US to impose new curbs on exports to China

New rules aim to keep tech away from firms connected to military

WASHINGTON • The United States says it will impose new restrictions on exports to China to keep semiconductor production equipment and other technology away from Beijing's military.

The new rules announced on Monday will require licences for US businesses to sell certain items to companies in China that support the military, even if the products are for civilian use.

They also do away with a civilian exception that allows certain US technology to be exported without a licence if its use is not connected to the military.

The rules, which were posted for public inspection and were to be published in the Federal Register yesterday, could hurt the semiconductor industry and sales of civil aviation equipment to China, if the US presumes they are for military applications.

The changes, which include requiring licences for more items, also expand the rules for Russia and Venezuela, but the biggest impact will be on trade with China.

"It is important to consider the ramifications of doing business with countries that have histories of diverting goods purchased from US companies for military applications," Commerce Secretary Wilbur Ross said in a statement.

Washington trade lawyer Kevin Wolf said that the rule changes for China are in response to its policy of military-civil fusion: finding military applications for civilian items.

He said that the regulatory definitions of military use and user are broad and go beyond purchases by entities such as the People's Liberation Army.

For example, Mr Wolf said, if a car company in China repairs a military vehicle, that car company may now be a military end user, even if the item being exported is for another part of the business.

"A military end user is not limited to military organisations," Mr Wolf added.

"A military end user is also a civilian company whose actions are intended to support the operation of a military item."

The rules, which were posted for public inspection and were to be published in the Federal Register yesterday, could hurt the semiconductor industry and sales of civil aviation equipment to China, if the US presumes they are for military applications.

Another rule change involves eliminating civilian licence exceptions for Chinese importers and Chinese nationals for certain integrated circuits.

Other telecommunications equipment, radar and high-end computers will be caught as well.

The administration also posted a third proposed rule change that would force foreign companies shipping certain American goods to China to seek approval not only from their own governments, but from the US as well.

The actions come as relations between the US and China have deteriorated amid the coronavirus outbreak.

Meanwhile, China's Foreign Ministry yesterday denounced White House trade adviser Peter Navarro as a "liar", in the latest volley between the two sides over the coronavirus outbreak.

Foreign Ministry spokesman Geng Shuang repeated its past rejection of Mr Navarro's claims that the Chinese side had held back supplies of vital personal protective equipment amid the Covid-19 pandemic.

"Navarro has been a consistent liar with no credibility," Mr Geng told a regular news briefing in Beijing.

Mr Navarro, who wrote Death By China: Confronting The Dragon - A Global Call To Action before joining the White House, has equated the dispute with China to "a war".

"It's a war that China started by spawning the virus, by hiding the virus, by hoarding personal protective equipment during the time it hid the virus," he said during an interview last Saturday with Fox News.

Mr Navarro has argued that tariffs have spurred growth amid the ongoing trade war between the US and China, which dominated headlines about the relationship between the world's two biggest economies before the coronavirus emerged late last year.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on April 29, 2020, with the headline 'US to impose new curbs on exports to China'. Print Edition | Subscribe