Last week, the US Department of Commerce’s Bureau of Industry and Security (BIS) added 44 Chinese entities (8 entities and 36 subordinate institutions) to the Entity List for “acting contrary to the national security or foreign policy interests of the United States”. Some were specifically listed for their involvement in the “illicit procurement of [US-origin] commodities and technologies for unauthorized military end-use in China”.
For all 44 entities, BIS has imposed a licence requirement for all items subject to the Export Administration Regulations, and a licence review policy of presumption of denial. The licence requirements apply to any transaction in which items are to be exported, re-exported or transferred (in-country) to any of the 44 entities or in which such entities act as purchaser, intermediate consignee, ultimate consignee, or end-user. In addition, no licence exceptions will be available for exports, re-exports or transfers (in-country) to the entities. See Final Rule in the US Federal Register (contains the list of the 44 Chinese entities).
The UK’s Export Control Joint Unit (ECJU) has amended 12 military and dual-use Open General Export Licences (OGELs) to confirm, where applicable, that the requirement for a written letter of clearance to comply with the security conditions and requirements of the OGEL can be fulfilled by holding an approved F1686. The F1686 procedure itself and actions required to obtain one have not changed. See ECJU Notice here (includes the list of OGELs updated).
Last week (13 July 2018), the US Department of Commerce announced that Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) had placed $400 million in escrow at a US bank and, as a result, the Department had lifted the 7-year denial order on ZTE pursuant to the $1.4 billion settlement agreement approved last month (see our previous blog for the full details of that new agreement).
In April 2018, the US Department of Commerce announced that it had activated a 7-year denial of export privileges order in respect of Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) (previous blog).
In June 2018, ZTE agreed to a $1.4 billion settlement to replace the 7-year denial order (previous blog). However, until all elements of that new settlement have been implemented, the 7-year denial order will continue to take effect.
Yesterday (2 July 2018), the Department of Commerce announced that in the interim it has granted ZTE’s request for authorisation to engage in conduct otherwise prohibited by the 7-year denial order. The authorisation allows, from 2 July until 1 August 2018, the following:
- Continued operation of existing networks and equipment;
- Support to existing handsets;
- Cybersecurity research and vulnerability disclosure; and
- Limited transfer of funds.
The UK Export Control Joint Unit has announced that it will be reintroducing the control list classification advisory service on 25 June 2018 (service had been suspended since June 2014 for operational reasons). This advisory service is for the assessment of goods and technology against the UK strategic export control lists, and will be available through the SPIRE online processing system.
On 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of export privileges order in respect of Chinese telecoms company ZTE (Zhongxing Telecommunications Equipment Corporation and ZTE Kangxun Telecommunications Ltd) (previous blog).
On 13 May 2018, President Trump tweeted that, following talks with President Xi of China, he had instructed the Department of Commerce to get ZTE “back into business” (previous blog).
Today (7 June 2018), the Department of Commerce has announced that ZTE has agreed to “severe additional penalties and compliance measures” to replace the 7-year denial order. Under the new agreement, ZTE must pay $1 billion and place an additional $400 million in suspended penalty money in escrow before it can be removed from the Denied Persons List (these penalties are in addition to the $892 million in penalties ZTE had already paid to the US government under the March 2017 settlement agreement – see previous blog). Under the new agreement, ZTE will also be required to retain a team of special compliance coordinators for a period of 10 years, whose function will be to monitor on a real-time basis ZTE’s compliance with US export control laws. ZTE will also be required to replace its entire board of directors and senior leadership for both entities. Finally, as before, the new agreement imposes a suspended denial order (this time for 10 years), which the Department of Commerce can activate in the event of additional violations during the 10-year probationary period. Collectively, these are the “most severe penalty” the US Department of Commerce has ever imposed on a company.
On 16 April 2018, the US Department of Commerce announced that it had activated a 7-year denial of exports privileges order in respect of Chinese telecoms company ZTE (previous blog here).
Yesterday (13 May 2018), President Trump tweeted that, following talks with President Xi of China, he has instructed the US Department of Commerce to get ZTE “back into business”. ZTE previously announced in a filing to the Hong Kong Stock Exchange (9 May 2018) that as a result of the 7-year denial of exports privileges order, the company had ceased its “major operating activities”.
Last week, the EU continued its arms embargo on Burma/Myanmar for 1 year and expanded it to include a prohibition on the export of dual-use goods for use by the military and Border Guard Police, and imposed restrictions on the export of equipment for monitoring communications that may be used for internal repression (previous blog). As a result, the UK Export Control Joint Unit has announced that it has amended and republished the following 5 Open General Export Licences (OGELs) (to remove Burma/Myanmar as a permitted destination from Schedule 2):
1. Export after exhibition: dual-use items
2. Export after repair/replacement under warranty: dual-use items
3. Export for repair/replacement under warranty: dual use items
4. Low value shipments