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Commerce Takes Aim at China’s Military-Civil Fusion Policy

In recent years, the US Government has grown increasingly concerned by China’s official policy of “military-civil fusion” (MCF), and multiple national security agencies have sounded the alarm bell. The Defense Department referred to MCF in the 2018 National Defense Strategy, concluding that China and Russia have been “deliberately blurring the lines between civil and military goals.” 
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This week, the Commerce Department got into the game, taking significant steps to revise the Export Administration Regulations to address MCF. Specifically, the Bureau of Industry and Security (BIS) issued two final rules, and one proposed rule on April 28. The two final rules will be effective June 29, 2020, and comments to the proposed rule are due by the same date.

Our analysis on the key points of each rule can be found below.

RIP CIV! BIS to Remove License Exception CIV from the EAR

This rule eliminates License Exception Civil End-Users (CIV) that previously authorized certain exports to China, Russia, and other countries if for civil end-use.

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APR in APRIL, BIS MAY Make Changes to Restrict Re-Exports, Comments Due in JUNE

A second proposed rule would eliminate a provision of License Exception Additional Permissive Reexports (APR) that currently authorizes certain reexports to China and other countries if local export authorization requirements are met.

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Ahoy, Exporters to China, Russia, and Venezuela! Massive Military End-Use/User Controls & Reporting Icebergs Lie Ahead!

The third rule sets forth the most significant changes to the EAR by expanding military end-use and end-user controls applicable to China, Russia, and Venezuela.

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