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The US Commerce Department plans to expand export restrictions on aircraft and semiconductor-related parts to China

Published :5/5/2020 6:35:37 AM

Click Count:2103

According to Reuters, as a result of COVID - 19  has intensified the sino-us relations soured, in the local time on Monday (27th), the Commerce Department on Monday proposed amendment to China export commodities rules, requirements of aircraft parts, semiconductor related new restrictions on the export products, even require foreign companies to China's export u.s.-made products must obtain the consent


The new rules will require us companies to obtain permission to sell certain goods to Chinese military entities, according to a document.At the same time, a rule that no Chinese non-military entity needs a license to acquire us technology will be lifted

Wilbur Ross, the US commerce secretary, said in a statement that the new rules were put in place for national security reasons to cut off the consequences of diverting goods bought in the us for use in other countries' military applications.

Under current rules, if the goods total value contains the manufacturing parts of more than 25%, the company must have license to have the ability for sale, after news that the U.S. department of commerce has drafted regulations limit the threshold dropped to 10%, at the same time will be extended to a non-technical products, such as covering the sensitivity of the chip in consumer electronics.

In short, American companies selling civilian products to military entities need a license, even if they are civilian.However, the regulatory definition of military use and users is very broad and not limited to procurement by Chinese military entities

"For example, if a car company in China repairs a military vehicle, the car company is now a military end user, even if the product it exports is used in other parts of its business."Kevin Wolf, a trade lawyer in Washington, dc, sees the rules as a response to China's policy of integrated military-civilian development.

"A military end user is not limited to a military organization," Wolf adds.

Wolf said the new rules could hurt sales to China of the semiconductor industry and civil aviation equipment if the United States determines the products will be used for military purposes.At the same time, the new rules mean it will take more time for companies to apply for more export licenses, but the biggest impact will be on trade between the United States and China.

Another rule change involves removing licensing exemptions for certain integrated circuits for Chinese importers and citizens, and for other telecommunications equipment, radars and high-end computers.

A third proposed rule change would force foreign companies that ship some us goods to China to seek approval not only from their own governments but also from the us

Specifically, the rule changes include:

· Expansion of Military End Use/User Controls(MEU)

Expands MEU license requirements controls on China, Russia, and Venezuela to cover military end-

users in all three countries, as well as items such as semiconductor equipment, sensors, and other technologies sought for military end use or by military end-users in these countries.

· Removal of License Exception Civil End Users(CIV)

Removes a license exception for exports, reexports, or transfers(in-country) to civilian end-users in countries of national security concern for National Security-(NS) controlled items.

· Elimination of License Exception Additional Permissive Reexports (APR) Provisions

Proposes to eliminate certain provisions of a license exception for partner countries involving the reexport of NS-controlled items to countries of national security concern to ensure consistent reviews of exports and reexports of U.S. items.