After many associations urged the Commerce Department to grant more time for comments on its next advance NPRM for foundational technologies, officials said it will consider the request but suggested industry has ample time. “There’s no surprise that it’s coming,” said Rich Ashooh, assistant secretary-export administration, at the Bureau of Industry and Security’s annual export controls conference this week. Nazak Nikakhtar, undersecretary-industry and security, said companies should have given “quite a bit of thought” to foundational technologies already. “That it’s been out there for a while, and everybody knows the foundational technology piece is coming, hopefully businesses have given thoughts to their comments.” Nikakhtar said BIS plans the notice “very, very soon.” BIS plans its first proposed set of rules for export controls on emerging technologies in “weeks, but not months,” Ashooh said. But Nikakhtar said Commerce is moving slowly to make sure it's fully “understanding the technologies, understanding the applications” and “going about this in the right way.” Ashooh said the upcoming controls won’t be a “categorical rule” on broad groups of technologies but instead will be applied slowly to individual components. He said BIS is working on controls on one “basket” of technologies and will continue to issue more controls as they're created. “This process will have no end,” he said. “It will continue as technologies continue.”

The Office of the U.S. Trade Representative will begin a Section 301 investigation of France’s new digital services tax, which just passed the French parliament, USTR said: The 3 percent tax’s structure “as well as statements by officials suggest that France is unfairly targeting the tax at certain U.S.-based technology companies." A Federal Register notice will follow with instructions on how to comment on or testify, USTR said Wednesday. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., praised the investigation’s launch. “The United States would not need to pursue this path if other countries would abandon these unilateral actions and focus their energies on the multilateral process that is underway at the Organization for Economic Cooperation and Development,” they said. The U.S. Chamber of Commerce, Information Technology and Innovation Foundation, Information Technology Industry Council and Computer and Communications Industry Association welcomed the investigation, in statements through Thursday. French President Emmanuel Macron hadn't yet signed the bill, also passed Thursday.

The Commerce Department is reviewing export license applications to sell to Huawei to “mitigate as much of the negative impacts of the entity listing as possible” and hopes to have decisions “soon,” said Nazak Nikakhtar, Commerce undersecretary-industry and security. Nikakhtar, speaking Tuesday at Commerce's Bureau of Industry and Security’s annual export controls conference, briefly discussed Huawei after Commerce Secretary Wilbur Ross told the conference Huawei won't be removed from BIS’ entity list, confirming July 3 comments from a spokesperson (see 1907050003). Commerce is planning to roll back some restrictions on export licenses to Huawei and evaluate applications based on their U.S. national security impacts. White House Chief Economic Adviser Larry Kudlow said at a Tuesday CNBC event that some Huawei “general merchandise” sales will be permitted. Commerce’s altered approach came from recent feedback from U.S. companies, said Nikakhtar. “We’re moving forward cautiously by recognizing that the right approach is one that allows U.S. businesses to grow while we don’t stifle innovation but importantly while we also protect national security,” she said. President Donald Trump initially made the announcement at the G-20 Summit in Japan, saying the U.S. and China had agreed to resume trade talks (see 1907020060). Nikakhtar said BIS “recognizes the impact our entity listing has on U.S. exporters” and urged companies to make use of the 90-day temporary general license the agency issued in May. She said BIS hopes U.S. industries “consider shifting towards other sources of equipment, software and technology.” Huawei’s inclusion on the entity list “was not taken lightly,” Nikakhtar said. “We should not, nor should we ever, fail to take action because of a company's size or our dependence on export sales.”

Though President Donald Trump delayed imposing List 4 Section 301 tariffs to restart negotiations with the Chinese toward a comprehensive trade deal (see 1907010015), retailers continue stocking up on inventory as a hedge against the duties taking effect on short notice, said the National Retail Federation Wednesday. Imports at major U.S. retail container ports will remain at high levels this summer, “but are expected to grow only modestly compared with last year’s rush to bring merchandise into the country ahead of scheduled tariff increases,” said NRF. “Retailers still want to protect their customers against potential price increases that would come with any additional tariffs, but with the latest proposed tariffs on hold for now and warehouses bulging, there’s only so much they can do,” it said. “We will still see some near-record numbers this summer, but right now no one knows whether there will be additional tariffs or not.” U.S. ports handled 1.85 million 20-foot-long cargo containers or their equivalents in May, up 6 percent from April and a 1.4 percent increase from May 2018, said NRF. It’s estimated that ports handled 1.87 million containers in June, an increase of only 0.8 percent year over year. The July forecast is for 1.93 million containers to be handled, which would be 1.3 percent higher than the July 2018 volume, it said: “The small year-over-year increases expected in the next few months compare with double-digit growth in multiple months last year as retailers rushed to import Chinese merchandise ahead of expected tariff increases.”

Though the Trump administration “delayed” imposing new List 4 Section 301 tariffs on Chinese imports (see 1907010015), “it does not mean they will not be implemented at a later date,” emailed Ricoh USA to business customers Tuesday. Though “mitigation efforts are already underway,” Ricoh’s “increased costs (if new tariffs are implemented) may lead to increased pricing for new purchases,” it said. “Should that occur, we will continue to keep you updated.”

The Trump administration initiated “formal consultations” Tuesday with the South Korean government aimed at bolstering the due-process rights of U.S. companies that go before the Korea Fair Trade Commission, said the Office of the U.S. Trade Representative. Procedural “shortcomings” denied U.S. companies “certain rights” when going before the commission in “competition hearings,” said USTR. U.S. firms were denied the opportunity in the hearings to “review and rebut the evidence against them,” in violation of the U.S.-Korea free-trade agreement, it said. The administration wants Korea to act immediately to bring it “into compliance” with the trade agreement, said USTR. “Pending amendments” to the agreement “fail to address U.S. concerns” that the hearings “continue to deny U.S. firms due process rights,” it said. The Korean Embassy in Washington didn’t comment.

The Commerce Department will continue its presumption of denial policy for license applications for exports to Huawei, a Commerce spokesperson said, saying the Chinese company remains on Commerce’s entity list. The department will review export license applications for “their national security impacts” and plans to review licenses “under the highest national security scrutiny,” the spokesperson said. At the G-20 Summit in Japan, President Donald Trump announced the U.S. will loosen restrictions on exports to Huawei and allow U.S. companies to “sell their equipment” as long as “there’s no great national emergency problem.” National Economic Council Director Larry Kudlow said June 30 the U.S. will grant license applications for products that China can easily get elsewhere. There has been uncertainty about which specific products will get export licenses and when the changes will take effect (see 1907020017). “The Department intends to notify companies of decisions on export license applications once the review is complete,” the Commerce spokesperson emailed Wednesday.

Los Angeles resident Yi-Chi Shih, former president of China-based Chengdu GaStone Technology Co. (CGTC), was found guilty of conspiring to illegally export semiconductor chips to China, violating the International Emergency Economic Powers Act, DOJ said Tuesday. Shih gained access to a “protected computer” of a U.S. company that makes monolithic microwave integrated circuits (MMICs), before exporting the chips, which are used by the U.S. military for missiles and fighter jets, it said. Shih accessed the company’s computer systems with a co-conspirator by posing as a domestic customer looking to buy custom-designed MMICs that would be used only in the U.S., DOJ said. Shih illegally exported the ICs, without a license from the Commerce Department, to CGTC, which was building a MMIC manufacturing company in China, said Justice. CGTC was added to Commerce’s entity list in 2014, for “illicit procurement of commodities and items for unauthorized military end use in China.” Shih faces a statutory maximum federal sentence of 219 years.

Element Electronics, which assembles LCD TVs in Winnsboro, South Carolina, for sale through Walmart, Target and Costco, hasn’t “taken a position” on whether Section 301 tariffs should be slapped on finished TVs from China, General Counsel David Baer told a List 4 hearing June 17, according to a newly posted transcript. Baer spoke at the hearing to urge the removal from List 4 of the LCD panels and motherboards Element sources from China. Even when those goods weren't being considered for tariffs on List 1, Baer appeared at a May 2018 hearing to argue for finished TVs from China to be assessed 25 percent tariffs. Section 301 tariffs have “the potential to level the playing field for Element's U.S. work force and workers across America,” said Baer then. “Element supports the inclusion of finished TVs in the scope of the 301.” Baer said Element had an unfair disadvantage against competitors that imported finished TVs from China at 3.9 percent duties and sourced them from Mexico duty-free, versus the 4.5 percent tariffs it pays to import LCD modules from China. Baer didn’t respond to emails Tuesday seeking comment on why the company changed its position about tariffs on finished TVs from China. List 4 includes proposed tariffs on finished TVs, plus the LCD components Element sources from China.

With President Donald Trump’s announcement that U.S. companies will be allowed to sell to Huawei (see 1907010070 or 1907010015), it remains unclear how and if the Commerce Department will amend its May notice that added Huawei to the agency’s entity list and banned all exports of items subject to the export administration regulations with a review policy of presumption of denial. “That does not appear to be decided yet,” said William Reinsch of the Center for Strategic and International Studies and Commerce’s former undersecretary for export administration. Reinsch expects Commerce to keep its “presumption of denial” policy “but manage it by adding and subtracting to the” temporary general license. The temporary general license will likely be extended past the original 90-days and be expanded to cover more items, Reinsch said. “The debate will be about what items will be covered,” Reinsch emailed. “Everything else will be subject to a presumption of denial, which means you can apply but don’t hold your breath waiting for a ‘yes.’” Alternatively, Commerce could change its review policy to a case-by-case basis, Reinsch said, noting it’s more likely the agency simply expands its temporary general license. “I think it’s easier for them administratively,” Reinsch said. “If they change it, it would require another” Federal Register notice. Semiconductor Industry Association President John Neuffer called the announcement “good news for the semiconductor industry, the overall tech sector, and the world’s two largest economies.” Commerce plans to grant export licenses for products that China can easily get from other countries, including “various chips and software,” said National Economic Council Director Larry Kudlow Sunday on CBS and Fox News. “Anything to do with national security concerns will not receive a new license from the Commerce Department,” Kudlow said on CBS. A U.S.-China Business Council spokesperson said the specifics of the announcement were unclear but the move likely will provide relief for U.S. exporters. The net effect and next steps in Congress are difficult to predict (see 1907020060).