Nations allowing the export to Russia of dual-use products that have military as well as commercial applications are on notice, Commerce Deputy Secretary Don Graves said April 19 at the Space Foundation's 2023 Space Symposium. "Any country ... that seeks to backfill the Russian war machine ... does so at their own peril," he warned. Export controls by the U.S. and 38 other nations aimed at dual-use products such as semiconductors and lasers are "hobbling" the Russian war effort in Ukraine, he said.
The State Department completed a round of interagency review for an interim final rule that would seek public comments on revisions to the U.S. Munitions List. The rule, sent for review Feb. 2 (see 2302030013) and completed April 17, would request feedback “regarding the technology frontier,” which could help the agency identify specific technology capabilities that have “sufficiently evolved” to consider amending the International Traffic in Arms Regulations. The rule could add, revise or exclude certain items from the ITAR.
The Bureau of Industry and Security last week completed its interagency review of new proposed export controls on automated peptide synthesizers. The rule, sent for review at the Office of Information and Regulatory Affairs March 29 (see 2303300003) and completed April 12, could propose new restrictions on certain instruments for the automated synthesis of peptides that could be used to produce biological weapons (see 2209120021).
The U.S. needs to pour more funding and resources into the Bureau of Industry and Security to allow it to better address China-related national security risks, said Gregory Allen, a technology policy expert with the Center for Strategic and International Studies and a former Defense Department official. Although BIS is charged with implementing some of the U.S.’s most sensitive trade restrictions, its export control functions have “had a flat budget for the better part of a decade,” Allen said during a U.S.-China Economic and Security Review Commission hearing last week. “It has been profoundly neglected” and subject to an “appalling mismanagement of resources.”
The U.S., the Netherlands and Japan need to prepare for “expanded” Chinese retaliation as a result of their pact to impose new export controls on advanced semiconductor equipment (see 2303310031 and 2303090032), the Center for Strategic and International Studies said in a commentary this week, adding that China has “long put national security goals above those of market efficiency.”
The Biden administration’s October semiconductor chip controls against China (see 2210070049 and 2211010042) are expected in the short term to “constrain” the country’s access to the most advanced chips “used in computationally intensive subfields” of artificial intelligence, the International Institute for Strategic Studies said in an April report. But the controls could spur Chinese AI researchers toward “subfields that are less computationally demanding” and lead them to develop “new competitive advantages” in those areas, the report said.
About 10% of critical raw materials, as measured by value, faced export restrictions in the last decade, according to a new report from the Organization for Economic Co-operation and Development -- and the use of restrictions grew five-fold in the 2017-2019 period, compared with the two-year period 10 years earlier. Export taxes are the most frequent restriction, the authors said, adding: "This may be related to the fact that, under WTO rules, quantitative restrictions on exports are generally prohibited while export taxes are not."
The upcoming expiration of the Bureau of Industry and Security's temporary general license outlined in the China-related chip controls from October presents “good opportunities to see” how the agency will “interpret and enforce the new restrictions,” Lee, Tsai & Partners said in a recent client alert. The TGL expires April 7, when BIS has said it will begin reviewing license applications for activities that were covered by the TGL on a case-by-case basis (see 2301270026).
G-7 trade ministers stressed the importance of export controls this week and said they will continue to work together to counter evasion tactics. The countries, including the U.S., Japan, Germany, the U.K., France, Italy and Canada, said export controls are a “fundamental policy tool to address the challenges posed by the diversion of technology critical to military applications,” adding that they “continue to work with other states” to strengthen the restrictions.
Japan recently loosened export restrictions on shipments of hydrogen fluoride, fluorinated polymide and resists to South Korea following the end of a long-running trade dispute between the two countries. Japan's Ministry of Economy, Trade and Industry said it added the three items, which are high-tech materials used in smartphone displays and chips, to the scope of its "Special General Bulk Export License system," effectively lifting the restrictions. The announcement, which took effect March 23, comes after South Korea withdrew its dispute complaint at the World Trade Organization (see 2303240044 and 2303170015).