House Select Committee on China Republicans wrote to President Joe Biden, asking him to make human rights and military demands of Chinese President Xi Jinping when they meet at the Asia-Pacific Economic Cooperation summit, which will happen Nov. 15-17.
Exports to China
Trade ministers from Japan, the U.S., the EU, the U.K., France, Canada, Germany and Italy said they will work to reach an agreement on World Trade Organization reform "with the view to having a fully and well-functioning dispute settlement system accessible to all members by 2024." The binding appellate level of dispute settlement at the WTO has been defunct since late 2019, because the U.S. blocked all appointments to the appellate body.
The U.S. should convince Japan, the Netherlands and other allies to restrict exports of lower-level chipmaking equipment to China to prevent Beijing from becoming the global leader in the "foundational" semiconductors those tools can produce, the Silverado Policy Accelerator think tank said in a new report last week. The report warned that current restrictions on advanced equipment risks pushing China to instead dominate the foundational chip sector, which will increase the likelihood that those semiconductors will be incorporated in U.S. defense technologies and could help Chinese companies “climb the value chain in leading-edge nodes, whether through legitimate or illegitimate means.”
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.
South Korea will look to Tanzania, in addition to ramping up domestic production, to secure graphite as a result of China's impending export controls on the critical mineral (see 2310200030), South Korea's Ministry of Trade, Industry and Energy said this month, according to an unofficial translation. The agency said it will need to continue to monitor the situation and will look to "secure additional response capabilities" by supporting domestic artificial graphite production and securing long-term supply contracts with "private companies with mines in third countries such as Tanzania."
The Commerce Department should add China-affiliated public security bureaus and others to the Entity List for their involvement in a “mass DNA collection project” in Tibet, chairs of the bipartisan Congressional-Executive Commission on China said in a letter this month to the Biden administration. They said Chinese officials in Tibet have likely purchased DNA kits and replacement parts from American biotechnology company Thermo Fisher Scientific and are using those products for “political identification,” racial profiling and other “egregious” human rights abuses.
Multinational companies with operations in China are becoming increasingly concerned about facing retaliatory measures from Beijing for complying with Western sanctions, said Erika Trujillo, co-founder of SEIA, a compliance risk management firm. She noted that some businesses have begun to split their trade compliance efforts between a Western-focused team and a Chinese team to protect their Chinese employees and operations from potential penalties.
The European Commission last week said it plans to propose new foreign direct investment screening regulations by January, adding that it wants to “make better use of existing tools” to screen investments that may pose national security risks.
Although Dutch semiconductor equipment company ASML doesn’t expect the new U.S. export controls on China to have a “material effect” on the firm's financial outlook for 2023, it's preparing for the new rules to restrict more sales of its chipmaking equipment.
The Russian invasion of Ukraine changed export compliance dramatically, said Howard Mendelsohn, chief client officer for Kharon, "where the onus is on industry like it’s never been before to sort of find a way to be proactive." Mendelsohn, whose firm provides risk intelligence to businesses, spoke at an OCR Services trade compliance conference Oct. 17 in Bethesda, Maryland, outside Washington, D.C. He said exporters have to be proactive on blocking reports and applying for licenses, and importers have to find another supplier.