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New Export Controls on China Anticipated Soon

Friday, June 22, 2018
Sandler, Travis & Rosenberg Trade Report

President Trump could issue in the next few days an executive order imposing new China-focused export controls on a number of emerging high-tech sectors. A recent White House report asserts that U.S. national and economic security is threatened by China’s use of “economic aggression” to “capture” these industries, including through its “Made in China 2025” industrial policy.

The report from the White House’s Office of Trade and Manufacturing Policy asserts that China is aggressively seeking to acquire technology and intellectual property from around the world through (1) state-sponsored IP theft, including physical theft, cyber-enabled espionage and theft, evasion of export control laws, and counterfeiting and piracy; (2) coercive and intrusive regulatory gambits to force technology transfer from foreign companies; (3) economic coercion through export restraints on critical raw materials; (4) methods of information harvesting that include placing non-traditional information collectors at U.S. universities, national laboratories, and other centers of innovation as well as talent recruitment of business, finance, science, and technology experts; and (5) state-backed, technology-seeking foreign direct investment.

Steven Brotherton, who heads Sandler, Travis & Rosenberg’s export controls practice, said that in light of this report the anticipated executive order could impose export controls on sectors such as artificial intelligence, aerospace, augmented and virtual reality, high-speed rail and shipping, and new energy vehicles. The end result, Brotherton said, could be a new export license requirement for many activities in these sectors involving China, including manufacturing, technological exchanges with Chinese companies, and the employment of Chinese nationals in the U.S.

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