Companies are continuing to see heavy U.S. enforcement surrounding Chinese attempts to steal U.S. trade secrets, and the government is increasingly expecting U.S. companies to voluntarily disclose violations surrounding those and other cases, lawyers said. The U.S. is hoping to increase enforcement by incentivizing companies to self-disclose sanctions and export control compliance mistakes, especially through the Department of Justice's revised disclosure policy guidelines (see 1912130047), the lawyers said.

The Biden administration is preparing to launch new export controls and investment screening initiatives to more closely coordinate with allies and better combat Chinese attempts to acquire advanced technologies, the U.S. secretary of state and national security adviser said July 13. Although the administration supports offensive tools, such as more funding for the domestic semiconductor sector, both officials said the U.S will continue to evolve its approach to defensive trade restrictions.

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President Joe Biden nominated Alan Estevez, a former Obama administration Pentagon official, to lead the Bureau of Industry and Security, the White House announced July 13. Estevez is currently a defense and security consultant with Deloitte Consulting after serving as the principal deputy undersecretary of defense for acquisition, technology, and logistics and representing the Defense Department on the Committee on Foreign Investment in the U.S. Estevez didn’t respond to a request for comment.

The U.S. updated its Xinjiang Supply Chain Business Advisory, highlighting the increasing supply chain, sanctions, labor and export control risks of doing business in the Xinjiang region. The July 13 update, which builds and expands on the original advisory issued last year (see 2007010040), says China is committing genocide through its human rights violations against Muslim minorities, provides guidance to businesses that may invest in implicated Chinese companies, updates a list of U.S. enforcement actions related to Xinjiang and "strengthens" recommendations for companies that risk doing business in the region.

The Treasury Department issued a new general license authorizing certain exports and reexports of oil to the Venezuelan government and Petroleos de Venezuela, the country’s state-run energy company. General License No. 40, issued July 12, authorizes transactions related to indirect or direct exports and reexports of liquefied natural gas to PdVSA and any entity it owns by 50% or more. The transactions are authorized through 12:01 a.m. July 8, 2022.

The Bureau of Industry and Security added 34 entities under 43 entries to Entity List, BIS said in a final rule. Fourteen of those entities are based in China and “have enabled Beijing’s campaign of repression, mass detention, and high-technology surveillance against Uyghurs, Kazakhs, and members of other Muslim minority groups in the Xinjiang Uyghur Autonomous Regions of China (XUAR), where the PRC continues to commit genocide and crimes against humanity,” the Commerce Department said in a news release. Another five of the entities were “directly supporting PRC’s military modernization programs related to lasers and C4ISR programs, Commerce said.

Several U.S. and foreign companies in June and July provided updates to their transactions that require foreign investment reviews and approvals. The deals include a signed national security agreement (NSA) with the Committee on Foreign Investment in the U.S., plans to file joint CFIUS declarations and a stalled purchase involving a South Korean semiconductor company.

China’s recently passed foreign sanctions law gives it broad discretion to penalize companies for obeying U.S. and other countries' restrictions against China, although it remains unclear how China will use the new tools and what specific activities will be targeted, law firms said. Even so, businesses operating in China should closely review the new law, which passed the National People’s Congress in June (see 2106150030) and closely mirrors U.S. regulations. “It creates a menu of countersanctions available to Chinese authorities” that are “taken straight from the U.S. sanctions playbook,” Morrison & Foerster said in a June 30 post.

The State Department’s Directorate of Defense Trade Controls significantly increased its end-user checks from 2019 to 2020, partially because the agency was able to dedicate more resources to its Blue Lantern program after it transferred certain gun export controls to the Commerce Department last year. In its annual Blue Lantern report released July 6 -- which details the agency’s end-use monitoring efforts on controlled defense articles and services -- DDTC said it initiated checks on 272 export licenses or applications during the 2020 fiscal year, an increase of more than 45% from 2019.