Export Control Regulations

Some regulatory changes coming out of the Bureau of Industry and Security (BIS) this week. BIS has implemented a rule similar to OFAC's 50 percent rule, meaning that any entity that is at least 50 percent owned by one or more entities on the BIS Entity List or the Military End-User (MEU) List will itself automatically be subject to Entity List/MEU List restrictions. The new rule mimics OFAC restrictions to parties owned 50 percent or more, individually or in aggregate, by sanctioned parties.  When we're doing #EDD research we also need to be on the lookout for entities that have even a significant minority ownership by an entity on the Entity List/MEU List. It's a red flag and should trigger additional due diligence - especially for exporters. Previously, if these entities were not specifically named on these lists – even if there were extensive corporate and financial ties with listed entities – they were not subject to a licensing requirement . Now, there's an "affirmative duty" to determine the ownership of counterparties. 🚩 A new red flag identifies a scenario where an exporter, reexporter, or transferor has “knowledge” that a foreign entity has one or more owners that are listed on the Entity List or the MEU List, or that are unlisted entities that are subject to license requirements or other restrictions based upon their ownership. These companies, financial institutions, and other entities have an affirmative duty to determine the percentage of ownership of those listed entities. Be careful out there! Map out ownership to ensure your customer or member is not transacting with an entity that may be engaged in violations of strategic trade controls. Assess the risks associated with minority ownership, unknown ownership, opaque ownership of listed entities. We don't want to be facilitating sensitive US-origin goods and technologies falling into the hands of our adversaries. https://lnkd.in/eMaNWZ5G

The "component-problem" in export compliance: what works for Customs doesn't always work for Export Controls. In international trade, you learn quickly that two different things can be true at the same time. For customs purposes, it’s often correct to classify a machine under a single HS code. Even if that machine includes parts that could, on their own, fall under export controls. But in export control, that same logic can fail you. Because here, what matters is not just the label on the box, but the capability of the components inside it. A dual-use item (e.g. a valve, a pump or a feeder) doesn’t stop being controlled just because it’s now part of a larger, civilian machine, a car or any other equipment. If it’s removable, and if it still performs the function that makes it controlled, then the rules may still see it for what it is. ------------------ This is what the General Note n° 2 of Annex I of Dual-Use Regulation says: "The object of the controls contained in this Annex should not be defeated by the export of any non-controlled goods (including plant) containing one or more controlled components when the controlled component or components are the principal element of the goods and can feasibly be removed or used for other purposes." ------------------ And yet this mistake happens often: someone classifies the whole system correctly, assumes everything inside is fine, and misses that one part that quietly triggers a license requirement. No evil intentions, just plain complexity: that's export compliance.

[🇨🇳 𝐂𝐡𝐢𝐧𝐚 𝐈𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐞𝐬 𝐄𝐱𝐭𝐫𝐚𝐭𝐞𝐫𝐫𝐢𝐭𝐨𝐫𝐢𝐚𝐥 𝐄𝐱𝐩𝐨𝐫𝐭 𝐂𝐨𝐧𝐭𝐫𝐨𝐥𝐬 𝐀𝐟𝐟𝐞𝐜𝐭𝐢𝐧𝐠 𝐍𝐨𝐧-𝐂𝐡𝐢𝐧𝐞𝐬𝐞 𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐎𝐯𝐞𝐫𝐬𝐞𝐚𝐬] For example, an EU company that manufactures a product in the EU incorporating certain Chinese-origin goods must obtain a license from China’s Ministry of Commerce to export it legally. This mirrors the US-style extraterritorial export control rules. China will require a Chinese export license for exports 𝐟𝐫𝐨𝐦 𝐨𝐮𝐭𝐬𝐢𝐝𝐞 𝐂𝐡𝐢𝐧𝐚 (𝐞.𝐠., 𝐟𝐫𝐨𝐦 𝐭𝐡𝐞 𝐄𝐔) if: 🛑 The product is made abroad and contains, integrates, or mixes Chinese-origin items listed in MOFCOM Announcement No. 61 (foreign-made rare-earth magnets and certain semiconductor materials), and the value share of those Chinese items is ≥ 0.1%. 🚫 Applications involving military users, entities on MOFCOM’s control or concern lists (including subsidiaries with ≥50% ownership), or for WMD, terrorism, or military end-uses are “in principle not approved.” ❗️These rules will apply starting 𝟏 𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟐𝟎𝟐𝟓.❗️License application must be made in Chinese, here: https://lnkd.in/d7YbP4kt. Separately, export controls on Chinese companies are effective ❗️𝐢𝐦𝐦𝐞𝐝𝐢𝐚𝐭𝐞𝐥𝐲❗️. These cover exports of technologies related to rare-earth mining, separation, metal smelting, magnet manufacturing, and recycling. “Export” includes transfers from China to abroad and the provision of controlled technologies to foreign persons anywhere (inside or outside China) by any means—such as licensing, investment, training, consulting, R&D, testing, or exhibitions. China controls about 70 per cent of rare-earth mining, 90 per cent of separation and processing, and 93 per cent of magnet manufacturing. ▪️Ministry of Commerce Announcement No. 61: https://shorturl.at/p2YCP ▪️Ministry of Commerce Announcement No. 62: https://shorturl.at/FgkYb

Excited to share my collaborative work with Meia Nouwens 温玫雅 and Erik Green 林艾力 on China's use of export controls. Since 2019, China has been modernising its economic statecraft, beefing up one economic tool in particular – export controls. China’s recent use of export controls demonstrates the evolution of Beijing’s economic statecraft: 1️⃣ The Chinese government has significantly overhauled its export-control regime, emulating US legislation. The Export Control Law, which was passed in 2020, consolidated various pieces of legislation on dual-use items, military goods and national-security technology into one framework. China also created the Unreliable Entity List, incorporated extraterritorial measures into its framework and implemented reporting obligations for financial institutions regarding any export-control violations. This formalisation of China’s export-control policy is part of a broader trend and it stands in stark contrast to China’s previous preference for informal economic statecraft. 2️⃣ China’s economic measures are no longer symbolic, but calibrated to inflict economic pain on its adversary and minimise blowback for Chinese firms. The impact of China's latest restrictions reverberated across the globe causing significant supply chain disruptions. To counter the US strategy for targeting advanced chips and semiconductor-manufacturing equipment, China is leveraging its dominant position in global supply chains. Rather than targeting end products, Beijing’s approach has been to target the top of supply chains, where it controls materials and technological processes. Beijing’s responses have also evolved in terms of severity and speed, although they remain largely retaliatory in nature. China's export controls shifted from mere licencing requirements to outright export bans with extraterritorial effects on third countries. 3️⃣ Despite its state capitalism and greater control over businesses, the Chinese government faces similar challenges to Western governments in the area of information intelligence. To better understand its own supply chains and the ability to protect them, the Chinese government developed an "early warning system". Since October 2024, Chinese exporters have been obliged to provide the authorities with detailed information about their exports’ end use in Western supply chains. These initiatives demonstrate the CCP’s recognition that it currently experiences difficulties in obtaining high-quality information about China’s supply chain. https://lnkd.in/dZgstekv

Do you share anonymous U.S. health, genomic, geolocation or financial data with China (or third parties that share data with China)? What about IP addresses for U.S. government facilities and devices? If so, the DOJ's export rules on Americans' bulk sensitive data could apply to you. In a marked departure from traditional privacy laws, the DOJ seeks to restrict transactions involving anonymized datasets, if this data can be used by American adversaries. In addition to prohibitions on data broker/ data sales relationships with countries of concern, the DOJ’s final rule also requires administrative and technical controls for a wide swathe of “restricted transactions.” These “restricted transactions” include vendor, employment, investment and M&A activity involving individuals and entities located in, or controlled by, Russia, China (including Hong Kong and Macau), Cuba, Iran, North Korea and Venezuela. This could sweep in most midsized and larger companies that have global supply chains and operations. If you are covered, where should you begin? Here’s five tips to get started: 1️⃣ Review access to sensitive personal data including de-identified and anonymized datasets to see if the final rule applies. 2️⃣ Negotiate contractual restrictions with *any* foreign recipients of U.S. sensitive data (including the E.U. and elsewhere) regarding onward transfers of data. 3️⃣ Include countries of concern as part of the KYC process for any partners or targets of investment and M&A activity. 4️⃣ Review and implement the CISA Security Requirements for any restricted data: https://lnkd.in/gcQfAUjh 5️⃣ Document your good faith efforts to comply. Per the enforcement policy “NSD will not prioritize civil enforcement actions against any person for violations of the DSP that occur from April 8 through July 8, 2025 so long as the person is engaging in good faith efforts to comply with or come into compliance with the DSP during that time.” Learn more about the DOJ’s final rule and guidance here: https://lnkd.in/gbK_Ej-x   DOJ’s resources are at the links below: ·      Fact Sheet is available here: https://lnkd.in/gHa8wyzV ·      A Compliance Guide is available here: https://lnkd.in/gg8-eJv9   ·      The DOJ’s over 100 FAQs here: https://lnkd.in/gEDF3SDn ·      There’s also an Implementation and Enforcement Policy: https://lnkd.in/gUm63mBM #ExportControls #NationalSecurity #DataPrivacy #Cybersecurity #TradePolicy #Sanctions #KYC #MoreComplicatedROPAs #DataMappingOnSteroids

🚨 New from Foundation for Defense of Democracies (FDD): Why Export Controls Work — Five Myths About U.S.–China AI Smart, targeted #exportcontrols don’t need to be perfect to be powerful—they shift time, cost, and scale and keep sensitive U.S. tech away from high-risk users. Five myths, five facts: 🧭 Myth 1: Controls “caused” China’s chip push. Fact: The drive began years earlier (2014 Big Fund / 2015 MiC2025). Controls make delivery harder by limiting advanced chips, memory, tools, and lithography—raising costs and stretching timelines. 🌍 Myth 2: Controls stop U.S. AI from spreading. Fact: They redirect it away from high-risk users. U.S. firms dominate market cap and cloud capacity; models scale globally via APIs and allied clouds. 🧪 Myth 3: Controls failed on frontier models. Fact: China’s binding constraint is compute. Without dense, high-end clusters, training takes longer and models are smaller/less reliable. 🔒 Myth 4: “Evasion makes controls useless.” Fact: Leakage isn’t scale. Smuggled parts come in small, irregular, warranty-free lots—no substitute for steady, high-volume supply. 🎣 Myth 5: Repeal controls to gain leverage. Fact: Beijing’s doctrine is “indigenous & controllable” tech and self-reliance. Relaxation yields stockpiles and faster substitution—not dependence. 📄 Read the memo: https://lnkd.in/eX_zjHRa #AI #Semiconductors #Chips #ExportControls #China #USChina #NationalSecurity #TechnologyPolicy #AIpolicy #Geopolitics #SupplyChain #AdvancedManufacturing #CloudComputing #Innovation #Policy

China's new Regulations on Export Control of Dual-Use Items If you're involved in global trade, this is for you: Key features you need to know: 1. Structure and Scope ↳ The regulations have six chapters and fifty articles. ↳ They cover licensing, control measures, and compliance for dual-use items. 2. Licensing System ↳ Exporters need specific licenses before exporting dual-use items. ↳ A simplified process ensures transparency and prevents misuse. 3. End-User and End-Use Management ↳ A Control and Watch List System will monitor entities involved in exports. ↳ Exporters must submit end-user certifications to ensure proper use. 4. Extraterritorial Reach ↳ The regulations impose controls on certain dual-use items even outside China. ↳ Foreign entities dealing with specific countries or end-users may be affected. 5. Compliance Obligations ↳ Exporters must report suspected violations promptly. ↳ Service providers like freight forwarders also bear reporting responsibilities. 6. Transition from Legacy Regulations ↳ These new regulations replace older frameworks. ↳ They aim to unify existing controls for better clarity and efficiency. Conclusion: These changes show China's commitment to stronger export control and international cooperation. Businesses in international trade must adapt quickly to stay compliant and mitigate risks.

Today, the Chinese government, through the Ministry of Commerce, has announced new export restrictions on lithium-ion battery materials and equipment, specifically targeting graphite anodes. This action represents a significant step in limiting the Western world’s ability to establish its own supply chain. This is effective as of November 8th 2025. At Northern Graphite we are well advanced with our operating or soon to be operating mines in Lac des Iles Quebec and Okanjande Namibia and Battery Anode Materials processing sites in Quebec and Europe to rapidly provide a viable alternative to Chinese materials. #graphite #Batteryanodematerials #liionbatteries Key details include: Items related to graphite anode (negative electrode) materials: 1. Artificial (synthetic) graphite anode materials. 2. Anode materials composed of mixtures of artificial and natural graphite. 3. Granulation equipment for graphite anode materials: - Vertical granulating reactors with volume ≥ 5 m³ - Continuous granulating reactors with volume ≥ 5 m³ 4. Graphitization equipment for graphite anode materials: - Box furnaces - Acheson furnaces - Internal shuttle furnaces - Continuous graphitization furnaces 5. Coating/modification equipment for graphite anode materials: - Blending/coating apparatus with volume ≥ 300 L - Spray-drying equipment with volume ≥ 60 m³ - CVD (chemical vapor deposition) rotary kilns with drum diameter > 0.5 m 6. Technology and processes for graphite anode materials: - Granulation technology - Continuous graphitization - Liquid-phase coating technology Export Procedures and Requirements: - Exporters must apply for export licenses via the competent commerce authority, adhering to the Export Control Law and Regulations on Export Control of Dual-Use Items. - Exporters are responsible for the authenticity of goods declared in customs submissions and must strengthen identification of export items. - Items under export control must be marked as “dual-use item” with the export control code in the customs declaration. - Items not controlled but with specifications close to controlled items should be marked as “not a controlled item” with specific parameters provided. - Customs reserves the right to question the completeness, accuracy, or authenticity of submitted information; exports will not be released during this questioning

🚨 The 5 Most Misunderstood Dual-Use Items in Export Control Compliance As export control professionals, we often encounter items that seem "obviously civilian" but actually require licensing scrutiny. Here are the top 5 that catch even experienced teams off-guard: 1️⃣ High-Performance Gaming Computers Real example: A gaming PC with dual NVIDIA RTX 4090 GPUs exceeds 70 Weighted TeraFLOPS, classifying it as ECCN 4A003.b under EAR. This gaming rig requires an export license - despite being marketed to gamers. 2️⃣ Industrial 3D Printers Real example: 3D printing technology will fall under DU 2B510 in the EU with the most recent list update taking effect end of 2025. What looks like standard manufacturing equipment can have dual-use implications for aerospace/defense applications. 3️⃣ Encrypted Smartphones & Apps Real example: Even consumer phones with certain encryption capabilities can trigger EAR Category 5 Part 2 requirements. That routine phone shipment to your overseas office? It might need review. 4️⃣ Laboratory Centrifuges Real example: High-speed centrifuges used in medical research can also be used for uranium enrichment. Standard lab equipment often requires careful dual-use classification analysis under Category 2. 5️⃣ Carbon Fiber Materials Real example: Carbon fiber sheets and preforms used in sporting goods manufacturing can also strengthen missile components. Even "civilian" composite materials need dual-use assessment. Key Takeaway: The civilian application doesn't eliminate dual-use potential. Always classify based on technical specifications, not intended use. What dual-use items have surprised your team? Share your experiences below! 👇 #ExportControl #TradeCompliance #DualUse #ITAR #EAR #GlobalTrade

China is turning the critical mineral "screw" on the US and indeed the world, as it seeks maximum pressure with imminent US negotiations on tariffs. In a major upgrade to its export controls the Ministry of Commerce has annoucned significantly expanded licensing requirements. These relate to technologies and companies outside China to "safeguard national security and interests." In effect, Nikkei reports that the new rules "prohibit unauthorized export of technologies related to rare-earth mining, processing and magnet manufacturing" and will enter into force immediately. Furthermore, in reprising US extra-territorial export control rules targetting third parties in foreign countries, the commerce ministry announced its own extra-territorial export controls for foreign firms. Here Nikkei reports that: "foreign organizations and individuals" must also obtain a license to export items manufactured abroad to a third country if they contain certain rare-earth elements, such as samarium and terbium, of Chinese origin or were made using Chinese technologies. China has a complete stranglehold of over 95% of the market for both of these light (samarium) and heavy (terbium) rare earths, making these powerful cards to play. Although Lynas has very recently started to refine terbium in its Malaysia facility with feedstock from Mt Weld in Western Australia, this will take time to scale. Making life more difficult, China's commerce ministry noted that licenses will not be granted for exports to foreign militaries and entities on China's control or watch lists. While applications for R&D or some semiconductor production and AI technologies with possible military applications (this is broad) will be reviewed on a case-by-case basis. Such a process will dramatically slow down licensing. China is also assessing orders for possible hoarding, such that unusually large orders may not be processed for a given buyer. These measures significantly strengthen Beijing's hand against the Trump administration, as China seeks to keep tariffs as low as possible. Beijing's mineral chokepoint is proving to be a major economic weapon in its strategic competition with the US, while the rest of the world's supply chains face collateral damage. Diversification opportunities will only grow, however creating the enironment for catalysing investment into ex-China supply is still the boundary criteria in need of design and multi-government cooperation to create a secure, long-term market that private and public capital can enter. #economicsecurity #criticalminerals #internationaltrade Hayley Channer Mikael Wigell Helen Mitchell Angus Barker