The U.S. and China launched a new commercial trade working group and a new pathway to exchange information on export control enforcement, two initiatives to allow the countries to better communicate around sensitive trade issues, the Commerce Department announced during meetings between Washington and Beijing officials this week. The export enforcement information sharing initiative, which will meet for the first time this week, is aimed at reducing “misunderstanding” surrounding U.S. policies toward China, Commerce said, including export restrictions on critical and sensitive technologies.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
The Committee on Foreign Investment in the U.S. may continue to see a drop in short-form declarations, particularly if more declarations continue to result in full filings, said Laura Fraedrich, a lawyer with Lowenstein Sandler. She said the decrease in declarations submitted to CFIUS last year -- the first drop since the concept was introduced in 2018 -- highlights the challenges investors face in assessing how best to approach CFIUS.
U.S. national security agencies recently warned the American space industry about increasing risks of theft from foreign intelligence services, saying companies need to be vigilant to protect their technology, data and intellectual property. A joint alert issued this month by the FBI, the National Counterintelligence and Security Center and the Air Force includes a list of red flags that may signal IP theft from foreign intelligence bodies and explains how the space industry can mitigate those risks.
American chipmaker Nvidia continued to raise alarms this week about the potential of additional export restrictions on the U.S. semiconductor industry, saying new rules will hurt its long-term sales to China.
The Biden administration’s road to implement regulations for its outbound investment executive order will be “incredibly complex,” particularly if agencies disagree on how narrow or broad to scope the restrictions,Thomas Feddo, a former Treasury Department official, said during a webinar this week. Lawyers on the webinar said investors are “very concerned” about the rules having a potential “chilling” effect on a broad range of investments, especially if the government fails to adequately define a range of key terms in the executive order.
British semiconductor company Arm, in its initial U.S. public offering this week, said it’s facing uncertainty from U.S. and U.K. export controls and doesn’t expect to receive an export license to ship certain high performance processor cores to China. The company also said it’s expecting to see slower growth in its China sales revenue due to several factors, including various government-imposed “trade and national security policies.”
The U.S. and Europe should create a shared list of companies subject to investment restrictions, which would help both sides better harmonize their inbound and outbound screening rules and create a “level playing field” for investors, said Zongyuan Zoe Liu, a China studies fellow at the Council on Foreign Relations. She also said the two sides could create a shared “white list” of foreign investors that would be exempt from the restrictions, streamlining filings before the Committee on Foreign Investment in the U.S. and reviews conducted by EU member states.
The Treasury Department is putting eight more military bases under the jurisdiction of the Committee on Foreign Investment in the U.S. after proposing the additions in May (see 2305040052). The expansion, effective Sept. 22, includes the Grand Forks Air Force Base in North Dakota that was the subject of a controversial CFIUS decision last year (see 2212150035, 2212290023 and 2208310066) as well as bases in Texas, California, South Dakota, Iowa and Arizona. CFIUS will be able to intervene in certain land purchases by foreign buyers if they are near any of those sensitive military bases.
The Bureau of Industry and Security this week removed 33 entities from its Unverified List -- including Chinese technology companies and universities -- after it was able to successfully complete end-use checks. The entities include 27 based in China, two in Pakistan and one each in Indonesia, Singapore, Turkey and the United Arab Emirates. The agency also removed two Russian entities from the UVL because it placed both on the more restrictive Entity List last year.
Republicans last week urged the Biden administration against meeting with Beijing to discuss semiconductor export controls, saying the U.S. should not negotiate its policies with China and should instead enact tougher restrictions. They specifically asked Commerce Secretary Gina Raimondo, who is considering a trip to China, to pledge that the U.S. plans to increase its export restrictions against the country.