10 Oct 2019
Export Restrictions Imposed on 28 Mainland Chinese Entities
The U.S. Department of Commerce’s Bureau of Industry and Security has added 28 mainland Chinese entities, including eight technology firms, to the U.S. Entity List, sharply limiting their ability to do business with entities in the United States. The listed entities include two video surveillance companies (Hikvision and Dahua Technology) along with four firms developing artificial intelligence (iFlytek, Megvii Technology, Sense Time and Yitu Technologies). Also added to the Entity List were Xiamen Meiya Pico Information, whose website describes it as an “expert in digital forensics and cybersecurity,” and Yixin Science and Technology, a supplier of micro and nano fabrication equipment.
BIS states that 20 of these entities have been implicated in “human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, and high-technology surveillance against Uighurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uighur Autonomous Region.” BIS is also adding eight commercial entities for related reasons.
For these 28 entities BIS is imposing a licence requirement for exports of all items subject to the Export Administration Regulations and a licence review policy of case-by-case review for (i) Export Control Classification Numbers 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983 and 2E983 and (ii) items designated as EAR99 that are described in the note to ECCN 1A995, specifically, items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products. For all other items subject to the EAR, BIS is adopting a licence review policy of presumption of denial.
These requirements apply to any transaction in which items are to be exported, re-exported or transferred (in-country) to any of these entities or in which they act as purchaser, intermediate consignee, ultimate consignee or end-user. In addition, no licence exceptions are available for exports, re-exports or transfers (in-country) to these entities.
Shipments of items removed from licence exception eligibility or for export or re-export without a licence (NLR) as a result of this rule that were en route aboard a carrier to a port of export or re-export on 9 October pursuant to actual orders for export or re-export to a foreign destination may proceed to that destination under the previous licence exception eligibility or without a licence.
The BIS notice announcing these restrictions was submitted for Federal Register publication as a special submission on 7 October even as working level negotiations were beginning between U.S. and mainland Chinese officials ahead of the high-level talks scheduled for 10 October in Washington, D.C. A DOC spokesman described the action as “unrelated to the trade negotiations.”