House Republican committee chairmen are requesting the Commerce Department's Bureau of Industry and Security and other government agencies brief them by Sept. 28 on the national security implications of granting licenses to companies controlled by the Chinese Communist Party.
“We are extremely troubled and perplexed about the Bureau of Industry and Security’s (BIS) inability to effectively write and enforce export control rules against violators, especially China,” the lawmakers wrote in a letter to Commerce Under Secretary for Industry and Security Alan Estevez.
The letter requested BIS coordinate with the Defense, State and Energy departments for the briefing and urged placement of “additional pressure” on export controls for U.S. adversaries and competitors, like China.
“For more than two years, our committees and numerous members of Congress have written you regarding loopholes in BIS rules attempting, unsuccessfully, to restrict technology to Huawei and [Semiconductor Manufacturing International Corp (SMIC)], among others,” the letter stated. “Despite this knowledge and continued Congressional pressure to adopt stricter policies, BIS has continued to grant licenses to Chinese Communist Party (CCP) controlled companies, such as SMIC, worth hundreds of billions of dollars. These companies support the CCP’s military and have been responsible for manufacturing semiconductors that power Huawei’s 5G devices, in violation of BIS’ export controls.”
The letter comes in response to reports which revealed that Huawei Technologies Co. developed a smartphone containing 7-nanometer chips capable of supporting 5G, produced by the Chinese state-owned SMIC, which the lawmakers say violates U.S. export-control regulations.
The letter was signed by House Armed Services Committee Chairman Mike Rogers (R-AL), Foreign Affairs Committee Chairman Michael McCaul (R-TX), Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers (R-WA), House Select Committee on the Chinese Communist Party Chairman Mike Gallagher (R-WI) and Reps. Ann Wagner (R-MO), Robert Latta (R-OH), Young Kim (R-CA), Gus Bilirakis (R-FL), Brian Mast (R-FL) and Morgan Griffith (R-VA).
The lawmakers suggested seven immediate steps that BIS should take, stating they were already explained to the Foreign Affairs Committee earlier this year.
These suggestions included establishing a sanctions authority through the International Emergency Economic Powers Act on Chinese companies, barring the import of SMIC produced semiconductors, placing SMIC and Huawei on the Entity List with a Foreign Direct Product Rule designation, implementing a policy of denial for all items subject to the Export Administration Regulations (EAR) for Huawei subsidiaries and SMIC, removing all license exceptions for all items subject to the EAR to SMIC and pursuing criminal charges against SMIC and Huawei executives.
“We need to enforce laws under your authority against them and not play into their hands,” the letter states. “Times have changed in our relations with China. It is beyond time for our bureaucracy to as well.”