Wednesday, December 23, 2020
On December 21, 2020, the Division of Commerce’s Bureau of Trade and Safety (BIS) added 102 Chinese language and Russian firms to a brand new restricted “Navy Finish Consumer” (MEU) listing within the U.S. Export Administration Rules (EAR). Individually, BIS eliminated the Hong Kong Particular Administrative Area (SAR) from the listing of locations within the EAR to replicate that it’ll now be handled in the identical method for export management functions as mainland China, finishing a collection of modifications first reported in July 2020. These guidelines, in line with the pre-publication variations (MEU listing, Hong Kong SAR elimination), are to take impact when printed within the Federal Register on December 23, 2020.
The Navy Finish Consumer Checklist
The brand new MEU Checklist is expounded to export restrictions that went into impact in June 2020 on “navy finish customers” in China, Russia and Venezuela. The preliminary restrictions didn’t determine any particular “navy finish customers” to which they utilized. The dearth of an inventory made it difficult for exporters to conduct “know your buyer” due diligence to find out if an entity in China, Russia or Venezuela may be thought-about to be a “navy finish person” by BIS. In consequence, within the span of only a few months, firms submitted over 80 advisory opinion requests and e-mail requests for steerage to BIS and filed a number of hundred license purposes associated to the June 2020 navy finish person rule. The brand new MEU listing is designed to deal with these considerations and supply larger readability to business.
On the identical time, BIS has cautioned that the brand new listing is simply the “first tranche” of navy finish customers and that extra could also be added within the weeks and months forward. Additional, BIS has cautioned that firms ought to pay shut consideration to Chinese language firms that, whereas not listed by BIS, have been included on the lists made public by the U.S. Division of Protection (DOD) pursuant to Part 1237 of the Nationwide Protection Authorization Act of Fiscal Yr 1999, 50 U.S.C. § 1701 Be aware. In line with BIS, the involvement of any of the DOD-designated entities is ample to lift a “purple flag” underneath the EAR and “require extra due diligence by the exporter, reexporter, or transferor to find out whether or not a license is required” underneath the EAR navy finish person rule.
Elimination of Hong Kong as a Separate Export Designation
BIS has now eliminated Hong Kong as a separate export designation from the EAR. This modification was made to implement a July 2020 Govt Order that discovered that Hong Kong needs to be handled for export and different trade-related functions like mainland China because of current modifications carried out by the federal government of Hong Kong, resembling a brand new nationwide safety regulation.
The brand new MEU listing and the elimination of Hong Kong as a separate vacation spot from the EAR proceed to spotlight the significance of “know your buyer” compliance, together with understanding the vacation spot, finish person, and finish use of all objects exported out of the U.S. — or in any other case topic to the EAR — and monitoring how these frequent rule modifications and designations could have an effect on current or future export actions.
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