The Bureau of Industry and Security on July 7 sent an interim final rule for interagency review that will clarify how export controls are applied in the context of international standards-setting bodies. The rule will specifically authorize certain items and “releases of technology” to entities on the Entity List “for standards setting or development in standards organizations,” BIS said.
Although Chinese companies with little international exposure may decide to violate export restrictions against Russia, most of the larger companies likely won’t take the risk, experts said. So far, most Chinese companies are complying with the sanctions and only continuing to buy Russian oil and gas, the experts said, despite strong opposition to Western sanctions by the Chinese government.
The Bureau of Industry and Security's recent shift in enforcement policies and strategy could “significantly” increase risks for companies, law firms said, especially those based in the U.S. The changes could cause businesses to invest more in compliance, they said, and could lead to a more aggressive BIS enforcement posture.
Although China hasn’t yet implemented its anti-foreign-sanctions law in Hong Kong, it may only be a matter of time, said Jessica Bartlett, the global head of financial crime legal at Barclays, speaking during a July 6 event hosted by the Center for Strategic and International Studies. She said multinational companies are continuing to face a “challenging” sanctions compliance environment in Hong Kong, which could grow more difficult depending on how the government decides whether and if to penalize firms for complying with foreign sanctions.
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The State Department published its spring 2022 regulatory agenda, including a new mention of a final rule that will expand the types of defense items and services that can be sent to Australia, the U.K. and Canada. The rule would specifically amend the International Traffic in Arms Regulations to expand certain trade under existing defense trade treaties between the countries, and would also amend the Canadian exemptions. Other changes will make “clarifying amendments and conforming updates” to Supplement No. 1 to part 126 of the ITAR, specifically to U.S. Munitions List Categories IV(i), manufacturing know-how, and Category XII, night vision entries. The agency hopes to issue the rule this month.
The Bureau of Industry and Security is using recently received funding to expand its U.S. field offices and send more officers overseas, said Matthew Axelrod, the agency’s top enforcement official. Axelrod said BIS soon will launch a field office in Phoenix and has sent export control officers to the U.S. Embassy in Helsinki and the American Institute of Taiwan in Taipei. BIS also recently sent its first intelligence analyst abroad to work with the Canadian Border Services Agency.
The U.S. needs to build a new multilateral export control forum to “institutionalize” the licensing and enforcement coordination of the last several months, said Don Graves, the Commerce Department’s deputy secretary. Although Bureau of Industry and Security officials said they are unsure whether the cooperation will lead to a new, formal export control regime (see 2206290032), Graves was critical of the existing ones, saying the U.S. needs a more modern approach to respond to Russia and other global crises in the future.
The U.S. and its allies should be sharing more export control information to better align their licensing decisions, said Thea Kendler, the Bureau of Industry and Security's assistant secretary for export administration. Although the U.S. is already sharing some of that information through the U.S.-EU Trade and Technology Council to keep Russia from acquiring sensitive technologies and other items for its military, Kendler said more can be done.
Global supply chain issues could be alleviated with better data sharing and processing, experts said during a June 29 meeting of the Advisory Committee on Supply Chain Competitiveness. But to overcome trust issues among companies reluctant to share data, some government intervention may be necessary, they said.