The “Export Control Law” will be effective on December 1, 2020.

In consideration of the national security and interests, many countries have set regulations on import and export. In 1994, China promulgated the “Foreign Trade Law”, in which the principles for import and export of goods and technologies have been stipulated. Since 1997, China has successively released several regulations on the export of military products, import and export of dual-use items and technologies. With the development of economic, the methods of import and export become more diversified, such as investment, re-export, re-import and so on; the export objects become more complicated, which beyond the scope of goods and technologies, so the current laws and regulations on export could no longer meet the practical needs. Therefore, on 17th Oct., 2020, the 22nd Session of the Standing Committee of the 13th National People’s Congress adopted the “Export Control Law”, which will be effective on 1st Dec., 2020.

This law has made a series of adjustments on the current export control rules, and the key points are as follows:

1. Objects of export control

Compared with the previous export related laws and regulations, in addition to the traditional goods and technologies, the “Export Control Law” has added service as an export control object.

However, enterprise does not have to be panicked with this new law. There is a precondition for objects of export control. The precondition is that the dual-use items, military products, nuclear, and other goods, technologies, services and items shall be relate to the safeguarding of national security and interests, the performance of nonproliferation and other international obligations. Therefore, the majority civil goods, technologies, service and other items will not be applied with this law.

2. To control export with list of objects

The State will release an export control list on the objects. It should be noted that, in light of the needs of safeguarding national security and interests and fulfilling non-proliferation obligations and other international obligations, the State’s export control authorities may, impose temporary control over goods, technologies and services not included in the export control list. The duration of temporary control shall not exceed 2 years. An evaluation shall be made prior to the expiration of the duration of temporary control. The State’s export control authorities may make a decision to cancel the temporary control, extend the temporary control or include the temporary controlled items in the export control list.

3. It is the first time to administrate end-user and end-uses.

Articles 15 to 18 of the “Export Control Law” make relevant provisions on end-users and end-uses.

Article 15 stipulates that exporters shall submit to the State’s export control authorities documents certifying the end-user and end-uses of controlled items; the relevant certifying documents shall be issued by the end-user or the government agency of the country or region where the end-user is located.

Article 16 stipulates that the end-user shall promise not to change the end-uses of the relevant controlled items, or transfer such items to any third party without the consent of the State’s export control authorities. In addition, if the end-user or end-uses are likely to be changed, the exporter or importer shall report as required the situation to the State’s export control authorities immediately.

Article 17 stipulates that the State’s export control authorities shall be entitled to evaluate and review the end-user or end-uses. There are different voices on this article in practice. Because it does not mention whether the authorities could enter into the domicile of the exporter and the end-user, if it is deemed that the authorities have this right, then the exercise of public power outside the territory will be a big problem.

Article 18 stipulates that if importers or end-users breach of requirements for administration of end-users or end-uses, being likely to endanger national security and interests, or using controlled items for any terrorist purpose, the State’s export control authorities may take necessary measures, such as prohibiting or restricting the transaction of relevant controlled items, ordering the importers and end-users to suspend the export of relevant controlled items.

For companies involved in export business, it is recommended to check whether the exported items are subject to control. If they may be subject to export control, such as certain chemicals, metals, etc., it is recommended to add articles on export control to end users and end-uses in the relevant contracts.