Republicans Demand Tougher Export Controls, Criminal Charges for Huawei, SMIC

Republicans are asking the Biden administration to strengthen export controls against Huawei and Semiconductor Manufacturing International Company after Huawei this month unveiled a new smartphone that may have been made through means that violated U.S. export restrictions (see 2309120005). They said both technology companies should be subject to “full blocking sanctions” and their executives should face criminal investigations, adding that the Commerce Department should revoke all of their existing license applications, add all their subsidiaries to the Entity List and take other measures to cut off a broad range of shipments to both firms.

In a letter sent to the Bureau of Industry and Security last week, 10 House Republicans, including Foreign Affairs Committee Chair Michael McCaul, R-Texas, said they are “extremely troubled and perplexed” about BIS’ “inability to effectively write and enforce export control rules against violators, especially China.” They said BIS has continued to grant licenses to SMIC and other Chinese companies despite “continued Congressional pressure to adopt stricter policies.”

The lawmakers asked for a briefing with BIS and other agencies that oversee export controls by Sept. 28 and listed several recommendations for the administration to further limit sensitive technology exports to China, including by creating a new sanctions authority under the International Emergency Economic Powers Act specifically focused on China. The new sanctions authority should be used to target companies that “flout” export controls and should be leveraged to “designate SMIC and Huawei with full blocking sanctions.”

BIS should also place all Huawei and SMIC subsidiaries on the Entity List and make them subject to foreign direct product rule restrictions, which requires a license for certain foreign-origin exports to those companies if those products were made with certain U.S.-controlled technology or software. BIS should also put in place a license review policy of denial for Huawei and its subsidiaries for all items subject to the Export Administration regulations, eliminate all license exceptions for SMIC for all items subject to the EAR and “pursue criminal charges against executives” from both SMIC and Huawei.

“The circumstances before us demonstrate the need for additional pressure and more effective export controls on our adversaries,” the letter said. “Times have changed in our relations with China. It is beyond time for our bureaucracy to as well.”

Sen. Marco Rubio, R-Fla, in a similar letter to Commerce Secretary Gina Raimondo, said the agency should revoke all existing export licenses to Huawei, apply FDP rule restrictions to SMIC and deny export licenses to Huawei’s “principal Chinese suppliers other than SMIC.” He also said foreign chipmakers should face “penalties” if they knowingly evade U.S. sanctions or controls to do business with Huawei.

“What is clear is that the export controls and sanctions the United States placed on Huawei and its suppliers have failed to stop them,” Rubio said. “It is painfully clear that tougher restrictions are needed.”

Spokespeople for Commerce and BIS didn't comment.