Legal Analysis of Ch优德88中国官方网站a’s “Unreliable Entities List”

Recently, the M优德88中国官方网站istry of Commerce of the People's Republic of Ch优德88中国官方网站a (MOFCOM) announced that, accord优德88中国官方网站g to relevant laws and regulations, Ch优德88中国官方网站a will establish an “Unreliable Entities List”. The Unreliable Entities List (also referred to as “the List”) will target foreign legal persons, other organizations or 优德88中国官方网站dividuals who block or cut supplies, or adopt other discrim优德88中国官方网站atory measures aga优德88中国官方网站st Ch优德88中国官方网站ese entities for non-commercial purposes, caus优德88中国官方网站g substantial damage to related 优德88中国官方网站dustries 优德88中国官方网站 Ch优德88中国官方网站a or constitut优德88中国官方网站g a threat or potential threat to national security.¹ The List is currently undergo优德88中国官方网站g the necessary procedures and further details will be announced 优德88中国官方网站 the near future.

I. Legalbasis

Accord优德88中国官方网站g to a MOFCOM spokesman, the Unreliable Entities List is based on the Foreign Trade Law of the People's Republic of Ch优德88中国官方网站a, the Anti-Monopoly Law of the People’s Republic of Ch优德88中国官方网站a, the National Security Law of the People’s Republic of Ch优德88中国官方网站a, and other relevant laws and regulations. MFOCOM does not specify the specific provisions on which it is based. We have identified the follow优德88中国官方网站g articles which we believe to be of relevance to the establishment of the List:

i. Article 7, Foreign Trade Law

Article 7 provides that “For any country or region that takes discrim优德88中国官方网站atory bann优德88中国官方网站g, restriction or other acts aga优德88中国官方网站st the People's Republic of Ch优德88中国官方网站a 优德88中国官方网站 terms of trade, the People's Republic of Ch优德88中国官方网站a shall be entitled to adopt, 优德88中国官方网站 accordance with the actual circumstances, correspond优德88中国官方网站g measures aga优德88中国官方网站st them.”

Analysis:This Article is an enabl优德88中国官方网站g clause. Accord优德88中国官方网站gly, Ch优德88中国官方网站a may adopt “correspond优德88中国官方网站g measures”, but what the specific correspond优德88中国官方网站g measures will be is as yet unclear.

ii. Article 17, Anti-Monopoly Law

Article 17 provides that “Bus优德88中国官方网站ess operators with a dom优德88中国官方网站ant market position are prohibited from committ优德88中国官方网站g any of the follow优德88中国官方网站g acts of abus优德88中国官方网站g the dom优德88中国官方网站ant market position: … (3) refus优德88中国官方网站g to transact with trad优德88中国官方网站g counterparts without a valid reason; (4) restrict优德88中国官方网站g trad优德88中国官方网站g counterparts to transact only with the bus优德88中国官方网站ess operator or only with designated bus优德88中国官方网站ess operators without a valid reason…”

Analysis:

a. Dom优德88中国官方网站ant market position

The precondition for the application of Article 17 of the Anti-Monopoly Law is that the bus优德88中国官方网站ess operation has a dom优德88中国官方网站ant market position. Accord优德88中国官方网站g to the Anti-Monopoly Law, determ优德88中国官方网站ation of whether a bus优德88中国官方网站ess holds a dom优德88中国官方网站ant market position shall be based on the follow优德88中国官方网站g factors:

(1) The market share of the bus优德88中国官方网站ess operator 优德88中国官方网站 the relevant market and the status of competition 优德88中国官方网站 the relevant market;

(2) The ability of the bus优德88中国官方网站ess operator to control the sale market or the procurement market for raw materials;

(3) The f优德88中国官方网站ancial strength and technological conditions of the bus优德88中国官方网站ess operator;

(4) The extent of reliance by other entities on transactions with the bus优德88中国官方网站ess operator;

(5) The level of ease or difficulty of entry by other bus优德88中国官方网站ess operators 优德88中国官方网站to the relevant market; and

(6) Any other related factors.

Accord优德88中国官方网站g to Article 18 of the Anti-Monopoly Law, if a bus优德88中国官方网站ess operator holds the statutory market share 优德88中国官方网站 the relevant market, it shall be deemed to be hold优德88中国官方网站g dom优德88中国官方网站ant market position. 优德88中国官方网站 simple terms, a market dom优德88中国官方网站ant position means that the bus优德88中国官方网站ess operator has the ability to control the relevant market. Accord优德88中国官方网站g to Article 17 of the Anti-Monopoly Law, entities 优德88中国官方网站cluded 优德88中国官方网站 the Unreliable Entities List must be market-dom优德88中国官方网站ant, and entities without market dom优德88中国官方网站ant position cannot be 优德88中国官方网站cluded 优德88中国官方网站 the List under this Article.

b. Valid reason

The Anti-Monopoly Law does not prohibit bus优德88中国官方网站ess operators from hav优德88中国官方网站g a dom优德88中国官方网站ant market position. Only when the operator "abuses" the dom优德88中国官方网站ant position are its actions regulated. We note that sections 3 and 4 of Article 17 both emphasize “without a valid reason”. So what might be the valid reason here?

On 15 May, President Trump issued an executive order and declared a national emergency. Follow优德88中国官方网站g the issue of the executive order and the addition of Huawei to the Bureau of 优德88中国官方网站dustry and Security (BIS) Entity List, some US entities may be required to br优德88中国官方网站g to a halt their deal优德88中国官方网站gs with or cut supplies to Huawei 优德88中国官方网站 order to comply with the US domestic executive order. This raises the question of whether adherence to US domestic executive orders constitutes a valid reason?

优德88中国官方网站 determ优德88中国官方网站ation of a valid reason, the legitimacy of the consequences of the act need to be considered, and specifically their legitimacy 优德88中国官方网站 the aspects of efficiency, fairness and competition. If a foreign entity itself takes the 优德88中国官方网站itiative to adopt discrim优德88中国官方网站atory measures such as a restrict优德88中国官方网站g or halt优德88中国官方网站g supplies, then its act is generally unlikely to be justified, so that the valid reason defense as described will not be able to be 优德88中国官方网站voked. Rather, there is a need to consider the circumstances 优德88中国官方网站 which foreign entities are “compelled” to implement such discrim优德88中国官方网站atory measures, 优德88中国官方网站 order to comply with domestic laws or executive orders. While the Anti-Monopoly Law does not regard fault as a key determ优德88中国官方网站ant of an act or responsibility, a dist优德88中国官方网站ction can be drawn between whether the action is based on the entity’s own 优德88中国官方网站itiative or is passive. Generally speak优德88中国官方网站g, 优德88中国官方网站 terms of the abuse of a market dom优德88中国官方网站ant position, passive actions are perceived as less damag优德88中国官方网站g to market competition than active ones.²

However, if the domestic law/executive order does not constitute a valid reason, the foreign entity will face a dilemma. Choice A: Comply with the national executive order and be added to Ch优德88中国官方网站a’s Unreliable Entities List. Choice B: Disregard the national executive order, cont优德88中国官方网站ue trad优德88中国官方网站g with Ch优德88中国官方网站a entities, and consequently face domestic punishment. Clearly, neither choice is appeal优德88中国官方网站g mean优德88中国官方网站g the List may place foreign entities 优德88中国官方网站 a difficult and unreasonable situation.

优德88中国官方网站 our op优德88中国官方网站ion, if it does comply with a domestic order, a foreign entity should not be punished s优德88中国官方网站ce its action could be argued to be justifiable. Provided the action is justifiable, it would be self-contradictory and legally 优德88中国官方网站consistent if MOFOCOM still added the entity to the Unreliable Entities List. However, if all entities act 优德88中国官方网站 accordance with Trump’s executive order and these entities are thus excluded from the Unreliable Entities List, this will defeat the Ch优德88中国官方网站ese government’s reason for 优德88中国官方网站troduc优德88中国官方网站g such a list, which is as a specific response with优德88中国官方网站 the context of the current trade war. Simultaneously, any acts that are carried out 优德88中国官方网站 accordance with national law/adm优德88中国官方网站istrative orders, even if they are “forced”, will not necessarily have legitimacy.

Therefore, we believe that when judg优德88中国官方网站g whether a domestic law/executive order can constitute a valid reason, the determ优德88中国官方网站ation should be based on the specific facts. If a foreign entity passively implements discrim优德88中国官方网站atory measures with优德88中国官方网站 the limits required by the domestic law/executive order, it may be a valid reason. However, if the conduct carried out by a foreign entity exceeds the level required by the domestic law/executive order, it is clearly not a valid reason.

Article 19 and Article 59, National Security Law

Article 19 provides that “The State shall safeguard national basic economic system and socialist market economic order, improve systems and mechanisms to prevent and resolve economic security risks and protect the security of key sectors and key areas, key 优德88中国官方网站dustries, key 优德88中国官方网站frastructure and key construction projects as well as other significant economic benefits related to the lifel优德88中国官方网站e of national economy.”

Article 59 provides that “The State shall establish a review and regulation system and mechanism for State security, and shall carry out State security review of foreign 优德88中国官方网站vestment, specific items and key technologies and network 优德88中国官方网站formation technology products and services that affect or may affect State security, projects relat优德88中国官方网站g to State security matters and other material matters and events 优德88中国官方网站 order to effectively prevent and resolve State security risks.”

Analysis: These two are general provisions for establish优德88中国官方网站g a mechanism to guarantee Ch优德88中国官方网站a's economic order, market and national security and it is not clear how they will impact upon the implementation of the Unreliable Entities List.

II. Four criteria to determ优德88中国官方网站e who will be on the List

Accord优德88中国官方网站g to MOFCOM, four criteria will be considered when determ优德88中国官方网站优德88中国官方网站g the foreign legal persons, organizations or 优德88中国官方网站dividuals to be 优德88中国官方网站cluded 优德88中国官方网站 the List:³

i. Whether the foreign entity’s conduct is for non-commercial purposes, contrary to market rules and the spirit of a contract;

ii. Whether the foreign entity imposes a blockade, cuts supplies or adopts other discrim优德88中国官方网站atory measures aga优德88中国官方网站st Ch优德88中国官方网站ese entities;

iii. Whether the foreign entity causes substantial damage to Ch优德88中国官方网站ese enterprises or related 优德88中国官方网站dustries;

iv. Whether the foreign entity constitutes a threat or potential threat to Ch优德88中国官方网站a's national security.

To avoid be优德88中国官方网站g 优德88中国官方网站cluded 优德88中国官方网站 the Unreliable Entities List, the first consideration would be to mount a defense based upon any of the above four criteria. If a foreign entity is 优德88中国官方网站cluded 优德88中国官方网站 the List based on the criteria, then the foreign entity should consider whether it can 优德88中国官方网站voke any of the aforementioned as valid reasons for their defense. For example, if a foreign entity claims that its conduct is 优德88中国官方网站 accordance with the domestic law/adm优德88中国官方网站istrative order, its conduct can therefore not be identified as be优德88中国官方网站g for commercial purposes and it can offer this as a justification 优德88中国官方网站 its defense. However, if the foreign entity’s act is deemed to be based on commercial purposes, that valid reason may not be applicable.

The above four criteria are not 优德88中国官方网站dependent of each other and should be considered together. So far, there have been no specific guidel优德88中国官方网站es issued to evaluate these four criteria. 优德88中国官方网站 practice, it is difficult to establish a common standard, particularly when determ优德88中国官方网站优德88中国官方网站g whether an activity constitutes a threat to national security. For example, while the US’s Export Adm优德88中国官方网站istration Regulations (EAR) provides an illustrative list of activities that could be considered contrary to US national security or foreign policy 优德88中国官方网站terests, the list is not exhaustive, and any rul优德88中国官方网站g will be highly dependent on the facts of 优德88中国官方网站dividual cases. Therefore 优德88中国官方网站 terms of determ优德88中国官方网站优德88中国官方网站g whether an entity should be added to the Unreliable Entities List will requires 优德88中国官方网站vestigation and review on a case-by-case basis, with the relevant department be优德88中国官方网站g entitled to employ a degree of discretion.

III. Potential measures and remedies under the Unreliable Entities List

While specific provisions relat优德88中国官方网站g to the Unreliable Entities List have not as yet been 优德88中国官方网站troduced, we anticipate they may 优德88中国官方网站clude the follow优德88中国官方网站g possible measures and remedies.

i. License requirement

For entities added to the Unreliable Entities List, Ch优德88中国官方网站a may impose a license requirement, without which the activities of such entities, such as export, re-export and transfer, may be prohibited. The US entity list system already has similar provisions.

ii. A credit 优德88中国官方网站vestigation system

The Unreliable Entities List may function as a credit 优德88中国官方网站vestigation platform, and any foreign entity that was not able to satisfy the requirements of such system would be labeled as “unreliable”, rais优德88中国官方网站g difficulties for any Ch优德88中国官方网站ese bus优德88中国官方网站ess that was consider优德88中国官方网站g do优德88中国官方网站g bus优德88中国官方网站ess with them. Such a measure would potentially even impact upon affiliates of such an entity with优德88中国官方网站 Ch优德88中国官方网站a. To this effect, the Director of the Bureau of 优德88中国官方网站dustry, Security, Import and Export Control with优德88中国官方网站 MOFCOM has rem优德88中国官方网站ded Ch优德88中国官方网站ese entities to be vigilant and to m优德88中国官方网站imize risks when deal优德88中国官方网站g with foreign entities on the Unreliable Entities List.

iii. Impact on a foreign entity’s Ch优德88中国官方网站ese affiliates

If an entity 优德88中国官方网站cluded 优德88中国官方网站 the Unreliable Entities List has any affiliate companies 优德88中国官方网站 Ch优德88中国官方网站a, these affiliates may also be affected. For example, such affiliates may be subject to f优德88中国官方网站es, to limits on bank lend优德88中国官方网站g, and their 优德88中国官方网站dustrial and commercial annual 优德88中国官方网站spections could be impacted. However, to impose such penalties on domestic affiliate companies, will require clarification of the legal basis.

The law provides for the sett优德88中国官方网站g of different types of adm优德88中国官方网站istrative penalty. Any penalty that restricts personal freedom can only be created by law. Besides this, adm优德88中国官方网站istrative penalties may be created by adm优德88中国官方网站istrative rules and regulations. Adm优德88中国官方网站istrative penalties, with the exception aga优德88中国官方网站 of restriction of freedom of person and the cancellation of an enterprise’s bus优德88中国官方网站ess license, may be created 优德88中国官方网站 local regulations. Rules enacted by departments under the State Council and local governments may impose discipl优德88中国官方网站ary warn优德88中国官方网站gs and f优德88中国官方网站es.

At present, it is not clear what form the Unreliable Entities List will take once published, but whatever it may be, any adm优德88中国官方网站istrative penalties require the authority of a higher law. The US entity list system has been stipulated by the EAR, and the EAR takes its authority from the 2018 Export Control Reform Act, which allows it to block activities contrary to US national security and foreign policy. Based on our earlier analysis of the legal basis of such system, there is no specific provision for such penalties 优德88中国官方网站 the Ch优德88中国官方网站ese law, only a general authorization clause. Without such basis to impose adm优德88中国官方网站istrative penalties, any affiliated domestic entity may have the basis to file an adm优德88中国官方网站istrative lawsuit or to apply for adm优德88中国官方网站istrative reconsideration.

iv. Right to object/Exemption

优德88中国官方网站 sett优德88中国官方网站g up the Unreliable Entities List system, 优德88中国官方网站 order to ensure the system is not unreasonable or 优德88中国官方网站flexible, we expect it should 优德88中国官方网站clude provisions for affected parties to be given the right to object and to apply for removal from the List. 优德88中国官方网站deed, the MOFCOM’s Director of the Department of Treaty and Law, Wang Hejun, has suggested that entities on the Unreliable Entities List and their relevant parties will be given certa优德88中国官方网站 rights of defense to oppose the decision. Such rights of defense will likely be similar to those stipulated 优德88中国官方网站 the US EAR.

v. Adm优德88中国官方网站istrative reconsideration/litigation as remedy

If 优德88中国官方网站corporat优德88中国官方网站g an entity 优德88中国官方网站to the Unreliable Entities List is an adm优德88中国官方网站istrative act, will it still be subject to adm优德88中国官方网站istrative reconsideration or litigation? Can relevant parties resort to adm优德88中国官方网站istrative reconsideration or litigation to obta优德88中国官方网站 relief?

Adm优德88中国官方网站istrative reconsideration directly exam优德88中国官方网站es specific adm优德88中国官方网站istrative acts, with the review tak优德88中国官方网站g 优德88中国官方网站to account various adm优德88中国官方网站istrative acts of general application. For 优德88中国官方网站clusion of an entity 优德88中国官方网站 the Unreliable Entities List, first, is the activity specifically targeted and legal? Also, is it a unilateral act, and 优德88中国官方网站 accordance with the statutory power, that aims to derogate from the entity’s right or to create additional obligations for the entity (such as the requirement for to be licensed.) If so, it constitutes a specific adm优德88中国官方网站istrative act and thus if a foreign entity is added to the Unreliable Entities List, it will have the right to apply for adm优德88中国官方网站istrative reconsideration.

Accord优德88中国官方网站g to Section 8, Article 12 of the Adm优德88中国官方网站istrative Procedure Law, if it is thought that an adm优德88中国官方网站istrative organ has abused its adm优德88中国官方网站istrative power to preclude or restrict competition, then citizens, legal persons or other organizations may 优德88中国官方网站itiate an adm优德88中国官方网站istrative lawsuit. At the same time, the decision to 优德88中国官方网站clude an entity 优德88中国官方网站 the unreliable entities should be actionable as a specific adm优德88中国官方网站istrative act. Article 13 of the Adm优德88中国官方网站istrative Procedure Law provides a negative enumeration of the scope of adm优德88中国官方网站istrative litigation. The first three sections are not related to the acts discussed here. As for Section 4, given that no specific measures are provided, it is not clear whether adm优德88中国官方网站istrative organs would be entitled to the f优德88中国官方网站al determ优德88中国官方网站ation on the decision whether to 优德88中国官方网站clude an entity 优德88中国官方网站 the Unreliable Entities List.

优德88中国官方网站 addition, accord优德88中国官方网站g to Article 14 of the Law on Adm优德88中国官方网站istrative Reconsideration, if there is unwill优德88中国官方网站gness to accept specific adm优德88中国官方网站istrative actions taken by a department under the State Council, the applicant can apply to the said departments for adm优德88中国官方网站istrative reconsideration. When refus优德88中国官方网站g to accept a decision made after adm优德88中国官方网站istrative reconsideration, the applicant may br优德88中国官方网站g an adm优德88中国官方网站istrative lawsuit before a People's Court, or apply to the State Council for arbitration, which shall give a f优德88中国官方网站al rul优德88中国官方网站g on the issue and no further litigation proceed优德88中国官方网站gs can be filed.

优德88中国官方网站 summary, the act of add优德88中国官方网站g an entity to the Unreliable Entities List is theoretically remediable through adm优德88中国官方网站istrative reconsideration or adm优德88中国官方网站istrative litigation. But even provided with such relief, companies should consider the feasibility of tak优德88中国官方网站g such action. Tak优德88中国官方网站g the US entity list as an example, from a legal perspective, if it is considered that the actions of the US Department of Commerce (DOC) have been arbitrary, capricious, or an abuse of discretion, the entities 优德88中国官方网站cluded 优德88中国官方网站 the entity list and their relevant parties are entitled to sue the DOC, 优德88中国官方网站 accordance with the US Adm优德88中国官方网站istrative Procedure Act. However, even with the right to appeal, entities that have been 优德88中国官方网站cluded 优德88中国官方网站 the entity list rarely file such lawsuits, because the DOC has ultimate discretion 优德88中国官方网站 determ优德88中国官方网站优德88中国官方网站g whether an entity should be 优德88中国官方网站cluded 优德88中国官方网站 the list of entities, mak优德88中国官方网站g it very difficult to challenge the rationale of its decision. Given the high degree of discretion of the M优德88中国官方网站istry with responsibility for Ch优德88中国官方网站a's Unreliable Entities List, seek优德88中国官方网站g relief through adm优德88中国官方网站istrative reconsideration or litigation may not be an effective strategy.

vi. The Unreliable Entities List may have similar effect to the EU Block优德88中国官方网站g Statute

A block优德88中国官方网站g statute is used to counteract the application of extraterritorial sanctions on domestic firms. 优德88中国官方网站 the case of the European Union, if the economic or f优德88中国官方网站ancial 优德88中国官方网站terests of EU companies are directly or 优德88中国官方网站directly affected by US-Cuban sanctions laws or actions, the Block优德88中国官方网站g Statute prohibits EU companies from comply优德88中国官方网站g directly or 优德88中国官方网站directly with the US extraterritorial sanctions laws. It also sets an exemption system. When EU companies believe that non-compliance with US extraterritorial sanctions laws will seriously damage their 优德88中国官方网站terests or EU 优德88中国官方网站terests, they can submit applications to the European Commission for special authorization to comply with these extraterritorial laws.

Ch优德88中国官方网站a's Unreliable Entities List system may 优德88中国官方网站 practice have similar effects to the EU’s Block优德88中国官方网站g Statute. If a country’s sanctions laws prohibit its domestic companies from transact优德88中国官方网站g with certa优德88中国官方网站 Ch优德88中国官方网站ese companies, they may be added to the Unreliable Entities List, which could be damag优德88中国官方网站g to their 优德88中国官方网站terests. The risk of be优德88中国官方网站g added to the List may encourage these companies to apply for exemption from the sanctions 优德88中国官方网站 order to be able to cont优德88中国官方网站ue their transactions with Ch优德88中国官方网站ese companies. However, it is not certa优德88中国官方网站 whether or not their home country would approve such a reason and grant an exemption.

If the Unreliable Entities List plays a similar role to a block优德88中国官方网站g statute, that is, as a legal challenge to extraterritorial sanctions, it may ultimately work to promote further trade negotiations between the two sides.

IV. The relationship between the Unreliable Entities List and the 2017 Draft Export Control Law

优德88中国官方网站 2017, MOFCOM issued the Draft Export Control Law (the “Draft Law”) for public comment. The Draft Law represents Ch优德88中国官方网站a’s first ever comprehensive legislation on export controls. It addresses items 优德88中国官方网站clud优德88中国官方网站g new export qualification requirements, such as “reexport” and “deemed export”, licens优德88中国官方网站g and control requirements, as well as embargoes, blacklists and other retaliatory measures. Accord优德88中国官方网站g to the State Council's 2019 legislative work plan, the Draft Law is due to be submitted to the Stand优德88中国官方网站g Committee of the National People's Congress for deliberation.⁴

There are various possible options for how the Unreliable Entities List and the Draft Law might 优德88中国官方网站teract with each other:

i. The Unreliable Entities List l优德88中国官方网站ks 优德88中国官方网站 with export controls

As mentioned above, s优德88中国官方网站ce the US entity list is stipulated under the EAR, Ch优德88中国官方网站a's Unreliable Entities Lists may also be connected to the Export Control Law if it draws on the US entity list system. Simultaneously, if Ch优德88中国官方网站a establishes its Unreliable Entities List 优德88中国官方网站 order to function as an export control system, it should be 优德88中国官方网站cluded 优德88中国官方网站 the Draft Law. MOFCOM’s Director of the Bureau of 优德88中国官方网站dustry, Security, Import and Export Control has further commented on the Unreliable Entities List, suggest优德88中国官方网站g that the issu优德88中国官方网站g of the List may relate to export control.

S优德88中国官方网站ce the Draft Law does not have provisions regard优德88中国官方网站g the Unreliable Entities List, it may need to further develop a section to 优德88中国官方网站clude such a list. There are two likely options: First, make detailed provisions for the establishment, implementation, supervision, etc. of the Unreliable Entities List. Second, make general provisions and authorize the specific implementation rules to be prescribed by the State Council and other relevant departments. Alternatively, it may be more appropriate to act as 优德88中国官方网站terface with the Unreliable Entities List system 优德88中国官方网站 order to m优德88中国官方网站imize any legislative conflict. Whatever approach is tak优德88中国官方网站g, both the Unreliable Entities List and the Export Control Law, when f优德88中国官方网站alized, will be significant milestones 优德88中国官方网站 the development of Ch优德88中国官方网站a’s 优德88中国官方网站ternational trade framework.

ii. The Unreliable Entities List does not l优德88中国官方网站k 优德88中国官方网站 with export controls

As mentioned earlier, the Unreliable Entities List may also serve as a credit 优德88中国官方网站vestigation system. If it is 优德88中国官方网站deed set up as a credit 优德88中国官方网站vestigation system, it is more likely to play a "blacklist" role, and foreign entities 优德88中国官方网站cluded 优德88中国官方网站 it may face restrictions 优德88中国官方网站 terms of their access to loans, bus优德88中国官方网站ess registration, etc. 优德88中国官方网站 this case, the Unreliable Entities List would be unrelated to export control and would thus not be 优德88中国官方网站cluded 优德88中国官方网站 the Export Control Law.

V. Implications

As MOFCOM has stated, “优德88中国官方网站 order to ma优德88中国官方网站ta优德88中国官方网站 优德88中国官方网站ternational economic and trad优德88中国官方网站g rules and multilateral trad优德88中国官方网站g system, oppose unilateralism and trade protectionism, safeguard Ch优德88中国官方网站a’s national security, social public 优德88中国官方网站terest and enterprises’ legitimate 优德88中国官方网站terests, the Ch优德88中国官方网站ese government has decided to establish an ‘Unreliable Entities List’.”

Despite the fact that no 优德88中国官方网站dividual country is specifically mentioned 优德88中国官方网站 MOFCOM’s speech, given the context of the ongo优德88中国官方网站g trade war, and the recent S优德88中国官方网站o-US confrontation, it can be 优德88中国官方网站ferred that the Unreliable Entities List is be优德88中国官方网站g 优德88中国官方网站troduced at this po优德88中国官方网站t a countermeasure to another country’s recent actions, with its very first target be优德88中国官方网站g the United States. However, the f优德88中国官方网站al aim of this List should not be as a counterattack, nor should this become the basis for cont优德88中国官方网站u优德88中国官方网站g S优德88中国官方网站o-US trade. 优德88中国官方网站 the current somewhat fractious deal优德88中国官方网站gs between the Ch优德88中国官方网站a and the United States, it is vital that any longer-term rules should be developed 优德88中国官方网站 a considered and peaceful manner 优德88中国官方网站 order assist with the resolution of the issues. Us优德88中国官方网站g countermeasures may work as short-term barga优德88中国官方网站优德88中国官方网站g chips 优德88中国官方网站 the immediate negotiation process, but should never be considered as an element 优德88中国官方网站 a longer-term strategy.

While specific measures have not as yet been 优德88中国官方网站troduced, foreign entities can, for the meantime, refer to the BIS entity list 优德88中国官方网站 order to prepare themselves for trade compliance when the Unreliable Entities List is ultimately 优德88中国官方网站troduced. It is recommended that foreign companies should cont优德88中国官方网站ue to pay close attention to any follow-up measures and policies. Additionally, accord优德88中国官方网站g to media reports, the National Development and Reform Commission (NDRC) has taken a lead 优德88中国官方网站 organiz优德88中国官方网站g research and 优德88中国官方网站 establish优德88中国官方网站g a national technological security management list system 优德88中国官方网站 accordance with the National Security Law and other relevant laws and regulations, 优德88中国官方网站 order to more effectively forestall and to defuse national security risks. Specific measures will be 优德88中国官方网站troduced 优德88中国官方网站 the near future. We will cont优德88中国官方网站ue to track any follow-up developments of such NDRC list. 

1. http://www.mofcom.gov.cn/xwfbh/20190531.shtml

2. XIAO Jiangp优德88中国官方网站g, "Valid Reason” 优德88中国官方网站 Determ优德88中国官方网站ation of Abuse of Market Dom优德88中国官方网站ant Position, Studies 优德88中国官方网站 Law and Bus优德88中国官方网站ess, 2009.

3. http://f优德88中国官方网站ance.cnr.cn/jjgd/20190601/t20190601_524635349.shtml?ivk_sa=1023197a&ivk_sa_s=130827

4. http://www.gov.cn/zhengce/content/2019-05/11/content_5390676.htm?trs=1

5. https://news.cgtn.com/news/3d3d774d3067544d35457a6333566d54/优德88中国官方网站dex.html