radio was export controlled, the agency said.
Clete Willems, former White House deputy assistant to the president for international economics, believes the U.S. must convince allies to present a unified front to China on industrial subsidies, censorship and cybersecurity issues. Willems, who is now a lobbyist with Akin Gump, was speaking during a June 12 online program of the Asia Society. When it's just the U.S. arguing for reforms, he said, China can portray it as the U.S. trying to keep China down. But, he said, it might be possible to get China to change, “if we are able to portray them as an international outlier, which I think they are.”
Companies operating in Hong Kong and mainland China should be reviewing their portfolios in preparation for increased U.S. export controls, which could impact a wide range of global firms, a Mayer Brown trade lawyer said. Aside from sanctions against Chinese officials for interference in Hong Kong’s autonomy, the U.S. is likely to align export control policies for Hong Kong with its policies toward mainland China, creating a significantly more restrictive trade environment, the lawyer said.
State-controlled and private Chinese buyers continue to purchase U.S. soybeans, despite growing tensions between the two countries (see 2005290047), Bloomberg reported June 10. Chinese companies purchased at least 10 cargoes of soybeans this month, Bloomberg said, which came after earlier reports that China was halting certain agricultural imports from the U.S., including soybeans, pork, corn and cotton (see 2006010044).