international regulatory enforcement
State and Commerce Departments Take New Action on 24 Chinese Companies
By Tom Best, Shaun Wu, Quinn Dang, Talya Hutchison, and Holly Flynn
On August 26 2020, the United States Government announced visa restrictions on Chinese individuals and imposed sanctions on 24 Chinese companies for their alleged activities related to the PRC’s territorial claims in the South China Sea. The Department of Commerce added those companies to the Entity List, a list maintained by the Bureau of Industry and Security (BIS) that identifies persons believed to be involved in, or pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States. Separately, the Department of State issued visa restrictions on executives (and their family members) believed to be involved in the conduct at issue.
A list of the designated companies can be found
Department of Commerce Entity List Designations
An Entity List designation does not prohibit all dealings with the listed entity. The effect of the Department of Commerce’s action is that any person – whether a U.S. person or a foreign person – cannot export, reexport, or transfer (in-country) any item subject to the Export Administration Regulations (EAR) to the designated entity without first obtaining a BIS license. Moreover, applications for the required specific authorization are “usually subject to a policy of denial” according to Department of Commerce guidance. License applications for transfer of items to all of the companies designated pursuant to the August 26 action for their roles involving the South China Sea also will be subject to a presumption of denial. Items that are subject to the EAR include those that are: (i) located in the United States; (ii) of U.S. origin; (iii) foreign-made items that incorporate U.S.-origin goods, software, or technology (often above a specified threshold); and (iv) certain other items that are “direct products” of U.S.-origin technology or software.
A leading Chinese microchip manufacturer was placed on the Entity List in October 2018 reportedly in connection with alleged theft of U.S. trade secrets.
State Department Visa Restrictions
In addition to the Department of Commerce’s actions, the Department of State