Commerce Adds Chinese Companies to Entity List and Implements Licensing Review Process for Certain Items Related to Treatment of Infectious Diseases

Effective July 22, 2020, pursuant to a Federal Register notice, the Department of Commerce’s Bureau of Industry and Security (BIS) has placed 11 Chinese entities on the Entity List stating that all “have been implicated in human rights violations and abuses in the implementation of China’s campaign of repression, mass arbitrary detention, forced labor and high-technology surveillance against Uyghurs, Kazakhs, and other members of Muslim minority groups in the Xinjiang Uyghur Autonomous Region (XUAR).” This action comes shortly after Commerce and other federal agencies cautioned U.S. businesses about conducting sufficient supply chain due diligence regarding the Chinese government’s repression of ethnic minorities, see Thompson Hine International Trade Update of July 2020.

Specifically, BIS determined that Changji Esquel Textile Co. Ltd.; Hefei Bitland Information Technology Co. Ltd.; Hefei Meiling Co. Ltd.; Hetian Haolin Hair Accessories Co. Ltd.; Hetian Taida Apparel Co., Ltd.; KTK Group; Nanjing Synergy Textiles Co. Ltd.; Nanchang O-Film Tech; and Tanyuan Technology Co. Ltd. are engaging in activities contrary to the foreign policy interests of the United States through the practice of forced labor involving members of Muslim minority groups in the XUAR. BIS also determined that Xinjiang Silk Road BGI and Beijing Liuhe BGI are enabling activities contrary to the foreign policy interests of the United States through conducting genetic analyses used to further the repression of Muslim minority groups in the XUAR.

These actions establish entity-specific license requirements for the export, re-export and transfer of U.S goods and technology to these designated parties.  Specifically, BIS has imposed a license requirement for all items subject to the Export Administration Regulations (EAR) with case-by-case license review policy for certain items with specified Export Control Classification Numbers (ECCNs). Additionally, BIS states that “in light of the current global pandemic, BIS has adopted a policy of case-by-case review for items subject to the EAR that are necessary to detect, identify and treat infectious disease.” BIS has adopted a license review policy of presumption of denial for all other items subject to the EAR and removed these entities from being eligible for any license exceptions.

In this notice, BIS has also modified the Entity List as to 37 other Chinese entities previously determined to be engaged in or enabling human rights abuses in Xinjing. See Federal Register notice of June 5, 2020. Specifically, and again, in light of the current global pandemic, BIS has modified the license review policy for these 37 entities “to reflect a policy of case-by-case review for items subject to the EAR that are necessary to detect, identify and treat infectious disease.” The license review policy for these entities otherwise remains the same.