U.S. Imposes Additional Export Controls Restrictions on Advanced Computing and Semiconductor Manufacturing Items

U.S. Imposes Additional Export Controls Restrictions on Advanced Computing and Semiconductor Manufacturing Items

October 10, 2022, Covington Alert

On October 7, 2022, the U.S. Commerce Department, Bureau of Industry and Security (“BIS”) announced two rules aimed at restricting China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. These two rules reflect the Biden Administration’s new approach to technology containment, as previewed in National Security Advisor Jake Sullivan’s remarks on September 16, 2022, and reflect a sweeping change to China-related export controls.

The Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification Interim Final Rule (the “Advanced Computing and Semiconductors Rule”) adds certain advanced chips, computer commodities containing such chips, and semiconductor manufacturing equipment to the Commerce Control List (“CCL”) of the Export Administration Regulations (“EAR”); expands the scope of the EAR to reach additional items produced outside the United States; restricts the ability of U.S. persons to support the development or production of integrated circuits (“ICs”) at certain semiconductor fabrication facilities (“fabs”) in China; and adds new license requirements for certain items destined to China, including certain items for use in supercomputers, the development or production of semiconductors or semiconductor manufacturing equipment, and destined to fabs in China that produce logic chips with non-planar transistor architectures or with a “production” technology node of 16/14 nanometers (“nm”) or below; DRAM memory chips of 18nm half-pitch or less; or NAND flash memory chips with 128 layers or more. As detailed below, this rule is being implemented in phases, with certain aspects of the rule already taking effect on October 7, and other aspects taking effect on October 12 and October 21.

Additionally, the Revisions to the Unverified List: Clarifications to Activities and Criteria that May Lead to Additions to the Entity List Rule (the “Entity List Criteria and UVL Rule”) clarifies that entities may be added to the Commerce Department’s Entity List, thus imposing a broad restriction on trade with such entities in items subject to the EAR, when the government of the country where the entity is located does not cooperate with BIS to facilitate end-use checks of items subject to the EAR that the entity has received. In addition, this rule designates 31 China-based entities to the Unverified List, which identifies parties for which BIS has been unable to confirm their bona fides, including prominent memory chip manufacturer Yangtze Memory Technologies Co., Ltd. (“YMTC”). The rule also removed nine Chinese entities from the Unverified List.

BIS will hold a public briefing on the new measures on October 13, 2022. There also will be a 60-day comment period for the Advanced Computing and Semiconductors Rule following its publication in the Federal Register.

Sections One through Four of this alert focus on changes resulting from the Advanced Computing and Semiconductors Rule. In Section One, we first discuss changes to the CCL. Section Two addresses the expansion of U.S. export controls jurisdiction to certain items manufactured outside the United States. Section Three summarizes new license requirements applicable to items subject to the EAR and to U.S. persons even when such persons are engaged in activities involving non-U.S. made items that are not subject to the EAR. Section Four describes the savings clause and Temporary General License. Section Five provides an overview of clarifications to Entity List designation criteria and designations to and removals from the Unverified List as set out in the Entity List Criteria and UVL Rule. Finally, Section Six discusses potential reactions from China.

Semiconductor Manufacturing Items

Effective October 7, 2022, the Advanced Computing and Semiconductors Rule establishes new Export Control Classification Number (“ECCN”) 3B090 on the EAR’s CCL, which controls certain semiconductor manufacturing deposition equipment and specially designed parts, components, and accessories for such equipment for China-related regional stability reasons (“RS-China”) and anti-terrorism (“AT”) reasons. Associated software and technology is also controlled for RS-China and AT reasons under ECCNs 3D001 and 3E001. ECCN 3B991 also has been amended to clarify that it controls for AT reasons certain electronics manufacturing equipment and specially designed parts, components, and accessories for such equipment not controlled under ECCN 3B090, in addition to equipment not controlled under existing ECCN 3B001.

Advanced Chips, Commodities Containing Those Chips, and Related Controls

Effective October 21, 2022, the rule adds three additional new ECCNs to the CCL:

• ECCN 3A090 will control for RS-China and AT reasons certain ICs that have or are programmable to have an aggregate bidirectional transfer rate over all inputs and outputs of 600 Gbyte/s or more to or from ICs other than volatile memories. A note to ECCN 3A090.a provides that the ICs specified by that paragraph include graphical processing units (“GPUs”), tensor processing units (“TPUs”), neural processors, in-memory processors, vision processors, text processors, co-processors/accelerators, adaptive processors, field-programmable logic devices (“FPLDs”), and application-specific integrated circuits (“ASICs”).
• ECCN 4A090 will control for RS-China and AT reasons computers, electronic assemblies, and components containing ICs that exceed the limit in ECCN 3A090.a.
• ECCN 4D090 will control for RS-China and AT reasons software that is specially designed or modified for the development or production of the items controlled under ECCN 4A090.

Additionally, the following ECCNs will be revised:

• ECCNs 3D001 and 3E001 will be revised to also control for RS-China and AT reasons certain software and technology associated with ECCN 3A090 items. Additionally, as discussed further in the section on new license requirements, the RS controls that apply to certain ECCN 3E001 technology (for ECCN 3A090 items) will apply to items exported from China to any destination for certain end uses.
• ECCN 4E001 will be revised to also control for RS-China and AT reasons technology for commodities controlled by ECCN 4A090 or software controlled by 4D090.
• ECCNs 5A992.c and 5D992.c will be revised to also control for RS-China reasons mass-market encryption items that are controlled under ECCN 5A992.c (mass market encryption commodities) or ECCN 5D992.c (mass market encryption software) and meet or exceed the performance parameters of ECCNs 3A090 or 4A090. Mass-market encryption items classified under these ECCNs have previously been subject only to AT controls.
• A new paragraph will be added at ECCN 3A991.p to control for AT reasons ICs that do not appear elsewhere on the CCL and have a processing performance of 8 Tera Operations Per Second (“TOPS”) or more, or an aggregate bidirectional transfer rate over all inputs and outputs of 150 Gbyte/s or more to or from ICs other than volatile memories.
• A new paragraph will be added at ECCN 4A994.l to control for AT reasons computers, electronic assemblies, and components that do not appear elsewhere on the CCL and contain ICs that exceed the limit of ECCN 3A991.p.
• ECCNs 3D991, 3E991, 4D994, and 4E992 will control certain technology and software associated with ECCNs 3A991.p and 4A994.l.

II. Expansion of EAR Scope

Effective October 21, 2022, the Advanced Computing and Semiconductors Rule expands the scope of items produced outside of the United States that are subject to U.S. export controls jurisdiction under the EAR by revising the Foreign Direct Product (“FDP”) rules at EAR Section 734.9 to cover certain items produced outside the United States that:

• are destined to entities on the Entity List designated with new footnote 4, through revisions to the Entity List FDP rule at EAR Section 734.9(e);
• are advanced ICs, commodities containing such ICs, or related technology and there is knowledge that the items are either (i) destined for China or incorporation into a non-EAR99 item that is destined for China, or (ii) technology developed by an entity headquartered in China for the production of a mask or IC wafer or die, through the addition of a new Advanced Computing FDP rule at EAR Section 734.9(h); and
• will be for use in or with a supercomputer located in or destined for China or will be incorporated into or used in the development or production of any part, component, or equipment that will be used in a supercomputer located in or destined to China, through the addition of a new Supercomputer FDP rule at EAR Section 734.9(i).

Like existing FDP rules, the new FDP rules define when certain foreign-made items are subject to the EAR by providing both a product scope -- identifying the types of items that may be caught -- and a destination, end-user, or end-use scope -- identifying the specific circumstances which must be present for the items to be subject to the EAR.

Entity List FDP Rule Revisions

The Advanced Computing and Semiconductors Rule adds new product and end-user scopes to the Entity List FDP rule at EAR Section 734.9(e) related to entities that are designated with a new footnote 4 on the Entity List. The revisions to the EAR do not alter the scope of requirements of the existing Entity List FDP rule applicable to entities on the Entity List designated with footnote 1 (which apply to Huawei Technologies Co., Ltd. and many of its affiliates).

The new product scope of the Entity List FDP rule for footnote 4 entities covers foreign (non-U.S.) produced items that are (1) a direct product of technology or software subject to the EAR (not limited to U.S.-origin items) and specified in ECCNs 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E002, or 5E991; or (2) produced by any plant or major component of a plant when the plant or major component of a plant, including essential equipment, is itself a direct product of U.S.-origin software or technology specified in the same group of ECCNs, regardless of where the plant or major component of a plant was made.

The end-user scope of the Entity List FDP rule for footnote 4 entities is met where there is knowledge, as defined in the EAR, that either: (1) the item will be incorporated into, or used in the production or development of, any part, component, or equipment produced, purchased, or ordered by any footnote 4 entity, or (2) any footnote 4 entity is party to any transaction involving the item.

If both the product and end-user scopes are met, the foreign-made item is subject to the EAR and associated license requirements.

Effective October 21, 2022, BIS’s Advanced Computing and Semiconductors Rule designates 28 entities in China, all of which already were on the Entity List, as footnote 4 entities, including, e.g., Beijing Sensetime Technology Development Co., Ltd. and Dahua Technology. All items subject to the EAR require a Commerce Department license for export, reexport, or transfer (in country) to these entities or for transactions to which these entities are a party; as of October 21, 2022, this now includes foreign-made items that meet the above parameters.

New Advanced Computing FDP Rule

The product scope of the new Advanced Computing FDP rule at Section 734.9(h) covers foreign-made items that are: (1) specified in ECCNs 3A090, 3E001 (when involving technology for 3A090 items), 4A090, or 4E001 (when involving technology for 4A090 items), or are an IC, computer, electronic assembly, or component specified elsewhere on the CCL that meets the performance parameters of ECCNs 3A090 or 4A090; and (2) either the direct product of software or technology subject to the EAR (not limited to U.S.-origin software and technology) and specified in ECCNs 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D090, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E002, or 5E991, or produced by a plant or major component of a plant that is itself the direct product of U.S.-origin technology or software specified in the same ECCNs.

The destination or end-use scope of the Advanced Computing FDP rule is met where there is knowledge, as defined in the EAR, that either the item is: (1) destined to China or will be incorporated into any non-EAR99 part, component, computer, or equipment that is destined for China; or (2) technology developed by a China-headquartered entity for the production of a mask or an IC wafer or die.

If both the product and destination/end-use scopes are met, the foreign-made item is subject to the EAR and any associated license requirements apply.

Additionally, paragraph (3) of the Advanced Computing FDP rule provides that exporters, reexporters, and transferors may obtain a written certification from a supplier that asserts an item being provided would or would not be subject to the EAR if future transactions meet the scope definitions described above. A model certificate for this purpose is provided at EAR Part 734, Supp. No. 1. In the absence of such a certification, due diligence must be conducted to assess whether an item is covered by the Advanced Computing FDP rule. BIS also explains that “[w]hile this certificate is expected to be useful for a company to understand the application of the EAR to an item, BIS does not view this as the only step to be completed during a company’s due diligence process.”

New Supercomputer End-Use FDP Rule

The product scope of the new Supercomputer End-Use FDP rule at EAR Section 734.9(i) broadly covers any foreign-made item that is the direct product of software or technology subject to the EAR (not limited to U.S.-origin software or technology) and specified in ECCNs 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E002, or 5E991, or produced by a plant or major component of a plant that is itself the direct product of U.S.-origin technology or software specified in the same ECCNs.

The country and end-use scope is met if there is knowledge, as defined in the EAR, that the foreign-produced items will be: (1) used in the design, development, production, operation, installation (including on-site installation), maintenance (checking), repair, overhaul, or refurbishing of a “supercomputer” located in or destined to China; or (2) incorporated into, or used in the development or production of any part, component, or equipment that will be used in a “supercomputer” located in or destined to China. The Advanced Computing and Semiconductors Rule also amends EAR Section 772.1 to add a definition of “supercomputer,” which means “[a] computing ‘system’ having a collective maximum theoretical compute capacity of 100 or more double-precision (64-bit) petaflops or 200 of more single-precision (32-bit) petaflops within a 41,600 ft³ or smaller envelope.”

If both the product and destination/end-use scopes are met, the foreign-produced item is subject to the EAR and associated license requirements apply. For items subject to the Supercomputer End-Use FDP rule, the license requirements and license review policy are set out in new EAR Section 744.23.

III. New License Requirements

Regional Stability (RS) Controls

The new CCL-based RS controls at EAR Section 742.6(a)(6) impose, effective October 7, 2022, a license requirement on exports, reexports, or transfers to or within China of items subject to the EAR and controlled under ECCNs 3B090, 3D001 (for software associated with ECCN 3B090), and 3E001 (for technology associated with ECCN 3B090). This new license requirement does not apply to “deemed” exports or reexports (i.e., disclosures or releases) of controlled technology or software source code to nationals of China located outside of China. License applications will be reviewed by BIS with a presumption of denial, except that applications to export, reexport, or transfer (in country) semiconductor manufacturing items destined to end users in China that are headquartered in the United States or in a country in the EAR’s Country Groups A:5 or A:6 (as identified in EAR Part 740, Supp. No. 1) will be considered on a case-by-case basis, taking into account factors including technology level, customers, and compliance plans.

On October 21, 2022, the new RS controls will be expanded to extend the above license requirement to also apply to items subject to the EAR and specified in ECCNs 3A090, 4A090, 5A992 (that meet or exceed the performance parameters of ECCNs 3A090 or 4A090), and associated software and technology in ECCNs 3D001 (for software associated with ECCN 3A090), 3E001 (for technology associated with ECCN 3A090), 4D090, 4E001 (for technology associated with ECCNs 4A090 and 4D090), and 5D992 (that meet or exceed the performance parameters of ECCNs 3A090 or 4A090).

Additionally, on October 21, 2022, a license will be required for the export from China to any destination of ECCN 3E001 technology (for 3A090 items) developed by an entity headquartered in China that is the direct product of software subject to the EAR and is for the production of commodities identified in ECCNs 3A090, 4A090, or elsewhere on the CCL and that meet or exceed the parameters of ECCNs 3A090 or 4A090, consistent with the scope of the Advanced Computing FDP rule discussed above. 

Restrictions on All License Exceptions 

The Advanced Computing and Semiconductors Rule also limits the availability of most license exceptions for certain exports, reexports, or transfers to or within China.

Effective October 7, 2022, exports, reexports, or transfers to or within China of items controlled under ECCNs 3B090, 3D001 (when software for 3B090 items), or 3E001 (when technology for 3B090 items) will be eligible only for License Exception GOV, restricted to the provisions of EAR Section 740.11(b)(2)(ii).

Effective October 21, 2022, exports, reexports, or transfers to or within China of items controlled under ECCNs 3A090, 4A090, 3D001 (when software for 3A090 items), 3E001 (when technology for 3A090 items), 4D090, and 4E001 (when technology for 4A090 items) will be eligible only for:

• License Exception RPL, under the provisions of EAR Section 740.10;
• License Exception GOV, restricted to the provisions of EAR Section 740.11(b)(2)(ii); and
• License Exception TSU, under the provisions of EAR Sections 740.13(a) and (c).

Semiconductor Manufacturing End-Use Controls

Effective October 7, 2022, the Advanced Computing and Semiconductors Rule adds new EAR Section 744.23, which includes end-use-based license restrictions on certain items subject to the EAR. Specifically, licensing is required for exports, reexports, or transfers of:

• any item subject to the EAR when there is knowledge that the item is destined for end use in the development or production of ICs at a fab in China that fabricates ICs meeting any of the following criteria:
  • llogic ICs using a non-planar transistor architecture or with a “production” technology node of 16/14 nm or less;
  • lNOT AND (NAND) memory ICs with 128 layers or more; or
  • ldynamic random-access memory (DRAM) ICs using a “production” technology node of 18 nm half-pitch or less;
• items subject to the EAR and controlled under an ECCN in Product Groups B, C, D, or E in Category 3 of the CCL when there is knowledge that the item will be used in the development or production of ICs at any fab located in China, but where the exporter does not know whether such fab produces ICs that meet the above technical criteria; and
• any item subject to the EAR when there is knowledge that the item is destined for end use in the development or production in China of any parts, components, or equipment specified under ECCNs 3B001, 3B002, 3B090, 3B611, 3B991, or 3B992.

No license exceptions overcome the semiconductor manufacturing equipment end-use license requirements at EAR Section 744.23. Further, the rule establishes a presumption of denial for license applications, except for those applications to export, reexport, or transfer items subject to the EAR to end users in China that are headquartered in the United States or in countries in Country Groups A:5 or A:6 for the development or production of ICs at a fab in China that produces ICs meeting the above technical criteria.

Activities of U.S. Persons

Effective October 12, 2022, BIS is notifying U.S. persons that the prohibitions at EAR Section 744.6(b) are triggered by the provision of certain support related to semiconductor manufacturing in China. EAR Section 744.6(b) prohibits U.S. persons, absent licensing, from providing support for certain end uses and end users, including weapons of mass destruction-related end uses, even where the activity does not involve any items subject to the EAR. “U.S. persons” include U.S. legal entities and their non-U.S. branches; individual U.S. citizens, lawful permanent residents (“green-card” holders), and protected individuals as defined by 8 U.S.C. 1324b(a)(3), no matter where located or employed; and persons present in the United States.

The Advanced Computing and Semiconductors Rule informs U.S. persons that a license is required for the following activities, which “could involve ‘support’ for the weapons of mass destruction-related end uses” specified at Section 744.6(b):

• Shipping, transmitting, or transferring, or facilitating such movement, to or within China, or servicing, any item not subject to the EAR with knowledge that the item will be used in the development or production of ICs at a fab in China that produces ICs meeting any of the following criteria:
  • llogic ICs using a non-planar transistor architecture or with a “production” technology node of 16/14 nm or less;
  • lNOT AND (NAND) memory ICs with 128 layers or more; or
  • ldynamic random-access memory (DRAM) ICs using a “production” technology node of 18 nm half-pitch or less.
• Shipping, transmitting, or transferring, or facilitating such movement, to or within China, or servicing, any item not subject to the EAR and meeting the parameters of any ECCN in Product Groups B, C, D, or E in Category 3 of the CCL with knowledge that the item will be used in the development or production of ICs at any fab in China where the U.S. person does not know whether the fab produces ICs meeting the criteria above.
• Shipping, transmitting, or transferring, or facilitating such movement, to or within China, or servicing, any item not subject to the EAR and meeting the parameters of ECCN 3B090, 3D001 (for 3B090), or 3E001 (for 3B090) regardless of the end use or end user.

No license exceptions overcome these license requirements. However, in limited circumstances certain support may be provided by employees or contractors of a department or agency of the U.S. government without prior licensing.

License applications will be subject to a presumption of denial, except for end users in China that are headquartered in the United States or a country in Country Groups A:5 or A:6, which will be considered on a case-by-case basis.

Supercomputer End-Use Controls

Effective October 21, 2022, the Advanced Computing and Semiconductors Rule expands new EAR Section 744.23 to add end-use-based license restrictions on certain items subject to the EAR when exported for use in or with supercomputers in China. Specifically, licensing will be required for exports, reexports, or transfers of the following items when there is knowledge that an item will be (1) used in the development, production, use, operation, installation (including on-site installation), maintenance (checking), repair, overhaul, or refurbishing of a supercomputer located or destined to China; or (2) incorporated into, or used to develop or produce, any component or equipment that will be used in a supercomputer located in or destined to China:

• ICs subject to the EAR (including as a result of the Supercomputer End-Use FDP rule discussed above) and specified in ECCNs 3A001, 3A991, 4A994, 5A002, 5A004, or 5A992; or
• computers, electronic assemblies, or components subject to the EAR (including as a result of the Supercomputer End-Use FDP rule) and specified in ECCNs 4A003, 4A004, 4A994, 5A002, 5A004, or 5A992.

No license exceptions overcome the supercomputer end-use license requirements at EAR Section 744.23. Additionally, there is a presumption of denial for license applications to engage in such exports, reexports, or transfers to or within China.

IV. Savings Clause and Temporary General License

Savings Clause

The Advanced Computing and Semiconductors Rule provides that shipments of items no longer eligible for license exceptions or for export, reexport, or transfer (in-country) without a license as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on October 7, 2022, may continue to the destination under the previous license exception or without a license so long as they have been exported, reexported, or transferred (in-country) before November 7, 2022.

Further, the savings clause provides that deemed exports and reexports of technology and software source code related to ECCNs 3A991.p and 4A994.l that previously did not require a license, but now require a license because of the controls implemented by this rule, will only require licenses if the technology or software release exceeds the scope of the technology or software that the foreign national already had access to prior to the implementation of controls in this rule.

Temporary General License

The Advanced Computing and Semiconductors Rule includes a Temporary General License (“TGL”) that authorizes from October 21, 2022 through April 7, 2023 exports, reexports, transfers, and exports from abroad destined to or within China by companies not headquartered in countries in Country Groups D:1, D:5, E:1, or E:2 to continue or to engage in integration, assembly (mounting), inspection, testing, quality assurance, and distribution of items covered by ECCNs 3A090, 4A090, 3D001 (for 3A090 or 4A090 items), 3E001 (for 3A090 or 4A090 items), 4D090, or 4E001 (for 3A090 or 4A090 items), or items specified elsewhere on the CCL that meet or exceed the performance parameters of ECCNs 3A090 or 4A090.

Importantly, the TGL may be used only by companies that engage in the activities specifically authorized by the TGL and does not authorize the export, reexport, transfer, or export from abroad to end-users or ultimate consignees in China. It also does not overcome the license requirements applicable to prohibited end uses or users, including those identified with footnote 4 designations on the Entity List. BIS states that the purpose of the TGL is to avoid disruption of supply chains for items covered by ECCNs that are ultimately destined to customers outside of China.

V. Revisions to Entity List Criteria and Additions to Unverified List

The Entity List Criteria and UVL Rule clarifies that the Entity List designation criteria permits designation of an entity due to the sustained lack of cooperation by a host government in the entity’s country that effectively prevents BIS from determining compliance with the EAR by the entity. The revisions clarify that BIS’s inability to conduct timely end-use checks may result in a determination that an entity is at significant risk of being or becoming involved in activities contrary to U.S. national security or foreign policy interests. Such a finding is sufficient for designation to the Entity List and may be caused not only by the end user but also by the sustained lack of cooperation by a host government, including where the host government fails to schedule and facilitate end-use checks.

Notably, BIS officials at the annual BIS Update Conference in July 2022 reported experiencing significant challenges coordinating with China’s Ministry of Commerce to schedule end-use checks. The rule appears to signal that if this continues, BIS is prepared to designate to the Entity List entities at which it is prevented from performing these checks.

In parallel, the Entity List Criteria and UVL Rule designated 31 China-based entities to the Unverified List, which identifies parties for which BIS has been unable to confirm their bona fides. Those entities include prominent memory chip manufacturer YMTC.

No license exceptions may be used for exports, reexports, or transfers to entities on the Unverified List, and certain outbound export filing requirements also apply. In addition, prior to exporting, reexporting, or transferring an item subject to the EAR to a party on the Unverified List that does not require a license, an exporter, reexporter, or transferor must obtain a written statement from that party that includes:

• an agreement to cooperate with end-use checks, including a post-shipment verification, conducted by or behalf of BIS for any item subject to the EAR in transactions to which the entity was a party in the last five years;
• an agreement not to use the items for any use prohibited by the EAR; and
• a declaration of the end use, end user, and country of ultimate destination of the items subject to the EAR.

Besides adding entities to the UVL, BIS also with this rule removed nine Chinese entities from the UVL because BIS said it was able to verify their bona fides. This includes, among others, Wuxi Biologics Co., Ltd., a significant company in the Chinese life-sciences sector that BIS had added to the Unverified List in February 2022.

In response to a question about the new rules, a spokesperson for China's Ministry of Foreign Affairs made comments consistent with other reactions by China to U.S. export controls, criticizing U.S. efforts to "politiciz[e] tech and trade issues." Given the complexity of the rules, we anticipate that China may take some time digesting the new rules. China possesses a number of counter-measures, including the Countering Foreign Sanctions Law (see Covington's alert here), although to date, China has used that Law against state-affiliated actors and NGOs in relation to sensitive political issues (e.g., Xinjiang, Hong Kong, Taiwan) and against defense firms involved in arms sales to Taiwan rather than against companies for pursuing day-to-day compliance with international trade controls laws.

*           *           *

We are closely monitoring developments and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.

Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, Brussels, and Frankfurt—regularly advises clients across business sectors, and would be well-placed to provide support in connection with these new and expanded export controls.

Our trade controls lawyers also work closely with Covington's Global Public Policy team which consists of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia. Many of the members of the Public Policy team have had substantial government experience in sanctions and export controls matters, and regularly advise our clients on emerging trade controls policy matters and related engagements with government stakeholders.

If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls practice group.