On February 16, 2023, the U.S. Department of Justice (DOJ) and the Bureau of Industry and Security (BIS) announced a new enforcement program aimed at preventing and prosecuting attempts to evade U.S. export controls on critical technologies such as semiconductors, artificial intelligence, additive manufacturing, and advanced biosciences. This program will pose unprecedented challenges to companies involved in these fields and their supply chains, making it a focal point for international businesses to address.
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This new enforcement program establishes a cross-agency, disruptive technology strike force, aimed at pooling federal law enforcement resources to enhance the protection of critical technology assets and prevent these assets from being acquired or used by national adversaries. The strike force will initially focus on tracking the end users and end uses of products, software, and technology sold by U.S. companies, with particular emphasis on areas including supercomputing and heterogeneous computing, artificial intelligence, advanced manufacturing equipment and materials, quantum computing, and biosciences. The technologies in these areas have become enforcement priorities due to their potential military and intelligence applications, covering weapon design and testing, as well as encryption algorithm cracking that poses threats to U.S. national security.
The implementation of this program will have significant implications for the enforcement of export controls on semiconductor technology and electronic products. In particular, export controls on semiconductor technology will be a key focus. The U.S. announced a series of export controls on semiconductor technology in 2022, requiring companies to conduct detailed due diligence to ensure their technology is not used in Chinese military, semiconductor manufacturing, and advanced computing applications. Additionally, the strike force will also focus on whether companies have taken measures to prevent the supply of U.S. electronic products and other components to projects supporting sanctioned countries' military activities, such as electronic components and assemblies found in drones used by Iran and supplied to the Ukrainian Russian army.
In this new enforcement environment, foreign companies need to take a series of response measures to ensure their business activities comply with U.S. export controls and sanctions laws:
Compliance Review: Companies should conduct comprehensive reviews of their supply chains and business processes to identify potential risks and vulnerabilities.
Due Diligence: Ensure detailed due diligence is conducted to verify end users and end uses, especially in transactions involving semiconductor technology and other critical technologies.
Partnership Relationships: Review relationships with supply chain partners to ensure they also comply with export control regulations.
Emergency Planning: Be prepared to address investigations and inquiries from law enforcement agencies, establish emergency plans to address potential legal challenges.
Voluntary Self-Disclosure: If violations are discovered, consider utilizing voluntary self-disclosure mechanisms to obtain more lenient penalties and quicker resolutions.
