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Estevez Exit Interview

Alan Estevez, Undersecretary of Commerce for Industry and Security, delivered remarks Tuesday at Washington's CSIS Wadhwani AI Center, focusing on the evolving role of export controls in safeguarding U.S. national security and addressing technological threats. The conversation, moderated by Greg Allen, Director of CSIS's Wadhwani AI Center, covered key achievements, challenges, and future priorities for the Bureau of Industry and Security (BIS).

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January 2025 Export Practitioner

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Re-Designation Stymies Potential Sanctions Revanchists

In a move some read as an effort to "Trump Proof" the Treasury's Russian sanctions regime, OFAC is re-designating pursuant to Executive Order (E.O.) 13662 almost 100 entities already designated pursuant to E.O. 14024. This codification provides legislative backing, making it more difficult for any administration to unilaterally lift these sanctions. This move places the sanctions under rules governed by the Countering America’s Adversaries Through Sanctions Act (CAATSA). CAATSA, enacted in 2017, codified and expanded existing sanctions imposed by executive orders, including E.O. 13662. As a result of these entities’ designation pursuant to E.O. 13662, foreign persons, including foreign financial institutions, that knowingly facilitate significant transactions for or on behalf of any of these entities could be subject to mandatory secondary sanctions under the Ukraine-/Russia-related sanctions program.

Entity List Updates

BIS added 11 Chinese entities to the Entity List, 10 for advanced artificial intelligence research and one for development of lithography technology for advanced-node fabrication facilities. The committee also removed three Indian nuclear research entities after diplomatic considerations. …

Biotech as Domain for Great Power Competition

The Center for a New American Security (CNAS) released a new report, Biopower: Securing American Leadership in Biotechnology by Vivek Chilukuri and Hannah Kelley . The report identifies key …

Due Diligence Measures Rule Released

The Bureau of Industry and Security (BIS) is revising the Export Administration Regulations (EAR) to provide additional due diligence procedures for advanced computing integrated circuits (ICs). This interim final rule (IFR) aims to safeguard U.S. national security and support foundries and Outsourced Semiconductor Assembly and Test (OSAT) companies in complying with EAR provisions related to advanced computing ICs in the supply chain. Additionally, the IFR updates and clarifies changes introduced in BIS’s December 2, 2024, IFR, titled “Foreign-Produced Direct Product Rule Additions, and Refinements to Controls for Advanced Computing and Semiconductor Manufacturing Items” (FDP IFR). It also extends the deadline for written comments on the FDP IFR to March 14, 2025.

Bio-Lab Equipment Dual Use Controls Released

BIS has published an Interim Final Rule revising the Export Administration Regulations (EAR) to address national security and foreign policy concerns related to dual-use biotechnology tools. It imposes new export controls on specific laboratory equipment and related technology to prevent misuse, particularly by foreign adversaries.

Chinese Radio Firm Guilty in IP Theft Case

A Chinese telecommunications company has admitted in federal court in Chicago that it conspired to steal digital mobile radio technology developed by Illinois-based Motorola Solutions, Inc. Hytera Communications Corp. Ltd. pleaded guilty on Monday in the Northern District of Illinois to a federal charge of conspiracy to steal trade secrets. Under the terms of a plea agreement, Hytera may be fined up to $60 million. …

OFAC Collaboration with Britain's OFSI Formalized

The Department of the Treasury's Office of Foreign Assets Control (OFAC) has published its Memorandum of Understanding with the United Kingdom's Office of Financial Sanctions Implementation (OFSI). The Memorandum of Understanding (MoU) outlines a framework for collaboration to strengthen their shared mission of enforcing and promoting compliance with economic and trade sanctions

Balkans Sanctions Updated

United States President Joe Biden signed an executive order amending existing sanctions measures targeting individuals and groups involved in "ongoing attempts to undermine the sovereignty and territorial integrity of the countries of the Western Balkans." The sanctions were imposed in response to activities that undermine post-war agreements and institutions, as well as serious forms of corruption that undermine the rule of law and trust in democratic institutions. In November the Administration sanctioned parties involved in "destabilizing activities in Bosnia and Herzegovina. "

Broader Russia Oil Sanctions

New US sanctions will add nearly 200 more Russian ships, and two of the principal Russian maritime insurers New US sanctions add nearly 200 more Russian ships, two oil producers and two of the principal Russian maritime insurers to efforts to restrict Russian oil revenues. The new sanctions affect producers Gazprom Neft and Surgutneftegaz and insurers Ingosstrakh and Alfastrakhovanie, which insure much of Russia's "shadow fleet" of tankers. Also included are "opaque traders of Russian oil" and two UAE-based ship managers. Restrictions on the provision of oil services in Russia may finally impact the flourishing Russian trade of Houston oil services firm SLB.

Read more of our coverage of Sanctions

Policy Briefs

Connected Vehicle Ban Finalized

The Bureau of Industry and Security (BIS) issued a final rule prohibiting transactions involving the sale or import of connected vehicles or components integrating specific hardware and software linked to the PRC or Russia. The final rule bans the import of VCS hardware or connected vehicles containing such hardware, as well as the import and sale of vehicles with VCS or ADS software linked to the PRC or Russia. VCS encompasses systems enabling external communication, such as telematics, Bluetooth, cellular, satellite, and Wi-Fi modules. ADS refers to components enabling highly autonomous vehicle operation without a driver. The rule also prohibits manufacturers with a sufficient nexus to the PRC or Russia from selling new connected vehicles that incorporate VCS hardware or software or ADS software in the United States, even if the vehicle was made in the United States.

Notorious Markets Report Pharma Focus

January 8th, the USTR released the findings of its 2024 Review of Notorious Markets for Counterfeiting and Piracy (the Notorious Markets List). The Notorious Markets List highlights online and physical markets that reportedly engage in or facilitate substantial trademark counterfeiting or copyright piracy. This year’s Notorious Markets List’s issue focus section examines illicit online pharmacies and counterfeit medicines. The issue focus describes the growth in illicit online pharmacies and the dangers of counterfeit medicines, including the health and safety risks. USTR calls on trading partners to improve on criminal and border enforcement against counterfeit goods, particularly counterfeit medicines.

U. Michigan Cuts Link with Chinese

University of Michigan has announced it is ending its joint institute with Shanghai Jiao Tong University (SJTU). In a letter, Santa Ono, president of the University of Michigan, said following a thorough review the university has initiated the six-month process to “officially end the partnership” with Shanghai Jiao Tong University in the Chinese metropolis of Shanghai. Ono said the university, while valuing academic international partnerships, takes “matters of national security very seriously” and will better vet visa requirements for international students.

Supply Chain

DHS Adds 37 Firms to Uyghur Blacklist

The Department of Homeland Security (DHS) announced the addition of 37 entities to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, marking the largest expansion since the law’s enforcement began in 2022. The additions include globally recognized companies involved in mining critical minerals, producing solar modules, and manufacturing textiles.

Low-Value Shipment Rules Published

The U.S. Customs and Border Protection (CBP) has issued a proposed amendment to its regulations to strengthen oversight of low-value shipments valued at $800 or less. The proposed rule would establish a new process for entering low-value shipments under Section 321(a)(2)(C) of the Tariff Act. This process would enable CBP to collect enhanced electronic data to better identify high-risk shipments, including those potentially containing illicit drugs such as fentanyl, counterfeit goods, or other contraband.

USTR Supply Chain Research Published

The US Trade Representative’s Office issed six policy papers on trade and investment policy initiatives that promote supply chain resilience. The policy papers address a trade policy framework for supply chain resilience; challenges and opportunities for advancing resilience in the US textile and apparel industries; use of rules of origin to promote resilience; how more effective responses to non-market policies and practices build resilience; data and analytics for developing resilience-oriented trade policy; and sectoral trade agreements for enhancing resilience.

Entity List Adds: China, Burma, Pakistan

January 6th, The Commerce Department added 13 entities to the Entity List under the destinations of Burma (1), China, People's Republic of (China) (11), and Pakistan (1). The Chinese firms were added for acquiring and attempting to acquire U.S.-origin items in support of China's military modernization. In addition, these entities have "demonstrable ties to activities of concern, including hypersonic weapons development, design and modeling of vehicles in hypersonic flight, using proprietary software to model weapons design and damage; and otherwise supporting China's military-civil fusion efforts," according to the Commerce Department. The entities are added with a license requirement for the export, reexport, and transfer (in-country) of all items subject to the EAR and a license review policy of presumption of denial.

White House Updates Missile Control Regime Policy

The United States has adjusted its policy on implementing the Missile Technology Control Regime (MTCR) to expand access to some weapons for its allies, the White House said. Now, the US authorities must show greater flexibility in considering each specific case of export of such technologies, and facilitate the transfer of "certain MTCR Category I military missiles, Unmanned Aerial Systems (UAS), and Space Launch Vehicle (SLV) systems to certain partners with strong export control systems."

Trade Security Sprint to the Finish

As the Biden Administration prepares to hand over the reins, there's a palpable sense of urgency to get as much regulatory work done as possible before January 20th. The Bureau of Industry and Security (BIS) regulatory agenda has dozens of rulemaking actions underway, including further steps targeting the illicit trade in advanced chips. The Global Artificial Intelligence Diffusion" rule aims to control the global shipments of graphics processing units (GPUs) to forestall diversion through third countries. Restrictions are said to include geographic controls as well as a worldwide licensing system that includes reporting requirements and exceptions.

Read more of our Export Control coverage

Licensing

Drone Rule Proposed

The Bureau of Industry and Security is seeking public comments on regulations addressing risks posed by information and communications technology and services (ICTS) integral to unmanned aircraft systems. BIS seeks public feedback on several matters including: definitions of UAS and components, assessments of how potential classes of ICTS transactions integral to UAS may present undue or unacceptable risks to U.S. national security, evaluations of risk posed by different foreign adversaries, potential processes for the public to request approval to engage in an otherwise prohibited transaction, the economic impact such regulation could have on certain entities, and, where feasible, potential mitigation measures.

Corrections to Sept 6th Export Controls Published

On September 6, 2024, BIS published in the Federal Register an interim final rule entitled “Commerce Control List Additions and Revisions; Implementation of Controls on Advanced Technologies Consistent with Controls Implemented by International Partners” that contained inadvertent errors. This rule corrects those errors.

Export Control Enforcement "Inadequate at Every Level" : Senate Report

A report from the Senate’s Permanent Subcommittee on Investigations (PSI) has revealed critical failures in the United States’ semiconductor export control regime, underscoring its inability to curb the flow of critical technologies to adversaries such as China and Russia. The findings highlight significant deficiencies in the enforcement capabilities of the Department of Commerce’s Bureau of Industry and Security (BIS) and inadequate compliance efforts by U.S.-based semiconductor manufacturers, according to the authors.