Friday, 03 April 2020 05:58

US officials agree on new curbs for China tech exports: report Featured

US officials agree on new curbs for China tech exports: report Image by Gerd Altmann from Pixabay

American officials have agreed on three measures to prevent China from obtaining US technology that can be diverted for use in the military, a report claims, adding that the only step remaining for these curbs to take effect is for US President Donald Trump to sign them into law.

The news agency Reuters reported on Thursday that the new restrictions were aimed at blocking sales of some optical materials, radar equipment and semiconductors, among others.

As reported on 27 March, officials at the same meeting — said to have been held on 25 March — also decided on specific restrictions to limit the Chinese telecommunications equipment vendor Huawei Technologies from buying semiconductors from Taiwan Semiconductor Manufacturing Company, which it uses in its HiSilicon chip-designing unit.

Huawei has been the main target of US restrictions that have been introduced over the last three years and then tightened as the company appears to still be relatively unaffected.

Thursday's Reuters report said industries that export the products on which bans were being considered were nervous that such steps could drive China's companies to seek exports from competitors in other countries.

Washington trade lawyer Eric McClafferty was quoted as saying: “There’s a chilling effect when they start taking away the availability of these licence exceptions for particular exports. It makes people more nervous to export to China.”

Asked about the likelihood of new restrictions, Chinese Foreign Ministry spokesperson Hua Chunying told the regular daily media conference in Beijing on Thursday: "The Chinese government consistently objects to the US using state power and trumped-up charges to suppress Chinese companies. We will not sit idle and watch the US resort to technological bullying."

One of the changes agreed on is to get rid of the civilian exemption which allows the export of some items, like field programmable gate array integrated circuits, without a licence. Chinese companies and citizens would need a licence for such exports under the new curbs.

A second change would block Beijing firms from buying scientific gear like digital oscilloscopes, airplane engines and certain types of computers without a licence, no matter the reason for the purchase.

And the final change would make it compulsory for foreign companies who ship some American goods to China to obtain approval from the US Government, apart from their own authorities.

To do this, the US would have to change its Foreign Direct Product Rule which places some goods made abroad under US regulations if they are based on American technology or software or made using American equipment.

Trump has hinted that he does not favour additional restrictions on China and said he wanted to make the US an easy place for other countries to buy products. His statement was made after news about the additional curbs on Huawei was published.

In a tweet at the time, Trump wrote: "We want to sell product and goods to China and other countries. That’s what trade is all about. We don’t want to make it impossible to do business with us. That will only mean that orders will go to someplace else."

In May last year, the US placed Huawei on a trade blacklist that prevents the company from buying any product with more than 25% of American content unless it has a licence from the Commerce Department. The main effect has been that the company has been unable to use Google's Android mobile operating system in its smartphones.

Instead, Huawei has used the open-source version of Android which is devoid of the proprietary apps Gmail, YouTube, Drive, Maps and the Google Play Store.

Since May 2019, Huawei has been given repeated extensions to trade with US companies, with the latest extension being until 15 May. Some American firms have got around the ban by selling products to Huawei from their subsidiaries abroad, a loophole which would be closed if changes were made to the Foreign Direct Product Rule as mentioned above.

Washington has campaigned for more than two years to try and push countries it considers allies to avoid using 5G equipment from Huawei in their networks. Thus far, only Australia and Vietnam have said openly that they would follow the US' lead.

Japan, South Korea and Poland have indicated that they are likely to toe the US line, but have yet to make public pronouncements about what policy they would follow.

The UK broke ranks with the US in January, saying it would allow Huawei to supply up to a third of equipment for non-core parts of its 5G networks. Since then, India, the UAE and Cambodia have said they would allow Huawei to participate in 5G trials.

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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