The Commerce Department is planning to expand end-use checks for export controls, said Nazak Nikakhtar, the nominee for Commerce’s undersecretary for industry and security, a move she said is part of a broader reform movement to improve “export control coordination.”

Panelists warned against increasingly strict export controls and criticized the Trump administration's handling of the Huawei blacklisting during a June 4 Senate Committee on Banking, Housing and Urban Affairs hearing on “Confronting Threats From China: Assessing Controls on Technology and Investment, and Measures to Combat Opioid Trafficking.” The U.S. is drawing dangerously close to shrinking markets for U.S. semiconductor exporters, the panelists said, a move that could prove devastating for the industry. They also suggested the Trump administration’s restrictions on Huawei are too broad and have hurt U.S. exporters as well as damaged trade talks between the two sides.

Export Compliance Daily is providing readers with some of the top stories for May 28-31 in case they were missed.

The Commerce Department plans to issue an advance notice of proposed rulemaking for export controls of foundational technologies in the coming weeks, Commerce officials said. The notice will be published “quite soon” and in “weeks, not months,” said Rich Ashooh, Commerce's assistant secretary for export administration, speaking at a June 4 Bureau of Industry and Security Regulations and Procedures Technical Advisory Committee meeting. Hillary Hess, director of Commerce’s regulatory policy division, was more reserved in her prediction, saying she is unsure exactly when the notice will be released but assuring the committee it is the next export-related notice that BIS plans to publish. “It is in the process now,” Hess said at the meeting. “We’re trying to prepare it.”

China opened an investigation into FedEx after it said the shipping company “failed to deliver” packages to certain addresses in China, state-media reported June 1. China suspects FedEx of “undermining the legitimate rights and interests of Chinese clients,” the report said, damaging the rights and interests of FedEx’s clients and violating industry laws.

China is investigating complaints from U.S. exporters about Chinese customs clearances, including accusations of slower processing, increased inspections and inexplicable delays in licensing approval, China’s Vice Minister of Commerce Wang Shouwen said during a June 2 press conference. Wang said he did not know if the complaints were about “a real or specific situation,” according to an unofficial translation of his comments, but some U.S. exporters allege the moves are another step in China’s 2018 threat to take retaliatory measures against the U.S. that extend beyond tariff hikes (see 1905290041).

China is creating a list to penalize foreign entities that damage the interests of Chinese companies, a sweeping but vague move widely viewed as a direct response to U.S.’s recent blacklisting of Huawei Technologies.

The Trump administration warned Europe that anyone associated with the creation of the Instrument for Supporting Trade Exchanges, or INSTEX, could face U.S. sanctions, according to a May 29 report from Bloomberg. The report cites a May 7 letter from Treasury Department official Sigal Mandelker to INSTEX President Per Fischer. “I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker, the undersecretary for terrorism and financial intelligence, wrote in the letter, according to Bloomberg. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

The temporary general license issued by the U.S. after it added Huawei Technologies to its Entity List has offered “almost no relief” for the U.S. semiconductor industry, which has been hurt severely by the move, said John Neuffer, president and CEO of the Semiconductor Industry Association. Speaking on U.S.-China trade issues at a Washington International Trade Association discussion on May 29, Neuffer underscored the importance of the Chinese market to U.S. semiconductor exporters and called on the Trump administration to more tactfully negotiate with China. “We would like the U.S. government to better balance its national security concerns with its economic security concerns,” Neuffer said.

China is finding ways other than tariff increases to retaliate against U.S. exporters, further damaging the U.S.’s struggling agricultural export sector, panelists said during a Washington International Trade Association discussion on U.S.-China trade. The expected retaliation from China -- along with stalled trade negotiations and the increased difficulty of accessing China’s markets -- could lead to crippling, long-term consequences for some U.S. exporters, the panelists said.