China’s sudden rejection on May 10 of an already agreed-upon US-China bilateral trade agreement’s articles, including major changes to all seven chapters, angered US President Donald Trump, who responded by raising tariffs on US$200 billion of Chinese goods from 10 to 25 percent.
On May 15, the US Department of Commerce, citing national security concerns, issued double sanctions, prohibiting selling to and buying from Huawei Technologies and its 68 subsidiaries. There is obviously a wide gulf between the US and Chinese positions.
To abide by the US sanctions, tech giants in the US, the UK and Japan immediately stopped providing products to Huawei or suspended cooperation.
The US government also rejected tax exemption applications by General Motors, Uber and other businesses, as they were involved in the “Made in China 2025” project.
The US Congress is also drawing up legislation to bolster controls on exports of core technologies and monitor US-listed foreign businesses, while Japan is to restrict foreign investors from owning shares in high-tech manufacturing businesses to prevent key technologies from spreading to other countries.
Premier Su Tseng-chang (蘇貞昌) has said that a few unscrupulous businesses must not be allowed to hurt Taiwan’s overall image and its businesses.
However, some Taiwanese businesses have said that they would continue to provide Huawei with products or original equipment manufacturing (OEM) work for the company.
This is worrying, so here are a few suggestions for the government’s consideration.
As in the US, sensitive tech product, spare part and component controls should be elevated to a level of national security to protect national interests.
In the short term, the government should use current legislation to implement clear export inspection and control regulations for sensitive high-tech products, prohibit unscrupulous businesses from hurting Taiwan’s interests, demand that government agencies enforce these regulations, and prevent law enforcement agencies from shirking responsibility.
As for the Taiwanese businesses that have announced that they would continue to provide Huawei with key spare parts and components, the government must collect information and begin a dialogue with them to determine if they are contravening US sanctions, and if necessary, provide assistance or training or issue warnings.
Businesses contravening the law should be severely punished and strictly controlled.
Special attention should be given to semiconductor spare parts and components and manufacturing, as well as data storage products.
The world’s three largest semiconductor equipment manufacturers have announced that they would respect US sanctions.
If Taiwanese businesses continue to provide OEM services or semiconductor spare parts or components to Huawei in contravention of the US ban, they would be punished by the US and be unable to obtain advanced US semiconductor equipment. This will severely restrict the development of Taiwan’s semiconductor industry.
In the long term, the government must set up an export control center for sensitive high-tech products that should be operated by the Ministry of Economic Affairs, the National Security Council and the Ministry of Science and Technology.
The US’ regulations for the control of sensitive technology exports could serve as a reference when setting up licenses for sensitive high-tech product exports and other related legislation.
Eugene Yeh and Chun Chiu are retired and live in California.
Translated by Perry Svensson
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