Questions Remain About How US, EU Will Treat Legacy Chips, Panelist Says
Although the U.S. and the EU have been collaborating more closely on technology export controls and supply chain due diligence laws, there are still “massive questions” about whether those controls will extend to more mature-node semiconductors and how new EU supply chain laws are going to affect companies doing business in Europe, said U.S.-EU trade and security consultant Frances Burwell.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Burwell, speaking during an event last week hosted by the Atlantic Council, said both the EU and the U.S. governments need to better define what types of semiconductors it considers “strategic” enough to be subject to export controls.
Some observers, including at least one former Bureau of Industry and Security official, have called on the U.S. to restrict older, legacy chips (see 2311090015 and 2310270044), and Burwell noted that officials from both the U.S. and the EU discussed possible policies for mature chips during the last Trade and Technology Council meeting in April (see 2404050030).
“You can't build a car or a washing machine or anything without regular chips, so do those become strategic because your whole industry, a major backbone of your economy, is about to collapse because it can't get the chips it needs? How far out does this go?” said Burwell, who is also an Atlantic Council fellow. “And I think that that's the question that we don't know.”
Claire Chu, a nonresident fellow with the Atlantic Council and senior China analyst at Janes, said Beijing is currently trying to buy and manufacture as many semiconductors as possible, “especially in light of potential expanded sanctions and export controls in the future.” BIS last revised its China-related chip export controls in April and is expected to continue updating them (see 2404010020)
But the more China invests in its chip industry and expands its chip “capabilities,” the more difficult it will be for the U.S. and other countries to “extract” China from global semiconductor supply chains, Chu said.
Burwell said the U.S. and the EU also must grapple with similar questions about other critical technologies. “What do you do if it's not just chips, but it's green technologies?” she said. “Those are the questions that I think that Europe is going to have to deal with.”
She said she expects the EU to soon complete its countervailing duty probe on Chinese electric vehicles (see 2310040012 and 2403150047) and impose tariffs on China that are “high enough to make the news cycle, but they won't stop the flow of cars into Europe.” China likely will retaliate, Burwell said, which could lead to a “kind of Kabuki dance for both sides to demonstrate their toughness.”
Burwell also pointed to the EU’s new bloc-wide supply chain due diligence rules (see 2405240031) and a regulation that prohibits both export and import of certain commodities if they come from land that was recently deforested (see 2212280032 and 2212070039). She said both sets of rules will be a “real challenge for companies,” particularly for smaller- to medium-sized firms.
“Europe has made a lot of progress. Their attitudes are shifting in some important ways,” Burwell said. “But we have some massive questions about implementation and how this is actually going to work, and the impact on companies, including U.S. companies, that are in the European market.”