During a July 20 hearing before the House Foreign Affairs Committee titled "Assessing the U.S. Economic Policy Response to Russia's Invasion of Ukraine,"1 Under Secretary of Commerce for Industry and Security Alan Estevez discussed the future of export controls on Russia in response to its invasion of Ukraine, and how this export control regime could be replicated with respect to China.

In his opening remarks, Under Secretary Estevez highlighted the Department of Commerce's 38 new export controls on emerging technologies since 2018, when the Department of Commerce received new authority to regulate emerging technologies under the Export Control Reform Act. He added that he "believe[s] the US need[s] a new regime -- we've been talking to allies about that, and it's not just for Russia. It's about China." Under Secretary Estevez also stated, "[t]he threat from China and their diversion of technology through civil-military fusion for human rights abuses, building power and threatening their neighbors is as important for a new regime." He also noted that the export controls on Russia, where 37 countries quickly banded together to impose similar controls on Russia, would be a good model for any future export control regime on China.

During the question and answer period, Under Secretary Estevez confirmed that the Department of Commerce views China as an ongoing concern from the standpoint of US export controls. Several Congressmen, like Steve Chabot (R-OH), Claudia Tenney (R-NY), and Mark Green (R-TN), asked Under Secretary Estevez if the Department of Commerce was considering imposing new export controls on semiconductor manufacturing equipment to China, as the US works to boost domestic semiconductor manufacturing through the passage of the CHIPS Act. Under Secretary Estevez said that the Department was "looking at" its controls on semiconductor manufacturing technology in coordination with allies, but was "pretty confident that the highest-end things like microelectronics from US origin [sic] are stopped." He added that any change would be done in coordination with allies.

Under Secretary Estevez has been consistent in calling for increased export controls on China. During a speaking engagement at the Center for a New American Security's annual conference in June, he said, "[w]e need to ensure that the US retains technological overmatch. . . . In other words, China cannot build capabilities that they will then use against us, or against their neighbors for that matter, in any kind of conflict."2

Since the hearing, press coverage from outlets like Inside U.S. Trade indicate that negotiations are ongoing between the Department of Commerce and US allies to develop a new, fifth export control regime on sensitive technologies.3 This regime would be enacted alongside four current export control regimes, which are focused on nuclear and conventional weapons and items used to manufacture such weapons: the Missile Technology Control Regime, the Australia Group, the Nuclear Suppliers Group, and the Wassenaar Arrangement. Former Commerce Department experts surveyed by Inside U.S. Trade indicated that if this new regime is to be effective, it should be limited to a small number of participants that produce the sensitive technologies that the US would like to control.4 This smaller, focused group would be able to respond quickly to emerging challenges.

With this in mind, entities with business dealings with counterparties in China should carefully monitor the development of US and multilateral export controls and related initiatives on China.

Footnotes

1 House Foreign Affairs Committee, Assessing the U.S. Economic Policy Response to Russia's Invasion of Ukraine (July 19, 2022), https://foreignaffairs.house.gov/hearings?ID=BF5F2711-2FEE-4078-8FAE-71A28E446D4D.

2 Edward Wong & Anna Swanson, U.S. Aims to Expand Export Bans on China Over Security and Human Rights, New York Times (July 5, 2022), https://www.nytimes.com/2022/07/05/us/politics/us-china-export-controls.html.

3 New export control regime requirements: Limited membership, scope, Inside U.S. Trade (July 28, 2022), https://insidetrade.com/daily-news/new-export-control-regime-requirements-limited-membership-scope.

4 Id.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2020. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.