On August 26, 2020, the Department of Commerce’s Bureau of Industry and Security (BIS) announced that it was adding 24 Chinese companies to the Entity List for their role in helping the Chinese military construct and militarize the internationally condemned artificial islands in the South China Sea. “The United States, China’s neighbors, and the international community have rebuked the [China’s] sovereignty claims to the South China Sea and have condemned the building of artificial islands for the Chinese military,” said Commerce Secretary Wilbur Ross while noting that the newly listed companies “have played a significant role in China’s provocative construction of these artificial islands and must be held accountable.”

The notice also identifies and designates another 36 entities in France, Hong Kong, Indonesia, Malaysia, Oman, Pakistan, Russia, Switzerland and the United Arab Emirates (U.A.E.) for a range of activities, including: (1) attempted diversion of controlled U.S.-origin aircraft parts to Iran; (2) contributions to unsafeguarded nuclear activities; (3) involvement in a scheme to falsify information submitted in support of BIS license applications in order to divert U.S.-origin items to Iran; (4) representing an unacceptable risk that U.S.-origin items exported, reexported, or transferred (in-country) to certain listed entities will be used in military end-use activities in China and/or in support of programs for the People’s Liberation Army; (5) involvement with the Russian military and/or with Russia’s biological weapons program; and (6) engaging in activities contrary to U.S. national security or foreign policy interests.

The Entity List is used by BIS to restrict the export, re-export and transfer (in-country) of items subject to the Export Administration Regulations (EAR) to persons (individuals, organizations, companies) reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the United States. When placed on the list, additional license requirements apply to any business transactions involving such entities, and the licensing policy of BIS is often a policy of denial. The list of all companies is available in a Federal Register notice published on, and effective as of, August 27. 2020.

Shipments of items to any of these listed entities that were en route aboard a carrier to a port of export or reexport as of August 27, 2020 pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).