The Bureau of Industry and Security is preparing to issue new export control decisions involving emerging technologies agreed to at the 2021 Wassenaar Arrangement plenary. The interim final rule, sent for interagency review March 8, will harmonize the Commerce Control List with a portion of Wassenaar’s 2021 decisions for certain “recently developed or developing technologies,” BIS said. BIS will implement the remaining Wassenaar 2021 control decisions in a separate rule.
The Bureau of Industry and Security sent a final rule for interagency review March 8 related to its new export controls over certain cybersecurity items (see 2110200036). BIS in January delayed the effective date for the rule to March 7 (see 2201110025) after receiving feedback from industry, which said the new controls should be tweaked so they don’t impede certain activities in the cybersecurity sector, including information sharing and exports to certain government end-users (see 2112130028). BIS said last month it was planning to make minor revisions to the rule to address some public comments (see 2202100026).
South Korean officials said they plan to continue imposing "swift and effective" export controls against Russia following the addition of their country to the U.S.'s list of nations that align closely with the U.S.'s trade restrictions against Russia. South Korea was added to the list March 4, which excludes it from certain license requirements under the U.S.’s two recently issued foreign direct product rules (see 2202240069 and 2203040075). “Korea is closely aligned with the U.S. and the global coalitionto [impose] export control measures and economic sanctions against Russia's military aggression,” Trade Minister Yeo Han-koo said in a March 7 news release emailed by the Commerce Department.
The coordinated export controls being levied against Russia by many of the world’s democracies could lay the framework for also cutting off sensitive technologies to China, said Martin Chorzempa, a China expert with the Peterson Institute for International Economics. The current controls against Russia, if “effectively implemented by enough other countries,” could “amount to a near blockade” of advanced technology exports to Russia, Chorzempa wrote March 7, and prove that coordinated controls are effective. He said these same plurilateral restrictions could be used against China in the future, or sooner if the country continues to supply Russia.
The Bureau of Industry and Security last week added South Korea to the list of countries that have imposed similar export controls against Russia and are excluded from certain license requirements under the U.S.’s two recently issued foreign direct product rules (see 2202240069). BIS added South Korea to the list because it has committed to “implement substantially similar export controls on Russia and Belarus under its domestic laws,” the agency said March 4. The list, found under supplement No. 3 to part 746 of the Export Administration Regulations, already includes more than 25 countries, including Canada, Australia, Japan and many European nations. The addition of South Korea took effect March 4.
The Wall Street Journal, citing unnamed sources, said the administration could initiate another Section 301 investigation into China's practices in strategic sectors. It said the sources didn't say which sectors, but said there could also be tighter export controls, with greater cooperation with European and Asian allies on subsidies, and that the administration might increase scrutiny of U.S. companies' investments in China. The article said that a Section 301 investigation has been bandied about for months, but that it has new momentum since the talks to build on the Trump administration's phase one trade agreement have been fruitless. The Office of the U.S. Trade Representative and the White House press office didn't respond to requests for comment.
As part of the U.S.’s new Russian export controls (see 2202240069), the State Department will deny licenses or approvals for a range of defense-related exports and brokering activities associated with sales to Ukraine's Donetsk or Luhansk regions. The measures, outlined by the agency’s Directorate of Defense Trade Controls Feb. 25, will place new restrictions on exports, reexports, retransfers or temporary imports of defense articles or defense services listed on the U.S. Munitions List. Certain exemptions will apply to exports and transfers related to the “official business” of the U.S. government, DDTC said, including some activities by government employees, grantees or contractors. The agency urged exporters, “particularly those conducting business in the region,” to continue to monitor its website for policy updates or changes.
The Senate should move forward with the confirmation of Alan Estevez, who was nominated last summer to lead the Bureau of Industry and Security, said Kevin Wolf, former assistant secretary for export administration, in a LinkedIn post. "BIS is advancing significant national security objectives in novel and complex ways," said Wolf, who is now a lawyer at Akin Gump. "It needs Alan Estevez in as its Under Secretary now. Seriously. Whatever issues are holding up his confirmation need to be set aside today so that he can get to work at BIS." Sen. Bob Menendez, D-N.J., has voiced some reservations over Estevez's stance on gun export controls (see 2201050023 and 2110050029).
The Bureau of Industry and Security will look for ways to improve its administrative enforcement efforts and the voluntary self-disclosure program in the coming year, Assistant Secretary for Export Enforcement Matthew Axelrod said while speaking to the Silverado Policy Accelerator on Feb. 24. Under the administrative enforcement review, BIS will consider how often it uses its no admit/no deny resolutions to help deterrence and accountability, he said. The bureau will also review how it "calibrates" penalties and will explore additional or expanded penalties for items that harm national security even if the transaction value is low. It will also review how often, and in what cases, administrative resolutions should continue in parallel with criminal resolutions by DOJ.
The Bureau of Industry and Security’s reorganization and clarification of its foreign direct product rules this month (see 2202020021) could allow the administration to more easily use the rule to target specific Russian sectors if Russia invades Ukraine (see 2202150043), Akin Gump said in a February alert. The law firm outlined how companies can examine recent BIS changes to the FDP rule as a “guide for analyses of the scope and impact of possible” new Russia controls, and how certain changes to the Export Administration Regulations would affect various exports to Russia. Companies should examine whether their foreign-produced items contain certain levels of U.S. origin content, Akin Gump said, and whether they would have to comply with new licensing restrictions if Russia were moved to a different EAR Country Group.