New Export Controls on China Could Be Coming, Law Firm Says

The Trump administration is expected to complete a review of the current scope of U.S. export controls on countries subject to arms embargoes, including China, and may make potential regulatory changes by May 10, according to an April 5 blog post from Steptoe & Johnson. The administration’s review stems from a section of the 2018 Export Control Reform Act, which requires a “review relating to countries subject to comprehensive United States arms embargo.” The act specifically requires the Commerce, State and Defense departments, among others, to review export controls on trades with “military end uses and military end users,” according to the post.

The post suggests that changes could be coming to the Bureau of Industry and Security's export restrictions on products with “military end-uses” in China because the current restrictions are “relatively narrow.” It said the list of items in the Export Administration Regulations could be expanded from its current definition, which only applies to the “incorporation of an item into other military products or technologies” and does not “restrict exports for most direct uses by the Chinese military.” The post said BIS could broaden the restriction “to apply to any ‘military end user’ in China, a concept that already exists in the regulations for Russia and Venezuela, and to a lesser extent for Iraq.”

The post also suggests that BIS could eliminate the list of items that “narrows the scope” of the restriction and instead apply the restriction to “any items exported” to China. “It should go without saying that an extension of export controls to military-linked parties in China could have serious implications for international trade and technology transfers,” the firm said. “Companies doing business with China, particularly in high-tech sectors, should keep an eye on this issue.”

While the executive branch is required to review the export controls, there is no requirement to change regulations, the report said, adding that the administration “could maintain the status quo and find that current regulations are appropriate.” But the report said that growing “concerns” among the Trump administration and Congress with China could lead to changes.