Last Week: Commerce Added Chinese Companies to Entity List and Removed Some from Unverified List

1. 36 companies were added to Entity List, 35 of which are in China. These companies will be restricted from purchasing technology from American companies without a license.

2. 25 Chinese companies were removed from the “unverified list” after Chinese government cooperation to permit U.S. end use checks and determinations that firms were not using U.S. technology inappropriately.

Between the lines: Thea D. Rozman Kendler, Assistant Secretary of Commerce for Export Administration, said the new rules “further the Biden Administration’s efforts to deny the PRC access to advanced technologies for military modernization and human rights abuses.”In a December 8 press release, Alan Estevez, the Under Secretary of Commerce of Industry and Security, confirmed that the recent additions to the Entity List represent the US Department of Commerce’s Bureau of Industry and Security’s (BIS) focus on diversion.

US Argues That WTO Cannot Review Semiconductor Export Controls

1. In response to China’s World Trade Organization (WTO) challenge over new U.S. export controls on semiconductors, the Biden Administration argued the WTO is an inappropriate forum to address national security related policies.

Why it matters: The WTO challenge is the first Chinese response to the new rules, but it will take years to yield any concrete retaliation in terms of tariffs or other trade restrictions, if ever.

What’s next: The U.S. has 60 days to enter into consultations with the Chinese government, after which China can request the WTO establish a panel to judge the dispute. However, the U.S. could negate any eventual ruling by appealing it to the Dispute Settlement Body (DSB), which remains inactive due to the United States’ block on new judges, over broader calls to reform the WTO. So, despite China’s challenge, the US aggressive export controls on semiconductors may be here to stay.