China's New Export Control Law

After years of deliberation, and in accordance with the National People's Congress; The People's Republic of China, by order of the President, has confirmed a new Export Control Law for the purpose of safeguarding national interest and security and preventing the proliferation of potential weapons of mass destruction. This Export Control Law pertains to any entities, citizens, legal persons or incorporated organization's shipping 'controlled items' from the People's Republic of China overseas. It also applies to the transit, transshipment, through transportation and re-export of controlled items through the country.

The controlled items within the regulation focus on the following categories: Nuclear dual-use items, Missile items, Biological dual-use items, controlled Chemical and Chemical precursor items and Military items. The emphasis on these goods is accredited by the fact that the People's Republic of China is a valued member of the Nuclear Suppliers Group (NSG), Biological Weapons Convention (BWC) and Chemical Weapons Convention (CWC). The country's focus on controlling the exports of missile goods and technology aligns with the standards adhered to by the country members in the Missile Technology Control Regime (MTCR), although they are not a member.

In addition to listing the items under export control, this regulation details the factors that will be influential in the decision to grant export licenses to any exporter wishing to trade controlled items overseas. These include:

1. Confirming the trade of goods does not affect National Security and Interest
2. Confirming the trade of goods is in line with International commitments and obligations
3. The type of export
4. The 'sensitivity' of the controlled item
5. The destination country or region of the exported goods
6. End-user and end-use
7. The credit records of the exporter

To expand on reference point six above; when applying for an export license, the exporter is required to alongside the importer provide certified documentation detailing the end-user and end-use of the controlled item to the State Export Control Authority of China. The end-user is then required to agree not to change the end-use of the control item or transfer the item to a third party. The State Export Control Authority maintain an 'End-user Control List' of importers and end-users, adding entities who violate the terms and conditions over end-use. They have the authority to prohibit, restrict or suspend trade of those controlled items to the importer and end-user. The State Export Control Authority can at short notice, implement temporary export controls on items that are not included in the new Export Control Law. This is an added measure to safeguard national interest and security outside the scope of the regulation.

This regulation will come into force on 1 December 2020.

Posted 03 November 2020 by Ravi Amin, Trade Compliance Subject Matter Expert, Maritime, Trade & Supply Chain, S&P Global Market Intelligence