British semiconductor company Arm, in its initial U.S. public offering this week, said it’s facing uncertainty from U.S. and U.K. export controls and doesn’t expect to receive an export license to ship certain high performance processor cores to China. The company also said it’s expecting to see slower growth in its China sales revenue due to several factors, including various government-imposed “trade and national security policies.”
Republicans last week urged the Biden administration against meeting with Beijing to discuss semiconductor export controls, saying the U.S. should not negotiate its policies with China and should instead enact tougher restrictions. They specifically asked Commerce Secretary Gina Raimondo, who is considering a trip to China, to pledge that the U.S. plans to increase its export restrictions against the country.
The Bureau of Industry and Security made several changes to the Export Administration Regulations this week to align its controls with decisions made at the multilateral Nuclear Suppliers Group in 2019 and 2022. The amendments, outlined in a final rule effective Aug. 18, revised five existing Export Control Classification Numbers under the Commerce Control List to alter or clarify the scope of certain controls and make technical fixes to other ECCNs.
Compliance departments need to be increasingly “creative” to catch goods or transactions that may be tied to Russian sanctions evasion, an industry official and former Treasury Department official said this week, especially as the U.S. and its allies ramp up enforcement. They also said compliance is growing more complex, particularly for financial institutions, which must meet expanding government expectations outlined in joint alerts recently published by the Commerce and Treasury departments.
The Bureau of Industry and Security last week expanded the scope of its nuclear-related export controls on China and Macau, saying the change was necessary to impose tighter license requirements on items that could “contribute to nuclear activities of concern.” The Nuclear Regulatory Commission also suspended a general license that had authorized exports of certain nuclear items for nuclear end uses in China.
The top lawmakers on the House Select Committee on China urged the Commerce Department to strengthen its Oct. 7 China chip controls, saying Chinese firms have “identified workarounds.” In a letter last week to Commerce Secretary Gina Raimondo, Reps. Mike Gallagher, R-Wis., and Raja Krishnamoorthi, D-Ill., said the interim final rule’s threshold for the “bidirectional transfer rate of 600 Gbyte/s should be lowered sufficiently to prevent clever engineering that bypasses the regulations.” They also said the rule, which will be updated in the coming months when finalized by the Bureau of Industry and Security (see 2307260071), should address Chinese firms using cloud computing services to “outsource their advanced computing needs” and evade the export controls (see 2303210037 and 2305160092).
The most recent tri-seal compliance note from the Commerce, Treasury and Justice departments is another sign that the U.S. is increasing its focus on export and sanctions enforcement and of the government’s effort to push companies to voluntarily disclose potential violations, law firms said last week. The firms urged businesses to review each agency's disclosure policy, saying the note could mean increased risks for companies that choose not to disclose.
The Bureau of Industry and Security shouldn’t renew the one-year authorizations it gave to certain foreign chip companies as part of its Oct. 7 China chip controls unless the agency makes “significant” changes to the restrictions when it finalizes the controls in the coming months, said Derek Scissors, a China policy expert with the American Enterprise Institute. Scissors said extending the licenses beyond their October expiration would “undermine” the Biden administration’s goal of denying China advanced semiconductor technology and unfairly advantage foreign companies over U.S. firms.
Sen. Marco Rubio, R-Fla, introduced a bill this week that could lead to new export controls on certain U.S. “genetic technology” destined to China. The Stopping Genetic Monitoring by China Act would add various types of “genetic sampling and testing kits, analytical technology, and software” to the Bureau of Industry and Security’s Commerce Control List, including:
The U.S. this week issued new guidance on its various voluntary self-disclosure policies for sanctions and export control violations, urging companies to disclose offenses and stressing the importance of “robust” compliance programs. The six-page “compliance note,” the second jointly issued by the Commerce, Treasury and Justice departments (see 2303020054), outlines DOJ’s recently updated disclosure policies for criminal export and sanctions violations, the raft of changes made to the Bureau of Industry and Security's administrative enforcement policies over the past year, and the Office of Foreign Assets Control’s procedures for assessing voluntary disclosures. The notice also describes the Financial Crimes Enforcement Network’s whistleblower program.