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U.S. bans technology exports to Chinese semiconductor and drone companies, calling them security threats (nationthailand.com)

U.S. bans technology exports to Chinese semiconductor and drone companies, calling them security threats

InternationalDec 19. 2020

By The Washington Post · Jeanne Whalen

The Trump administration has added prominent Chinese semiconductor and drone manufacturers to an export blacklist, continuing to exert pressure on the country in the final weeks of the Trump presidency.

The Commerce Department said it has placed Semiconductor Manufacturing International Corp., or SMIC, drone maker DJI; and dozens of other Chinese companies and universities on the Entity List, which bans the export of U.S. technology to the entities unless the exporter receives a government license.

The sanction follows “evidence of activities between SMIC and entities of concern in the Chinese military industrial complex,” Commerce said in a statement.

“We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary,” Commerce Secretary Wilbur Ross said about SMIC in a statement. “Between SMIC’s relationships of concern with the military industrial complex, China’s aggressive application of military civil fusion mandates and state-directed subsidies, SMIC perfectly illustrates the risks of China’s leverage of U.S. technology to support its military modernization.”

The Commerce Department said it was adding DJI for enabling high-tech surveillance in China, which the agency called a human-rights abuse.

The additions also include several construction companies, including China Communications Construction Company, for helping China militarize and claim disputed territory in the South China Sea.

Commerce also added to the list several universities, in Beijing, Nanjing and Tianjin, for actions including trade-secret theft or “acquiring and attempting to acquire U.S.-origin items in support of programs for the People’s Liberation Army.”

The sanction shows that cutting trade ties with China remains a top priority for the Trump administration’s many China hawks, who view the country’s growing tech and military might with increasing alarm. Similar concerns have also taken root in Congress, among both Republicans and Democrats, and could continue during a Biden administration.

The Entity List has become a favorite Trump administration tool to punish China and now includes more than 300 Chinese entities.

The Commerce Department, which maintains the list, has previously used it against Chinese telecom company Huawei and against Chinese entities engaged in alleged human rights violations in China’s Xinjiang region.

Officials at SMIC and DJI, and at China’s embassy in Washington, D.C., didn’t respond immediately to requests for comment. SMIC has previously denied supporting China’s military.

It wasn’t immediately clear how much U.S. technology DJI uses to make its drones. The Shenzhen-based company is among the world’s biggest drone manufacturers.

The Trump administration already began restricting exports to SMIC in September by notifying some U.S. companies that they would need a license to export to the chip maker. Inclusion on the Entity List is a broader sanction.

Founded in 2000 in Shanghai, SMIC ranks among the top five semiconductor manufacturers in the world, according to a report from the United States International Trade Commission, or USITC.

Industry experts say that SMIC’s technology lags behind that of chip manufacturers in Taiwan and the United States but that Beijing is pouring billions into the industry to help SMIC and other Chinese companies catch up.

SMIC has enjoyed generous government financial support, including low-interest loans, tax breaks and investments to help build manufacturing facilities, the Organization for Economic Cooperation and Development in Paris said in a report last year.

Commerce said that the export ban will apply to technology needed to produce advanced semiconductors with silicon transistors sized at 10 nanometers or less. There are one billion nanometers in a meter.

Chip-industry experts say SMIC and other Chinese companies are not yet able to make such advanced semiconductors, and would for now need software and equipment from the U.S. and other Western countries to reach that capability.

SMIC started as a private company, but state ownership has steadily grown over time, to more than 45 percent of SMIC stock as of 2018, according to the OECD report.

SMIC’s shares used to trade on the New York Stock Exchange, but the company removed its stock from the NYSE last year. The shares now trade on the Shanghai and Hong Kong exchanges.

SMIC’s stock, held by some Western investors, fell 5% in Hong Kong trading on Friday.

The additions to the list also include some lesser known Chinese companies, such as NucTech, which makes luggage- and cargo-screening equipment. The Trump administration said it had determined that “NucTech’s lower performing equipment impair U.S. efforts to counter illicit international trafficking in nuclear and other radioactive materials.”

The administration also added several Russian entities, including OOO Sovtest Comp and Cosmos Complect, to the list, saying they appear to have used a front company to acquire “sensitive electronic components” for use in Russia, without obtaining required licenses.

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Europe is paying less than U.S. for many coronavirus vaccines (nationthailand.com)

Europe is paying less than U.S. for many coronavirus vaccines

InternationalDec 19. 2020

By The Washington Post · Michael Birnbaum, Christopher Rowland, Quentin Ariès

The European Union is paying less money than the United States for a range of coronavirus vaccines, including the Pfizer-BioNTech inoculation being rolled out across the country, according to a Washington Post comparison of the breakdowns.

The costs to the EU had been confidential until a Belgian official tweeted – and then deleted – a list late Thursday.

Comparing that list with U.S. calculations by Bernstein Research, an analysis and investment firm, it appears that the 27-nation union has a 24% discount on the Pfizer vaccine, paying $14.76 per dose relative to $19.50 in the United States. Some of the difference may reflect that the EU subsidized that vaccine’s development and the cost of shipping the European-made shots across the Atlantic.

According to the Belgian document, the bloc will pay 45 percent less than the United States for the AstraZeneca-Oxford vaccine currently under development. But it will pay 20 percent more than the United States for the Moderna vaccine, which is expected to be approved for U.S. use on Friday. Both of those vaccines were funded partly by the U.S. government as part of Operation Warp Speed, an effort to expedite their development. The AstraZeneca-Oxford team received $1.2 billion, and Moderna got $4.1 billion.

As in the United States, European countries generally plan to make the vaccines free for their citizens.

The per-dose prices of the vaccines are lower than most brand-name drugs, but the hundreds of millions of doses required to vaccinate entire populations will drive up costs significantly for individual countries. Disparities between the higher prices in the United States and Europe in overall drug prices have long driven outrage in Congress.

Asked about the price differences between the United States and Europe, Pfizer noted that the EU coronavirus vaccine purchase, 200 million doses, was double that of the United States.

“Pfizer and BioNTech are using a tiered pricing formula based on volume and delivery dates,” Pfizer said in a statement. “The agreement with the European Commission for the supply of 200m doses, and an option to request an additional 100m, represents the largest initial order of our candidate vaccine to date.”

It said it would not disclose further details.

“AstraZeneca is providing the vaccine at no profit during the pandemic and the price per dose varies depending on the supply chain. We are unable to comment on specific agreements,” the company said in a statement. The company has previously said it expected its vaccine to cost between $3 and $5 a dose, based on the cost of production. It was not clear why the Belgian figure was so much lower.

The U.S. Pfizer order has already been the subject of frustration, since Pfizer urged Operation Warp Speed over the summer to purchase double what the United States ultimately decided to order. By the time U.S. buyers asked for more doses earlier this month, the availability had been snapped up elsewhere – including by Europe.

Operation Warp Speed said that it had negotiated extensively with each drug manufacturer.

“Based on the significantly varying levels of developmental funding, distribution costs, and other contract terms, we are confident we negotiated the best possible price for the American taxpayer,”‘ the initiative said in a statement. It noted that the price of Pfizer’s vaccine included distribution across the United States and territories, including charter flights from manufacturing flights in Europe.

Most vaccines currently under development require two doses, although Johnson & Johnson’s – $10 in the United States and $8.50 in Europe – is a single shot.

The two vaccines that are first in line for approval – Pfizer-BioNTech and Moderna – are more expensive than others partly because they are more expensive to make, the result of a never-before-used approach that primes the immune system to defeat the coronavirus.

The EU’s finance arm offered a $122 million loan to BioNTech in June to help develop the vaccine, followed by an additional $458 million from the German government in September.

The other vaccine prices noted on the EU list were $9.30 for the one under development by Sanofi and GlaxoSmithKline, an 11 percent discount on the U.S. cost, and $12.30 for the one under development by CureVac, for which the United States has not signed contracts.

The EU has been secretive about the prices it negotiated for its 2 billion doses of various vaccines, drawing fire from transparency advocates who say the public and policymakers have a right to know how much their governments are paying for the inoculations.

The EU negotiated as a bloc, but most other countries, including the United States, are negotiating individual contracts with pharmaceutical companies. The confidentiality clauses presumably benefit the manufacturers, since they make it easier to vary the prices from country to country.

A spokesman for the European Commission, which negotiated the contracts for the vaccines on behalf of EU members, declined to comment about the pricing on Friday, other than to say disclosure was a breach of confidentiality clauses of the contracts.

The Belgian official, State Secretary for Budget Eva De Bleeker, posted the table of Belgium’s costs for vaccines on Twitter on Thursday, then deleted it shortly afterward. Because the EU has negotiated collectively for vaccines on behalf of its members, the same prices apply across all of its 27 nations.

A spokesman for De Bleeker confirmed the authenticity of the tweet, and said that it came after a Thursday evening discussion in the Belgian Parliament and opposition charges that there was no money to pay for the vaccines in the country’s 2021 budget.

“The communication team posted the tweet to close the discussion,” said Bavo De Mol, the spokesman. “We wanted to be as transparent as possible, but maybe we were a bit too transparent.”

The breach was first reported by HLN, a Belgian newspaper. Late Friday, Belgian media noted there was at least one error in the document – the number of doses of CureVac that the country planned to purchase was incorrect – but said that the prices per dose appeared to be accurate.

Drug pricing is linked to a number of factors, including volume discounts and other specific promises made by governments when they sign the contracts. Some governments have agreed to limit the liability drug manufacturers will face if side effects arise from the vaccines, for instance. In February, the Trump administration offered vaccine manufacturers protection from lawsuits until 2024.

Europe has spread its bets relatively evenly among six vaccines, reserving 200 million to 300 million doses of all of them except the one produced by Moderna, of which it purchased 80 million. A few countries, including Germany and Hungary, have purchased additional vaccines on the side.

The European Medicines Agency is likely to approve the Pfizer-BioNTech vaccine on Monday, with the vaccine expected to roll out across the EU the final week of this month.

The EU vaccines will be shared equally across the European Union based on each country’s population size.