U.S. Tightens Export Controls, Adding Subsidiaries of Sanctioned Companies to 'Entity List'
The U.S. Department of Commerce has bolstered its export controls, automatically adding subsidiaries of sanctioned companies to its 'Entity List'. This move, which mirrors the Treasury Department's '50-percent rule', has drawn swift criticism from China.
The new rule targets the transfer of equipment used in semiconductor production and other technology. It expands the Entity List to include subsidiaries that are 50% owned by already sanctioned companies. This significantly increases the number of companies requiring a license to receive U.S. goods and technology.
The impact on supply chains is expected to be substantial. Shipments to affected subsidiaries will now need an export license, potentially disrupting established routes. Certain transactions may continue for 60 days, providing a brief grace period.
China has swiftly condemned the U.S. move. The Chinese Ministry of Commerce called for an 'immediate correction' of what it deemed 'wrongdoing', and vowed to safeguard the rights of Chinese companies.
The U.S. Department of Commerce's expanded Entity List is set to complicate trade and supply chains. While some transactions can continue for 60 days, U.S. exporters face a more complex landscape in determining if shipments are subject to restrictions. China's strong opposition signals potential further tensions in U.S.-China trade relations.
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