{"id":401,"date":"2020-07-01T18:25:47","date_gmt":"2020-07-01T18:25:47","guid":{"rendered":"http:\/\/exportcompliancesolutions.com\/blog\/?p=401"},"modified":"2020-07-01T18:26:27","modified_gmt":"2020-07-01T18:26:27","slug":"important-breaking-developments-export-policies-towards-china-hong-kong-dod-releases-list-communist-chinese-military-companies-significant-interest-company","status":"publish","type":"post","link":"https:\/\/exportcompliancesolutions.com\/blog\/2020\/07\/01\/important-breaking-developments-export-policies-towards-china-hong-kong-dod-releases-list-communist-chinese-military-companies-significant-interest-company\/","title":{"rendered":"IMPORTANT&#8211;Breaking Developments in Export Policies Towards China and Hong Kong. DOD Releases List of Communist Chinese Military Companies which should be of significant interest to your company!"},"content":{"rendered":"<p>On June 24, 2020, the Department of Defense released the following <a href=\"https:\/\/www.cotton.senate.gov\/files\/documents\/Sen%20Cotton%20NDAA%20FY%201999%20Sec%201237%20Response%2006242020.pdf\">list of \u201cCommunist Chinese military companies\u201d<\/a>:<\/p>\n<ul>\n<li>Aviation Industry Corporation of China (AVIC)<\/li>\n<li>China Aerospace Science and Technology Corporation (CASC)<\/li>\n<li>China Aerospace Science and Industry Corporation (CASIC)<\/li>\n<li>China Electronics Technology Group Corporation (CETC)<\/li>\n<li>China South Industries Group Corporation (CSGC)<\/li>\n<li>China Shipbuilding Industry Corporation (CSIC)<\/li>\n<li>China State Shipbuilding Corporation (CSSC)<\/li>\n<li>China North Industries Group Corporation (Norinco Group)<\/li>\n<li>Hangzhou Hikvision Digital Technology Co., Ltd. (Hikvision)<\/li>\n<li>Huawei<\/li>\n<li>Inspur Group<\/li>\n<li>Aero Engine Corporation of China<\/li>\n<li>China Railway Construction Corporation (CRCC)<\/li>\n<li>CRRC Corp.<\/li>\n<li>Panda Electronics Group<\/li>\n<li>Dawning Information Industry Co (Sugon)<\/li>\n<li>China Mobile Communications Group<\/li>\n<li>China General Nuclear Power Corp.<\/li>\n<li>China National Nuclear Corp.<\/li>\n<li>China Telecommunications Corp.<\/li>\n<\/ul>\n<p>This list, required by section 1237 of the National Defense Authorization Act for FY 1999, has not previously been released and does not immediately affect export controls.\u00a0 The listed companies, however, could potentially be the subject of future sanctions and inclusion on the list should be considered a \u201cred flags\u201d under the <a href=\"https:\/\/exportcompliancesolutions.com\/blog\/2020\/05\/07\/commerce-targets-chinese-military-expanded-export-restrictions\/\">expanded restrictions on Chinese military end-users<\/a>.\u00a0 Some companies, such as Huawei, are already sanctioned under other authorities.<\/p>\n<p><strong>Commerce Issues Military End User FAQs<\/strong><\/p>\n<p>The <a href=\"https:\/\/exportcompliancesolutions.com\/blog\/2020\/05\/07\/commerce-targets-chinese-military-expanded-export-restrictions\/\">revised rule on Chinese Military End Users (MEUs)<\/a> in the Export Administration Regulations (EAR) came into effect on June 29, 2020.\u00a0 The Department of Commerce, Bureau of Industry and Security (BIS) released a <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/pdfs\/2566-2020-meu-faq\/file\">series of FAQs<\/a> on those changes.<\/p>\n<p>The FAQs refer frequently to the revised definitions and the importance of due diligence, but do not provide a list of known military end users.\u00a0 The answer to Q21 does state that a request for an Advisory Opinion may be submitted if there is a question about whether a specific end user or end use is restricted under the new rule.\u00a0 We expect BIS to be swamped with these requests as companies begin to deal with exports under the new rules.<\/p>\n<p>It is worth noting that BIS\u2019s existing <a href=\"https:\/\/www.bis.doc.gov\/index.php\/all-articles\/23-compliance-a-training\/47-know-your-customer-guidance\">know your customer guidance<\/a> states: \u201cYou can rely upon representations from your customer and repeat them in the documents you file unless \u2018Red Flags\u2019 oblige you to take verification steps.\u201d\u00a0 This does not allow conscious disregard or willful avoidance of facts, however, and an appropriate effort must be made to ascertain the true end user and end use.\u00a0 As noted above, inclusion on the list of Communist Chinese military companies is a definite red flag, but there will be many others.<\/p>\n<p><strong>EEI Filing Requirement Partially Delayed<\/strong><\/p>\n<p>The requirement for Electronic Export Information (EEI) filings for any items destined China, Russia, or Venezuela regardless of value, unless shipped under License Exception GOV took effect on June 29<sup>th<\/sup> for ECCNs listed in Supplement No. 2 to Part 744.\u00a0 <a href=\"https:\/\/www.bis.doc.gov\/index.php\/documents\/pdfs\/2566-2020-meu-faq\/file\">According to the FAQs<\/a>, the requirement for EEI filings for all other CCL items has been delayed for 90 days until September 27, 2020.\u00a0 The new rule does not require EEI filings for EAR99 items or intangible exports.<\/p>\n<p><strong>Hong Kong\u2019s Special Status Ending<\/strong><\/p>\n<p>On June 29, 2020, the <a href=\"https:\/\/www.state.gov\/u-s-government-ending-controlled-defense-exports-to-hong-kong\/\">Department of State<\/a> and <a href=\"https:\/\/www.commerce.gov\/news\/press-releases\/2020\/06\/statement-us-secretary-commerce-wilbur-ross-revocation-hong-kong\">Department of Commerce<\/a> released statements on the revocation of Hong Kong\u2019s special status under U.S. export controls.\u00a0 This follows the \u201cG7 Foreign Ministers\u2019 Statement on Hong Kong\u201d from June 17<sup>th<\/sup> which expressed concern with China\u2019s imposition of a new \u201cnational security law\u201d that reduces Hong Kong\u2019s preexisting autonomy.<\/p>\n<p>Both departments previously distinguished between Hong Kong and the People\u2019s Republic of China for export control purposes.<\/p>\n<p>The Department of State, Directorate of Defense Trade Controls (DDTC) previously approved licenses for Hong Kong on a case by case basis.\u00a0 China was already listed as a prohibited destination under the International Traffic in Arms Regulations (ITAR) \u00a7126.1.<\/p>\n<p>BIS listed Hong Kong separately in its country chart and country groups.\u00a0 While BIS licensing requirements were largely the same as China (minus CB column 3), Hong Kong\u2019s listing in Country Group A:6 and Country Group B made it eligible for some license exceptions, including Shipments to Country Group B (GBS), Shipments of Limited Value (LVS), some use of the Strategic Trade Authorization (STA).\u00a0 These exceptions will no longer be available for exports to Hong Kong.<\/p>\n<p><strong>Huawei Cleared for Standards Organizations<\/strong><\/p>\n<p>On June 18, 2020, the BIS released an interim final rule (<a href=\"https:\/\/www.federalregister.gov\/documents\/2020\/06\/18\/2020-13093\/release-of-technology-to-certain-entities-on-the-entity-list-in-the-context-of-standards\">85 FR 36719<\/a>) which authorizes the release of certain technology to Huawei in support of international standards organizations.\u00a0 The rule replaces a previous advisory opinion and a Temporary General License, by amending the Huawei Entity List entries to include the following under \u201cLicense requirement\u201d:<\/p>\n<p>For all items subject to the EAR, see \u00a7\u00a7\u2009736.2(b)(3)(vi), and 744.11 of the EAR, EXCEPT for technology subject to the EAR that is designated as EAR99, or controlled on the Commerce Control List for anti-terrorism reasons only, when released to members of a \u201cstandards organization\u201d (see \u00a7\u2009772.1) for the purpose of contributing to the revision or development of a \u201cstandard\u201d (see \u00a7\u2009772.1).<\/p>\n<p>This is intended to prevent regulatory roadblocks to U.S. participation in international standards setting in areas such as 5G and autonomous vehicles.<\/p>\n<p>The rule was effective upon publication and comments will be accepted through August 17, 2020.\u00a0 BIS also <a href=\"https:\/\/www.commerce.gov\/news\/press-releases\/2020\/06\/commerce-clears-way-us-companies-more-fully-engage-tech-standards\">issued a press release<\/a> on this topic.<\/p>\n<p><strong>Xinjiang Supply Chain Business Advisory<\/strong><\/p>\n<p>On July 1, 2020, the Department of State <a href=\"https:\/\/www.treasury.gov\/resource-center\/sanctions\/Programs\/Documents\/20200701_xinjiang_advisory.pdf\">issued a supply chain business advisory<\/a> related to forced labor human rights abuses in the Xinjiang Uyghur Autonomous Region (Xinjiang) of the People\u2019s Republic of China:<\/p>\n<p>Businesses, individuals, and other persons, including but not limited to academic institutions, research service providers, and investors\u2026 that choose to operate in Xinjiang or engage with entities that use labor from Xinjiang elsewhere in China should be aware of reputational, economic, and, in certain instances, legal, risks associated with certain types of involvement with entities that engage in human rights abuses, which could include Withhold Release Orders (WROs), civil or criminal investigations, and export controls.<\/p>\n<p>The advisory provides substantial background to the situation in Xinjiang, red flags, and due diligence advice.\u00a0 The document relates both to activities known to be occurring in Xinjiang and facilities in other regions using labor or goods from Xinjiang.\u00a0 Page 15 of the advisory includes a map identifying 19 developed cities and provinces that have established satellite factories in Xinjiang.<\/p>\n<p>Industries of concern include:<\/p>\n<ul>\n<li>Agriculture (including such products as hami melons, korla pears, tomato products, and garlic)<\/li>\n<li>Cell Phones<\/li>\n<li>Cleaning Supplies<\/li>\n<li>Construction<\/li>\n<li>Cotton Yarn, Cotton Fabric, Ginning, Spinning Mills, and Cotton Products<\/li>\n<li>Electronics Assembly<\/li>\n<li>Extractives (including coal, copper, hydrocarbons, oil, uranium, and zinc)<\/li>\n<li>Fake Hair and Human Hair Wigs, Hair Accessories<\/li>\n<li>Food Processing Factories<\/li>\n<li>Hospitality Services<\/li>\n<li>Noodles<\/li>\n<li>Printing Products<\/li>\n<li>Footwear<\/li>\n<li>Stevia<\/li>\n<li>Sugar<\/li>\n<li>Textiles (including such products as apparel, bedding, carpets, wool)<\/li>\n<li>Toys<\/li>\n<\/ul>\n<p>The advisory does not create any new export compliance obligations, but is intended to assist with the due diligence needed to avoid problems ranging from reputational risk to export compliance violations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On June 24, 2020, the Department of Defense released the following list of \u201cCommunist Chinese military companies\u201d: Aviation Industry Corporation of China (AVIC) China Aerospace Science and Technology Corporation (CASC) China Aerospace Science and Industry Corporation (CASIC) China Electronics Technology Group Corporation (CETC) China South Industries Group Corporation (CSGC) China Shipbuilding Industry Corporation (CSIC) China [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[7,8,9],"tags":[],"class_list":["post-401","post","type-post","status-publish","format-standard","hentry","category-all","category-ear-licensing","category-licensing"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin 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