US Export Controls 'Confusing, Burdensome,' AmCham Says

The report, compiled from the Chamber’s interviews with compliance and supply chain managers of 16 member companies, listed several main categories wherein U.S. companies are suffering the most: loss of revenue, damage to their reputations, competitive disadvantages among foreign buyers, a loss of trust, an increase in legal confusion, the abrupt nature of policy announcements and lengthy license review times. The report also covers businesses’ concerns with the Commerce Department Bureau of Industry and Security's Entity List, the Unverified List and the upcoming export controls on emerging and foundational technologies.

AmCham member companies said they have experienced “significant losses in revenue” due to “canceled orders and lost sales” from companies being added to the Entity List. This has led, in part, to a diminished U.S. reputation of trustworthiness and reliability, specifically in China, the report said. In addition, the increased U.S. export controls and regulations, specifically related to Huawei, have created a “compliance minefield” that requires companies to spend more money on lawyers, it said.

One U.S. semiconductor company reported “significant business loss” because one-third of its annual profit comes from doing business in China, the company told the Chamber. Because of additions to the Entity List, the company has been “disproportionately impacted,” and with only 15 to 20 customers, the company’s supply chain is “largely inflexible,” the report said.

U.S. export controls may also inadvertently strengthen China’s development of emerging technologies “through nationalization and the strengthening of local industries,” the report said. Because U.S. companies are banned from exporting to certain Chinese markets, other foreign suppliers will fill the void, the Chamber said.

“Competitors would love to see our business with Huawei ending,” one multinational technology company told the Chamber. Another company said the U.S. should do a better job of convincing its allies to impose similar controls. “If we want to limit our export control with certain China companies, I am 100% for this but it should not be the U.S. only,” the semiconductor company said. “We should be followed by our alliance countries like the European Union, Japan, and Korea. If we act together that is fair, otherwise it will destroy your industry and economy.”

The companies were also critical of the Trump administration, saying policy announcements are “too sudden” and are “often announced without warning or substantive guidance.” And when companies apply for exemptions to export controls, the processing times are “overly protracted,” the report said, and require “onerous documentation.” Commerce averages a 30-day review period, one software company told the Chamber, which will likely get longer because of the interagency approval required for Huawei-related licenses.

AmCham made several recommendations, including asking the Trump administration to propose regulations on emerging and foundational technologies that are “tailored to avoid unwarranted restrictions” and target “only truly sensitive technologies.” The U.S. should also better partner with the industry to understand where there is “consensus regarding potentially targeted technologies and their current availability world-wide,” the report said, and reward companies with “strong” compliance programs with certain exceptions for Export Administration Regulation requirements. Exceptions could include a “streamlined export licensing process” or “additional exceptions.”

The Chamber also said that upcoming regulations on emerging and foundational technologies, which Commerce is working to publish (see 1909030037), should be introduced with multilateral support from allies. Commerce should also better consider impacts on U.S. industry when adding to the Entity List, the report said, allow for a comment period for “industry consultation” and a longer “timeframe to enact the necessary policy changes to ensure effective compliance.”

Lastly, to reduce the compliance burden on U.S. industries, BIS should be “adequately staffed” to ensure “license applications are processed effectively” and to ensure “openness and transparency are maintained to the greatest degree possible.” Commerce should also consider investing in U.S. commercial competitiveness, adding that Chinese companies in emerging industries benefit from “far more” investment from their government than U.S. companies receive.

The report will be taken along when AmCham Shanghai’s "annual Doorknock delegation" makes a visit to Washington this month and be "presented to the Trump administration and Congress," the group's website says.