U.S policymakers should further study the extent to which U.S. investors support China’s artificial intelligence industry and should revise the scope of a Treasury Department list that restricts investments in Chinese military companies, experts from Georgetown University’s Center for Security and Emerging Technology said in a new report. The report also said the U.S. should consider imposing investment restrictions on certain companies added to the Entity List.
New U.S. chip export controls are among the most complex export regulatory provisions ever published and have caused significant uncertainty in the semiconductor industry, trade groups and technology firms told the Bureau of Industry and Security in comments that were due this week. More than 40 companies, trade associations, law firms and others asked BIS to revise parts of the regulations or offer more guidance to avoid hurting U.S. competitiveness, with some saying the new controls may force foreign companies to stop using U.S.-origin items altogether rather than deal with the added compliance obligations.
The Bureau of Industry and Security added seven Iranian entities to the Entity List this week for their involvement in drone transfers to Russia, the agency said in a final rule. The entities are Iranian producers of unmanned aerial vehicles, top BIS export enforcement official, Matthew Axelrod, said during a Toronto conference this week, adding that Russia is using the drones to “attack civilian infrastructure” in Ukraine.
The upcoming U.S. outbound investment review tool probably won’t be used to unwind past deals, and will likely only target investments in specific, sensitive technology areas, said Laura Black, a former Treasury Department official. But she said companies still should prepare for a new outbound investment executive order and be ready for other jurisdictions to implement their own outbound investment controls, including in the EU.
Despite requests from industry, the Bureau of Industry and Security may push back on publishing a comprehensive list of advanced Chinese semiconductor fabrication facilities that are subject to the October chip controls, said Kevin Wolf, an Akin Gump lawyer and former BIS official. But the agency could meet industry halfway and publish a list similar to its military end-user list (see 2012220027), which could be a regularly updated, noncomprehensive set of facilities subject to the agency’s China chip controls.
The Bureau of Industry and Security has drafted new guidance for its October rule that expanded certain China-related chip controls (see 2210070049) and hopes to release it soon, said Thea Kendler, the agency’s assistant secretary for export administration. Kendler, speaking during a virtual conference hosted by the Massachusetts Export Center last week, also touched on the rule’s expiring temporary general license and urged industry to submit feedback on the new restrictions before the deadline this week.
The U.S. should impose sanctions against China for allowing its companies to continue to supply semiconductors and other dual-use technologies to Russia, said Sen. Bob Menendez, chair of the Senate Foreign Relations Committee. Although the U.S. has penalized specific Chinese companies for supplying Russia -- including new sanctions this week -- Menendez said he wants to see a more “robust” set of measures.
The U.S. should double down on its resources, oversight and enforcement to prevent Russia from acquiring semiconductors and other dual-use goods used to power its war against Ukraine, the Silverado Policy Accelerator said in a report this week. If the broad Western export controls against Russia aren’t followed up with strict enforcement, the think tank said, Moscow will continue to find ways to import chips, including from China.
ASML, the Netherlands’ flagship semiconductor company, said it saw higher-than-expected fourth quarter revenue and expects a 25% increase in net sales this year despite challenges caused by existing and potential future export controls against China. The company also declined to predict whether the Netherlands will join the U.S. in imposing similar chip export restrictions but warned that broad controls could severely damage the semiconductor industry.
The Federal Maritime Commission will amend its proposed rule on unreasonable carrier conduct (see 2209130040), after industry, lawmakers and at least one federal agency said the rule was too broad, missed congressional intent and didn’t go far enough to address carriers that refuse to carry exports in favor of imports. The commission plans to issue a “supplemental notice of proposed rulemaking” to incorporate changes to the rule, FMC Chair Daniel Maffei said during a Jan. 25 commission meeting, adding that he hopes to publish the updates “as quickly as possible.”