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Expand your Horizons 25/10/23 - Export Control News

US - Changes in Semiconductor and Advanced Computing Export Control Rules

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released three rules to update the export controls issued on October 7, 2022 for advanced computing semiconductors, semiconductor manufacturing equipment, and items that support supercomputing applications and end-uses.

Advanced Computing Chips Rule (AC/S IFR):

The new rule is adjusting the parameters that determine whether an advanced computing chip is restricted. Second, it is imposing new measures to address risks of circumvention of the controls. Based on public comments, recent technological developments, and analysis of the prior rule’s national security impact, the AC/S IFR removes “interconnect bandwidth” as a parameter for identifying restricted chips. This update also introduces an exemption that will permit the export of chips for consumer applications.

To prevent circumvention, the new rule:

  • establishes a worldwide licensing requirement for export of controlled chips to any company that is headquartered in any destination subject to a U.S. arms embargo (including the PRC) or Macau, or whose ultimate parent company is headquartered in those countries, to prevent firms from countries of concern from securing controlled chips through their foreign subsidiaries and branches.

  • creates new red flags and additional due diligence requirements to help foundries identify restricted chip designs from countries of concern. This will make it easier for foundries to assess whether foreign parties are attempting to circumvent the controls by illicitly fabbing restricted chips.

  • expands licensing requirements for export of advanced chips, with a presumption of denial, to all 22 countries to which the United States maintains an arms embargo (including the PRC) and Macau.

  • imposes license requirements for export of advanced chips, with a presumption of approval, to these same additional countries, in response to reporting that countries of concern have used third countries to divert or access restricted items. This will provide greater visibility for compliance monitoring and enforcement.

  • creates a notification requirement for a small number of high-end gaming chips to increase visibility into shipments and prevent their misuse to undermine U.S. national security.

Expansion of Export Controls on Semiconductor Manufacturing Items Interim Final Rule (SME IFR):

Key changes made from the October 7, 2022, rule include: •

  • imposes controls on additional types of semiconductor manufacturing equipment.

  • refines and better focuses the U.S. persons restrictions while codifying previously existing agency guidance, to ensure U.S. companies cannot provide support to advanced PRC semiconductor manufacturing while avoiding unintended impacts.

  • expanding license requirements for semiconductor manufacturing equipment to apply to additional countries beyond the PRC and Macau, to 21 other countries for which the U.S. maintains an arms embargo.

Additions to the Entity List:

BIS is adding to the Entity List two PRC entities and their subsidiaries (a total of 13 entities) involved in the development of advanced computing chips that have been found to be engaged in activities contrary to U.S. national security and foreign policy interests. These entities will also be subject to restrictions on foreign-produced items made with U.S. technology. 17 Oct 2023. Source: BIS

EU - Niger - New sanctions

On 28 July 2023, the United Nations Security Council strongly condemned the efforts to change unconstitutionally the legitimate government of the Republic of Niger (‘Niger’) on 26 July 2023. It called for the immediate and unconditional release of the democratically elected President of the Republic, Mohamed Bazoum, and underscored the urgent need for the restoration of constitutional order in Niger. The EU, the same day, stated that any disruption of the constitutional order will have consequences for cooperation between the Union and Niger and expressed support to the efforts of the Economic Community of West African States (‘Ecowas’) to enable an immediate return to constitutional order in Niger. The EU budget support to Niger and of all cooperation in the area of defence and security between the Union and Niger was suspended. On 30 July 2023, the Authority of Heads of State and Government of Ecowas issued a statement which condemned the attempted coup and affirmed that President Bazoum remains the legitimate elected President of Niger. Moreover, the heads of state of Ecowas decided on a number of measures, including closing land and air borders between Ecowas Member States and Niger, imposing a no-fly zone on all commercial flights to and from Niger, suspending all commercial and financial transactions between Ecowas Member States and Niger, freezing the assets of the Republic of Niger held in the central banks of Ecowas Member States as well as any state assets of Niger held in commercial banks located in Ecowas Member States, suspending financial assistance to Niger and financial transactions of regional financial institutions with Niger, and imposing travel ban and asset freeze measures on the military officials involved in the coup. In view of the gravity of the situation, which constitutes a threat to international peace and security in the region, the EU has now established a dedicated framework of restrictive measures against natural or legal persons, entities or bodies. Targeted are the responsible persons for actions that threaten the peace, stability and security of Niger, undermine the constitutional order, democracy, and the rule of law, in particular those who are responsible for the arbitrary detention of democratically elected authorities of Niger, or that constitute serious human rights violations or abuses or violations of applicable international humanitarian law in Niger, and against natural or legal persons, entities or bodies associated with them. The list of sanctioned persons, empty right now, should be filled in the coming weeks. Sources: Council Decision (CFSP) 2023/2287 of 23 October 2023 concerning restrictive measures in view of the situation in Niger Council (EU) 2023/2406 of 23 October 2023 concerning restrictive measures in view of the situation in Niger

Read for you - Our readings of the week

The dual-use conundrum - In the ongoing war between Ukraine and Russia, there has emerged something of an unlikely hero. Known as the TB-2, it is a medium-range reconnaissance and strike drone manufactured by the company Baykar Tech in Türkiye. Costing on average between $US1–2 million, these drones are more than ten times cheaper than their US-manufactured counterparts. To protect innovation and military superiority, most countries use export control laws – but they aren’t very good at applying to dual-use technology. Contribution by Brendan Walker-Munro. 24 Oct 2023 Source. Additive Manufacturing Factsheet. Additive manufacturing (AM) is an emerging means of production in which objects are created by layering materials in precise geometric shapes according to a predetermined design. This contrasts with traditional “subtractive” manufacturing in which material is pared, milled, carved, or otherwise reduced to shape an object. Additive manufacturing refers to the general manufacturing process that can include various production processes such as rapid prototyping, rapid tooling or mass customization, while 3D printing generally refers to the sub-category of non-industrial scale production not designed for high-value manufacturing applications. The AM process involves creating an object’s design via computer software then directing hardware to fabricate the object using spools of filament that are melted and applied in successive, precise layers. Should We Be Concerned About Proliferation? Contribution by Center for Arms Control and Non-Proliferation. 19 Oct 2023. Source

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