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U.S. firms drawn into Trump admin's effort to identify firms with ties to Chinese military

12/02/2020 | 01:50pm EST

Dec 2 (Reuters) - Major U.S. companies are getting caught up in a Trump administration effort to identify companies with ties to the Chinese military that would restrict exports to them.

TTI Electronics Asia PTE Hong Kong Ltd, a subsidiary of a U.S.-based TTI Inc, a Berkshire Hathaway company, is on a draft list of such companies, as is Arrow Asia Pac Ltd, a subsidiary of Arrow Electronics.

Both companies, which distribute electronics, deny links to the Chinese military and say they are taking steps to be removed from the list, if and when it is published.

A spokesman for the Department of Commerce declined to comment.

The list is part of a draft rule that identifies Chinese and Russian companies the U.S. considers "military end users," a designation that means U.S. suppliers must seek licenses to sell a broad swath of commercially available items to them, as Reuters exclusively reported last month.

TTI Electronics Asia is an authorized distributor of various electronic components, none of which is a military or defense item, the company said http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20201202:nBw9dR0Qya&default-theme=true in a statement on Wednesday.

Arrow made a similar statement on Tuesday.

"Arrow carefully conducted an analysis of the draft rule and has concluded that Arrow Asia Pac Ltd is not a military end-user, nor does it engage in any military end-use as defined in the draft-rule," it said.

Arrow distributes for Advanced Micro Devices, Rand Technology, Intel, Taiwan Semiconductor Co, and Texas Instruments, among many others, according to Source ESB.

Reuters reported on Nov. 22 that the U.S. Department of Commerce had drafted a list of 89 Chinese and 28 Russian companies that it determined were "military end users."

The pending list comes after the Commerce Department expanded the definition of "military end user" in April.

The Commerce Department rule includes not only armed service and national police, but any person or entity that supports or contributes to the maintenance or production of military items - even if their business is primarily non-military.

The licenses are more likely to be denied than granted, according to the Commerce Department rule.

The 117-company list is "not exhaustive," the draft rule said, and is considered an "initial tranche." (Reporting by Karen Freifeld in New York; additional reporting by Ayanti Bera in Bengaluru; Editing by Krishna Chandra Eluri, Chris Sanders and Marguerita Choy)

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
ADVANCED MICRO DEVICES, INC. -2.84% 88.21 Delayed Quote.-3.82%
ARROW ELECTRONICS, INC. -0.21% 103.89 Delayed Quote.6.77%
BERKSHIRE HATHAWAY INC. -0.70% 350320 Delayed Quote.1.43%
INTEL CORPORATION -2.82% 57.58 Delayed Quote.15.58%
TAIWAN SEMICONDUCTOR CO., LTD. -3.54% 57.2 End-of-day quote.-8.04%
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