The Morning Risk Report: Commerce Chief Promises Tougher Export-Control Regime By David Smagalla
Good morning. With abrupt shifts in U.S. trade and foreign policy under the Trump administration, as well as severe cuts to staff and budgets across the federal government, attendees at this year's annual Update conference for the U.S. Commerce Department's Bureau of Industry were hoping for indications both of the direction of policy and enforcement, and of how BIS will fare in terms of resources for its export-control activities.
They came away with a somewhat clearer idea of policy but little additional clarity on budgets.
Getting tough: Commerce Secretary Howard Lutnick, in his keynote address, promised tougher penalties for those who run afoul of an export control-regime that has increasingly targeted China, adding that export controls would now be a regular part of trade deal negotiations with international partners.
More money, more staffing? Lutnick, though, in his speech didn't address possible staffing issues that might arise from cuts. A representative for BIS didn't answer a question as to whether additional manpower or financial resources would be put toward this effort.
More on the BIS Update conference:
China hot, Russia not so much: Much of the discussion at the BIS conference centered on concerns over possible diversion of sensitive technologies to China. A Thursday morning panel discussion in which attendees could ask about the regulatory regimes around China was packed and filled with questions about the nuances of trading with the country and the possible risks of items under export control, especially high-tech products, being diverted to mainland China, Russia or elsewhere when being shipped to Hong Kong, among other places. A subsequent session on Russia-related regulations was comparatively sparsely attended.
On the topic of Russia, Commerce officials didn't say there would be immediate changes to the export control regime, but anticipated there would likely be, depending on the success of peace negotiations between Trump and Putin.
Red flags: Hong Kong is a key transfer point, especially for high-tech goods, and the risk there of diversion of equipment and technology is high. To mitigate this risk, BIS enforcement officers advise companies to pay close attention to customers, locations and routes-as well as the rationale-for shipments going through Hong Kong.
But each time regulations are changed, a new Russia sanctions package gets added or another type of chip is controlled, companies will likely see an uptick in orders of the recently controlled products coming from new locations, said a BIS official. Trade compliance teams should take notice of such changes when monitoring sales, the officials added.
-With reporting by Katherine Peavy, Export Compliance Manager
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The Trump administration said it would review the civil-right plans previously submitted by federal contractors to assess whether the contractors should be investigated or penalized for discriminatory employment practices. About Us
Follow us on X at @WSJRisk . Follow Risk & Compliance editor David Smagalla @DSmagalla_DJ and reporters Mengqi Sun @_MengqiSun and Richard Vanderford @VanderfordRich .
You can reach us by replying to any newsletter, or email David at [david.smagalla@wsj.com].
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
March 25, 2025 07:07 ET (11:07 GMT)
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