Trade War

President Trump planning more restrictions on tech exports to China

By ADAM BEHSUDI


The Trump administration is taking steps toward issuing even more restrictions on exports of high-tech goods to China as the U.S. ratchets up its trade war with Beijing, according to two people familiar with the plans.
The Commerce Department will soon recommend rolling back regulations making it easier for U.S. companies to export certain goods that have both civilian and military purposes, the people said. Commerce will also recommend ending a general policy of approving export licenses for that group of goods if they go to civilian use and instead require reviews on a case-by-case basis.
The expected moves would make it harder for China to acquire U.S. technology. 

They come on top of actions President Donald Trump has taken since U.S.-China trade talks ground to a halt earlier this month, such as raising tariffs on $200 billion in Chinese goods. 

His administration also put Chinese telecommunications giant Huawei on a trade blacklist and is considering similar actions against other Chinese tech companies.
How President Trump is willing to use these actions as leverage could become clearer next month when he may meet with Chinese dictator Xi Jinping in late June on the sidelines of the G20 summit in Japan, though no formal plans have been set.

“It seems to me we’re still turning up the pressure to try to get a deal,” said Scott Kennedy, a senior adviser and China expert at the Center for Strategic and International Studies.
Commerce is drafting the recommendations as part of a review required by an export-control law recently passed by Congress. 

A Commerce spokesperson said the department is finalizing the review, which has a May 10 deadline, but declined to confirm specific actions the administration is weighing.
Commerce is considering at least four regulatory actions targeting China under the Export Control Reform Act, said the two people, who declined to be identified because of the sensitive nature of the deliberations.
Two of those options would involve revoking two license exceptions U.S. companies can get for shipping restricted technology to China. 

U.S. firms can avoid an export license requirement to China if they can prove the good is bound for civilian end-use or if a U.S.-origin good is approved for re-export to China from an allied third country.
Another option would be expanding a prohibition on any U.S. goods bound for military use in China on par with restrictions now applied to Russia and Venezuela.
Finally, Commerce could look at changing its general policy of approving export licenses for goods bound for civilian uses.
One of the people close to the deliberations said the actions appear to be “a direct response to the civilian-military fusion that is happening in China.”
The U.S. already maintains relatively tight restrictions on exports to China of technology and goods that have both civilian and military uses. 

Tough U.S. export controls aimed at China have long riled Beijing and Chinese officials have raised objection to mounting restrictions with previous administrations.
The additional restrictions would add to the recent Commerce Department decision to blacklist Huawei, forcing most of the company’s U.S. suppliers to obtain a special license for export transactions. 

Commerce has a general policy of denying license applications for blacklisted companies.
The Commerce Department is also considering similar action against a number of other Chinese companies, including Hikvision and Dahua Technology, which manufacture sophisticated video surveillance technology, according to the two people familiar with the plans.
Those companies have been implicated in human rights abuses as a result of the monitoring and mass detention of members of the Muslim Uighur group in China’s East Turkestan colony.
Any final actions related to the surveillance companies are complicated by the scope of a broader proposed package of sanctions the administration is considering. 

Officials are looking at using a law that would allow the U.S. to ban Chinese government and business officials accused of human rights abuses in the region from entering the U.S. or holding assets in America, said a lobbyist familiar with the matter.
“There is broad disagreement over both timing and which tools to use here,” the lobbyist said. 

“In any case, this will really piss off Beijing.”
The Trump administration had held back on several actions — including punishing China for its activities in East Turkestan as well as Huawei’s blacklisting — in the hopes that a deal could be reached with Xi to draw down trade tension. 

But talks fell apart earlier this month amid accusations from U.S. officials that Beijing had backtracked on commitments to codify under domestic law obligations to address intellectual property theft and forced technology transfers.
“China’s backtracking in a massive way at the eleventh hour from four months of shuttle diplomacy has fed a view in the administration that there is no reason to hold back from these types of actions,” said one person close to the internal deliberations.