The Export Control Law Requires Export Compliance

China’s new export control law is more comprehensive than many companies doing business in China believe. It targets not only the cross-border transfer of controlled items, but also the act of a Chinese subject providing controlled items to a foreign subject within or outside its territory. The controlled items include not only goods, technology and services, but also data such as technical information related to the items.

The Export Control List is not yet available. However, when assessing one’s own affectedness, it should be noted that under the catch-all rule, goods, services, know-how stocks and data that are not on these lists can also be controlled. The State Export Control Administration may impose temporary controls on goods, technologies and services that are not on the Export Control List for reasons such as safeguarding national security. Even free products that contain controlled goods may fall under the Export Control Act.

Similar to the US export control “entity list” system, the Export Control Law also provides for a “control list” system whereby importers and end-users who may endanger China’s national security and interests, etc., may be placed on the “control list”. Any importer, exporter or end user who violates the legal requirements will face blacklisting, trade bans, fines and criminal prosecution. However, he has the opportunity to apply to the Chinese authorities for de-listing by providing evidence of measures taken to eliminate the violations and prevent future misconduct.   

We recommend that companies doing business in China or with China consider the requirements of the law in their compliance function. The Export Control Law, along with the Cyber Security Law and the Data Security Law, is another reason to expand this function now. The task is comprehensive: Exporters in China should assess and determine whether the exported items are subject to export control and verify the relevant end-user and end-use documentation; Foreign importers should also verify whether the imported items from China are subject to Export Control Law to avoid falling onto the “control list” and being prohibited from trading with China.

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