The Trump administration sought to close a potential loophole in its global technology restrictions on Monday by expanding the range of companies that are subject to sanctions when included on a government “entity list.”
The change will allow the United States to sweep in any majority-owned subsidiary of a company that’s on the entity list. In the past, an entity listing applied only to the corporation specifically named by the U.S. government, not other companies related to it. Exporters are prohibited from sending certain technology to companies and organizations on the list unless they first obtain a special license from the government.
Some targets of the entity list have easily sidestepped the impact of U.S. sanctions by shifting business to their subsidiaries instead. The rule change is aimed at cracking down on that practice.
Now, any subsidiary that is more than 50 percent owned by a parent company on the entity list will have the same restrictions automatically apply, a move that could capture tens of thousands of additional companies.
While the Commerce Department does not publish the total number of companies and organizations on the entity list, there are thousands of entries, some of which have numerous subsidiaries. Many of them are Chinese or Russian owned.
Kit Conklin, the global head of risk and compliance for Exiger, a data analytics firm, called the change “a significant hardening of U.S. economic security policy.”
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The post Trump Expands Global Technology Net With Rules Covering Subsidiaries appeared first on New York Times.
