Commerce Moves to Curb Chinese Technology Advancements | Brownstein Hyatt Farber Schreck – JDSupra – JD Supra
Over the last several weeks, the Bureau of Industry and Security (BIS) has telegraphed sweeping, new controls on U.S. exports to the People’s Republic of China (PRC) pertaining to tools and technologies that support advanced semiconductor production, AI, and supercomputing. As a package, the rules announced on Friday, Oct. 7, 2022, are a significant escalation in export control policy with respect to China because they not only seek to control the proliferation of technology to specific end users of concern, but also aim to contain the PRC’s overall ambitions to dominate global markets with domestically manufactured and produced advanced semiconductors, AI, and supercomputing capability and capacity.
Alan Estevez, the undersecretary of BIS, stated concurrent to the release of these rules that “my north star at BIS is to ensure that we are appropriately doing everything in our power to protect our national security and prevent sensitive technologies with military applications from being acquired by the People’s Republic of China’s military, intelligence, and security services.” These new rules are a necessary step according to Thea Kendler, BIS assistant secretary for export administration, stating, “The PRC has poured resources into developing supercomputing capabilities and seeks to become a world leader in artificial intelligence by 2030. It is using these capabilities to monitor, track, and surveil their own citizens, and fuel its military modernization.”
Jake Sullivan, President Biden’s national security advisor, in a recent speech to the National Security Commission on Artificial Intelligence laid out the administration’s policy more broadly, claiming that “on export controls, we [the U.S.] have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies. We previously maintained a ‘sliding scale’ approach that said we need to stay only a couple of generations ahead. That is not the strategic environment we are in today. Given the foundational nature of certain technologies, such as advanced logic and memory chips, we must maintain as large of a lead as possible.”
Below is a detailed explanation of BIS’s actions with respect to export controls aimed at the PRC.
Unverified List
Semiconductor Controls and Expanded Foreign Direct Product Rules
More information regarding BIS’s rulemaking is here and the Federal Register notice can be found here.
The PRC government was not supportive of the Biden administration’s policy changes. In a statement, Chinese Ministry of Foreign Affairs Spokesperson Mao Ning declared “The U.S. has been abusing export control measures to wantonly block and hobble Chinese enterprises … It will not only harm Chinese companies’ legitimate rights and interests, but also hurt the interests of U.S. companies.”
Despite this, it appears unlikely that the Biden administration will change its aggressive stance towards China any time soon. On the same day BIS’s economic restrictions were rolled out, the White House announced a new Artic strategy that is widely viewed to be a security and economic check on China’s presence in the region. To stay up to date on the continued evolutions on U.S.-Chinese relations and what organizations could be affected, please contact Brownstein’s foreign relations team.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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