Commerce Should Hold Off on Major Export Control Actions During Pandemic, Industry Officials Say

Some companies are concerned about the possibility of the Commerce Department issuing major export control actions during the COVID-19 pandemic, which they say will compound economic hardships caused by the mitigation response to the highly contagious disease. In interviews, industry officials said they are unsure about their ability to manage sweeping regulatory changes even as they acknowledge that a moratorium on export control actions is unlikely.

“Right now everybody is just completely throwing everything they have at managing this pandemic,” an auto industry official said. “There's just no bandwidth to process this stuff right now.” Although Congress has pushed for more export controls against China (see 2003300039) -- and some industry representatives have urged Commerce to more quickly issue controls over emerging technologies (see 1911070014) -- industry officials said new measures now would be met with industry backlash.

“This is the worst possible time to sort of add another layer of complexity to an already extremely complex situation,” the auto industry official said. The person said they have not heard from Commerce’s Bureau of Industry and Security about plans to postpone actions until after the pandemic subsides. “I would sincerely hope they would not throw anything else at companies right now,” the person said. BIS declined to comment.

Commerce issued a rule last week to increase export restrictions for China, Venezuela and Russia (see 2004270027) and eliminated a license exception for civil end-users (see 2004270026), both of which take effect next month. The agency is also considering restricting the number of destination countries eligible for a license exception for certain re-exports (see 2004270025).

“Some companies in the technology space might be struggling for reasons related to the virus, and don't have the capacity to deal with that,” a technology industry official said. The official added that BIS is likely considering how regulatory changes will affect exporters amid the economic crisis, which may also impact the quality of public comments BIS receives. “We would handle it if they do come out,” the official said of future Commerce actions. “But I could definitely see the current crisis being in consideration [for BIS] as far as release goes.”

Another technology industry representative said the pandemic response is “stretching resources thin” and causing “a lot of uncertainty” for companies in the export space, which could hurt their ability to respond to new regulations. “I don't think that any government policy of any sort, whether it's regulatory or otherwise, that's going to potentially cause any type of economic slowdown on any front, would be welcomed by many companies right now,” that person said.

While some companies are likely busy trying to manage the required measures to respond to the pandemic, others may have more time to address regulatory actions due to remote working conditions, trade lawyer Doug Jacobson said. “They may have more time on their hands to do things that they may not have been able to focus on before,” Jacobson said in a recent interview. Jacobson’s clients have not explicitly expressed concerns about how they will manage export control actions during the pandemic, he said, adding that he understands how others may be worried. “Obviously companies have a lot on their plate right now,” he said. “You have to prioritize.”