The Trump Administration has added eight Chinese entities and 36 of their subsidiaries to the US Department of Commerce, Bureau of Industry Security’s (BIS) Entity List. Per the final rule published in the Federal Register on August 2, 2018, “[t]he entities that are being added to the Entity List have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States.” The rule is effective as of August 1, 2018.
What This Means
The Entity List to which the Chinese entities have been added is Supplement No. 4 to Part 744 of the Export Administration Regulations (EAR). Accordingly, a license is required to export, re-export or transfer (in-country) any item subject to the EAR to these organizations. License exceptions are not available and license applications will be reviewed on a case by case basis with a presumption of denial. (15 CFR § 744.11(a), License requirement, availability of license exceptions, and license application review policy.)
Why This Matters
The impact on the Chinese companies added to the Entity List is that they will not be able to obtain items that are subject to the EAR. This includes items exported from the US and US-origin items, but it also includes non-US items if they contain more than a de minimis amount of US controlled content or are the direct product of US-origin controlled technology or software.
There is a process to petition BIS to have a company removed from the Entity List and our team is able to assist companies that desire to make the case that they should be removed or that are willing to implement internal controls that BIS deems satisfactory to demonstrate compliance with their handling of items subject to the EAR.
Continue reading here for the complete list of Chinese entities added on August 2, 2018.
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