Dealmakers are hoping for more certainty when the Treasury Department finalizes regulations for its August executive order on outbound investment restrictions, which may force companies to make difficult investment decisions without assurances that their deals won’t be later unwound.
Exports to China
The Office of Foreign Assets Control this week sanctioned two people and five entities based in Iran, China, Hong Kong, Turkey and the United Arab Emirates for their involvement in procuring sensitive parts for Iran unmanned aerial vehicle program. OFAC said the network has specifically facilitated shipments and financial transactions for Iran’s Islamic Revolutionary Guard Corps Aerospace Force Self Sufficiency Jihad Organization’s procurement of servomotors, a “critical component” used in Iran’s Shahed-series UAVs. The agency said Iran has been supplying the Shahed-136 UAVs to Russia for its war in Ukraine.
China and the EU held the "10th EU-China High-Level Economic and Trade Dialogue" on Sept. 25, discussing the effect of Russia's war in Ukraine on global economics, food and energy security. Also discussed were "EU concerns on access to the Chinese market," prospects for rebalancing the EU-China trade relationship "on the basis of transparency," and predictability and reciprocity, the European Commission said.
China condemned the Treasury Department's additions of 28 entities, including various Chinese entities, on the Entity List for their acts violating U.S. national security. The U.S. "abuses unilateral sanctions" to undercut international trade rules, hinder normal trade exchanges and curb the "legitimate rights and interests of Chinese companies," the Ministry of Commerce said, according to an unofficial translation.
Rising U.S.-China tensions are causing all-time highs in uncertainty and pessimism for U.S. companies doing business in China, and are driving U.S. companies to reduce investment in China in record numbers, according to an annual member survey released by the U.S.-China Business Council on Sept. 26. More than a third of companies said they have either stopped investing in China or have scaled back.
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China recently updated the list of products whose foreign production facilities are required to register under Decree 248, the USDA Foreign Agricultural Service said in a Sept. 20 report. China removed from the list 14 products and added 15 products, impacting certain dairy products, poultry products, fruit and vegetable juice, canned fruit, aquatic products, sweets and chocolates. It said: "Some of the updates are not complete removals of the products, but additions of the same products with different Customs, Inspection, and Quarantine (CIQ) codes created for China Customs’ use."
Australia will continue its case at the World Trade Organization against China's tariff treatment of wine imports and reject Beijing's proposal to curtail the issue to China's case against Australia's treatment of steel products. Australian Agriculture Minister Murray Watt told Australian Broadcasting Corp. that the government sees the cases as "entirely separate matters."
The Bureau of Industry and Security added 28 entities to the Entity List this week for various reasons, all falling under the umbrella of “acting contrary to the national security or foreign policy interests of the United States.” The final rule, effective Sept. 27, adds entities in China, Finland, Germany, Oman, Pakistan, Russia and the United Arab Emirates. It also modifies entries for two entities and removes a Military End User List entity.
The CEOs of two major European multinationals called for the simplification and increased coordination of sanctions at a forum held by the Atlantic Council last week. Michael Schoellhorn, CEO of Airbus Defense and Space, said the implementation of Russia sanctions, and the latest EU sanctions package in particular (see 2306230013), has “triggered such a bureaucracy,” with “a degree of minutia that is killing small companies.”