Tougher Export Controls Sought on Chinese Companies

Ten members of the House of Representatives have asked Bureau of Industry and Security chief Alan Estevez to toughen controls on exports to two Chinese entities.

In a Sept. 14 letter the lawmakers cite recent media reports that Huawei Technologies Co. has developed a smartphone containing 7-nanometer chips capable of supporting 5G that were produced by the Chinese state-owned Semiconductor Manufacturing International Corp. “Due to the ubiquity of U.S- origin technology throughout the semiconductor supply chain,” the letter states, “these reports suggest a violation of U.S. export control regulations.”

The letter chastises BIS for its “inability to effectively write and enforce export control rules against violators, especially China.” It asserts that for more than two years members of Congress have been expressing concern about “loopholes” in BIS rules attempting to restrict exports of technology to Huawei, SMIC, and others but that during that time “BIS has continued to grant licenses to Chinese Communist Party-controlled companies” that support China’s military.

Stating that “the circumstances before us demonstrate the need for additional pressure and more effective export controls on our adversaries,” the lawmakers are therefore calling on BIS to take the following actions.

– establish a sanctions authority focused on Chinese companies that flout U.S. technology controls and leverage this authority to designate SMIC and Huawei with full blocking sanctions

– strategically bar the import of SMIC-produced semiconductors, particularly those that pose risks to national security

– place SMIC and Huawei and all of their subsidiaries on the Entity List with a foreign direct product rule designation

– implement a policy of denial for exports of all items subject to the Export Administration Regulations for Huawei and all of its subsidiaries, spin-offs, and successors

– implement a policy of denial and remove all license exceptions for exports of all items subject to the EAR, not just those below 14nm, to SMIC

– revoke all existing export licenses for SMIC and Huawei

– pursue criminal charges against executives from SMIC and Huawei.

For more information on these and other export control issues, please contact Kristine Pirnia at (202) 730-4964 or via email.