China - U.S. Export Controls China - U.S. Export Controls
The United States imposes export controls to protect national security interests and promote foreign policy objectives. The United States also participates in various multilateral export control regimes to prevent the proliferation of weapons of mass destruction and prevent destabilizing accumulations of conventional weapons and related materials. The Department of Commerce’s Bureau of Industry and Security (BIS) administers U.S. laws, regulations and policies governing the export, reexport, and transfer (in-country) of commodities, software, and technology (collectively “items”) falling under the jurisdiction of the Export Administration Regulations (EAR). The primary goal of BIS is to advance the United States’ national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership. BIS also enforces antiboycott laws and coordinates with U.S. agencies and other countries on export control, nonproliferation, and strategic trade issues.
The EAR controls certain exports, reexports, or in-country transfers of purely commercial items, items that have both commercial and military applications (i.e., “dual-use” items), and less sensitive military items.
Items subject to the EAR may require a license prior to export, reexport, or transfer (in-country). BIS’s Export Administration reviews license applications for exports, reexports, and deemed exports/reexports (technology transfers to foreign nationals in/outside of the United States) subject to the EAR. Through its Office of Exporter Services, Export Administration also provides information on BIS programs, conducts seminars at locations across the United States on the EAR’s requirements and compliance thereof, and provides guidance to individual exporters via telephone and e-mail. BIS also provides web-based guidance on export controls, including links to amendments to the EAR, videos and webinars on export control topics, and electronic decision tree tools to facilitate an exporter’s export control-related determinations. BIS’s Export Enforcement is staffed with federal law enforcement agents who investigate illegal exports of items subject to the EAR and enforcement analysts who analyze intelligence and other information to assess the bona fides of parties and evaluate export transactions in support of investigations. BIS also posts regional Export Control Officers in Beijing, Dubai, Frankfurt, Hong Kong, New Delhi, and Singapore to conduct end-use verifications, perform industry outreach and liaise with foreign government counterparts on export control matters of mutual interest.
Under the EAR, a license is required to export, reexport, or transfer (in-country) certain controlled items to end users in China. See the Commerce Control List in Supplement No. 1 to Part 774 of the EAR for item-specific information. In some cases, an end-use check, which can take the form of either a Pre-license Check (PLC) or Post-Shipment Verification (PSV), is also required. U.S. exporters are required to obtain an End-User Statement from China’s Ministry of Commerce (MOFCOM) for licensed transactions valued over $50,000 as part of the license application process. In certain circumstances, an End-User Statement may be required for transactions of a lower dollar value.
Generally, the licensing policy for China is to approve items for civil end use to civil end users. There is a presumption of denial for items that would make a direct and significant contribution to China’s military capabilities. Items that are destined to a military end user or for military end use are reviewed with a presumption of denial. See parts 742 and 744 of the EAR. End users in China can apply for the Validated End-User (VEU) program. This allows end users who have an established track record of engaging in only civil activities to receive exports of specified items without the need for their suppliers to first obtain individual export or reexport licenses. Interested companies can apply by submitting a request for an advisory opinion to BIS, as described in Section 748.15 of the EAR.
U.S. exporters should consult the EAR for information on how export license requirements may apply to the sale of their goods to China. If necessary, a commodity classification request may be submitted in order to determine how an item is controlled (i.e., the Export Control Classification Number (ECCN)). Exporters may also request a written advisory opinion from BIS about the application of EAR’s licensing requirements.
Information on commodity classifications, advisory opinions, and export licenses can be obtained through the BIS website or by contacting the Office of Exporter Services at the following numbers:
Washington, D.C. Tel: (202) 482-4811 Fax: (202) 482-3322
Western Regional Office Tel: (949) 660-0144 Fax: (949) 660-9347 ECDOEXS@bis.doc.gov
Exporters are also urged to check lists identifying specific end users (persons, companies and entities) that are under U.S. government sanctions or for whom export licenses or other authorization may be required. Information on these lists, which include the Entity List, Denied Persons List, Unverified List, Specially Designated Nationals List, and Debarred List, is available on the BIS website.
A consolidation of export screening lists of the Departments of Commerce, State, and the Treasury can be found online. Exporters who engage in unauthorized transactions with listed parties may themselves become subject to administrative and/or criminal penalties.
Additional information about U.S. export controls administered by BIS may be obtained from the BIS Export Control Officer at the U.S. Commercial Service, U.S. Embassy Beijing, Tel: (86) (10) 8531-3301/4484 or Fax: (86) (10) 8529-6558.
Executive Orders, or Regulatory Actions Impacting Exports or Re-exports to China
In 1990, the U.S. Congress passed P.L. 101-246, Title IX of which is commonly referred to as the “Tiananmen Square Sanctions.” Among other things, this law restricts the U.S. licensing of exports and re-exports of crime control and crime detection equipment and instruments listed in the EAR to China, as well as the licensing of defense articles and defense services subject to the International Traffic in Arms Regulations (ITAR). These restrictions apply regardless of the end user in China.
In 1999, the U.S. Congress passed P.L. 105-261, Section 1512 of which requires the President to certify to Congress before any export to China of missile equipment or technology that the specific proposed export is not detrimental to the United States space launch industry and the equipment or technology to be exported, including any indirect technical benefit, will not measurably improve China’s missile or space launch capabilities. In 2009, the President delegated the certification responsibility to the Secretary of Commerce. This requirement may affect the licensing process for any missile technology or equipment exports to China.
On June 28, 2005, President Bush signed Executive Order 13382, which amended Executive Order 12938 by providing sanctions against entities that finance and support proliferation activities. Chinese entities have been sanctioned under this Executive Order, as well as under the Iran Nonproliferation Act of 2000 (P.L. 106-178), Iran-Iraq Arms Nonproliferation Act of 1992 (P.L. 102-484), and Executive Order 12938, as amended by Executive Orders 13094, 13128, and13382. Additional information on these sanctions can be found on the State Department website.
In addition, although foreign made items incorporating less than 25% controlled U.S.-origin content are generally not subject to the EAR for purposes of export or reexport to China, there is no de minimis for exports to China of foreign made items incorporating U.S.-origin 600-series and 9x515 content. All such items will remain subject to the licensing requirements of the EAR, regardless of the level of U.S.-origin 600-series and 9x515 content.
While China is not mentioned specifically in FIRRMA, there will be impact on Chinese investment in the U.S. CFIUS has greater visibility of Chinese investment into the U.S., which in turn will lead to heightened scrutiny of potential Chinese investments in areas related to critical technologies, critical infrastructure, businesses with sensitive personal data, and certain types of real estate transaction
Other U.S. agencies regulate exports of more specialized items. For example, the U.S. Department of State’s Directorate of Defense Trade Controls administers U.S. export controls covering defense articles and defense services that appear on the U.S. Munitions List under the ITAR. Information on U.S. Department of State export licensing procedures, the ITAR, and the Arms Export Control Act can be found at Tel: (202) 663-1282.
The point of contact for U.S. Department of State licensing issues at the U.S. Embassy Beijing is the Economic Section, Tel: (86) (10) 8531-3000, Fax: (86) (10) 8531-4949.