On June 12, 2023, the US Department of Commerce Bureau of Industry and Security ("BIS") added 43 entities under 50 entries to the BIS Entity List.1
In announcing these additions, BIS officials noted the designations reflect determinations relating to several specific areas of concern, including hypersonic weapons development activities and flight modeling, and development of supercomputing capabilities including for support of hypersonic research, and surveillance and biometric technologies relating to human rights concerns. The 50 entries are listed under the following destinations: 31 entries under China, five entries under the United Arab Emirates ("UAE"), four entries under Pakistan, three entries under South Africa, two entries under the UK, and one entry each under Kenya, Laos, Malaysia, Singapore, and Thailand.
According to the Federal Register notice of designation, the additions to the BIS Entity List were based on the following determinations by the End-User Committee ("ERC"), an interagency body chaired by BIS:
- Eight entities listed under the destination of China ("Destination China Entities") based on an ERC determination of "demonstrable ties to activities of concern, including hypersonic weapons development, design and manufacture of air-to-air missiles, hypersonic flight modeling, and weapon lifecycle management using Western software."2
- One Destination China Entity based on an ERC determination of "acquiring and attempting to acquire U.S.-origin items in support of China's military modernization." BIS claims this entity has "supported the operation of supercomputers located in" China by "offering cloud-based supercomputing capabilities to support hypersonic research."3
- Two Destination China Entities based on an ERC determination of "procuring and supplying items subject to the [Export Administration Regulations ("EAR")] that enable the Chinese government to carry out human rights abuses against individuals in China." BIS claims these items included "mobile phone inspection software, fingerprint analysis technology, biostatistics software, . . . DNA testing items . . . [and] biotechnology items[.]"4
- Six Destination China Entities based on ERC determinations of contributions to Pakistan's ballistic missile program; Four Destination Pakistan Entities based on ERC determinations of contributions to Pakistan's ballistic missile program, as well as advanced conventional weapons and strategic weapons capabilities.5
- One Destination China Entity was allegedly contributing significantly "to certain advanced conventional weapons and strategic weapons capabilities in Pakistan."6
- Six Destination China Entities were "implicated in a conspiracy to violate U.S. export controls, including a scheme to supply the Chinese People's Liberation Army – Navy with U.S. military grade vessels and equipment."7
- The Destination UAE, South Africa, UK, Kenya, Laos, Malaysia, Singapore, and Thailand Entities were allegedly "providing training to Chinese military pilots using Western and NATO sources."
The US Export Administration Regulations "impose additional license requirements on, and limit the availability of, most license exceptions for exports, reexports, and transfers (in-country) when a listed entity is a party to the transaction."8 When BIS is reviewing license applications for the export, reexport, or transfer (in-country) to these entities of items subject to the EAR, there generally will be a presumption of denial.9 The BIS press release emphasized that "the Entity List is not intended for use as a sanction against any particular country or government," noting that this is "particularly true for close U.S. allies, such as those identified [of the EAR] or in Country Groups A:5 or A:6 in supplement no. 1 of part 740 of the EAR"—here, the UK,10 South Africa,11 and Singapore.12
Footnotes
1. https://www.federalregister.gov/documents/2023/06/14/2023-12726/additions-of-entities-to-the-entity-list-and-removal-of-entity-from-the-entity-list; https://www.bis.doc.gov/index.php/documents/about-bis/newsroom/press-releases/3287-rainbow-trout-rule-press-release/file
2. Id.
3. Id.
4. Id.
5. Id.
6.Id.
7. Id.
10. Supplement no. 3 to part 746 of the EAR; Country Group A:5 in supplement no. 1 of part 740 of the EAR
11. Country Group 6 in supplement no. 1 of part 740 of the EAR.
12. Id.
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