.png)
In October of 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a notice entitled Commerce Implements New Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic Of China. The notice explains that two export control rules will be implemented to restrict the People’s Republic of China (PRC) from both purchasing and manufacturing high end chips and technology that are used in surveillance and military applications. These categories of restriction may seem very broad, but the key to understanding this language is to reference the relevant new Commerce Control List entries.
Businesses that are not directly and overwhelmingly impacted by these new controls may be confused as to how advanced computing and semiconducting are defined and how to identify if a PRC entity conducts business for surveillance and military applications.
To answer these questions it is first important to acknowledge a quote from the Assistant Secretary of Commerce for Export Administration, “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.” The fact that over 60% of businesses and enterprises in China are state owned makes attempting to discern whether a tech company in the PRC is even tangentially connected to military modernization extremely difficult. Acknowledging this fact, BIS has focused heavily on increasing scrutiny on examining end-users and end-uses for relevant exports to the PRC.
BIS have added new designations in the Commerce Control List and licensing requirements specifically for certain advanced and high performance computing chips and computer commodities
28 new entities have been added to the list of advanced license requirements for foreign produced items
BIS have added new designations in the Commerce Control List and licensing requirements specifically for semiconductor manufacturing equipment and related items
BIS now operates with a presumption of denial for export transactions involving state owned semiconductor fabrication facilities but will examine interactions with multinational facilities on a case-by-case basis. BIS has also outlined specific thresholds for the types of chips that will automatically need licenses and will likely be restricted from export to the PRC.
In summary, the key to defining Advanced Computing and Semiconductor Manufacturing items in context of these new regulations is highly dependent on understanding and identifying the end-user, and then accurately interpreting the new categories in the Commerce Control List.
Are you unsure of how to interpret the Commerce Control List? Do you need help identifying your end-users? Are you still unsure if these new regulations effect your business? Give our office a call today, we would be happy to speak with you.
Ready to Learn More About CBP, OFAC,
BIS, and FDA? - for free! Details below.
We have dozens (literally!) of videos in our educational library on our YouTube channel related to importing, exporting, US Customs, BIS, OFAC, FDA, NFTs, and so much more. Subscribe to our channel now to stay up to date on the latest on these topics!
Our law firm helps growing companies who import and export comply with government regulations. We love what we do and we take our oath of confidentiality over your matters very seriously. How much? Watch this video to learn about it. CLICK HERE
Wondering "why should you have an attorney on your side?" Click here to watch one of our attorneys, Susan Steinman, break down the critical benefits as to why you want to have one on your side - whether you hire us to help you or another law firm.
Have questions? We are determined to help you.
We listen carefully to clients to ensure our understanding of the legal issues at hand, their factual context, and any limitations that might impact a chosen strategy. Feel free to connect with us using the contact form at the bottom of the Home page or send us an email at contact@clarkespositolaw.com.