New Bill Targets Foreign Economic Spies and Adversary Supporters with Sanctions, Demands Report on China-Russia Tech Flow

The "Economic Espionage Prevention Act" is a new piece of legislation aiming to give the U.S. more muscle against foreign entities caught stealing American trade secrets or helping out countries considered adversaries. A key immediate action under this bill, as outlined in Section 3, is a directive for the Secretary of State to investigate and report back to Congress within 90 days. This report will focus on how citizens or entities from the People's Republic of China are allegedly providing critical components for weapons and military equipment to Russia's defense industry, especially in light of Russia's ongoing war against Ukraine. The bill's findings (Section 2) specifically cite State Department notifications from March 2024 about a significant jump in China's semiconductor exports to Russia – an increase of $25 million to $50 million monthly compared to pre-invasion levels, plus another $50 million to $100 million monthly to known transshipment points.

Following the Tech Trail: China, Russia, and a 90-Day Deadline

This bill puts a direct spotlight on the flow of technology, particularly from China to Russia. The required report isn't just a casual inquiry; Section 3 mandates a detailed analysis. It needs to describe how Chinese entities might be supplying parts for Russian military manufacturing, making deals with Russia's defense or intelligence sectors, or even selling to third parties who then pass these components to Russia. Think about it: this could mean a public accounting of companies, potentially including those dealing in U.S.-branded semiconductors, whose products are ending up in Russian military hardware. The report is intended to be unclassified, meaning its findings could become public knowledge, though a classified annex is permitted for sensitive details.

New Sanctions on the Table: Who Gets Hit and How Hard?

Beyond the report, Section 4 of the Act gives the President new powers to impose sanctions, kicking in 30 days after the bill's enactment. These sanctions can target foreign entities found 'knowingly' involved in a few key activities: economic or industrial espionage against U.S. trade secrets, providing support to the military or intelligence services of 'foreign adversaries,' or violating U.S. export control laws.

What does 'economic or industrial espionage' mean here? The bill points to an existing definition in the National Defense Authorization Act for Fiscal Year 2015 (also found in 50 U.S.C. 1708(d)), which covers theft of trade secrets and proprietary info. And who are these 'foreign adversaries'? Section 6 defines them by referencing a list in federal regulations (15 CFR 7.4), which currently includes countries like China, Russia, Iran, and North Korea.

If a foreign company, say, is caught stealing U.S. software blueprints or selling advanced tech to a designated adversary's military, the penalties could be severe. The sanctions include blocking their property and interests in property if it's in the U.S. or controlled by a U.S. person (under the International Emergency Economic Powers Act - IEEPA). Plus, individuals associated with these entities could find themselves ineligible for U.S. visas or have existing ones revoked under the Immigration and Nationality Act (INA). This means not just the company, but its key people could be locked out of the U.S. financial system and barred from entry.

The Escape Hatches and Exemptions: What's Off-Limits for Sanctions?

Now, it's not an all-out, no-exceptions kind of deal. Section 4 includes some important outs. The President can waive these sanctions for up to 180 days at a time (and renew these waivers) if it's deemed in the 'U.S. national security interest.' This is a fairly broad justification, and the President would need to report to Congress about such waivers. This flexibility is common in sanctions laws, but it also means that how strictly these sanctions are applied could depend on wider geopolitical considerations. There are also specific exceptions for authorized U.S. intelligence activities, actions necessary to meet U.N. obligations, or to help U.S. law enforcement.

Interestingly, Section 4 also clarifies that just participating in international standards-setting bodies – which is crucial for how tech around the world works together – won't get an entity sanctioned. And a big one, tucked into Section 5, is the 'Importation of goods exception.' This means the sanctions under this Act don't apply to the act of importing physical goods into the U.S. The definition of 'goods' here covers tangible items but explicitly excludes 'technical data.' So, while a sanctioned company might still be able to sell its manufactured products in the U.S. (assuming other import laws allow), sharing the underlying technology or designs could still trigger problems under this Act.

Making It Stick: Enforcement, Penalties, and the 'Should Have Known' Clause

So how does all this get enforced? The President is authorized by Section 4 to use existing powers under the International Emergency Economic Powers Act (IEEPA), specifically sections 203 (which grants broad economic powers during national emergencies) and 205 (which allows for rules and regulations to implement IEEPA). If someone violates these new sanctions, they'd face penalties outlined in section 206 of IEEPA, which can be hefty – civil penalties up to $250,000 (or twice the transaction value) and criminal penalties including fines up to $1 million and up to 20 years in prison. The President is also tasked with setting up procedures for implementing these sanctions.

The term 'knowingly,' as defined in Section 6, is also critical. It means a person either had actual knowledge or should have known about the conduct. This is a standard that aims to prevent companies from claiming ignorance if they didn't do their homework on who they're dealing with or what their products are being used for. Finally, unless sanctions have been imposed in the previous year, the President is required to submit an annual report to Congress on economic or industrial espionage activities. This ongoing reporting requirement aims to keep the issue on the radar.