In the last couple of years, the businesses in the global trade observed and experienced many volatilities involving China as they added a set of new trade laws to their legal system. Apart from their Customs Law and Foreign Trade Law, there was no specific legislation addressing export controls previously within China. The new ECL was ratified on 17 October and took effect from 01 December 2020.
In a snapshot, an ECL is a standard international practice. It consists of regulations limiting or preventing certain exports from gaining control over a country’s consumption patterns. It is also formulated to align with other national policies such as foreign trade, economic, security, environment and military.
Existing and budding businesses in the export industry need to understand the core principles of the new ECL when trading with China
- The ECL applies to the export of dual-use goods, military goods, nuclear goods,technologies and services and other goods and services associated with national security matters and anti-proliferation responsibilities. These are listed as controlled goods.
- It requires exporters to apply for licenses to export the controlled goods where they will have to meet multiple criteria classified by the licensing authorities.
- Exporters should provide documents validating and explaining the end-user and end-use of the controlled goods to the Chinese State Export Control Administration.
- Authorities can use the ECL to force export bans for controlled goods from particular countries, regions, companies or individuals if they threaten national security.
- It applies to the procurement of controlled goods by Chinese entities and individuals to foreign entities and individuals inside or outside the country.
China faces challenges in the practical utilisation and administration of the ECL and ts integration with the existing legal system. There is also a demand for further direction, detailed interpretation requirements from international businesses.Exporters trading with China are highly recommended to conduct comprehensive research and evaluation of prerequisites and ramifications of the new ECL. It is also necessary to understand how the ECL facilitates managing risks and opportunities of exporting to China.
China has a reputation for having a conspicuously intricate compliance system.International businesses should pay attention to the regular developments and deviations of the ECL to ensure their transactions with China are faultless.
