U.S. and EU Export controls: A Growing Divide in Global Trade Policy
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as the second Trump administration takes office, the global trade landscape is poised for significant shifts, notably in the realm of export controls. While tariffs dominated the first Trump presidency, the focus now turns to tightening restrictions on China, especially in the semiconductor sector. Meanwhile, the European Union is advancing its own Economic Security Strategy, signaling a potential divergence in U.S. and EU trade policies.
U.S. Export Controls: A Sharpened Focus on China
Unlike tariffs, export controls were not a central theme of Donald Trump’s 2024 campaign. However, the new administration is expected to intensify restrictions on China, particularly targeting the semiconductor industry. This includes broadening the scope of items on the Commerce Control List and expanding the foreign direct product rule, which subjects foreign-made items incorporating U.S.technology to U.S. export regulations.
Additionally, the administration will enforce new restrictions on U.S. outbound investments in Chinese companies developing AI models,semiconductors,and quantum technologies,effective January 2,2025. these measures, part of the so-called “Reverse CFIUS” program, aim to curb China’s access to advanced technologies.
“The incoming trump administration will have the chance to shape, enforce, and possibly expand these restrictions,” notes a recent analysis. This includes finalizing draft regulations on U.S.-connected vehicle supply chains, AI modeling, and the export of “bulk” U.S. person data.
EU Economic Security Strategy: A Different Approach
While the U.S. tightens its grip, the EU is charting a different course with its Economic Security Strategy. Announced in June 2023,the strategy focuses on enhancing foreign investment screening,monitoring outbound investments in advanced technologies,and harmonizing export controls on dual-use goods.
Key components of the EU’s strategy include:
- Improving foreign investment screening mechanisms by aligning national rules and extending screening to EU-entity investments controlled by non-EU companies.
- Introducing new national export controls on semiconductors and emerging technologies like quantum computing.
- Developing import controls related to forced labor issues, a growing concern in global supply chains.
This approach reflects the EU’s commitment to balancing economic security with open trade, a stark contrast to the U.S.’s more restrictive stance.
A Growing Transatlantic Divide?
The divergence between U.S. and EU policies could lead to increased tensions. The U.S. is likely to pressure its Western allies to strengthen their own export controls, as seen in the Biden administration’s efforts to encourage countries like Japan and the netherlands to limit China’s access to critical technologies.
“If a rift does indeed open between the U.S. and the U.K./EU,we expect to see a ramping up of U.S. pressure on its Western partners,” the analysis predicts. This could further complicate global trade dynamics, particularly in sectors like semiconductors and AI.
Key Takeaways
| Region | Key Measures | Focus Areas |
|---|---|---|
| United States | Expand export controls, enforce outbound investment restrictions | Semiconductors, AI, quantum technologies |
| European Union | Enhance foreign investment screening, harmonize export controls | Dual-use goods, forced labor, emerging technologies |
As the U.S. and EU navigate these complex trade policies, businesses must stay informed and adapt to the evolving regulatory landscape. The coming months will be critical in shaping the future of global trade and economic security.
The Rise of National Export Controls and Forced Labor Import Bans: A Global Shift in Trade Policy
In a rapidly evolving global trade landscape, nations are increasingly turning to unilateral and multilateral measures to address economic security and human rights concerns. From export controls on advanced technologies to import bans tied to forced labor,governments are reshaping trade policies to safeguard national interests and uphold ethical standards.
The Proliferation of National Export Controls
The Wassenaar Arrangement, a multilateral export control regime involving 42 jurisdictions, has long been the cornerstone of global efforts to regulate the trade of dual-use goods—items that can be used for both civilian and military purposes. However, since Russia’s invasion of Ukraine in 2022, the arrangement has been effectively paralyzed, with Russia vetoing additions to the control list.
This deadlock has led to a surge in national export controls,particularly in Europe. For instance:
- The U.K. introduced new controls in April 2024 on emerging technologies, including quantum computing, semiconductor technologies, and additive manufacturing equipment.
- France imposed restrictions on quantum computing and advanced electronic components under Article 9(1) of the EU Dual-use Regulation, which allows member states to regulate non-listed dual-use items for public security reasons.
- Spain expanded its controls to include semiconductor production equipment and technologies related to explosive devices.
- The Netherlands implemented parallel export restrictions on semiconductor manufacturing equipment as part of a trilateral agreement with the U.S. and Japan.
These measures highlight a growing trend of unilateral action in the absence of multilateral coordination. As the Wassenaar Arrangement remains stalled, experts predict that national controls will continue to proliferate, potentially through alternative frameworks like the “Wassenaar Minus One” group, which excludes Russia.
| Contry | Key Export Controls | Legal basis |
|——————–|—————————————————————————————-|————————————-|
| U.K. | Quantum computing, semiconductor technologies, additive manufacturing | National legislation |
| France | Quantum computing, advanced electronic components | Article 9(1) of EU Dual-use Reg. |
| Spain | Semiconductor production equipment, explosive-related technologies | Article 9(1) of EU dual-Use reg. |
| Netherlands | Semiconductor manufacturing equipment | Trilateral agreement with U.S., Japan |
Forced Labor Import Bans: A Growing Global Trend
Beyond export controls, governments are also tightening import regulations to combat forced labor in global supply chains.The U.S. led the charge with the Uyghur Forced Labor Prevention Act (UFLPA) in 2021, which establishes a rebuttable presumption that goods produced in Xinjiang, China, or by entities on the UFLPA entity List, are made with forced labor and are thus banned from U.S. markets.
The EU has followed suit with its Forced Labor Regulation (EU FLR), which entered into force on December 13, 2024. The regulation prohibits the sale or export of products made with forced labor within the EU market, with operative provisions set to take effect on December 14, 2027.
In the U.K., while no equivalent legislation has been formally proposed, there is growing momentum for similar measures.Secretary of State for Energy Security and Net Zero Ed Miliband has confirmed that the government is addressing the issue, and a recent House of Lords report recommended reforms to the Modern Slavery Act 2015 to include import bans on forced labor goods.
The Broader Implications
These developments reflect a broader shift toward economic security and ethical trade practices. The European Economic Security Strategy (EESS), a key pillar of the European Commission’s 2024-2029 agenda, underscores this trend. The strategy focuses on:
- Identifying risks associated with outbound investments in advanced technologies.
- Harmonizing national export control regimes.
- Encouraging R&D in dual-use technologies.
- Protecting research outcomes from misuse by third countries.
With the first legislative proposals under the EESS expected in 2025, the EU is poised to play a leading role in shaping global trade norms.
Conclusion
As nations grapple with the dual challenges of economic security and human rights, the rise of national export controls and forced labor import bans marks a significant shift in global trade policy. While these measures aim to address pressing concerns, they also raise questions about the future of multilateral cooperation and the potential for trade fragmentation.
For businesses, staying ahead of these changes will require vigilance and adaptability. As governments continue to refine their policies, companies must ensure compliance while advocating for balanced and clear regulations.
What’s your take on these evolving trade policies? Share your thoughts in the comments below.U.K. Unlikely to Introduce a Version of the Uyghur Forced Labor Prevention Act in 2025
In a significant development, the U.K.government has indicated that it has no plans to introduce a version of the Uyghur Forced Labor prevention Act (UFLPA) in 2025. This decision comes despite growing international pressure to address forced labor practices, particularly in regions like the Xinjiang Uyghur Autonomous Region (XUAR) of China.
The UFLPA, enacted by the U.S. in 2021,establishes a rebuttable presumption that goods mined,produced,or manufactured in Xinjiang or by entities on the UFLPA Entity List are prohibited from importation into the United States under Section 307 of the Tariff Act of 1930. This law has been a cornerstone of U.S. efforts to combat forced labor, with Customs and Border Protection (CBP) issuing region-wide Withhold Release Orders (WROs) on imports of cotton and tomato products from Xinjiang.
However, the U.K. government’s December 2024 response suggests a different approach. Instead of introducing new legislation, the government plans to continue monitoring and assessing the effectiveness of existing measures. “The government’s december 2024 response indicated there are currently no planned legislative reforms to introduce such a ban,” according to a recent report.
This decision has sparked debate among policymakers and human rights advocates. Critics argue that the U.K. is lagging behind other nations in addressing forced labor, while supporters of the government’s stance emphasize the need for a measured approach to avoid unintended economic consequences.
Key Points at a Glance
| Aspect | U.S. Approach | U.K. Approach |
|————————–|———————————————————————————–|———————————————————————————–|
| Legislation | Enacted the UFLPA in 2021 | No plans for a UFLPA-like law in 2025 |
| Focus | Prohibits imports from Xinjiang or UFLPA Entity List | Relies on existing measures and monitoring |
| Recent Actions | Issued WROs on Xinjiang cotton and tomato products | No new legislative reforms announced |
| Future Plans | Continues to enforce UFLPA and expand trade strategies to combat forced labor | Will assess effectiveness of current measures |
the U.S. has also taken broader steps to integrate forced labor prevention into its trade strategy. In January 2025, the Office of the U.S. Trade Representative (USTR) released its first-ever trade strategy to combat forced labor, highlighting initiatives like the United States-Mexico-Canada Agreement and Section 301 investigations into labor rights violations in Nicaragua.
While the U.K. may not be introducing a UFLPA-like law in the near future, the government’s commitment to monitoring existing measures suggests a cautious yet ongoing effort to address forced labor. As global scrutiny intensifies, the effectiveness of these measures will likely be a key focus in the coming years.
For more insights into the evolving landscape of import controls and forced labor prevention, explore the full report here.
What are your thoughts on the U.K.’s approach to forced labor prevention? Share your views in the comments below.
Orms to introduce a U.K. version of the Uyghur Forced Labour Prevention Act in 2025,” a spokesperson stated.
This decision has sparked debate among policymakers, human rights advocates, and businesses. Critics argue that the U.K. is lagging behind other nations in addressing forced labor in global supply chains, particularly given the U.S. and EU’s proactive measures. Supporters, though, contend that the U.K. is taking a more cautious and evidence-based approach, focusing on strengthening existing frameworks like the Modern Slavery act 2015 rather than introducing new legislation.
Implications for Businesses and Supply Chains
The U.K.’s decision not to adopt a UFLPA-like law in 2025 has significant implications for businesses operating in global supply chains. Companies importing goods from regions like Xinjiang may face fewer regulatory hurdles in the U.K.compared to the U.S. or EU. However, businesses must still navigate the complexities of international trade, particularly if they operate in jurisdictions with stricter forced labor import bans.
Such as, companies exporting to the U.S. or EU must comply with the UFLPA and the EU Forced Labor Regulation (EU FLR), respectively. Failure to do so could result in penalties,supply chain disruptions,and reputational damage. In this very way, businesses are increasingly adopting due diligence measures to identify and mitigate forced labor risks in their supply chains.
Looking Ahead
While the U.K. has opted not to introduce a UFLPA-like law in 2025, the issue of forced labor remains a priority for policymakers and stakeholders. The government’s decision to focus on strengthening existing frameworks suggests a commitment to addressing forced labor through a combination of monitoring, enforcement, and international cooperation.
However, as global trade norms continue to evolve, the U.K. may face increasing pressure to align its policies with those of its allies.the U.S. and EU’s proactive measures have set a high standard for combating forced labor, and the U.K. may need to revisit its approach in the coming years to remain competitive and uphold its commitment to human rights.
Conclusion
The U.K.’s decision not to introduce a version of the Uyghur Forced Labor Prevention Act in 2025 reflects a cautious approach to addressing forced labor in global supply chains. While this decision may provide short-term relief for businesses, it also raises questions about the U.K.’s long-term strategy for combating forced labor and aligning with international trade norms.
As the global landscape continues to shift, businesses must remain vigilant and adaptable, ensuring compliance with evolving regulations while advocating for balanced and clear policies.
What’s your take on the U.K.’s decision? Share your thoughts in the comments below.
