Industry groups call for BIS’s China rule to be withdrawn

Industry groups call for BISÆs China rule to be withdrawn Twenty-four large industry groups called for the U.S. Commerce Department's Bureau of Industry and Security to 'withdraw and reconsider' a proposed rule for exports destined to China.
   The proposed rule, published by BIS on July 6, promises fewer administrative burdens for U.S. shipments to China that would otherwise require a export license from BIS. The goal of the rulemaking is to make it more difficult for the Chinese military to obtain certain American-made technologies and products.
   However, the industry groups warned in a letter to the agency that the economic consequences of such a rule, if implemented, would be detrimental to U.S. businesses.
   'The compliance costs associated with this proposed rule are likely to result in an annual effect on the economy of more than $100 million, and are also likely to result in significant adverse effects on the ability of U.S.-based enterprises to compete with foreign-based enterprises in export markets,' the groups said.
   Some of the associations to sign the letter are the American Electronics Association (AeA), Coalition of Employment through Exports, Computer Coalition for Responsible Exports, General Aviation Manufacturers Association, National Association of Manufacturers, National Council on International Trade and Development, National Foreign Trade Council, Semiconductor Industry Association, and U.S. Chamber of Commerce.
   Even some groups that don't normally engage in export matters signed the letter.
   'We haven't been involved in export control issues before,' said Dirk Van Dongen, president of the National Association of Wholesaler-Distributors, in a statement. 'We are deeply involved in this now because our members have made it clear that the proposed regulations are unrealistic and simply unworkable.
   'If adopted as proposed, they will shut down markets for American firms without denying Chinese buyers the products they desire,' he added. 'This does nothing to further our security.'
   The groups' letter said the current export rules for China should remain unchanged.
   'The administration has not demonstrated that this proposed change would provide any additional security benefit, and has not articulated a clear purpose for it,' the groups said. 'It is extremely unlikely that it will have any impact on the military capability' of China.
   Another serious flaw in the proposed rule, the groups point out, is its unilateral nature. Other countries, particularly in Europe, have shown little interest in signing onto this type of export control.
   When BIS proposed the rule, the agency promised that a validated end-user program for Chinese companies would ease the compliance burdens for U.S. companies.
   'The expansion of the Chinese end user certificate requirement is significant and is likely to create lengthy backlogs,' the groups countered. 'Even if the Chinese government decides to cooperate, it is clear that they do not have sufficient resources to issue certificates efficiently.'
   The comment period for the proposed rulemaking closes today. BIS officials have stated that it will take several months to review the comments and finalize the regulation. BIS may publish its final rule in late February or March at the earliest.