The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) has issued a final rule amending the Export Administration Regulations (“EAR”) to add 77 entities to the Entity List. This rule took effect on Friday, December 18, 2020, when BIS made a copy available for public inspection on the Federal Register website.
As a result of these Entity List designations, the EAR will now require BIS licensing for any exports, reexports, or in-country transfers of items “subject to the EAR” to these entities. The designated entities include 60 Chinese companies and additional entities from the countries of Bulgaria, France, Germany, Italy, Malta, Pakistan, Russia and the United Arab Emirates. The designated entities include (but are not limited to):
-Semiconductor Manufacturing International Corporation Incorporated (SMIC) of China and ten of its related entities, which BIS added to the Entity List because of “SMIC’s relationships of concern with the military-industrial complex, China’s aggressive application of military-civil fusion mandates and state-directed subsidies” (according to a BIS press release). BIS will evaluate any SMIC license applications involving “items uniquely required for the production of semiconductors at advanced technology nodes (10 nanometers and below, including extreme ultraviolet technology)” according to a presumption of denial and will evaluate all other license applications on a case-by-case basis.
-A group of four Chinese biotechnology companies (AGCU Scientech, China National Scientific Instruments and Materials (CNSIM), DJU and Kuang-Chi Group, which BIS added to the Entity List because it determined that they “have enabled wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance, and/or facilitated the export of items by China that aid repressive regimes around the world, contrary to U.S. foreign policy interests.” BIS will evaluate any license applications for these entities involving “items necessary to detect, identify and treat infectious disease” on a case-by-case basis and will evaluate all other applications involving these entities according to a presumption of denial.
-China State Shipbuilding Corporation, Ltd. (CSSC) and over twenty of its research institutions, which BIS added to the Entity List after determining that they had acquired and attempted to acquire U.S.-origin items in support of programs for the People’s Liberation Army of China. BIS will evaluate any license applications involving these entities according to a presumption of denial.
-A group of four Chinese universities (Tianjin University, Beijing University of Posts and Telecommunications, Nanjing University of Aeronautics and Astronautics, and Nanjing University of Science and Technology), as well as businesses and individuals associated with those entities. BIS will review license applications involving these universities, entities, and individuals according to a presumption of denial.
As a result of these new designations, these entities will now be ineligible for almost all license exceptions provided under the EAR. The announcement also included a savings clause which would allow shipments to any of these newly listed entities to continue without a BIS license if: (i) they were en route aboard a carrier to a port of export or reexport as of December 22, 2020, (ii) they were made pursuant to an actual order for export or reexport to a foreign destination, and (iii) they did not otherwise require a BIS license under any separate provision of the EAR.
These new designations were partially offset by BIS’s removal of Israel’s Ben Gurion University and Dow Technology, Hassan Dow and Modest Marketing LLC of the United Arab Emirates from the Entity List. Those delistings were also effective December 18, 2020.
Grant Leach is an Omaha-based partner with the law firm Husch Blackwell LLP focusing on international trade, export controls, trade sanctions and anti-corruption compliance.
Cortney O’Toole Morgan is a Washington D.C.-based partner with the law firm Husch Blackwell LLP. She leads the firm’s International Trade & Supply Chain group,