On May 22, 2020, the United States Department of Commerce Bureau of Industry and Security (BIS) declared that it would add a total of 33 entities in the People’s Republic of China (PRC), the Hong Kong Special Administrative Region (HKSAR), and the Cayman Islands (United Kingdom) to the Entity List. The new restrictions became effective on June 5, 2020.
The Entity List, found in Supplement No. 4 to Part 744 of the Export Administration Regulations (EAR), is a list of foreign persons, including legal and natural persons, governmental and private organizations, and research institutes, that are subject to specific license requirements for the export, re-export, and/or transfer (in-country) of specified items. The EAR limits the availability of most exceptions for licenses to export, re-export, or transfer items subject to the EAR to persons on the Entity List.
BIS added 24 of the 33 entities to the list because the U.S. Government determined that they are “acting contrary to the national security or foreign policy interests of the United States.” BIS imposed a license requirement on exports, re-exports, and transfers (in-country) to these entities of all items subject to the EAR and a license review policy of presumption of denial. No license exceptions are available for exports, re-exports, or transfers (in-country) to the entities.
BIS added the following six persons to the Entity List due to the concern that they pose a significant risk of becoming involved in the procurement of commodities and technologies for military end-use in China:
- Beijing Cloudmind Technology Co., Ltd.;
- Kunhai (Yanjiao) Innovation Research Institute;
- Qihoo 360 Technology Company;
- Cloudminds (Hong Kong) Limited;
- Cloudminds Inc.; and
- Qihoo 360 Technology Co. Ltd.
Ten persons were added to the list because of concerns about their procurement of U.S.-origin items for activities contrary to U.S. national security or foreign policy interests. They are owned, operated by, or directly affiliated with the Chinese Academy of Engineering Physics, which is responsible for the research, development, and testing of China’s nuclear weapons. The entities are:
- Beijing Computational Science Research Center;
- Beijing Jincheng Huanyu Electronics Co., Ltd.;
- Center for High Pressure Science and Technology Advanced Research;
- Chengdu Fine Optical Engineering Research Center;
- China Jiuyuan Trading Corporation;
- Peac Institute of Multiscale Science;
- Sichuan Dingcheng Material Trade Co., Ltd.;
- Sichuan Haitian New Technology Group Co. Ltd.;
- Sichuan Zhonghe Import and Export Trade Co., Ltd.; and
- Skyeye Laser Technology Limited.
BIS added Harbin Engineering University to the Entity List for the reason of acquiring and attempting to acquire U.S.-origin items in support of programs for the People’s Liberation Army.
Three persons were added to the Entity List because of concerns that they acquired or attempted to acquire items in support of programs for the People’s Liberation Army:
- Harbin Institute of Technology;
- Harbin Chuangyue Technology Co., Ltd.; and
- Harbin Yun Li Da Technology and Development Co., Ltd.
BIS added the following three persons to the list for the reason of involvement in the procurement of items subject to the EAR for possible use in missile and unmanned aerial vehicle applications in China without the required licenses:
- K Logistics (China) Limited;
- Shanghai Nova Instruments Co., Ltd.; and
- Zhu Jiejin.
JCN (HK) Technology Co. Ltd. was added to the list because it is co-located with Reekay Technologies, which was added to the Entity List on November 12, 2015, for supplying U.S.-origin items for the Iranian defense industry.
The nine remaining entities were added to the Entity List because the U.S. Government determined that they are “acting contrary to the foreign policy interests of the United States.” Specifically, the U.S. Government has concerns about the entities’ complicity in human rights violations and abuses against Uighurs, ethnic Kazakhs, and other Muslim minority groups in the Xinjiang Uighur Autonomous Region.
BIS imposed a license requirement on any export, re-export, or transfer (in-country) of items subject to the EAR to any of the entities or any transaction involving items subject to the EAR in which any of the entities acts as a purchaser, intermediate consignee, ultimate consignee, or end-user.
BIS established a license review policy of case-by-case review for Export Control Classification Numbers (ECCNs) 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983 as well as items designated as EAR99 that are described in the Note to ECCN 1A995 (items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products).
All other items subject to the EAR are subject to a license review policy of presumption of denial.
No license exceptions are available for exports, re-exports, or transfers (in-country) to the entities.
The nine entities are:
- Ministry of Public Security Institute of Forensic Science of China;
- Aksu Huafu Textiles Co.;
- CloudWalk Technology;
- FiberHome Technologies Group;
- Nanjing FiberHome Starrysky Communication Development Co.;
- Intellifusion; and
The BIS press releases are available at: “Commerce Department to Add Two Dozen Chinese Companies with Ties to WMD and Military Activities to the Entity List,” May 22, 2020, https://www.commerce.gov/news/press-releases/2020/05/commerce-department-add-two-dozen-chinese-companies-ties-wmd-and, and “Commerce Department to Add Nine Chinese Entities Related to Human Rights Abuses in the Xinjiang Uighur Autonomous Region to the Entity List,” May 22, 2020, https://www.commerce.gov/news/press-releases/2020/05/commerce-department-add-nine-chinese-entities-related-human-rights.
The Federal Register notices of additions to the Entity List are available at 85 FR 34495, https://www.federalregister.gov/documents/2020/06/05/2020-10869/addition-of-entities-to-the-entity-list-revision-of-certain-entries-on-the-entity-list, and 85 FR 34503, https://www.federalregister.gov/documents/2020/06/05/2020-10868/addition-of-certain-entities-to-the-entity-list-revision-of-existing-entries-on-the-entity-list.
The updated Entity List is available at https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=9ae4a21068f2bd41d4a5aee843b63ef1&ty=HTML&h=L&n=15y126.96.36.199.28&r=PART.
June 22, 2020; by SECURUS Research Assistant Autumn Fredline and Managing Director Richard Glen Young, Richard.Young@SECURUSTrade.com.