BLACKLISTED: THE US DEPARTMENT OF COMMERCE’S ENTITY LIST AND ITS CONSEQUENCES FOR NON-US COMPANIES

On 30th September, TerraLex Inc published a briefing about the “Entity List”, which imposes a restrictive licensing regime on exports of US-origin goods and technology to designated foreign parties.  It starts by saying that the addition of Chinese telecommunications giant Huawei to the Entity List in May 2019 underscores the willingness of the US Government to employ this powerful regulatory enforcement tool notwithstanding its adverse impact on US relations with a major trading partner as well as on domestic US companies that sell goods and technology to the listed foreign party.  It explains that the Entity List is a list of non-US parties that are prohibited from receiving items subject to the Export Administration Regulations (EAR) unless the exporter receives a licence.  This prohibition precludes the export, re-export, or transfer (in-country) of specified US-origin items to any party named on the Entity List without a licence from the Bureau of Industry and Security (BIS).  A footnote interestingly notes that the Entity List was established in 1997, when it was first invoked to preclude the export of certain computers to Ben Gurion University in Israel without a licence.  Foreign parties eligible for inclusion on the Entity List may include a business, individual, research institution, or government organisation, and branches and operating divisions of a listed entity are considered a part of the listed entity.  However, where the subsidiary of a foreign party is added to the Entity List, the listing does not extend to the subsidiary’s parent company unless the applicable listing so states.  The briefing warns that inclusion on the List can have the effect of strangling its access to supplies of US equipment, parts, or technology – even low-technology consumer goods.  The article goes on to consider the criteria and procedure for additions to the List, and its recent use.  Appeal processes are also discussed.  The briefing concludes by saying that the Commerce Department’s “aggressive” use of the Entity List is unlikely to abate.  It recommends that, in the event they are added to the Entity List, a business should be prepared to make a cogent, credible factual showing that they are no longer engaged in the activities that triggered the listing and are unlikely to engage in such activities in the future.

https://www.lexology.com/library/document.ashx?g=16f6558e-0ea5-4a7d-b5b1-5be85d4a6c2f

This blog is primarily for my own use, to keep informed and up to date. However, if you would like to say thank you (and perhaps help me get a new, better laptop when I am away…) you can “buy me a coffee” at https://www.buymeacoffee.com/KoIvM842y

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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