Sens. Cruz, Wicker, Colleagues Urge Commerce Dept. To Prevent Unlawful Shipments To Huawei, Other Entity List Companies
WASHINGTON, D.C. – U.S. Sens. Ted Cruz (R-Texas), member of the Senate Commerce Committee, Roger Wicker (R-Miss.), Marsha Blackburn (R-Tenn.), Jerry Moran (R-Kan.), Todd Young (R-Ind.), Rick Scott (R-Fla.), Cynthia Lummis (R-Wyo.), and Tom Cotton (R-Ark.) this week sent a letter urging Department of Commerce Secretary Gina Raimondo to act quickly to prevent unlawful shipments of prohibited products to Entity List companies like Huawei. The senators also seek to ensure that the Bureau of Industry and Security (BIS) is equipped to enforce the Department’s export control regulations, specifically the Foreign Direct Product Rule.
In the letter, the senators wrote:
“The Commerce Department’s lax enforcement of this rule has the effect of incentivizing other tech-focused companies throughout the supply chain to jeopardize our country’s security by transacting with Entity List companies like Huawei. Unless BIS enforces this rule with the speed the situation necessitates, additional suppliers of sensitive technology will likely engage in unlawful trade practices with companies closely connected to adversarial governments.”
Read the full letter here and below.
Dear Secretary Raimondo,
Enforcement of the Commerce Department’s regulations must be a priority to combat growing threats to national security posed by China. This includes enforcement of the Final Direct Product Rule issued by the BIS in August 2020 restricting Huawei’s access to U.S. technologies.
In late October, Minority Staff on the Senate Committee on Commerce, Science, and Transportation released a report about Seagate Technology’s failure to comply with the rule by continuing to ship hard disk drives to Huawei without a license. The report simultaneously concluded that the rule’s delayed enforcement has likely allowed Seagate Technology to continue shipping these prohibited products for nearly a year without consequence.
Reporting suggests that BIS opened a similar investigation into Seagate Technology earlier this year, although no determination or enforcement action has been released to the public. We understand that compliance investigations require thoroughness, but they also must be conducted swiftly to determine whether violations demand the attention of law enforcement. This situation is especially urgent since Huawei’s access to certain sensitive U.S. produced technology products appears largely unobstructed, despite the company’s known connections to the Chinese Community Party.
Even more troubling, the Commerce Department’s lax enforcement of this rule has the effect of incentivizing other tech-focused companies throughout the supply chain to jeopardize our country’s security by transacting with Entity List companies like Huawei. Unless BIS enforces this rule with the speed the situation necessitates, additional suppliers of sensitive technology will likely engage in unlawful trade practices with companies closely connected to adversarial governments.
Poorly enforced regulations carry neither the force of law nor the respect of the private sector. Distorted incentives in sensitive technology markets caused by enforcement uncertainty requires the Commerce Department to act quickly to prevent additional unlawful shipments of prohibited products to Entity List companies like Huawei. We also encourage you to take action to ensure that BIS is equipped to enforce the full arsenal of the Department’s export control regulations––and meet the challenges posed by this precarious moment––considering the harms to national security they are intended to prevent.
/s/
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