Reed Smith Client Alerts

On June 5, 2020, the U.S. Department of Commerce issued its final rule designating 33 Chinese entities on its Entity List. The designations follow recently expanded restrictions on military end users and end uses in China, which were addressed in our prior client alert on, and also target parties complicit in human rights abuses in the Xinjiang Uyghur Autonomous Region in northwest China.  With respect to the latter designations, on July 1, 2020, the U.S. Departments of State, Commerce, Homeland Security and Treasury issued a risk advisory for businesses with potential supply chain exposure to entities, facilities, or laborers tied to Xinjiang.

The U.S. Department of Commerce, Bureau of Industry and Security (BIS) is responsible for administering and enforcing the Export Administration Regulations, 15 C.F.R. parts 730 – 774 (EAR). The EAR regulate exports, reexports, and “deemed exports” of commercial and “dual-use” items. The Entity List is a list of persons that the U.S. government has identified as acting contrary to U.S. national security or foreign policy interests, and who are subject to specific license requirements for the export, reexport, and in-country transfer of specified items. See EAR section 744.16. The Entity List provides specific license requirements and licensing review policies for each listed person. The Entity List also restricts the availability of most license exceptions for listed entities. Where the Entity List provides that items are subject to a licensing policy of denial, the BIS will deny the license application.

I. U.S. Department of Commerce – Entity List developments

On June 5, 2020, BIS added 33 Chinese entities to the Entity List, which were determined by the U.S. government “to be acting contrary to the national security of foreign policy interests of the United States.” See 85 Fed. Reg. 34495 and 85 Fed. Reg. 34503.

A. Twenty-four entities added to Entity List – June 5, 2020 (85 Fed. Reg. 34495)

In its original press release, the Department of Commerce stated that it would be adding 24 governmental and commercial organizations to the Entity List based in China, Hong Kong, and the Cayman Islands, and that these entities “represent a significant risk of supporting procurement of items for military end-use in China.” See BIS Press Release (May 22, 2020). Secretary of Commerce Wilbur Ross stated, “[t]he new additions to the Entity List demonstrate our commitment to preventing the use of U.S. commodities and technologies in activities that undermine our interests.” Id.

For the following 24 entities, BIS will now be imposing a license requirement for all items subject to the EAR and a licensing review policy of denial for these 24 entities. No license exceptions are available for exports, reexports, or transfers (in-country) for the 24 entities. 85 Fed. Reg. 34495.

  • China
    • Beijing Cloudmind Technology Co., Ltd.
    • Beijing Computational Science Research Center
    • Beijing Jincheng Huanyu Electronics Co., Ltd.
    • Center for High Pressure Science and Technology Advanced Research
    • Chengdu Fine Optical Engineering Research Center
    • China Jiuyuan Trading Corporation
    • Harbin Chuangyue Technology Co. Ltd.
    • Harbin Engineering University
    • Harbin Institute of Technology
    • Harbin Yun Li Da Technology and Development Co., Ltd.
    • JCN (HK) Technology Co., Ltd.
    • Kunhai (Yanjiao) Innovation Research Institute
    • Peac Institute of Multiscale Science
    • Qihoo 360 Technology Company
    • Shanghai Nova Instruments Co., Ltd.
    • Sichuan Dingcheng Material Trade Co., Ltd.
    • Sichuan Haitian New Technology Group Co., Ltd.
    • Sichuan Zhonghe Import and Export Trade Co., Ltd.
    • Skyeye Laser Technology Limited
    • Zhu Jiejin
  • Hong Kong
    • Cloudminds (Hong Kong) Limited
    • JCN (HK) Technology Co., Ltd.
    • K Logistics (China) Limited
  • United Kingdom
    • CloudMinds Inc.
    • Qihoo 360 Technology Co. Ltd.