China’s Foreign Ministry criticized the U.S.’s May 19 decision to sanction a Chinese company for providing logistics services to an Iranian airline. A ministry spokesperson said “mutually beneficial and friendly cooperation” with Iran should be “respected” and urged the U.S. to revoke the sanctions. “I want to stress that at the crucial moment when the international community is mounting a joint fight against COVID-19, the U.S. practice of unilateralism and maximum pressure runs counter to the concerted international efforts against the pandemic and seriously violates humanitarianism.” the spokesperson said. The U.S. sanctioned China-based Shanghai Saint Logistics Limited for acting as a general sales agent for Mahan Air (see 2005190020).
Exports to China
Three senators are concerned the U.S.’s deal with the Taiwan Semiconductor Manufacturing Company (see 2005150033) may disadvantage U.S. chip companies through unfair subsidies and could allow China access to sensitive technologies. In a May 19 letter to the Commerce and Defense departments, Senate Minority Leader Chuck Schumer, D-N.Y., and Sens. Patrick Leahy, D-Vt., and Jack Reed, D-R.I., urged the administration to stop all negotiations with TSMC regarding plans to build a U.S.-based chip factory. The senators said they have “serious questions” about how the deal, announced last week, aligns with the U.S’s strategy of diversifying its semiconductor supply chain away from China.
China is considering additional import restrictions on Australian goods that would target Australia’s wine and dairy sector, according to a May 20 Bloomberg report. China recently placed restrictions on imports of Australian barley (see 2005180016) and beef (see 2005130013), but officials have composed a list of additional Australian goods they may target, which may also include seafood, oatmeal and fruit. Those products could become subject to stricter quality checks, antidumping investigations, tariffs or customs delays, the report said.
The top executive for customs policy at UPS said the consequence of the COVID-19 pandemic will be that companies “reassess everything” about supply chains. Norm Schenk, executive vice president for customs policy, was on a panel that included the director of corporate customs for a major logistics provider, the head of customs for a major automaker, and the executive director of the Georgia Ports Authority. The panelists, hosted by the U.S. Chamber of Commerce on May 19, agreed that even after the crisis is over, trading will not return to how it was.
The Taiwan Semiconductor Manufacturing Company declined to say whether it has stopped processing new orders for Huawei and said it is still reviewing new U.S. export restrictions issued last week (see 2005150058). In a statement, a TSMC spokesperson said the company does not comment on details relating to customer orders but said it has “always complied with the law. The company said it has hired outside counsel to “conduct legal analysis and ensure a comprehensive examination and interpretation” of the new restrictions. “The semiconductor industry supply chain is extremely complex,” the spokesperson said. “TSMC is following the U.S. export rule change closely.”
The Treasury’s Office of Foreign Assets Control sanctioned China-based Shanghai Saint Logistics Limited for acting as a general sales agent for Mahan Air (see 1912050032), the U.S.-designated Iranian airline, according to a May 19 press release. The designation of Shanghai Saint Logistics is the seventh designation of a general sales agent to Mahan Air since 2018, OFAC said. The company provides freight booking and other services for Mahan Air flights. “We will not hesitate to target those entities that continue to maintain commercial relationships with Mahan Air,” Treasury Secretary Steven Mnuchin said in a statement.
Treasury Secretary Steven Mnuchin, who was testifying in front of the Senate Banking Committee May 19, was asked by Sen. Ben Sasse, R-Neb., why the government hasn't placed sanctions on Huawei. He said that Huawei and some other Chinese companies aren't really private-sector firms, and that they were built by stealing American intellectual property.
Export Compliance Daily is providing readers with some of the top stories for May 11-15 in case you missed them.
China said it will take countermeasures to respond to increased U.S. export restrictions against Huawei, calling the changes an “abuse of export controls” and a violation of international trade laws. The restrictions, which place a license requirement on shipments to Huawei for foreign-made chips containing U.S. content, are a “serious threat” to China’s chip industry and supply chains, China’s Commerce Ministry said May 17, according to an unofficial translation. The ministry did not specify what the countermeasures will entail, but state media said China is considering placing U.S. companies on its so-called unreliable entity list and stopping purchases of aircraft from Boeing (see 2005150058).
The struggle the U.S. is having to manage the COVID-19 pandemic is a higher priority than what's happening at the World Trade Organization, said Dennis Shea, U.S. ambassador to the WTO. He noted that the U.S. has a third of the world's reported cases of the disease, and that more Americans have died from COVID-19 than citizens in any other country.