The Office of the U.S. Trade Representative will issue its Section 301 investigation report and “any proposed action in the investigation” Monday on France’s digital service tax (DST), said the agency Wednesday. Tech firms and trade associations blasted the DST during the summer as a radical departure from international norm that discriminates against U.S. companies and undermines efforts to reach global, multilateral consensus on the digital economy (see 1908190043). France’s DST “invites other trading partners to similarly disregard their international commitments and move forward with their own proposed taxes,” said the Computer & Communications Industry Association Wednesday. “A timely, proportionate and impactful response is needed by the U.S. to send a message that our trading partners may not single out American enterprises for discriminatory treatment.”

The Commerce Department proposed new procedures for reviewing transactions, including imports, that involve information and communications technology and services seen as a potential national security threat, it said Tuesday. The proposed rules are aimed at implementing President Donald Trump's May executive order, which directed Commerce to issue regulations to bar some foreign companies' technology from U.S. networks. The order was seen potentially targeting Chinese's Huawei and ZTE (see 1905150066). Commerce proposes "a case-by-case, fact-specific approach to determine those transactions that meet the requirements" in the EO. Parties subject to it will be expected to "maintain records related to such transaction in a manner consistent with the recordkeeping practices used in their ordinary course of business for such a transaction," Commerce says in Wednesday's Federal Register. Transactions are "any acquisition, importation, transfer, installation, dealing in, or use of any information and communications technology or service." Transactions subject to the reviews are any that involve people or property under U.S. jurisdiction, plus "any property in which any foreign country or a national thereof has an interest," it says. Transactions "initiated, pending, or completed" after May 15 would be subject to review. Comments are due Dec. 27 in docket DOC-2019-0005 via Regulations.gov. The Telecommunications Industry Association “has long maintained that supply chain risk management is best addressed by public-private partnerships and consensus-based, industry-driven standards, but there is a place for targeted and careful government intervention,” said CEO David Stehlin. “Today’s rules exemplify this approach and, through the invitation of comments from industry, represent a clear step forward towards a public-private effort." USTelecom is glad Commerce accepted “our recommendation to seek industry comment before establishing interim final rules, a process that should reduce the risk of unintended consequences,” said Senior Vice President-Cybersecurity Robert Mayer. “We are especially encouraged the Department has already adopted a process to determine whether a transaction meets the requirements.” The Information Technology Industry Council appreciates Commerce's “wise decision to issue proposed rather than final rules to maximize the ability of the Department to account for crucial industry feedback,” said CEO Jason Oxman. “The tech industry will continue to engage with the White House, Commerce, and other stakeholders to ensure this process furthers important national security imperatives while allowing U.S. innovation to thrive as it is finalized.”

Apple was fined about $465,000 for violating foreign narcotics kingpin sanctions regulations after it hosted, sold and “facilitated the transfer” of software applications and content belonging to a sanctioned company, Treasury Department’s Office of Foreign Assets Control said Monday. Apple allegedly dealt in “the property and interests” of SIS, a Slovenian software company added to OFAC’s specially designated nationals list in 2015. Apple didn't comment Tuesday.

Bose said it’s “actively pursuing” production-sourcing outside China for the two categories of products for which it applied Friday for exclusions from the 15 percent List 4A Section 301 tariffs that took effect Sept. 1. The S1 Pro Bluetooth portable speaker system that Bose imports under the 8518.22.00.00 tariff code “is built to unique specifications and is currently produced only in China,” said one tariff request posted in the U.S. Trade Representative’s public docket. “We are exploring alternatives, but it will require a significant amount of time and investment to move manufacturing.” The S1 Pro sells for $599 to a wide variety of target audiences, including campers and amateur DJs. The noise-cancelling wireless headphones Bose sources from China under the 8517.62.00.90 tariff code contain a “microphone system that automatically adapts to the user’s environment to isolate voice from competing background noises,” said Bose in its other exclusion request. Bose markets several models of noise-cancelling wireless headphones, but the exclusion request was not product-specific as it was for the S1 Pro. Bose in both requests blocked as “business confidential” its arguments for seeking an exemption, including its discussion of efforts to find sourcing in the U.S. or third countries. Public responses for or against the exclusion requests are due Dec. 6 in the public docket, and Bose would have seven days to reply. Bose didn’t comment Friday.

Fifteen senators asked the Commerce Department to reverse its decision to approve Huawei-related export licenses (see 1911210027) for U.S. companies to have their products included in the Chinese telecom maker's equipment. The senators, led by Minority Leader Chuck Schumer, D-N.Y., and Tom Cotton, R-Ark., wrote President Donald Trump Thursday they're “concerned that the approval of additional, more permanent licenses will allow Huawei to fully resume its engagement with certain U.S. firms without an adequate assessment of the risks to national security.” Though the legislators acknowledged license decisions will come under a review with presumption of denial, they fear several licenses will be granted after Commerce Secretary Wilbur Ross said the agency plans to grant “quite a few." Democratic presidential candidates Cory Booker, New Jersey, and Elizabeth Warren, Massachusetts, were among the signers. Commerce "is issuing these narrow licenses to authorize limited and specific activities which do not pose a significant risk to the national security or foreign policy interests of the U.S.," a spokesperson emailed Friday. "These applications were approved through an interagency license review process." Huawei and its affiliates remain on the department's entity list subjecting it to restrictions, the representative noted.

The Commerce Department Bureau of Industry and Security finalized some interagency reviews of Huawei license applications and will begin issuing approvals and denials on a “rolling basis,” said Matt Borman, Commerce deputy assistant secretary-export administration. Secretary Wilbur Ross said the department will "send out the 20-day intent-to-deny letters and some approvals” for U.S. companies to export some things to the Chinese telecom gearmaker. Ross said Commerce got about 290 “requests for specific licenses.” BIS plans to approve at least “several” licenses while denying others, a Commerce spokesperson told us after Borman spoke at the agency's Materials and Equipment Technical Advisory Committee meeting Wednesday. The Semiconductor Industry Association welcomes approvals for licenses that aren't national security threats. “Sales of these non-sensitive commercial products help ensure the competitiveness of the U.S. semiconductor industry, which is essential to national security,” said SIA President John Neuffer.

Element Electronics applied for an exclusion to the 15 percent List 4A Section 301 tariffs on the LCD main board assemblies it imports from China under the 8529.90.13.00 tariff code to assemble finished TVs in South Carolina, said a posting Thursday in the Office of U.S. Trade Representative’s public docket. The main board assemblies “are combined with LCD panel assemblies and other components to assemble a complete LCD television,” said Element. “There are currently no U.S. or third country sources available to Element for the LCD main board assemblies Element imports to assemble finished LCD TVs.” Element applied Nov. 1 for a List 4A exclusion on the LCD panel assemblies it sources from China under the 9013.80.90.00 tariff code (see 1911040030). Element didn’t respond to emails asking why it waited three weeks to file the second exclusion request. The LCD TVs Element builds in South Carolina are sold through Costco, Walmart and other big-box retailers.

The Commerce Department hopes to release proposed controls on emerging technology exports “in the next couple weeks,” said Matt Borman, deputy undersecretary for export administration. “We’ve got a set that we’re working on in internal review,” he told a Materials and Equipment Technical Advisory Committee meeting Wednesday. “So we’re hoping to get those through interagency [review] and out for public comment in the next couple weeks.” Officials have said for months the controls would be released soon, and companies and trade groups are growing concerned (see 1911070026). Also at the meeting, Borman said decisions on Huawei license applications are coming (see 1911210027).

China strongly condemns the U.S. Senate’s unanimous passage Tuesday of the Hong Kong Human Rights and Democracy Act, said a Foreign Affairs Ministry spokesperson Wednesday. The bill (S-1838), introduced by Sen. Marco Rubio, R-Fla., would authorize the president to impose sanctions on China, including barring from U.S. entry individuals alleged to be responsible for violating human rights in Hong Kong. Similar legislation (HR-3289) cleared the House Oct. 15 by voice vote. “China will have to take strong countermeasures to defend our national sovereignty, security and development interests if the U.S. is bent on having its own way,” said the spokesperson. “No one should underestimate China's determination to defend its national sovereignty, security and development interests.” He sidestepped questions about whether China’s threatened retaliation would endanger the U.S.-China trade talks. “China and the U.S. remain in close communication” on trade, said the spokesperson. “We hope the U.S. will work with China to find a proper settlement on the basis of mutual respect, equality and mutual benefit.”

The U.S. should study China’s efforts to dominate emerging technology sectors, said the U.S.-China Economic and Security Review Commission. The congressionally created commission's annual report said China's outpacing the U.S. in artificial intelligence. Though it recommended Congress consider increased export controls, it said curbs on smart chips may “only accelerate China’s efforts to produce sophisticated chips domestically.” China faces “nearly insurmountable” hurdles in its effort to develop comparable technology to that of the U.S., as China’s semiconductor industry “is still heavily reliant on foundational technology dominated by U.S. firms,” the panel said Thursday. China's taking a “commanding position” in commercial satellite sectors, the commission found: That lets the country undercut some U.S. and other countries’ launch and satellite providers. The commission urged Congress to direct the National Science Foundation and the Trump administration to study China’s influence in international bodies charged with developing standards for emerging technologies. The China Embassy didn't comment.