The Bureau of Industry and Security needs more resources to investigate export control violations, Commerce Secretary Gina Raimondo said this week. She also said a potential government shutdown would be “crushing” for the agency’s enforcement efforts and work on semiconductor export regulations.
Exports to China
The U.S. unsealed an indictment this week against a Russian citizen and Hong Kong resident who helped illegally procure U.S. dual-use microelectronics with military applications for Russian end users. Maxim Marchenko used a network of shell companies to source the items from the U.S., DOJ said, giving false information to American distributors to assure them the products weren’t destined for Russia. Marchenko was charged with conspiring to defraud the U.S. along with money laundering, wire fraud and smuggling offenses.
A new Defense Department policy memo and guidance on foreign influence within American research institutions could exacerbate already complex export control due diligence challenges at universities, said Jackson Wood, director for industry strategy at Descartes. It also could lead to larger compliance risks for universities pursuing DOD-funded research, said Kit Conklin of compliance risk advisory firm Kharon.
Republicans are asking the Biden administration to strengthen export controls against Huawei and Semiconductor Manufacturing International Company after Huawei this month unveiled a new smartphone that may have been made through means that violated U.S. export restrictions (see 2309120005). They said both technology companies should be subject to “full blocking sanctions” and their executives should face criminal investigations, adding that the Commerce Department should revoke all of their existing license applications, add all their subsidiaries to the Entity List and take other measures to cut off a broad range of shipments to both firms.
China’s commerce ministry is paying “close attention” to a decision by Mexico in August to raise tariffs on imports of steel and other items from non-free trade agreement countries, a ministry spokesperson said last week. “Although this measure does not target specific countries,” China is monitoring its impact, the spokesperson said, according to an unofficial translation. “Judging from historical experience, raising tariffs will increase the production costs of downstream industries and reduce consumer welfare," the spokesperson said, adding that China hopes Mexico "will adhere to the principles of free trade and use such measures with caution.”
The top two lawmakers on the House Select Committee on China criticized Beijing’s decision last month to suspend imports of Japanese seafood, saying the trade restrictions are “unacceptable and must be reversed.” China suspended the imports in response to Japan's release of nuclear-contaminated water into the ocean stemming from the 2011 Fukushima nuclear power plant incident following a tsunami (see 2308220022).
A think tank with roots in libertarianism that now supports a carbon tax warned that members of Congress who want to pass a carbon border adjustment tax without a domestic carbon tax face more than just litigation at the World Trade Organization.
On a panel on critical minerals ally-shoring, panelists representing the perspective of Latin America, the U.S., the EU and, to some degree, China, agreed that the current race to lock down supplies of the raw materials needed for advanced batteries, wind turbines and computer chips is one where every man is out for himself, and resource-rich countries in the Global South are exploited.
Sen. Marco Rubio, R-Fla., said he is concerned about the “growing relationship” between Venezuela and China, and urged the Biden administration to threaten sanctions against China for aiding the Nicolas Maduro-led regime in Caracas. In a Sept. 13 letter, Rubio noted that Maduro is in Beijing to meet with Chinese leader Xi Jinping, where Maduro is “expected to request economic and development assistance” from China. The U.S. should declare that “any decision by a Chinese entity to provide new funding for the Venezuelan regime will be met with U.S. sanctions,” Rubio said.
The EU will open a countervailing duty investigation on electric vehicles from China, European Commission President Ursula von der Leyen said during her 2023 state of the union address to the European Parliament. The bloc "must defend" itself "against unfair practices," including Chinese state subsidies that keep its electric vehicles at artificially low prices, von der Leyen said. She also clarified that the EU's policy is one of "de-risk" and not decoupling, insisting that open lines of communication will remain open with Chinese leadership.