Contributor: Ge Xiaoming, Senior Consultant of Guanheng Group
China's export control laws and anti-sanctions related laws and regulations
1. "Export Control Law of the People's Republic of China"
Established to safeguard national security and interests, fulfill international obligations such as non-proliferation, and strengthen and standardize export control; it was promulgated by Order of the President of the People’s Republic of China (No. 58) on October 17, 2020, since December 1, 2020 Take effectThe export control law includes general rules, control policies, control lists and control measures, supervision and management, legal responsibilities, five chapters, and a total of 49 articles.What is export controlExport control refers to the prohibition or restrictive measures taken by the state against the transfer of controlled items from the territory of the People's Republic of China to foreign countries, and the provision of controlled items by citizens, legal persons and unincorporated organizations of the People's Republic of China to foreign organizations and individuals. The implementation of export control is an internationally accepted practice for fulfilling international obligations such as non-proliferation.The Export Control Law clarifies the scope of export control to ensure full coverage of controlled items, controlled subjects and behaviors; stipulates: transfer of controlled items from within China to overseas, and Chinese citizens, legal persons and unincorporated organizations providing controlled items to foreign organizations and individuals All items are subject to this law .
The law establishes export control lists , temporary controls, and comprehensive controls . It is stipulated that the export control list shall be formulated, adjusted and issued by the national export control management department ; the temporary control system shall be issued by the national export control management department to implement temporary control of goods, technologies and services not included in the export control list; comprehensive control means not listed Export control lists and temporarily controlled items are also subject to export control when notified by the national export control management department that there are risks that may endanger national security and interests.Clarify the existence of export operators 1) Unauthorized export of controlled items; 2) Export controlled items beyond the scope of the export license; 3) Consequences of violating the "Export Control Law" such as exporting controlled items that are prohibited from export:1. Order to stop illegal activities and confiscate illegal gains2. If the illegal business amount is more than 500,000 yuan, a fine of five times to ten times the illegal business amount shall be imposed concurrently;3. If there is no illegal business amount or the illegal business amount is less than 500,000 yuan, a fine of 500,000 yuan up to 5 million yuan shall be imposed;4. If the circumstances are serious, it shall be ordered to suspend business for rectification until the qualification for export business of related controlled items is revoked:
2. The Anti-Foreign Sanctions Law of the People's Republic of China
The Anti-Foreign Sanctions Law of the People's Republic of China was passed and implemented on June 10, 21. This law provides a powerful legal weapon for China to respond to foreign sanctions, and it also provides a clearer legal basis for the relevant regulations and countermeasures that the relevant Chinese authorities have formulated before.1) Objects of counter-sanctions
Individuals or organizations that participate in direct or indirect ways, violate international laws and basic norms of international relations, use various excuses or in accordance with their own laws to contain and suppress my country, take discriminatory restrictive measures against Chinese citizens and organizations, and interfere with my country’s internal affairs. .
2) Specific measures against sanctions
In addition to individuals and organizations directly or indirectly involved in the formulation, decision, and implementation of discriminatory restrictive measures, those included on the counter-control list may also include their spouses and immediate family members, senior managers or actual controllers of the counter-organized organization, Organizations in which the counter-inhibited individuals serve as senior management personnel, or organizations in which the counter-inhibited individuals and organizations actually control or participate in the establishment and operation of the organization. Individuals/organizations included in the counter-control list may be subject to sanctions such as denial of entry, deportation, seizure, seizure, and freezing of assets in my country, and prohibition of transactions and cooperation with organizations and individuals in my country. In July this year, the Chinese government implemented anti-sanction measures against seven senior US officials for the first time in accordance with the Anti-Foreign Sanctions Law.
3. "Measures for Blocking Improper Extraterritorial Application of Foreign Laws and Measures"
In order to safeguard national sovereignty, security, and development interests, protect the legitimate rights and interests of Chinese citizens, legal persons or other organizations, and block the impact of improper extraterritorial application of foreign laws and measures on China, in accordance with the " National Security Law of the People's Republic of China " and other relevant laws, Based on the actual situation, it is formulated by the Ministry of Commerce, approved by the State Council , and promulgated and implemented on January 9, 2021 as Ministry of Commerce Order No. 1 of 2021.The "Measures" clearly define the scope of application, that is, the extraterritorial application of foreign laws and measures that violate international law and basic norms of international relations and improperly prohibit or restrict the normal economic and trade activities of Chinese enterprises and third-country enterprises.The "Measures" stipulate the reporting system for Chinese citizens, legal persons or other organizations when they encounter improper extraterritorial application that prohibits or restricts their normal economic and trade activities with third countries, and also stipulates a variety of relief channels to protect the legitimate rights and interests of enterprises.4. "Regulations on the List of Unreliable Entities"
In accordance with the "Foreign Trade Law of the People's Republic of China", "The National Security Law of the People's Republic of China" and other laws and regulations, formulated by the Ministry of Commerce, approved by the State Council, announced and implemented on September 19, 2020 as Ministry of Commerce Order No. 4 of 2020 .The "Regulations" comprehensively consider the following factors to make a decision on whether to include the relevant foreign entity in the list of unreliable entities:1) The degree of harm to China's national sovereignty, security, and development interests;2) The degree of damage to the legitimate rights and interests of Chinese enterprises, other organizations or individuals;3) Whether it complies with internationally accepted economic and trade rules;4) Other factors that should be considered.
The Regulations may decide to take one or more of the following measures for foreign entities included in the list of unreliable entities:1) Restrict or prohibit them from engaging in import and export activities related to China;2) Restrict or prohibit its investment in China;3) Restrict or prohibit the entry of related personnel, transportation vehicles, etc.;4) Restrict or cancel the work permit, stay or residence qualification of relevant personnel in China;5) According to the seriousness of the circumstances, a corresponding fine shall be given;
Interpretation:
1. In the anti-sanction law, the obligor for the implementation of countermeasures is only defined as "organizations and individuals in China", so it may also include foreign legal persons in China, representatives of foreign organizations in China, and foreign individuals.2. The anti-sanction law prohibits "any organization or individual" from taking discriminatory restrictive measures against China, so it also includes foreign organizations and individuals.3. With the promulgation of three laws including China’s Anti-Foreign Sanctions Law, “Measures for Blocking the Improper Extraterritorial Application of Foreign Laws and Measures”, and “Provisions on the List of Unreliable Entities”, China’s anti-sanctions, anti-interference, and countermeasures Jurisdiction and other legal "toolboxes" for coping with challenges and preventing risks have taken shape. If foreign companies blindly follow U.S. laws and regulations, they will also face legal risks in the Chinese market.
5. "Guiding Opinions of the Ministry of Commerce on the Establishment of an Internal Compliance Mechanism for Export Control by Export Operators of Dual-use Items"
In April 21, the Ministry of Commerce issued the "Guiding Opinions of the Ministry of Commerce on the Establishment of an Internal Compliance Mechanism for Export Control by Export Operators of Dual-use Items" (hereinafter referred to as the "Guiding Opinions")Scope of application: applicable to export operators of dual-use items.
With the continuous improvement and perfection of China's export control laws and regulations, enterprises should also strengthen the construction of export control compliance systems. In particular, companies involved in the export of dual-use items in China should establish an internal compliance mechanism that meets the requirements of national regulations as soon as possible.
1) The basic principles for the establishment of internal compliance mechanisms by enterprises
; the principle of legality; that is, the strict implementation of national export control laws and regulations; the principle of independence; the independent existence of internal compliance mechanisms in the management system; the principle of effectiveness; internal compliance mechanisms should Combining with the actual operating conditions of its own business, it will give full play to the role of the internal compliance mechanism in the supervision and control of export business activities.
2) The basic elements of an enterprise's establishment of an internal compliance mechanismA) Drafting a policy statement
The export business operator draws up and issues a written commitment statement signed by the top management or main person in charge, stating that the business operator will strictly implement the national export control laws and regulations, and the senior management’s supportive attitude towards the internal compliance mechanism. The policy statement reflects the principle of legality.
B) Establish an organizational structure to
set up an organizational structure for an internal compliance mechanism for export control, and clarify the responsibilities of the competent department and personnel. The establishment of an organization should consider: the establishment of the organization system, the functions of the organization, the job responsibilities, powers and contact information of full-time (part-time) export control personnel. The establishment of an organization should reflect the principle of independence.
C) Comprehensive risk assessment The
export business operator shall conduct a comprehensive assessment of the export control risks that it may face according to the size of its organization, industry, and business methods.
D) Establish review procedures.
Export operators shall establish export review procedures, clarify which specific links in the business process need to implement internal compliance control, and through procedural and institutional management, prevent the random export of controlled items without internal review.
E) Develop emergency measures.
Export operators set up internal reporting channels and suspicious matters investigation procedures, and require employees to promptly report suspicious orders, suspicious customers or suspicious behaviors to the internal compliance mechanism of export control, who will carry out investigations and make a final decision . If violations of export control regulations are found, emergency remedial measures should be taken and reported to the government in a timely manner. F) Carry out education and training
Export operators formulate regular or irregular training plans based on actual conditions, adopt various forms of training to achieve full-staff training, and list export control training as an indicator of employee performance appraisal.
H) Improve compliance audits. Export operators regularly audit
the rationality, feasibility, and effectiveness of the internal compliance mechanisms of export control, and evaluate the standardization of compliance operations in specific business processes. The compliance audit can be conducted by a dedicated person within the company, or an external third-party agency can be hired to conduct it.
I) Retaining data files. The exporter keeps
complete and accurate documents related to export control, including export records, communication with government departments, customer information and transaction documents, license application documents, license approval documents, and export project implementation.
J) Preparation of management manuals. Export operators prepare management manuals of
internal compliance mechanisms for export control, covering the contents of the aforementioned basic elements, popularizing national export control laws and regulations and compliance systems, so that employees can understand and effectively implement the manuals in a timely manner.
U.S. export control regulations and economic sanctions
1. The United States’ Export Administration Regulations (EAR)
The BIS (Industry) Bureau under the US Department of Commerce sets the EAR list.EAR implements the following supervision and control of most commodities, software and technologies (including "dual use" projects that can be used for commercial and national defense purposes, as well as certain defense projects):A) Export goods from the United States.B) Goods exported to U.S. source projectsC) Transfer or disclosure to persons in other countries/regions.For goods subject to EAR restrictions, you can find the "Export Control Classification Number" (ECCN) in the Commercial Control List (CCL), and you need to apply for an export license (BIS) before exporting. Goods that are not listed on the CCL are designated as EAR99. Generally, B IS is not required . However, depending on the country of export, end user or end use, even EAR99 projects may require BIS.
2. The "List of Entity" in the United States
Determined and issued by the Bureau of Industry and Security (BIS) of the US Department of Commerce and the US End User Review Committee (ERC);BIS provides additional license requirements for export, re-export and transfer (domestic) to most entities included in the “entity list” (whether the entity is a buyer, intermediary, ultimate consignee or end user) And it limits most of the license exceptions. When BIS is reviewing such license applications, unless the applicant provides sufficient evidence to overturn the presumption, BIS refuses to issue an export license. It also requires other institutions not to provide assistance or convenience to the transactions of entities on the list of entities. Once BIS is included in the “list of entities”, it will be difficult for the entity to legally obtain U.S. export-controlled items.Simply put, the "entity list" is a "blacklist". Once on the list, it actually deprives related companies of trade opportunities in the United States.As of July this year, Chinese companies included in the US entity list include: Hikvision, iFLYTEK, Questyle Technology, Dahua Technology, Meiya Biotech, Yitu Technology, Yixin Technology and other nearly 100 Chinese companies .
3. US "SDN List"
The full length of the SDN list is the Specially Designated Nationals and Blocked Persons List (Specially Designated Nationals and Blocked Persons List), which is formulated/published by the Office of Overseas Assets Control (OFAC) of the U.S. Department of the Treasury.Entities listed on the SDN list will face serious consequences:1) Unless authorized by OFAC, no American is allowed to conduct any transactions with SDN listed entities;2) Any assets of SDN list entities will be automatically frozen if they are in the United States or owned or controlled by Americans; 3) The subject scope of the freeze will also be extended to one or more SDN list entities individually or collectively, directly or directly An entity that indirectly owns more than 50% control (50% principle).As of March this year, 7 Chinese companies including "Wuhan Ilson" have been included in the US "SDN List".4. Military end-user and end-use control
The U.S. Bureau of Industry and Security (BIS) amended the Export Administration Regulations (EAR) to expand the licensing requirements for the export, re-export, and transfer of articles used for military end-uses or military end-users in China, Russia, and Venezuela.A) The licensing requirements for China have been extended to include both "military end-use" and "military end-user", the list of items applicable to licensing requirements and review policies has been expanded, and the definition of "military end-use" has been expanded.B) For certain commodities exported to China, Russia and Venezuela, new control reasons and related regional stability review policies (RS) have been created, thereby structurally adjusting the existing related content.C) Added the filing requirements for electronic export information (EEI) filing in the Automatic Export System (AES) for exports to China, Russia and Venezuela.The "List of Military Enterprises" (CCMC) was first determined by the U.S. Department of Defense, later changed to be determined by the U.S. Treasury Department, and finally issued by the U.S. Department of Treasury's Office of Overseas Assets Control (OFAC).Up to now, there are 59 Chinese companies on the CCMC list, as well as other companies that directly or indirectly own or control these companies. This list can be queried in the Sanctions List Search Tool of the U.S. Department of the Treasury.The United States also stipulates that Americans are prohibited from buying or selling publicly traded securities and derivative securities of companies listed on the CCMC.
5. Sanctions by US Customs
In June, the US Customs and Border Protection "CBP" issued a temporary seizure order against the silica-based products produced by Hoshin and its subsidiaries in Xinjiang, stating that there is reasonable evidence that they were produced through "forced labor." .
6. Other sanctions
In June of this year, the U.S. Senate voted to pass the "Strategic Competition Act of 2021" issued by the U.S. Senate Foreign Relations Committee "OFAC".The bill authorizes the United States to take a series of measures, including sanctions, export controls, and to strengthen cooperation with allies in investment review. It urges the United States and the European Union to establish a multilateral export control organization to restrict China’s access to sensitive technologies and test the implementation of China’s export control system on the United States. A series of domestic measures such as "circumvention actions".
400 880 9138
Micro lecture hall
RichScan for Consultation
CN
