The U.S. on Monday cracked down on companies in China and other countries that use subsidiaries or other foreign affiliates to circumvent export curbs on chipmaking equipment and other goods and technology.
The Commerce Department issued a new rule expanding its restricted export list, known as the Entity List, to automatically include subsidiaries owned 50% or more by a company on the list, according to posting in the U.S. Federal Register. The action greatly increases the number of companies that require licenses to receive American goods and services.
The rule is likely to disrupt supply chains. It also makes it more difficult for companies to determine whether exports to a customer or supplier are restricted, and places more of a burden on the exporter to figure out ownership before moving forward. According to the rule, certain transactions may be allowed during a 60-day grace period.
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