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    Sunday, April 7, 2024

    Dutch Set to Comply with U.S. Demands on China Exports

    US demands that chipmaking giant ASML stop servicing some equipment it has sold to Chinese customers are a diplomatic and business headache for the Dutch government, but signs are it will continue to align with Washington on export restrictions.

    Although Prime Minister Mark Rutte's government is reluctant to make a blanket decision, its public statements and national security interests suggest it will be slow to approve Chinese maintenance requests in future and quick to deny them.

    That would be a setback for China's attempts to build up its domestic chip industry, because ASML gear is almost impossible to replace and will break down over time if not maintained.

    But it could also complicate efforts by Rutte's government to stop ASML Holdings NV, the Netherlands' biggest company, from moving operations abroad.

    One emerging factor is Dutch security priorities, particularly support for Ukraine in its war against Russia.

    Rutte, who is favoured to become the next Nato secretary general, discussed ASML with Chinese President Xi Jinping when they met in Beijing last week.

    He said afterwards that China's support for Russia was a serious problem at a time when the Netherlands is arming Ukraine with F-16s.

    "It is incredibly important that China understand any victory for Russia (in Ukraine) would pose an immediate threat" to both the Netherlands and Europe, Rutte said.

    Xi told Chinese state media he had warned Rutte against "decoupling and breaking links" with China.

    While Beijing says it is neutral on the Ukraine conflict, Xi has a strategic alliance with Russian President Vladimir Putin.

    The Netherlands holds Russia responsible for the 2014 downing of Malaysia Flight 17 (MH17) over eastern Ukraine, which killed 198 Dutch citizens. It also houses and supports the Hague-based International Criminal Court which has issued a warrant for Putin's arrest on war crimes charges.

    Rutte called on China to do more to keep Russia from obtaining "dual-use goods" with both civilian and military applications - such as ASML's machines and the chips they are used to make.

    While his comments do not translate to a policy of presumptive denial for Chinese customers seeking ASML gear that falls under licensing rules, as U.S. policy does, they do indicate the Dutch government's likely starting point.

    ASML declined to comment. It has previously said it complies with all export regulations.

    European Parliament lawmaker Bart Groothuis said the Netherlands should determine export policy in concert with larger allies.

    "It is much better for us to do that, regulate ASML, together with the US, or in the future it may be Europe, and I would say that is the best way forward," he said.

    US President Joe Biden's export policy chief Alan Estevez is expected to raise the servicing contracts at a meeting on Monday with Dutch government officials and executives from ASML.

    The Dutch government must weigh its response given fears of weakening US support for its security priorities, including Ukraine, especially if Donald Trump wins November's presidential election. — Reuters

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