Alert
Alert
08.15.19
On August 14, 2019, the U.S. Commerce Department added China General Nuclear Power Group (CGN) and three of its affiliates, China General Nuclear Power Corporation (CGNPC), China Nuclear Power Technology Research Institute Co. Ltd., and Suzhou Nuclear Power Research Institute Co. Ltd., to the Commerce Department’s “Entity List.” Effective immediately, both U.S. and non-U.S. companies are prohibited from exporting or transferring to the listed Chinese entities any goods, software or technology that is subject to control under the U.S. Export Administrations Regulations (EAR) (including EAR99 items not on the Commerce Control List). Licenses from the Commerce Department’s Bureau of Industry and Security (BIS) are subject to a presumption of denial.
The Entity List, found in Supplement No. 4 to Part 744 of the EAR, permits U.S. officials to identify non-U.S. persons as subject to restrictions and licensing policies for the export, reexport and/or transfer (in-country) of items subject to the Commerce Department’s export control jurisdiction. These Entity List requirements are independent of, and in addition to, controls and license requirements otherwise imposed in the EAR.
The Entity List designations are different from sanctions designations as administered by the Treasury Department’s Office of Foreign Assets Control.
The Commerce Department explained that the four Chinese entities had engaged in or enabled efforts to acquire advanced U.S. nuclear technology and material for diversion to military uses in China. This announcement comes in the context of U.S.-China trade tensions, but is not the first move to limit civil nuclear cooperation. The U.S. Government’s Policy Framework on Civil Nuclear Cooperation with China, issued in October 2018, applied a presumption of denial of exports to CGN, its subsidiaries, and CGN-related entities of nuclear technology, equipment, components and materials subject to the Department of Energy’s regulations at 10 CFR Part 810 or licensing requirements under the NRC’s 10 CFR Part 110 regulations. Unlike the broader DOE policy framework, the new BIS prohibitions are limited to the four entities added to the Entity List. These join two existing parties on the Entity List in the China nuclear sector, the Baotou Guanghua Chemical Industrial Corporation and Northwestern Polytechnical University of China.
This latest U.S. use of the Entity List will make it important for companies to understand (A) where U.S. export control jurisdiction applies; and (B) whether a good, software or technology is subject to control under the EAR versus other U.S. nuclear export control regimes. This announcement follows the U.S. designation of Huawei and several affiliates on the Entity List in May 2019, and marks an increased in this policy tool for China.