Suspending BIS Affiliates Rule Was 'Big Mistake,' Lawmaker Says
Sen. Chris Van Hollen, D-Md., this week criticized the Trump administration’s decision to suspend the Bureau of Industry and Security's 50% rule (see 2510300024) and allow exports of Nvidia H200 chips to China, suggesting the U.S. is sacrificing national security for improved trade relations with China.
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Suspending the 50% rule, known as the Affiliates Rule, was a “big mistake,” Van Hollen said during a Senate Appropriations Committee hearing with U.S. Trade Representative Jameison Greer. Van Hollen said he was at first “glad” that the Trump administration appeared to be closing a “loophole” in which unlisted affiliates of Chinese Entity Listed companies were allowed to evade strict export license requirements. But then the rule “seems to have been traded away” during a meeting between Trump and President Xi Jinping in South Korea.
Greer noted that the U.S., in exchange, got Beijing to suspend its sweeping rare earth export controls. “This threatened our entire industrial supply chain to have the rare earths be held over a barrel like that,” Greer said.
He said the administration’s decision to suspend the Affiliates Rule was meant to create a trade truce with China, buying time for the U.S. to “reindustrialize” its rare earth industry and supply chain so it won’t be susceptible to Chinese export controls in the future. “We want to get along with China. We want to get rare earths from China while we reindustrialize,” Greer said. “So it makes total sense to try to have good relations with China, rather than blow up the global economy.”
Van Hollen agreed, saying “there's no reason to have bad relations where it's not necessary.” But he also said the Affiliates Rule shouldn’t have been suspended. “Obviously, we want to protect our national security, and in my view, this was a big mistake,” he said. “I don't think we should be compromising our national security to advance a trade agreement.”
Asked whether he believes the Affiliates Rule is “vital” for U.S. national security, Greer didn’t directly answer. “I think it would be helpful,” he said. “Congress did not include it in [the Export Control Reform Act] that they passed in 2018. For 40 years we didn't have that. Congress didn't pass it.” But the administration “thought it could be a good idea.”
Van Hollen also questioned Trump’s recent announcement that he plans to approve certain exports of Nvidia’s H200 chips to China and other chips to the United Arab Emirates. He said the Nvidia decision “undermines our national security,” and he was critical of the Commerce Department's decision to allow UAE-based AI company G42 to buy sensitive Nvidia chips (see 2511190068).
Van Hollen and Sen. Elizabeth Warren, D-Mass., sent a letter to the White House in May expressing concern about Emirati state-owned investment firm MGX agreeing to invest in what Van Hollen called the “Trump family crypto coin business.” He added that the chairman of MGX, Sheik Tahnoun Bin Zayed Al Nahya, also is the chair of G42.
Al Nahya is “part of the Emirati royal family, is a very good businessman, and obviously got a good deal from the president of the United States,” Van Hollen said.