WASHINGTON: The United States is widening the reach of its trade blacklist, extending export restrictions faced by certain companies to their subsidiaries — a move set to hit Chinese businesses, among others.
The change relates to parties on the so-called “entity list” that face restrictions obtaining US items and technologies without government authorization.
Under the new rule, subsidiaries that are at least 50-percent owned by one or more listed entities will also be automatically subject to the list’s restrictions.
While the shift under the Commerce Department’s notice published Monday is a broad move affecting global companies, it will likely have a notable impact on those in China, given that Washington has targeted many China-based entities in recent times.
The latest rule is set to take effect Tuesday, and companies can submit comments or make temporary modification requests in the meantime.
The “entity list” takes aim at companies and others deemed a risk to US national security or foreign policy interests.
A spokesperson for China’s Ministry of Commerce said in a statement that Beijing has taken note of this development, calling it a “malicious” act that infringes upon enterprises’ legitimate rights.
The official added that the rule is “yet another typical example of the United States overstretching the concept of national security and abusing export controls.”
China will take necessary measures to safeguard the rights and interests of its companies, the spokesperson said.
In recent years, US officials have been concerned over the use of American tech to enable Chinese firms, as competition between the world’s two biggest economies heated up.
The Department of Commerce’s notice said the latest shift aims to “address diversion concerns,” such as the formation of new foreign companies to evade restrictions. Current standards exclude entities that are not specifically placed on the “entity list,” regardless of their affiliation with targeted companies, Monday’s notice said.
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