Too Soon to Tell If New Multilateral Framework Will Lead to Formal Regime, BIS Official Says
Although the U.S. and allies are discussing creating a new multilateral export control framework, it’s too soon to tell whether those talks will result in a formal regime, said Alan Estevez, undersecretary of the Bureau of Industry and Security. He said the group of countries has “momentum” toward a new framework, but they haven’t yet agreed to establish a formal organization to replace some of the existing multilateral regimes, such as the Wassenaar Arrangement.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
“It's nascent. It’s in early discussions,” Estevez said during a June 29 news conference. “It could formalize. We'll see.”
Former government officials and export control experts have urged the U.S. to create a new, modern export control regime to better address control issues surrounding emerging technologies (see 2205240039 and 2206100021). A new regime is also necessary, they say, because Russia is a member of Wassenaar and there is no path to vote it out.
Estevez said BIS is “concerned” about Russia’s membership in Wassenaar and member states’ “ability to reach consensus agreements” on updating the regime’s control list. “We need to take the opportunity with our allies to develop a 21st century export control framework,” Estevez said, speaking earlier in the day at the agency’s annual update conference. “Multilateral cooperation, and where necessary, plurilateral cooperation, are both high priorities for this administration.”
Although the talks with allies eventually could lead to a formal regime, Estevez pointed to other avenues for export control cooperation, including the U.S.-EU Trade and Technology Council and the Indo-Pacific Economic Framework. The White House last year also announced an export control initiative with several trading partners that outlined a code of conduct for how human rights concerns are applied to export licensing decisions for sensitive technologies (see 2112100044).
“It's clear that cooperation with our allies and partner countries is essential to the effectiveness of our export controls,” Estevez said, adding that BIS is continuing to “monitor the effectiveness of the current multilateral regimes.”
The coordinated export controls have so far proven effective against Russia, Commerce Secretary Gina Raimondo said at the conference. Global exports of semiconductors to Russia have “plummeted” by 90% since the restrictions were introduced, she said, and Russia could be forced to ground more than half of its commercial aircraft in the next four years to “cannibalize” them for spare parts.
“It's working because we have this global coalition. Now we have to sustain it, and we have to aggressively enforce it,” Raimondo said. “We have to do it over a sustained period of time, because unfortunately, I don't think it's going to end anytime soon.”
She said she has “zero tolerance for any country trying to do an end-run around of our export controls. Commerce will add any company violating the controls to the Entity List, Raimondo said, doubling down on comments last year, when she threatened to “shut” down SMIC, China’s largest chip-maker, or any other Chinese company skirting the regulations (see 2203080053).
“I said we'll shut them down, and we will shut them down, and we can because almost every chip in the world and in China is made using U.S. equipment and software,” Riamondo said. “I intend to make good on that commitment if it's necessary.”
Raimondo’s comments came just one day after BIS added several Chinese entities to the Entity List for supplying products to Russia’s military in violation of U.S. export controls (see 2206280056). During the news conference, BIS officials declined to say what types of items the companies were exporting to China. They also declined to say whether BIS is investigating any other Chinese companies for export control violations, including Chinese semiconductor manufacturer Yangtze Memory Technologies Co., which is reportedly under investigation for illegally supplying chips to Huawei.
“We are always looking at Chinese companies’ compliance with U.S. export controls,” said Thea Kendler, BIS assistant secretary for export administration. “Please understand that this is an absolute priority for the BIS.”