Consistent with U.S., EU, and other global export control regimes, the Export Control Law (ECL) will establish export license requirements pertaining to items that are “dual use” (civil by design but, depending on specific capabilities, could be used for defense-related or nuclear purposes) as well as “military” (specifically designed for defense purposes).
Across a broad spectrum of industries, outbound exports from China, as well as the sharing of export-sensitive technology in China with non-Chinese nationals (including those from Taiwan, Hong Kong and Macao) i.e. “deemed exports”, will be covered under these regulations, as well as international end-user requirements for permitted exports. Preliminarily, the draft ECL sets forth stringent fiscal penalties for export violations, potential criminal penalties, as well as related export and credit sanctions.
For EU and other European companies who are manufacturing products in China, or developing software or R&D and exporting these commodities or services from China, these regulations will significantly impact local supply chain operations to the extent that export license determinations are required and, if such items are controlled, license approvals are required. Likewise, E.U. and other non-Chinese citizen personnel receiving export-sensitive technology will likewise be effected and potentially subject to the ECL’s deemed export requirements in order to perform their corporate responsibilities.
For companies directly exporting from China or part of a China-based supply chain, proactive compliance attention will be essential in order to avoid export supply chain disruption. These compliance measures include:
- Determining whether or not your products and technology will be covered under the ECL and subject to export license approval
- Determining whether technology sharing with international personnel working in China is subject to export license approval
- Establishing the necessary documented procedures to address export control products, including licensing and international shipping procedures, as well as local Technology Control Plans for safeguarding export-sensitive technology
- Proactively training corporate personnel and logistics facilitators on compliance and documentary requirements.
Through BDO’s affiliated professionals based in the PRC, we can assist your company in proactively addressing these new ECL requirements through supply chain assessments, procedural development and resource training, so as to minimize supply chain impact. For further information please contact BDO.
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