The Commerce and State Department should improve export control guidance for universities, which sometimes struggle to comply with U.S. export regulations because of unclear guidance that is usually tailored toward industry, the Government Accountability Office said May 12. The GAO also said Defense Department officials should better familiarize themselves with export control regulations in order to not hamper university research efforts.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
The European Union will launch its new customs pre-arrival security program in March 2021, calling it a “complete overhaul” of its existing customs regime. The program, the Import Control System 2, will collect data on all EU imports before their arrival and will require “Economic Operators” to declare security data through an “Entry Summary Declaration,” according to a May 11 European Commission newsletter. Although the system launches next year, some operators may not have to begin filing those declarations until 2023 or 2024, the newsletter said. The effective date depends “on the type of services they provide in the international movement of goods,” the commission said.
Chinese direct investment in the U.S. last year fell to its lowest levels in a decade and will likely continue to drop this year, according to a May 11 report from the National Committee on U.S.-China Relations and the Rhodium Group. Investment dropped to $5 billion in 2019 from a decade-high of $45 billion in 2016 due to more investment reviews by the U.S., restrictions on outbound investment by Beijing, the COVID-19 pandemic and rising tensions between the two countries, the report said. The decreased investment may be part of a broader trend caused by the pandemic as industry grows concerned about the consequences of over-dependence on foreign supply chains, the report said.
The U.S. needs a clearer strategy for leading 5G and artificial intelligence standards-setting to counter China’s growing tech leadership, technology experts said. The Trump administration should define a strategy and work with allies to set global standards, the experts said, or risk forcing its companies out of global markets because of restrictions placed on China.
Plans to finalize a reorganization of the International Traffic in Arms Regulations have been put on hold due to the COVID-19 pandemic, said Mike Miller, the State Department’s deputy assistant secretary for defense trade. The reorganization -- which involves moving definitions and consolidating exemptions within the ITAR (see 1907120011) -- has been “de-emphasized as a priority,” Miller said during a May 8 conference call hosted by the Society for International Affairs. “In the current environment, with all the disruption and the difficulties everyone is facing, a rollout of that at this time would not be timely.”
If countries place trade restrictions on food supplies similar to those on medical goods, the global supply chain could see significant agricultural shortages within months, trade experts said during a Washington International Trade Association webinar. But even without export controls on food, restrictions on movement and other COVID-19-related controls are already beginning to impact the flow of food goods, the experts said.
Republican lawmakers urged the Commerce Department to be more transparent when imposing export restrictions on critical U.S. industries, saying they are concerned that Commerce did not consult with industry before imposing significant export regulations last week. In a May 6 letter, six senators asked President Donald Trump to more closely follow congressional intent as described in the 2018 Export Control Reform Act, which lists a preference for a public comment period and multilateral export controls over unilateral decisions.
The U.S. should be mindful of not harming the U.S. technology industry as it seeks to impose export restrictions on semiconductor shipments to China, said James Andrew Lewis, director of the technology policy program at the Center for Strategic and International Studies. Those restrictions could cut the U.S. off from consumers, leading foreign companies to design U.S. components out of their products and build alternate supply sources, Lewis said in a May 5 CSIS post.
The Treasury Department fined a Kansas animal nutrition company more than $250,000 for illegally exporting agricultural goods to Cuba, which violated U.S. sanctions, according to a May 6 notice. The company, BIOMIN America, completed 30 illegal sales to Cuba between 2012 and 2017 and did not have a sanctions compliance program, the Treasury's Office of Foreign Assets Control said. If BIOMIN had consulted with OFAC before the sales took place, the company may have received a license, the agency said.
The Commerce Department’s new export restrictions on military end-users may significantly raise due diligence requirements for industry, leading to licensing delays and a burdensome vetting process for technology companies, law firms said. If Commerce's Bureau of Industry and Security does not clarify the scope of the rule to limit its impact, the rules are likely to damage the semiconductor, telecommunications and aircraft sectors, the law firms said. “This could have a detrimental impact on a broad swath of U.S. industry,” Baker McKenzie said in an April 30 blog post. “A universe of transactions triggering license requirements could significantly increase.”