The Department of Commerce’s U.S. Bureau of Industry and Commerce (BIC) has added 17 organizations from 11 countries to its “entity list,” citing national security concerns. Presence on the list means the organization or enterprise is presumed to be acting counter to the national security interests of the United States. In a practical sense, this also means any export license requested by any listed entity will be scrutinized closely within the Export Administration Regulations, given their presence on the entity list, and licenses rarely will be granted. Effectively, the entity list is the equivalent of a “blacklist.”
The 11 countries are Armenia (two entities), Belgium (two entities), Canada (one entity), the People’s Republic of China (China – four entities), Georgia (one entity), Hong Kong (one entity), Malaysia (one entity), the Netherlands (one entity), Russia (one entity), the United Arab Emirates (U.A.E. – four entities), and the United Kingdom (U.K. – one entity).
The actions that landed the offending companies on the BIC list include:
- Transhipping of U.S-origin items to sanctioned destinations.
- Enabled efforts to acquire advanced U.S. nuclear technology and material for diversion to military use in China.
- Sale of U.S. technology to Iran’s military and space programs.
- Sale of U.S. technology to North Korea front companies.
- Sale of U.S. technology to subordinate entities of the Chinese government and its defense industry.
- Unlawful attempt to procure and divert aluminum tubing to Iran.
China General Nuclear Power Group
Of interest, especially given China’s identification of nuclear technology as a national priority, is the fact that the four Chinese organizations identified are all associated with China’s largest nuclear entity, China General Nuclear Power Group (CGNPG). CGNPG and its three affiliates are responsible for building nuclear power plants in China and abroad. Their presence on the list effectively cuts the company’s access to any U.S. technology. This tightening of restrictions is, according to BIC, due to the group diverting technologies bought for civilian applications to China’s military.
This action by the BIC, which occurred Aug. 19, was followed by the announcement that 46 entities associated with China telecom giant Huawei would also be added to the entity list. These additional 46 entities, located in 25 different countries, brings the total to 100 Huawei entities on the BIC blacklist. And in true carrot-and-stick fashion, Commerce Secretary Wilbur Ross extended the 90-day moratorium on Huawei products for another 90 days to allow Huawei to service existing U.S. customers (mostly located in rural areas) and buy from U.S. suppliers. When asked what would happen Nov. 19, when the current extension expires, Ross responded that people have had ample time to ween themselves from Huawei.
As one may imagine, Huawei protested, stating: “These actions violate the basic principles of free-market competition. They are in no one’s interests, including U.S. companies.”
The BIC list coupled with the sanctions list should be mainstay tools for all companies engaged in the exportation of goods and services, especially if the technology is identified as defense industry-specific or has been identified as dual-use.