Commerce Dept. Moves to Restrict Business Dealings With 28 Chinese Tech and Science Entities

October 9, 2019Alerts

Effective October 9, 2019, the U.S. Department of Commerce has added 28 Chinese entities to the prohibited Entity List, including large technology, artificial intelligence and science companies.

Notable among the additions are: Hikvision, a major supplier of video surveillance products, Dahua Technology, IFLYTEK, Megvii Technology, Sense Time, Xiamen Meiya Pico Information Co., Yitu Technologies, and Yixin Science and Technology Co. Ltd.

A complete list of all 28 entities can be found here.

U.S. companies must now obtain a specific export license to do business with these entities. The Commerce Department imposed the licensing requirements as a result of the entities’ involvement in human rights violations of Uighur and other Muslim populations in China’s Xinjiang region.

The new licensing requirements effectively operate as a total embargo on shipments of American products to the 28 entities. Many of the entities are among the world’s largest technology companies which, to date, have relied on procuring American components and key parts for their products. The new licensing requirements could, therefore, jeopardize China’s goal of becoming the top global exporter of surveillance technology by crippling its video surveillance, voice recognition, and AI industries.

What U.S. Companies Need to Know:

  • All items subject to the Export Administration Regulations being exported to any of the 28 entities are subject to the new licensing requirement.
  • Licensing applications for items falling under Export Control Classification Numbers (ECCN) 1A004.c, 1A004.d, 1A995, 1A999.a, 1D003, 2A983, 2D983, and 2E983 will be reviewed and approved on a case-by-case basis.
  • Licensing applications will also be reviewed and approved on a case-by-case basis for:
    • items used for protection against chemical or biological agents
    • consumer goods
    • items packaged for retail sale or personal use
    • medical products that fall under ECCN EAR99
  • Licensing applications for items falling under any other ECCN will be presumptively denied unless BIS decides otherwise.
  • Shipments to any of the 28 entities that were in transit aboard a carrier to a port as of October 9, 2019 are authorized to proceed to their destinations without having to comply with the new licensing requirements.