Suspended China Export Controls Set New Framework That Could Easily 'Snap Back': Experts
The recent export controls suspended by the Chinese government created a new framework for export controls that could quickly be reinstated should tensions between the U.S. and China flare up again, according to compliance experts.
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Siqi Zhao, an associate at European law firm Bennink Dunin, said that Chinese export controls "have been developing very fast" recently and the suspended measures form a "legal framework allowing China to adopt these measures." The export controls, which the Chinese government recently suspended during a general rapprochement with the U.S. (see 2511100047, 2511100038 and 2511070010), can be seen as a "reference point for any future snapback" should relations again sour, she cautioned.
Zhao, speaking at an event hosted by Dow Jones Nov. 12, said that while both sides have suspended export controls, exporters should consider the suspensions tenuous at best because officials are "cautioning that it's under careful evaluation." Additionally, she said that "only part of the measures recently adopted have been suspended."
Jeannette Chu, vice president at the National Foreign Trade Council, concurred, saying that it is "very difficult to rebottle the genie" on Chinese export controls because China "clearly understands how to weaponize this." Though the suspensions are for a year, Chu said that events may "shorten that time frame" and advised companies to use the reprieve to find alternative sourcing solutions.
Sahar Hafeez, senior counsel at Pillsbury Winthrop, agreed "100% with the assessment that the legal framework is in place." She said the suspensions were a "pause" in an "evolving" situation because over the past few months there have been changes "on a daily basis" to export control measures.
While the suspensions shouldn't be considered a "stop point," they do present an "opportunity for companies" to begin "really carefully" reviewing their compliance programs, Zhao said. Due to the complexity of supplying from China, she said that "a good point to start" is to develop a "China tailored internal compliance program" that can be "tailored to Chinese law" to prepare for future escalation.
Eva Galfi, principal at International Trade Advisors, said that it would be "worthwhile" for compliance teams to ensure that future contracts have clauses stipulating that "there might be delays in delivery due to things like the Chinese putting on permit restrictions" to exports. She also suggested that companies begin stockpiling critical minerals to make sure that they have "got enough just in case this hits again."
Hafeez advised companies trying to read the tea leaves on Chinese export controls to look at how U.S. export control measures evolve: "Any Entity List additions that are made that would then trigger a response, and how we deal with that."
She also recommended staying ahead of the Affiliates Rule even though "it's hard and it's onerous," because the Commerce Department may continue to "add those entities to the Entity List" even though the rule has been suspended.