Some media sources like to spin that Trump has softened on China, but a review of the activities at the Department of Commerce suggests otherwise. Indeed, the Department appears to be following the mandates of bipartisan legislation and the President’s Executive Orders.
Within the Department of Commerce, the Bureau of Industry and Security (BIS) staff work across the federal government to identify and implement national security controls on the export of sensitive technologies while ensuring that the US remains competitive. As Commerce Secretary Ross detailed in a recent speech, since 2017, BIS has initiated 2,284 export control investigations, a 21 percent increase in the number of cases opened from the previous two-and-a-half years. Of the closed cases for export violations during that same period, there were 89 civil adjudications and 70 criminal prosecutions involving China, Russia, Pakistan, North Korea, and Iran, among other countries. Additionally, some 2,000 end-use checks on technology sales were conducted in more than 65 countries. On average, 25 percent were found to be unfavorable or unverified, a hit rate that proves that the investigations are warranted.
Another key tool is the Entity List which restricts US commerce of sensitive technologies to entities endangering America’s national security and foreign policy interests. Since 2017, 182 companies have been added to the Entity List, including 49 Chinese companies, 49 Russian ones, and 20 Pakistanis. China’s device maker ZTE was added to the list and is reportedly the most monitored firm in BIS history, employing full time staff to enforce settlements and fines.
In May 2019, China’s Huawei Technologies was added to the Entity List — the largest telecommunications equipment producer in the world. Contrary to media pronouncements of the President making an about face, the statutes governing the Entity List allow firms to do business with Huawei if they obtain a license from BIS. For example, Huawei is doing business with multiple US law firms and public relations agencies to defend itself in court. Notably sales to Huawei which endanger national security, e.g. 5G patented goods, are not allowed. Nothing has changed on this front. Moreover, the policy contained a window of time for the policy to take place, not unreasonable given the scope of the restrictions.
As mandated by President Trump’s May 15, 2019 Executive Order on “Securing the Information and Communications Technology and Services Supply Chain,” Commerce must issue by mid-October interim regulations for making determinations to ensure the viability of IT and telecom providers. The final rules take input from the public, stakeholders in the private sector, government agencies, and academia. This action gives a much-needed boost to investigate the supply chain vulnerabilities evident in the US–China Economic and Security Review Commission’s April 2018 report, which highlights supply chain risks from companies reportedly involved with China’s military, nuclear, or cyberespionage programs and whose products are prevalent in US markets. These include ZTE, Tianma Microelectronics, and Lenovo, the world’s leading maker of laptops and a former American company now owned by a Chinese government affiliate. As detailed by multiple military intelligence sources and security analysts, these and other Chinese firms pose risks with “backdoors” embedded in equipment as well as software vulnerabilities.
Conducting policy and negotiation is rarely straightforward or linear, and the President has been critiqued at every turn. While Presidents over the last 30 years turned a blind eye to China’s abuse, President Trump has changed the status quo. China policy is not up to the President alone; it requires a “whole of government” approach. As such, Senator Rubio’s (R-FL) legislation to prevent Huawei Technologies Co Ltd from seeking damages in U.S. patent courts is a welcome development.