ILMA Compoundings - July 2020 - 14

INDUSTRY RUNDOWN

International Insight

U.S. Export Controls: China's Tainted
Commercial Sector
By James Eggenschwiler
The compliance landscape for the U.S. export trade
community recently became more precarious, as the
U.S. Bureau of Industry Security (BIS) published additional export restrictions affecting trade with Hong
Kong, China, Russia and other venues. These new rules
include broad definitions that greatly enhance their
scope of applicability. Although the rules do not specifically prohibit these exports, they expand the likelihood
of companies to seek U.S. export licenses - perhaps for
the first time in some cases.
EXPANDED DEFINITION OF 'MILITARY END USE'
Currently, "military end use" includes the use, development, production of or the incorporation into military
items, including those on the U.S. Munitions List under
the International Traffic in Arms Regulations (ITAR), the
Wassenaar Arrangement Munitions List and certain items
on the Commerce Control List Export Administration

14

JULY 2020

| COMPOUNDINGS | ILMA.ORG

Regulations (EAR).  Under the new rule, military end use
will now include any item "that supports or contributes to
the operation, installation, maintenance, repair, overhaul,
refurbishing, 'development' or 'production' of military
items." These new restrictions are part of the General
Prohibitions (of the EAR), which removes the limitations
associated with specific items identified in that regulation
and listed commodities.
As importantly, the term "military end users" includes
the military branches (Army, Navy, Air Force, etc.), but
also "the national guard and national police, government
intelligence or reconnaissance organizations, or any person
or entity whose actions or functions are intended to support
military end uses." The breadth of this definition augments
the difficulty for an exporter to ascertain (with any degree of
accuracy) whether or not its customer (whether end user or
distributor) is off-limits.
Translating the breadth of this new restriction into an
industry-relevant example, the sale of metalworking fluids
into China could be captured by the military end use


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ILMA Compoundings - July 2020

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