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File photo of Chinese President Xi Jinping and his American counterpart Donald Trump.
The new rules will require licenses for US companies to sell certain items to companies in China that support the military, even if the products are for civilian use.
- Reuters
- Last update: April 28, 2020 7:55 AM IST
The United States said on Monday it will impose new restrictions on exports to China to keep semiconductor production equipment and other technologies away from the Beijing army.
The new rules will require licenses for US companies to sell certain items to companies in China that support the military, even if the products are for civilian use. They also remove a civil exception that allows you to export certain US technology without a license.
They occur when relations between the United States and China have deteriorated amid the new coronavirus outbreak.
The rules, which were published for public inspection and will be published in the Federal Register on Tuesday, could harm the semiconductor industry and sales of civil aviation parts and components to China.
The changes, which also expand the universe of items that require licenses, also affect Russia and Venezuela, but the biggest impact will be on trade with China.
“It is important to consider the ramifications of doing business with countries that have a history of diverting goods purchased from US companies for military applications,” Commerce Secretary Wilbur Ross said in a statement.
Washington trade attorney Kevin Wolf said the rule changes for China are in response to his military-civil fusion policy: finding military applications for civilian items.
He said that the regulatory definitions of military use and user are broad and go beyond purchases by entities such as the People’s Liberation Army.
For example, Wolf said that if a car company in China repairs a military vehicle, that car company can now be a military end user, even if the item being exported is for another part of the business.
“A military end user is not limited to military organizations,” Wolf said. “A military end user is also a civilian company whose actions are intended to support the operation of a military element.”
The rule change also requires U.S. companies to file returns for all exports to China, Russia, and Venezuela, regardless of value.
“Obviously, this is intended to give the United States government more visibility into the types of goods that American exporters ship to these countries and to their clients,” said Washington attorney Doug Jacobson.
Another rule change involves removing civil licensing exceptions for Chinese importers and Chinese citizens, as well as for other countries, including Ukraine and Russia. Exceptions have been applied to certain integrated circuits, telecommunications equipment, radars, high-end computers and other items.
The administration also released a third proposed rule change that would compel foreign companies that ship certain American products to China to seek approval not only from their own governments but also from the United States.
The Commerce Department is unaware of the economic impact of imposing the re-export license and will allow a comment period to gather information on the proposed change, a representative said.
Republican Senator Ben Sasse supported the new rules, saying that Chinese leader Xi Jinping “has erased all the light of day between Chinese companies and the Communist Party army.”
The tighter restrictions have been in process since at least last year, but top US officials agreed to move forward with them in late March, as Reuters reported earlier this month.
John Neuffer, president and CEO of the Semiconductor Industry Association, said the industry was concerned that the broad rules “unnecessarily expand semiconductor export controls and create greater uncertainty for our industry during this time of economic turmoil. world record. “
