A lobbying group whose board includes U.S. firms like Oracle, Amazon.com and Exxon Mobil is urging the Trump administration to immediately suspend a rule it says halted billions of dollars’ worth of U.S. exports and will prompt China and other countries to drop U.S. firms from their supply chains. In a letter addressed to President Donald Trump and seen by Reuters, the National Foreign Trade Council takes aim at the so-called Affiliates Rule, which bars American companies from shipping goods and technology to companies part-owned by sanctioned firms. The rule “has resulted in an immediate pause of billions in U.S. exports, which is contrary to your desire to reduce the trade deficit and increase U.S. exports globally,” NFTC President Jake Colvin wrote in the letter, dated October 3 and not previously reported. The rule, if left intact, would encourage other countries to turn to non-U.S.-made goods, “resulting in weakening U.S. national security as the rest of the world, led by China, removes American nodes from its supply chains,” he added.
The White House and the Commerce Department, which oversees export controls, did not respond to requests for comment. NFTC declined to comment.
The letter lays bare the extent of private sector opposition to the controversial rule, long sought by China hawks in Washington to crack down on sanctioned Chinese firms using unsanctioned subsidiaries to bypass export restrictions to access prized technology.
The rule, implemented on September 29, adds to the Entity List firms that are at least 50% owned by an entity-listed parent company. Companies are added to the list for taking actions that harm U.S. foreign policy or national security and are barred from receiving U.S. technology.
China strongly objected to the rule.
NFTC also accused the Commerce Department of “significantly” slowing and “even temporarily” halting the processing of export license applications, particularly for Chinese customers, with “thousands of licenses worth billions of dollars” accumulating at the Commerce Department.
Reuters reported in August that thousands of license applications by U.S. companies to export goods and technology around the globe, including to China, were in limbo due to turmoil and near paralysis at the agency.
(Reporting by Alexandra Alper; Editing by Chris Sanders and Andrea Ricci)