On July 12, 2021, the Commerce Department’s Bureau of Industry and Security (BIS) published a Federal Register notice amending the Export Administration Regulations (EAR) by adding 34 entities to the BIS Entity List under 43 entries. The Entity List prohibits US companies from exporting or transferring US products and technology to listed entities without a license. 23 of the 43 entries were for entities based in China, while the remaining entities were based in Russia (6), Canada (2), Iran (2), Lebanon (2), the Netherlands (1), Pakistan (1), Singapore (1), South Korea (1), Taiwan (1), Turkey (1), the UAE (1), and the UK (1). The notice also removed two previously listed entities.

The BIS stated that the 34 entities were listed for “acting contrary to the foreign-policy interests of the United States.” The notice details several grounds for listing each entity. The BIS listed 14 Chinese entities for their involvement in human rights abuses in Xinjiang. The BIS listed the remaining entities for activities relating to nuclear proliferation, the export of US technology to Russian and Chinese military end users, and violations of OFAC sanctions.

The listing of Chinese companies linked to Xinjiang is part of a wider US government effort to address human rights abuses in the Xinjiang region. On July 13, 2021, the Commerce Department, State Department, Treasury Department and several other agencies released an updated Xinjiang Supply Chain Business Advisory, which provides detailed guidance on the risks of doing business with companies in Xinjiang (we will discuss this advisory in more detail in another blog post). Shortly after the listing was made public, China’s Commerce Ministry announced that it plans to take “necessary measures” to respond to the listing of Chinese companies. China may use a law passed last month, the “Anti-Foreign Sanctions Law,” to sanction US companies and government officials in retaliation.

The additions to Entity List reflect the Biden Administration’s apparent strategy of utilizing targeted sanctions to respond to human rights violations. Despite some changes in rhetoric and strategy, the Biden Administration has demonstrated a continued willingness to use sanctions and export controls as an element of its policies with respect to China.

We will continue to monitor developments in this area, and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or our usual Herbert Smith Freehills contacts for more information.

Jonathan Cross
Jonathan Cross
Counsel, New York
+1 917 542 7824
Christopher Boyd
Christopher Boyd
Associate, New York
+1 917 542 7821
Brittany Crosby-Banyai
Brittany Crosby-Banyai
Associate, New York
+1 917 542 7837
Alex Hokenson
Alex Hokenson
Associate, New York
+1 917 542 7836
Christopher Milazzo
Christopher Milazzo
Associate, New York
+1 917 542 7807

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