The U.S. Department of Commerce's Bureau of Industry and Security Issues Final Rule Expanding Export Restrictions on Military End-Users in China.

2024-09-24 22:24:02

On April 28, 2020, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce issued a final rule that expands restrictions on exports, re-exports, and transfers (in-country) of products intended for military end-use or destined for military end-users in China, Russia, and Venezuela. This rule is set to take effect on June 29, 2020.

Notably, the rule broadens the definition of "military end-use" under the Export Administration Regulations (EAR). The current definition of "military end-use" under the EAR includes products directly used for military purposes (i.e., components, parts, or subsystems of weapons or other defense articles) and those indirectly used for military purposes (i.e., for the design, development, testing, repair, and maintenance of weapons). The rule expands this definition to include products that can support or contribute to the operation, installation, maintenance, repair, overhaul, refurbishing, development, or production of military items, in addition to those used for the use, development, or production of military products.

Additionally, the rule introduces new licensing requirements for the export, re-export, and transfer (in-country) of military-related products to China. Previously, the licensing restrictions under export control laws applied only to exports, re-exports, and transfers (in-country) of products intended for military end-use in China. Now, these licensing restrictions are extended to military end-users in China. This will undoubtedly require exporters to enhance their due diligence on Chinese end-users.